EXHIBIT 2.24
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
IXL HOLDINGS, INC.,
iXL-BOSTON, INC.,
SPINNERS INCORPORATED
AND
THE SPINNERS SHAREHOLDERS
DATED AS OF JULY 30, 1998
TABLE OF CONTENTS
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PAGE NO.
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ARTICLE I THE MERGER...................................................... 1
1.1 The Merger...................................................... 1
1.2 Closing and Closing Date........................................ 2
1.3 Effective Time of the Merger.................................... 2
1.4 Effect of the Merger............................................ 2
ARTICLE II THE SURVIVING CORPORATION...................................... 2
2.1 Certificate of Incorporation.................................... 2
2.2 Bylaws.......................................................... 2
2.3 Board of Directors; Officers.................................... 2
ARTICLE III CONVERSION OF SHARES.......................................... 3
3.1 Merger Consideration............................................ 3
3.2 Dissenting Shares............................................... 4
3.3 No Further Rights............................................... 4
3.4 Closing of Spinners' Transfer Books............................. 4
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SPINNERS..................... 5
4.1 Organization and Qualification.................................. 5
4.2 Authority....................................................... 5
4.3 Capitalization.................................................. 6
4.4 Subsidiaries.................................................... 6
4.5 No Conflicts, Required Filings and Consents..................... 6
4.6 Financial Statements............................................ 7
4.7 Absence of Changes.............................................. 7
4.8 Undisclosed Liabilities......................................... 8
4.9 Title to Properties............................................. 8
4.10 Equipment....................................................... 8
4.11 Intellectual Property........................................... 8
4.12 Real Property................................................... 9
4.13 Leases.......................................................... 9
4.14 Contracts....................................................... 10
4.15 Directors and Officers.......................................... 10
4.16 Payroll Information............................................. 10
4.17 Litigation...................................................... 10
4.18 Employee Benefit Plans/Labor Relations.......................... 10
4.19 ERISA........................................................... 11
4.20 Taxes........................................................... 12
4.21 Compliance with Applicable Law.................................. 12
4.22 Board of Directors/Shareholder Consent.......................... 12
4.23 Brokers......................................................... 12
4.24 Environmental Matters........................................... 12
4.25 Interest in Customers, Suppliers and Competitors................ 13
4.26 Accounts Receivable.............................................. 13
4.27 Accounts Payable................................................. 13
4.28 Insurance........................................................ 14
4.29 Bankruptcy....................................................... 14
4.30 Spinners Debt and Cash........................................... 14
4.31 Accredited Investors; Investment Purpose......................... 14
4.32 Restrictions on Transfer......................................... 14
4.33 Ability to Bear Risk; Access to Information; Sophistication...... 15
4.34 Disclosure....................................................... 15
4.35 Nature of Liabilities............................................ 15
4.36 Former Option Holders............................................ 15
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB................. 16
5.1 Organization and Qualification................................... 16
5.2 Authority........................................................ 16
5.3 No Conflicts, Required Filings and Consents...................... 16
5.4 Litigation....................................................... 17
5.5 Brokers.......................................................... 17
5.6 Parent Stock..................................................... 17
5.7 Subsidiaries..................................................... 18
5.8 Financial Statements............................................. 18
5.9 Undisclosed Liabilities.......................................... 18
5.10 Compliance with Applicable Laws.................................. 18
5.11 Board of Directors/Shareholder Consent........................... 19
5.12 Bankruptcy....................................................... 19
5.13 Absence of Charges............................................... 19
5.14 Taxes............................................................ 19
5.15 Disclosure....................................................... 19
ARTICLE VI ADDITIONAL AGREEMENTS........................................... 20
6.1 Conduct of Business by Spinners Pending the Merger............... 20
6.2 Access to Information............................................ 21
6.3 Filings; Tax Elections........................................... 21
6.4 Public Announcements............................................. 21
6.5 Transfer and Gains Taxes and Certain Other Taxes and Expenses.... 21
6.6 Options.......................................................... 21
6.7 Further Assurances............................................... 22
6.8 Landlord's Consent............................................... 22
6.9 Section 338 Election; Tax-Free Merger............................ 22
6.10 Personal Guaranties of Spinners Leases........................... 23
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ARTICLE VII CONDITIONS PRECEDENT........................................... 23
7.1 Conditions to Obligation of Spinners and
The Spinners Shareholders to Effect the Merger............... 23
7.2 Conditions to Obligations of Parent and Sub
To Effect the Merger......................................... 24
ARTICLE VIII INDEMNIFICATION............................................... 25
8.1 Indemnification by Parent....................................... 25
8.2 Indemnification by the Spinners Shareholders.................... 26
8.3 Notification of Claims; Election to Defend...................... 27
8.4 Payment......................................................... 28
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER............................... 28
9.1 Termination..................................................... 28
9.2 Fees and Expenses............................................... 29
9.3 Amendment....................................................... 29
9.4 Waiver.......................................................... 29
ARTICLE X GENERAL PROVISIONS............................................... 29
10.1 Survival; Recourse.............................................. 29
10.2 Notices......................................................... 30
10.3 Entire Agreement................................................ 31
10.4 Assignments; Parties in Interest................................ 31
10.5 Governing Law................................................... 32
10.6 Headings........................................................ 32
10.7 Counterparts.................................................... 32
10.8 Severability.................................................... 32
10.9 Post-Closing Access............................................. 32
10.10 Post-Closing Notice............................................. 32
10.11 Certain Definitions............................................. 32
iii
LIST OF EXHIBITS
TO AGREEMENT AND PLAN OF MERGER
AMONG
IXL HOLDINGS, INC., iXL BOSTON, INC.
