EXHIBIT 2.27
AGREEMENT AND PLAN OF MERGER
by and between
IXL HOLDINGS, INC.,
iXL-BOSTON, INC.,
XXXXX XXXXXX PRODUCTIONS, INC.
AND
THE LMP PRINCIPALS
Dated as of September 9th, 1998
AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER is entered into as of this 9th day of
September, 1998, by and between Xxxxx Xxxxxx Productions, Inc., a Massachusetts
corporation ("LMP"), IXL Holdings, Inc., a Delaware corporation ("Parent"), iXL-
Boston, Inc., a Delaware corporation, or its successors or assigns ("Sub"), and
the principals of LMP as listed on the signature page hereto (the "LMP
Principals").
R E C I T A L S:
- - - - - - - -
A. LMP is engaged in the business of developing internet sites and furnishing
internet services, including website design and maintenance (the "LMP
Business").
B. LMP 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 LMP Principals comprise (i) Xxxx Xxxxx and Xxxx Xxxxxxx, as the
holders, in aggregate, of a majority of the LMP Stock as defined below (the "LMP
Principal Shareholders"), (ii) the other shareholders of LMP, as identified as
such on Schedule 4.3(a) hereto (collectively, the "LMP Other Shareholders";
collectively with the LMP Principal Shareholders, the "LMP Shareholders"), (iii)
Xxxx Xxxxx, Xxxx Xxxxxxxx and Xxxx Xxxxxxx, as the holders, in aggregate, of a
majority of LMP's outstanding non-qualified stock options ("LMP $25 Options") at
$25 per share (collectively, together with the LMP Principal Shareholders in
their capacity as such, the "LMP Majority Principals") and (iv) the other
holders of LMP $25 Options, as identified as such on Schedule 4.3(a) hereto
---------------
(collectively, together with the LMP Other Shareholders, the "LMP Other
Principals").
D. The LMP Shareholders collectively own 100% of the issued and outstanding
capital stock of LMP (the "LMP Stock").
E. The respective Boards of Directors of Parent, Sub and LMP, and the
respective shareholders of Sub and LMP, have approved the Merger, upon the terms
and subject to the conditions set forth herein.
F. 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) LMP shall be merged with
and into Sub, (b) the separate existence of LMP 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-Boston, 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 or place is agreed to by the parties.
1.3 Effective Time of the Merger. At the Closing, the parties hereto shall
cause (a) a certificate of merger (the "Delaware Certificate of Merger") to be
filed with the office of the Secretary of State of Delaware in accordance with
the provisions of the Delaware General Corporation Law, as amended (the "DGCL");
and (b) Articles of Merger (the "Massachusetts Articles of Merger"; collectively
with the Delaware Certificate of Merger, the "Certificate of Merger") to be
filed with the office of the Secretary of the Commonwealth of Massachusetts in
accordance with the provisions of the Massachusetts Business Corporation Law
(the "BCL"). When used herein, the term "Effective Time" shall mean the time
when the Certificate of Merger has been accepted for filing by the Secretary of
State of Delaware and by the Secretary of the Commonwealth of Massachusetts,
respectively, or such time as otherwise specified therein.
1.4 Effect of the Merger. The Merger shall, from and after the Effective
Time, have all the effects provided by the DGCL and the BCL. If at any time
after the Effective Time, any further action is deemed necessary or desirable to
carry out the purposes of this Agreement, the parties hereto agree that the
Surviving Corporation and its proper officers and directors shall be authorized
to take, and shall take, any and all such action.
ARTICLE II
THE SURVIVING CORPORATION
2.1 Certificate of Incorporation. The Certificate of Incorporation of Sub, a
form of which is attached to a closing certificate and incumbency certificate,
substantially in the form of Exhibit "A-2" hereto ("Sub's Closing Certificate"),
-------------
shall be the Certificate of Incorporation of
-2-
the Surviving Corporation after the Effective Time, until thereafter changed or
amended as provided therein or by applicable law.
2.2 Bylaws. The Bylaws of Sub as in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation, until
thereafter changed or amended as provided therein or by applicable law. A copy
of the Bylaws of Sub is attached to the Sub's Closing Certificate.
2.3 Board of Directors; Officers. The Board of Directors and officers of Sub
immediately prior to the Effective Time shall be the Board of Directors and
officers, respectively, of the Surviving Corporation, until the earlier of their
respective resignations or the time that their respective successors are duly
elected or appointed and qualified.
ARTICLE III
CONVERSION OF SHARES
3.1 Merger Consideration. As of the Effective Time:
(a) All shares of LMP Stock owned by LMP shall, by virtue of the Merger
and without any action on the part of any shareholder, officer or director of
LMP 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 LMP Stock owned by the LMP
Other Shareholders shall, upon surrender to Sub, at the Closing, of the
underlying share certificates, become exchangeable for an amount of cash based
on the following equation:
C = ($5,300,000 - D) - (PS x S\\2\\ x $10)
-------------------------------------
S\\1\\ + O + W
where:
C = the amount of cash for which each share of LMP Stock owned by the
LMP Other Shareholders shall be exchanged pursuant to the Merger
S\\1\\ = the aggregate number of issued and outstanding shares of LMP Stock
owned by the LMP Other Shareholders on the Closing Date
S\\2\\ = the aggregate number of issued and outstanding shares of LMP Stock
owned by the LMP Principal Shareholders on the Closing Date
and the other terms are as defined in Section 3.1(c) below.
-3-
(c) Each issued and outstanding share of LMP Stock (other than (i) any
Dissenting Shares, as defined in Section 3.2 hereof and (ii) shares of LMP Stock
owned by the LMP Other Shareholders) 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:
PS= 530,000 - D
---
$10
------------------
S + O + W
where:
PS = the number of shares of Parent Stock (valued, as of the
Closing, at $10 per share) for which each share of LMP Stock
owned by those LMP Principal Shareholders) shall be
exchanged pursuant to the Merger
D = the outstanding indebtedness of LMP (the "LMP Debt"),
including debt for borrowed money and accrued interest
thereon, capital leases, and that portion of accounts
payable and accrued expenses, including any unpaid legal,
accounting, broker or other fees of LMP, that exceeds the
five month average ended May 1998, 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")
S = the aggregate number of issued and outstanding shares of LMP
Stock owned by the LMP Shareholders on the Closing Date
O = the total number of options to purchase LMP Stock
outstanding on the Closing Date, to be exchanged for cash,
or for options to acquire Parent Stock, pursuant to Section
6.6(b) hereof
W = the total number of warrants to purchase LMP Stock
outstanding on the Closing Date, to be exchanged for
warrants to acquire Parent Stock pursuant to Section 6.6(b)
hereof
(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 LMP or Sub, be converted into and become one fully paid
and nonassessable share of common stock of the Surviving Corporation.
-4-
3.2 Dissenting Shares. Notwithstanding any provision hereof to the
contrary, any shares of LMP Stock held by a Dissenting Shareholder (as
hereinafter defined) shall not be converted as described in Sections 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 BCL, as
applicable; provided, however, that if a Dissenting Shareholder shall fail to
perfect his demand, withdraw his demand or otherwise lose his right for
appraisal under the terms of the DGCL or BCL, as applicable, then the LMP 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. LMP shall not voluntarily make any payment with respect to,
settle, or offer to settle or otherwise negotiate, any such demand. 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 an LMP Shareholder who (a)
objects to the Merger; and (b) complies with the applicable provisions of the
DGCL or BCL concerning dissenter's rights.
3.3 No Further Rights. From and after the Effective Time, holders of
certificates theretofore evidencing LMP Stock shall cease to have any rights as
stockholders of LMP, except as provided herein or by applicable law.
3.4 Closing of LMP's Transfer Books. At the Effective Time, the stock
transfer books of LMP shall be closed and no transfer of LMP Stock shall be made
thereafter. If after the Effective Time, certificates for LMP Stock are
presented to Parent or the Surviving Corporation, then 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 LMP
LMP, and the LMP Majority Principals, jointly and severally, and in addition
the LMP Other Principals, severally but not jointly, represent and warrant to
Parent and Sub as follows, which representations and warranties shall survive
the Closing in accordance with Section 10.1 hereof.
