EXHIBIT 2.25
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
IXL HOLDINGS, INC.,
IXL-RICHMOND, INC.,
TEKNA, INC.
AND
THE TEKNA SHAREHOLDERS
DATED AS OF SEPTEMBER 4, 1998
AGREEMENT AND PLAN OF MERGER
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THIS AGREEMENT AND PLAN OF MERGER is entered into as of this 4th day of
September, 1998, by and between TEKNA, INC., a Virginia corporation ("Tekna"),
IXL HOLDINGS, INC., a Delaware corporation ("Parent"), IXL-RICHMOND, INC., a
Delaware corporation, or its successors or assigns ("Sub"), and the shareholders
of Tekna as listed on the signature page hereto (the "Tekna Shareholders").
R E C I T A L S:
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A. Tekna is engaged in the business of developing internet sites and
furnishing internet services, including website design and maintenance (the
"Tekna Business").
B. Tekna 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 Tekna Shareholders collectively own 100% of the issued and
outstanding capital stock of Tekna (the "Tekna Stock").
D. The respective Boards of Directors of Parent, Sub and Tekna, and the
respective shareholders of Sub and Tekna, 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) Tekna shall be merged
with and into Sub, (b) the separate existence of Tekna 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-Richmond, Inc. For purposes of this
Agreement, Sub shall be referred to, for the period commencing on the Effective
Time, as the "Surviving Corporation."
1.2 CLOSING AND CLOSING DATE. Unless this Merger Agreement shall have
been terminated and the transactions herein contemplated shall have been
abandoned pursuant to Section 9.1 hereof, and subject to the satisfaction or
waiver of the conditions set forth in Article VII hereof, the closing of the
Merger (the "Closing") will take place as promptly as practicable (and in any
event within five business days after satisfaction of the conditions set forth
in Sections 7.1 and 7.2 hereof) (the "Closing Date") at the offices of ▇▇▇▇▇▇ &
▇▇▇▇▇▇, A Professional Corporation, One Buckhead Plaza, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇.
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, unless another date or place is agreed to by the
parties.
1.3 EFFECTIVE TIME OF THE MERGER. At the Closing, the parties hereto shall
cause (a) a certificate of merger (the "Delaware Certificate of Merger") to be
filed with the office of the Secretary of State of Delaware in accordance with
the provisions of the Delaware General Corporation Law, as amended (the "DGCL");
and (b) Articles of Merger (the "Virginia Articles of Merger"; collectively with
the Delaware Certificate of Merger, the "Certificate of Merger") to be filed
with the office of the State Corporation Commission of Virginia in accordance
with the provisions of the Virginia Stock Corporation Act (the "VSCA"). 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
the State Corporation Commission of Virginia, 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 VSCA. 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 copy of which is attached to a closing certificate and incumbency
certificate, substantially in the form of Exhibit "A-2" hereto ("Sub's Closing
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Certificate"), shall be the Certificate of Incorporation of the Surviving
Corporation after the Effective Time, until thereafter changed or amended as
provided therein or by applicable law.
2.2 BYLAWS. The Bylaws of Sub as in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation, until
thereafter changed or amended as provided therein or by applicable law. A copy
of the Bylaws of Sub is attached to Sub's Closing Certificate.
2.3 BOARD OF DIRECTORS; OFFICERS. The Board of Directors and officers of
Sub immediately prior to the Effective Time shall be the Board of Directors and
officers, respectively, of the Surviving Corporation, until the earlier of their
respective resignations or the time that their respective successors are duly
elected or appointed and qualified.
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ARTICLE III
CONVERSION OF SHARES
3.1 MERGER CONSIDERATION. As of the Effective Time:
(a) All shares of Tekna Stock owned by Tekna shall, by virtue of the
Merger and without any action on the part of any shareholder, officer or
director of Tekna 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 Tekna Stock (other than any
Dissenting Shares, as defined in Section 3.2 hereof) shall, upon surrender to
Sub, at the Closing, of the underlying share certificates, be converted into,
and become exchangeable for, (i) a number of shares of validly issued, fully
paid and nonassessable Class B Common Stock of Parent, $.01 par value (the
"Parent Stock") based on the following equation:
PS= 850,000 - (D-ARC)
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$10
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S + O
where:
PS = the number of shares of Parent Stock (valued, as of the
Closing, at $10 per share) for which each share of Tekna
Stock shall be exchanged pursuant to the Merger
D = the outstanding indebtedness of Tekna (the "Tekna Debt"),
including debt for borrowed money and accrued interest
thereon, capital leases, any unpaid legal, accounting or
other fees of Tekna, and accounts payable and accrued
expenses, all to be determined as of August 7, 1998 and all
as determined in accordance with generally accepted
accounting principles ("GAAP")
ARC = the accounts receivable of Tekna less than 90 days old (from
the due date), to be determined as of August 7, 1998 in
accordance with GAAP
S = the number of issued and outstanding shares of Tekna Stock
on the Closing Date
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O = the total number of options to purchase Tekna Stock
outstanding on the Closing Date, to be exchanged for options
to acquire Parent Stock pursuant to Section 6.6(b) hereof;
provided, however, that for the purpose of the above formula, regardless of
whether D exceeds ARC, the maximum, aggregate Parent Stock issuable pursuant to
this Section is 850,000 shares; and
(ii) the Escrowed Stock (as hereinafter defined), if any, to be determined
pursuant to Section 6.8 hereof.
(c) Each issued and outstanding share of common stock of Sub shall,
by virtue of the Merger and without any action on the part of any shareholder,
officer or director of Tekna or Sub, be converted into and become one fully paid
and nonassessable share of common stock of the Surviving Corporation.
3.2 DISSENTING SHARES. Notwithstanding any provision hereof to the
contrary, any shares of Tekna Stock held by a Dissenting Shareholder (as
hereinafter defined) shall not be converted as described in Section 3.1(b)
hereof, but instead shall be converted into the right to receive the
consideration due a Dissenting Shareholder pursuant to the DGCL or VSCA, as
applicable, provided, however, that if a Dissenting Shareholder shall fail to
perfect her demand, withdraw her demand or otherwise lose her right for
appraisal under the terms of the DGCL or VSCA, as applicable, then the Tekna
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. Tekna shall not voluntarily make any payment
with respect to, settle, or offer to settle or otherwise negotiate, any such
demands. All amounts paid to Dissenting Shareholders shall be paid without
interest thereon (to the extent permitted by applicable law) by the Surviving
Corporation. For purposes hereof, the term "Dissenting Shareholder" shall mean
a Tekna Shareholder who (a) objects to the Merger; and (b) complies with the
applicable provisions of the DGCL or VSCA concerning dissenter's rights.
3.3 NO FURTHER RIGHTS. From and after the Effective Time, holders of
certificates theretofore evidencing Tekna Stock shall cease to have any rights
as stockholders of Tekna, except as provided herein or by applicable law.
3.4 CLOSING OF TEKNA'S TRANSFER BOOKS. At the Effective Time, the stock
transfer books of Tekna shall be closed and no transfer of Tekna Stock shall be
made thereafter. If after the Effective Time, certificates for Tekna Stock are
presented to Parent or the Surviving Corporation, they shall be canceled and
exchanged for a consideration as set forth in Section 3.1 hereof, subject to
applicable law in the case of Dissenting Shareholders.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TEKNA
Tekna, and the Tekna Shareholders, jointly and severally, represent and
warrant to Parent and Sub as follows, which representations and warranties shall
survive the Closing in accordance with Section 10.1 hereof.
