EXHIBIT 2.32
AGREEMENT AND PLAN OF MERGER
by and among
IXL HOLDINGS, INC.,
iXL-CHICAGO, INC.,
IONIX DEVELOPMENT CORPORATION
AND
THE IONIX SHAREHOLDER
Dated as of SEPTEMBER 23, 1998
AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER is entered into as of this 23rd day of
September, 1998, by and between Ionix Development Corporation, an Illinois
corporation ("Ionix"), IXL Holdings, Inc., a Delaware corporation ("Parent"),
iXL-Chicago, Inc., a Delaware corporation, or its successors or assigns ("Sub"),
and the sole shareholder of Ionix as listed on the signature page hereto (the
"Ionix Shareholder").
R E C I T A L S:
- - - - - - - -
A. Ionix is engaged in the business of developing internet sites and
furnishing internet services, including website design and maintenance (the
"Ionix Business").
B. Ionix 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 Ionix Shareholder owns 100% of the issued and outstanding capital
stock of Ionix (the "Ionix Stock").
D. The respective Boards of Directors of Parent, Sub and Ionix, and the
respective shareholders of Sub and Ionix, 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) Ionix shall be merged
with and into Sub, (b) the separate existence of Ionix 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 the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, A
Professional Corporation, One Buckhead Plaza, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇. ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, unless another date or place is agreed to by the parties.
1.3 Effective Time of the Merger. At the Closing, the parties hereto shall
cause (a) a certificate of merger (the "Delaware Certificate of Merger") to be
filed with the office of the Secretary of State of Delaware in accordance with
the provisions of the Delaware General Corporation Law, as amended (the "DGCL");
and (b) 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 Business Corporation Act (the "BCA"). When used
herein, the term "Effective Time" shall mean the time when the applicable
Certificate of Merger has been accepted for filing by the Secretary of State of
Delaware and Illinois, 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 BCA. 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" hereto ("Sub's Closing Certificate"),
-----------
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.
-2-
ARTICLE III
CONVERSION OF SHARES
3.1 Merger Consideration. As of the Effective Time:
(a) All shares of Ionix Stock owned by Ionix shall, by virtue of the
Merger and without any action on the part of any shareholder, officer or
director of Ionix or Sub, be canceled and retired and shall cease to exist, and
no consideration shall be delivered in exchange therefor.
(b) Each issued and outstanding share of Ionix Stock (other than any
Dissenting Shares, as defined in Section 3.2 hereof) shall, upon surrender to
Sub, at the Closing, of the underlying share certificates, be converted into,
and become exchangeable for, (i) a number of shares of validly issued, fully
paid and nonassessable Class B Common Stock of Parent, $.01 par value (the
"Parent Stock") based on the following equation:
PS= 345,000 + {[(C + ARc + WIP) - D] /$10
--------------------------------------
S
where:
PS = the number of shares of Parent Stock
(valued, as of the Closing, at $10 per
share) for which each share of Ionix Stock
shall be exchanged pursuant to the Merger
S = the number of issued and outstanding
shares of Ionix Stock on the Closing Date
D = any outstanding liabilities of Ionix (the "Ionix
Debt"), including debt for borrowed money and accrued
and unpaid interest thereon, capital leases, accounts
payable, accrued expenses, and any unpaid legal,
accounting or other fees, all to be determined as of
three business days prior to the Closing Date and all
as determined in accordance with generally accepted
accounting principles ("GAAP")
C, ARc and WIP = respectively, cash owned by Ionix; the net accounts
receivable of Ionix less than 60 days' old (from their
respective invoice dates); and unbilled work in process
of Ionix; all to be determined as of three business
days prior to the Closing Date and all as determined in
accordance with GAAP
provided, however, that 345,000 is the minimum number of shares payable
hereunder; to the extent that the sum of C plus ARc plus WIP exceeds D, it will
be split evenly between an increase in X
-3-
and an increase in PS, until the increase in X is $100,000, after which all of
the remaining excess will accrue to PS;
and (ii) an amount of cash based on the following equation:
X= $1,200,000 - [D - (C + ARc + WIP)]
--------------------------------
S
where:
X= the amount of cash for which each share of Ionix Stock shall be
exchanged pursuant to the Merger
and other terms are as defined above; provided, however, that the maximum amount
of cash payable hereunder is $1.3 million; to the extent that the sum of C plus
ARc plus WIP exceeds D, it will be split evenly between an increase in X and an
increase in PS, until the increase in X is $100,000, after which all of the
remaining excess will accrue to PS; to the extent that D exceeds such sum, C
shall be decreased.
(c) Each issued and outstanding share of common stock of Sub shall, by
virtue of the Merger and without any action on the part of any shareholder,
officer or director of Ionix or Sub, be converted into and become one fully paid
and nonassessable share of common stock of the Surviving Corporation.
3.2 Dissenting Shares. Notwithstanding any provision hereof to the
contrary, any shares of Ionix Stock held by a Dissenting Shareholder (as
hereinafter defined) shall not be converted as described in Section 3.1(b)
hereof, but instead shall be converted into the right to receive the
consideration due a Dissenting Shareholder pursuant to the DGCL or BCA, as
applicable, provided, however, that if a Dissenting Shareholder shall fail to
perfect his demand, withdraw his demand or otherwise lose his right for
appraisal under the terms of the DGCL or BCA, as applicable, then the Ionix
Stock held by such Dissenting Shareholder (the "Dissenting Shares") shall be
deemed to be converted as of the Effective Time in accordance with the
provisions of Section 3.1 hereof. Ionix shall not voluntarily make any payment
with respect to, settle, or offer to settle or otherwise negotiate, any such
demands. All amounts paid to Dissenting Shareholders shall be paid without
interest thereon (to the extent permitted by applicable law) by the Surviving
Corporation. For purposes hereof, the term "Dissenting Shareholder" shall mean a
Ionix Shareholder who (a) objects to the Merger; and (b) complies with the
applicable provisions of the DGCL or BCA concerning dissenter's rights.
3.3 No Further Rights. From and after the Effective Time, holders of
certificates theretofore evidencing Ionix Stock shall cease to have any rights
as shareholders of Ionix, except as provided herein or by applicable law.