4.1 Organization and Qualification. LMP is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Massachusetts. LMP has the requisite corporate power and authority to carry on
the LMP Business as it is now being conducted and is duly qualified or licensed
to do business, and is in good standing, in each jurisdiction where the
character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure so to
qualify could not have a material adverse effect on the LMP Business or on LMP's
properties or assets. Complete and correct copies of the Articles of
Organization and Bylaws of LMP as in effect on the date hereof are attached to a
closing certificate and incumbency certificate, substantially in the form
-5-
of Exhibit "E" hereto ("LMP's Closing Certificate"). The minute book of LMP, a
-----------
true and complete copy of which has been delivered to Parent, (a) accurately
reflects all action taken by the directors and shareholders of LMP at meetings
of LMP'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. LMP 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 LMP have been duly and validly
authorized and approved by LMP's Board of Directors and the LMP Shareholders,
and no other corporate or shareholder proceedings on the part of LMP, its Board
of Directors, the LMP Shareholders or the LMP Principals is necessary to
authorize or approve this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by LMP
and each LMP Principal, and assuming the due authorization, execution and
delivery by Parent and Sub, constitutes the valid and binding obligation of LMP
and each LMP Principal, enforceable against LMP and each LMP Principal 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 LMP consists of (i) 1,000 shares of
Class A Common Stock, $.01 par value, of which 450 shares are validly issued and
outstanding, fully paid and nonassessable; and (ii) 2,000 shares of Class B
Common Stock, $.01 par value, of which 250 shares are validly issued and
outstanding, fully paid and nonassessable. All outstanding capital stock of LMP
was issued in accordance with applicable federal and state securities laws.
Except as set forth on Schedule 4.3(a) hereto, there are no options, warrants,
---------------
calls, convertible notes, agreements, commitments or other rights presently
outstanding that would obligate LMP or any of the LMP 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, LMP has no bonds,
debentures, notes or other indebtedness issued or outstanding that have voting
rights in LMP. Schedule 4.3(a) sets forth a list of (i) all holders of record of
---------------
(A) LMP Stock, and (B) options, warrants, convertible notes or other rights to
purchase capital stock of LMP (collectively, "LMP Stock Rights"); (ii) the
number of shares held by each LMP Shareholder and the number of shares of
capital stock of LMP represented by the LMP Stock Rights; and (iii) the exercise
price, date of grant, duration and vesting schedule for each LMP Stock Right.
All agreements with or among present or former LMP shareholders to which LMP or
any of the LMP Principals is a party are hereby terminated, including all
rights, obligations and restrictions thereunder; no such agreement is
enforceable by any party thereto; and neither any LMP Principal nor any other
Person, including any party thereto other than the LMP Principals, has
-6-
rights to receive LMP Stock, LMP Stock Rights or other consideration under any
such agreement.
(b) All of the issued and outstanding shares of capital stock of LMP are
validly issued, fully paid and nonassessable. Except as set forth on Schedule
--------
4.3(b) hereto, each LMP Shareholder represents and warrants that the LMP Stock
------
held by such LMP 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. LMP 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
------------
LMP or the LMP Principals, (ii) the consummation by LMP and the LMP Principals
of the transactions contemplated hereby or (iii) compliance by LMP with any of
the provisions hereof will:
(a) conflict with or violate the Articles of Organization or Bylaws of
LMP;
(b) result in a violation of any statute, ordinance, rule, regulation,
order, judgment or decree applicable to LMP or any of the LMP Principals, or by
which LMP 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 LMP is a party or by which LMP 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 LMP; or
(e) require any consent, waiver, license, approval, authorization, order,
permit, registration or filing with, or notification to (any of the foregoing
being a "Consent"), (i) any government or subdivision thereof, whether domestic
or foreign, or any administrative, governmental, or regulatory authority,
agency, commission, court, tribunal or body, whether domestic, foreign or
multinational (any of the foregoing, a "Governmental Entity"), except for the
filing of the Certificate of Merger pursuant to the DGCL and the BCL; or (ii)
any other individual or Entity (collectively, a "Person").
-7-
4.6 Financial Statements. LMP has heretofore furnished Parent with a true
and complete copy of (a) the reviewed financial statements of LMP for the years
ended December 31, 1994, 1995, 1996 and 1997; and (b) the unaudited financial
statements of LMP for the five month period ended May 31, 1998 (all of the
foregoing collectively herein referred to as the "LMP Financial Statements").
Except as disclosed therein or on Schedule 4.6 hereto, the LMP Financial
-------------------
Statements have been prepared in accordance with GAAP (except for the absence of
footnotes and normal year end adjustments in the case of the LMP Financial
Statements for the period ended May 31, 1998) consistently followed throughout
the periods indicated, and present fairly, in all material respects, the
financial position and operating results of LMP as of the dates, and during the
periods, indicated therein.
4.7 Absence of Changes. Except as provided in Schedule 4.7 hereto and except
------------
as contemplated hereby, since December 31, 1997 (a) LMP 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 LMP; (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 LMP in respect of its
stock, whether in cash or property, and (ii) no purchase or redemption of any
share of the capital stock of LMP; (d) there has been no declaration, payment,
or commitment for the payment, by LMP, of a bonus or other additional salary,
compensation, or benefit to any employee of LMP that was not in the ordinary
course of business, except for normal year-end bonuses paid in the ordinary
course of business; (e) there has been no release, compromise, waiver or
cancellation of any debt to or claim by LMP, or waiver of any right of LMP; (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 LMP (other than LMP 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 LMP 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 LMP Business or the operations of LMP; (i) there has
been no loan by LMP, or guaranty by LMP of any loan, to any employee of LMP; (j)
LMP has not ceased to transact business with any customer that, as of the date
of such cessation, represented more than 5% of the 1997 annual gross revenues of
LMP; (k) there has been no termination or resignation of any key employee or
officer of LMP, and to the knowledge of LMP, 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 LMP Business, to
which LMP is a party or by which it is bound, except in the ordinary course of
business, or except as expressly contemplated hereby; (m) LMP has not failed to
satisfy any of its debts, obligations or liabilities related to the LMP Business
or the assets of LMP as the same become due and owing (except for LMP 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 LMP to do any of the foregoing; and (o) there has
been no other event or condition of any character specifically pertaining to and
materially and adversely affecting the assets, business or financial condition
of LMP.
-8-
4.8 Undisclosed Liabilities. Except as set forth on Schedule 4.8 hereto, LMP
------------
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 LMP; (b) liabilities reflected on the LMP
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, LMP has
------------
good and marketable title to, or good and valid title to its leasehold interests
in, all tangible property and assets used in the LMP Business, free and clear of
any and all Liens other than Permitted Liens (as defined in Section 10.11
hereof).
4.10 Equipment. LMP 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 LMP Business in the manner in
which it has been and is now operated by LMP ("the LMP Equipment"), except for
personal property having a net book value of less than $1,000. Except as set
forth on Schedule 4.10 hereto, each material item of LMP Equipment is in good
-------------
working order, ordinary wear and tear excepted.
4.11 Intellectual Property.
(a) LMP has heretofore furnished Parent with a true and complete list of
all material 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 LMP in the conduct of the
LMP Business (together with trade secrets and know how used in the conduct of
the LMP Business, the "LMP Intellectual Property Rights"). LMP owns, or is
validly licensed or otherwise has the right to use or exploit, as currently used
or exploited, all of the LMP Intellectual Property Rights, free of any
obligation to make any payment (whether of a royalty, license fee, compensation
or otherwise). No claims are pending or, to the knowledge of LMP, threatened,
that LMP is infringing or otherwise adversely affecting the rights of any Person
with regard to any LMP Intellectual Property Right. To the knowledge of LMP, no
Person is infringing the rights of LMP with respect to any LMP Intellectual
Property Right. Neither LMP nor, to the knowledge of LMP, any employee, agent or
independent contractor of LMP, in connection with the performance of such
Person's services with LMP, 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) LMP has heretofore furnished Parent with a true and complete list of
all material computer software used by LMP in the conduct of the LMP Business
(the "LMP Software"). LMP currently licenses, or otherwise has the legal right
to use, all of the LMP Software (including any upgrade, alteration or
enhancement with respect thereto), and all of the
-9-
LMP Software is being used in material compliance with any applicable license or
other agreement.
