EXHIBIT 2.10
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
IXL HOLDINGS, INC.,
IXL MERGER CORP. IV, INC.
SWAN INTERACTIVE MEDIA, INC.,
XXXX XXXXXXX,
XXXX XXXXXX,
N. XXXXX XXXXXX
ESTATE OF XXXXXX X. XXXXXXX
AND
XXXXX XXXXX
DATED AS OF JULY 28, 1997
AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER is entered into this 28th day of July,
1997, by and between SWAN INTERACTIVE MEDIA, INC., a Georgia corporation
("Swan"), IXL HOLDINGS, INC., a Delaware corporation ("Parent"), IXL MERGER
CORP. IV, INC., a Delaware corporation, or its successors or assigns ("Sub"),
and the shareholders of Swan as listed on the signature page hereto (the "Swan
Shareholders").
R E C I T A L S:
- - - - - - - -
X. Xxxx is engaged in the business of multimedia production and designing
and maintaining web pages for customers (the "Swan Business").
X. Xxxx 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 Swan Shareholders collectively own 100% of the issued and
outstanding capital stock of Swan (the "Swan Stock").
D. The respective Boards of Directors and stockholders of Parent, Sub and
Swan have approved the Merger, upon the terms and subject to the conditions set
forth herein.
E. The parties hereto intend for the Merger to qualify, for federal
income tax purposes, as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the mutual covenants, benefits,
conditions and agreements set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, it
is hereby agreed as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions hereof, at
the Effective Time (as defined in Section 1.3 hereof), (a) Swan shall be merged
with and into Sub, (b) the separate existence of Swan 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 Swan Interactive Media, 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. 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 at the offices of Xxxxxx & Xxxxxx, A Professional Corporation, One
Buckhead Plaza, 0000 Xxxxxxxxx Xxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000.
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 the State of Delaware
in accordance with the provisions of the Delaware General Corporation Law, as
amended (the "DGCL"); and (b) a certificate of merger (the "Georgia Certificate
of Merger") to be filed with the office of the Secretary of State of the State
of Georgia in accordance with the provisions of the Georgia Business
Corporations Code, as amended (the "GBCC"). When used in this Agreement, the
term "Effective Time" shall mean the time when the Delaware Certificate of
Merger and the Georgia Certificate of Merger (collectively herein referred to as
the "Certificate of Merger") have been accepted for filing by the Secretary of
State of the State of Delaware and Georgia, respectively, or such time as
otherwise specified in the Certificate of Merger.
1.4 EFFECT OF THE MERGER. The Merger shall, from and after the Effective
Time, have all the effects provided by the DGCL and GBCC. 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 Amended and Restated Certificate of
Incorporation of Sub, a form of which is attached hereto as Schedule 2.1, shall
------------
be the Certificate of Incorporation of the Surviving Corporation after the
Effective Time, until thereafter changed or amended as provided therein or by
applicable law.
2.2 BYLAWS. The Bylaws of Sub as in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation, until
thereafter changed or amended as provided therein or by applicable law.
2.3 BOARD OF DIRECTORS; OFFICERS. The Board of Directors and officers of
Sub immediately prior to the Effective Time shall be the Board of Directors and
officers, respectively, of the Surviving Corporation, until the earlier of their
respective resignations or the time that their respective successors are duly
elected or appointed and qualified.
2
ARTICLE III
CONVERSION OF SHARES
3.1 MERGER CONSIDERATION. As of the Effective Time, by virtue of the
Merger and without any action on the part of any stockholder of Swan or Sub:
(a) All shares of Swan Stock owned by Swan shall 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 Swan Stock shall be
converted into, and become exchangeable for, (i) 2.696104044 shares of validly
issued, fully paid and nonassessable Class B Common Stock of Parent, $.01 par
value (the "Parent Stock"); and (ii) $290.63489 in cash.
(c) Each issued and outstanding share of common stock of Sub shall
be converted into and become one fully paid and nonassessable share of common
stock of the Surviving Corporation.
3.2 NO FURTHER RIGHTS. From and after the Effective Time, holders of
certificates theretofore evidencing Swan Stock shall cease to have any rights as
stockholders of Swan, except as provided herein or by law.
3.3 CLOSING OF THE SWAN'S TRANSFER BOOKS. At the Effective Time, the
stock transfer books of Swan shall be closed and no transfer of Swan Stock shall
be made thereafter. If after the Effective Time, certificates for Swan Stock
are presented to Parent or the Surviving Corporation, they shall be canceled and
exchanged for an amount of Parent Stock as set forth in Section 3.1 hereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SWAN
Swan and the Swan Shareholders, jointly and severally, represent and
warrant to Parent and Sub, which representations and warranties shall survive
the Closing in accordance with Section 9.1 of this Agreement, as follows (except
that the Minority Shareholders (as defined in Section 9.12 hereof) hereby make
only those representations and warranties that specifically pertain to the
them):
4.1 ORGANIZATION AND QUALIFICATION. Swan is a corporation duly organized,
validly existing and in good standing under the laws of the State of Georgia.
Swan has the requisite corporate power and authority to carry on the Swan
Business as it is now being conducted and is duly qualified or licensed to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned or held under lease or the nature of its activities makes
such qualification necessary. Complete and correct copies of the Articles of
Incorporation and Bylaws
3
of Swan as in effect on the date hereof are attached as Schedule 4.1 hereto. The
------------
minute book of Swan, a true and complete copy of which has been delivered to
Parent, (a) accurately reflects all action taken by the directors and
shareholders of Swan at meetings of Swan's Board of Directors or shareholders,
as the case may be at which minutes were taken; and (b) contains true and
complete copies of, or originals of, the respective minutes of all meetings or
consent actions of the directors or shareholders at which minutes were taken.
4.2 AUTHORITY. Swan has the necessary corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by Swan have been duly and
validly authorized and approved by Swan's Board of Directors and the Swan
Shareholders, and no other corporate or shareholder proceedings on the part of
Swan, its Board of Directors or the Swan Shareholders is necessary to authorize
or approve this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Swan and each Swan
Shareholder, and assuming the due authorization, execution and delivery by
Parent and Sub, constitutes the valid and binding obligation of Swan and each
Swan Shareholder, enforceable against Swan and each Swan Shareholder in
accordance with its terms.
4.3 CAPITALIZATION.
(a) The authorized capital stock of Swan consists of 10,000 shares of
common stock, no par value, of which 1,052.63 shares are validly issued and
outstanding, fully paid and nonassessable. All outstanding capital stock of
Swan was issued in accordance with applicable federal and state securities laws.