SPINNERS INCORPORATED
AND
THE SPINNERS SHAREHOLDERS
EXHIBITS
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Exhibit "A-1" Parent's Closing Certificate
Exhibit "A-2" Sub's Closing Certificate
Exhibit "B" Agreement to be Bound to the Registration Rights Agreement
Exhibit "C" Form of Option Agreement
Exhibit "D" Parent's Opinion of Counsel
Exhibit "E" Spinners' Closing Certificate
Exhibit "F" Agreement to be Bound to the Stockholders' Agreement
Exhibit "G" Spinners' Opinion of Counsel
Exhibit "H" Certificate of Merger
iv
LIST OF SCHEDULES
TO AGREEMENT AND PLAN OF MERGER
AMONG
IXL HOLDINGS, INC., iXL BOSTON, INC.
SPINNERS INCORPORATED
AND
THE SPINNERS SHAREHOLDERS
SCHEDULES
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Schedule 3.1(b) Sample Calculation of Parent Stock and Cash Issuable
Schedule 4.3(a) Spinners' Stock and Stock Rights
Schedule 4.3(b) Spinners' Liens
Schedule 4.5 Spinners' Consents
Schedule 4.7 Absence of Changes - Spinners
Schedule 4.8 Spinners' Undisclosed Liabilities
Schedule 4.9 Spinners' Title
Schedule 4.10 Spinners' Equipment
Schedule 4.11(a) Spinners' Intellectual Property Rights
Schedule 4.11(b) Spinners' Software
Schedule 4.12 Spinners' Real Property
Schedule 4.13 Spinners' Leases
Schedule 4.14 Spinners' Contracts
Schedule 4.15 Spinners' Directors and Officers
Schedule 4.16 Spinners' Payroll Report
Schedule 4.17 Spinners' Litigation
V
Schedule 4.18 Spinners' Employee Benefit Plans
Schedule 4.19 Spinners' ERISA Disclosures
Schedule 4.21 Spinners' Permits
Schedule 4.23 Spinners' Brokers
Schedule 4.25 Spinners' Direct or Indirect Material Interests
Schedule 4.28 Spinners' Insurance
Schedule 5.3 Conflicts, Required Filings and Consents of Parent and Sub
Schedule 5.4 Parent Litigation
Schedule 5.5 Parent and Sub Brokers
Schedule 5.6 Class B Common Stock Options
Schedule 5.7 Subsidiaries
Schedule 5.9 Parent Undisclosed Liabilities
Schedule 5.13 Absence of Changes - Parent
Schedule 6.6(b) Options
Schedule 6.6(c) New Options
Schedule 7.1c Parent Consents
Schedule 7.2(c) Spinners' and Spinners' Shareholders Consents
Schedule 10.11 Permitted Liens
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AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER is entered into as of this 30th day of
July, 1998, by and among SPINNERS INCORPORATED, a Delaware corporation
("Spinners"), IXL HOLDINGS, INC., a Delaware corporation ("Parent"), IXL-BOSTON,
INC., a Delaware corporation, or its Successors or assigns ("Sub"), and the
shareholders of Spinners as listed on the signature page hereto (the "Spinners
Shareholders").
RECITALS:
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A. Spinners is engaged in the business of developing internet sites and
furnishing internet services, including website design and maintenance (the
"Spinners Business").
B. Spinners 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 Spinners Shareholders collectively own 100% of the issued and
outstanding capital stock of Spinners (the "Spinners Stock").
D. The respective Boards of Directors of Parent, Sub and Spinners, and
the respective shareholders of Sub and Spinners, 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 respective 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) Spinners shall be
merged with and into Sub, (b) the separate existence of Spinners shall cease,
and (c) Sub shall continue as the surviving corporation in the Merger under the
laws of the State of Delaware under the name iXL-Boston, Inc. For purposes of
this Agreement, Sub shall be referred to, for the period commencing on the
Effective Time, as the "Surviving Corporation."
1.2 CLOSING AND CLOSING DATE. Unless this Merger Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 9.1 hereof, and subject to the satisfaction or waiver of the
conditions set forth in Article VII hereof, the closing of the Merger (the
"Closing") will take place as promptly as practicable (and in any event within
five business days after satisfaction of the conditions set forth in Sections
7.1 and 7.2 hereof) (the "Closing Date") at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, A
Professional Corporation, One Buckhead Plaza, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇. ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, unless another date, time or place is agreed to by the
parties.
1.3 EFFECTIVE TIME OF THE MERGER. At the Closing, the parties hereto shall
cause a certificate of merger, substantially in the form of Exhibit "H" hereto
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(the "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"). 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, 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. 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 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
of Sub, substantially in the form of Exhibit "A-2" hereto ("Sub's Closing
------------
Certificate"), shall be the Certificate of Incorporation of the Surviving
Corporation after the Effective Time, until thereafter changed or amended as
provided therein or by applicable law.