4.12 Real Property. Except as set forth on Schedule 4.12 hereto:
-------------
(a) LMP has a good and valid leasehold interest in all real property
(including all buildings, improvements and fixtures thereon) used in the
operation of the LMP Business (the "LMP Real Property"). LMP owns no real
property. Except for Permitted Liens, and for the items set forth on Schedule
--------
4.12, there are no Liens on LMP's interest in any of the LMP Real Property.
----
Schedule 4.12 lists each county and state where any LMP Real Property is
-------------
located, or where LMP has ever leased or owned any real property.
(b) There are no parties in possession of any portion of the LMP Real
Property other than LMP, whether as sublessees, subtenants at will or
trespassers.
(c) To the knowledge of LMP, 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 LMP
Leases (as hereinafter defined), any material expenditure by LMP to modify or
improve any of the LMP Real Property to bring it into material compliance
therewith.
4.13 Leases. Schedule 4.13 hereto sets forth a list of all leases pursuant
-------------
to which LMP leases, as lessor or lessee, real or personal property used in
operating the LMP Business or otherwise (the "LMP Leases"). Copies of the LMP
Leases, all of which have previously been provided to Parent, are true and
complete copies thereof. All of the LMP Leases are valid, binding and
enforceable against LMP and, to the knowledge of LMP, against the other parties
thereto, in accordance with their respective terms, and there is not under any
such LMP Lease any existing default by LMP, or, to the knowledge of LMP, by any
other party thereto, or any condition or event that, with notice or lapse of
time or both, would constitute a default. LMP has not received notice that the
lessor of any of the LMP Leases intends to cancel, suspend or terminate such LMP
Lease or to exercise or not exercise any option thereunder.
4.14 Contracts. Schedule 4.14 hereto sets forth a true and complete list of
-------------
all contracts, agreements and commitments (whether written or oral) to which LMP
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 LMP Intellectual Property Rights and the like
(collectively, the "LMP Contracts"); excepting only those LMP Contracts which
involve less than $10,000, or 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 LMP
is a party or by which it or any of its properties or assets is otherwise bound,
and that are not listed on
-10-
Schedule 4.14, is less than $50,000 (calculating such value by adding together
-------------
the value of rights and obligations, and not by determining the net amount
thereof).
True and complete copies of all such LMP Contracts or of proposals evidencing
LMP Contracts, as the case may be (or a true and complete narrative description
of any oral LMP Contract) have previously been provided to Parent. Neither LMP
nor, to the knowledge of LMP, any other party to any of the LMP Contracts (x) is
in default under (nor does there exist any condition that, with notice or lapse
of time or both, would cause such a default under) any of the LMP Contracts, or
(y) has waived any right it may have under any of the LMP Contracts, the waiver
of which is reasonably likely to have a material adverse effect on the
business, assets or financial condition or prospects of LMP. All of the LMP
Contracts constitute the valid and binding obligations of LMP, enforceable in
accordance with their respective terms, and, to the knowledge of LMP, of the
other parties thereto.
4.15 Directors and Officers. Schedule 4.15 hereto sets forth a list, as of
-------------
the Closing Date, of the name of each director and officer of LMP and the
position(s) held by each.
4.16 Payroll Information. LMP has previously provided Parent with a true and
complete copy of the payroll report of LMP dated August 27, 1998, showing all
employees of LMP as of such date and their levels of compensation as of such
date, other than bonuses and other extraordinary compensation, all of which
bonuses and other extraordinary compensation are set forth in Schedule 4.16
-------------
hereto. LMP has paid all compensation required to be paid to employees of LMP
on or prior to the date hereof other than compensation (and bonuses pursuant to
arrangements described in Schedule 4.16 hereto) accrued in the current pay
-------------
period.
4.17 Litigation. Except as set forth on Schedule 4.17 hereto, there is no
-------------
suit, action, claim, investigation or proceeding pending or, to the knowledge of
LMP, threatened against or affecting LMP or the LMP Business, nor is there any
judgment, decree, injunction or order of any applicable Governmental Entity or
arbitrator outstanding against LMP.
4.18 Employee Benefit Plans/Labor Relations.
(a) Except as disclosed in Schedule 4.18 hereto, there are no employee
-------------
benefit plans, agreements or arrangements maintained by LMP, 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, "LMP Benefit Plans"). All LMP Benefit Plans are
administered in accordance with, and are in material compliance with, all
applicable laws and regulations. No default exists with respect to the
obligations of LMP under any LMP Benefit Plan.
(b) LMP 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 LMP; no representation campaign or election is now in progress with
respect to any employee of LMP;
-11-
and there are no labor disputes, grievances, controversies, strikes or requests
for union representation pending, or, to the knowledge of LMP, threatened,
relating to or affecting the LMP Business. To the knowledge of LMP, no event has
occurred that could give rise to any such dispute, controversy, strike or
request for representation.
4.19 ERISA.
(a) Except as set forth on Schedule 4.19 hereto, all LMP 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 LMP
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 LMP Benefit Plan is
subject to Title IV of ERISA or Section 412 of the Code. LMP 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 LMP Benefit Plans that would
subject LMP to the penalty or tax imposed under Section 502(i) of ERISA or
Section 4975 of the Code. LMP 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 LMP 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 LMP, (ii) increase any benefit otherwise payable under any LMP
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 LMP 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 LMP under Section 4001 of ERISA or
Section 414 of the Code, within the 12-month period ending on the Closing Date.
LMP has not incurred any liability to the Pension Benefit Guaranty Corporation
in respect of any LMP Benefit Plan that remains unpaid.
4.20 Taxes.
(a) LMP 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 LMP on or prior to the
Closing Date. LMP has duly and timely paid all taxes and other governmental
charges, and all interest and penalties with respect thereto, required to be
paid by LMP (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 LMP Financial Statements). As of the Closing Date, all deficiencies proposed
as a result of any audit have been paid or settled.
-12-
(b) LMP is not a party to, or bound by, or otherwise in any way
obligated under, any tax sharing or similar agreement.
(c) LMP has not consented to have the provisions of Section 341(f)(2)
of the Code (or comparable state law provisions) apply to it, and LMP 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. LMP 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
LMP, as appropriate, and to carry on the LMP Business as now conducted (the "LMP
Permits"). To the knowledge of LMP, LMP is in material compliance with all
applicable laws, ordinances and regulations and the terms of the LMP Permits.
Except as set forth on Schedule 4.21 hereto, all of the LMP Permits are fully
-------------
assignable by LMP in connection with the Merger. Schedule 4.21 sets forth a
-------------
true and complete list of all LMP Permits, true and complete copies of which
have previously been provided to Parent.
4.22 Board of Directors/Shareholder Consent. Both the Board of Directors of
LMP and the LMP 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
-------------
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 LMP.
4.24 Environmental Matters.
(a) To the knowledge of LMP, no real property currently or formerly
owned or operated by LMP is contaminated with any Hazardous Substance (as
hereinafter defined);
(b) LMP is not a party to any litigation or administrative proceeding
nor, to the knowledge of LMP, is any litigation or administrative proceeding
threatened against it, that, in either case, asserts or alleges that LMP (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 LMP, 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 LMP containing materials that, if known to be
present in soil or ground water, would require cleanup, removal or other
remedial action under Environmental Law;
-13-
(d) To the knowledge of LMP, LMP 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; and
(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
-------------
of LMP, employee of LMP and no family member (including a spouse, parent,
sibling or lineal descendent of any of the foregoing), has any direct or
indirect material interest in any material customer, supplier or competitor of
LMP, or in any Person from whom or to whom LMP leases any real or personal
property, or in any other Person with whom LMP 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 LMP (collectively, "LMP Accounts Receivable") were acquired by
LMP in the ordinary course of business arising from bona fide transactions. To
the knowledge of LMP, there are no set-offs, counterclaims or disputes asserted
with respect to any LMP Accounts Receivable that would result in claims in
excess of the reserve for bad debts set forth on the LMP Financial Statements or
on Schedule 4.26 hereto and, to the knowledge of LMP and subject to such
-------------
reserve, all LMP Accounts Receivable are collectible in full. LMP has previously
provided Parent with a true and complete aging report prepared as of August 27,
1998 which shows the time elapsed since invoice date for all LMP Accounts
Receivable as of such date.