There are no classes of or series of capital stock of Swan outstanding other
than the Swan Stock, and no options, warrants, calls, agreements, commitments or
other rights presently outstanding that would obligate Swan or the any of the
Swan Shareholders to issue, deliver or sell shares of its capital stock, or to
grant, extend or enter into any such option, warrant, call, agreement,
commitment or other right. In addition to the foregoing, as of the date hereof,
Swan has no bonds, debentures, notes or other indebtedness issued or outstanding
that have voting rights in Swan.
(b) Except as set forth on Schedule 4.3(b), All of the issued and
---------------
outstanding shares of capital stock of Swan are validly issued, fully paid and
nonassessable and owned by the Swan Shareholders, free and clear of any lien,
charge, security interest, pledge, option, right of first refusal, voting
proxies or other voting agreements, or encumbrance of any kind or nature (any of
the foregoing, a "Lien").
4.4 SUBSIDIARIES. Swan 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 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 the execution and delivery of this Agreement by
------------
Swan or the Swan
4
Shareholders, the consummation by Swan and the Swan Shareholders of the
transactions contemplated hereby or compliance by Swan with any of the
provisions hereof will:
(a) conflict with or violate the Articles of Incorporation or Bylaws
of Swan;
(b) result in a violation of any statute, ordinance, rule, regulation,
order, judgment or decree applicable to Swan or the Swan Shareholders, or by
which Swan or 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 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 Swan is a party or by which Swan or its
properties may be bound or affected (collectively, for purposes of this Section
4.5, a "Swan Agreement");
(d) result in the creation of any Lien on any of the property or
assets of Swan; 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"), of (i) any government or subdivision thereof,
whether domestic, foreign or multinational, or any administrative, governmental,
or regulatory authority, agency, commission, court, tribunal or body, whether
domestic, foreign or multinational (a "Governmental Entity"), except for the
filing of the Certificate of Merger pursuant to the DGCL and GBCC; or (ii) any
other individual or Entity (collectively, a "Person") pursuant to any Swan
Agreement.
4.6 FINANCIAL STATEMENTS. Swan has heretofore furnished Parent with a
true and complete copy of (a) the unaudited financial statements of Swan for the
period ending December 31, 1995, and 1996; and (b) the unaudited financial
statements of Swan for the six-month period ending June 30, 1997, a copy of each
of which is attached hereto as Schedule 4.6 (collectively herein referred to as
------------
the "Swan Financial Statements"). The Swan Financial Statements have been
prepared in accordance with generally accepted accounting principles (except for
the absence of footnotes and normal year-end adjustments in the case of the Swan
Financial Statements for the period ending June 30, 1997) consistently followed
throughout the period indicated, and present fairly, in all material respects,
the financial position and operating results of Swan 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 by this Agreement, since June 30, 1997, (a) Swan 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 assets or properties of Swan; (c) there has
been (i) no declaration or payment of a dividend, or any other declaration,
payment
5
or distribution of any type or nature to any shareholder of Swan in respect of
its stock, whether in cash or property, and (ii) no purchase or redemption of
any shares of the capital stock of Swan; (d) there has been no declaration,
payment, or commitment for the payment, by Swan, of a bonus or other additional
salary, compensation, or benefit to any employee of Swan that was not in the
ordinary course of business; (e) there has been no release, compromise, waiver
or cancellation of any debts to or claims by Swan, or waiver of any rights of
Swan, in each case having a value in excess of $10,000; (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 assets of Swan (other than Swan Accounts Receivable (as
defined in Section 4.25 hereof) written down in the ordinary course of business
that are not in excess of $10,000 for any single Swan Account Receivable and
$25,000 in the aggregate); (h) there has been no material damage, destruction or
loss of physical property (whether or not covered by insurance) adversely
affecting the Swan Business or the operations of Swan; (i) there has been no
loan by Swan, or guaranty by Swan of any loan, to any employee of Swan or to any
Person related to the Swan Business; (j) Swan has not ceased to transact
business with any customer that, as of the date of such cessation, represented
more than 5% of the annual gross revenues of Swan; (k) there has been no
termination or resignation of any key employee or officer of Swan, and to the
knowledge of Swan and the Swan Shareholders, 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 Swan Business, to
which Swan is a party or by which it is bound, except in the ordinary course of
business, or except as expressly contemplated by this Agreement; (m) Swan has
not failed to satisfy any of its debts, obligations or liabilities related to
the Swan Business or the assets of Swan as the same become due and owing (except
for Swan Accounts Payable (as defined in Section 4.26 hereof), payable in
accordance with past practices and in the ordinary course of business); (n)
there has been no agreement or commitment by Swan to do any of the foregoing;
and (o) there has been no other event or condition of any character pertaining
to and materially affecting the assets, Business or financial condition of Swan.
4.8 UNDISCLOSED LIABILITIES. Except as set forth on Schedule 4.8 hereto,
------------
neither Swan nor the Swan Business has any debt, liability or obligation of any
kind, whether accrued, absolute or otherwise, including, without limitation, any
liability or obligation on account of taxes or any governmental charges or
penalty, interest or fines, except (a) liabilities not in excess of $50,000
(whether individually or in the aggregate) incurred in the ordinary course of
business after June 30, 1997; (b) liabilities reflected on the Swan Financial
Statements; and (c) liabilities incurred as a result of the transactions
contemplated by this Agreement.
4.9 TITLE TO PROPERTIES. Except as set forth on Schedule 4.9 hereto,
------------
Swan has good and marketable title to all tangible property and assets used in
the Swan Business (other than Swan Real Property (as defined in Section 4.12
hereof)), and good title to all of its leasehold interests, in each case, free
and clear of any and all Liens other than liens for taxes not yet due and
payable.
4.10 EQUIPMENT. Schedule 4.10 hereto sets forth a true and correct list
-------------
of all items of tangible personal property (including, without limitation,
computer hardware) necessary for or
6
used in the operation of the Swan Business in the manner in which it has been
and is now operated by Swan ("the Swan Equipment"), except for personal property
having a net book value of less than $5,000. Except as set forth on Schedule
--------
4.10, each material item of Swan Equipment is in good condition and repair,
----
ordinary wear and tear excepted.
4.11 INTELLECTUAL PROPERTY.
(a) Except as set forth on Schedule 4.11 hereto, Swan owns, or is
-------------
validly licensed or otherwise has the right to use or exploit, as currently used
or exploited, all Swan Intellectual Property Rights (as hereinafter defined),
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 Swan,
threatened, that Swan is infringing or otherwise adversely affecting the rights
of any Person with regard to any Swan Intellectual Property Right. Except as
set forth on Schedule 4.11, Swan has used commercially reasonable efforts to
-------------
protect the Swan Intellectual Property Rights, and, to the knowledge of Swan, no
Person is infringing the rights of Swan with respect to any Swan Intellectual
Property Right. To the knowledge of Swan, neither Swan nor any employee, agent
or independent contractor of Swan has used, appropriated or disclosed, directly
or indirectly, any trade secrets or other proprietary or confidential
information of any other Person, or otherwise violated any confidential
relationship with any other Person. To the knowledge of Swan, use of the name
"Swan Interactive Media, Inc." does not infringe upon the rights of any Person.