2.2 BYLAWS. The Bylaws of Sub as in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation, until
thereafter changed or amended as provided therein or by applicable law. A copy
of the Bylaws of Sub is attached to 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 Spinners Stock owned by Spinners shall, by virtue
of the Merger and without any action on the part of any shareholder, officer or
director of Spinners 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 Spinners 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, $.O1 par value (the "Parent Stock") based on the
following equation:
PS= (900,000 + X) - (D + $1 MILLION)
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$10 $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 Spinners
Stock shall be exchanged pursuant to the Merger
D = the outstanding indebtedness of Spinners (the "Spinners
Debt"), including debt for borrowed money and accrued
interest thereon, capital leases, accounts payable and
accrued expenses, any dividends exceeding cash on hand,
approximately $200,000 of fees for Spinners investment
bankers, payable by the Surviving Corporation in accordance
with Section 9.2(a) hereof, and any unpaid legal, accounting
or other fees of Spinners, all to be determined as of three
business days prior to the Closing Date and all as
determined in accordance with generally accepted accounting
principles ("GAAP")
S = the number of issued and outstanding shares of Spinners
Stock on the Closing Date
O = the total number of options to purchase Spinners Stock
outstanding on the Closing Date, to be exchanged for options
to acquire Parent Stock pursuant to Section 6.6(b) hereof;
and
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x = one-half of the aggregate exercise price of O, as set forth
on Schedule 3.1(b) hereto
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(ii) an amount of cash based on the following equation:
C= $1 MILLION
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S
where:
C = the amount of cash for which each share of Spinners Stock
shall be exchanged pursuant to the Merger
and other terms are as defined above.
Set forth on Schedule 3.1(b) hereto is a calculation of the number of shares of
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Parent Stock and cash into which each issued and outstanding share of Spinners
Stock (except for any Dissenting Shares) is exchangeable, based on the
assumptions set forth in Schedule 3.1(b).
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(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 Spinners 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 Spinners 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, provided,
however, that if a Dissenting Shareholder shall fail to perfect his demand,
withdraw his demand or otherwise lose his right for appraisal under the terms of
the DGCL, then the Spinners 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. Spinners shall not
voluntarily make any payment with respect to, settle, or offer to settle or
otherwise negotiate, any demands of any Dissenting Shareholder. 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 Spinners Shareholder who (a)
objects to the Merger; and (b) complies with the applicable provisions of the
DGCL concerning dissenter's rights.
3.3 NO FURTHER RIGHTS. From and after the Effective Time, holders of
certificates theretofore evidencing Spinners Stock shall cease to have any
rights as stockholders of Spinners, except as provided herein or by applicable
law.
3.4 CLOSING OF SPINNERS' TRANSFER BOOKS. At the Effective Time, the stock
transfer books of Spinners shall be closed and no transfer of Spinners Stock
shall be made thereafter. If
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after the Effective Time, certificates for Spinners Stock are presented to
Parent or the Surviving Corporation, they shall be canceled and exchanged for a
consideration as set forth in Section 3.1 hereof, subject to applicable law in
the case of Dissenting Shareholders.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SPINNERS
Spinners, and the Spinners 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. Spinners is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Spinners has the requisite corporate power and authority to carry on
the Spinners 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 and where the failure to qualify
would have a material adverse effect on Spinners. Complete and correct copies of
the Certificate of Incorporation and Bylaws of Spinners as in effect on the date
hereof are attached to a closing certificate and incumbency certificate of
Spinners, substantially in the form of Exhibit "F" hereto ("Spinners Closing
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Certificate"). The minute book of Spinners, a true and complete copy of which
has been delivered to Parent, (a) accurately reflects all action taken by the
directors and shareholders of Spinners at meetings of Spinners' 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. Spinners 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 Spinners have been duly and validly
authorized and approved by Spinners' Board of Directors and the Spinners
Shareholders, and no other corporate or shareholder proceedings on the part of
Spinners, its Board of Directors or the Spinners 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
Spinners and each Spinners Shareholder, and assuming the due authorization,
execution and delivery by Parent and Sub, constitutes the valid and binding
obligation of Spinners and each Spinners Shareholder, enforceable against
Spinners and each Spinners 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.
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4.3 CAPITALIZATION.
(a) The authorized capital stock of Spinners consists of 10 million
shares of common stock, $.0l par value, of which 7 million shares are validly
issued and outstanding, fully paid and nonassessable. All outstanding capital
stock of Spinners 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 Spinners or any of the Spinners
Shareholders to issue, deliver or sell shares of its capital stock, or to grant,
extend or enter into any such option, warrant, call, convertible note,
agreement, commitment or other right. In addition to the foregoing, as of the
date hereof, Spinners has no bonds, debentures, notes or other indebtedness
issued or outstanding that have voting rights in Spinners. Schedule 4.3(a) sets
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forth a list of (i) all holders of record of (A) Spinners Stock, and (B)
options, warrants, convertible notes or other rights to purchase capital stock
of Spinners (collectively, "Spinners Stock Rights"); (ii) the number of shares
held by each Spinners Shareholder and the number of shares of capital stock of
Spinners represented by the Spinners Stock Rights; and (iii) the exercise price
for each Spinners Stock Right.
(b) All of the issued and outstanding shares of capital stock of
Spinners are validly issued, fully paid and nonassessable. Except as set forth
on Schedule 4.3(b) hereto, each Spinners Shareholder represents and warrants
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that the Spinners Stock held by such Spinners 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. Spinners 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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Spinners or the Spinners Shareholders, (ii) the consummation by Spinners and the
Spinners Shareholders of the transactions contemplated hereby or (iii)
compliance by Spinners with any of the provisions hereof will:
(a) conflict with or violate the Certificate of Incorporation or
Bylaws of Spinners;
(b) result in a violation of any statute, ordinance, rule,
regulation, order, judgment or decree applicable to Spinners or any of the
Spinners Shareholders, or by which Spinners 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
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or other instrument or obligation, to which Spinners is a party or by which
Spinners 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 Spinners; or
(e) require any consent, waiver, license, approval, authorization,
order, permit, registration or filing with, or notification to (any of the
foregoing being a "Consent"), (i) any government or subdivision thereof, whether
domestic or foreign, or any administrative, governmental, or regulatory
authority, agency, commission, court, tribunal or body, whether domestic,
foreign or multinational (any of the foregoing, a "Governmental Entity"), except
for the filing of the Certificate of Merger pursuant to the DGCL; or (ii) any
other individual or Entity (collectively, a "Person").