4.27 Accounts Payable. Except as set forth on Schedule 4.27 hereto, all
-------------
material accounts, notes, contracts and other amounts payable of LMP
(collectively, "LMP Accounts Payable") are not past due by more than 90 days.
LMP has previously provided Parent with a true and complete aging report
prepared as of August 27, 1998 which shows the time elapsed since invoice date
for all LMP Accounts Payable as of such date.
4.28 Insurance. LMP currently maintains, in full force and effect, all
insurance policies that are required to be maintained for the conduct of the LMP
Business or the ownership of LMP's property (both real and personal)
(collectively, the "LMP Insurance Policies"). The LMP Insurance Policies are
listed on Schedule 4.28 hereto, and true and complete copies of all LMP
-------------
Insurance Policies have previously been provided to Parent. LMP (a) is not in
material
-14-
default regarding the provisions of any LMP 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. LMP 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 LMP Debt. As of the date hereof, the LMP Debt is not in excess of
$656,000.
4.31 Investment Purpose; Accredited Investors or Purchaser representative.
(a) Each LMP Principal Shareholder, with respect to the Parent Stock, and each
holder of LMP $25 Options listed on Schedule 4.31 hereto ("4.31 Optionholder"),
-------------
with respect to the options on Parent Stock the he will receive pursuant to
Section 6.6(b) hereof as well as to any Parent Stock that he may be issued upon
exercise of such Parent options (such options and Stock, collectively, "Parent
Securities"), represents that he (i) is acquiring the Parent Stock (in the case
of each 4.31 Optionholder, the Parent Securities) solely for his own account for
investment and not with a view to, or for sale in connection with, any
distribution thereof; and (ii) will not, directly or indirectly, offer,
transfer, sell, pledge, hypothecate or otherwise dispose of any Parent Stock (or
solicit any offers to buy, purchase or otherwise acquire or take a pledge of any
such shares) except in compliance with the Securities Act of 1933, as amended
(the "Securities Act"), and the rules and regulations thereunder, other
applicable laws, rules and regulations, and the Second Amended and Restated
Stockholders' Agreement of Parent, dated December 17, 1997 (the "Stockholders'
Agreement); (b) Each LMP Principal Shareholder, and each 4.31 Optionholder
identified on Schedule 4.31 as an accredited investor, further represents that
-------------
he is an "accredited investor" as such term is defined in Rule 501 of Regulation
D promulgated by the Securities and Exchange Commission under the Securities
Act; and (c) Xxxx Xxxxxxxx, the only 4.31 Optionholder identified on Schedule
--------
4.31 as not an accredited investor, further represents that (i) Corporate
----
Finance Advisors, Inc. is his Purchaser representative (the "Purchaser
representative") as such term is defined in Rule 501 of Regulation D under the
Securities Act; and (ii) the Purchaser representative (A) is not an affiliate,
director, officer or other employee of Parent, or beneficial owner of 10% or
more of any class of the equity securities of, or 10% or more of the equity
interest in, Parent; (B) has such knowledge and experience in financial and
business matters that he is capable of evaluating, alone, or together with Xxxx
Xxxxxxxx, the merits and risks of the prospective investment in Parent
Securities; (C) has been acknowledged by Xxxx Xxxxxxxx in writing, during the
course of the Merger, to be his purchaser representative in connection with
evaluating the merits and risks of the prospective investment in Parent
Securities; and (D) has disclosed to Xxxx Xxxxxxxx in writing a reasonable time
prior to the Closing any material relationship between the Purchaser
representative or his affiliates and Parent or its affiliates that exists, is
mutually understood to be contemplated, or has existed at any time during the
previous two years, and any compensation received or to be received as a result
of such relationship.
-15-
4.32 Restrictions on Transfer. Each LMP Principal Shareholder, and each 4.31
Optionholder, acknowledges that (a) any Parent Stock received by him directly or
indirectly in connection with the Merger has not been registered under the
Securities Act; (b) such Parent Stock may be required to be held indefinitely,
and he must continue to bear the economic risk of the investment in such shares
unless such shares are subsequently registered under the Securities Act or an
exemption from such registration is available; (c) there may not be any public
market for the Parent Stock in the foreseeable future; (d) Rule 144 promulgated
under the Securities Act is not presently available with respect to sales of any
securities of Parent, and such Rule is not anticipated to be available in the
foreseeable future; (e) when and if Parent Stock may be disposed of without
registration in reliance upon Rule 144, such disposition can be made only in
limited amounts and in accordance with the terms and conditions of such Rule;
(f) if the exemption afforded by Rule 144 is not available, public sale without
registration will require the availability of an exemption under the Securities
Act; (g) the Parent Stock is subject to the terms and conditions of the
Stockholders' Agreement; (h) restrictive legends shall be placed on the
certificates representing Parent Stock; and (i) a notation shall be made in the
appropriate records of Parent indicating that Parent Stock is subject to
restrictions on transfer and, if Parent should in the future engage the services
of a stock transfer agent, appropriate stop-transfer instructions will be issued
to such transfer agent with respect to Parent Stock.
4.33 Ability to Bear Risk; Access to Information; Sophistication. (a) Each
LMP Principal Shareholder, and each 4.31 Optionholder, represents and warrants
that (i) his financial situation is such that he can afford to bear the economic
risk of holding Parent Stock acquired by him directly or indirectly in
connection with the Merger for an indefinite period; and (ii) he can afford to
suffer the complete loss of such Parent Stock; (b) Each LMP Principal
Shareholder, and each 4.31 Optionholder identified on Schedule 4.31 hereto as an
--------------------------
accredited investor, further represents that (i) he has been granted the
--------------------
opportunity to ask questions of, and receive answers from, representatives of
Parent concerning the terms and conditions of the Parent Stock (in the case of
each such 4.31 Optionholder, the Parent Securities) and to obtain any additional
information that he deems necessary; (ii) his knowledge and experience in
financial business matters is such that he is capable of evaluating the merits
and risk of ownership of the Parent Stock or Parent Securities, as the case may
be; (iii) he has carefully reviewed the terms of the Stockholders' Agreement and
has evaluated the restrictions and obligations contained therein; and (iv) he
(A) has reviewed the Private Placement Memorandum of Parent dated as of
September 4, 1998 (the "Memorandum"); (B) has carefully examined the Memorandum
and has had an opportunity to ask questions of, and receive answers from,
representatives of Parent, and to obtain additional information concerning
Parent and its Subsidiaries (as hereinafter defined); and (C) does not require
additional information regarding Parent or its Subsidiaries in connection with
the Merger; and (c) Xxxx Xxxxxxxx further represents that, either alone or with
the Purchaser representative, (i) he has been granted the opportunity to ask
questions of, and receive answers from, representatives of Parent concerning the
terms and conditions of the Parent Securities and to obtain any additional
information that he deems necessary; (ii) his knowledge and experience in
financial business matters is such that he is capable of evaluating the merits
and risk of ownership of the Parent Securities; (iii) he has carefully reviewed
the terms of the Stockholders' Agreement and has evaluated the restrictions and
obligations contained therein; and (iv) he (A) has reviewed the Memorandum; (B)
has carefully examined the Memorandum and has had an opportunity to ask
questions of, and receive answers from,
-16-
representatives of Parent, and to obtain additional information concerning
Parent and its Subsidiaries; and (C) does not require additional information
regarding Parent or its Subsidiaries in connection with the Merger.
4.34 Disclosure. No statement of fact by LMP or any LMP Shareholder
contained herein and no written statement of fact furnished by LMP or any LMP
Shareholder to Parent or Sub in connection herewith contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements herein or therein contained not misleading.
4.35 Nature of Liabilities. Any unpaid legal, accounting or other fees of
LMP are solely and directly related to the Merger or to the performance of
services for LMP and not for or on behalf of any shareholder, director or
employee of LMP.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Each of Parent and Sub jointly and severally represents and warrants to LMP
and the LMP Principals, 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, respectively, to a closing
certificate and incumbency certificate, substantially in the form of Exhibit "A-
----------
1" hereto ("Parent's Closing Certificate"), and to Sub's Closing Certificate.
