EXHIBIT 2.19
AGREEMENT AND PLAN OF MERGER
by and between
IXL HOLDINGS, INC.,
iXL SAN DIEGO, INC.,
CommerceWAVE, INC.
AND
THE CommerceWAVE SHAREHOLDERS
Dated as of JULY 2, 1998
AGREEMENT AND PLAN OF MERGER
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THIS AGREEMENT AND PLAN OF MERGER is entered into as of this 2nd day of July,
1998, by and between CommerceWAVE, Inc., a California corporation
("CommerceWAVE"), IXL Holdings, Inc., a Delaware corporation ("Parent"), iXL-San
Diego, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent, or
its successors or assigns ("Sub"), and the shareholders of CommerceWAVE as
listed on the signature page hereto (the "CommerceWAVE Shareholders").
R E C I T A L S:
- - - - - - - -
A. CommerceWAVE is engaged in the business of electronic commerce solutions,
including developing internet sites and furnishing internet services, including
website design and maintenance (the "CommerceWAVE Business").
B. CommerceWAVE 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 CommerceWAVE Shareholders collectively own 100% of the issued and
outstanding capital stock of CommerceWAVE (the "CommerceWAVE Stock").
D. The respective Boards of Directors of Parent, Sub and CommerceWAVE, and
the respective shareholders of Sub and CommerceWAVE, 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) CommerceWAVE shall be
merged with and into Sub, (b) the separate existence of CommerceWAVE 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-
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San Diego, 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 Xxxxxx & Xxxxxx, A
Professional Corporation, One Buckhead Plaza, 0000 Xxxxxxxxx Xx., Xxx. 0000,
Xxxxxxx, XX 00000, unless another date, time or place is agreed to by the
parties.
1.3 Effective Time of the Merger. At the Closing, the parties hereto shall
cause (a) a certificate of merger (the "Delaware Certificate of Merger") to be
filed with the office of the Secretary of State of Delaware in accordance with
the provisions of the Delaware General Corporation Law, as amended (the "DGCL");
and (b) a copy of the Delaware Certificate of Merger (the "California
Certificate 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 California in accordance with the provisions of the California General
Corporation Law (the "GCL"). When used herein, the term "Effective Time" shall
mean the time when the Delaware Certificate of Merger has been accepted for
filing by the Secretary of State of Delaware, or such time as otherwise
specified therein.
1.4 Effect of the Merger. The Merger shall, from and after the Effective
Time, have all the effects provided by the DGCL and the GCL. If at any time
after the Effective Time, any further action is deemed necessary or desirable to
carry out the purposes of this Agreement, the parties hereto agree that the
Surviving Corporation and its proper officers and directors shall be authorized
to take, and shall take, any and all such action.
ARTICLE II
THE SURVIVING CORPORATION
2.1 Certificate of Incorporation. The Certificate of Incorporation of Sub, a
form of which is attached hereto on Schedule 5.1, shall be the Certificate of
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Incorporation of the Surviving Corporation after the Effective Time, until
thereafter changed or amended as provided therein or by applicable law.
2.2 Bylaws. The Bylaws of Sub as in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation, until
thereafter changed or amended as provided therein or by applicable law. A copy
of the Bylaws of Sub is included on Schedule 5.1 hereto.
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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.
ARTICLE III
CONVERSION OF SHARES
3.1 Merger Consideration. As of the Effective Time:
(a) All shares of CommerceWAVE Stock owned by CommerceWAVE shall, by
virtue of the Merger and without any action on the part of any shareholder,
officer or director of CommerceWAVE 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 CommerceWAVE common stock, no
par value ("CommerceWAVE Common Stock") (other than any Dissenting Shares, as
defined in Section 3.2 hereof) shall, upon surrender to Sub, at the Closing, of
the underlying share certificates, be converted into, and become exchangeable
for, a number of shares of validly issued, fully paid and nonassessable Class B
Common Stock of Parent, $.01 par value (the "Parent Stock") based on the
following equation:
PSc = 910,000 - D - ([C + (90% x ARc)])
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$10
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S + O
where:
PSc = the number of shares of Parent Stock (valued, as of the
Closing, at $10 per share) for which each share of
CommerceWAVE Common Stock shall be exchanged pursuant to the
Merger
D = the outstanding indebtedness of CommerceWAVE (the
"CommerceWAVE Debt"), including debt for borrowed money and
accrued interest thereon, capital leases, accounts payable
and accrued expenses, and any unpaid legal, accounting or
other fees of Commerce, but excluding convertible debt
instruments to be converted into shares of CommerceWAVE
Common Stock at or prior to the Closing, 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")
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C = the cash balance of CommerceWAVE, to be determined as of
three business days prior to the Closing Date in accordance
with GAAP
S = the number of issued and outstanding shares of CommerceWAVE
Common Stock, plus the number of shares of CommerceWAVE
Common Stock issuable on conversion of CommerceWAVE Series A
Preferred Stock ("CommerceWAVE Preferred Stock") and
convertible notes, on the Closing Date
O = the total number of options to purchase CommerceWAVE Stock
outstanding on the Closing Date, to be exchanged for options
to acquire Parent Stock pursuant to Section 6.6(c) hereof
ARc = CommerceWAVE's accounts receivable less than 90 days' old,
to be determined as of three business days prior to the
Closing Date in accordance with GAAP;
provided, however, that for the purpose of the above formula, regardless of
whether D exceeds the sum of C plus 90% of ARc, the maximum, aggregate Parent
Stock issuable pursuant to both this Section and Section 3.1(c) is one million
shares.
(c) Each issued and outstanding share of CommerceWAVE Preferred Stock
(other than any Dissenting Shares, as defined in Section 3.2 hereof) shall, upon
surrender to Sub, at the Closing, of the underlying share certificates, be
converted into, and become exchangeable for, a number of shares of validly
issued, fully paid and nonassessable Parent Stock based on the following
equation:
PSp= 910,000 - (D - [C + (90% x ARc)])
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.02222 + $10
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S + O
where:
PSp = the number of shares of Parent Stock (valued, as of the
Closing, at $10 per share) for which each share of
CommerceWAVE Preferred Stock shall be exchanged pursuant to
the Merger
and all other terms are as defined above; provided, however, that for the
purpose of the above formula, regardless of whether D exceeds the sum of C plus
90% of ARc, the maximum, aggregate Parent Stock issuable pursuant to both this
Section and Section 3.1(b) is one million shares.
(d) 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
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CommerceWAVE 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 CommerceWAVE Stock held by a Dissenting Shareholder (as
hereinafter defined) shall not be converted as described in Section 3.1(b) or
(c) hereof, but instead shall be converted into the right to receive the
consideration due a Dissenting Shareholder pursuant to the DGCL or GCL, as
applicable; provided, however, that if a Dissenting Shareholder shall fail to
perfect his demand, withdraw his demand or otherwise lose his right for
appraisal under the terms of the DGCL or the GCL, as applicable, the
CommerceWAVE 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. CommerceWAVE 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 CommerceWAVE Shareholder who (a) does not vote in favor of the Merger; and (b)
complies with the applicable provisions of the DGCL or GCL concerning
dissenter's rights.
3.3 No Further Rights. Subject to Section 3.4 hereof, from and after the
Effective Time, holders of certificates theretofore evidencing CommerceWAVE
Stock shall cease to have any rights as stockholders of CommerceWAVE, except as
provided herein or by applicable law.
3.4 Closing of CommerceWAVE's Transfer Books. At the Effective Time, the
stock transfer books of CommerceWAVE shall be closed and no transfer of
CommerceWAVE Stock shall be made thereafter. If after the Effective Time,
certificates for CommerceWAVE 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 COMMERCEWAVE
CommerceWAVE, and Xxxxxxx Xxxx and Xxxxxxx Xxxx (collectively, the
"Controlling Shareholders"), severally but not jointly represent and warrant to
Parent and Sub all of the representations and warranties in this Article IV. In
addition, each other CommerceWAVE Shareholder severally but not jointly makes
the representations and warranties with respect to such CommerceWAVE Shareholder
in Sections 4.2, 4.3(b), 4.5, 4.31, 4.32, 4.33 and 4.34 hereof. All
representations and warranties in this Article IV shall survive the Closing in
accordance with Section 10.1 hereof.