3.4 Closing of Ionix's Transfer Books. At the Effective Time, the stock
transfer books of Ionix shall be closed and no transfer of Ionix Stock shall be
made thereafter. If after the
-4-
Effective Time, certificates for Ionix Stock are presented to Parent or the
Surviving Corporation, they shall be canceled and exchanged for a consideration
as set forth in Section 3.1 hereof, subject to applicable law in the case of
Dissenting Shareholders.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF IONIX
Ionix, and the Ionix Shareholder, jointly and severally, represent and warrant
to Parent and Sub as follows, which representations and warranties shall survive
the Closing in accordance with Section 10.1 hereof.
4.1 Organization and Qualification. Ionix is a corporation duly organized,
validly existing and in good standing under the laws of the State of Illinois.
Ionix has the requisite corporate power and authority to carry on the Ionix
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 those jurisdictions where the failure to
qualify, singly or in the aggregate, would not have a material, adverse effect
on Ionix's financial condition or on the Ionix Business. Complete and correct
copies of the Articles of Incorporation and Bylaws of Ionix as in effect on the
date hereof are attached to a closing certificate and incumbency certificate,
substantially in the form of Exhibit "B" hereto ("Ionix's Closing Certificate").
-----------
The minute book of Ionix, a true and complete copy of which has been delivered
to Parent, (a) accurately reflects all action taken by the directors and
shareholders of Ionix at meetings of Ionix's Board of Directors or shareholders,
as the case may be; and (b) contains true and complete copies, or originals, of
the respective minutes of all meetings or consent actions of the directors or
shareholders.
4.2 Authority. Ionix 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 Ionix have been duly and validly
authorized and approved by Ionix's Board of Directors and the Ionix Shareholder,
and no other corporate or shareholder proceedings on the part of Ionix, its
Board of Directors or the Ionix Shareholder is necessary to authorize or approve
this Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Ionix and the Ionix
Shareholder, and assuming the due authorization, execution and delivery by
Parent and Sub, constitutes the valid and binding obligation of Ionix and the
Ionix Shareholder, enforceable against Ionix and the Ionix Shareholder in
accordance with its terms subject, in each case, to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general application relating to
or affecting creditors' rights and to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing.
-5-
4.3 Capitalization.
(a) The authorized capital stock of Ionix consists of 1,000 shares of
common stock, $1.00 par value, of which 1,000 shares are validly issued and
outstanding, fully paid and nonassessable. All outstanding capital stock of
Ionix was issued in accordance with applicable federal and state securities
laws. Except as set forth on Schedule 4.3(a) hereto, there are no options,
---------------
warrants, calls, convertible notes, agreements, commitments or other rights
presently outstanding that would obligate Ionix or the Ionix Shareholder to
issue, deliver or sell shares of its capital stock, 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, Ionix has no
bonds, debentures, notes or other indebtedness issued or outstanding that have
voting rights in Ionix. Schedule 4.3(a) sets forth a list of (i) all holders
---------------
of record of (A) Ionix Stock, and (B) options, warrants, convertible notes or
other rights to purchase capital stock of Ionix (collectively, "Ionix Stock
Rights"); (ii) the number of shares held by each Ionix Shareholder and the
number of shares of capital stock of Ionix represented by the Ionix Stock
Rights; and (iii) the exercise price for each Ionix Stock Right.
(b) All of the issued and outstanding shares of capital stock of Ionix
are validly issued, fully paid and nonassessable. Except as set forth on
Schedule 4.3(b) hereto, the Ionix Shareholder represents and warrants that the
---------------
Ionix Stock held by him is free and clear of any lien, charge, security
interest, pledge, option, right of first refusal, voting proxy or other voting
agreement, or encumbrance of any kind or nature other than restrictions on
transfer imposed by federal and state securities laws (any of the foregoing, a
"Lien").
4.4 Subsidiaries. Ionix 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
------------
Ionix or the Ionix Shareholder, (ii) the consummation by Ionix and the Ionix
Shareholder of the transactions contemplated hereby or (iii) compliance by Ionix
with any of the provisions hereof will:
(a) conflict with or violate the Articles of Incorporation or Bylaws
of Ionix;
(b) result in a violation of any statute, ordinance, rule, regulation,
order, judgment or decree applicable to Ionix or the Ionix Shareholder, or by
which Ionix 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
-6-
other instrument or obligation, to which Ionix is a party or by which Ionix 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
Ionix; 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 BCA; or (ii)
any other individual or Entity (collectively, a "Person").
4.6 Financial Statements. Ionix has heretofore furnished Parent with a true
and complete copy of (a) the unaudited financial statements of Ionix for the
years ended December 31, 1996 and 1997; and (b) the unaudited financial
statements of Ionix for the eight month period ended August 31, 1998 (all of the
foregoing collectively herein referred to as the "Ionix Financial Statements").
Except as disclosed therein, the Ionix 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 Ionix Financial Statements) consistently followed
throughout the period indicated, and present fairly, in all material respects,
the financial position and operating results of Ionix as of the dates, and
during the periods, indicated therein.
4.7 Absence of Changes. Except as provided in Schedule 4.7 hereto and
------------
except as contemplated hereby, since June 30, 1998 (a) Ionix has not entered
into any material transaction that was not in the ordinary course of business;
(b) except for sales of services and conveyances (whether by license, sale or
otherwise) to clients in the ordinary course of business of intellectual
property developed by Ionix pursuant to engagements with such clients, there has
been no sale, assignment, transfer, mortgage, pledge, encumbrance or lease of
any material asset or property of Ionix; (c) there has been (i) no declaration
or payment of a dividend, or any other declaration, payment or distribution of
any type or nature to any shareholder of Ionix in respect of its stock, whether
in cash or property, and (ii) no purchase or redemption of any share of the
capital stock of Ionix; (d) there has been no declaration, payment, or
commitment for the payment, by Ionix, of a bonus or other additional salary,
compensation, or benefit to any employee of Ionix 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 Ionix, or waiver of any right of Ionix;
(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 Ionix (other than Ionix
Accounts Receivable as defined in Section 4.26 hereof written down in the
ordinary course of business in excess of $10,000 for any single Ionix 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) materially adversely affecting the Ionix Business or the operations
of Ionix; (i) there has been no loan by Ionix, or guaranty by Ionix of any loan,
to any employee of Ionix; (j) Ionix has not ceased to transact business with any
customer that, as of the date of such cessation, represented
-7-
more than 5% of the annual gross revenues of Ionix; (k) there has been no
termination or resignation of any key employee or officer of Ionix, and to the
knowledge of Ionix, 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 Ionix Business, to which Ionix is a party or
by which it is bound, except in the ordinary course of business, or except as
expressly contemplated hereby; (m) Ionix has not failed to satisfy any of its
debts, obligations or liabilities related to the Ionix Business or the assets of
Ionix as the same become due and owing (except for Ionix 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 Ionix 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 Ionix.