--
5.2 Authority. Each of Parent and Sub has the necessary corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery hereof and the
consummation of the transactions contemplated hereby by each of Parent and Sub
have been duly and validly authorized and approved by their respective board of
directors and by Sub's sole shareholder, and no other corporate or shareholder
proceedings on the part of either Parent or Sub, or their respective board of
directors or shareholders, are necessary to authorize or approve this Agreement
or to consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by each of Parent and Sub, and assuming the due
authorization, execution and delivery by LMP and the LMP Shareholders,
constitutes the valid and binding
-17-
obligation of each of Parent and Sub, enforceable against each of Parent and Sub
in accordance with its terms, subject, in each case, to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general application relating to
or affecting creditors' rights and to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing.
5.3 No Conflicts, Required Filings and Consents. Except as set forth on
Schedule 5.3 hereto, none of the execution and delivery of this Agreement by
------------
Parent or Sub, the consummation by Parent and Sub of the transactions
contemplated hereby, or compliance by Parent and Sub with any of the provisions
hereof, will:
(a) conflict with or violate the Certificate of Incorporation or Bylaws
of Parent or Sub, or the organizational documents of any other Subsidiaries;
(b) result in a violation of any statute, ordinance, rule, regulation,
order, judgment or decree applicable to Parent or its Subsidiaries, or by which
Parent, any of its Subsidiaries, or their respective properties or assets may be
bound or affected;
(c) result in a violation or breach of, or constitute a default (or an
event that, with notice or lapse of time or both, would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any note, bond, mortgage, indenture, or any material contract,
agreement, arrangement, lease, license, permit, judgment, decree, franchise or
other instrument or obligation to which Parent or any of its Subsidiaries is a
party or by which Parent, any of its Subsidiaries or their respective properties
may be bound or affected;
(d) result in the creation of any Lien on any of the property or assets
of Parent or any of its Subsidiaries; or
(e) require any Consent of (i) any Governmental Entity (except for (x)
compliance with any applicable requirements of any applicable securities laws,
and (y) the filing of the Certificate of Merger pursuant to the DGCL and the
BCL); or (ii) any other Person.
5.4 Litigation. Except as set forth on Schedule 5.4 hereto, there is no
------------
suit, action, claim, investigation or proceeding pending or, to the knowledge of
Parent, threatened against or affecting Parent or its Subsidiaries, nor is there
any judgment, decree, injunction or order of any applicable Governmental Entity
or arbitrator outstanding against Parent or its Subsidiaries that, either
individually or in the aggregate, would have a material adverse effect on the
assets, business or financial condition of Parent and its Subsidiaries, taken as
a whole.
5.5 Brokers. Except as disclosed on Schedule 5.5 hereto, no broker or finder
------------
is entitled to any broker's or finder's fee in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of Parent or
Sub.
-18-
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 13,621,814, shares are
validly issued and outstanding (without taking into account any shares of Parent
Stock to be issued pursuant hereto), fully paid and nonassessable; (ii) 750,000
shares of blank check preferred stock, (A) 250,000 of which have been designated
as Class A Convertible Preferred Stock, of which 176,291 shares are validly
issued and outstanding, fully paid and nonassessable, (B) 200,000 of which have
been designated as Class B Convertible Preferred Stock, of which 98,767 shares
are validly issued and outstanding, fully paid and nonassessable, (C) 15,000 of
which have been designated as Class C Convertible Preferred Stock, of which
9,232 shares are validly issued and outstanding, fully paid and nonassessable,
and (D) 50,000 of which have been designated as Class D Nonvoting Preferred
Stock, of which 35,700 shares are validly issued and outstanding, fully paid and
nonassessable. Except as set forth on Schedule 5.6 hereto, there are no options,
------------
warrants, calls, agreements, commitments or other rights presently outstanding
that would obligate Parent to issue, deliver or sell shares of its capital
stock, or to grant, extend or enter into any such option, warrant, call,
agreement, commitment or other right. 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 LMP Principal 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 LMP 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 three month period ended June 30, 1998
(all of the foregoing, collectively, "Parent Financial Statements"). The Parent
Financial Statements present fairly in all material respects the consolidated
financial position, results of operations, shareholders' equity and cash flow of
Parent at the respective dates
-19-
or for the respective periods to which they apply. Except as disclosed therein,
such statements and related notes have been prepared in accordance with GAAP
consistently applied throughout the periods involved (except, in the case of the
unaudited financial statements, for the exclusion of footnotes and normal year-
end adjustments).
5.9 Undisclosed Liabilities. Except as set forth on Schedule 5.9 hereto,
------------
neither Parent nor any of its Subsidiaries has any debt, liability or obligation
of any kind, whether accrued, absolute or otherwise, including any liability or
obligation on account of taxes or any governmental charges or penalty, interest
or fines, except (a) liabilities incurred in the ordinary course of business
after December 31, 1997 that would not, whether individually or in the
aggregate, have a material adverse impact on the business or financial condition
of Parent and its Subsidiaries, taken as a whole; (b) liabilities reflected on
the Parent Financial Statements; and (c) liabilities incurred as a result of the
transactions contemplated hereby.
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
-------------
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
-20-
the ordinary course of business consistent with past practice; (d) any
declaration, setting aside or payment of any dividend or distribution (whether
in cash, stock or property) with respect to Parent's capital stock; (e) any
material change in Parent's accounting principles, practices or methods; (f) any
split, combination or reclassification of any of Parent's capital stock, or the
issuance or authorization of any issuance of any other securities in respect of,
in lieu of or in substitution for, shares of Parent's capital stock; or (g) any
agreement (whether or not in writing), arrangement or understanding to do any of
the foregoing.
5.14 Taxes. Parent and its Subsidiaries have duly and timely filed all
federal, state and local income, franchise, excise, real and personal property
and other tax returns and reports, including extensions, required to have been
filed by Parent and its Subsidiaries on or prior to the Closing Date. Parent
and its Subsidiaries have duly and timely paid all taxes and other governmental
charges, and all interest and penalties with respect thereto, required to be
paid by Parent and its Subsidiaries (whether by way of withholding or otherwise)
to any federal, state, local or other taxing authority (except to the extent the
same are being contested in good faith, and adequate reserves therefor have been
provided in the applicable Parent Financial Statement). As of the Closing Date,
all deficiencies proposed as a result of any audits have been paid or settled.
5.15 Disclosure. No statement of fact by Parent or Sub contained herein and
no written statement of fact furnished or to be furnished by Parent or Sub to
LMP 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.
5.16 Section 6.6(b) Options. With respect to the options to acquire Parent
Stock to be granted to 4.31 Optionholders pursuant to Section 6.6(b) hereof
("Section 6.6(b) Options"), if at any time prior to the expiration of the
Section 6.6(b) Options Parent files under the Securities Act a registration
statement on Form S-8 as to Parent Stock, then Parent shall, subject to any
underwriter's restrictions and applicable securities laws, and to such
registration statement becoming effective, include in such registration the
Parent Stock underlying the Section 6.6(b) Options, and shall promptly give
notice of such registration to each 4.31 Optionholder.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Conduct of Business by LMP 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, LMP 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
-21-
business dealings with LMP 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, LMP
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 LMP 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 LMP or any security
convertible into, or any right, warrant or option to acquire any such share or
voting security;
(c) amend its Articles of Organization, 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 LMP;
(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 LMP,
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,
LMP 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 LMP, 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 LMP.
-22-
6.3 Filings; Tax Elections. LMP shall promptly provide Parent with copies of
all filings made by LMP with any Governmental Entity in connection herewith and
the transactions contemplated hereby. LMP shall, before settling or
compromising any material income tax liability of LMP, 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, (a) public disclosure
of the transactions contemplated hereby shall be made only upon or after the
consummation of the Merger, and any such disclosure shall be coordinated by
Parent, and none of the LMP Principals shall make any such disclosure without
the prior written consent of Parent; and (b) the timing and text of any
disclosure, to the employees of LMP or Sub, of the transactions contemplated
hereby will be mutually agreed by LMP, Parent and the LMP Principals.
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) LMP hereby covenants and agrees that at the Effective Time, all of
the LMP 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 cash, or
options or warrants to acquire Parent Stock, described in Section 6.6(b) below,
all rights and obligations thereunder shall have been terminated.
