EXHIBIT 2.30
AGREEMENT AND PLAN OF MERGER
by and among
IXL HOLDINGS, INC.,
iXL-CHICAGO, INC.,
TWO-WAY COMMUNICATIONS, L.L.C.
AND
THE TWC MEMBERS
Dated as of September 18, 1998
AGREEMENT AND PLAN OF MERGER
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THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into as of
this 18th day of September, 1998, by and among Two-Way Communications, L.L.C.,
an Illinois limited liability company ("TWC"), IXL Holdings, Inc., a Delaware
corporation ("Parent"), iXL-Chicago, Inc., a Delaware corporation, or its
successors or assigns ("Sub"), and the members of TWC as listed on the signature
page hereto (the "TWC Members").
R E C I T A L S:
- - - - - - - -
A. TWC is engaged in the business of developing internet sites and furnishing
internet services, including website design and maintenance (the "TWC
Business").
B. TWC 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 TWC Members collectively own 100% of the issued and outstanding
membership interests of TWC (the "TWC Membership Interests").
D. The Board of Directors of Parent and Sub, the Manager and members of TWC
and the shareholder of Sub 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) TWC shall be merged with
and into Sub, (b) the separate existence of TWC 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-Chicago, 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 such date and place as 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) Articles of Merger (the "Illinois Articles of Merger"; collectively with
the Delaware Certificate of Merger, the "Certificate of Merger") to be filed
with the office of the Secretary of State of Illinois in accordance with the
provisions of the Illinois Limited Liability Company Act (the "ILLCA"). When
used herein, the term "Effective Time" shall mean the time when the Certificate
of Merger has been accepted for filing by the Secretary of State of Delaware and
Illinois Secretary of State, respectively, 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 ILLCA. 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 to a closing certificate and incumbency certificate,
substantially in the form of Exhibit "A-2" hereto ("Sub's Closing Certificate"),
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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 attached to the Sub's Closing Certificate.
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, 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.
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ARTICLE III
CONVERSION OF MEMBERSHIP INTERESTS
3.1 Merger Consideration. As of the Effective Time:
(a) Each one percent (1.0%) of the TWC Membership Interests owned by the
TWC Members (other than any Dissenting Membership Interests, as defined in
Section 3.2 hereof) shall, upon delivery at Closing of an Acknowledgement of
Delivery of Membership Interest substantially in the form of Exhibit "I"
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hereto, 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 (the "Parent Stock") and/or an amount of cash (as provided below)
based on the following equation:
TC%= 12 x 1.75 x R + $273,555 - D
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100
where:
TC%= the total consideration per percentage ownership, payable
(as provided below) in either shares of Parent Stock
(valued, as of the Closing, at $10 per share) and/or cash,
for which each one percent of TWC Membership Interests
shall be exchanged pursuant to the Merger
R= the aggregate gross revenues of TWC for the seven-month
period ended July 31, 1998, as determined in accordance
with generally accepted accounting principles ("GAAP") as
consistently applied by TWC prior to the date hereof
D= (a) any outstanding liabilities of TWC (the "TWC Debt"),
including debt for borrowed money and accrued interest
thereon, capital leases, accounts payable, and accrued
expenses, but excluding deferred-revenue liabilities to
the extent such deferred revenues are also included in
accounts receivable, minus (b) the sum of TWC's cash and
accounts receivable less than 90 days' old (from invoice
date), all to be determined as of three business days
prior to the Closing Date and all as determined in
accordance with GAAP.
(i) As to ▇▇▇▇▇ ▇▇▇▇, the total consideration per percentage ownership,
multiplied by his percentage of TWC Membership Interests, shall be
payable in cash.
(ii) As to the other TWC Members, all of whom are listed on Schedule 3.1(a)
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hereto, the
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total consideration per percentage ownership, multiplied
by their respective percentages of TWC Membership Interests, shall be
payable as follows:
(A) Cash portion = $4,200; and
(B) Stock portion = the balance of TC%.
(b) 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 shareholder,
member, officer or director of TWC or Sub, be converted into and become one
fully paid and nonassessable share of common stock of the Surviving Corporation.
3.2 Dissenting Membership Interests. Notwithstanding any provision
hereof to the contrary, any TWC Membership Interests held by a Dissenting Member
(as hereinafter defined) shall not be converted as described in Section 3.1
hereof, but instead shall be converted into the right to receive the
consideration due a Dissenting Member pursuant to the DGCL or ILLCA, as
applicable; provided, however, that if a Dissenting Member shall fail to perfect
his demand, withdraw his demand or otherwise lose his right for appraisal under
the terms of the DGCL or ILLCA, as applicable, then the TWC Membership Interests
held by such Dissenting Member (the "Dissenting Membership Interests") shall be
deemed to be converted as of the Effective Time in accordance with the
provisions of Section 3.1 hereof. TWC 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 Members shall be paid without interest
thereon (to the extent permitted by applicable law) by the Surviving
Corporation. For purposes hereof, the term "Dissenting Member" shall mean a TWC
Member who (a) objects to the Merger; and (b) complies with the applicable
provisions, if any, of the DGCL or ILLCA concerning dissenter's rights.