4.8 Undisclosed Liabilities. Except as set forth on Schedule 4.8 hereto,
------------
Ionix 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 Ionix; (b) liabilities reflected on the Ionix
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,
------------
Ionix has good and marketable title to all tangible property and assets used in
the Ionix 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. Ionix 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 Ionix Business in the
manner in which it has been and is now operated by Ionix ("the Ionix
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
-------------
Ionix Equipment is in good condition and repair, ordinary wear and tear
excepted.
4.11 Intellectual Property.
(a) Ionix 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 Ionix in the conduct of the Ionix Business (provided that such list need
not and does not include (a) any software as to which Ionix has acquired a
perpetual, fully-paid license on a non-negotiated basis from the owner of such
software in the ordinary course of the owner's business (a "shrink-wrap
license") or (b) algorithms, sub-routines, objects and other software components
which Ionix has developed in the past and may incorporate in future engagements)
(together with trade secrets and know how used in the conduct of the Ionix
Business, but excluding software subject to shrink-wrap licenses, the "Ionix
Intellectual Property Rights").
-8-
Ionix owns, or is validly licensed or otherwise has the right to use or exploit,
as currently used or exploited, all of the Ionix 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 Ionix,
threatened, that Ionix is infringing or otherwise adversely affecting the rights
of any Person with regard to any Ionix Intellectual Property Right. To Ionix's
knowledge, no Person is infringing the rights of Ionix with respect to any Ionix
Intellectual Property Right. Neither Ionix nor any employee, agent or
independent contractor of Ionix, in connection with the performance of such
Person's services with Ionix, 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) Ionix has heretofore furnished Parent with a true and complete list of
all material third-party computer software used by Ionix in the conduct of the
Ionix Business (the "Ionix Software"). Ionix currently licenses, or otherwise
has the legal right to use, all of the Ionix Software (including any upgrade,
alteration or enhancement with respect thereto), and all of the Ionix Software
is being used in compliance with any applicable license or other agreement.
4.12 Real Property. Except as set forth on Schedule 4.12 hereto:
-------------
(a) Ionix has a good and valid leasehold interest in all real property
(including all buildings, improvements and fixtures thereon) used in the
operation of the Ionix Business (the "Ionix Real Property"). Ionix owns no real
property. Except for Permitted Liens, and for the items set forth on Schedule
--------
4.12, there are no Liens on Ionix's interest in any of the Ionix Real Property.
----
Schedule 4.12 lists each county and state where any Ionix Real Property is
-------------
located, or where Ionix has ever leased or owned any real property.
(b) There are no parties in possession of any portion of the Ionix
Real Property other than Ionix, whether as sublessees, subtenants at will or
trespassers.
(c) To the knowledge of Ionix, 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
Ionix Leases (as hereinafter defined), any material expenditure by Ionix to
modify or improve any of the Ionix Real Property to bring it into compliance
therewith.
4.13 Leases. Schedule 4.13 hereto sets forth a list of all leases
-------------
pursuant to which Ionix leases, as lessor or lessee, real or personal property
used in operating the Ionix Business or otherwise (the "Ionix Leases"). Copies
of the Ionix Leases, all of which have previously been provided to Parent, are
true and complete copies thereof. All of the Ionix Leases are valid, binding and
enforceable against Ionix and, to the knowledge of Ionix, against the other
parties thereto, in accordance with their respective terms, and there is not
under any such Ionix Lease any existing default by Ionix, or, to the knowledge
of Ionix, by any other party thereto, or any condition or event that, with
notice or lapse of time or both, would constitute a default, except such
defaults which would not give any non-defaulting party the right either to
terminate the Ionix Lease or to accelerate any material amount due thereunder.
Ionix has not received notice that the lessor of any of the
-9-
Ionix Leases intends to cancel, suspend or terminate such Ionix Lease or to
exercise or not exercise any option thereunder.
4.14 Contracts. Schedule 4.14 hereto sets forth a true and complete list
-------------
of all contracts, agreements and commitments (whether written or oral) to which
Ionix 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, shareholder agreements, employment
agreements, agreements relating to Ionix Intellectual Property Rights and the
like (collectively, the "Ionix Contracts"); excepting only those Ionix Contracts
which involve less than $10,000 and are cancelable, without penalty, on no more
than 90 days' notice. (Schedule 4.14 does not include contracts, such as leases,
-------------
specifically disclosed on any other disclosure schedule.) The aggregate value
of all payment obligations and rights to receive payments, under agreements,
contracts and commitments (whether oral or in writing) to which Ionix is a party
or by which it or any of its properties or assets is otherwise bound, and that
are not listed on Schedule 4.14, is less than $50,000 (calculating such value by
-------------
adding together the value of rights and obligations, and not by determining the
net amount thereof).
True and complete copies of all Ionix Contracts (or a true and complete
narrative description of any oral Ionix Contract) have previously been provided
to Parent. Neither Ionix nor, to the knowledge of Ionix, any other party to any
of the Ionix 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 Ionix Contracts, or (y) has waived any right it may have under
any of the Ionix Contracts, the waiver of which would have a material adverse
effect on the business, assets or financial condition or prospects of Ionix.
All of the Ionix Contracts constitute the valid and binding obligations of
Ionix, enforceable in accordance with their respective terms, and, to the
knowledge of Ionix, of the other parties thereto.
4.15 Directors and Officers. Schedule 4.15 hereto sets forth a list, as
-------------
of the Closing Date, of the name of each director and officer of Ionix and the
position(s) held by each.
4.16 Payroll Information. Ionix has previously provided Parent with a true
and complete copy of the payroll report of Ionix dated September 11, 1998,
showing all current employees of Ionix 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.