4.1 ORGANIZATION AND QUALIFICATION. Tekna is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia. Tekna has the requisite corporate power and authority
to carry on the Tekna Business as it is now being conducted and is duly
qualified or licensed to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary. Complete and
correct copies of the Articles of Incorporation and Bylaws of Tekna as in effect
on the date hereof are attached to a closing certificate and incumbency
certificate, substantially in the form of Exhibit "E" hereto ("Tekna's Closing
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Certificate"). The minute book of Tekna, a true and complete copy of which has
been delivered to Parent, (a) accurately reflects all action taken by the
directors and shareholders of Tekna at meetings of Tekna'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. Tekna 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 Tekna have been duly and validly
authorized and approved by Tekna's Board of Directors and the Tekna
Shareholders, and no other corporate or shareholder proceedings on the part of
Tekna, its Board of Directors or the Tekna 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
Tekna and each Tekna Shareholder, and assuming the due authorization, execution
and delivery by Parent and Sub, constitutes the valid and binding obligation of
Tekna and each Tekna Shareholder, enforceable against Tekna and each Tekna
Shareholder in accordance with its terms subject, in each case, to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general application
relating to or affecting creditors' rights and to general principles of equity,
including principles of commercial reasonableness, good faith and fair dealing.
4.3 CAPITALIZATION.
(a) The authorized capital stock of Tekna consists of (i) 1,000,000
shares of common stock, $1.00 par value, of which 850,000 shares are validly
issued and outstanding, fully paid and nonassessable. All outstanding capital
stock of Tekna was issued in accordance with applicable federal and state
securities laws. Except as set forth on Schedule 4.3(a) hereto, there are no
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options, warrants, calls, convertible notes, agreements, commitments or other
rights presently outstanding that would obligate Tekna or any of the Tekna
Shareholders to issue, deliver or sell shares of its capital stock, or to grant,
extend or enter into any such option, warrant, call, convertible
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note, agreement, commitment or other right. In addition to the foregoing, as of
the date hereof, Tekna has no bonds, debentures, notes or other indebtedness
issued or outstanding that have voting rights in Tekna. Schedule 4.3(a) sets
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forth a list of (i) all holders of record of (A) Tekna Stock, and (B) options,
warrants, convertible notes or other rights to purchase capital stock of Tekna
(collectively, "Tekna Stock Rights"); (ii) the number of shares held by each
Tekna Shareholder and the number of shares of capital stock of Tekna represented
by the Tekna Stock Rights; and (iii) the exercise price for each Tekna Stock
Right.
(b) All of the issued and outstanding shares of capital stock of Tekna
are validly issued, fully paid and nonassessable. Except as set forth on
Schedule 4.3(b) hereto, each Tekna Shareholder represents and warrants that the
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Tekna Stock held by such Tekna 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. Tekna has no subsidiaries and does not otherwise own or
control, directly or indirectly, any equity interest, or any security
convertible into an equity interest, in any corporation, partnership, limited
liability company, joint venture, association or other business entity (any of
the foregoing, an "Entity").
4.5 NO CONFLICTS, REQUIRED FILINGS AND CONSENTS. Except as set forth on
Schedule 4.5 hereto, none of (i) the execution and delivery of this Agreement by
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Tekna or the Tekna Shareholders, (ii) the consummation by Tekna and the Tekna
Shareholders of the transactions contemplated hereby or (iii) compliance by
Tekna with any of the provisions hereof will:
(a) conflict with or violate the Articles of Incorporation or Bylaws
of Tekna;
(b) result in a violation of any statute, ordinance, rule, regulation,
order, judgment or decree applicable to Tekna or any of the Tekna Shareholders,
or by which Tekna 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 Tekna is a party or by which Tekna 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 Tekna; 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
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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 VSCA; or (ii) any other individual or Entity (collectively, a
"Person").
4.6 FINANCIAL STATEMENTS. Tekna has heretofore furnished Parent with a
true and complete copy of (i) the unaudited financial statements of Tekna for
the period ended December 31, 1997, and for the six month period ended June 30,
1998 and (ii) the balance sheet of Tekna dated as of August 7, 1998 (all of the
foregoing collectively herein referred to as the "Tekna Financial Statements").
Except as disclosed therein, the Tekna Financial Statements have been prepared
in accordance with GAAP (except for the absence of footnotes and normal year end
adjustments) consistently followed throughout the period indicated, and present
fairly, in all material respects, the financial position and operating results
of Tekna as of the dates, and during the periods, indicated therein.
4.7 ABSENCE OF CHANGES. Except as provided in Schedule 4.7 hereto and
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except as contemplated hereby, since December 31, 1997 (a) Tekna 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 Tekna; (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 Tekna in
respect of its stock, whether in cash or property, and (ii) no purchase or
redemption of any share of the capital stock of Tekna; (d) there has been no
declaration, payment, or commitment for the payment, by Tekna, of a bonus or
other additional salary, compensation, or benefit to any employee of Tekna 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 Tekna, or waiver
of any right of Tekna; (f) there have been no capital expenditures in excess of
$10,000 for any single item, or $27,000 in the aggregate; (g) there has been no
change in accounting methods or practices or revaluation of any asset of Tekna
(other than Tekna 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
Tekna 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 Tekna Business or the
operations of Tekna; (i) there has been no loan by Tekna, or guaranty by Tekna
of any loan, to any employee of Tekna; (j) Tekna 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 Tekna; (k) there has been no
termination or resignation of any key employee or officer of Tekna, and to the
knowledge of Tekna, 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 Tekna Business, to which Tekna is a party or
by which it is bound, except in the ordinary course of business, or except as
expressly contemplated hereby; (m) Tekna has not failed to satisfy any of its
debts, obligations or liabilities related to the Tekna Business or the assets of
Tekna as the same become due and owing (except for Tekna 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 Tekna to do any
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of the foregoing; and (o) there has been no other event or condition of any
character pertaining to and materially and adversely affecting the assets,
business or financial condition of Tekna.
4.8 UNDISCLOSED LIABILITIES. Except as set forth on Schedule 4.8 hereto,
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Tekna 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 Tekna; (b) liabilities reflected on the
Tekna Financial Statements; and (c) liabilities incurred as a result of the
transactions contemplated hereby.
4.9 TITLE TO PROPERTIES. Except as set forth on Schedule 4.9 hereto,
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Tekna has good and marketable title to all tangible property and assets used in
the Tekna Business, and good and valid title to its leasehold interests, in each
case, free and clear of any and all Liens other than Permitted Liens (as defined
in Section 10.11 hereof).
4.10 EQUIPMENT. Tekna 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 Tekna Business in the
manner in which it has been and is now operated by Tekna ("the Tekna
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
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Tekna Equipment is in good condition and repair, ordinary wear and tear
excepted.