(b) Parent hereby covenants and agrees that, at the Effective Time, each
of the holders of LMP Stock Rights shall receive cash, or fully vested options
or warrants 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(b) 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"), and shall be in the form of Exhibit "C-1" hereto, and all of
--------------------
which warrants shall be in the form of Exhibit "H" hereto ("Warrants"). Each
-----------
holder of LMP $25 Options other than the 4.31 Optionholders will be entitled to
the amount of cash set forth opposite such Person's name on Schedule 6.6(b).
---------------
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
-23-
the requesting party may reasonably request in order to effectuate fully the
purposes, terms and conditions hereof.
6.8 Confidentiality and Non-Competition Agreements. Each of the LMP
Majority Principals shall enter into an employee confidentiality and non-
competition agreement with Parent, substantially in the form of Exhibit "I"
-----------
hereto ("Non-compete Agreement").
6.9 Purchaser Representative. With respect to Xxxx Xxxxxxxx, (a) the
Purchaser representative shall furnish to Parent, to Parent's satisfaction, a
completed Purchaser representative Questionnaire, in the form of Exhibit "J"
-----------
hereto; and (b) Xxxx Xxxxxxxx shall furnish to Parent a signed Purchaser
Acknowledgement in connection therewith.
6.10 Amendment of Employment Agreements. Any LMP employment agreement,
written or oral, under which any LMP employee is entitled to a commission or
bonus based on LMP's overall revenues shall be amended to delete such
entitlement.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Obligation of LMP and the LMP Principals to Effect the
Merger. The obligations of LMP and the LMP Principals to effect the Merger
shall be subject to the fulfillment at or prior to the Effective Time of the
following conditions:
(a) Parent and Sub shall have performed in all material respects their
respective agreements contained herein required to be performed at or prior to
the Effective Time, and the representations and warranties of Parent and Sub
contained herein shall be true when made and (except for representations and
warranties made as of a specified date, which need only be true as of such date)
at and as of the Effective Time as if made at and as of such time, except as
contemplated hereby;
(b) (i) the appropriate officers of Parent shall have executed and
delivered to LMP at the Closing, Parent's Closing Certificate, and (ii) the
appropriate officers of Sub shall have executed and delivered to LMP at the
Closing, Sub's Closing Certificate;
(c) Parent shall have obtained all of the Consents, if any, listed on
Schedule 7.1(c) hereto;
---------------
(d) LMP 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;
-24-
(e) there shall have been delivered to the LMP Principal Shareholders at
the Closing, duly executed by Parent, an Agreement to be Bound to the
Registration Rights Agreement of Parent, dated as of the Closing Date (the
"Agreement to be Bound to the Registration Rights Agreement"), in the form of
Exhibit "B" hereto;
-----------
(f) Parent shall have executed and delivered at the Closing an Option
Agreement for each of the 4.31 Optionholders, and a Warrant for each of the
Persons listed on Schedule 6.6(b) hereto as receiving warrants to purchase
---------------
Parent Stock;
(g) LMP shall have received, at the Closing, a duly executed opinion of
counsel to Parent and Sub, substantially in the form of Exhibit "D" hereto;
-----------
(h) LMP shall have received from Parent and Sub such other documents as
LMP's counsel shall have reasonably requested, in form and substance reasonably
satisfactory to LMP's counsel; and
(i) Sub shall have executed and delivered at the Closing a Non-compete
Agreement for each of the LMP Majority Principals.
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) LMP and the LMP Principals 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 LMP
and the LMP Principals contained herein shall be true when made and (except for
representations and warranties made as of a specified date, which need only be
true as of such date) at and as of the Effective Time as if made at and as of
such time, except as contemplated hereby;
(b) the appropriate officers of LMP shall have executed and delivered to
Parent at the Closing, LMP's Closing Certificate;
(c) LMP and the LMP Principals shall have obtained or caused to be
obtained all of the Consents, if any, listed on Schedule 7.2(c) hereto;
---------------
(d) there shall have been delivered to Parent at the Closing, duly
executed by each of the LMP Principal Shareholders, (i) an Agreement to be Bound
to the Stockholders' Agreement, in the form of Exhibit "F" hereto; and (ii) an
-----------
Agreement to be Bound to the Registration Rights Agreement;
(e) Parent shall have received a corporate certificate of good standing
for LMP, and a copy of the Articles of Organization of LMP, both as certified by
the Secretary of the Commonwealth of Massachusetts;
-25-
(f) as of the date three business days prior to the Closing Date the LMP
Debt shall be no greater than $656,000;
(g) LMP shall have furnished evidence to Parent's satisfaction of
performance under Sections 6.6(a), 6.9 and 6.10 hereof;
(h) Parent shall have received, at the Closing, a duly executed opinion
of counsel to LMP and the LMP Principals, substantially in the form of Exhibit
-------
"G" hereto;
---
(i) Parent shall have received from LMP or the LMP Principals, 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;
(j) Parent shall have received, at the Closing, (i) an Option Agreement
executed by each recipient pursuant to Sections 6.6(b) hereof, and (ii) a Non-
compete Agreement executed by each LMP Majority Principal; and
(k) Parent shall have received evidence satisfactory to it that at the
Closing the assets and properties used in the LMP Business are free and clear of
all Liens other than Permitted Liens (as hereinafter defined), and that the LMP
Principal Shareholders, and all 4.31 Optionholders except for Xxxx Xxxxxxxx, are
accredited investors in accordance with Section 4.31(a) hereof.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by Parent.
(a) Parent shall indemnify and hold the LMP Principals and LMP's
directors, officers and employees (collectively, the "LMP Indemnified Parties")
harmless from and against, and agree promptly to defend each of the LMP
Indemnified Parties from and reimburse each of the LMP 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 "LMP Loss") that any of the LMP 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;
-26-
(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 LMP Losses for which Parent 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 $5,500,000 in
the aggregate, and (iii) unless the LMP Principals 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 18 months of the Effective Time.
Notwithstanding any implication to the contrary contained herein, the parties
acknowledge and agree that a decrease in the value of Parent Stock would not, by
itself, constitute a LMP 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 LMP Shareholders.
(a) The LMP Majority Principals, jointly and severally, and in addition
the LMP Other Principals, severally but not jointly, shall indemnify and hold
Parent, Sub, Surviving Corporation and their respective shareholders, directors,
officers and employees (collectively, the "Parent Indemnified Parties") harmless
from and against, and agree to defend promptly each of the Parent Indemnified
Parties from and reimburse each of the Parent Indemnified Parties for, any and
all losses, damages, costs, expenses, liabilities, obligations and claims of any
kind (including reasonable attorneys' fees and other legal costs and expenses)
(collectively, a "Parent Loss") that any of the Parent Indemnified Parties may
at any time suffer or incur, or become subject to, as a result of or in
connection with:
(i) any breach or inaccuracy of any of the representations and
warranties made by LMP or the LMP Principals in or pursuant hereto, or in any
instrument certificate or affidavit delivered by any of the same at the Closing
in accordance with the provisions hereof;
(ii) any failure by LMP or any of the LMP Principals 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 LMP pursuant hereto; and
(iii) any suit, action or other proceeding arising out of, or in any
way related to, any of the matters referred to in this Section 8.2.
-27-
(b) Notwithstanding the above, none of the LMP Shareholders shall have
any liability under Section 8.2(a)(i) above (i) unless the aggregate of all
Parent Losses for which the LMP 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 $5,500,000 in
the aggregate, and (iii) unless Parent has asserted a claim with respect to the
matters set forth in Sections 8.2(a)(i), or 8.2(a)(iii) to the extent applicable
to Section 8.2(a)(i) within 18 months of the Effective Time, except with respect
to the matters arising under (A) Sections 4.18, 4.19 or 4.20 hereof, in which
event Parent must have asserted a claim within the applicable statute of
limitations; or (B) Section 4.24 hereof, in which event Parent must have
asserted a claim within six years of the Effective Time. Notwithstanding any
implication to the contrary contained herein, the parties acknowledge and agree
that a decrease in the value of Parent Stock would not, by itself, constitute a
Parent Loss, unless and to the extent a decrease in the value of Parent Stock
has been demonstrated to be as a result of any event described in Sections
8.2(a)(i), (ii) or (iii) above.