For purposes of this Section 4.11(a), the term "Swan Intellectual Property
Right(s)" shall mean all material proprietary technology, trade secrets, know-
how, patents, patent rights, trademarks, trademark rights, trade names, trade
name rights, service marks, service xxxx rights, and copyrights used or required
to be used by Swan in the conduct of the Swan Business.
(b) Swan currently licenses, or otherwise has the legal right to
use, at least one copy of all of the Swan Software (as hereinafter defined)
(including any upgrades, alterations or enhancements with respect thereto), and
each such copy of the Swan Software is being used in compliance with any
applicable licenses or other agreements. For purposes of this Section 4.11(b),
the term "Swan Software" shall mean all material computer software used or
required to be used by Swan in the conduct of the Swan Business.
4.12 REAL PROPERTY. Swan owns no real property, and has a month-to-month
lease to use its current premises.
4.13 LEASES. Schedule 4.13 hereto sets forth a list of all leases
-------------
pursuant to which Swan leases, as lessor or lessee, real or personal property
used in operating the Swan Business or otherwise (the "Swan Leases"). Copies of
the Swan Leases, which have previously been provided to Parent, are true and
complete copies thereof. All of the Swan Leases are valid, binding and
enforceable in accordance with their respective terms, and there is not under
any such Swan Lease any existing default by Swan, or, to the knowledge of Swan
and the Swan Shareholders, by any other party thereto, or any condition or event
of that, with notice or lapse of time or both, would constitute a default. Swan
has not received notice that the lessor of any of the Swan Leases intends to
cancel, suspend or terminate the Swan Leases or to exercise or not exercise any
options under any of the Swan Leases.
7
4.14 CONTRACTS. Schedule 4.14 hereto sets forth a complete and accurate
-------------
list of all material contracts, agreements and commitments (whether written or
oral) to which Swan is, directly or indirectly, a party (in its own name or as a
successor in interest), or by which it is otherwise bound, including, without
limitation, any service agreements, customer agreements, supplier agreements,
agreements to lend or borrow money, shareholder agreements, employment
agreements, agreements relating to Swan Intellectual Property and the like
(collectively, the "Swan Contracts").
Except as set forth on Schedule 4.14 hereto, true and complete copies of
-------------
each Swan Contract (or a true and complete narrative description of any oral
Swan Contract) have previously been provided to Parent. Neither Swan nor, to
the knowledge of Swan and the Swan Shareholders, any other party to any of the
Swan 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 Swan Contracts, or (y) has waived any right it may have under any of
the Swan Contracts, the waiver of which would have a material adverse effect on
the business, assets or financial condition of Swan. Swan and Xxxxxxx hereby
jointly and severally represent and warrant that all of the Swan Contracts
constitute the valid and binding obligation of Swan, and, to the knowledge of
Swan and the Swan Shareholders, the other parties thereto.
4.15 DIRECTORS AND OFFICERS. Schedule 4.15 hereto sets forth a list, as
-------------
of the date of this Agreement, of the name of each director and officer of Swan
and the offices held by each.
4.16 PAYROLL INFORMATION. Schedule 4.16 hereto sets forth a true and
-------------
complete copy of the most recent payroll report of Swan, showing all current
employees of Swan and their current levels of compensation, other than bonuses
and other extraordinary compensation. Swan has paid all compensation required
to be paid to employees of Swan on or prior to the date hereof.
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
Swan, threatened against or affecting Swan, the Swan Business, or the Swan
Shareholders, nor is there any judgment, decree, injunction or order of any
applicable Governmental Entity or arbitrator outstanding against Swan that,
either individually or in the aggregate, would have a material adverse effect on
the assets, business or financial condition of Swan.
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 Swan,
including, without limitation, (i) "employee benefit plans," within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"); (ii) affirmative action plans; (iii) current or deferred
compensation, pension, profit sharing, vacation or severance plans or programs;
or (iv) medical, hospital, accident, disability or death benefit plans
(collectively, "Swan Benefit Plans"). All Swan Benefit Plans are administered in
accordance with, and are in material compliance with,
8
all applicable laws and regulations. No default exists with respect to the
obligations of Swan under any Swan Benefit Plans.
(b) Swan 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 Swan, no representation campaign or election is now in progress
with respect to any employee of Swan and there are no labor disputes,
grievances, controversies, strikes or requests for union representation pending,
or, to the knowledge of Swan and the Swan Shareholders, threatened, relating to
or affecting the Swan Business. To the knowledge of Swan and the Swan
Shareholders, no event has occurred that could give rise to any such dispute,
controversy, strike or request for representation.
4.19 ERISA.
(a) All Swan 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 Swan 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 Swan Benefit Plan is subject to Title IV of ERISA or Section 412
of the Code. Swan has not engaged in any non-exempt "prohibited transactions,"
as such term is defined in Section 4975 of the Code or Section 406 of ERISA,
involving Swan Benefit Plans that would subject Swan to the penalty or tax
imposed under Section 502(i) of ERISA or Section 4975 of the Code. Swan 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 Swan Benefit Plans, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (i)
result in any payment (including, without limitation, severance, unemployment
compensation or golden parachute) becoming due to any director or other employee
of Swan, (ii) increase any benefits otherwise payable under any Swan Benefit
Plan or (iii) result in the acceleration of the time of payment or vesting of
any such benefits 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 Swan 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 Swan under Section 4001 of ERISA or
Section 414 of the Code (an "ERISA Affiliate"), within the 12-month period
ending on the date hereof. Swan has not incurred any liability to the Pension
Benefit Guaranty Corporation in respect of any Swan Benefit Plan that remains
unpaid.
4.20 TAXES.
(a) Swan 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 Swan on or prior
to the date hereof. Swan has duly
9
and timely paid all taxes and other governmental charges, and all interest and
penalties with respect thereto, required to be paid by Swan (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 therefore have been provided in the Swan Financial Statements). As of
the date hereof, all deficiencies proposed as a result of any audits have been
paid or settled.
(b) Swan is not a party to, or bound by, or otherwise in any way
obligated under, any tax sharing or similar agreement.