4.11 INTELLECTUAL PROPERTY.
(a) Tekna has heretofore furnished Parent with a true and complete
list of all material proprietary technology, patents, patent rights, trademarks,
trademark rights, trade names, trade name rights, service marks, service ▇▇▇▇
rights, and copyrights (and all pending applications for any of the foregoing)
used by Tekna in the conduct of the Tekna Business (together with trade secrets
and know how used in the conduct of the Tekna Business, the "Tekna Intellectual
Property Rights"). Tekna owns, or is validly licensed or otherwise has the
right to use or exploit, as currently used or exploited, all of the Tekna
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 Tekna, threatened, that Tekna is infringing or
otherwise adversely affecting the rights of any Person with regard to any Tekna
Intellectual Property Right. No Person is infringing the rights of Tekna with
respect to any Tekna Intellectual Property Right. Neither Tekna nor any
employee, agent or independent contractor of Tekna, in connection with the
performance of such Person's services with Tekna, 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) Tekna has heretofore furnished Parent with a true and complete
list of all material computer software used by Tekna in the conduct of the Tekna
Business (the "Tekna Software"). Tekna currently licenses, or otherwise has the
legal right to use, all of the Tekna
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Software (including any upgrade, alteration or enhancement with respect
thereto), and all of the Tekna Software is being used in compliance with any
applicable license or other agreement.
4.12 REAL PROPERTY. Except as set forth on Schedule 4.12 hereto:
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(a) Tekna has a good and valid leasehold interest in all real property
(including all buildings, improvements and fixtures thereon) used in the
operation of the Tekna Business (the "Tekna Real Property"). Tekna owns no real
property. Except for Permitted Liens, and for the items set forth on Schedule
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4.12, there are no Liens on Tekna's interest in any of the Tekna Real Property.
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Schedule 4.12 lists each county and state where any Tekna Real Property is
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located, or where Tekna has ever leased or owned any real property.
(b) There are no parties in possession of any portion of the Tekna
Real Property other than Tekna, whether as sublessees, subtenants at will or
trespassers.
(c) To the knowledge of Tekna, 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
Tekna Leases (as hereinafter defined), any material expenditure by Tekna to
modify or improve any of the Tekna Real Property to bring it into compliance
therewith.
4.13 LEASES. Schedule 4.13 hereto sets forth a list of all leases pursuant
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to which Tekna leases, as lessor or lessee, real or personal property used in
operating the Tekna Business or otherwise (the "Tekna Leases"). Copies of the
Tekna Leases, all of which have previously been provided to Parent, are true and
complete copies thereof. All of the Tekna Leases are valid, binding and
enforceable against Tekna and, to the knowledge of Tekna, against the other
parties thereto, in accordance with their respective terms, and there is not
under any such Tekna Lease any existing default by Tekna, or, to the knowledge
of Tekna, by any other party thereto, or any condition or event that, with
notice or lapse of time or both, would constitute a default. Tekna has not
received notice that the lessor of any of the Tekna Leases intends to cancel,
suspend or terminate such Tekna Lease or to exercise or not exercise any option
thereunder.
4.14 CONTRACTS. Schedule 4.14 hereto sets forth a true and complete list
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of all contracts, agreements and commitments (whether written or oral) to which
Tekna 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 Tekna Intellectual Property Rights and the
like (collectively, the "Tekna Contracts"); excepting only those Tekna Contracts
which involve less than $10,000 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 Tekna is a party or by which it or any of its properties
or assets is otherwise bound, and that are not listed on Schedule 4.14, is less
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than $50,000 (calculating such value by adding together the value of rights and
obligations, and not by determining the net amount thereof).
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True and complete copies of all Tekna Contracts (or a true and complete
narrative description of any oral Tekna Contract) have previously been provided
to Parent. Neither Tekna nor, to the knowledge of Tekna, any other party to any
of the Tekna 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 Tekna Contracts, or (y) has waived any right it may have under
any of the Tekna Contracts, the waiver of which would have a material adverse
effect on the business, assets or financial condition or prospects of Tekna.
All of the Tekna Contracts constitute the valid and binding obligations of
Tekna, enforceable in accordance with their respective terms, and, to the
knowledge of Tekna, of the other parties thereto.
4.15 DIRECTORS AND OFFICERS. Schedule 4.15 hereto sets forth a list, as of
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the Closing Date, of the name of each director and officer of Tekna and the
position(s) held by each.
4.16 PAYROLL INFORMATION. Tekna has previously provided Parent with a true
and complete copy of the payroll report of Tekna dated [August 1], 1998, showing
all current employees of Tekna and their current levels of compensation, other
than bonuses and other extraordinary compensation, all of which bonuses and
other extraordinary compensation are set forth in Schedule 4.16 hereto. Tekna
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has paid all compensation required to be paid to employees of Tekna on or prior
to the date hereof other than compensation (and bonuses pursuant to arrangements
described in Schedule 4.16) accrued in the current pay period.
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4.17 LITIGATION. Except as set forth on Schedule 4.17 hereto, there is no
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suit, action, claim, investigation or proceeding pending or, to the knowledge of
Tekna, threatened against or affecting Tekna or the Tekna Business, nor is there
any judgment, decree, injunction or order of any applicable Governmental Entity
or arbitrator outstanding against Tekna.
4.18 EMPLOYEE BENEFIT PLANS/LABOR RELATIONS.
(a) Except as disclosed in Schedule 4.18 hereto, there are no employee
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benefit plans, agreements or arrangements maintained by Tekna, 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, "Tekna Benefit Plans"). All Tekna 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 Tekna under any Tekna Benefit Plan.
(b) Tekna 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 Tekna; no representation campaign or election is now in progress
with respect to any employee of Tekna; and there are no labor disputes,
grievances, controversies, strikes or requests for union representation pending,
or, to the knowledge of Tekna, threatened, relating to or affecting the Tekna
Business. To the knowledge of Tekna, no event has occurred that could give rise
to any such dispute, controversy, strike or request for representation.
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4.19 ERISA.
(a) All Tekna 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 Tekna 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 Tekna Benefit Plan is subject to Title IV of
ERISA or Section 412 of the Code. Tekna 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 Tekna Benefit Plans that would subject Tekna
to the penalty or tax imposed under Section 502(i) of ERISA or Section 4975 of
the Code. Tekna 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 Tekna 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 Tekna,
(ii) increase any benefit otherwise payable under any Tekna 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 Tekna 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 Tekna under Section 4001 of ERISA or
Section 414 of the Code, within the 12-month period ending on the Closing Date.
Tekna has not incurred any liability to the Pension Benefit Guaranty Corporation
in respect of any Tekna Benefit Plan that remains unpaid.
4.20 TAXES.
(a) Tekna 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 Tekna on or prior
to the Closing Date. Tekna has duly and timely paid all taxes and other
governmental charges, and all interest and penalties with respect thereto,
required to be paid by Tekna (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 Tekna Financial Statements). As of the Closing Date, all
deficiencies proposed as a result of any audit have been paid or settled.
(b) Tekna is not a party to, or bound by, or otherwise in any way
obligated under, any tax sharing or similar agreement.
(c) Tekna has not consented to have the provisions of Section
341(f)(2) of the Code (or comparable state law provisions) apply to it, and
Tekna 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.