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4.1 Organization and Qualification. CommerceWAVE is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California. CommerceWAVE has the requisite corporate power and authority to
carry on the CommerceWAVE Business as it is now being conducted and is duly
qualified or licensed to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary. Complete and
correct copies of the Articles of Incorporation and Bylaws of CommerceWAVE as in
effect on the date hereof are attached as Schedule 4.1 hereto. The minute book
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of CommerceWAVE, a true and complete copy of which has been delivered to Parent,
(a) accurately reflects all action taken by the directors and shareholders of
CommerceWAVE at meetings of CommerceWAVE'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. CommerceWAVE 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 CommerceWAVE have been duly and validly
authorized and approved by CommerceWAVE's Board of Directors and the
CommerceWAVE Shareholders, and no other corporate or shareholder proceedings on
the part of CommerceWAVE, its Board of Directors or the CommerceWAVE
Shareholders is necessary to authorize or approve this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by CommerceWAVE and each CommerceWAVE Shareholder, and
assuming the due authorization, execution and delivery by Parent and Sub,
constitutes the valid and binding obligation of CommerceWAVE and each
CommerceWAVE Shareholder, enforceable against CommerceWAVE and each CommerceWAVE
Shareholder in accordance with its terms subject, in each case, to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general application
relating to or affecting creditors' rights and to general principles of equity,
including principles of commercial reasonableness, good faith and fair dealing.
4.3 Capitalization.
(a) The authorized capital stock of CommerceWAVE consists of (i) 16
million shares of CommerceWAVE Common Stock, of which eight million shares are
validly issued and outstanding, fully paid and nonassessable; and (ii) 4,050,405
shares of CommerceWAVE Preferred Stock, of which all 4,050,405 shares are
validly issued and outstanding, fully paid and nonassessable. All outstanding
capital stock of CommerceWAVE was issued in accordance with applicable federal
and state securities laws. Except as set forth on Schedule 4.3(a) hereto, there
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are no options, warrants, calls, convertible notes, agreements, commitments or
other rights presently outstanding that would obligate CommerceWAVE or any of
the CommerceWAVE Shareholders 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, CommerceWAVE has no bonds, debentures, notes
or other indebtedness issued or outstanding that have voting rights in
CommerceWAVE. Schedule 4.3(a) sets forth a list
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of (i) all holders of record of (A) CommerceWAVE Stock, and (B) options,
warrants, convertible notes or other rights to purchase capital stock of
CommerceWAVE (collectively, "CommerceWAVE Stock Rights"); (ii) the number of
shares held by each CommerceWAVE Shareholder and the number of shares of capital
stock of CommerceWAVE represented by the CommerceWAVE Stock Rights; and (iii)
the exercise price for each CommerceWAVE Stock Right.
(b) All of the issued and outstanding shares of capital stock of
CommerceWAVE are validly issued, fully paid and nonassessable. Except as set
forth on Schedule 4.3(b) hereto, each CommerceWAVE Shareholder represents and
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warrants that the CommerceWAVE Stock held by such CommerceWAVE Shareholder is
free and clear of any lien, charge, security interest, pledge, option, right of
first refusal, voting proxy or other voting agreement, or encumbrance of any
kind or nature other than restrictions on transfer imposed by federal and state
securities laws (any of the foregoing, a "Lien").
4.4 Subsidiaries. CommerceWAVE has no subsidiaries and does not otherwise
own or control, directly or indirectly, any equity interest, or any security
convertible into an equity interest, in any corporation, partnership, limited
liability company, joint venture, association or other business entity (any of
the foregoing, an "Entity").
4.5 No Conflicts, Required Filings and Consents. Except as set forth on
Schedule 4.5 hereto, none of (i) the execution and delivery of this Agreement by
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CommerceWAVE or the CommerceWAVE Shareholders, (ii) the consummation by
CommerceWAVE and the CommerceWAVE Shareholders of the transactions contemplated
hereby or (iii) compliance by CommerceWAVE with any of the provisions hereof
will:
(a) conflict with or violate the Articles of Incorporation or Bylaws of
CommerceWAVE;
(b) result in a violation of any statute, ordinance, rule, regulation,
order, judgment or decree applicable to CommerceWAVE or any of the CommerceWAVE
Shareholders, or by which CommerceWAVE or any of its properties or assets may be
bound or affected;
(c) result in a violation or breach of, or constitute a default (or an
event that, with notice or lapse of time or both, would become a default) under,
or give to any other any right of termination, amendment, acceleration or
cancellation of, any note, bond, mortgage, indenture, or any material contract,
agreement, arrangement, lease, license, permit, judgment, decree, franchise or
other instrument or obligation, to which CommerceWAVE is a party or by which
CommerceWAVE 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 CommerceWAVE; or
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(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 GCL; or
(ii) any other individual or Entity (collectively, a "Person").
4.6 Financial Statements. CommerceWAVE has heretofore furnished Parent with
a true and complete copy of the unaudited financial statements of CommerceWAVE
for the years ended December 31, 1995, 1996 and 1997 and for the four month
period ended April 30, 1998 (all of the foregoing collectively herein referred
to as the "CommerceWAVE Financial Statements"). Except as disclosed therein,
the CommerceWAVE Financial Statements have been prepared in accordance with GAAP
(except for the absence of footnotes and normal year end adjustments)
consistently followed throughout the period indicated, and present fairly, in
all material respects, the financial position and operating results of
CommerceWAVE as of the dates, and during the periods, indicated therein.
4.7 Absence of Changes. Except as provided in Schedule 4.7 hereto and except
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as contemplated hereby, since December 31, 1997 (a) CommerceWAVE has not entered
into any transaction that was not in the ordinary course of business; (b) except
for sales of services and licenses of software in the ordinary course of
business, there has been no sale, assignment, transfer, mortgage, pledge,
encumbrance or lease of any material asset or property of CommerceWAVE; (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
CommerceWAVE in respect of its stock, whether in cash or property, and (ii) no
purchase or redemption of any share of the capital stock of CommerceWAVE; (d)
there has been no declaration, payment, or commitment for the payment, by
CommerceWAVE, of a bonus or other additional salary, compensation, or benefit to
any employee of CommerceWAVE that was not in the ordinary course of business,
except for normal 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
CommerceWAVE, or waiver of any right of CommerceWAVE; (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 CommerceWAVE (other than CommerceWAVE 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 CommerceWAVE Accounts
Receivable, or $25,000 in the aggregate); (h) there has been no material damage,
or destruction to, or loss of, physical property (whether or not covered by
insurance) adversely affecting the CommerceWAVE Business or the operations of
CommerceWAVE; (i) there has been no loan by CommerceWAVE, or guaranty by
CommerceWAVE of any loan, to any employee of CommerceWAVE, except for travel-
related expenses in the ordinary course of business; (j) CommerceWAVE has not
ceased to transact business with any customer that, as of the date of such
cessation, represented more than 5% of the annual gross revenues of CommerceWAVE
in 1997; (k) there has been no termination or resignation of any key employee or
officer of CommerceWAVE, and to the knowledge of
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CommerceWAVE, 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 CommerceWAVE Business, to which CommerceWAVE
is a party or by which it is bound, except in the ordinary course of business,
or except as expressly contemplated hereby; (m) CommerceWAVE has not failed to
satisfy any of its debts, obligations or liabilities related to the CommerceWAVE
Business or the assets of CommerceWAVE as the same become due and owing (except
for CommerceWAVE 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 CommerceWAVE 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 CommerceWAVE.
4.8 Undisclosed Liabilities. Except as set forth on Schedule 4.8 hereto,
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CommerceWAVE 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 December 31, 1997, that would
not, whether individually or in the aggregate, have a material adverse impact on
the business or financial condition of CommerceWAVE; (b) liabilities reflected
on the CommerceWAVE 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,
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CommerceWAVE has good and marketable title to all tangible property and assets
used in the CommerceWAVE 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. CommerceWAVE 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 CommerceWAVE Business in
the manner in which it has been and is now operated by CommerceWAVE ("the
CommerceWAVE 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
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item of CommerceWAVE Equipment is in good condition and repair, ordinary wear
and tear excepted.
4.11 Intellectual Property.
(a) CommerceWAVE has heretofore furnished Parent with a true and
complete description of all material proprietary technology, patents, patent
rights, trademarks, trademark rights, trade names, trade name rights, service
marks, service xxxx rights, and copyrights (and all pending applications for any
of the foregoing) used by CommerceWAVE in the conduct of the CommerceWAVE
Business (together with trade secrets and know how used in the conduct of the
CommerceWAVE Business, the "CommerceWAVE Intellectual Property Rights").