(c) Swan has not consented to have the provisions of Section
341(f)(2) of the Code (or comparable state law provisions) apply to it, and Swan
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. Swan 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
Swan, as appropriate, and to carry on the Swan Business as now conducted (the
"Swan Permits"). To the knowledge of Swan, Swan is in material compliance with
all applicable laws, ordinances and regulations and the terms of the Swan
Permits. Schedule 4.21 hereto sets forth a list of the Swan Permits, a true and
-------------
correct copy of each of which has been provided to Parent.
4.22 BOARD OF DIRECTOR/SHAREHOLDER CONSENT. Both the Board of Directors
of Swan and the Swan Shareholders have, by unanimous written consent, adopted
and approved this Agreement and the transactions contemplated hereby (including,
without limitation, the Merger).
4.23 BROKERS. Except as set forth on Schedule 4.23 hereto, no broker or
-------------
finder is entitled to any broker's or finder's fee or other commission in
connection with the transactions contemplated by this Agreement as a result of
arrangements made by or on behalf of Swan.
4.24 ENVIRONMENTAL MATTERS.
(a) To the knowledge of Swan and the Swan Shareholders, no real
property currently or formerly owned or operated by Swan is contaminated with
any Hazardous Substances (as hereinafter defined);
(b) Swan is not a party to any litigation or administrative
proceeding nor, to the knowledge of Swan and the Swan Shareholders, is any
litigation or administrative proceeding threatened against it, that, in either
case, asserts or alleges that Swan (i) violated any Environmental Laws (as
hereinafter defined); (ii) is required to clean up, remove or take remedial or
other response action due to the disposal, deposit, discharge, leak or other
release of any Hazardous Substances; 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 Substances.
10
(c) To the knowledge of Swan and the Swan Shareholders, there are no
conditions existing currently that would subject Swan or the Swan Shareholders
(as owners of Swan) to damages, penalties, injunctive relief or cleanup costs
under any Environmental Laws, or that would require cleanup, removal, remedial
action or other response pursuant to Environmental Laws.
(d) To the knowledge of Swan and the Swan Shareholders, Swan is not
subject to any judgment, order or citation related to or arising out of any
Environmental Laws 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 Laws.
(e) For purposes of this Agreement, (i) the term "Environmental Law"
means any federal, state or local law (including statutes, regulations,
ordinances, codes, rules, judicial opinions and other governmental restrictions
and requirements), relating to the discharge of air pollutants, water
pollutants, noise, odors or process waste water, or otherwise relating to the
environment or hazardous or toxic substances; and (ii) the term "Hazardous
Substance" means any toxic or hazardous substance that is regulated by or under
authority of any Environmental Law, including, without limitation, any petroleum
products, asbestos or polychlorinated biphenyls.
4.25 ACCOUNTS RECEIVABLE. All accounts, notes, contracts and other
receivables of Swan (collectively, "Swan Accounts Receivable") were acquired by
Swan in the ordinary course of business arising from bona fide transactions
completed in accordance with the terms and provisions related thereto. To the
knowledge of Swan and the Swan Shareholders, there are no set-offs,
counterclaims or disputes asserted with respect to any Swan Accounts Receivable
that would result in claims in excess of the reserve for bad debts set forth on
the Swan Financial Statements and, to the knowledge of Swan and the Swan
Shareholders, subject to such reserve, all Swan Accounts Receivable are
collectible in full. Schedule 4.25 hereto is a true and complete aging report
-------------
prepared as of June 26, 1997, which shows the time elapsed since invoice date
for all Swan Accounts Receivable.
4.26 ACCOUNTS PAYABLE. Except as set forth on Schedule 4.26 hereto, all
-------------
material accounts, notes, contracts and other amounts payable of Swan
(collectively, "Swan Accounts Payable") are currently within their respective
terms, and are neither in default nor otherwise past due by more than 90 days.
Schedule 4.26 hereto is a true and complete aging report prepared as of June 25,
-------------
1997, which shows the time elapsed since invoice date for all Swan Accounts
Payable.
4.27 INSURANCE. Swan currently maintains, in full force and effect, all
insurance policies that are either (a) required to be maintained for the conduct
of the Swan Business or the ownership of Swan's property (both real and
personal); or (b) otherwise maintained by companies engaged in a business
comparable to the Swan Business (collectively, the "Swan Insurance Policies");
provided, however, that Swan makes no representation or warranty as to the
adequacy of such Insurance Policies for the Surviving Corporation. The Swan
Insurance Policies are listed on Schedule 4.27 hereto, and true and compete
-------------
copies of all Swan Insurance Policies have previously been provided to Parent.
Swan (i) is not in default regarding the provisions of any
11
Swan Insurance Policy; (ii) has paid all premiums due thereunder; and (iii) has
not failed to present any notice or present any material claim thereunder in a
due and timely fashion.
4.28 BANKRUPTCY. Neither Swan nor any of the Swan Shareholders 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.
4.29 SWAN DEBT. Except as set forth on Schedule 4.29 hereto, as of the
-------------
date hereof, Swan has no outstanding indebtedness (including, without
limitation, debt for borrowed money (including any bank overdrafts), deferred
income and capitalized leases of Swan, and accrued interest on any of the
foregoing) other than Swan Accounts Payable, which are not in excess of $64,724.
4.30 ACCREDITED INVESTORS; INVESTMENT PURPOSE. Each Swan Shareholder
represents that he is either (i) an "accredited investor" as such term is
defined in Rule 501 of Regulation D promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Securities Act");
or (ii) an employee of Swan. Each Swan Shareholder further represents that he
is acquiring the Parent Stock solely for his own account for investment and not
with a view to, or for sale in connection with, any distribution thereof, except
as provided in the Stockholders' Agreement (as defined in Section 7.2(c)
hereof). Each Swan Shareholder agrees that he 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 other acquire or take a pledge
of any such shares) except in compliance with the Securities Act and the rules
and regulations thereunder, other applicable laws, rules and regulations, and
the Stockholders' Agreement.
4.31 RESTRICTIONS ON TRANSFER. Each Swan Shareholder acknowledges that
(a) the Parent Stock received by him hereunder has not been registered under the
Securities Act; (b) the Parent Stock may be required to be held indefinitely,
and each Swan Shareholder 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,
12
appropriate stop-transfer instructions will be issued to such transfer agent
with respect to Parent Stock.
4.32 ABILITY TO BEAR RISK; ACCESS TO INFORMATION; SOPHISTICATION. Each
Swan Shareholder represents and warrants that (a) his financial situation is
such that he can afford to bear the economic risk of holding Parent Stock
acquired by him hereunder for an indefinite period; (b) he can afford to suffer
the complete loss of such Parent Stock; (c) he has been granted the opportunity
to ask questions of, and receive answers from, representatives of Sub and Parent
concerning the terms and conditions of the Parent Stock and to obtain any
additional information that he deems necessary; (d) his knowledge and experience
in financial business matters is such that he is capable of evaluating the
merits and risk of ownership of the Parent Stock; and (e) he has carefully
reviewed the terms of the Stockholders' Agreement and has evaluated the
restrictions and obligations contained therein.