--------------
Ionix has paid all compensation required to be paid to employees of Ionix on or
prior to the date hereof other than compensation (and bonuses pursuant to
arrangements described in Schedule 4.16) accrued in the current pay period.
-------------
4.17 Litigation. Except as set forth on Schedule 4.17 hereto, there is no
-------------
suit, action, claim, investigation or proceeding pending or, to the knowledge of
Ionix, threatened against or affecting Ionix or the Ionix Business, nor is there
any judgment, decree, injunction or order of any applicable Governmental Entity
or arbitrator outstanding against Ionix.
-10-
4.18 Employee Benefit Plans/Labor Relations.
(a) Except as disclosed in Schedule 4.18 hereto, there are no
-------------
employee benefit plans, agreements or arrangements maintained by Ionix,
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, "Ionix Benefit Plans"). All Ionix 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 Ionix under any Ionix Benefit Plan.
(b) Ionix 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 Ionix; no representation campaign or election is now in progress
with respect to any employee of Ionix; and there are no labor disputes,
grievances, controversies, strikes or requests for union representation pending,
or, to the knowledge of Ionix, threatened, relating to or affecting the Ionix
Business. To the knowledge of Ionix, no event has occurred that could give rise
to any such dispute, controversy, strike or request for representation.
4.19 ERISA.
(a) All Ionix 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 Ionix Benefit Plans that is intended
to meet the requirements of Section 401(a) of the Code has been determined by
the Internal Revenue Service to meet such requirements within the meaning of
such provision. No Ionix Benefit Plan is subject to Title IV of ERISA or Section
412 of the Code. Ionix 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 Ionix Benefit Plans that would subject Ionix to the
penalty or tax imposed under Section 502(i) of ERISA or Section 4975 of the
Code. Ionix has not engaged in any transaction described in Section 4069 of
ERISA within the last five years. Except as disclosed in Schedule 4.19 hereto or
-------------
pursuant to the terms of the Ionix 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 director or other employee of Ionix,
(ii) increase any benefit otherwise payable under any Ionix 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 Ionix 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 Ionix under Section 4001 of ERISA or
Section 414 of the Code, within the 12-month period ending on the Closing Date.
Ionix has not incurred any liability to the Pension Benefit Guaranty Corporation
in respect of any Ionix Benefit Plan that remains unpaid.
-11-
4.20 Taxes.
(a) Except as set forth on Schedule 4.20 hereto, Ionix 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 Ionix on or prior to the Closing Date. Ionix has
duly and timely paid all taxes and other governmental charges, and all interest
and penalties with respect thereto, required to be paid by Ionix (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 Ionix Financial
Statements). As of the Closing Date, all deficiencies proposed as a result of
any audit have been paid or settled.
(b) Ionix is not a party to, or bound by, or otherwise in any way
obligated under, any tax sharing or similar agreement.
(c) Ionix has not consented to have the provisions of Section
341(f)(2) of the Code (or comparable state law provisions) apply to it, and
Ionix 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. Ionix 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
Ionix, as appropriate, and to carry on the Ionix Business as now conducted (the
"Ionix Permits"). To the knowledge of Ionix, Ionix is in material compliance
with all applicable laws, ordinances and regulations and the terms of the Ionix
Permits. Except as set forth on Schedule 4.21 hereto, all of the Ionix Permits
-------------
are fully assignable by Ionix in connection with the Merger. Schedule 4.21 sets
-------------
forth a true and complete list of all Ionix Permits, true and complete copies of
which have previously been provided to Parent.
4.22 Board of Directors/Shareholder Consent. Both the Board of Directors
of Ionix and the Ionix Shareholder 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
-------------
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 Ionix.
4.24 Environmental Matters.
(a) To the knowledge of Ionix, no real property currently or formerly
owned or operated by Ionix is contaminated with any Hazardous Substance (as
hereinafter defined).
(b) Ionix is not a party to any litigation or administrative
proceeding nor, to the knowledge of Ionix, is any litigation or administrative
proceeding threatened against it, that, in
-12-
either case, asserts or alleges that Ionix (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 Ionix, 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 Ionix 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 Ionix, Ionix 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.
4.25 Interest in Customers, Suppliers and Competitors. Except as provided
in Schedule 4.25 hereto, no officer, director, shareholder or employee of Ionix
-------------
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 Ionix, or in any Person from whom
or to whom Ionix leases any real or personal property, or in any other Person
with whom Ionix 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 Ionix (collectively, "Ionix Accounts Receivable") were generated
by Ionix in the ordinary course of business arising from bona fide transactions.
There are no set-offs, counterclaims or disputes asserted with respect to any
Ionix Accounts Receivable that would result in claims in excess of the reserve
for bad debts set forth on the Ionix Financial Statements and, to the knowledge
of Ionix and subject to such reserve, all Ionix Accounts Receivable are
collectible in full. Ionix has previously provided Parent with a true and
complete aging report prepared as of September 18, 1998 which shows the time
elapsed since invoice date for all Ionix Accounts Receivable as of such date.
4.27 Accounts Payable. All material accounts, notes, contracts and other
amounts payable of Ionix (collectively, "Ionix Accounts Payable") are currently
within their respective
-13-
terms, and are neither in default nor otherwise past due by more than 90 days.
Ionix has previously provided Parent with a true and complete aging report
prepared as of September 18, 1998 which shows the time elapsed since invoice
date for all Ionix Accounts Payable as of such date.
4.28 Insurance. Ionix currently maintains, in full force and effect, all
insurance policies that are required to be maintained for the conduct of the
Ionix Business or the ownership of Ionix's property (both real and personal)
(collectively, the "Ionix Insurance Policies"). The Ionix Insurance Policies
are listed on Schedule 4.28 hereto, and true and complete copies of all Ionix
-------------
Insurance Policies have previously been provided to Parent. Ionix (a) is not in
default regarding the provisions of any Ionix 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. Ionix 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 Ionix Debt. As of the date hereof, the Ionix Debt is not in excess of
$371,927.
4.31 Accredited Investors; Investment Purpose. The Ionix Shareholder
represents that he (a) is an "accredited investor" as such term is defined in
Rule 501 of Regulation D promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Securities Act"); (b) is
acquiring the Parent Stock solely for his own account for investment and not
with a view to, or for sale in connection with, any distribution thereof; and
(c) 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 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").