CommerceWAVE owns, or is validly licensed or otherwise has the right to use or
exploit, as currently used or exploited, all of the CommerceWAVE Intellectual
Property Rights, free of any
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obligation to make any payment (whether of a royalty, license fee, compensation
or otherwise). Except as set forth in Schedule 4.11(a), no claims are pending
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or, to the knowledge of CommerceWAVE, threatened, that CommerceWAVE is
infringing or otherwise adversely affecting the rights of any Person with regard
to any CommerceWAVE Intellectual Property Right. To the knowledge of
CommerceWAVE, no Person is infringing the rights of CommerceWAVE with respect to
any CommerceWAVE Intellectual Property Right. Neither CommerceWAVE nor, to the
knowledge of CommerceWAVE, any employee, agent or independent contractor of
CommerceWAVE, in connection with the performance of such Person's services with
CommerceWAVE, 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) CommerceWAVE has heretofore furnished Parent with a true and
complete description of all material computer software used by CommerceWAVE in
the conduct of the CommerceWAVE Business (the "CommerceWAVE Software").
CommerceWAVE currently licenses, or otherwise has the legal right to use, all of
the CommerceWAVE Software (including any upgrade, alteration or enhancement with
respect thereto), and all of the CommerceWAVE 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:
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(a) CommerceWAVE has a good and valid leasehold interest in all real
property (including all buildings, improvements and fixtures thereon) used in
the operation of the CommerceWAVE Business (the "CommerceWAVE Real Property").
CommerceWAVE owns no real property. Except for Permitted Liens, and for the
items set forth on Schedule 4.12, there are no Liens on CommerceWAVE's interest
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in any of the CommerceWAVE Real Property.
(b) There are no parties in possession of any portion of the
CommerceWAVE Real Property other than CommerceWAVE, whether as sublessees,
subtenants at will or trespassers.
(c) To the knowledge of CommerceWAVE, 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 CommerceWAVE Leases (as hereinafter defined), any material expenditure by
CommerceWAVE to modify or improve any of the CommerceWAVE Real Property to bring
it into compliance therewith.
4.13 Leases. Schedule 4.13 hereto sets forth a list of all leases pursuant
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to which CommerceWAVE leases, as lessor or lessee, real or personal property
used in operating the CommerceWAVE Business or otherwise (the "CommerceWAVE
Leases"). Copies of the CommerceWAVE Leases, all of which have previously been
provided to Parent, are true and complete copies thereof. All of the
CommerceWAVE Leases are valid, binding and enforceable against CommerceWAVE and,
to the knowledge of CommerceWAVE, against the other parties thereto, in
accordance with their respective terms, and there is not under any such
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CommerceWAVE Lease any existing default by CommerceWAVE, or, to the knowledge of
CommerceWAVE, by any other party thereto, or any condition or event that, with
notice or lapse of time or both, would constitute a default. CommerceWAVE has
not received notice that the lessor of any of the CommerceWAVE Leases intends to
cancel, suspend or terminate such CommerceWAVE Lease or to exercise or not
exercise any option thereunder.
4.14 Contracts. Schedule 4.14 hereto sets forth a true and complete list of
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all contracts, agreements and commitments (whether written or oral) to which
CommerceWAVE 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 CommerceWAVE Intellectual Property
Rights and the like (collectively, the "CommerceWAVE Contracts"); excepting only
those CommerceWAVE Contracts which involve less than $25,000 and are cancelable,
without penalty, on no more than 90 days' notice. The aggregate value of all
payment obligations and rights to receive payments, under agreements, contracts
and commitments (whether oral or in writing) to which CommerceWAVE 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 $100,000 (calculating such value by
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adding together the value of rights and obligations, and not by determining the
net amount thereof).
True and complete copies of all CommerceWAVE Contracts (or a true and complete
narrative description of any oral CommerceWAVE Contract) have previously been
provided to Parent. Neither CommerceWAVE nor, to the knowledge of CommerceWAVE,
any other party to any of the CommerceWAVE Contracts (x) is in material 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 CommerceWAVE Contracts, or
(y) has waived any right it may have under any of the CommerceWAVE Contracts,
the waiver of which would have a material adverse effect on the business, assets
or financial condition or prospects of CommerceWAVE. All of the CommerceWAVE
Contracts constitute the valid and binding obligations of CommerceWAVE,
enforceable in accordance with their respective terms, and, to the knowledge of
CommerceWAVE, of the other parties thereto.
4.15 Directors and Officers. Schedule 4.15 hereto sets forth a list, as of
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the Closing Date, of the name of each director and officer of CommerceWAVE and
the position(s) held by each.
4.16 Payroll Information. CommerceWAVE has previously provided Parent with a
true and complete copy of the payroll report of CommerceWAVE dated May 31, 1998,
showing all current employees of CommerceWAVE and their current levels of
compensation, other than bonuses and other extraordinary compensation.
CommerceWAVE has paid all compensation required to be paid to employees of
CommerceWAVE on or prior to the date hereof other than compensation accrued in
the current pay period.
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4.17 Litigation. Except as set forth on Schedule 4.17 hereto, there is no
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suit, action, claim, investigation or proceeding pending or, to the knowledge of
CommerceWAVE, threatened against or affecting CommerceWAVE or the CommerceWAVE
Business, nor is there any judgment, decree, injunction or order of any
applicable Governmental Entity or arbitrator outstanding against CommerceWAVE.
4.18 Employee Benefit Plans/Labor Relations.
(a) Except as disclosed in Schedule 4.18 hereto, there are no employee
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benefit plans, agreements or arrangements maintained by CommerceWAVE, 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, "CommerceWAVE Benefit Plans"). All CommerceWAVE Benefit
Plans are administered in accordance with, and are in material compliance with,
all applicable laws and regulations. No material default exists with respect to
the obligations of CommerceWAVE under any CommerceWAVE Benefit Plan.
(b) CommerceWAVE 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 CommerceWAVE; no representation campaign or election is now in
progress with respect to any employee of CommerceWAVE; and there are no labor
disputes, grievances, controversies, strikes or requests for union
representation pending, or, to the knowledge of CommerceWAVE, threatened,
relating to or affecting the CommerceWAVE Business. To the knowledge of
CommerceWAVE, no event has occurred that could give rise to any such dispute,
controversy, strike or request for representation.
4.19 ERISA.
(a) All CommerceWAVE 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 CommerceWAVE 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 CommerceWAVE Benefit Plan is subject to Title IV
of ERISA or Section 412 of the Code. CommerceWAVE 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 CommerceWAVE Benefit Plans that
would subject CommerceWAVE to the penalty or tax imposed under Section 502(i) of
ERISA or Section 4975 of the Code. CommerceWAVE 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
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CommerceWAVE 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 CommerceWAVE, (ii) increase
any benefit otherwise payable under any
12
CommerceWAVE 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 CommerceWAVE 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 CommerceWAVE under Section 4001
of ERISA or Section 414 of the Code, within the 12-month period ending on the
Closing Date. CommerceWAVE has not incurred any liability to the Pension Benefit
Guaranty Corporation in respect of any CommerceWAVE Benefit Plan that remains
unpaid.
4.20 Taxes.
(a) CommerceWAVE 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 CommerceWAVE on or
prior to the Closing Date. CommerceWAVE has duly and timely paid all taxes and
other governmental charges, and all interest and penalties with respect thereto,
required to be paid by CommerceWAVE (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 CommerceWAVE Financial Statements). As of the Closing Date, all
deficiencies proposed as a result of any audit have been paid or settled.
(b) CommerceWAVE is not a party to, or bound by, or otherwise in any
way obligated under, any tax sharing or similar agreement.
(c) CommerceWAVE has not consented to have the provisions of Section
341(f)(2) of the Code (or comparable state law provisions) apply to it, and
CommerceWAVE 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. CommerceWAVE 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 CommerceWAVE, as appropriate, and to carry on the CommerceWAVE
Business as now conducted (the "CommerceWAVE Permits"). To the knowledge of
CommerceWAVE, CommerceWAVE is in material compliance with all applicable laws,
ordinances and regulations and the terms of the CommerceWAVE Permits. Except as
set forth on Schedule 4.21 hereto, all of the CommerceWAVE Permits are fully
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assignable by CommerceWAVE in connection with the Merger. Schedule 4.21 sets
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forth a true and complete list of all CommerceWAVE Permits, true and complete
copies of which have previously been provided to Parent.