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4.21 COMPLIANCE WITH APPLICABLE LAWS. Tekna 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
Tekna, as appropriate, and to carry on the Tekna Business as now conducted (the
"Tekna Permits"). To the knowledge of Tekna, Tekna is in material compliance
with all applicable laws, ordinances and regulations and the terms of the Tekna
Permits. Except as set forth on Schedule 4.21 hereto, all of the Tekna Permits
-------------
are fully assignable by Tekna in connection with the Merger. Schedule 4.21 sets
-------------
forth a true and complete list of all Tekna 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 Tekna and the Tekna Shareholders have adopted and approved this Agreement and
the transactions contemplated hereby (including the Merger).
4.23 BROKERS. Except as set forth on Schedule 4.23 hereto, no broker or
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finder is entitled to any broker's or finder's fee or other commission in
connection with the transactions contemplated hereby as a result of arrangements
made by or on behalf of Tekna.
4.24 ENVIRONMENTAL MATTERS.
(a) To the knowledge of Tekna, no real property currently or formerly
owned or operated by Tekna is contaminated with any Hazardous Substance (as
hereinafter defined).
(b) Tekna is not a party to any litigation or administrative
proceeding nor, to the knowledge of Tekna, is any litigation or administrative
proceeding threatened against it, that, in either case, asserts or alleges that
Tekna (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 Tekna, 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 Tekna containing materials that, if known to
be present in soil or ground water, would require cleanup, removal or other
remedial action under Environmental Law.
(d) To the knowledge of Tekna, Tekna is not subject to any judgment,
order or citation related to or arising out of any Environmental Law and has not
been named or listed as a potentially responsible party by any Governmental
Entity in a matter related to or arising out of any Environmental Law.
(e) For purposes hereof, (i) the term "Environmental Law" means any
federal, state or local law (including statutes, regulations, ordinances, codes,
rules, judicial opinions and other governmental restrictions and requirements)
relating to the discharge of air pollutants, water
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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 Tekna, any employee of Tekna 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
Tekna, or in any Person from whom or to whom Tekna leases any real or personal
property, or in any other Person with whom Tekna 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 Tekna (collectively, "Tekna Accounts Receivable") were acquired
by Tekna in the ordinary course of business arising from bona fide transactions.
There are no set-offs, counterclaims or disputes asserted with respect to any
Tekna Accounts Receivable that would result in claims in excess of $10,000 and,
to the knowledge of Tekna and subject to such Dollar limit, all Tekna Accounts
Receivable are collectible in full. Tekna has previously provided Parent with a
true and complete aging report prepared as of August 7, 1998 which shows the
time elapsed since invoice date for all Tekna Accounts Receivable as of such
date.
4.27 ACCOUNTS PAYABLE. All material accounts, notes, contracts and other
amounts payable of Tekna (collectively, "Tekna Accounts Payable") are currently
within their respective terms, and are neither in default nor otherwise past due
by more than 90 days. Tekna has previously provided Parent with a true and
complete aging report prepared as of August 7, 1998 which shows the time elapsed
since invoice date for all Tekna Accounts Payable as of such date.
4.28 INSURANCE. Tekna currently maintains, in full force and effect, all
insurance policies that are required to be maintained for the conduct of the
Tekna Business or the ownership of Tekna's property (both real and personal)
(collectively, the "Tekna Insurance Policies"). The Tekna Insurance Policies
are listed on Schedule 4.28 hereto, and true and complete copies of all Tekna
-------------
Insurance Policies have previously been provided to Parent. Tekna (a) is not in
default regarding the provisions of any Tekna 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. Tekna 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 TEKNA DEBT. As of the date hereof, the Tekna Debt is not in excess of
$656,272.
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4.31 ACCREDITED INVESTORS; INVESTMENT PURPOSE. Each Tekna Shareholder
represents that she (a) is an "accredited investor" as such term is defined in
Rule 501 of Regulation D promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Securities Act"); (b) is
acquiring the Parent Stock solely for her own account for investment and not
with a view to, or for sale in connection with, any distribution thereof; and
(c) will not, directly or indirectly, offer, transfer, sell, pledge, hypothecate
or otherwise dispose of any Parent Stock (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of any such shares) except in compliance
with the Securities Act and the rules and regulations thereunder, other
applicable laws, rules and regulations, and the Second Amended and Restated
Stockholders' Agreement of Parent, dated December 17, 1997 (the "Stockholders'
Agreement).
4.32 RESTRICTIONS ON TRANSFER. Each Tekna Shareholder acknowledges that
(a) the Parent Stock received by her hereunder has not been registered under the
Securities Act; (b) the Parent Stock may be required to be held indefinitely,
and she must continue to bear the economic risk of the investment in such shares
unless such shares are subsequently registered under the Securities Act or an
exemption from such registration is available; (c) there may not be any public
market for the Parent Stock in the foreseeable future; (d) Rule 144 promulgated
under the Securities Act is not presently available with respect to sales of any
securities of Parent, and such Rule is not anticipated to be available in the
foreseeable future; (e) when and if Parent Stock may be disposed of without
registration in reliance upon Rule 144, such disposition can be made only in
limited amounts and in accordance with the terms and conditions of such Rule;
(f) if the exemption afforded by Rule 144 is not available, public sale without
registration will require the availability of an exemption under the Securities
Act; (g) the Parent Stock is subject to the terms and conditions of the
Stockholders' Agreement; (h) restrictive legends shall be placed on the
certificates representing Parent Stock; and (i) a notation shall be made in the
appropriate records of Parent indicating that Parent Stock is subject to
restrictions on transfer and, if Parent should in the future engage the services
of a stock transfer agent, appropriate stop-transfer instructions will be issued
to such transfer agent with respect to Parent Stock.
4.33 ABILITY TO BEAR RISK; ACCESS TO INFORMATION; SOPHISTICATION. Each
Tekna Shareholder represents and warrants that (a) her financial situation is
such that she can afford to bear the economic risk of holding Parent Stock
acquired by her hereunder for an indefinite period; (b) she can afford to suffer
the complete loss of such Parent Stock; (c) she has been granted the opportunity
to ask questions of, and receive answers from, representatives of Parent
concerning the terms and conditions of the Parent Stock and to obtain any
additional information that she deems necessary; (d) her knowledge and
experience in financial business matters is such that she is capable of
evaluating the merits and risk of ownership of the Parent Stock; (e) she has
carefully reviewed the terms of the Stockholders' Agreement and has evaluated
the restrictions and obligations contained therein; and (f) she (i) has reviewed
the Private Placement Memorandum of Parent dated July 14, 1998, as amended (the
"Memorandum"), (ii) has carefully examined the Memorandum and has had an
opportunity to ask questions of, and receive answers from, representatives of
Parent, and to obtain additional information concerning Parent and its
Subsidiaries (as hereinafter defined), and (iii) does not require additional
information regarding Parent or its Subsidiaries in connection with the Merger.
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4.34 DISCLOSURE. No statement of fact by Tekna or any Tekna Shareholder
contained herein and no written statement of fact furnished by Tekna or any
Tekna 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 PROJECTION OF TEKNA 1998 GROSS REVENUE. The projected gross revenue
of Tekna for calendar year 1998 is $3,500,000 (the "Projection").
4.36 NATURE OF LIABILITIES. Any unpaid legal, accounting or other fees of
Tekna are solely and directly related to the Merger.