4.32 Restrictions on Transfer. The Ionix Shareholder acknowledges that (a)
the Parent Stock received by him hereunder has not been registered under the
Securities Act; (b) the Parent Stock may be required to be held indefinitely,
and he must continue to bear the economic risk of the investment in such shares
unless such shares are subsequently registered under the Securities Act or an
exemption from such registration is available; (c) there may not be any public
market for the Parent Stock in the foreseeable future; (d) Rule 144 promulgated
under the Securities Act is not presently available with respect to sales of any
securities of Parent, and such Rule is not anticipated to be available in the
foreseeable future; (e) when and if Parent Stock may be disposed of without
registration in reliance upon Rule 144, such disposition can be made only in
limited amounts and in accordance with the terms and conditions of such Rule;
(f) if the exemption afforded by Rule 144 is not available, 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
-14-
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. The Ionix
Shareholder represents and warrants that (a) his financial situation is such
that he can afford to bear the economic risk of holding Parent Stock acquired by
him hereunder for an indefinite period; (b) he can afford to suffer the complete
loss of such Parent Stock; (c) 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; (d) 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; (e) he has carefully reviewed the
terms of the Stockholders' Agreement and has evaluated the restrictions and
obligations contained therein; and (f) he (i) has reviewed the Private Placement
Memorandum of Parent dated September 15, 1998 (the "Memorandum"), (ii) 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 (iii) does not require additional information regarding Parent or
its Subsidiaries in connection with the Merger.
4.34 Disclosure. No statement of fact by Ionix or the Ionix Shareholder
contained herein and no written statement of fact furnished by Ionix or the
Ionix Shareholder 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
Ionix and the Ionix Shareholder, which representations and warranties shall
survive the Closing in accordance with Section 10.1 hereof, as follows:
5.1 Organization and Qualification. Each of Parent and its Subsidiaries (as
defined in Section 10.11 hereof) is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation.
Each of Parent and its Subsidiaries has the requisite corporate power and
authority to carry on its business as it is now being conducted and is duly
qualified or licensed to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary, except those
jurisdictions where the failure to qualify, singly or in the aggregate, would
not have a material adverse effect on the business and financial condition of
Parent and its Subsidiaries, taken as a whole. 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
-15-
certificate and incumbency certificate, substantially in the form of Exhibit "C"
----------
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 boards of
directors and by Parent, in its capacity as 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 Ionix and the
Ionix Shareholder, constitutes the valid and binding obligation of each of
Parent and Sub, enforceable against each of Parent and Sub in accordance with
its terms, subject, in each case, to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general application relating to or affecting
creditors' rights and to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing.
5.3 No Conflicts, Required Filings and Consents. Except as set forth on
Schedule 5.3 hereto, none of the execution and delivery of this Agreement by
------------
Parent or Sub, the consummation by Parent and Sub of the transactions
contemplated hereby, or compliance by Parent and Sub with any of the provisions
hereof, will:
(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 any other any rights of termination, amendment, acceleration or
cancellation of, any note, bond, mortgage, indenture, or any material contract,
agreement, arrangement, lease, license, permit, judgment, decree, franchise or
other instrument or obligation to which Parent or any of its Subsidiaries is a
party or by which Parent, any of its Subsidiaries or their respective properties
may be bound or affected;
(d) result in the creation of any Lien on any of the property or
assets of Parent or any of its Subsidiaries; or
(e) require any Consent of (i) any Governmental Entity (except for (x)
compliance with any applicable requirements of any applicable securities laws,
and (y) the filing of the Certificate of Merger pursuant to the DGCL and the
BCA); or (ii) any other Person.
-16-
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., Two-Way Communications, L.L.C.
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 Ionix Shareholder 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.
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.
-17-
5.8 Financial Statements. Parent has heretofore furnished Ionix 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 penalties,
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).
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.
-18-
5.13 Absence of Changes. Except as provided in Schedule 5.13 hereto, since
-------------
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
Ionix in connection herewith contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary in order
to make the statements herein or therein contained not misleading.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Conduct of Business by Ionix 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, Ionix 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
-19-
relationships with customers, suppliers, licensors, licensees, distributors and
others having business dealings with Ionix to the end that its goodwill and on-
going businesses shall not be impaired in any material respect at the Effective
Time. Without limiting the generality of the foregoing, and except as
contemplated hereby, unless Parent shall otherwise agree in writing, prior to
the Effective Time, Ionix shall not, directly or indirectly:
(a) (i) declare, set aside, or pay any dividend on, or make any other
distribution in respect of, any of its capital stock, (ii) split, combine or
reclassify any of its capital stock, or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for, shares of its
capital stock, or (iii) purchase, redeem or otherwise acquire, any share of
capital stock of Ionix or any other equity security thereof or any right,
warrant, or option to acquire any such share or other security;
(b) issue, deliver, sell, pledge or otherwise encumber any share of
its capital stock, any other voting security issued by Ionix or any security
convertible into, or any right, warrant or option to acquire any such share or
voting security;
(c) amend its Articles of Incorporation, Bylaws or other comparable
organizational documents;
(d) acquire or agree to acquire (i) by merging or consolidating with,
or by purchasing a substantial portion of the assets of, or by any other manner,
any business or any Entity or division thereof, or (ii) any assets that are
material, individually or in the aggregate, to Ionix;
(e) subject to a Lien or sell, lease or otherwise dispose of any of
its properties or assets, other than conveyance to clients of intellectual
property developed by Ionix pursuant to engagements by such clients;
(f) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another Person or issue or sell any debt security of Ionix,
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,
Ionix shall afford to Parent and Parent's accountants, counsel and other
representatives reasonable access during normal business hours (and at such
other times as the parties may mutually agree) upon reasonable prior notice and
approval of Ionix, which shall not be unreasonably withheld, to its properties,
books, contracts, commitments, records and personnel and, during such period,
shall furnish promptly to Parent all information concerning its business,
properties and personnel as Parent may reasonably request. Parent and its
accountants, counsel and other representatives shall, in the exercise of the
rights described in this Section 6.2, not unduly interfere with the operation of
the business of Ionix. Parent and its agents shall maintain the confidentiality
of all information
-20-
produced or disclosed pursuant to this Section 6.2, on the terms and conditions
of the non-disclosure agreement between Parent and Ionix, referred to in Section
10.3 hereof.