3.3 No Further Rights. From and after the Effective Time, holders of the
TWC Membership Interests shall cease to have any rights as members of TWC,
except as provided herein or by applicable law.
3.4 Closing of TWC's Transfer Books. At the Effective Time, the membership
interest transfer books of TWC shall be closed and no transfer of TWC Membership
Interests shall be made thereafter. If, after the Effective Time, any
instruments evidencing ownership of TWC Membership Interests 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 Members.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TWC
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TWC, ▇▇▇▇▇▇ Gear, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇, jointly and
severally, and in addition the other TWC Members, severally but not jointly,
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. TWC is a limited liability company duly
organized and validly existing under the laws of the State of Illinois. TWC has
the requisite power and authority to carry on the TWC 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, except where the failure to be so qualified would not have a material
adverse effect on TWC or the TWC Business. Complete and correct copies of the
Articles of Organization and Operating Agreement of TWC as in effect on the date
hereof are attached to a closing certificate and incumbency certificate,
substantially in the form of Exhibit "E" hereto ("TWC's Closing Certificate").
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The minute book of TWC, a true and complete copy of which has been delivered to
Parent, (a) accurately reflects all action taken by the Manager and members of
TWC at meetings, 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 members.
4.2 Authority. TWC has the necessary 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 TWC have been duly and validly authorized and approved by
TWC's Members, and no other member proceedings on the part of TWC, the Manager
or the TWC Members is necessary to authorize or approve this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by TWC and each TWC Member, and assuming the due
authorization, execution and delivery by Parent and Sub, constitutes the valid
and binding obligation of TWC and each TWC Member, enforceable against TWC and
each TWC Member 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) All of the authorized membership interests of TWC are validly issued
and outstanding, fully paid and nonassessable. All of the membership interests
of TWC were issued in accordance with applicable federal and state securities
laws. Except as set forth on Schedule 4.3(a) hereto, there are no options,
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warrants, calls, convertible notes, agreements, commitments or other rights
presently outstanding that would obligate TWC or any of the TWC Members to
issue, deliver or sell additional membership interests, or to grant, extend or
enter into any such option, warrant, call, convertible note, agreement,
commitment or other right. In addition to the foregoing, as of the date hereof,
TWC has no bonds, debentures, notes or other indebtedness issued or outstanding
that have voting rights in TWC. Schedule 4.3(a) sets forth a list of (i) all
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holders of record of (A) TWC Membership Interests, and (B) any options,
warrants, convertible notes or other rights to purchase
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membership interests of TWC (collectively, "TWC Membership Interests Rights");
and (ii) the membership interests held by each TWC Member.
(b) Except as set forth on Schedule 4.3(b) hereto, each TWC Member
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represents and warrants that the TWC Membership Interests held by such TWC
Member are 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. TWC 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").
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
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TWC or the TWC Members, (ii) the consummation by TWC and the TWC Members of the
transactions contemplated hereby or (iii) compliance by TWC with any of the
provisions hereof will:
(a) conflict with or violate the Articles of Organization or Operating
Agreement of TWC;
(b) result in a violation of any statute, ordinance, rule, regulation,
order, judgment or decree applicable to TWC or any of the TWC Members, or by
which TWC 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 TWC is a party or by which TWC 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 TWC; 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 ILLCA; or (ii)
any other individual or Entity (collectively, a "Person").
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4.6 Financial Statements. TWC has heretofore furnished Parent with a true
and complete copy of (a) the unaudited financial statements of TWC for the years
ended December 31, 1995, 1996 and 1997; and (b) the unaudited financial
statements of TWC for the six-month period ended June 30, 1998 (all of the
foregoing collectively herein referred to as the "TWC Financial Statements").
Except as disclosed therein, the TWC Financial Statements have been prepared in
accordance with GAAP (except for the absence of footnotes and normal year end
adjustments in the case of the TWC Financial Statements for the period ended
June 30, 1998) consistently followed throughout the period indicated, and
present fairly, in all material respects, the financial position and operating
results of TWC 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
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as contemplated hereby, since June 30, 1998 (a) TWC 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 TWC; (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 member of TWC in respect of its
membership interests, whether in cash or property, and (ii) no purchase or
redemption of any membership interest of TWC; (d) there has been no declaration,
payment, or commitment for the payment, by TWC, of a bonus or other additional
salary, compensation, or benefit to any employee of TWC 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 TWC, or waiver of any right of TWC;
(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 TWC (other than TWC Accounts
Receivable as defined in Section 4.26 hereof written down in the ordinary course
of business and not in excess of $10,000 for any single TWC 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 TWC Business or the operations of TWC; (i)
there has been no loan by TWC, or guaranty by TWC of any loan, to any employee
of TWC; (j) TWC 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 TWC; (k) there has been no termination or resignation of any key
employee or officer of TWC, and to the knowledge of TWC, 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 TWC
Business, to which TWC is a party or by which it is bound, except in the
ordinary course of business, or except as expressly contemplated hereby; (m) TWC
has not failed to satisfy any of its debts, obligations or liabilities related
to the TWC Business or the assets of TWC as the same become due and owing
(except for TWC 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 TWC 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 TWC.