13
4.22 Board of Directors/Shareholder Consent. Both the Board of Directors of
CommerceWAVE and the CommerceWAVE Shareholders have adopted and approved this
Agreement and the transactions contemplated hereby (including the Merger).
4.23 Brokers. Except as set forth on Schedule 4.23 hereto, no broker or
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finder is entitled to any broker's or finder's fee or other commission in
connection with the transactions contemplated hereby as a result of arrangements
made by or on behalf of CommerceWAVE.
4.24 Environmental Matters.
(a) To the knowledge of CommerceWAVE, no real property currently or
formerly owned or operated by CommerceWAVE is contaminated with any Hazardous
Substance (as hereinafter defined);
(b) CommerceWAVE is not a party to any litigation or administrative
proceeding nor, to the knowledge of CommerceWAVE, is any litigation or
administrative proceeding threatened against it, that, in either case, asserts
or alleges that CommerceWAVE (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 CommerceWAVE, 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 CommerceWAVE 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 CommerceWAVE, CommerceWAVE 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, to the knowledge
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of CommerceWAVE, employee of CommerceWAVE or family member (including a spouse,
parent, sibling or lineal
14
descendent of any of the foregoing), has any direct or indirect material
interest in any material customer, supplier or competitor of CommerceWAVE, or in
any Person from whom or to whom CommerceWAVE leases any real or personal
property, or in any other Person with whom CommerceWAVE 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 CommerceWAVE (collectively, "CommerceWAVE Accounts Receivable")
were acquired by CommerceWAVE in the ordinary course of business arising from
bona fide transactions. To the knowledge of CommerceWAVE, there are no set-
offs, counterclaims or disputes asserted with respect to any CommerceWAVE
Accounts Receivable that would result in claims in excess of the reserve for bad
debts set forth on the CommerceWAVE Financial Statements and, to the knowledge
of CommerceWAVE and subject to such reserve, all CommerceWAVE Accounts
Receivable are collectible in full. CommerceWAVE has previously provided Parent
with a true and complete aging report prepared as of April 30, 1998 which shows
the time elapsed since invoice date for all CommerceWAVE Accounts Receivable as
of such date.
4.27 Accounts Payable. All material accounts, notes, contracts and other
amounts payable of CommerceWAVE (collectively, "CommerceWAVE Accounts Payable")
are currently within their respective terms, and are neither in default nor
otherwise past due by more than 90 days. CommerceWAVE has previously provided
Parent with a true and complete aging report prepared as of April 30, 1998 which
shows the time elapsed since invoice date for all CommerceWAVE Accounts Payable
as of such date.
4.28 Insurance. CommerceWAVE currently maintains, in full force and effect,
all insurance policies that are required to be maintained for the conduct of the
CommerceWAVE Business or the ownership of CommerceWAVE's property (both real and
personal) (collectively, the "CommerceWAVE Insurance Policies"). The
CommerceWAVE Insurance Policies are listed on Schedule 4.28 hereto, and true and
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complete copies of all CommerceWAVE Insurance Policies have previously been
provided to Parent. CommerceWAVE (a) is not in default regarding the provisions
of any CommerceWAVE 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. CommerceWAVE 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 CommerceWAVE Debt. As of the date hereof, the CommerceWAVE Debt is not
in excess of $800,000.
15
4.31 Accredited Investors; Investment Purpose. Each CommerceWAVE 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. Each CommerceWAVE Shareholder acknowledges
that (a) the Parent Stock received by him hereunder has not been registered
under the Securities Act; (b) the Parent Stock may be required to be held
indefinitely, and he must continue to bear the economic risk of the investment
in such shares unless such shares are subsequently registered under the
Securities Act or an exemption from such registration is available; (c) there
may not be any public market for the Parent Stock in the foreseeable future; (d)
Rule 144 promulgated under the Securities Act is not presently available with
respect to sales of any securities of Parent, and such Rule is not anticipated
to be available in the foreseeable future; (e) when and if Parent Stock may be
disposed of without registration in reliance upon Rule 144, such disposition can
be made only in limited amounts and in accordance with the terms and conditions
of such Rule; (f) if the exemption afforded by Rule 144 is not available, public
sale without registration will require the availability of an exemption under
the Securities Act; (g) the Parent Stock is subject to the terms and conditions
of the Stockholders' Agreement; (h) restrictive legends shall be placed on the
certificates representing Parent Stock; and (i) a notation shall be made in the
appropriate records of Parent indicating that Parent Stock is subject to
restrictions on transfer and, if Parent should in the future engage the services
of a stock transfer agent, appropriate stop-transfer instructions will be issued
to such transfer agent with respect to Parent Stock.
4.33 Ability to Bear Risk; Access to Information; Sophistication. Each
CommerceWAVE 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 June 25, 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.
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4.34 Disclosure. No statement of fact by CommerceWAVE or any CommerceWAVE
Shareholder contained herein and no written statement of fact furnished by
CommerceWAVE or any CommerceWAVE 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 materially misleading.
4.35 Nature of Liabilities. Any unpaid legal, accounting or other fees of
CommerceWAVE are solely and directly related to the Merger.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Each of Parent and Sub jointly and severally represents and warrants to
CommerceWAVE and the CommerceWAVE Shareholders, which representations and
warranties shall survive the Closing in accordance with Section 10.1 hereof, as
follows:
5.1 Organization and Qualification. Each of Parent and its Subsidiaries (as
defined in Section 10.11 hereof) is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation.
Each of Parent and its Subsidiaries has the requisite corporate power and
authority to carry on its business as it is now being conducted and is duly
qualified or licensed to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary. Complete and
correct copies of the Certificates of Incorporation and Bylaws of Parent and Sub
as in effect on the date hereof are attached as Schedule 5.1 hereto.
------------
5.2 Authority. Each of Parent and Sub has the necessary corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery hereof and the
consummation of the transactions contemplated hereby by each of Parent and Sub
have been duly and validly authorized and approved by their respective board of
directors and by Sub's sole shareholder, and no other corporate or shareholder
proceedings on the part of either Parent or Sub, or their respective board of
directors or shareholders, are necessary to authorize or approve this Agreement
or to consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by each of Parent and Sub, and assuming the due
authorization, execution and delivery by CommerceWAVE and the CommerceWAVE
Shareholders, constitutes the valid and binding obligation of each of Parent and
Sub, enforceable against each of Parent and Sub in accordance with its terms,
subject, in each case, to bankruptcy, insolvency, reorganization, moratorium and
similar laws of general application relating to or affecting creditors' rights
and to general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing.
17
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 others any rights of termination, amendment, acceleration or
cancellation of, any note, bond, mortgage, indenture, or any material contract,
agreement, arrangement, lease, license, permit, judgment, decree, franchise or
other instrument or obligation to which Parent or any of its Subsidiaries is a
party or by which Parent, any of its Subsidiaries or their respective properties
may be bound or affected;
(d) result in the creation of any Lien on any of the property or assets
of Parent or any of its Subsidiaries; or
(e) require any Consent of (i) any Governmental Entity (except for (x)
compliance with any applicable requirements of any applicable securities laws,
and (y) the filing of the Certificate of Merger pursuant to the DGCL and the
GCL); or (ii) any other Person.
5.4 Litigation. Except as set forth on Schedule 5.4 hereto, there is no
------------
suit, action, claim, investigation or proceeding pending or, to the knowledge of
Parent, threatened against or affecting Parent or its Subsidiaries, nor is there
any judgment, decree, injunction or order of any applicable Governmental Entity
or arbitrator outstanding against Parent or its Subsidiaries that, either
individually or in the aggregate, would have a material adverse effect on the
assets, business or financial condition of Parent and its Subsidiaries, taken as
a whole.
5.5 Brokers. Except as disclosed on Schedule 5.5 hereto, no broker or finder
------------
is entitled to any broker's or finder's fee in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of Parent or
Sub.