(c) Notwithstanding the above, except for claims for indemnification
based on (i) fraud, (ii) intentional misrepresentation or (iii) any breach of
any representation made in Section 4.3 hereof or otherwise with respect to title
to any LMP Stock or any LMP Stock Rights, the liability of the LMP Principals
under Section 8.2(a) hereof will not exceed their respective portions of the
merger consideration receivable hereunder, as determined, in the case of the LMP
Principal Shareholders or the 4.31 Optionholders, by multiplying by $10 the sum
of (A) the number of shares of Parent Stock issued to them pursuant to Section
3.1(c) hereof, plus (B) the number of Parent options granted to them pursuant to
Section 6.6(b) hereof in exchange for their LMP $25 Options; and, in the case of
the LMP Other Principals exluding Xxxxxxx Xxxxxxxxx and Xxxxx Xxxxxxx, by the
amount of cash receivable by them pursuant to Sections 3.1(b) or 6.6(b) hereof.
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 12% per annum, or, if lower, at the
highest rate of interest permitted by applicable law at the time of such
payment.
(b) If the Indemnified Party shall notify the Indemnifying Party of any
Claim pursuant to Section 8.3(a) hereof, and if such Claim relates to a Claim
asserted by a third party against the Indemnified Party that the Indemnifying
Party acknowledges (subject to a reasonable reservation of rights) is a Claim
for which it must indemnify or hold harmless the Indemnified
-28-
Party under Section 8.1 or 8.2 hereof, as the case may be, the Indemnifying
Party shall have the right, at its sole cost and expense, to employ counsel of
its own choosing to defend any such Claim asserted against the Indemnified
Party. Notwithstanding anything to the contrary in the preceding sentence, if
the Indemnified Party (i) reasonably believes that its interests with respect to
a Claim (or any material portion thereof) are in conflict with the interests of
the Indemnifying Party with respect to such Claim (or portion thereof), and (ii)
promptly notifies the Indemnifying Party, in writing, of the nature of such
conflict, then the Indemnified Party shall be entitled to choose, at the sole
cost and expense of the Indemnifying Party, independent counsel to defend such
Claim (or the conflicting portion thereof). The Indemnified Party shall have the
right to participate in the defense of any Claim at its own expense (except to
the extent provided in the preceding sentence), but the Indemnifying Party shall
retain control over such litigation (except as provided in the preceding
sentence). The Indemnifying Party shall notify the Indemnified Party in writing,
as promptly as possible (but in any case before the due date for the answer or
response to a Claim) after receipt of the notice of Claim given by the
Indemnified Party to the Indemnifying Party under Section 8.3(a) hereof, of its
election to defend in good faith any such third party Claim. For so long as the
Indemnifying Party is defending in good faith any such Claim asserted by a third
party against the Indemnified Party, the Indemnified Party shall not settle or
compromise such Claim without the prior written consent of the Indemnifying
Party. The Indemnified Party shall cooperate with the Indemnifying Party in
connection with any such defense and shall make available to the Indemnifying
Party or its agents all records and other materials in the Indemnified Party's
possession reasonably required by it for its use in contesting any third party
Claim; provided, however, that the Indemnifying Party shall have agreed, in
writing, to keep such records and other materials confidential except (i) to the
extent required for defense of the relevant Claim, or (ii) as required by law or
court order. Whether or not the Indemnifying Party elects to defend any such
Claim, the Indemnified Party shall have no obligations to do so. Within 30 days
after a final determination (including a settlement) has been reached with
respect to any Claim contested pursuant to this Section 8.3(b), the Indemnifying
Party shall satisfy its obligations hereunder with respect thereto. Any amount
paid thereafter shall include interest thereon for the period commencing at the
end of such 30-day period and ending on the actual date of payment, at a rate of
15% per annum, or, if lower, at the highest rate of interest permitted by
applicable law at the time of such payment.
8.4 Payment. Any Indemnifying Party may, at such Indemnifying Party's
option, pay all or part of any amount due under this Article VIII by delivery of
shares of Parent Stock having a value equal to the amount due (to the extent
that such Indemnifying Party owns sufficient shares of Parent Stock). For the
purpose of this provision, the value of Parent Stock shall be deemed to be $10
per share.
8.5 Further Agreements Regarding Indemnification. Notwithstanding anything
to the contrary in this Article VIII, (a) the entitlement of any Indemnified
Party will be determined on an after-tax basis after giving effect to insurance
recoveries, if any; and (b) if the Merger is not consummated, then (i) only LMP,
in lieu of the LMP Principals, shall be liable hereunder, and (ii) the
indemnification provisions of Sections 8.1 through 8.4 hereof will not apply,
and any
-29-
liability hereunder shall arise, instead, from the representations and
warranties made pursuant hereto, or in any instrument, certificate or affidavit
delivered in accordance herewith.
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 LMP;
(b) by LMP, upon a material breach hereof on the part of Parent or Sub
which has not been cured and which would cause any condition set forth in
Section 7.1 hereof to be incapable of being satisfied by September 15, 1998;
(c) by Parent, upon a material breach hereof on the part of LMP or any
of the LMP Principals which has not been cured and which would cause any
condition set forth in Section 7.2 hereof to be incapable of being satisfied by
September 15, 1998;
(d) by Parent or LMP 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 LMP if the Merger shall not have been
consummated on or before September 15, 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 LMP Principals shall pay
all fees and expenses (including agents, counsel and other advisors) of LMP and
themselves that are not solely and directly related to the Merger or to the
provision of services to LMP and not to or on behalf of any shareholder,
director or employee of LMP.
(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.
-30-
(c) If the Merger is not consummated because of a willful and material
breach hereof by any party, the nonbreaching party or parties shall be entitled
to pursue all legal and equitable remedies against the breaching party for such
breach including specific performance and all fees and expenses incurred by the
nonbreaching party or parties in connection with enforcing its or their rights
hereunder with respect to such breach shall be paid by the breaching party.
9.3 Amendment. This Merger Agreement may be amended by Parent, Sub, LMP and,
on behalf of all of the LMP Principals, the LMP Principal Shareholders, at any
time before or after approval hereof by the LMP 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 LMP Shareholders, or (iii) under
applicable law would require approval of the LMP Shareholders, in any such case
referred to in clauses (i), (ii) and (iii), without the further approval of the
LMP 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 LMP Stock.
9.4 Waiver. At any time prior to the Effective Time, the parties hereto
may, to the extent permitted by applicable law, (i) extend the time for the
performance of any of the obligations or other acts of any other party hereto,
(ii) waive any inaccuracies in the representations and warranties by any other
party contained herein or in any documents delivered by any other party pursuant
hereto and (iii) waive compliance with any of the agreements of any other party
or with any conditions to its own obligations contained herein. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid only
if set forth in an instrument in writing signed on behalf of such party.
ARTICLE X
GENERAL PROVISIONS
10.1 Survival; Recourse. None of the agreements contained herein shall
survive the Merger, except that (i) the agreements contained in Article III
hereof, the covenants contained in Article VI hereof, the obligations to
indemnify contained in Article VIII hereof and the agreements of the Surviving
Corporation referred to in Sections 10.9 and 10.10 hereof, shall survive the
Merger indefinitely (except to the extent a shorter period of time is explicitly
specified therein) and (ii) the representations and warranties made in Articles
IV and V hereof shall survive the Merger, and shall survive any independent
investigation by the parties, and any dissolution, merger or consolidation of
LMP or Parent, and shall bind the legal representatives, assigns and successors
of LMP, the LMP Principals and Parent, for a period of 18 months after the
Closing Date (other than the representations and warranties contained in (A)
Sections 4.18, 4.19 and 4.20 hereof, which shall survive for the applicable
statute of limitations, or (B) Section 4.24 hereof, which shall survive for six
years after the Effective Time).
-31-
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 LMP: Xxxxx Xxxxxx Productions, Inc.
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xx. Xxxx Xxxxx, President and CEO
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to: Brown, Rudnick, Freed & Gesmer
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to the LMP To the address listed under the signature
Shareholders: line of the applicable LMP Shareholder
If to Parent or Sub: IXL Holdings, Inc.
0000 Xxxxx Xx., 0xx Xxxxx
Xxxxxxx, XX 00000
Attention: Xx. Xxxxx X. Xxxxxx, Exec. V.P.
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
-32-
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
LMP dated as of April 14, 1998. There are no other representations or
warranties, whether written or oral, between the parties in connection the
subject matter hereof, except as expressly set forth herein.