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4.8 Undisclosed Liabilities. Except as set forth on Schedule 4.8 hereto, TWC
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has no 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 June 30, 1998, that would not,
whether individually or in the aggregate, have a material adverse impact on the
business or financial condition of TWC; (b) liabilities reflected on the TWC
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, TWC has
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good and marketable title to all tangible property and assets used in the TWC
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. TWC has heretofore furnished Parent with a true and correct
list of all items of tangible personal property (including computer hardware)
necessary for or used in the operation of the TWC Business in the manner in
which it has been and is now operated by ▇▇▇ ("▇▇▇ ▇▇▇ Equipment"), except for
personal property having a net book value of less than $1,000. Except as set
forth on Schedule 4.10 hereto, each material item of TWC Equipment is in good
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condition and repair, ordinary wear and tear excepted.
4.11 Intellectual Property.
(a) TWC 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 TWC in the conduct of the TWC Business (together with trade secrets and
know how used in the conduct of the TWC Business, the "TWC Intellectual Property
Rights"). TWC owns, or is validly licensed or otherwise has the right to use or
exploit, as currently used or exploited, all of the TWC 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 TWC, threatened, that TWC is infringing or otherwise adversely
affecting the rights of any Person with regard to any TWC Intellectual Property
Right. To TWC's knowledge, no Person is infringing the rights of TWC with
respect to any TWC Intellectual Property Right. Neither TWC nor, to TWC's
knowledge, any employee, agent or independent contractor of TWC, in connection
with the performance of such Person's services with TWC, 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) TWC has heretofore furnished Parent with a true and complete list of
all material computer software used by TWC in the conduct of the TWC Business
(the "TWC Software"). TWC currently licenses, or otherwise has the legal right
to use, all of the TWC Software (including any upgrade, alteration or
enhancement with respect thereto), and all of the TWC Software is being used in
compliance with any applicable license or other agreement.
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4.12 Real Property. Except as set forth on Schedule 4.12 hereto:
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(a) TWC has a good and valid leasehold interest in all real property
(including all buildings, improvements and fixtures thereon) used in the
operation of the TWC Business (the "TWC Real Property"). TWC owns no real
property. Except for Permitted Liens, and for the items set forth on Schedule
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4.12, there are no Liens on TWC's interest in any of the TWC Real Property.
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(b) There are no parties in possession of any portion of the TWC Real
Property other than TWC, whether as sublessees, subtenants at will or
trespassers.
(c) To the knowledge of TWC, 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 TWC
Leases (as hereinafter defined), any material expenditure by TWC to modify or
improve any of the TWC Real Property to bring it into compliance therewith.
4.13 Leases. Schedule 4.13 hereto sets forth a list of all leases pursuant
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to which TWC leases, as lessor or lessee, real or personal property used in
operating the TWC Business or otherwise (the "TWC Leases"). Copies of the TWC
Leases, all of which have previously been provided to Parent, are true and
complete copies thereof. All of the TWC Leases are valid, binding and
enforceable against TWC and, to the knowledge of TWC, against the other parties
thereto, in accordance with their respective terms, and there is not under any
such TWC Lease any existing default by TWC, or, to the knowledge of TWC, by any
other party thereto, or any condition or event that, with notice or lapse of
time or both, would constitute a default. TWC has not received notice that the
lessor of any of the TWC Leases intends to cancel, suspend or terminate such TWC
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
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all contracts, agreements and commitments (whether written or oral) to which TWC
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 any service agreements, customer agreements, supplier agreements,
agreements to lend or borrow money, member agreements, employment agreements,
agreements relating to TWC Intellectual Property Rights and the like
(collectively, the "TWC Contracts"); excepting only those TWC Contracts which
involve less than $10,000 and are cancelable, without penalty, on no more than
90 days' notice.
True and complete copies of all TWC Contracts (or a true and complete
narrative description of any oral TWC Contract) have previously been provided to
Parent. Neither TWC nor, to the knowledge of TWC, any other party to any of the
TWC 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 TWC Contracts, or (y) has waived any right it may have under any of the TWC
Contracts, the waiver of which would have a material adverse effect on the
business, assets or financial condition or prospects of TWC. All of the TWC
Contracts constitute the valid and
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binding obligations of TWC, enforceable in accordance with their respective
terms, and, to the knowledge of TWC, of the other parties thereto.
4.15 Manager and Officers. Schedule 4.15 hereto sets forth a list, as of the
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Closing Date, of the name of each Manager and officer of TWC and the position(s)
held by each.