5.6 Parent Stock.
(a) As of the date hereof, the authorized capital stock of Parent
consists of (i) (A) 75,000,000 shares of Class A Common Stock, $.01 par value,
of which no shares are validly issued and outstanding, and (B) 100,000,000
shares of Class B Common Stock, $.01 par value, of which 10,319,628 shares are
validly issued and outstanding (without taking into account any shares of Parent
Stock to be issued pursuant hereto), fully paid and nonassessable; (ii) 750,000
shares of
18
blank check preferred stock, (A) 250,000 of which have been designated as Class
A Convertible Preferred Stock, of which 174,191 shares are validly issued and
outstanding, fully paid and nonassessable, (B) 200,000 of which have been
designated as Class B Convertible Preferred Stock, of which 98,767 shares are
validly issued and outstanding, fully paid and nonassessable, and (C) 15,000 of
which have been designated as Class C Convertible Preferred Stock, of which
9,232 shares are validly issued and outstanding, fully paid and nonassessable.
Except as set forth on Schedule 5.6 hereto, there are no options, warrants,
------------
calls, agreements, commitments or other rights presently outstanding that would
obligate Parent to issue, deliver or sell shares of its capital stock, or to
grant, extend or enter into any such option, warrant, call, agreement,
commitment or other right. In addition to the foregoing, as of the Closing Date,
Parent has no bonds, debentures, notes or other indebtedness issued or
outstanding that have voting rights in Parent.
(b) When delivered to the CommerceWAVE Shareholders 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.
5.8 Financial Statements. Parent has heretofore furnished CommerceWAVE 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 four month period ended April
30, 1998 (all of the foregoing, collectively, "Parent Financial Statements").
The Parent Financial Statements present fairly in all material respects the
consolidated financial position, results of operations, shareholders' equity and
cash flow of Parent at the respective dates or for the respective periods to
which they apply. Except as disclosed therein, such statements and related
notes have been prepared in accordance with GAAP consistently applied throughout
the periods involved (except, in the case of the unaudited financial statements,
for the exclusion of footnotes and normal year end adjustments).
5.9 Undisclosed Liabilities. Except as set forth on Schedule 5.9 hereto,
------------
neither Parent nor any of its Subsidiaries has any debt, liability or obligation
of any kind, whether accrued, absolute or otherwise, including any liability or
obligation on account of taxes or any governmental charges or penalty, interest
or fine, except (a) liabilities incurred in the ordinary course of business
after December 31, 1997 that would not, whether individually or in the
aggregate, have a material
19
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.
5.13 Absence of Changes. Except as provided in Schedule 5.13 hereto, since
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December 31, 1997, there has not been (a) any transaction, commitment, dispute
or other event or condition (financial or otherwise) of any character (whether
or not in the ordinary course of business) individually or in the aggregate that
has had, or would reasonably be expected to have, a material adverse effect on
the business, properties, assets, condition (financial or otherwise),
liabilities or results of operations of Parent and its Subsidiaries, taken as a
whole; (b) any damage, destruction or loss, whether or not covered by insurance,
which has had, or would reasonably be expected to have, a material adverse
effect on the business, properties, assets, condition (financial or otherwise),
liabilities or results of operations of Parent and its Subsidiaries, taken as a
whole; (c) any entry into any commitment or transaction material to Parent and
its Subsidiaries, taken as a whole (including any borrowing or sale of assets)
except in the ordinary course of business consistent with past practice; (d) any
declaration, setting aside or payment of any dividend or distribution (whether
in cash, stock or property) with respect to Parent's capital stock; (e) any
material change in Parent's accounting principles, practices or methods; (f) any
split, combination or reclassification of any of Parent's capital stock, or the
issuance or authorization of any issuance of any other securities in respect of,
in lieu of or in substitution for, shares of Parent's capital stock; or (g) any
agreement (whether or not in writing), arrangement or understanding to do any of
the foregoing.
5.14 Taxes. Parent and its Subsidiaries have duly and timely filed all
federal, state and local income, franchise, excise, real and personal property
and other tax returns and reports,
20
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
CommerceWAVE 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 CommerceWAVE 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, CommerceWAVE shall carry on its
business in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted, use reasonable efforts to preserve intact its
present business organization, keep available the services of its employees and
preserve its relationships with customers, suppliers, licensors, licensees,
distributors and others having business dealings with CommerceWAVE 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, CommerceWAVE 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 CommerceWAVE 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 CommerceWAVE or any security
convertible into, or any right, warrant or option to acquire any such share or
voting security, except as provided in Section 6.6(a) hereof;
21
(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 CommerceWAVE;
(e) subject to a Lien or sell, lease or otherwise dispose of any of its
properties or assets;
(f) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another Person or issue or sell any debt security of
CommerceWAVE, 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,
CommerceWAVE 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 CommerceWAVE acting solely through its President, 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 CommerceWAVE.
6.3 Filings; Tax Elections. CommerceWAVE shall promptly provide Parent with
copies of all filings made by CommerceWAVE with any Governmental Entity in
connection herewith and the transactions contemplated hereby. CommerceWAVE
shall, before settling or compromising any material income tax liability of
CommerceWAVE, consult with Parent and its advisors as to the positions and
elections that will be taken or made with respect to such matter.
6.4 Public Announcements. The parties agree that, except as may otherwise be
required to comply with applicable laws and regulations (including applicable
securities laws) or to obtain consents required hereunder, public disclosure of
the transactions contemplated hereby shall be made only upon or after the
consummation of the Merger. Any such disclosure shall be coordinated by Parent,
and none of the CommerceWAVE Shareholders shall make any such disclosure without
the prior written consent of Parent.
22
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) CommerceWAVE hereby covenants and agrees that, prior to Closing, it
shall issue to its employees all unissued options remaining in its option pool,
at the same exercise price and subject to the same vesting schedule as its
issued and outstanding options.
(b) CommerceWAVE hereby covenants and agrees that at the Effective Time,
all of the CommerceWAVE Stock Rights (all of which are set forth on Schedule
--------
4.3(a) hereto) shall have been properly canceled and, except for the right to
------
receive options to acquire Parent Stock described in Section 6.6(c) below, all
rights and obligations thereunder shall have been terminated.
(c) Parent hereby covenants and agrees that, at the Effective Time, each
of the holders of CommerceWAVE Stock Rights shall receive options to purchase
the number of shares of validly issued, fully paid and nonassessable Parent
Stock, at the exercise price per share, as set forth on Schedule 6.6(c) hereto,
---------------
all of which options shall have been issued pursuant to the IXL Holdings, Inc.
1996 Stock Option Plan, as amended (the "Parent Stock Option Plan").
6.7 Further Assurances. From time to time after the Effective Time, upon the
reasonable request of any party hereto, the other party or parties hereto shall
execute and deliver or cause to be executed and delivered such further
instruments, and take such further action, as the requesting party may
reasonably request in order to effectuate fully the purposes, terms and
conditions hereof.
6.8 State Tax Assumption. CommerceWAVE shall, prior to the Closing, have
obtained a tax clearance certificate (the "Tax Clearance Certificate") from the
California Franchise Tax Board ("FTB") and, in that connection, Xxxxxxx Xxxx
shall execute, and deliver to the FTB, a personal assumption of tax liability
("State Tax Assumption"). Sub agrees to enter into an Assumption Agreement with
Xxxxxxx Xxxx, substantially in the form of Exhibit "H" hereto, whereby Sub will
-----------
assume the State Tax Assumption ("Assumption Agreement").
6.8 No Impairment. From and after the date hereof, prior to the Effective
Time, except as contemplated hereby, Parent will not take any action, including
amending or modifying its Certificate of Incorporation or Bylaws, which would
materially adversely affect the benefits to be received by the CommerceWAVE
Shareholders as a whole hereunder.
6.10 Landlord's Consent. CommerceWAVE shall, prior to the Closing, have
obtained written consent, in accordance with its Office Lease, dated September
8, 1994, with respect to its premises, from the Landlord thereof.