4.37 ▇▇▇▇▇▇ ▇▇▇▇▇▇ AGREEMENT. The Professional Services Agreement between
Tekna and Universal Leaf Tobacco Company ("Universal Leaf"), dated May 18, 1998,
and the fact that Universal Leaf is a client of Tekna does not violate any
agreement (whether written or oral) or other business relationship or
understanding between Tekna and ▇▇▇▇▇▇ ▇▇▇▇▇▇ U.S.A. or require the consent of
▇▇▇▇▇▇ ▇▇▇▇▇▇ U.S.A.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Each of Parent and Sub jointly and severally represents and warrants to
Tekna and the Tekna Shareholders, which representations and warranties shall
survive the Closing in accordance with Section 10.1 hereof, as follows:
5.1 ORGANIZATION AND QUALIFICATION. Each of Parent and its Subsidiaries
(as defined in Section 10.11 hereof) is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation.
Each of Parent and its Subsidiaries has the requisite corporate power and
authority to carry on its business as it is now being conducted and is duly
qualified or licensed to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary. Complete and
correct copies of the Certificates of Incorporation and Bylaws of Parent and Sub
as in effect on the date hereof are attached, 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
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assuming the due authorization, execution and delivery by Tekna and the Tekna
Shareholders, constitutes the valid and binding obligation of each of Parent and
Sub, enforceable against each of Parent and Sub in accordance with its terms,
subject, in each case, to bankruptcy, insolvency, reorganization, moratorium and
similar laws of general application relating to or affecting creditors' rights
and to general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing.
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
VSCA); or (ii) any other Person.
5.4 LITIGATION. Except as set forth on Schedule 5.4 hereto, there is no
------------
suit, action, claim, investigation or proceeding pending or, to the knowledge of
Parent, threatened against or affecting Parent or its Subsidiaries, nor is there
any judgment, decree, injunction or order of any applicable Governmental Entity
or arbitrator outstanding against Parent or its Subsidiaries that, either
individually or in the aggregate, would have a material adverse effect on the
assets, business or financial condition of Parent and its Subsidiaries, taken as
a whole.
5.5 BROKERS. Except as disclosed on Schedule 5.5 hereto, no broker or
------------
finder is entitled to any broker's or finder's fee in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
Parent or Sub.
5.6 PARENT STOCK.
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(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 12,537,764 shares are
validly issued and outstanding (without taking into account any shares of Parent
Stock to be issued pursuant hereto or to the potential acquisition of LAVA
GmbH), 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 Tekna 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 Tekna 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
March 31, 1998 (all of the foregoing, collectively, "Parent Financial
Statements"). The Parent Financial Statements present fairly in all material
respects the consolidated financial position, results of operations,
shareholders' equity and cash flow of Parent at the respective dates or for the
respective periods to which they apply. Except as disclosed therein, such
statements and related notes have been prepared in accordance with GAAP
consistently applied throughout
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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 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
-18-
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 Tekna in connection herewith contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact necessary in
order to make the statements herein or therein contained not misleading.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 CONDUCT OF BUSINESS BY TEKNA 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, Tekna shall carry on its business in
the usual, regular and ordinary course in substantially the same manner as
heretofore conducted, use reasonable efforts to preserve intact its present
business organization, keep available the services of its employees and preserve
its relationships with customers, suppliers, licensors, licensees, distributors
and others having business dealings with Tekna 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, Tekna 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 Tekna or any other equity security thereof or any right,
warrant, or option to acquire any such share or other security;
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(b) issue, deliver, sell, pledge or otherwise encumber any share of
its capital stock, any other voting security issued by Tekna or any security
convertible into, or any right, warrant or option to acquire any such share or
voting security;
(c) amend its Articles of Incorporation, Bylaws or other comparable
organizational documents;
(d) acquire or agree to acquire (i) by merging or consolidating with,
or by purchasing a substantial portion of the assets of, or by any other manner,
any business or any Entity or division thereof, or (ii) any assets that are
material, individually or in the aggregate, to Tekna;
(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 Tekna,
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, Tekna and Parent shall afford to the other of them and the other'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, which shall not be unreasonably withheld,
to its properties, books, contracts, commitments, records and personnel and,
during such period, shall furnish promptly to the other of them all information
concerning its business, properties and personnel as the other may reasonably
request. Parent and Tekna, and their respective 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 the other of
them.
6.3 FILINGS; TAX ELECTIONS. Tekna shall promptly provide Parent with
copies of all filings made by Tekna with any Governmental Entity in connection
herewith and the transactions contemplated hereby. Tekna shall, before settling
or compromising any material income tax liability of Tekna, consult with Parent
and its advisors as to the positions and elections that will be taken or made
with respect to such matter.
6.4 PUBLIC ANNOUNCEMENTS. The parties agree that, except as may otherwise
be required to comply with applicable laws and regulations (including applicable
securities laws) or to obtain consents required hereunder, public disclosure of
the transactions contemplated hereby shall be made only upon or after the
consummation of the Merger. Any such disclosure shall be coordinated by Parent,
and none of the Tekna Shareholders shall make any such disclosure without the
prior written consent of Parent.
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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) Tekna hereby covenants and agrees that at the Effective Time, all
of the Tekna Stock Rights (all of which are set forth on Schedule 4.3(a) hereto)
---------------
shall have been properly canceled and, except for the right to receive options
to acquire Parent Stock described in Section 6.6(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 Tekna Stock Rights shall receive options to purchase the
number of shares of validly issued, fully paid and nonassessable Parent Stock,
at the exercise price per share, as set forth on Schedule 6.6(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").
(c) Parent further covenants that (i) at the Effective Time, it will
issue options to purchase up to 125,000 shares of validly issued, fully paid and
nonassessable Parent Stock, at an exercise price of $10 per share and vesting
20% per year over each of five years, to those employees of Tekna (excluding the
Tekna Shareholders) listed on Schedule 6.6(c) hereto, all of which options shall
---------------
be issued pursuant to the Parent Stock Option Plan; and (ii) to the extent that
as of the Closing Date fewer than 125,000 such options are granted, the balance
of such options may be granted within three months thereafter, to employees of
the Surviving Corporation (excluding the Tekna Shareholders) designated by the
Tekna Shareholders and approved by Parent.
6.7 FURTHER ASSURANCES. From time to time after the Effective Time, upon
the reasonable request of any party hereto, the other party or parties hereto
shall execute and deliver or cause to be executed and delivered such further
instruments, and take such further action, as the requesting party may
reasonably request in order to effectuate fully the purposes, terms and
conditions hereof.
6.8 ESCROWED STOCK. Parent covenants that, at Closing and until March 1,
1999, it will escrow 50,000 shares of Parent Stock, at $10.00 per share (the
"Escrowed Stock"), pursuant to the terms of an Escrow Agreement substantially in
the form attached hereto as Exhibit "H" among the Tekna Shareholders, SunTrust
----------
Bank, Atlanta ("Escrow Agent"), and Parent ("Escrow Agreement"). Tekna's
Shareholders may be entitled to all or a portion of the Escrowed Stock on March
1, 1999, depending upon the gross revenue for Tekna for the period from January
1, 1998 through the Closing prepared in accordance with GAAP combined on a pro-
forma basis with Tekna revenue as reflected on Parent's books for the period
from Closing through December 31, 1998, ("Actual Revenue") relative to the
Projection, as follows:
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(a) If Actual Revenue is between 75% and 100% of the Projection, then
Tekna's Shareholders will be entitled to a pro rata portion of the Escrowed
Stock; and
(b) If Actual Revenue is less than $2,625,000, then Tekna's Shareholders
will be entitled to none of the Escrowed Stock.