4.16 Payroll Information. TWC has previously provided Parent with a true and
complete copy of the payroll report of TWC dated June 30, 1998, showing all
current employees of TWC and their current levels of compensation, other than
bonuses and other extraordinary compensation, all of which bonuses and other
extraordinary compensation are set forth in Schedule 4.16 hereto. TWC has paid
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all compensation required to be paid to employees of TWC on or prior to the date
hereof other than compensation (and bonuses pursuant to arrangements described
in Schedule 4.16 hereto) accrued in the current pay period.
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4.17 Litigation. Except as set forth on Schedule 4.17 hereto, there is no
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suit, action, claim, investigation or proceeding pending or, to the knowledge of
TWC, threatened against or affecting TWC or the TWC Business, nor is there any
judgment, decree, injunction or order of any applicable Governmental Entity or
arbitrator outstanding against TWC.
4.18 Employee Benefit Plans/Labor Relations.
(a) Except as disclosed in Schedule 4.18 hereto, there are no employee
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benefit plans, agreements or arrangements maintained by TWC, including (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, "TWC Benefit Plans"). All TWC 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 TWC under any TWC Benefit Plan.
(b) TWC 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 TWC; no representation campaign or election is now in progress with
respect to any employee of TWC; and there are no labor disputes, grievances,
controversies, strikes or requests for union representation pending, or, to the
knowledge of TWC, threatened, relating to or affecting the TWC Business. To the
knowledge of TWC, no event has occurred that could give rise to any such
dispute, controversy, strike or request for representation.
4.19 ERISA.
(a) All TWC 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 TWC 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
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such provision. No TWC Benefit Plan is subject to Title IV of ERISA or Section
412 of the Code. TWC 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 TWC Benefit Plans that would subject TWC to the penalty or tax imposed
under Section 502(i) of ERISA or Section 4975 of the Code. TWC 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
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the TWC Benefit Plans, neither the execution and delivery hereof nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation or golden parachute)
becoming due to any member or employee of TWC, (ii) increase any benefit
otherwise payable under any TWC 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 filed for any TWC 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 TWC under Section 4001 of ERISA or Section 414 of
the Code, within the 12-month period ending on the Closing Date. TWC has not
incurred any liability to the Pension Benefit Guaranty Corporation in respect of
any TWC Benefit Plan that remains unpaid.
4.20 Taxes.
(a) TWC 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 TWC on or prior to the
Closing Date. TWC has duly and timely paid all taxes and other governmental
charges, and all interest and penalties with respect thereto, required to be
paid by TWC (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 TWC Financial Statements). As of the Closing Date, all deficiencies proposed
as a result of any audit have been paid or settled.
(b) TWC is not a party to, or bound by, or otherwise in any way obligated
under, any tax sharing or similar agreement.
(c) TWC has not consented to have the provisions of Section 341(f)(2) of
the Code (or comparable state law provisions) apply to it, and TWC 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. TWC 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
TWC, as appropriate, and to carry on the TWC Business as now conducted (the "TWC
Permits"). To the knowledge of TWC, TWC is in material
11
compliance with all applicable laws, ordinances and regulations and the terms of
the TWC Permits. Except as set forth on Schedule 4.21 hereto, all of the TWC
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Permits are fully assignable by TWC in connection with the Merger. Schedule 4.21
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sets forth a true and complete list of all TWC Permits, true and complete copies
of which have previously been provided to Parent.
4.22 Manager/Member Consent. Both the Manager of TWC and the TWC Members
have adopted and approved this Agreement and the transactions contemplated
hereby (including the Merger).
4.23 Brokers. Except as set forth on Schedule 4.23 hereto, no broker or
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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 TWC.
4.24 Environmental Matters.
(a) To the knowledge of TWC, no real property currently or formerly owned
or operated by TWC is contaminated with any Hazardous Substance (as hereinafter
defined);
(b) TWC is not a party to any litigation or administrative proceeding
nor, to the knowledge of TWC, is any litigation or administrative proceeding
threatened against it, that, in either case, asserts or alleges that TWC (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 TWC, 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 TWC 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 TWC, TWC 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 any petroleum products, asbestos or polychlorinated biphenyls.
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4.25 Interest in Customers, Suppliers and Competitors. Except as provided
in Schedule 4.25 hereto, no officer, manager, member or, to TWC's knowledge,
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employee of TWC 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 TWC, or in any
Person from whom or to whom TWC leases any real or personal property, or in any
other Person with whom TWC is doing business whether directly or indirectly
(including 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 TWC (collectively, "TWC Accounts Receivable") were acquired by
TWC in the ordinary course of business arising from bona fide transactions. To
the knowledge of TWC, there are no set-offs, counterclaims or disputes asserted
with respect to any TWC Accounts Receivable that would result in claims in
excess of the reserve for bad debts set forth on the TWC Financial Statements
and, to the knowledge of TWC and subject to such reserve, all TWC Accounts
Receivable are collectible in full. TWC has previously provided Parent with a
true and complete aging report prepared as of July 31, 1998 which shows the time
elapsed since invoice date for all TWC Accounts Receivable as of such date.