6.3 Filings; Tax Elections. Ionix shall promptly provide Parent with copies
of all filings made by Ionix with any Governmental Entity in connection herewith
and the transactions contemplated hereby. Ionix shall, before settling or
compromising any material income tax liability of Ionix, 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 the Ionix Shareholder shall not 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.
(a) Ionix hereby covenants and agrees that at the Effective Time,
all of the Ionix Stock Rights (all of which are set forth on Schedule 4.3(a)
---------------
hereto) shall have been properly canceled and all rights and obligations
thereunder shall have been terminated.
(b) Parent hereby covenants and agrees that, at the Effective Time, it
will issue options ("Options") to purchase 260,000 shares in aggregate of
validly issued, fully paid and nonassessable Parent Stock, to such employees of
Ionix who will continue as employees of Surviving Corporation, as designated by
Ionix and approved by Parent, and in such respective amounts, as set forth on
Schedule 6.6(b) hereto, exercisable at $10 per share, subject to the IXL
---------------
Holdings, Inc. 1996 Stock Option Plan, as amended, and to a vesting schedule of
20% at date of grant, and 20% each at 12/31/98, 12/31/99, 12/31/00 and 12/31/01.
If any such Option recipient leaves Sub's (or Parent's) employ prior to full
vesting of his or her Options in accordance with the terms of the award thereof,
and therefore the unvested portion of the Options are cancelled, then options on
the number of shares of Parent Stock subject to such cancellation, and
corresponding as to exercise price and vesting, will be issued to the Ionix
Shareholder without the payment of any additional consideration therefor.
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
-21-
conditions hereof, at the sole cost of the requesting party, except as otherwise
provided in Article VIII hereof.
6.8 Employment Agreement. The Ionix Shareholder shall enter into an
employment agreement with Sub, substantially in the form of Exhibit "I" hereto
-----------
("▇▇▇▇▇▇▇ Employment Agreement").
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Obligation of Ionix and the Ionix Shareholder to Effect
the Merger. The obligations of Ionix and the Ionix Shareholder 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 (provided that, for those of such
representations and warranties that are not by their terms qualified as to
materiality or knowledge, this condition may be satisfied if they shall be true
when made in all material respects) 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 Ionix at the Closing, Parent's Closing Certificate, and (ii) the
appropriate officers of Sub shall have executed and delivered to Ionix 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) Ionix 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 the Ionix Shareholder at the
Closing, duly executed by Parent, (i) 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 "D" hereto, and (ii) the ▇▇▇▇▇▇▇ Employment Agreement;
-----------
(f) Parent shall have executed and delivered at the Closing an
Option Agreement in the form of Exhibit "E" hereto for each of the Persons
-----------
listed on Schedule 6.6(b) hereto as receiving options to purchase Parent Stock;
----------------
-22-
(g) Ionix shall have received, at the Closing, a duly executed opinion
of counsel to Parent and Sub, substantially in the form of Exhibit "F" hereto;
-----------
and
(h) Ionix shall have received from Parent and Sub such other documents
as Ionix's counsel shall have reasonably requested, in form and substance
reasonably satisfactory to Ionix'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) Ionix and the Ionix Shareholder 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 Ionix and the Ionix Shareholder contained herein shall be true
when made (provided that, for those of such representations and warranties that
are not by their terms qualified as to materiality or knowledge, this condition
may be satisfied if they shall be true when made in all material respects) 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 Ionix shall have executed and
delivered to Parent at the Closing, Ionix's Closing Certificate.
(c) Ionix and the Ionix Shareholder 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 the Ionix Shareholder, (i) an Agreement to be Bound to the
Stockholders' Agreement, in the form of Exhibit "G" hereto; (ii) an Agreement to
-----------
be Bound to the Registration Rights Agreement; and (iii) the ▇▇▇▇▇▇▇ Employment
Agreement;
(e) Parent shall have received a corporate certificate of good
standing for Ionix, and a copy of the Articles of Incorporation of Ionix, both
as certified by the Secretary of State of Illinois;
(f) as of the date three business days prior to the Closing Date the
Ionix Debt shall be no greater than $371,927;
(g) Parent shall have received, at the Closing, a duly executed
opinion of counsel to Ionix and the Ionix Shareholder, substantially in the form
of Exhibit "H" hereto;
-----------
(h) Parent shall have received from Ionix or the Ionix Shareholder, 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
-23-
(i) Parent shall have received evidence reasonably satisfactory to it
that at the Closing the assets and properties used in the Ionix Business are
free and clear of all Liens other than Permitted Liens (as hereinafter defined),
and that the Ionix Shareholder is an accredited investor in accordance with
Section 4.31(a) hereof.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by Parent.
(a) Parent shall indemnify and hold the Ionix Shareholder and Ionix's
directors, officers and employees (collectively, the "Ionix Indemnified
Parties") harmless from and against, and agree promptly to defend each of the
Ionix Indemnified Parties from and reimburse each of the Ionix 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 "Ionix Loss") that any of the Ionix
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 (or Section 8.1(a)
(iii) above, to the extent arising from or based upon matters subject to Section
8.1 (a) (i)) (i) unless the aggregate of all Ionix Losses for which Parent would
be liable but for this sentence exceeds, on a cumulative basis, an amount equal
to $150,000, and then only to the extent of such excess, (ii) for Ionix Losses
in excess of the total Merger consideration payable (in any form, with shares of
Parent Stock valued at $10 each) pursuant to Section 3.1 hereof ("Cap") in the
aggregate, and (iii) unless the Ionix Shareholder has asserted a claim with
respect to the matters set forth in Section 8.1(a)(i), or 8.1(a)(iii) to the
extent applicable to Section 8.1(a)(i), within 30 days after the final
completion, including Parent's receipt, of the audit of Parent's financial
statements for the year ending December 31, 1999. Notwithstanding any
implication to the contrary contained herein, the parties acknowledge and agree
that a decrease in the value of Parent Stock would not, by itself, constitute a
Ionix Loss, unless and then only to the extent a decrease in the value of Parent
Stock has been demonstrated to be as a result of any event described in Sections
8.1(a)(i), (ii) or (iii) above.