Parent and Tekna's Shareholders shall notify the Escrow Agent accordingly and,
pursuant to the Escrow Agreement, (i) the portion of the Escrowed Stock to which
the Tekna Shareholders are entitled, as determined by Parent in the foregoing
manner, will be delivered to them, pro rata in accordance with their respective
Tekna shareholdings immediately prior to the Effective Time; and (ii) any
remaining Escrowed Stock shall be returned to Parent.
6.9 EMPLOYMENT AGREEMENTS. Each of the Tekna Shareholders shall enter
into an employment agreement with Sub, substantially in the form of Exhibit "I"
-----------
hereto ("Employment Agreement").
-
6.10 TEKNA OPTIONHOLDERS. Each of the existing Tekna optionholders, as
identified on Schedule 6.6(b) hereto ("Tekna Optionholders"), shall make the
---------------
representations to Parent and Sub in the form of Exhibit "J" hereto.
-----------
Furthermore, any Tekna Optionholder who is not an "accredited investor" as
defined in the Securities Act shall acknowledge his or her Purchaser
representative, who shall complete a questionnaire to Parent's satisfaction,
such questionnaire and acknowledgment to be in the form of Exhibit "K" hereto.
-----------
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO OBLIGATION OF TEKNA AND THE TEKNA SHAREHOLDERS TO EFFECT
THE MERGER. The obligations of Tekna and the Tekna Shareholders to effect the
Merger shall be subject to the fulfillment at or prior to the Effective Time of
the following conditions:
(a) Parent and Sub shall have performed in all material respects their
respective agreements contained herein required to be performed at or prior to
the Effective Time, and the representations and warranties of Parent and Sub
contained herein shall be true 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 Tekna at the Closing, Parent's Closing Certificate, and (ii) the
appropriate officers of Sub shall have executed and delivered to Tekna 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;
---------------
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(d) Tekna shall have received corporate certificates of good standing
for Parent and Sub, and a copy of the Certificate of Incorporation for Parent
and Sub, respectively, both as certified by the Secretary of State of Delaware;
(e) there shall have been delivered to each of the Tekna Shareholders
at the Closing, duly executed by Parent, an Agreement to be Bound to the
Registration Rights Agreement of Parent, dated as of Closing Date (the
"Agreement to be Bound to the Registration Rights Agreement"), in the form of
Exhibit "B" hereto;
-----------
(f) Parent shall have executed and delivered at the Closing (i) a
Nonqualified Stock Option Agreement for each of the Persons listed on Schedule
--------
6.6(b) hereto as receiving options to purchase Parent Stock, in the form of
------
Exhibit "C-1" hereto; and (ii) an Incentive Stock Option Agreement for each of
-------------
the Persons listed on Schedule 6.6(c) hereto as receiving options to purchase
Parent Stock, in the form of Exhibit "C-2" hereto (collectively, "Options");
-------------
(g) Tekna 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) Tekna shall have received from Parent and Sub such other documents
as Tekna's counsel shall have reasonably requested, in form and substance
reasonably satisfactory to Tekna's counsel; and
(i) The Escrow Agreement shall have been executed and delivered at the
Closing by Parent and the Escrow Agent.
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) Tekna and the Tekna Shareholders shall have performed in all
material respects their respective agreements contained herein required to be
performed at or prior to the Effective Time, and the representations and
warranties of Tekna and the Tekna Shareholders 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 Tekna shall have executed and
delivered to Parent at the Closing, Tekna's Closing Certificate.
(c) Tekna and the Tekna Shareholders 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 Tekna Shareholders, (i) an Agreement to be Bound to the
Stockholders' Agreement, in
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the form of Exhibit "F" hereto; (ii) an Agreement to be Bound to the
-----------
Registration Rights Agreement; and (iii) an Employment Agreement.
(e) Parent shall have received a corporate certificate of good
standing for Tekna, and a copy of the Articles of Incorporation of Tekna, both
as certified by the State Corporation Commission of Virginia;
(f) as of the date three business days prior to the Closing Date the
Tekna Debt shall be no greater than $656,272;
(g) Tekna shall have complied with its obligations under Section
6.6(a) hereof; Parent shall have received, at the Closing, Options executed and
delivered by each of the recipients thereof; and the Tekna Optionholders shall
have complied with all of their obligations under Section 6.10 hereof;
(h) Parent shall have received, at the Closing, a duly executed
opinion of counsel to Tekna and the Tekna Shareholders, substantially in the
form of Exhibit "G" hereto;
-----------
(i) Parent shall have received from Tekna or the Tekna 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;
(j) Parent shall have received evidence satisfactory to it that at the
Closing the assets and properties used in the Tekna Business are free and clear
of all Liens other than Permitted Liens (as hereinafter defined); and
(k) Parent shall have received, at the Closing, the Escrow Agreement
executed and delivered by the Tekna Shareholders and the Escrow Agent,
respectively.
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION BY PARENT.
(a) Parent shall indemnify and hold the Tekna Shareholders and Tekna's
directors, officers and employees (collectively, the "Tekna Indemnified
Parties") harmless from and against, and agree promptly to defend each of the
Tekna Indemnified Parties from and reimburse each of the Tekna 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 "Tekna Loss") that any of the Tekna
Indemnified Parties may at any time suffer or incur, or become subject to, as a
result of or in connection with:
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(i) any breach or inaccuracy of any of the representations and
warranties made by Parent or Sub in or pursuant hereto, or in any instrument,
certificate or affidavit delivered by Parent or Sub at the Closing in accordance
with the provisions hereof;
(ii) any failure by Parent or Sub to carry out, perform, satisfy
and discharge any of its respective covenants, agreements, undertakings,
liabilities or obligations hereunder or under any of the documents and materials
delivered by Parent pursuant hereto; and
(iii) any suit, action or other proceeding arising out of, or
in any way related to, any of the matters referred to in this Section 8.1(a).
(b) Notwithstanding any other provision hereof to the contrary,
Parent shall not have any liability under Section 8.1(a)(i) above (i) unless the
aggregate of all Tekna 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 $7,000,000 in
the aggregate, and (iii) unless the Tekna 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 Tekna 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 TEKNA SHAREHOLDERS.
(a) The Tekna Shareholders, jointly and severally, 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 Tekna or the Tekna Shareholders in or pursuant hereto, or in
any instrument certificate or affidavit delivered by any of the same at the
Closing in accordance with the provisions hereof;
(ii) any failure by Tekna or any of the Tekna Shareholders to
carry out, perform, satisfy and discharge any of their respective covenants,
agreements, undertakings, liabilities or obligations hereunder or under any of
the documents and materials delivered by Tekna 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.