4.27 Accounts Payable. All material accounts, notes, contracts and other
amounts payable of TWC (collectively, "TWC Accounts Payable") are currently
within their respective terms, and are neither in default nor otherwise past due
by more than 90 days. TWC has previously provided Parent with a true and
complete aging report prepared as of July 31, 1998 which shows the time elapsed
since invoice date for all TWC Accounts Payable as of such date.
4.28 Insurance. TWC currently maintains, in full force and effect, all
insurance policies that are required to be maintained for the conduct of the TWC
Business or the ownership of TWC's property (both real and personal)
(collectively, the "TWC Insurance Policies"). The TWC Insurance Policies are
listed on Schedule 4.28 hereto, and true and complete copies of all TWC
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Insurance Policies have previously been provided to Parent. TWC (a) is not in
default regarding the provisions of any TWC 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. TWC 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 TWC Debt. As of the date hereof, the TWC Debt is not in excess of
$298,833.
4.31 Investment Purpose; Accredited Investors or Purchaser representative.
(a) Each TWC Member receiving Parent Stock in the Merger represents that he (i)
is acquiring the
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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) Except for ▇▇▇▇ ▇▇▇▇▇▇, each TWC
Member receiving Parent Stock in the Merger further represents that he is an
"accredited investor" as such terms is defined in Rule 501 of Regulation D
promulgated by the Securities and Exchange Commission under the Securities Act;
and (c) ▇▇▇▇ ▇▇▇▇▇▇ represents that (i) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ is his Purchaser
representative (the "Purchaser representative") as such term is defined in Rule
501 to 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 such TWC Member, the merits and risks of the prospective
investment in Parent Stock; (C) has been acknowledged by such TWC Member 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 such TWC Member 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 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 TWC Member receiving Parent Stock in the
Merger 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
TWC Member receiving Parent Stock in the Merger represents and warrants that (i)
his financial situation
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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) Except for ▇▇▇▇ ▇▇▇▇▇▇, each
such TWC Member receiving Parent Stock in the Merger 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 September
15, 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 the 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.
4.34 Disclosure. No statement of fact by TWC or any TWC Member contained
herein and no written statement of fact furnished by TWC or any TWC Member to
Parent or Sub in connection herewith contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
herein or therein contained not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Each of Parent and Sub jointly and severally represents and warrants to TWC
and the TWC Members, 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
15
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, respectively, to a closing certificate and incumbency
certificate, substantially in the form of Exhibit "A-1" hereto ("Parent's
-------------
Closing Certificate"), and to Sub's Closing Certificate.
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 TWC and the TWC Members, 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
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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:
(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
16
(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
ILLCA); 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 14,053,489 shares are validly
issued and outstanding (without taking into account any shares of Parent Stock
to be issued pursuant hereto, and excluding the potential acquisitions of Pequot
Systems, Inc., Pantheon Interactive, Inc., Ionix Development Corporation and
NetResponse L.L.C.), 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 176,291 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, (C) 15,000 of
which have been designated as Class C Convertible Preferred Stock, of which
9,232 shares are validly issued and outstanding, fully paid and nonassessable,
and (D) 50,000 of which have been designated as Class D Nonvoting Preferred
Stock, of which 35,700 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 (excluding the same potential acquisitions
as referred to above). 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 TWC Members in accordance with the terms
hereof, the Parent Stock will be (i) duly authorized, fully paid and
nonassessable, and (ii) free and clear of all Liens other than restrictions
imposed by the Stockholders' Agreement and by federal and state securities laws.
17
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.
5.8 Financial Statements. Parent has heretofore furnished TWC 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) the 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 six month period ended June 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 charges or penalty, interest
or fines, except (a) liabilities incurred in the ordinary course of business
after June 30, 1998 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.
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. The board of directors of
Parent, and both the board of directors and shareholder of Sub, have, by
unanimous written consent or other action, adopted and approved this Agreement
and the transactions contemplated hereby (including the Merger).
18
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
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June 30, 1998, 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, 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
TWC 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
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ADDITIONAL AGREEMENTS
6.1 Conduct of Business by TWC 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, TWC 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 TWC 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 or in Schedule 6.1 hereto, unless Parent shall otherwise
agree in writing, prior to the Effective Time, TWC shall not, directly or
indirectly:
(a) (i) declare, set aside, or pay any dividend on, or make any other
distribution in respect of, any membership interest, (ii) split, combine or
reclassify any membership interest, or issue or authorize the issuance of any
securities in respect of, in lieu of or in substitution for, any membership
interests, or (iii) purchase, redeem or otherwise acquire, any membership
interest of TWC 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 membership
interest, any other voting security issued by TWC or any security convertible
into, or any right, warrant or option to acquire any such membership interest or
voting security;
(c) amend its Articles of Organization, Operating Agreement 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 TWC;
(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 TWC,
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,
TWC shall afford to Parent and its accountants, counsel and other
representatives reasonable access during
20
normal business hours (and at such other times as the parties may mutually
agree) upon reasonable prior notice and approval of TWC, 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 the other 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 TWC. Parent will
furnish to TWC and its representatives all information reasonably requested by
them.