4.33 DISCLOSURE. No statement of fact by Swan contained in this
Agreement and no written statement of fact furnished by Swan to Parent or Sub
pursuant to or in connection with this Agreement contains contain any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements herein or therein contained not materially
misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Each of Parent and Sub jointly and severally represents and warrants to
Swan and the Swan Shareholders, which representations and warranties shall
survive the Closing in accordance with Section 9.1 of this Agreement, as
follows:
5.1 ORGANIZATION AND QUALIFICATION. Each of Parent and its Subsidiaries
(as defined in Section 9.12 hereof) is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation.
Each of Parent and its Subsidiaries has the requisite corporate power and
authority to carry on its business as it is now being conducted and is duly
qualified or licensed to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary. Complete and
correct copies of the Certificates of Incorporation and Bylaws of Parent and Sub
as in effect on the date hereof are attached as Schedule 5.1 hereto. The minute
------------
books of Parent and Sub, a true and complete copy of each of which has been made
available to Swan, (a) accurately reflects all action taken by the directors and
shareholders of Parent at meetings of Parent's Board of Directors or
shareholders, as the case may be; and (b) contains true and complete copies of,
or originals of, the respective minutes of all meetings or consent actions of
the directors or shareholders.
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 of this Agreement
and the consummation of the transactions
13
contemplated hereby by each of Parent and Sub have been duly and validly
authorized and approved by their respective Board of Directors and shareholders,
and no other corporate or shareholder proceedings on the part of either Parent
or Sub, or their respective boards 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
Swan and the Swan Shareholders, constitutes the valid and binding obligation of
each of Parent and Sub, enforceable against each of Parent and Sub in accordance
with its terms.
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 (collectively, for purposes of this Section 5.3, an
"IXL Agreement");
(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 GBCC;
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.
14
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 by this Agreement based upon arrangements made by or
on behalf of Parent or Sub.
5.6 PARENT STOCK.
(a) As of the date hereof the authorized capital stock of Parent
consists of (i) (A) 250,000 shares of Class A Common Stock, $.01 par value (the
"Class A Common Stock"), of which no shares are validly issued and outstanding,
and (B) 1,000,000 shares of Class B Common Stock, $.01 par value, of which
79,459 shares are validly issued and outstanding (without taking into account
any shares of Parent Stock to be issued pursuant to this Agreement), fully paid
and nonassessable; and (ii) 250,000 shares of Class A Convertible Preferred
stock, of which 157,760 shares are validly issued and outstanding, fully paid
and nonassessable. All outstanding capital stock of Parent was issued in
accordance with applicable federal and state securities laws. Except as set
forth on Schedule 5.6(a) 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 date hereof,
Parent has no bonds, debentures, notes or other indebtedness issued or
outstanding that have voting rights in Parent.
(b) The holders of record as of the Effective Time of the outstanding
shares of capital stock of Parent, together with the number of shares of capital
stock then outstanding, are set forth on a pro forma basis on Schedule 5.6(b)
---------------
hereto.
(c) When delivered to the Swan Shareholders in accordance with the
terms hereof, the Parent Stock will (i) be duly authorized, fully paid and
nonassessable, and (ii) be free and clear of all Liens.
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 hereto lists the name of each of the Subsidiaries of
------------
Parent, and indicates their respective jurisdictions of incorporation and
authorized and outstanding capitalization.
5.8 FINANCIAL STATEMENTS. Parent has heretofore furnished Swan 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 ending April 30, 1996; (b)
audited combined financial statements for Creative Video, Inc. (n/k/a iXL,
Inc.), Creative Video Library, Inc. and Entrepreneur Television, Inc. for the
years ending December 31, 1993, 1994 and 1995, and for the four-month period
ending April 30, 1996; (c) the audited consolidated financial statements for
Parent and its Subsidiaries for the eight months ended December 31, 1996; and
(d) the unaudited consolidated financial statements for Parent and its
Subsidiaries, dated May 31, 1997 ((a) through (d) collectively herein referred
to as the "Parent Financial Statements"). The Parent Financial Statements have
been prepared in accordance with
15
generally accepted accounting principles (except, in the case of the unaudited
financial statements, for the exclusion of footnotes and normal year-end
adjustments) consistently followed throughout the period indicated, and present
fairly, in all material respects, the financial position and operating results
of Parent and its Subsidiaries as of the dates, and during the periods,
indicated therein.
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, without
limitation, any liability or obligation on account of taxes or any governmental
charges or penalty, interest or fines, except (a) liabilities not in excess of
$300,000 (whether individually or in the aggregate) incurred in the ordinary
course of business after May 31, 1997; (b) liabilities reflected on the Parent
Financial Statements; and (c) liabilities incurred as a result of the
transactions contemplated by this Agreement.
5.10 COMPLIANCE WITH APPLICABLE LAWS. Parent or its Subsidiaries 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 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.
Schedule 5.10 hereto sets forth a list of the Parent Permits, a true and correct
-------------
copy of each of which has been made available to Swan.
5.11 BOARD OF DIRECTOR CONSENT. Both the Board of Directors of Parent and
Sub have, by unanimous written consent, adopted and approved this Agreement and
the transactions contemplated hereby (including, without limitation, the
Merger).
5.12 BANKRUPTCY. Neither Parent nor any of its Subsidiaries has filed a
petition or request for reorganization or protection or relief under the
bankruptcy laws of the United States or any state or territory thereof, made any
general assignment for the benefit of creditors, or consented to the appointment
of a receiver or trustee, including a custodian under the United States
bankruptcy laws, whether such receiver or trustee is appointed in a voluntary or
involuntary proceeding.
5.13 DISCLOSURE. No statement of fact by Parent or Sub contained in this
Agreement and no written statement of fact furnished or to be furnished by
Parent or Sub to Swan pursuant to or in connection with this Agreement 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.
16
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 PUBLIC ANNOUNCEMENTS. The parties agree that, except as may
otherwise be required to comply with applicable laws and regulations (including,
without limitation, applicable securities laws) or to obtain consents required
hereunder, public disclosure of the transactions contemplated by this Agreement
shall be made only upon or after the consummation of the Merger. Any such
disclosure shall be coordinated between the parties, and no party shall make any
such disclosure without the prior consent of the other parties, which consent
shall not be unreasonably withheld or delayed.
6.2 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.
6.3 FURTHER ASSURANCES. From time to time after the Effective Time, upon
the reasonable request of any party hereto, the other party or parties hereto
shall execute and deliver or cause to be executed and delivered such further
instruments, and take such further action, as the requesting party may
reasonably request in order to effectuate fully the purposes, terms and
conditions of this Agreement.