4.6 FINANCIAL STATEMENTS. Spinners has heretofore furnished Parent with a
true and complete copy of (a) the audited financial statements of Spinners for
the years ended December 31, 1996 and 1997; and (b) the unaudited financial
statements of Spinners for the five month period ended May 31, 1998 (all of the
foregoing collectively herein referred to as the "Spinners Financial
Statements"). Except as disclosed therein, the Spinners Financial Statements
have been prepared in accordance with GAAP (except for the absence of footnotes
and normal year end adjustments in the case of the Spinners Financial Statements
for the period ended May 31, 1998) consistently followed throughout the period
indicated, and present fairly, in all material respects, the financial position
and operating results of Spinners 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) Spinners 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 Spinners; (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 Spinners in
respect of its stock, whether in cash or property, and (ii) no purchase or
redemption of any share of the capital stock of Spinners; (d) there has been no
declaration, payment, or commitment for the payment, by Spinners, of a bonus or
other additional salary, compensation, or benefit to any employee of Spinners
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 Spinners, or
waiver of any right of Spinners; (f) there have been no capital expenditures in
excess of $10,000 for any single item, or $25,000 in the aggregate; (g) there
has been no change in accounting methods or practices or revaluation of any
asset of Spinners (other than Spinners 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 Spinners 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 Spinners
Business or the operations of Spinners; (i) there has been no loan by Spinners,
or guaranty by Spinners of any loan, to any employee of Spinners; (j) Spinners
has not ceased to transact business with any customer that, as of the date of
such cessation,
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represented more than 5% of the annual gross revenues of Spinners; (k) there has
been no termination or resignation of any key employee or officer of Spinners,
and to the knowledge of Spinners, 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 Spinners Business, to
which Spinners is a party or by which it is bound, except in the ordinary course
of business, or except as expressly contemplated hereby; (m) Spinners has not
failed to satisfy any of its debts, obligations or liabilities related to the
Spinners Business or the assets of Spinners as the same become due and owing
(except for Spinners 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 Spinners to do any
of the foregoing; and (o) there has been no other event or condition of any
character pertaining to and materially and adversely affecting the assets,
business or financial condition of Spinners.
4.8 UNDISCLOSED LIABILITIES. Except as set forth on Schedule 4.8 hereto,
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Spinners 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 Spinners; (b) liabilities reflected on
the Spinners 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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Spinners has good and marketable title to, or good and valuable title to its
leasehold interest in, all tangible property and assets used in the Spinners
Business, free and clear of any and all Liens other than Permitted Liens (as
defined in Section 10.11 hereof).
4.10 EQUIPMENT. Schedule 4.10 hereto sets forth a true and correct list of
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all items of tangible personal property (including computer hardware) necessary
for or used in the operation of the Spinners Business in the manner in which it
has been and is now operated by Spinners ("the Spinners Equipment"), except for
personal property having a net book value of less than $1,000. Except as set
forth on Schedule 4.10, each material item of Spinners Equipment is in good
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condition and repair, ordinary wear and tear excepted.
4.11 INTELLECTUAL PROPERTY.
(a) Schedule 4.11(a) hereto sets forth a true and complete list of
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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 Spinners in the conduct of the Spinners Business (together with trade
secrets and know how used in the conduct of the Spinners Business, the "Spinners
Intellectual Property Rights"). Spinners owns, or is validly licensed or
otherwise has the right to use or exploit, as currently used or exploited, all
of the Spinners 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 Spinners, threatened, that Spinners
is infringing or otherwise adversely affecting the rights of any Person with
regard to any Spinners Intellectual Property Right.
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To the knowledge of Spinners, no Person is infringing the rights of Spinners
with respect to any Spinners Intellectual Property Right. Neither Spinners nor,
to the knowledge of Spinners, any employee, agent or independent contractor of
Spinners, in connection with the performance of such Person's services with
Spinners, 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) Schedule 4.11(b) hereto sets forth a true and complete list of
----------------
all material computer software used by Spinners in the conduct of the Spinners
Business (the "Spinners Software"), other than pre-loaded or shrink-wrap
software, and an estimated aggregate value of all Spinners Software. Spinners
currently licenses, or otherwise has the legal right to use, all of the Spinners
Software (including any upgrade, alteration or enhancement with respect
thereto), and all of the Spinners Software is being used in material compliance
with any applicable license or other agreement.
4.12 REAL PROPERTY. Except as set forth on Schedule 4.12 hereto:
-------- ----
(a) Spinners has a good and valid leasehold interest in all real
property (including all buildings, improvements and fixtures thereon) used in
the operation of the Spinners Business (the "Spinners Real Property"). Spinners
owns no real property. Except for Permitted Liens, and for the items set forth
on Schedule 4.12, there are no Liens on Spinners' interest in any of the
-------------
Spinners Real Property.
(b) There are no parties in possession of any portion of the Spinners
Real Property other than Spinners, whether as sublessees, subtenants at will or
trespassers.