6.3 Filings; Tax Elections. TWC shall promptly provide Parent with copies of
all filings made by TWC with any Governmental Entity in connection herewith and
the transactions contemplated hereby. TWC shall, before settling or
compromising any material income tax liability of TWC, 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 TWC Members 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. Parent hereby covenants and agrees that at the Effective
Time it will issue options to purchase an aggregate of 70,000 shares of Parent
Stock to such employees of TWC (after Closing, of the Surviving Corporation),
and in such amounts per person, as set forth in Schedule 6.6 hereto, at an
------------
exercise price of $10 per share, all in the form of Exhibit "C" hereto
-----------
("Options") and subject to Parent's standard five-year vesting schedule and
Parent's 1996 Stock Option Plan, as amended.
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. ▇▇▇▇▇▇ Gear, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ shall, at the Closing, each enter into an employment
agreement with Sub, substantially in the form of Exhibit "H" hereto.
-----------
21
6.9 Purchaser Representative. With respect to ▇▇▇▇ ▇▇▇▇▇▇, (a) the Purchaser
representative shall furnish to Parent, to Parent's satisfaction, a completed
Purchaser Representative Questionnaire, substantially in the form of Exhibit "J"
-----------
hereto; and ▇▇▇▇ ▇▇▇▇▇▇ shall furnish to Parent a signed Purchaser
Acknowledgement in connection therewith.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Obligation of TWC and the TWC Members to Effect the Merger.
The obligations of TWC and the TWC Members 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 TWC at the Closing, Parent's Closing Certificate, and (ii) the
appropriate officers of Sub shall have executed and delivered to TWC at the
Closing, Sub's Closing Certificate;
(c) Parent shall have obtained all of the Consents, if any, listed on
Schedule 7.1(c) hereto;
---------------
(d) TWC 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;
(e) there shall have been delivered to each of the TWC Members receiving
Parent Stock at the Closing, duly executed by Parent, an Agreement to be Bound
to the Registration Rights Agreement of Parent, dated as of Closing Date (the
"Agreement to be Bound to the Registration Rights Agreement"), in the form of
Exhibit "B" hereto;
-----------
(f) Parent shall have executed and delivered at the Closing an Option
Agreement for each of the Persons listed on Schedule 6.6 hereto as receiving
------------
options to purchase Parent Stock at that time;
(g) TWC shall have received, at the Closing, a duly executed opinion of
counsel to Parent and Sub, substantially in the form of Exhibit "D" hereto;
-----------
22
(h) Sub shall have executed and delivered at the Closing the employment
agreement for each of the persons referred to in Section 6.8 hereof; and
(i) TWC shall have received from Parent and Sub such other documents as
TWC's counsel shall have reasonably requested, in form and substance reasonably
satisfactory to TWC'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) TWC and the TWC Members 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 TWC and
the TWC Members 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) the appropriate officers of TWC shall have executed and delivered to
Parent at the Closing, TWC's Closing Certificate;
(c) TWC and the TWC Members shall have obtained or caused to be obtained
all of the Consents, if any, listed on Schedule 7.2(c) hereto;
---------------
(d) there shall have been delivered to Parent at the Closing, duly
executed by each of the TWC Members receiving Parent Stock in the Merger, (i) an
Agreement to be Bound to the Stockholders' Agreement, substantially in the form
of Exhibit "F" hereto; and (ii) an Agreement to be Bound to the Registration
-----------
Rights Agreement;
(e) Parent shall have received a certificate of existence for TWC, as
certified by the Secretary of State of Illinois;
(f) as of the date three business days prior to the Closing Date the TWC
Debt shall be no greater than $298,833;
(g) Each of the TWC Members referred to in Section 6.8 hereof shall have
executed and delivered his or her respective employment agreements, and each
person to receive Options at the Closing shall have executed and delivered an
Option Agreement;
(h) Parent shall have received, at the Closing, a duly executed opinion
of counsel to TWC and the TWC Members, substantially in the form of Exhibit "G"
-----------
hereto;
23
(i) TWC shall have furnished evidence to Parent's satisfaction of
performance under Section 6.9 hereof, and Parent shall have received from TWC or
the TWC Members, 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
(j) Parent shall have received evidence satisfactory to it that at the
Closing the assets and properties used in the TWC Business are free and clear of
all Liens other than Permitted Liens (as hereinafter defined), and that, except
for ▇▇▇▇ ▇▇▇▇▇▇, all TWC Members receiving Parent Stock in the Merger are
accredited investors in accordance with Section 4.31(a) hereof.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by Parent.
(a) Parent shall indemnify and hold the TWC Members and TWC's manager,
officers and employees (collectively, the "TWC Indemnified Parties") harmless
from and against, and agree promptly to defend each of the TWC Indemnified
Parties from and reimburse each of the TWC Indemnified Parties for, any and all
losses, damages, costs, expenses, liabilities, obligations and claims of any
kind (including reasonable attorney fees and other legal costs and expenses)
(collectively, a "TWC Loss") that any of the TWC 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).