23
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Obligation of CommerceWAVE and the CommerceWAVE
Shareholders to Effect the Merger. The obligation of CommerceWAVE and the
CommerceWAVE Shareholders to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Time of the following conditions:
(a) Parent and Sub shall have performed in all material respects their
respective agreements contained herein required to be performed at or prior to
the Effective Time, and the representations and warranties of Parent and Sub
contained herein shall be true in all material respects when made and (except
for representations and warranties made as of a specified date, which need only
be true as of such date) at and as of the Effective Time as if made at and as of
such time, except as contemplated hereby;
(b) (i) the appropriate officers of Parent shall have executed and
delivered to CommerceWAVE at the Closing, a closing certificate and incumbency
certificate, substantially in the form of Exhibit "A-1" hereto, and (ii)
-------------
the appropriate officers of Sub shall have executed and delivered to
CommerceWAVE at the Closing, a closing certificate and incumbency certificate,
substantially in the form of Exhibit "A-2" hereto;
-------------
(c) Parent shall have obtained all of the Consents, if any, listed on
Schedule 7.1(c) hereto;
---------------
(d) CommerceWAVE shall have received corporate certificates of good
standing for Parent and Sub, and a copy of the Certificate of Incorporation for
Parent and Sub, respectively, both as certified by the Secretary of State of
Delaware;
(e) there shall have been delivered to each of the CommerceWAVE
Shareholders at the Closing, duly executed by Parent, an Agreement to be Bound
to the Registration Rights Agreement of Parent, dated as of Closing Date (the
"Agreement to be Bound to the Registration Rights Agreement"), substantially in
the form of Exhibit "B" hereto;
-----------
(f) Parent shall have executed and delivered at the Closing an Option
Agreement for each of the Persons listed on Schedule 6.6(c) hereto receiving
options to purchase Parent Stock, substantially in the form of Exhibit "C"
-----------
hereto;
(g) the CommerceWAVE Shareholders shall have received, at the Closing, a
duly executed opinion of counsel to Parent and Sub, substantially in the form of
Exhibit "D" hereto;
-----------
24
(h) CommerceWAVE shall have received the Tax Clearance Certificate from
the FTB, and Sub shall have executed and delivered at the Closing the Assumption
Agreement; and
(i) CommerceWAVE shall have received from Parent and Sub such other
documents as CommerceWAVE's counsel shall have reasonably requested, in form and
substance reasonably satisfactory to CommerceWAVE'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) CommerceWAVE and the CommerceWAVE Shareholders shall have performed
in all material respects their respective agreements contained herein required
to be performed at or prior to the Effective Time, and the representations and
warranties of CommerceWAVE and the CommerceWAVE Shareholders contained herein
shall be true in all material respects when made and (except for representations
and warranties made as of a specified date, which need only be true as of such
date) at and as of the Effective Time as if made at and as of such time, except
as contemplated hereby;
(b) the appropriate officers of CommerceWAVE shall have executed and
delivered to Parent at the Closing, a closing certificate and incumbency
certificate, substantially in the form of Exhibit "E" hereto;
-----------
(c) CommerceWAVE and the CommerceWAVE Shareholders shall have obtained
or caused to be obtained all of the Consents, if any, listed on Schedule 7.2(c)
---------------
hereto, including that referred to in Section 6.10 hereof;
(d) there shall have been delivered to Parent at the Closing, duly
executed by each of the CommerceWAVE Shareholders, (i) an Agreement to be Bound
to the Stockholders' Agreement, substantially in the form of Exhibit "F" hereto,
-----------
including for each of the CommerceWAVE Shareholders who is married an executed
Spousal Waiver, substantially in the form attached thereto; and (ii) an
Agreement to be Bound to the Registration Rights Agreement;
(e) Parent shall have received a corporate certificate of good standing
for CommerceWAVE, and a copy of the Articles of Incorporation of CommerceWAVE,
both as certified by the Secretary of State of California;
(f) CommerceWAVE shall have complied with its obligations under Sections
6.6(a) and (b) hereof;
(g) Parent shall have received, at the Closing, a duly executed opinion
of counsel to CommerceWAVE and the CommerceWAVE Shareholders, substantially in
the form of Exhibit "G" hereto;
-----------
25
(h) Parent shall have received from CommerceWAVE the Tax Clearance
Certificate, indicating that no taxes are owed by CommerceWAVE to state or local
taxing authorities in the State of California, and Xxxxxxx Xxxx shall have
executed and delivered at the Closing the Assumption Agreement;
(i) Parent shall have received from CommerceWAVE or the CommerceWAVE
Shareholders, as the case may be, such other documents as Parent's counsel shall
have reasonably requested, in form and substance reasonably satisfactory to
Parent's counsel; and
(j) Parent shall have received evidence satisfactory to it that at the
Closing the assets and properties used in the CommerceWAVE Business are free and
clear of all Liens other than Permitted Liens (as hereinafter defined).
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by Parent.
(a) Parent shall indemnify and hold the CommerceWAVE Shareholders and
CommerceWAVE's directors, officers and employees (collectively, the
"CommerceWAVE Indemnified Parties") harmless from and against, and agree
promptly to defend each of the CommerceWAVE Indemnified Parties from and
reimburse each of the CommerceWAVE 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 "CommerceWAVE Loss") that any of the CommerceWAVE Indemnified
Parties may at any time suffer or incur, or become subject to, as a result of or
in connection with:
(i) any breach or inaccuracy of any of the representations and
warranties made by Parent or Sub in or pursuant hereto, or in any instrument,
certificate or affidavit delivered by Parent or Sub at the Closing in accordance
with the provisions hereof;
(ii) any failure by Parent or Sub to carry out, perform, satisfy
and discharge any of its respective covenants, agreements, undertakings,
liabilities or obligations hereunder or under any of the documents and materials
delivered by Parent pursuant hereto; and
(iii) any suit, action or other proceeding arising out of, or in any
way related to, any of the matters referred to in this Section 8.1(a).
(b) Notwithstanding any other provision hereof to the contrary, Parent
shall not have any liability under Section 8.1(a)(i) above (i) unless the
aggregate of all CommerceWAVE Losses for which Parent would be liable but for
this sentence exceeds, on a cumulative basis, an
26
amount equal to $100,000, and then only to the extent of such excess, (ii) for
amounts in excess of $10,000,000 in the aggregate, and (iii) unless the
CommerceWAVE Shareholders have asserted a claim with respect to the matters set
forth in Section 8.1(a)(i), or 8.1(a)(iii) to the extent applicable to Section
8.1(a)(i), within one year of the Effective Time. Notwithstanding any
implication to the contrary contained herein, the parties acknowledge and agree
that a decrease in the value of Parent Stock would not, by itself, constitute a
CommerceWAVE Loss, unless and to the extent a decrease in the value of Parent
Stock has been demonstrated to be as a result of any event described in Sections
8.1(a)(i), (ii) or (iii) above.
8.2 Indemnification by the CommerceWAVE Shareholders.
(a) Subject to Section 8.2(c) hereof, the CommerceWAVE Shareholders,
severally but not jointly, shall indemnify and hold Parent, Sub, Surviving
Corporation and their respective shareholders, directors, officers and employees
(collectively, the "Parent Indemnified Parties") harmless from and against, and
agree to defend promptly each of the Parent Indemnified Parties from and
reimburse each of the Parent Indemnified Parties for, any and all losses,
damages, costs, expenses, liabilities, obligations and claims of any kind
(including reasonable attorneys' fees and other legal costs and expenses)
(collectively, a "Parent Loss") that any of the Parent Indemnified Parties may
at any time suffer or incur, or become subject to, as a result of or in
connection with:
(i) in the case of the Controlling Shareholders, any breach or
inaccuracy of any of the representations and warranties made by CommerceWAVE or
the CommerceWAVE Shareholders in or pursuant hereto, or in any instrument
certificate or affidavit delivered by any of the same at the Closing in
accordance with the provisions hereof;
(ii) in the case of each other CommerceWAVE Shareholder, any breach
or inaccuracy of any of the representations and warranties made by and with
respect to such CommerceWAVE Shareholder in Sections 4.2, 4.3(b), 4.5, 4.31,
4.32, 4.33 and 4.34 hereof or in any certificate or affidavit delivered by any
of the same at the Closing in accordance herewith;
(iii) any failure by CommerceWAVE or any of the CommerceWAVE
Shareholders to carry out, perform, satisfy and discharge any of their
respective covenants, agreements, undertakings, liabilities or obligations
hereunder or under any of the documents and materials delivered by CommerceWAVE
pursuant hereto; and
(iv) any suit, action or other proceeding arising out of, or in any
way related to, any of the matters referred to in this Section 8.2.