(c) To the knowledge of Spinners, 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
Spinners Leases (as hereinafter defined), any material expenditure by Spinners
to modify or improve any of the Spinners Real Property to bring it into
compliance therewith.
4.13 LEASES. Schedule 4.13 hereto sets forth a list of all leases pursuant
-------------
to which Spinners leases, as lessor or lessee, real or personal property used in
operating the Spinners Business or otherwise (the "Spinners Leases"). Copies of
the Spinners Leases, all of which have previously been provided to Parent, are
true and complete copies thereof. All of the Spinners Leases are valid, binding
and enforceable against Spinners and, to the knowledge of Spinners, against the
other parties thereto, in accordance with their respective terms, and there is
not under any such Spinners Lease any existing default by Spinners, or, to the
knowledge of Spinners, by any other party thereto, or any condition or event
that, with notice or lapse of time or both, would constitute a default. Spinners
has not received notice that the lessor of any of the Spinners Leases intends to
cancel, suspend or terminate such Spinners Lease or to exercise or not exercise
any option thereunder.
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4.14 CONTRACTS. Schedule 4.14 hereto sets forth a true and complete list
-------------
of all contracts, agreements and commitments (whether written or oral) to which
Spinners 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 Spinners Intellectual Property
Rights and the like, excepting only those Spinners contracts which involve less
than $10,000 and are cancelable, without penalty, on no more than 90 days'
notice (collectively, subject to such exception, the "Spinners Contracts"). The
aggregate value of all payment obligations and rights to receive payments under
agreements, contracts and commitments (whether oral or in writing) to which
Spinners is a party or by which it or any of its properties or assets is
otherwise bound, and that are not listed on Schedule 4.14, is less than $50,000
-------------
(calculating such value by adding together the value of rights and obligations,
and not by determining the net amount thereof).
True and complete copies of all Spinners Contracts (or a true and complete
narrative description of any oral Spinners Contract) have previously been
provided to Parent. Except as set forth on Schedule 4.14, neither Spinners nor,
-------------
to the knowledge of Spinners, any other party to any of the Spinners 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 Spinners
Contracts, or (y) has waived any right it may have under any of the Spinners
Contracts, the waiver of which would have a material adverse effect on the
business, assets or financial condition or prospects of Spinners. All of the
Spinners Contracts constitute the valid and binding obligations of Spinners,
enforceable in accordance with their respective terms, and, to the knowledge of
Spinners, of the other parties thereto.
4.15 DIRECTORS AND OFFICERS. Schedule 4.15 hereto sets forth a list, as of
-------------
the Closing Date, of the name of each director and officer of Spinners and the
position(s) held by each.
4.16 PAYROLL INFORMATION. Schedule 4.16 hereto sets forth a true and
-------------
complete copy of the payroll report of Spinners for the period July 1 -- July
15, 1998, showing all current employees of Spinners and their current levels of
compensation, other than bonuses and other extraordinary compensation, all of
which bonuses and such compensation are set forth on Schedule 4.16. Spinners has
-------------
paid all compensation required to be paid to employees of Spinners on or prior
to the date hereof other than compensation accrued in the current pay period are
reflected in Schedule 4.16.
-------------
4.17 LITIGATION. Except as set forth on Schedule 4.17 hereto, there is no
-------------
suit, action, claim, investigation or proceeding pending or, to the knowledge of
Spinners, threatened against or affecting Spinners or the Spinners Business, nor
is there any judgment, decree, injunction or order of any applicable
Governmental Entity or arbitrator outstanding against Spinners.
4.18 EMPLOYEE BENEFIT PLANS/LABOR RELATIONS.
(a) Except as disclosed in Schedule 4.18 hereto, there are no
-------------
employee benefit plans, agreements or arrangements maintained by Spinners,
including (i) "employee benefit plans"
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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,
"Spinners Benefit Plans"). All Spinners 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 Spinners under
any Spinners Benefit Plan.
(b) Spinners 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 Spinners; no representation campaign or election is now in
progress with respect to any employee of Spinners; and there are no labor
disputes, grievances, controversies, strikes or requests for union
representation pending, or, to the knowledge of Spinners, threatened, relating
to or affecting the Spinners Business. To the knowledge of Spinners, no event
has occurred that could give rise to any such dispute, controversy, strike or
request for representation.
4.19 ERISA.
(a) All Spinners 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 Spinners 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 Spinners Benefit Plan is subject to Title IV of
ERISA or Section 412 of the Code. Spinners 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 Spinners Benefit Plans that would subject
Spinners to the penalty or tax imposed under Section 502(i) of ERISA or Section
4975 of the Code. Spinners 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 Spinners 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 Spinners, (ii) increase any benefit otherwise
payable under any Spinners 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 Spinners 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 Spinners under Section 4001 of
ERISA or Section 414 of the Code, within the 12-month period ending at the
Effective Time. Spinners has not incurred any liability to the Pension Benefit
Guaranty Corporation in respect of any Spinners Benefit Plan that remains
unpaid.
-11-
4.20 TAXES.
(a) Spinners 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 Spinners on or
prior to the Effective Time. Spinners has duly and timely paid all taxes and
other governmental charges, and all interest and penalties with respect thereto,
required to be paid by Spinners (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 Spinners Financial Statements). As of the Effective Time, all
deficiencies proposed as a result of any audit will have been paid or settled.
(b) Spinners is not a party to, or bound by, or otherwise in any way
obligated under, any tax sharing or similar agreement.