(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 TWC Losses for which Parent would be liable but for this
sentence exceeds, on a cumulative basis, an amount equal to 5% of the aggregate
Merger consideration payable, in any form (each share of Parent Stock valued at
$10), pursuant to Section 3.1 hereof ("Basket"), and then only to the extent of
such excess, (ii) for amounts in excess of the aggregate Merger consideration
payable, in any form (each share of Parent Stock valued at $10), pursuant to
Section 3.1 hereof ("Cap") in the aggregate, and (iii) unless the TWC Members
have asserted a claim pursuant to Section 8.3 hereof with respect to the matters
24
set forth in Section 8.1(a)(i), or 8.1(a)(iii) to the extent applicable to
Section 8.1(a)(i), within 18 months 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 owned by any of the TWC Members
would not, by itself, constitute a TWC Loss, unless and to the extent a decrease
in the value of such 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 TWC Members.
(a) ▇▇▇▇▇▇ Gear, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, and ▇▇▇▇▇ ▇▇▇▇, jointly and
severally, and in addition the other TWC Members, severally but not jointly,
shall 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 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 TWC or the TWC Members 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 TWC or any of the TWC Members 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 TWC 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 TWC Members shall have any
liability under Section 8.2(a)(i) above (i) unless the aggregate of all Parent
Losses for which the TWC Members would be liable but for this sentence exceeds,
on a cumulative basis, an amount equal to the Basket, and then only to the
extent of such excess, (ii) for amounts in excess of the Cap in the aggregate,
and (iii) unless Parent has asserted a claim pursuant to Section 8.3 hereof with
respect to the matters set forth in Sections 8.2(a)(i), or 8.2(a)(iii) to the
extent applicable to Section 8.2(a)(i), within 18 months of the Effective Time,
except with respect to the matters arising under (A) Sections 4.18, 4.19 or 4.20
hereof, in which event Parent must have asserted a claim within the applicable
statute of limitations; or (B) Section 4.24 hereof, in which event Parent must
have asserted a claim within five years of the Effective Time.
25
(c) Notwithstanding the above, except for claims for indemnification
based on (i) fraud, (ii) intentional misrepresentation or (iii) any breach of
any representation made in Section 4.3 hereof or otherwise with respect to title
to any TWC Membership Interests, the liability of the TWC Members under Section
8.2(a) hereof will not exceed their respective portions of the merger
consideration receivable hereunder, as determined by multiplying by $10 the
number of shares of Parent Stock, if any, issued to them pursuant to Section 3.1
hereof and by adding the amount of cash receivable by them pursuant to Section
3.1.
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, such consent not to be unreasonably withheld. The
Indemnified Party shall cooperate with the Indemnifying Party in connection with
any such defense and shall make available to the
26
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 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.
8.4 Payment. Any Indemnifying Party may, at such Indemnifying Party's
option, pay all or part of any amount due under this Article VIII by delivery of
shares of Parent Stock having a value equal to the amount due (to the extent
that such Indemnifying Party owns sufficient shares of Parent Stock). For the
purpose of this provision, the value of Parent Stock shall be deemed to be $10
per share.
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 TWC;
(b) by TWC, 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 September 30, 1998;
(c) by Parent, upon a material breach hereof on the part of TWC or any of
the TWC Members 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 September 30,
1998;
(d) by Parent or TWC 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
27
(e) by either Parent or TWC if the Merger shall not have been consummated
on or before September 30, 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 party incurring such fees or expenses (including agents, counsel and other
advisors); provided, however, that the TWC Members shall pay all such fees and
expenses of TWC.
(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 Parent, Sub, TWC and
the TWC Members at any time before or after approval hereof by the TWC Members,
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 TWC Members, or (iii)
under applicable law would require approval of the TWC Members, in any such case
referred to in clauses (i), (ii) and (iii), without the further approval of the
TWC Members. 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 TWC Membership Interests.
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
28
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 indefinitely
(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 TWC or Parent, and
shall bind the legal representatives, assigns and successors of TWC, the TWC
Members and Parent, for a period of 18 months after the Effective Time (other
than the representations and warranties contained in (A) Sections 4.18, 4.19 or
4.20 hereof, which shall survive for the applicable statute of limitations; or
(B) Section 4.24 hereof, which shall survive for five years after the Effective
Time).
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),
or by registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
If to TWC : Two-Way Communications, L.L.C.
▇▇▇ ▇. ▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Manager
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, Esq.
▇▇▇▇▇▇, ▇▇▇▇▇ & Samotny Ltd.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the TWC To the address listed under the signature
Members: line of the applicable TWC Member
If to Parent or Sub: IXL Holdings, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: 404/267-3801
Telephone: 404/▇▇▇-▇▇▇▇
29
With copies to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇, A Professional Corporation
One Buckhead Plaza
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇. ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telecopy: 404/233-5824
Telephone: 404/▇▇▇-▇▇▇▇
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 by reference. 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 between Parent and
TWC dated as of August 26, 1998. 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. 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 ILLCA or
the DGCL is mandatorily applicable to the Merger, or to the rights of the TWC
Members 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.