-24-
8.2 Indemnification by the Ionix Shareholder.
(a) The Ionix Shareholder 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 Ionix or the Ionix Shareholder 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 Ionix or the Ionix Shareholder 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 Ionix 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, the Ionix Shareholder shall not have
any liability under Section 8.2(a)(i) above (or Section 8.2(a)(iii) above, to
the extent arising from or based upon matters subject to Section 8.2(a)(i)) (i)
unless the aggregate of all Parent Losses for which the Ionix Shareholder would
be liable but for this sentence exceeds, on a cumulative basis, an amount equal
to $150,000, and then only to the extent of such excess, (ii) for Parent Losses
in excess of the Cap in the aggregate, and (iii) unless Parent has asserted a
claim with respect to the matters set forth in Sections 8.2(a)(i), or
8.2(a)(iii) to the extent applicable to Section 8.2(a)(i) within 30 days after
final completion, including Parent's receipt, of the audit of Parent's financial
statements for the year ending December 31, 1999, except with respect to the
matters arising under Sections 4.18, 4.19, 4.20 or 4.24 hereof, in which event
Parent must have asserted a claim within the applicable statute of limitations.
Notwithstanding any implication to the contrary contained herein, the parties
acknowledge and agree that a decrease in the value of Parent Stock would not, by
itself, constitute a Parent Loss, unless and then only to the extent a decrease
in the value of Parent Stock has been demonstrated to be as a result of any
event described in Sections 8.2(a)(i), (ii) or (iii) above.
8.3 Notification of Claims; Election to Defend
(a) A party entitled to be indemnified pursuant to Section 8.1 or 8.2
hereof, as the case may be (the "Indemnified Party"), shall notify the party
liable for such indemnification (the "Indemnifying Party") in writing of any
claim or demand (a "Claim") that the Indemnified Party has
-25-
determined has given or could give rise to a right of indemnification hereunder.
The Indemnified Parties will furnish prompt notice as to all Claims involving
third party claims. 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 12%
per annum, or, if lower, at the highest rate of interest permitted by applicable
law at the time of such payment.
(b) If the Indemnified Party shall notify the Indemnifying Party of
any Claim pursuant to Section 8.3(a) hereof, and if such Claim relates to a
Claim asserted by a third party against the Indemnified Party that the
Indemnifying Party acknowledges is a Claim for which it must indemnify or hold
harmless the Indemnified Party under Section 8.1 or 8.2 hereof, as the case may
be, the Indemnifying Party shall have the right, at its sole cost and expense,
to employ counsel of its own choosing to defend any such Claim asserted against
the Indemnified Party. Notwithstanding anything to the contrary in the preceding
sentence, if the Indemnified Party (i) reasonably believes that its interests
with respect to a Claim (or any material portion thereof) are in conflict with
the interests of the Indemnifying Party with respect to such Claim (or portion
thereof), and (ii) promptly notifies the Indemnifying Party, in writing, of the
nature of such conflict, then the Indemnified Party shall be entitled to choose,
at the sole cost and expense of the Indemnifying Party, independent counsel to
defend such Claim (or the conflicting portion thereof). The Indemnified Party
shall have the right to participate in the defense of any Claim at its own
expense (except to the extent provided in the preceding sentence), but the
Indemnifying Party shall retain control over such litigation (except as provided
in the preceding sentence). The Indemnifying Party shall notify the Indemnified
Party in writing, as promptly as possible (but in any case before the due date
for the answer or response to a Claim) after receipt of the notice of Claim
given by the Indemnified Party to the Indemnifying Party under Section 8.3(a)
hereof, of its election to defend in good faith any such third party Claim. For
so long as the Indemnifying Party is defending in good faith any such Claim
asserted by a third party against the Indemnified Party, the Indemnified Party
shall not settle or compromise such Claim without the prior written consent of
the Indemnifying Party. The Indemnified Party shall cooperate with the
Indemnifying Party in connection with any such defense and shall make available
to the Indemnifying Party or its agents all records and other materials in the
Indemnified Party's possession reasonably required by it for its use in
contesting any third party Claim; provided, however, that the Indemnifying Party
shall have agreed, in writing, to keep such records and other materials
confidential except (i) to the extent required for defense of 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.
-26-
8.4 Payment. The Ionix Shareholder may, at his 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 he owns sufficient
shares of Parent Stock); provided, however, that he may do so only after
satisfying any such amount due to the extent of any cash received by him as
Merger consideration hereunder. 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 Ionix;
(b) by Ionix, 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 Ionix or
the Ionix Shareholder 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 Ionix 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
(e) by either Parent or Ionix 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 Surviving Corporation; provided, however, that the Ionix Shareholder shall
pay all fees and expenses (including agents, counsel and other advisors) of
Ionix and himself.
(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.
-27-
(c) If the Merger is not consummated because of a willful and material
breach hereof by any party, the nonbreaching party or parties shall be entitled
to pursue all legal and equitable remedies against the breaching party for such
breach including specific performance and all fees and expenses incurred by the
nonbreaching party or parties in connection with enforcing its or their rights
hereunder with respect to such breach shall be paid by the breaching party.
9.3 Amendment. This Merger Agreement may be amended by the mutual agreement
of Parent, Sub, Ionix and the Ionix Shareholder at any time before or after
approval hereof by the Ionix Shareholder. 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
Ionix Shareholder.
9.4 Waiver. At any time prior to the Effective Time, the parties hereto
may, to the extent permitted by applicable law, (i) extend the time for the
performance of any of the obligations or other acts of any other party hereto,
(ii) waive any inaccuracies in the representations and warranties by any other
party contained herein or in any documents delivered by any other party pursuant
hereto and (iii) waive compliance with any of the agreements of any other party
or with any conditions to its own obligations contained herein. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid only
if set forth in an instrument in writing signed on behalf of such party.
ARTICLE X
GENERAL PROVISIONS
10.1 Survival; Recourse. None of the agreements contained herein shall
survive the Merger, except that (i) the agreements contained in Article III
hereof, the covenants contained in Article VI hereof to the extent that they
relate to post-Closing periods, the obligations to indemnify contained in
Article VIII hereof and the agreements in this Article X to the extent that they
relate to post-Closing periods, 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 Ionix or Parent, and
shall bind the legal representatives, assigns and successors of Ionix, the Ionix
Shareholder and Parent, for a period of two years after the Effective Time
(other than the representations and warranties contained in Sections 4.18, 4.19,
4.20 and 4.24 hereof, which shall survive for the applicable statute of
limitations).