(c) Spinners has not consented to have the provisions of Section 341
(f)(2) of the Code (or comparable state law provisions) apply to it, and
Spinners has not agreed or been requested to make any adjustment under Section
481(c) of the Code by reason of a change in accounting method or otherwise.
4.21 COMPLIANCE WITH APPLICABLE LAWS. Spinners 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
Spinners, as appropriate, and to carry on the Spinners Business as now conducted
(the "Spinners Permits"). To the knowledge of Spinners, Spinners is in material
compliance with all applicable laws, ordinances and regulations and the terms of
the Spinners Permits. Except as set forth on Schedule 4.21 hereto, all of the
-------------
Spinners Permits are fully assignable by Spinners in connection with the Merger.
Schedule 4.21 hereto sets forth a true and complete list of all Spinners
-------------
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 Spinners and the Spinners Shareholders have adopted and approved this
Agreement and the transactions contemplated hereby (including the Merger).
4.23 BROKERS. Except as set forth on Schedule 4.23 hereto, no broker or
-------------
finder is entitled to any broker's or finder's fee or other commission in
connection with the transactions contemplated hereby as a result of arrangements
made by or on behalf of Spinners.
4.24 ENVIRONMENTAL MATTERS.
(a) To the knowledge of Spinners, no real property currently or
formerly owned or operated by Spinners is contaminated with any Hazardous
Substance (as hereinafter defined);
(b) Spinners is not a party to any litigation or administrative
proceeding nor, to the knowledge of Spinners, is any litigation or
administrative proceeding threatened against it, that,
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in either case, asserts or alleges that Spinners (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 Spinners, 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 Spinners 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 Spinners, Spinners is not subject to any
judgment, order or citation related to or arising out of any Environmental Law
and has not been named or listed as a potentially responsible party by any
Governmental Entity in a matter related to or arising out of any Environmental
Law; and
(e) For purposes hereof, (i) the term "Environmental Law" means any
federal, state or local law (including statutes, regulations, ordinances, codes,
rules, judicial opinions and other governmental restrictions and requirements)
relating to the discharge of air pollutants, water pollutants, noise, odors or
process waste water, or otherwise relating to the environment or hazardous or
toxic substances; and (ii) the term "Hazardous Substance" means any toxic or
hazardous substance that is regulated by or under authority of any Environmental
Law, including any petroleum products, asbestos or polychlorinated biphenyls.
4.25 INTEREST IN CUSTOMERS, SUPPLIERS AND COMPETITORS. Except as provided
in Schedule 4.25 hereto, no officer, director, shareholder or, to the knowledge
-------------
of Spinners, employee of Spinners 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
Spinners, or in any Person from whom or to whom Spinners leases any real or
personal property, or in any other Person with whom Spinners is doing business
whether directly or indirectly (including as a debtor or creditor), whether in
existence as of the Effective Time or proposed, other than the ownership of
stock of publicly traded corporations.
4.26 ACCOUNTS RECEIVABLE. All accounts, notes, contracts and other
receivables of Spinners (collectively, "Spinners Accounts Receivable") were
acquired by Spinners in the ordinary course of business arising from bona fide
transactions. To the knowledge of Spinners, there are no set-offs, counterclaims
or disputes asserted with respect to any Spinners Accounts Receivable that would
result in claims in excess of $10,000 and, to the knowledge of Spinners and
subject to such $10,000 amount, all Spinners Accounts Receivable are collectible
in full. Spinners has previously provided Parent with a true and complete aging
report prepared as of May 31, 1998 which shows the time elapsed since invoice
date for all Spinners Accounts Receivable as of such date.
4.27 ACCOUNTS PAYABLE. All material accounts, notes, contracts and other
amounts payable of Spinners (collectively, "Spinners Accounts Payable") are
currently within their
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respective terms, and are neither in default nor otherwise past due by more than
90 days. Spinners has previously provided Parent with a true and complete aging
report prepared as of May 31, 1998 which shows the time elapsed since invoice
date for all Spinners Accounts Payable as of such date.
4.28 INSURANCE. Spinners currently maintains in full force and effect, all
insurance policies that are required to be maintained for the conduct of the
Spinners Business or the ownership of Spinners' property (both real and
personal) (collectively, the "Spinners Insurance Policies"). The Spinners
Insurance Policies are listed on Schedule 4.28 hereto, and true and complete
-------------
copies of all Spinners Insurance Policies or certificates of insurance have
previously been provided to Parent. Spinners (a) is not in default regarding the
provisions of any Spinners 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. Spinners 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 SPINNERS DEBT AND CASH. As of the date hereof, the Spinners Debt is
not in excess of $680,000. As of June 30, 1998, Spinners cash on hand,
available for dividends, was $176,316.65.
4.31 ACCREDITED INVESTORS; INVESTMENT PURPOSE. Each Spinners Shareholder
represents that he (a) is an "accredited investor" as such term is defined in
Rule 501 of Regulation D promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Securities Act"); (b)is
acquiring the Parent Stock solely for his own account for investment and not
with a view to, or for sale in connection with, any distribution thereof; and
(c) will not, directly or indirectly, offer, transfer, sell, pledge, hypothecate
or otherwise dispose of any Parent Stock (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of any such shares) except in compliance
with the Securities Act and the rules and regulations thereunder, other
applicable laws, rules and regulations, and the Second Amended and Restated
Stockholders' Agreement of Parent, dated December 17, 1997 (the "Stockholders'
Agreement).