(b) Notwithstanding the above, none of the CommerceWAVE Shareholders
shall have any liability under Sections 8.2(a)(i) or (ii) above (i) unless the
aggregate of all Parent Losses for which the CommerceWAVE Shareholders would be
liable but for this sentence exceeds, on a cumulative basis, an amount equal to
$100,000, and then only to the extent of such excess, (ii) for amounts in excess
of $10,000,000 in the aggregate, and (iii) unless Parent has asserted a claim
27
with respect to the matters set forth in Sections 8.2(a)(i) or 8.2(a)(ii), or
8.2(a)(iv) to the extent applicable to Sections 8.2(a)(i) or 8.2(a)(ii), within
one year of the Effective Time, except (1) with respect to the matters arising
under Sections 4.18, 4.19, 4.20 or 4.24 hereof, and (2) for claims for
indemnification based on (A) fraud, (B) intentional misrepresentation or (C) any
breach of any representation made in Section 4.3(b) hereof or otherwise with
respect to title to any CommerceWAVE Stock, in which events 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 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), (iii) or (iv) above.
(c) Notwithstanding the above, except for claims for indemnification
based on (i) fraud, (ii) intentional misrepresentation or (iii) any breach of
any representation made in Section 4.3(b) hereof or otherwise with respect to
title to any CommerceWAVE Stock, the liability of the CommerceWAVE Shareholders
under Section 8.2(a) hereof will not exceed their respective portions of the
merger consideration receivable hereunder.
8.3 Notification of Claims; Election to Defend
(a) A party entitled to be indemnified pursuant to Section 8.1 or 8.2
hereof, as the case may be (the "Indemnified Party"), shall notify the party
liable for such indemnification (the "Indemnifying Party") in writing of any
claim or demand (a "Claim") that the Indemnified Party has determined has given
or could give rise to a right of indemnification hereunder. Subject to the
Indemnifying Party's right to defend in good faith third party claims as
hereinafter provided, the Indemnifying Party shall satisfy its obligations under
this Article VIII within 30 days after the receipt of written notice thereof
from the Indemnified Party. Any amounts paid thereafter shall include interest
thereon for the period commencing at the end of such 30-day period and ending on
the actual date of payment, at a rate of 15% per annum, or, if lower, at the
highest rate of interest permitted by applicable law at the time of such
payment.
(b) If the Indemnified Party shall notify the Indemnifying Party of any
Claim pursuant to Section 8.3(a) hereof, and if such Claim relates to a Claim
asserted by a third party against the Indemnified Party that the Indemnifying
Party acknowledges is a Claim for which it must indemnify or hold harmless the
Indemnified Party under Section 8.1 or 8.2 hereof, as the case may be, the
Indemnifying Party shall have the right, at its sole cost and expense, to employ
counsel of its own choosing to defend any such Claim asserted against the
Indemnified Party. Notwithstanding anything to the contrary in the preceding
sentence, if the Indemnified Party (i) reasonably believes that its interests
with respect to a Claim (or any material portion thereof) are in conflict with
the interests of the Indemnifying Party with respect to such Claim (or portion
thereof), and (ii) promptly notifies the Indemnifying Party, in writing, of the
nature of such conflict, then the Indemnified Party shall be entitled to choose,
at the sole cost and expense of the Indemnifying Party, independent counsel to
defend such Claim (or the conflicting portion thereof). The Indemnified Party
shall have the right to participate in the defense of any Claim at its own
expense (except to the extent provided in the preceding sentence), but the
Indemnifying Party shall retain
28
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.
8.4 Payment. Any Indemnifying Party may, at such Indemnifying Party's
option, pay all or part of any amount due under this Article VIII by delivery of
shares of Parent Stock having a value equal to the amount due (to the extent
that such Party owns sufficient shares of Parent Stock). For the purpose of
this provision, the value of Parent Stock shall be deemed to be $10 per share.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination. This Merger Agreement may be terminated at any time prior
to the Effective Time:
(a) by mutual written consent of Parent and CommerceWAVE;
(b) by CommerceWAVE, upon a material breach hereof on the part of Parent
or Sub which has not been cured and which would cause any condition set forth in
Section 7.1 hereof to be incapable of being satisfied by July 31, 1998;
(c) by Parent, upon a material breach hereof on the part of CommerceWAVE
or any of the CommerceWAVE Shareholders which has not been cured and which would
cause any condition set forth in Section 7.2 hereof to be incapable of being
satisfied by July 31, 1998;
29
(d) by Parent or CommerceWAVE 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 CommerceWAVE if the Merger shall not have been
consummated on or before July 31, 1998 (provided the terminating party is not
otherwise in material breach of its representations, warranties or obligations
hereunder).
9.2 Fees and Expenses.
(a) If the Merger is consummated, all costs and expenses incurred in
connection herewith and the transactions contemplated hereby shall be paid by
the Surviving Corporation; provided, however, that the Controlling Shareholders
shall pay all fees and expenses (including agents, counsel and other advisors)
of CommerceWAVE, themselves and the other CommerceWAVE Shareholders that are not
solely and directly related to the Merger.
(b) If the Merger is not consummated for a reason other than the willful
and material breach hereof by a party, all fees and expenses incurred in
connection herewith and the transactions contemplated hereby shall be paid by
the party incurring such fees or expenses.
(c) If the Merger is not consummated because of a willful and material
breach hereof by any party, the nonbreaching party or parties shall be entitled
to pursue all legal and equitable remedies against the breaching party for such
breach including specific performance and all fees and expenses incurred by the
nonbreaching party or parties in connection with enforcing its or their rights
hereunder with respect to such breach shall be paid by the breaching party.
9.3 Amendment. This Merger Agreement may be amended by CommerceWAVE, Parent,
Sub and, on behalf of all of the CommerceWAVE Shareholders, the Controlling
Shareholders, at any time before or after approval hereof by the CommerceWAVE
Shareholders, but, after such approval, no amendment shall be made which (i)
changes the form or decreases the amount of the consideration to be received in
the Merger, (ii) in any way materially adversely affects the rights of the
CommerceWAVE Shareholders, or (iii) under applicable law would require approval
of the CommerceWAVE Shareholders, in any such case referred to in clauses (i),
(ii) and (iii), without the further approval of the CommerceWAVE Shareholders.
This Agreement may not be amended except by an instrument in writing signed on
behalf of the parties hereto, provided that after the Effective Time, any such
amendment must be signed by the former holders of a majority of the CommerceWAVE
Stock.
9.4 Waiver. At any time prior to the Effective Time, the parties hereto may,
to the extent permitted by applicable law, (i) extend the time for the
performance of any of the obligations or other acts of any other party hereto,
(ii) waive any inaccuracies in the representations and warranties by any other
party contained herein or in any documents delivered by any other party pursuant
hereto and (iii) waive compliance with any of the agreements of any other party
or with
30
any conditions to its own obligations contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party.
ARTICLE X
GENERAL PROVISIONS
10.1 Survival; Recourse. None of the agreements contained herein shall
survive the Merger, except that (i) the agreements contained in Article III
hereof, the covenants contained in Article VI hereof, the obligations to
indemnify contained in Article VIII hereof and the agreements of the Surviving
Corporation referred to in Sections 10.9 and 10.10 hereof, shall survive the
Merger (except to the extent a shorter period of time is explicitly specified
therein) and (ii) the representations and warranties made in Articles IV and V
hereof shall survive the Merger, and shall survive any independent investigation
by the parties, and any dissolution, merger or consolidation of CommerceWAVE or
Parent, and shall bind the legal representatives, assigns and successors of
CommerceWAVE, the CommerceWAVE Shareholders and Parent, for a period of one year
after the Closing Date (other than (A) the representations and warranties
contained in Sections 4.18, 4.19, 4.20 and 4.24 hereof, and (B) the claims
described in Section 8.2(b)(2) hereof, all of 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:
If to CommerceWAVE: CommerceWAVE, Inc.
0000 Xxxxxxx Xxxxxxx Xx., Xxx. 000
Xxxxxxxx, XX 00000
Attention: Xx. Xxxxxxx Xxxx, Pres. and CEO
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to: Xxxx Xxxx Xxxx Friedenrich LLP
0000 Xxxxxxxxx Xx., Xxx. 0000
Xxx Xxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxx, Esq.
Telephone: 619/000-0000
Telecopy: 619/677-1477
If to the CommerceWAVE To the address listed under the signature
Shareholders: line of the applicable CommerceWAVE Shareholder
31
If to Parent or Sub: IXL Holdings, Inc.
Two Park Place
0000 Xxxxx Xx., 0xx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Telecopy: 404/267-3801
Telephone: 404/000-0000
With copies to: Xxxxxx & Xxxxxx, A Professional Corporation
One Buckhead Plaza
0000 Xxxxxxxxx Xx., Xxx. 0000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Telecopy: 404/233-5824
Telephone: 404/000-0000
and to: Xxxxx & Company
000 Xxxx Xxx., 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx XX, Esq.
Telecopy: 212/223-2379
Telephone: 212/000-0000
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
CommerceWAVE dated as of January 16, 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.