6.4 OPTIONS. Parent hereby covenants and agrees that, as soon as
reasonably practicable after the Effective Time, each of the Persons listed on
Schedule 6.4 shall receive options to purchase that number shares of validly
------------
issued, fully paid and nonassessable Parent Stock, at an exercise price of $75
per share, all of which shall be issued pursuant to (i) the IXL Holdings, Inc.
1996 Stock Option Plan, as amended (the "Parent Stock Option Plan") set forth
opposite the name of such Person, and (ii) a Stock Option Agreement
substantially in the form of Exhibit "C" hereto.
-----------
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO OBLIGATION OF SWAN AND THE SWAN SHAREHOLDERS TO EFFECT
THE MERGER. The obligation of Swan and the Swan Shareholders to effect the
Merger shall be subject to the fulfillment at or prior to the Effective Time of
the following conditions:
(a) (i) the appropriate officers of Parent shall have executed and
delivered to Swan at the Closing, a closing certificate and incumbency
certificate, substantially in the form of Exhibit "A-1" hereto (collectively
-------------
"Parent's Closing Certificate"), and (ii) the appropriate officers of Sub shall
have executed and delivered to Swan at the Closing, a closing certificate and
17
incumbency certificate, substantially in the form of Exhibit "A-2" hereto
-------------
(collectively "Sub's Closing Certificate");
(b) Parent shall have obtained all of the Consents listed on Schedule
--------
7.1(b) hereto;
------
(c) Swan shall have received a corporate certificate of good standing
for Parent and Sub, and a copy of the Certificate of Incorporation for Parent
and Sub, both as certified by the Secretary of State of Delaware;
(d) there shall have been delivered to each of the Swan Shareholders
at the Closing, duly executed by Parent, an Agreement to be Bound to the
Registration Rights Agreement of Parent, dated as of the hereof (the "Agreement
to be Bound to the Registration Rights Agreement"), substantially in the form of
Exhibit "B" hereto;
-----------
(e) Parent shall have executed and delivered at the Closing that
certain Side Letter, dated of even date herewith, addressed to the Swan
Shareholders (the "Side Letter"); and
(f) Swan shall have received from Parent such other documents as
Swan's counsel shall have reasonably requested, in form and substance reasonably
satisfactory to Swan's counsel.
7.2 CONDITIONS TO OBLIGATIONS OF PARENT AND SUB TO EFFECT THE MERGER.
The obligations of Parent and Sub to effect the Merger shall be subject to the
fulfillment, at or prior to the Effective Time of the following conditions:
(a) the appropriate officers of Swan shall have executed and delivered
to Parent at the Closing, a closing certificate, substantially in the form of
Exhibit "D" hereto ("Swan's Closing Certificate");
-----------
(b) Swan and the Swan Shareholders shall have obtained or caused to be
obtained all of the Consents listed on Schedule 7.2(b) hereto;
---------------
(c) there shall have been delivered to Parent at the Closing, duly
executed by each of the Swan Shareholders, (i) an Agreement to be Bound to the
First Amended and Restated Stockholders' Agreement of Parent, as amended
effective May 31, 1997 (the "Stockholders' Agreement"), substantially in the
form of Exhibit "E" hereto; and (ii) an Agreement to be Bound by the
-----------
Registration Rights Agreement;
(d) Parent shall have received a corporate certificate of good
standing for Swan, and a copy of the Articles of Incorporation of Swan, both as
certified by the Secretary of State of Georgia;
(e) as of the Closing the Swan Accounts Payable shall be no greater
than $64,724;
18
(f) Parent shall have received, duly executed and acknowledged by each
of the Swan Shareholders, the Side Letter; and
(g) Parent shall have received from Swan or the Swan Shareholders, as
the case may be, such other documents as Parent's counsel shall have reasonably
requested, in form and substance reasonably satisfactory to Parent's counsel.
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION BY PARENT.
(a) Parent shall indemnify and hold Swan, the Swan Shareholders and
Swan's directors, officers and employees (collectively, the "Swan Indemnified
Parties") harmless from and against, and agree promptly to defend each of the
Swan Indemnified Parties from and reimburse each of the Swan Indemnified Parties
for, any and all losses, damages, costs, expenses, liabilities, obligations and
claims of any kind (including, without limitation, reasonable attorney fees and
other legal costs and expenses) (collectively a "Swan Loss") that any of the
Swan 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 to this Agreement, or in any
instrument, certificate or affidavit delivered by Parent at the Closing in
accordance with the provisions hereof;
(ii) any failure by Parent or Sub to carry out, perform, satisfy
and discharge any of its respective covenants, agreements, undertakings,
liabilities or obligations under this Agreement or under any of the documents
and materials delivered by Parent pursuant to this Agreement; 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.
(b) Notwithstanding any other provision to the contrary Parent shall
not have any liability under Section 8.1(a) above (i) unless the aggregate of
all Swan 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 $1,000,000 in the aggregate, and
(iii) unless the Swan Shareholders have asserted a claim with respect to the
matters set forth in Section 8.1(a)(i), or 8.1(a)(iii) to the extent applicable
to Section 8.1(a)(i), within two years of the Effective Time. Notwithstanding
any implication to the contrary contained herein, the parties acknowledge and
agree that a decrease in the value of Parent Stock would not, by itself,
constitute a Swan 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.
19
8.2 INDEMNIFICATION BY THE SWAN SHAREHOLDERS.
(a) The Swan Shareholders shall severally but not jointly (in the
case of the Minority Shareholders, in proportion to their respective share of
the Merger consideration) 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 promptly defend each of the Parent Indemnified Parties from and
reimburse each of the Parent Indemnified Parties for, any and all losses,
damages, costs, expenses, liabilities, obligations and claims of any kind
(including, without limitation, reasonable attorney fees (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 representations and
warranties made by Swan or the Swan Shareholders in or pursuant to this
Agreement, or in any certificate or affidavit delivered by the same at the
Closing in accordance with the provisions hereof;
(ii) any failure by Swan or the Swan Shareholders to carry out,
perform, satisfy and discharge any of their respective covenants, agreements,
undertakings, liabilities or obligations under this Agreement or under any of
the documents and materials delivered by Swan pursuant to this Agreement; and
(iii) any suit, action or other proceeding arising out of, or in
any way related to, any of the matters referred to in this Section 8.2.