10.4 Assignments; Parties in Interest. Neither this Agreement nor any of the
rights, interests or obligations hereunder may be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that the rights, interests, and obligations
of Sub hereunder may be assigned to any direct wholly owned Delaware subsidiary
of Parent without such prior consent. Subject to the preceding sentence, this
Agreement shall be binding upon and inure solely to the benefit of each party
hereto, and nothing herein, express or implied, is intended to or shall confer
upon any Person not a party hereto any right, benefit or remedy of any nature
whatsoever under or by reason hereof, except as otherwise provided herein.
10.5 Governing Law. This Agreement, except to the extent that the BCL or the
DGCL is mandatorily applicable to the Merger, or to the rights of the LMP
Principals 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.
-33-
10.9 Post-Closing Access. For a period of six years after the Closing Date,
the LMP Principals and their agents and representatives shall have reasonable
access to the books and records of the LMP Business, which shall be retained, as
reasonable, by Parent during such period. Thereafter, the LMP Principals may
have such access to the extent (a) reasonably required to defend a claim for
indemnification under Sections 4.18, 4.19 or 4.20 hereof; and (b) that Parent
has retained such records.
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
LMP Principals, the Surviving Corporation shall promptly notify the affected LMP
Principal 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 LMP Real
Property or interfering with the ordinary conduct of any of the LMP Business;
and (e) those Liens listed on Schedule 10.11 hereto;
--------------
(b) (i) any representation or warranty stated to be made "to the
knowledge" of a party shall refer to such party's knowledge following reasonable
inquiry as to the matter in question; and (ii) any representation or warranty
stated to be made "to the knowledge of LMP" shall refer to the knowledge,
subject to clause (i) above, of any of the LMP Principals; 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 LMP or University Netcasting, Inc.
- SIGNATURES ON THE FOLLOWING PAGE -
-34-
IN WITNESS WHEREOF, Parent, Sub and LMP have caused this Agreement to be
signed and delivered by their respective duly authorized officers, and each LMP
Principal has signed and delivered this Agreement, all as of the date first
written above.
"LMP"
Xxxxx Xxxxxx Productions, Inc., a Massachusetts
corporation
By: /s/ Xxxx Xxxxx
----------------------------------------
Title: Chief Executive Officer
By:
----------------------------------------
Title:
-------------------------------------
"Parent"
IXL Holdings, Inc., a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx
----------------------------------------
Title:
-------------------------------------
"Sub"
iXL-Boston, Inc., a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx
----------------------------------------
Title:
-------------------------------------
- SIGNATURES CONTINUE ON THE FOLLOWING PAGE -
-35-
"LMP Majority Principals"
/s/ Xxxx Xxxxx
-------------------------------------------
Xxxx Xxxxx
Address: 00 Xxxxx Xxxx
Xxxx Xxxxxxx, XX 00000
/s/ Xxxx Xxxxxxx
-------------------------------------------
Xxxx Xxxxxxx
Address: 000 Xxx Xxxxxxx Xxxx
Xxxxxxx, XX 00000
/s/ Xxxx Xxxxxxxx
-------------------------------------------
Xxxx Xxxxxxxx
Address: 0000 Xxxx Xxxxxx
Xxxx Xxxxxxx, XX 00000
"LMP Other Principals"
/s/ Xxxxxxx Xxxxxxxxx
-------------------------------------------
Xxxxxxx Xxxxxxxxx
Address: 0000 Xxxx Xxxxxx
Xxxx Xxxxxxx, XX 00000
/s/ Xxxxxx Xxxxxx
-------------------------------------------
Xxxxxx Xxxxxx
Address: 000 Xxxxxx Xxxx
Xxxxxx, XX 00000
- SIGNATURES CONTINUE ON THE FOLLOWING PAGE -
-36-
/s/ Xxxxxx Xxxxxxxx
-------------------------------------------
Xxxxxx Xxxxxxxx
Address: 00 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
/s/ Xxxxx Xxxxxx
-------------------------------------------
Xxxxx Xxxxxx
Address: 000 Xxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
/s/ Xxxxxxxx Xxxxxxx
-------------------------------------------
Xxxxxxxx Xxxxxxx
Address: 00 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
/s/ Xxxxxx Xxxxxxx
-------------------------------------------
Xxxxxx Xxxxxxx
Address: 0 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
/s/ Xxxx Xxxx
-------------------------------------------
Xxxx Xxxx
Address: 00 Xxxxxxxxx Xxxx
Xxxx Xxxxxxxx, XX 00000
/s/ Xxxxx Xxxxxxx
-------------------------------------------
Xxxxx Xxxxxxx
Address: 000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
-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-1
Opinion of Counsel to Parent and Sub.............................. Exhibit D
LMP's Closing Certificate......................................... Exhibit E
Agreement to be Bound to Stockholders' Agreement.................. Exhibit F
Opinion of Counsel to LMP......................................... Exhibit G
Warrants.......................................................... Exhibit H
Non-Compete Agreement............................................. Exhibit I
Purchaser Representative Questionnaire and Acknowledgement........ Exhibit J
SCHEDULE 4.3(a)
---------------
CAPITALIZATION OF LMP
SCHEDULE 4.3(B)
---------------
LIENS ON LMP STOCK
SCHEDULE 4.5
------------
CONFLICTS, REQUIRED FILINGS AND CONSENTS OF LMP
SCHEDULE 4.6
------------
EXCEPTIONS TO FINANCIAL STATEMENTS BEING PREPARED
ACCORDING TO GAAP
SCHEDULE 4.7
------------
EXCEPTIONS TO ABSENCE OF CHANGES OF LMP
SCHEDULE 4.8
------------
UNDISCLOSED LIABILITIES OF LMP
SCHEDULE 4.9
------------
EXCEPTION TO TITLE TO PROPERTIES OF LMP
SCHEDULE 4.10
-------------
BAD EQUIPMENT OF LMP
SCHEDULE 4.12
-------------
REAL PROPERTY OF LMP
SCHEDULE 4.13
-------------
LEASES OF LMP
SCHEDULE 4.14
-------------
CONTRACTS OF LMP
SCHEDULE 4.15
-------------
DIRECTORS AND OFFICERS OF LMP
SCHEDULE 4.16
-------------
PAYROLL INFORMATION OF LMP
SCHEDULE 4.17
-------------
LITIGATION
SCHEDULE 4.18
-------------
EMPLOYEE BENEFIT PLANS/LABOR RELATIONS OF LMP
SCHEDULE 4.19
-------------
ERISA ISSUES OF LMP
SCHEDULE 4.21
-------------
LMP PERMITS
SCHEDULE 4.23
-------------
LMP BROKERS
SCHEDULE 4.25
-------------
INTEREST IN CUSTOMERS, SUPPLIERS, COMPETITORS
SCHEDULE 4.26
-------------
EXCEPTIONS TO LMP ACCOUNTS RECEIVABLE BEING FULLY COLLECTIBLE
SCHEDULE 4.27
-------------
LIST OF LMP ACCOUNTS PAYABLE BEING PAST DUE BY MORE THAN 90 DAYS
SCHEDULE 4.28
-------------
INSURANCE OF LMP
SCHEDULE 4.31
-------------
ACCREDITED INVESTORS
SCHEDULE 5.3
------------
CONFLICTS, REQUIRED FILING AND CONSENTS OF PARENT AND SUB
SCHEDULE 5.4
------------
PARENT LITIGATION
SCHEDULE 5.5
------------
PARENT AND SUB BROKERS
SCHEDULE 5.6
------------
OUTSTANDING OBLIGATIONS TO ISSUE OPTIONS, WARRANTS
OR OTHER PARENT STOCK RIGHTS
SCHEDULE 5.7
------------
SUBSIDIARIES OF PARENT
SCHEDULE 5.9
------------
PARENT UNDISCLOSED LIABILITIES
SCHEDULE 5.13
-------------
EXCEPTIONS TO ABSENCE OF CHANGES OF PARENT
SCHEDULE 6.6(B)
---------------
PARENT OPTIONS TO HOLDERS OF LMP STOCK RIGHTS
SCHEDULE 7.1(C)
---------------
PARENT CONSENTS
SCHEDULE 7.2(C)
---------------
LMP AND LMP SHAREHOLDERS CONSENTS
SCHEDULE 10.11
--------------
PERMITTED LIENS OF LMP