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(b) Notwithstanding the above, none of the Tekna Shareholders shall
have any liability under Section 8.2(a)(i) above (i) unless the aggregate of all
Parent Losses for which the Tekna 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 $7,000,000 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 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 the Indemnified Party has determined has given
or could give rise to a right of indemnification hereunder. Subject to the
Indemnifying Party's right to defend in good faith third party claims as
hereinafter provided, the Indemnifying Party shall satisfy its obligations under
this Article VIII within 30 days after the receipt of written notice thereof
from the Indemnified Party. Any amounts paid thereafter shall include interest
thereon for the period commencing at the end of such 30-day period and ending on
the actual date of payment, at a rate of 15% per annum, or, if lower, at the
highest rate of interest permitted by applicable law at the time of such
payment.
(b) If the Indemnified Party shall notify the Indemnifying Party of
any Claim pursuant to Section 8.3(a) hereof, and if such Claim relates to a
Claim asserted by a third party against the Indemnified Party that the
Indemnifying Party acknowledges is a Claim for which it must indemnify or hold
harmless the Indemnified Party under Section 8.1 or 8.2 hereof, as the case may
be, the Indemnifying Party shall have the right, at its sole cost and expense,
to employ counsel of its own choosing to defend any such Claim asserted against
the Indemnified Party. Notwithstanding anything to the contrary in the
preceding sentence, if the Indemnified Party (i) reasonably believes that its
interests with respect to a Claim (or any material portion thereof) are in
conflict with the interests of the Indemnifying Party with respect to such Claim
(or portion thereof), and (ii) promptly notifies the Indemnifying Party, in
writing, of the nature of such conflict, then the Indemnified Party shall be
entitled to choose, at the sole cost and expense of the Indemnifying Party,
independent counsel to defend such Claim (or the conflicting portion thereof).
The Indemnified Party shall have the right to participate in the defense of any
Claim at its own expense (except to the extent provided in the preceding
sentence), but the Indemnifying Party shall retain control over such litigation
(except as provided in the preceding sentence). The Indemnifying Party shall
notify the Indemnified Party in writing, as promptly as possible (but in any
case before the due date for the answer or response to a Claim) after receipt of
the notice of Claim given by the Indemnified Party to the Indemnifying Party
under Section 8.3(a) hereof, of its election to defend in
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good faith any such third party Claim. For so long as the Indemnifying Party is
defending in good faith any such Claim asserted by a third party against the
Indemnified Party, the Indemnified Party shall not settle or compromise such
Claim without the prior written consent of the Indemnifying Party. The
Indemnified Party shall cooperate with the Indemnifying Party in connection with
any such defense and shall make available to the Indemnifying Party or its
agents all records and other materials in the Indemnified Party's possession
reasonably required by it for its use in contesting any third party Claim;
provided, however, that the Indemnifying Party shall have agreed, in writing, to
keep such records and other materials confidential except (i) to the extent
required for defense of the relevant Claim, or (ii) as required by law or court
order. Whether or not the Indemnifying Party elects to defend any such Claim,
the Indemnified Party shall have no obligations to do so. Within 30 days after a
final determination (including a settlement) has been reached with respect to
any Claim contested pursuant to this Section 8.3(b), the Indemnifying Party
shall satisfy its obligations hereunder with respect thereto. Any amount paid
thereafter shall include interest thereon for the period commencing at the end
of such 30-day period and ending on the actual date of payment, at a rate of 15%
per annum, or, if lower, at the highest rate of interest permitted by applicable
law at the time of such payment.
8.4 PAYMENT. Any Indemnifying Party may, at such Indemnifying Party's
option, pay all or part of any amount due under this Article VIII by delivery of
shares of Parent Stock having a value equal to the amount due (to the extent
that such Party owns sufficient shares of Parent Stock). For the purpose of this
provision, the value of Parent Stock shall be deemed to be $10 per share.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 TERMINATION. This Merger Agreement may be terminated at any time
prior to the Effective Time:
(a) by mutual written consent of Parent and Tekna;
(b) by Tekna, 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 August 31, 1998;
(c) by Parent, upon a material breach hereof on the part of Tekna or
any of the Tekna Shareholders which has not been cured and which would cause any
condition set forth in Section 7.2 hereof to be incapable of being satisfied by
August 31, 1998;
(d) by Parent or Tekna 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
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(e) by either Parent or Tekna if the Merger shall not have been
consummated on or before August 31, 1998 (provided the terminating party is not
otherwise in material breach of its representations, warranties or obligations
hereunder).
9.2 FEES AND EXPENSES.
(a) If the Merger is consummated, all costs and expenses incurred in
connection herewith and the transactions contemplated hereby shall be paid by
the Surviving Corporation; provided, however, that (i) the Tekna Shareholders
shall pay all fees and expenses (including agents, counsel and other advisors)
of Tekna and themselves that are not solely and directly related to the Merger;
and (ii) Parent and the Tekna Shareholders shall split evenly the Escrow Agent's
fee.
(b) If the Merger is not consummated for a reason other than the
willful and material breach hereof by a party, all fees and expenses incurred in
connection herewith and the transactions contemplated hereby shall be paid by
the party incurring such fees or expenses.
(c) If the Merger is not consummated because of a willful and material
breach hereof by any party, the nonbreaching party or parties shall be entitled
to pursue all legal and equitable remedies against the breaching party for such
breach including specific performance and all fees and expenses incurred by the
nonbreaching party or parties in connection with enforcing its or their rights
hereunder with respect to such breach shall be paid by the breaching party.
9.3 AMENDMENT. This Merger Agreement may be amended by Parent, Sub and
the Tekna Shareholders at any time before or after approval hereof by the Tekna
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 Tekna
Shareholders, or (iii) under applicable law would require approval of the Tekna
Shareholders, in any such case referred to in clauses (i), (ii) and (iii),
without the further approval of the Tekna 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 Tekna 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
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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
Tekna or Parent, and shall bind the legal representatives, assigns and
successors of Tekna, the Tekna Shareholders and Parent, for a period of two
years after the Effective Date (other than the representations and warranties
contained in Sections 4.18, 4.19, 4.20 and 4.24 hereof, which shall survive for
the applicable statute of limitations).
10.2 NOTICES. All notices or other communications under this Agreement
shall be in writing and shall be given (and shall be deemed to have been duly
given upon receipt) by delivery in Person, by telecopy (with confirmation of
receipt), or by registered or certified mail, postage prepaid, return receipt
requested, addressed as follows:
If to Tekna: Tekna, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, President and CEO
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Tekna To the address listed under the signature
Shareholders: line of the applicable Tekna Shareholder
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If to Parent or Sub: IXL Holdings, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: 404/267-3801
Telephone: 404/▇▇▇-▇▇▇▇
With copies to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇, A Professional Corporation
One Buckhead Plaza
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇. ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telecopy: 404/233-5824
Telephone: 404/▇▇▇-▇▇▇▇
and to: ▇▇▇▇▇ & Company
▇▇▇ ▇▇▇▇ ▇▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇, Esq.
Telecopy: 212/223-2379
Telephone: 212/▇▇▇-▇▇▇▇
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
Tekna dated as of June 25, 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.
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10.5 GOVERNING LAW. This Agreement, except to the extent that the VSCA
or the DGCL is mandatorily applicable to the Merger, or to the rights of the
Tekna Shareholders or the other parties hereto with respect to the Merger, shall
be governed in all respects by the laws of the State of Georgia (without giving
effect to the provisions thereof relating to conflicts of law).