30
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. 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 five years after the Closing Date,
the TWC Members and their agents and representatives shall have reasonable
access to the books and records of the TWC 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
TWC Members, the Surviving Corporation shall promptly notify the affected TWC
Member of such matter, information, or event
31
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 TWC Real
Property or interfering with the ordinary conduct of any of the TWC 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 TWC" shall refer to the knowledge,
subject to clause (i) above, of any of the TWC Members; 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 Sub); provided, however, that
with respect to the Parent, the terms "Subsidiary" and "Subsidiaries" shall not
include TWC or University Netcasting, Inc.
[SIGNATURES ON FOLLOWING PAGES]
32
IN WITNESS WHEREOF, Parent, Sub and TWC have caused this Agreement to be
signed and delivered by their respective duly authorized officers, and each TWC
Member has signed and delivered this Agreement, all as of the date first written
above.
"TWC"
Two-Way Communications, L.L.C., an Illinois limited
liability company
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Manager
"Parent"
IXL Holdings, Inc., a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Executive Vice President
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"Sub"
iXL-Chicago, Inc., a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Title: Executive Vice President
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"TWC Members"
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇▇▇▇
Address: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ Gear
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▇▇▇▇▇▇ Gear
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
34
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
Address: ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ by: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------- --------------------
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Attorney in Fact
Address: ▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Kraft Enterprises, Ltd., an Illinois general partnership
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇, General Partner
Address: ▇▇▇ ▇. ▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
35
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
TWC's Closing Certificate...................................... Exhibit E
Agreement to be Bound to Stockholders' Agreement............... Exhibit F
Opinion of Counsel to TWC...................................... Exhibit G
Employment Agreement........................................... Exhibit H
Acknowledgement of Deliver of Membership Interest.............. Exhibit I
Purchaser Representative Questionnaire and Acknowledgement..... Exhibit J
SCHEDULE 3.1(A)
---------------
TWC MEMBERS RECEIVING CASH AND PARENT STOCK
SCHEDULE 4.3(A)
---------------
CAPITALIZATION OF TWC
SCHEDULE 4.3(B)
---------------
LIENS ON TWC MEMBERSHIP INTERESTS
SCHEDULE 4.5
------------
CONFLICTS, REQUIRED FILINGS AND CONSENTS OF TWC
SCHEDULE 4.7
------------
EXCEPTIONS TO ABSENCE OF CHANGES OF TWC
SCHEDULE 4.8
------------
UNDISCLOSED LIABILITIES OF TWC
SCHEDULE 4.9
------------
EXCEPTIONS TO TITLE TO PROPERTIES OF TWC
SCHEDULE 4.10
-------------
BAD EQUIPMENT OF TWC
SCHEDULE 4.12
-------------
LIENS ON REAL PROPERTY OF TWC
SCHEDULE 4.13
-------------
LEASES OF TWC
SCHEDULE 4.14
-------------
CONTRACTS OF TWC
SCHEDULE 4.15
-------------
MANAGERS AND OFFICERS OF TWC
SCHEDULE 4.16
-------------
PAYROLL INFORMATION OF TWC
SCHEDULE 4.17
-------------
LITIGATION
SCHEDULE 4.18
-------------
EMPLOYEE BENEFIT PLANS/LABOR RELATIONS OF TWC
SCHEDULE 4.19
-------------
ERISA ISSUES OF TWC
SCHEDULE 4.21
-------------
TWC PERMITS
SCHEDULE 4.23
-------------
TWC BROKERS
SCHEDULE 4.25
-------------
INTEREST IN CUSTOMERS, SUPPLIERS, COMPETITORS
SCHEDULE 4.28
-------------
INSURANCE OF TWC
SCHEDULE 5.3
------------
CONFLICTS, REQUIRED FILINGS AND CONSENTS OF PARENT AND SUB
SCHEDULE 5.4
------------
PARENT LITIGATION
SCHEDULE 5.5
------------
PARENT AND SUB BROKERS
SCHEDULE 5.6
------------
OUTSTANDING OBLIGATIONS TO ISSUES OPTIONS, WARRANTS
OR OTHER PARENT STOCK RIGHTS
SCHEDULE 5.7
------------
SUBSIDIARIES OF PARENT
SCHEDULE 5.9
------------
PARENT UNDISCLOSED LIABILITIES
SCHEDULE 5.13
-------------
EXCEPTIONS TO ABSENCE OF CHANGES
SCHEDULE 6.1
------------
CONDUCT OF BUSINESS BY TWC PENDING THE MERGER
SCHEDULE 6.6
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PARENT STOCK OPTIONS TO EMPLOYEES OF TWC
SCHEDULE 7.1(C)
---------------
PARENT CONSENTS
SCHEDULE 7.2(C)
---------------
TWC CONSENTS
SCHEDULE 10.11
--------------
PERMITTED LIENS OF TWC