32
10.5 Governing Law. This Agreement, except to the extent that the GCL or the
DGCL is mandatorily applicable to the Merger, or to the rights of the
CommerceWAVE Shareholders or the other parties hereto with respect to the
Merger, shall be governed in all respects by the laws of the State of Georgia
(without giving effect to the provisions thereof relating to conflicts of law).
10.6 Headings. The descriptive headings herein are inserted for convenience
of reference only and are not intended to be part of or to affect the meaning or
interpretation hereof.
10.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute a single agreement.
10.8 Severability. If any term or other provision hereof is invalid, illegal
or incapable of being enforced by any rule of law or public policy, all other
conditions and provisions hereof shall nevertheless remain in full force and
effect so long as the economics or legal substance of the transactions
contemplated hereby are not affected in any manner materially adverse to any
party. Upon determination that any term or other provision hereof is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible to the fullest extent permitted by applicable law
in an acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
10.9 Post-Closing Access. For a period of three years after the Closing
Date, the CommerceWAVE Shareholders and their agents and representatives shall
have reasonable access to the books and records of the CommerceWAVE Business.
10.10 Post-Closing Notice. To the extent the Surviving Corporation receives
written notice of any event or circumstance that materially affects any of the
CommerceWAVE Shareholders, the Surviving Corporation shall promptly notify the
affected CommerceWAVE Shareholder of such matter, information, or event and
shall provide them with copies of all relevant documentation or correspondence
in connection thereto.
10.11 Certain Definitions. As used herein:
(a) the term "Permitted Liens" shall mean (a) Liens for taxes,
assessments or other governmental charges or levies not yet due; (b) statutory
Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen
and other Liens imposed by law created in the ordinary course of business for
amounts not yet due; (c) Liens (other than any Lien imposed by ERISA) incurred
or deposits made in the ordinary course of business in connection with worker's
compensation, unemployment insurance or other types of social security; (d)
minor defects of title, easements, rights-of-way, restrictions and other similar
charges or encumbrances not materially detracting from the value of the
CommerceWAVE Real Property or interfering with the ordinary conduct of any of
the CommerceWAVE Business; and (e) those Liens listed on Schedule 10.11;
--------------
33
(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 CommerceWAVE" shall refer to the
knowledge, subject to clause (i) above, of any of the Controlling Shareholders;
and
(c) the term "Subsidiary" or "Subsidiaries" means any Entity of which
Parent (either alone or through or together with any other Subsidiary) owns,
directly or indirectly, stock or other equity interests the holders of which are
entitled to more than 50% of the vote for the election of the board of directors
or other governing body of such Entity (including Sub); provided, however, that
with respect to the Parent, the terms "Subsidiary" and "Subsidiaries" shall not
include CommerceWAVE or University Netcasting, Inc.
- SIGNATURES ON THE FOLLOWING PAGE -
34
IN WITNESS WHEREOF, Parent, Sub and CommerceWAVE have caused this Agreement to
be signed and delivered by their respective duly authorized officers, and each
CommerceWAVE Shareholder has signed and delivered this Agreement, all as of the
date first written above.
"CommerceWAVE"
CommerceWAVE, Inc., a California corporation
By: /s/ Xxxxxxx X. Xxxx
---------------------------------------
Title: President
"Parent"
IXL Holdings, Inc., a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx
---------------------------------------
Title:
------------------------------------
"Sub"
iXL-San Diego, Inc., a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx
---------------------------------------
Title:
------------------------------------
- SIGNATURES CONTINUE ON THE FOLLOWING PAGE -
35
"CommerceWAVE Shareholders"
/s/ Xxxxxxx X. Xxxx
--------------------------------------------------------
Xxxxxxx X. Xxxx
Address: 0000 Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
760/434-9091
/s/ Xxxxxxx Xxxx
--------------------------------------------------------
Xxxxxxx Xxxx
Address: 0000 Xxxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
619/535-9471
/s/ Xxxxxx Xxxxx
--------------------------------------------------------
Investar Burgeon Venture Capital, Inc.
Address: Room 1805, 18th Floor
Xx. 000, Xxxxxxx Xxxx
Xxxxxxx 0
Xxxxxx, Xxxxxx, R.O.C.
000-0-0000000
/s/ Xxxxxxx Xxxxxx
--------------------------------------------------------
Xxxxxxx Xxxxxx
Address: 0000 Xxxxxxx Xxxxx Xxx
Xxxxxx, XX 00000
703/620-4200
/s/ Xxx Xxxxx
--------------------------------------------------------
Xxx Xxxxx
Address: 00000 Xx Xxxxx Xx.
Xxx Xxxxx Xxxxx, XX 00000
415/948-1344
- SIGNATURES CONTINUE ON THE FOLLOWING PAGE -
36
/s/ Xxxxx Xxxx
--------------------------------------------------------
Maton Fund I, L.P. by Xxxxx Xxxx
Address: 0000 Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxx Xxxxx, XX 00000
408/919-7388
37
EXHIBITS
--------
Parent's Closing Certificate................................... Exhibit A-1
Sub's Closing Certificate...................................... Exhibit A-2
Agreement to be Bound to Registration Rights Agreement......... Exhibit B
Option Agreement............................................... Exhibit C
Opinion of Counsel to Parent and Sub........................... Exhibit D
CommerceWAVE's Closing Certificate............................. Exhibit E
Agreement to be Bound to Stockholders' Agreement............... Exhibit F
Opinion of Counsel to CommerceWAVE............................. Exhibit G
Assumption Agreement........................................... Exhibit H
SCHEDULE 4.1
------------
ARTICLES OF INCORPORATION AND BYLAWS OF COMMERCEWAVE
SCHEDULE 4.3(A)
---------------
CAPITALIZATION OF COMMERCEWAVE
SCHEDULE 4.3(B)
---------------
LIENS ON COMMERCEWAVE STOCK
SCHEDULE 4.5
------------
CONFLICTS, REQUIRED FILINGS AND CONSENTS OF COMMERCEWAVE
SCHEDULE 4.7
------------
EXCEPTIONS TO ABSENCE OF CHANGES OF COMMERCEWAVE
SCHEDULE 4.8
------------
UNDISCLOSED LIABILITIES OF COMMERCEWAVE
SCHEDULE 4.9
------------
EXCEPTIONS TO TITLE TO PROPERTIES OF COMMERCEWAVE
SCHEDULE 4.10
-------------
BAD EQUIPMENT OF COMMERCEWAVE
SCHEDULE 4.11(A)
----------------
INFRINGEMENT UPON INTELLECTUAL PROPERTY OF COMMERCEWAVE
SCHEDULE 4.12
-------------
LIENS ON REAL PROPERTY OF COMMERCEWAVE
SCHEDULE 4.13
-------------
LEASES OF COMMERCEWAVE
SCHEDULE 4.14
-------------
CONTRACTS OF COMMERCEWAVE
SCHEDULE 4.15
-------------
DIRECTORS AND OFFICERS OF COMMERCEWAVE
SCHEDULE 4.17
-------------
LITIGATION
SCHEDULE 4.18
-------------
EMPLOYEE BENEFIT PLANS/LABOR RELATIONS OF COMMERCEWAVE
SCHEDULE 4.19
-------------
ERISA ISSUES OF COMMERCEWAVE
SCHEDULE 4.21
-------------
COMMERCEWAVE PERMITS
SCHEDULE 4.23
-------------
COMMERCEWAVE BROKERS
SCHEDULE 4.25
-------------
INTEREST IN CUSTOMERS, SUPPLIERS, COMPETITORS
SCHEDULE 4.28
-------------
INSURANCE OF COMMERCEWAVE
SCHEDULE 5.1
------------
CERTIFICATE OF INCORPORATION AND BYLAWS OF PARENT AND SUB
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 OF ABSENCE OF CHANGES
SCHEDULE 6.6(C)
---------------
OPTIONS TO HOLDERS OF COMMERCEWAVE STOCK RIGHTS
SCHEDULE 7.1(C)
---------------
PARENT CONSENTS
SCHEDULE 7.2(C)
---------------
COMMERCEWAVE CONSENTS
SCHEDULE 10.11
--------------
PERMITTED LIENS OF COMMERCEWAVE