10.6 HEADINGS. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation hereof.
10.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute a single agreement.
10.8 SEVERABILITY. If any term or other provision hereof is invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions hereof shall nevertheless remain in full force
and effect so long as the economics or legal substance of the transactions
contemplated hereby are not affected in any manner materially adverse to any
party. Upon determination that any term or other provision hereof is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible to the fullest extent permitted by applicable law
in an acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
10.9 POST-CLOSING ACCESS. For a period of three years after the Closing
Date, the Tekna Shareholders and their agents and representatives shall have
reasonable access to the books and records of the Tekna Business.
10.10 POST-CLOSING NOTICE. To the extent the Surviving Corporation
receives written notice of any event or circumstance that materially affects any
of the Tekna Shareholders, the Surviving Corporation shall promptly notify the
affected Tekna Shareholder of such matter, information, or event and shall
provide them with copies of all relevant documentation or correspondence in
connection thereto.
10.11 CERTAIN DEFINITIONS. As used herein:
(a) the term "Permitted Liens" shall mean (a) Liens for taxes,
assessments or other governmental charges or levies not yet due; (b) statutory
Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen
and other Liens imposed by law created in the ordinary course of business for
amounts not yet due; (c) Liens (other than any Lien imposed by ERISA) incurred
or deposits made in the ordinary course of business in connection with worker's
compensation, unemployment insurance or other types of social security; (d)
minor defects of title, easements, rights-of-way, restrictions and other similar
charges or encumbrances not materially detracting from the value of the Tekna
Real Property or interfering with the ordinary conduct of any of the Tekna
Business; and (e) those Liens listed on Schedule 10.11 hereto;
--------------
-31-
(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 Tekna" shall refer to the knowledge,
subject to clause (i) above, of any of the Tekna Shareholders; and
(c) the term "Subsidiary" or "Subsidiaries" means any Entity of which
Parent (either alone or through or together with any other Subsidiary) owns,
directly or indirectly, stock or other equity interests the holders of which are
entitled to more than 50% of the vote for the election of the board of directors
or other governing body of such Entity (including Sub); provided, however, that
with respect to the Parent, the terms "Subsidiary" and "Subsidiaries" shall not
include Tekna or University Netcasting, Inc.
- SIGNATURES ON THE FOLLOWING PAGE -
-32-
IN WITNESS WHEREOF, Parent, Sub and Tekna have caused this Agreement to be
signed and delivered by their respective duly authorized officers, and each
Tekna Shareholder had signed and delivered this Agreement, all as of the date
first written above.
"TEKNA"
Tekna, Inc., a Virginia corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
Title: President
----------------------
"PARENT"
IXL Holdings, Inc., a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Exec VP
-----------------------
"SUB"
IXL - RICHMOND, INC., a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Exec VP
-----------------------
- SIGNATURES CONTINUE ON THE FOLLOWING PAGE -
"TEKNA SHAREHOLDERS"
/s/ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
Address: ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
EXHIBITS
--------
Parent's Closing Certificate.................................. Exhibit A-1
Sub's Closing Certificate..................................... Exhibit A-2
Agreement to Be Bound to the Registration Rights Agreement.... Exhibit B
Form of Nonqualified Stock Option Award Agreement............. Exhibit C-1
Form of Incentive Stock Option Award Agreement................ Exhibit C-2
Parent's Opinion of Counsel................................... Exhibit D
Tekna Closing Certificate..................................... Exhibit E
Agreement to be Bound to the Stockholders' Agreement.......... Exhibit F
Tekna's Opinion of Counsel.................................... Exhibit G
Escrow Agreement.............................................. Exhibit H
Employment Agreement.......................................... Exhibit I
Representations of Tekna Optionholders........................ Exhibit J
Purchaser Representative Questionnaire and Purchaser
Acknowledgement............................................... Exhibit K
SCHEDULE 4.3(A)
---------------
HOLDERS OF TEKNA STOCK AND TEKNA STOCK RIGHTS
SCHEDULE 4.3(B)
---------------
LIENS ON TEKNA STOCK
SCHEDULE 4.5
------------
CONFLICTS, REQUIRED FILINGS AND CONSENTS OF TEKNA
SCHEDULE 4.7
------------
EXCEPTIONS TO ABSENCE OF CHANGES OF TEKNA
SCHEDULE 4.8
------------
UNDISCLOSED LIABILITIES OF TEKNA
SCHEDULE 4.9
------------
EXCEPTIONS TO TITLE TO PROPERTIES OF TEKNA
SCHEDULE 4.10
-------------
BAD EQUIPMENT OF TEKNA
SCHEDULE 4.12
-------------
LIENS ON AND LOCATION OF REAL PROPERTY OF TEKNA
SCHEDULE 4.13
-------------
LEASES FOR REAL AND PERSONAL PROPERTY OF TEKNA
SCHEDULE 4.14
-------------
CONTRACTS, AGREEMENTS & COMMITMENTS OF TEKNA
SCHEDULE 4.15
-------------
DIRECTORS AND OFFICERS OF TEKNA
SCHEDULE 4.16
-------------
PAYROLL INFORMATION (BONUSES & OTHER EXTRAORDINARY COMPENSATION) OF TEKNA
SCHEDULE 4.17
-------------
LITIGATION OF TEKNA
2
SCHEDULE 4.18
-------------
EMPLOYEE BENEFIT PLANS OF TEKNA
SCHEDULE 4.19
-------------
ERISA ISSUES OF TEKNA
SCHEDULE 4.21
-------------
PERMITS OF TEKNA (INCLUDING EXCEPTIONS TO THEIR ASSIGNABILITY)
SCHEDULE 4.23
-------------
BROKERS OF TEKNA
SCHEDULE 4.25
-------------
INTEREST IN CUSTOMERS, SUPPLIERS & COMPETITORS OF TEKNA
SCHEDULE 4.28
-------------
INSURANCE OF TEKNA
SCHEDULE 5.3
------------
CONFLICTS, REQUIRED FILINGS AND CONSENTS OF PARENT AND SUB
3
SCHEDULE 5.4
------------
PARENT OR SUB LITIGATION
SCHEDULE 5.5
------------
PARENT AND SUB BROKERS
SCHEDULE 5.6
------------
STOCK OPTIONS AND WARRANTS OF PARENT
SCHEDULE 5.7
------------
SUBSIDIARIES OF PARENT
SCHEDULE 5.9
------------
PARENT AND SUB UNDISCLOSED LIABILITIES
SCHEDULE 5.13
-------------
EXCEPTIONS TO ABSENCE OF CHANGES OF PARENT AND SUB
SCHEDULE 6.6(B)
---------------
PARENT STOCK OPTIONS ISSUED TO HOLDERS OF TEKNA STOCK RIGHTS
4
SCHEDULE 6.6(C)
---------------
PARENT STOCK OPTIONS ISSUED TO TEKNA EMPLOYEES
SCHEDULE 7.1(C)
---------------
PARENT CONSENTS
SCHEDULE 7.2(C)
---------------
CONSENTS OF TEKNA
SCHEDULE 10.11
--------------
LIENS OF TEKNA
5