10.2 Notices. All notices or other communications under this Agreement
shall be in writing and shall be given (and shall be deemed to have been duly
given upon receipt) by delivery in Person, by telecopy (with confirmation of
receipt), or by registered or certified mail, postage prepaid, return receipt
requested, addressed as follows:
-28-
If to Ionix : Ionix Development Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇, President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇ ▇. ▇▇▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and to: Skip ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ Companies
▇▇▇ ▇. ▇▇▇▇▇ ▇▇.
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Ionix To the address listed under the signature
Shareholder: line of the Ionix Shareholder
If to Parent or Sub: IXL Holdings, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: 404/267-3801
Telephone: 404/▇▇▇-▇▇▇▇
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/▇▇▇-▇▇▇▇
-29-
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
Ionix dated as of August 21, 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, except that the rights, interests, and
obligations of Sub hereunder may be assigned to any direct wholly owned Delaware
subsidiary of Parent without such prior consent. Subject to the preceding
sentence, this Agreement shall be binding upon and inure solely to the benefit
of each party hereto, and nothing herein, express or implied, is intended to or
shall confer upon any Person not a party hereto any right, benefit or remedy of
any nature whatsoever under or by reason hereof, except as otherwise provided
herein.
10.5 Governing Law. This Agreement, except to the extent that the BCA or
the DGCL is mandatorily applicable to the Merger, or to the rights of the Ionix
Shareholder or the other parties hereto with respect to the Merger, shall be
governed in all respects by the laws of the State of Georgia (without giving
effect to the provisions thereof relating to conflicts of law).
10.6 Headings. The descriptive headings herein are inserted for convenience
of reference only and are not intended to be part of or to affect the meaning or
interpretation hereof.
10.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute a single agreement.
10.8 Severability. If any term or other provision hereof is invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions hereof shall nevertheless remain in full force
and effect so long as the economics or legal substance of the transactions
contemplated hereby are not affected in any manner materially adverse to any
party. 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.
-30-
10.9 Post-Closing Access. For a period of three years after the Closing
Date, the Ionix Shareholder and his agents and representatives shall have
reasonable access to the books and records of the Ionix Business.
10.10 Post-Closing Notice. To the extent the Surviving Corporation receives
written notice of any event or circumstance that materially affects the Ionix
Shareholder, the Surviving Corporation shall promptly notify the Ionix
Shareholder of such matter, information, or event and shall provide him 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 Ionix
Real Property or interfering with the ordinary conduct of any of the Ionix
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 Ionix" shall refer to the knowledge,
subject to clause (i) above, of the Ionix Shareholder; 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 Ionix or University Netcasting, Inc.
- SIGNATURES ON THE FOLLOWING PAGE -
-31-
IN WITNESS WHEREOF, Parent, Sub and Ionix have caused this Agreement to be
signed and delivered by their respective duly authorized officers, and each
Ionix Shareholder has signed and delivered this Agreement, all as of the date
first written above.
"Ionix"
Ionix Development Corporation, an Illinois corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------------
Title: President
"Parent"
IXL Holdings, Inc., a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Title: Executive Vice President
"Sub"
iXL-Chicago, Inc., a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Title: Executive Vice President
"Ionix Shareholder"
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
Address: ▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-32-
EXHIBITS
--------
Sub's Closing Certificate.......................................... Exhibit A
Ionix's Closing Certificate........................................ Exhibit B
Parent's Closing Certificate....................................... Exhibit C
Agreement to be Bound to Registration Rights Agreement............. Exhibit D
Option Agreement................................................... Exhibit E
Opinion of Counsel to Parent and Sub............................... Exhibit F
Agreement to be Bound to the Stockholders' Agreement............... Exhibit G
Opinion of Counsel to Ionix........................................ Exhibit H
▇▇▇▇▇▇▇ Employment Agreement....................................... Exhibit I
SCHEDULE 4.3(A)
---------------
CAPITALIZATION OF IONIX
SCHEDULE 4.3(B)
---------------
LIENS ON IONIX STOCK
SCHEDULE 4.5
------------
CONFLICTS, REQUIRED FILINGS AND CONSENTS OF IONIX
SCHEDULE 4.7
------------
EXCEPTIONS TO ABSENCE OF CHANGES OF IONIX
SCHEDULE 4.8
------------
UNDISCLOSED LIABILITIES OF IONIX
SCHEDULE 4.9
------------
EXCEPTIONS TO TITLE TO PROPERTIES OF IONIX
SCHEDULE 4.10
-------------
BAD EQUIPMENT OF IONIX
SCHEDULE 4.12
-------------
LIENS ON AND LOCATION OF REAL PROPERTY OF IONIX
SCHEDULE 4.13
-------------
LEASES OF IONIX
SCHEDULE 4.14
-------------
CONTRACTS OF IONIX
SCHEDULE 4.15
-------------
DIRECTORS AND OFFICERS OF IONIX
SCHEDULE 4.16
-------------
PAYROLL INFORMATION OF IONIX
SCHEDULE 4.17
-------------
LITIGATION
SCHEDULE 4.18
-------------
EMPLOYEE BENEFIT PLANS/LABOR RELATIONS OF IONIX
SCHEDULE 4.19
-------------
ERISA ISSUES OF IONIX
SCHEDULE 4.20
-------------
EXCEPTIONS TO TAXES OF IONIX BEING TIMELY FILED
SCHEDULE 4.21
-------------
IONIX PERMITS
SCHEDULE 4.23
-------------
IONIX BROKERS
SCHEDULE 4.25
-------------
INTEREST IN CUSTOMERS, SUPPLIERS, COMPETITORS
SCHEDULE 4.28
-------------
INSURANCE OF IONIX
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 ISSUE 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 6.6(B)
---------------
PARENT OPTIONS TO EMPLOYEES OF IONIX
SCHEDULE 7.1(C)
---------------
PARENT CONSENTS
SCHEDULE 7.2(C)
---------------
IONIX AND IONIX SHAREHOLDER CONSENTS
SCHEDULE 10.11
--------------
PERMITTED LIENS OF IONIX