4.32 RESTRICTIONS ON TRANSFER. Each Spinners Shareholder acknowledges that
(a) the Parent Stock received by him hereunder has not been registered under the
Securities Act; (b)the Parent Stock may be required to be held indefinitely, and
he must continue to bear the economic risk of the investment in such shares
unless such shares are subsequently registered under the Securities Act or an
exemption from such registration is available; (c) there may not be any public
market for the Parent Stock in the foreseeable future; (d) Rule 144 promulgated
under the Securities Act is not presently available with respect to sales of any
securities of Parent, and such Rule is not anticipated to be available in the
foreseeable future, (e) when and if Parent Stock may be disposed of without
registration in reliance upon Rule 144, such disposition can be made only in
limited amounts and in accordance with the terms and conditions of such Rule;
(j) if the exemption afforded by Rule 144 is not available, public sale without
registration will require the availability of
-14-
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
Spinners Shareholder represents and warrants that (a) his financial situation is
such that he can afford to bear the economic risk of holding Parent Stock
acquired by him hereunder for an indefinite period; (b) he can afford to suffer
the complete loss of such Parent Stock; (c) he has been granted the opportunity
to ask questions of, and receive answers from, representatives of Parent
concerning the terms and conditions of the Parent Stock and to obtain any
additional information that he deems necessary; (d) his knowledge and experience
in financial business matters is such that he is capable of evaluating the
merits and risk of ownership of the Parent Stock; (e) he has carefully reviewed
the terms of the Stockholders' Agreement and has evaluated the restrictions and
obligations contained therein; and (f) he (i) has reviewed the Private Placement
Memorandum of Parent dated June 30, 1998 (the "Memorandum"), (ii) has carefully
examined the Memorandum and has had an opportunity to ask questions of, and
receive answers from, representatives of Parent, and to obtain additional
information concerning Parent and its Subsidiaries (as hereinafter defined), and
(iii) does not require additional information regarding Parent or its
Subsidiaries in connection with the Merger.
4.34 DISCLOSURE. No statement of fact by Spinners or any Spinners
Shareholder contained herein and no written statement of fact furnished by
Spinners or any Spinners Shareholder to Parent or Sub in connection herewith
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements herein or therein contained not
materially misleading.
4.35 NATURE OF LIABILITIES. The $200,000 of fees for Spinners investment
bankers, payable by the Surviving Corporation in accordance with Section 9.2(a)
hereof, and any unpaid legal, accounting or other fees of Spinners, are solely
and directly related to the Merger.
4.36 FORMER OPTION HOLDERS. The employment of ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ was terminated more than ninety days prior to the Effective
Time and, in accordance with the terms of their respective incentive stock
option certificates and the Spinners stock option plan, none of these
individuals owns, or is entitled to own, any Spinners Stock Rights.
Notwithstanding anything to the contrary herein, any Parent Loss which arises as
a result of a breach of the representations provided in this Section 4.36 shall
not be subject to Section 8.2(b)(i) hereof.
-15-
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Each of Parent and Sub jointly and severally represents and warrants to
Spinners and the Spinners 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 of Parent, 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 boards 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 boards of
directors or shareholders, are necessary to authorize or approve this Agreement
or to consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by each of Parent and Sub, and assuming the due
authorization, execution and delivery by Spinners and the Spinners 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;
-16-
(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); or (ii)
any other Person.
5.4 LITIGATION. Except as set forth on Schedule 5.4 hereto, there is no
------------
suit, action, claim, investigation or proceeding pending or, to the knowledge of
Parent, threatened against or affecting Parent or its Subsidiaries, nor is there
any judgment, decree, injunction or order of any applicable Governmental Entity
or arbitrator outstanding against Parent or its Subsidiaries that, either
individually or in the aggregate, would have a material adverse effect on the
assets, business or financial condition of Parent and its Subsidiaries, taken as
a whole.
5.5 BROKERS. Except as disclosed on Schedule 5.5 hereto, no broker or
------------
finder is entitled to any broker's or finder's fee in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
Parent or Sub.
5.6 PARENT STOCK.
(a) As of the date hereof, the authorized capital stock of Parent
consists of (i) (A) 75,000,000 shares of Class A Common Stock, $.01 par value,
of which no shares are validly issued and outstanding, and (B) 100,000,000
shares of Class B Common Stock, $.01 par value, of which 11,863,632 shares are
validly issued and outstanding (without taking into account any shares of Parent
Stock to be issued pursuant hereto, or pursuant to any of the Potential
Acquisitions as defined in the Memorandum), 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 174,526 shares are
validly issued and outstanding, fully paid and nonassessable, (B) 200,000 of
which have been designated as Class B Convertible Preferred Stock, of which
98,767 shares are validly issued and outstanding, fully paid and nonassessable,
and (C) 15,000 of which have been designated as Class C Convertible Preferred
Stock, of which 9,232 shares are validly issued and outstanding, fully paid and
nonassessable. Except as set forth on Schedule 5.6 hereto, there are no options,
------------
warrants, calls, agreements, commitments or other rights presently outstanding
that would obligate Parent to issue, deliver or sell shares of its capital
stock, or to grant, extend or enter into any such option, warrant, call,
agreement, commitment or other right. In addition to the foregoing, as of the
Closing Date, Parent has no bonds, debentures, notes or other indebtedness
issued or outstanding that have voting rights in Parent.