(b) Notwithstanding the above, (i) the Minority Shareholders shall not
have any liability under Section 8.2(a) above except to the extent such
liability results from a breach, inaccuracy, failure, suit or other action made
or caused by such Minority Shareholder; and (ii) none of the Swan Shareholders
shall have any liability under Section 8.2(a) above (A) unless the aggregate of
all Parent Losses for which the Swan 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, (B) for amounts in excess of $1,000,000 in
the aggregate, and (C) unless Parent has asserted a claim with respect to the
matters set forth in Section 8.2(a)(i) or 8.2(a)(iii) (to the extent applicable
to Section 8.2(a)(i)) within two years of the Effective Time, except with
respect to the matters arising under Sections 4.18, 4.19, 4.20 or 4.24 hereof,
in which event Parent must have asserted a claim within the applicable statute
of limitations. Notwithstanding any implication to the contrary contained
herein, the parties acknowledge and agree that a decrease in the value of Parent
Stock would not, by itself, constitute a Parent Loss, unless and to the extent a
decrease in the value of Parent Stock has been demonstrated to be as a result of
any event described in Sections 8.2(a)(i), (ii) or (iii) above.
8.3 NOTIFICATION OF CLAIMS; ELECTION TO DEFEND.
(a) A party entitled to be indemnified pursuant to Section 8.1 or 8.2
hereof, as the case may be (the "Indemnified Party"), shall notify the party
liable for such indemnification (the "Indemnifying Party") in writing of any
claim or demand (a "Claim") that
20
the Indemnified Party has determined has given or could give rise to a right of
indemnification under this Agreement. Subject to the Indemnifying Party's right
to defend in good faith third party claims as hereinafter provided, the
Indemnifying Party shall satisfy its obligations under this Article VIII within
30 days after the receipt of written notice thereof from the Indemnified Party.
Any amounts paid thereafter shall include interest thereon for the period
commencing at the end of such 30-day period and ending on the actual date of
payment, at a rate of 15% per annum, or, if lower, at the highest rate of
interest permitted by applicable law at the time of such payment.
(b) If the Indemnified Party shall notify the Indemnifying Party of
any Claim pursuant to Section 8.3(a) hereof, and if such Claim relates to a
Claim asserted by a third party against the Indemnified Party that the
Indemnifying Party acknowledges is a Claim for which it must indemnify or hold
harmless the Indemnified Party under Section 8.1 or 8.2 hereof, as the case may
be, the Indemnifying Party shall have the right, at its sole cost and expense,
to employ counsel of its own choosing to defend any such Claim asserted against
the Indemnified Party; provided, however, that 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 such Claim at its own expense (except to the
extent provided in the foregoing sentence), but the Indemnifying Party shall
retain control over such litigation (except as provided in the foregoing
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 the date 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. 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 expect to the
extent required for defense of the relevant Claim. 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, without limitation, a settlement) has been reached with respect to
any Claim contested pursuant to this Section 8.2(b), the Indemnifying Party
shall satisfy its obligations with respect thereto. Any amounts paid thereafter
shall include interest thereon for the period commencing at the end of such 30-
day period and ending on the actual date of payment, at a rate of 15% per annum,
or, if lower, at the highest rate of interest permitted by applicable law at the
time of such payment.
8.4 INDEMNITIES AS SOLE REMEDY. Notwithstanding any implication to the
contrary contained herein, the parties hereby agree and acknowledge that the
indemnities provided in this
21
Article VIII shall be the sole remedy for breaches or inaccuracies of the
representations and warranties set forth in Articles IV and V hereof.
ARTICLE IX
GENERAL PROVISIONS
9.1 SURVIVAL; RECOURSE. None of the agreements contained in this
Agreement shall survive the Merger, except that (i) the agreements contained in
Articles III and VI hereof, the obligations to indemnify contained in Article
VIII hereof and the agreements of the Surviving Corporation referred to in
Sections 9.10 and 9.11 hereof, shall survive the Merger (except to the extent a
shorter period of time is explicitly specified therein) and (ii) the
representations and warranties made in Articles IV and V of this Agreement shall
survive the Merger, and shall survive any independent investigation by the
parties, and any dissolution, merger or consolidation of Swan or Parent, and
shall bind the legal representatives, assigns and successors of Swan, the Swan
Shareholders, Parent, for a period of two years after the Closing Date (other
than the representations and warranties contained in Sections 4.19, 4.20 and
4.24 hereof, which shall survive for the applicable statute of limitations).
9.2 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 Swan: Swan Interactive Media, Inc.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxx X-000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxxx
Telephone: 404/000-0000
Telecopy: 404/817-3534
E-mail: xxxx@xxxxxxxxx.xxx
With copies to: Xxxxxxxx Xxxxxxx, LLP
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxx
Telecopy: 404/885-3995
Telephone: 404/000-0000
If to the Swan To the address listed under the signature
Shareholders: line of the applicable Swan Shareholder
22
If to Parent: IXL Holdings, Inc.
Two Park Place
0000 Xxxxx Xxxxxx
0xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopy: 404/267-3801
Telephone: 404/000-0000
With copies to: Xxxxxx & Xxxxxx, A Professional Corporation
One Buckhead Plaza
0000 Xxxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Telecopy: 404/233-5824
Telephone: 404/000-0000
and to: Xxxxx & Company
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx XX, Esq.
Telecopy: 212/223-2379
Telephone: 212/000-0000
If to Sub/Surviving
Corporation: IXL Merger Corp. IV, Inc.
0000 Xxxxx Xxxxxx
0xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopy: 404/267-3801
Telephone: 404/000-0000
With copies to: Xxxxxx & Xxxxxx, A Professional Corporation
One Buckhead Plaza
0000 Xxxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Telecopy: 404/233-5824
Telephone: 404/000-0000
23
and to: Xxxxx & Company
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx XX, Esq.
Telecopy: 212/223-2379
Telephone: 212/000-0000
or to such other address as any party may have furnished to the other parties in
writing in accordance with this Section.
9.3 ENTIRE AGREEMENT. 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. 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.
9.4 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 in this Agreement, 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 of this Agreement,
except as otherwise provided herein.
9.5 FEES AND EXPENSES. All reasonable fees and expenses incurred in
connection with this Agreement and the transactions contemplated by this
Agreement shall be paid by the party incurring such fees or expenses; provided,
--------
however, that the expenses of Swan shall be paid by the Swan Shareholders.
-------
9.6 GOVERNING LAW. This Agreement, except to the extent that the GBCC or
the DGCL is mandatorily applicable to the Merger or the rights of the
shareholders of Swan 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).
9.7 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 of this Agreement.
9.8 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.
24
9.9 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement 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.
9.10 POST-CLOSING ACCESS. For a period of five years after the Closing
Date, the Swan Shareholders and their agents and representatives shall have
reasonable access to the books and records of Swan.
9.11 POST-CLOSING NOTICE. To the extent the Surviving Corporation
receives written notice of any event or circumstance that materially affects any
of the Swan Shareholders, the Surviving Corporation shall promptly notify the
affected Swan Shareholder of such matter, information, or event and shall
provide them with copies of all relevant documentation or correspondence in
connection thereto.
9.12 CERTAIN DEFINITIONS. As used in this Merger Agreement:
(a) 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 that are
entitled to more than 50% of the vote for the election of the board of directors
or other governing body of such Entity (including, without limitation, Sub);
provided, however, that with respect to the Parent, the terms "Subsidiary" and
-------- -------
"Subsidiaries" shall not include (i) University Netcasting, Inc., or (ii) Swan;
(b) 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
(c) the term "Minority Shareholders" shall mean and include all Swan
Shareholders other than Xxxx Xxxxxxx.
- SIGNATURES ON THE FOLLOWING PAGE -
25
IN WITNESS WHEREOF, Parent, Sub and Swan have caused this Agreement to be
signed by their respective officers thereunder duly authorized, and each Swan
Shareholder has signed this Agreement, all as of the date first written above.
"SWAN"
SWAN INTERACTIVE MEDIA, INC., a Georgia corporation
By: /s/ Xxxx Xxxxxxx
---------------------------------------------------
President
Title: ---------------------------------------------------
"PARENT"
IXL HOLDINGS, INC., a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx
---------------------------------------------------
Executive Vice President
Title: ---------------------------------------------------
"SUB"
IXL MERGER CORP. IV, INC., a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx
---------------------------------------------------
Executive Vice President
Title: ---------------------------------------------------
- SIGNATURES CONTINUE ON THE FOLLOWING PAGE -
26
"SWAN SHAREHOLDERS"
By: /s/ Xxxx Xxxxxxx
----------------------------------------------
XXXX XXXXXXX
Address:
___________________________________
___________________________________
___________________________________
By: /s/ N. Xxxxx Xxxxxx
----------------------------------------------
N. XXXXX XXXXXX
Address: 000 XXXXXXXXXX XX # X-0
-----------------------------------
XXXXXXX, XX 00000
-----------------------------------
___________________________________
By: /s/ Xxxx Xxxxxx
-----------------------------------------------
XXXX XXXXXX
Address: 0000 Xxxx Xx,
-----------------------------------
Xxxxxx, XX 00000
-----------------------------------
___________________________________
By: /s/ Xxxxx Xxxxx
----------------------------------------------
XXXXX XXXXX
Address: XX XXX 00000
-----------------------------------
XXXXXXX XX 00000
-----------------------------------
___________________________________
By:_______________________________________________
_________________________________
Address: ___________________________________
___________________________________
___________________________________
27
"SWAN SHAREHOLDERS"
By: ______________________________________________
XXXX XXXXXXX
Address:
___________________________________
___________________________________
___________________________________
By: ______________________________________________
N. XXXXX XXXXXX
Address:
___________________________________
___________________________________
___________________________________
By: _______________________________________________
XXXX XXXXXX
Address:
___________________________________
___________________________________
___________________________________
By: ______________________________________________
XXXXX XXXXX
Address:
___________________________________
___________________________________
___________________________________
By:
/s/ Xxxxx X. Xxxxxxx
----------------------------------------------
XXXXX X. XXXXXXX
Address: ___________________________________
___________________________________
___________________________________
28
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
Swan's Closing Certificate.................................. Exhibit D
Agreement to be Bound to Stockholders' Agreement............ Exhibit E
SCHEDULE 2.1
------------
CERTIFICATE OF INCORPORATION OF SURVIVING CORPORATION
SCHEDULE 4.1
------------
ARTICLES OF INCORPORATION AND BYLAWS OF SWAN
SCHEDULE 4.3(B)
---------------
LIENS ON SWAN STOCK
SCHEDULE 4.5
------------
CONFLICTS, REQUIRED FILINGS AND CONSENTS OF SWAN
SCHEDULE 4.6
------------
FINANCIAL STATEMENTS OF SWAN
SCHEDULE 4.7
------------
EXCEPTIONS TO ABSENCE OF CHANGES OF SWAN
SCHEDULE 4.8
------------
UNDISCLOSED LIABILITIES OF SWAN
SCHEDULE 4.9
------------
EXCEPTIONS TO TITLE TO PROPERTIES OF SWAN
SCHEDULE 4.10
-------------
EQUIPMENT OF SWAN
SCHEDULE 4.11
-------------
EXCEPTIONS TO TITLE OF INTELLECTUAL PROPERTY OF SWAN
SCHEDULE 4.13
-------------
LEASES OF SWAN
SCHEDULE 4.14
-------------
CONTRACTS OF SWAN
SCHEDULE 4.15
-------------
LIST OF DIRECTORS AND OFFICERS OF SWAN
SCHEDULE 4.16
-------------
PAYROLL INFORMATION OF SWAN
SCHEDULE 4.17
-------------
LITIGATION OF SWAN
SCHEDULE 4.18
-------------
EMPLOYEE BENEFIT PLANS/LABOR RELATIONS OF SWAN
SCHEDULE 4.19
-------------
ERISA ISSUES OF SWAN
SCHEDULE 4.21
-------------
PERMITS OF SWAN
SCHEDULE 4.23
-------------
BROKERS OF SWAN
SCHEDULE 4.25
-------------
ACCOUNTS RECEIVABLE OF SWAN
SCHEDULE 4.26
-------------
ACCOUNTS PAYABLE OF SWAN
SCHEDULE 4.27
-------------
INSURANCE OF SWAN
SCHEDULE 4.29
-------------
SWAN DEBT
SCHEDULE 5.1
------------
CERTIFICATE OF INCORPORATION AND BYLAWS OF PARENT AND SUB
SCHEDULE 5.3
------------
CONFLICTS, REQUIRED FILINGS AND CONSENTS OF PARENT AND SUB
SCHEDULE 5.4
------------
PARENT LITIGATION
SCHEDULE 5.5
------------
PARENT BROKERS
SCHEDULE 5.6(A)
---------------
PARENT STOCK, OPTIONS, WARRANTS, ETC.
SCHEDULE 5.6(B)
---------------
PARENT STOCK - STOCKHOLDERS AS OF THE EFFECTIVE DATE
SCHEDULE 5.7
------------
SUBSIDIARIES OF PARENT
SCHEDULE 5.9
------------
PARENT UNDISCLOSED LIABILITIES
SCHEDULE 5.9
------------
PARENT PERMITS
SCHEDULE 6.4
------------
RECIPIENTS OF OPTIONS/WARRANTS OF PARENT
SCHEDULE 7.1(B)
---------------
PARENT CONSENTS
SCHEDULE 7.2(B)
---------------
CONSENTS OF SWAN