-17-
(b) When delivered to the Spinners 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 Spinners with a
true and complete copy of (a) the audited financial statements of iXL
Interactive Excellence, Inc. (n/k/a iXL, Inc.) for the years ended December 31,
1993, 1994 and 1995, and for the four month period ended April 30, 1996; (b) the
audited combined financial statements for Creative Video, Inc. (n/k/a iXL,
Inc.), Creative Video Library, Inc. and Entrepreneur Television, Inc. for the
years ended December 31, 1993, 1994 and 1995, and for the four month period
ended April 30, 1996; (c) the audited consolidated financial statements for
Parent and its Subsidiaries for the eight months ended December 31, 1996 and for
the year ended December 31, 1997; and (d) the unaudited consolidated financial
statements for Parent and its Subsidiaries for the four month period ended 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 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.
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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 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 will 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 Spinners in connection herewith
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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 SPINNERS 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, Spinners 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 Spinners to the end that its goodwill
and on-going business 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, Spinners 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; provided, however, that
Spinners may distribute, by way of a dividend to the Spinners Shareholders, an
amount up to its earnings through June 30, 1998, but not in excess of cash on
hand as of June 30, 1998, (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 Spinners or
any other equity security thereof or any right, warrant, or option to acquire
any such share or other security;
(b) issue, deliver, sell, pledge or otherwise encumber any share of
its capital stock, any other voting security issued by Spinners or any security
convertible into, or any right, warrant or option to acquire any such share or
voting security;
(c) amend its Certificate 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 Spinners;
(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 Spinners,
guarantee any debt security of another Person or enter into any "keep well" or
other agreement to maintain the financial
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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, Spinners 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 Spinners, 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. Spinners shall promptly provide Parent with
copies of all filings made by Spinners with any Governmental Entity in
connection herewith and the transactions contemplated hereby. Spinners shall,
before settling or compromising any material income tax liability of Spinners,
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 Spinners Shareholders shall make any such disclosure without the
prior written consent of Parent.
6.5 TRANSFER AND GAINS TAXES AND CERTAIN OTHER TAXES AND EXPENSES. Parent
agrees that, to the extent it is legally able to do so, the Surviving
Corporation will pay all real property transfer, gains and other similar taxes
and all documentary stamps, filing fees, recording fees and sales and use taxes,
if any, and any penalties or interest with respect thereto, payable in
connection with consummation of the Merger.
6.6 OPTIONS.
(a) Spinners hereby covenants and agrees that at the Effective Time,
all of the Spinners 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 Spinners Stock Rights shall receive incentive or non-
qualified options (corresponding to whether their previous Spinners Options were
incentive or non-qualified) to purchase the number of
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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, at the Effective Time, it will
issue options to purchase up to 250,000 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 Persons designated by Spinners,
approved by Parent and listed on Schedule 6.6(c) hereto, all of which options
--------------
shall be issued pursuant to the Parent Stock Option Plan; provided, however,
that if for any reason any such options shall not fully vest in accordance with
the terms of the award thereof, or are not exercised within the time period
provided therein, and therefore expire or are canceled, then in that event non-
qualified options on the number of shares of Parent Stock subject to such
expired or canceled option, and corresponding as to price and vesting, shall be
issued to the Spinners Shareholders without the payment of any additional
consideration therefor, pro rata in accordance with the number of shares of
Parent Stock received in the Merger.
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 LANDLORD'S CONSENT. Spinners shall, prior to the Closing, have
obtained written consent from Athenaeum Property LLC, Landlord under a Lease
dated June 12, 1997 with Clam Associates Inc. ("Clam"), with respect to Spinners
premises subleased from Clam pursuant to a Sublease dated April 9, 1998.
6.9 SECTION 338 ELECTION; TAX-FREE MERGER.
(a) The parties agree and acknowledge that the Merger is intended to
qualify, for federal income tax purposes, as a reorganization within the meaning
of Section 368(a) of the Code. Accordingly, none of the parties hereto shall
attempt to file a Section 338 election without the prior written consent of the
other parties hereto.
(b) Parent hereby agrees that it will continue to maintain its
ownership of Sub so as not to violate the continuity of interest requirements
under Section 368 of the Code and the regulations thereunder. If Parent (i)
fails to continue its ownership in accordance with the foregoing sentence, or
(ii) takes any action, or fails to take any reasonable action, and, solely as a
result thereof, the Internal Revenue Service (the "IRS") determines that the
Merger constitutes a taxable event for the Spinners Shareholders, then Parent
shall loan to the Spinners Shareholders, on an interest-free basis, an amount
equal to the federal income tax imposed on the Spinners Shareholders for which
and to the extent that they would not otherwise have been liable; provided,
however, that (1) each Spinners Shareholder shall promptly (and in any event
within five days of his receipt thereof) deliver to Parent a copy of any notice
received from the IRS relating to the taxability of the Merger; (2) Parent shall
have the right, at its discretion, to defend against and/or settle any claim by
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the IRS to the effect that the Merger constitutes a taxable event; (3) each
Spinners Shareholder shall, promptly after receipt of such loan, furnish Parent
with evidence to Parent's satisfaction that such tax liability has been paid in
full; and (4) in consideration therefor, each Spinners Shareholder shall have
executed and delivered a non-interest bearing note, in form and substance
satisfactory to Parent, providing for payment at a date to be agreed upon by the
parties (and in any event if any Spinners Shareholder fails to comply with the
condition specified in the preceding clause (3)), for the full principal amount
so loaned by Parent, the note to be secured by delivery to Parent of Parent
Stock certificates (with executed stock powers in favor of Parent) evidencing
Parent Stock, valued for this purpose at $10 per share, in aggregate at least
equal to the principal amount of the note, the note to be non-recourse except as
to such Parent Stock. Parent and the Spinners Shareholders further agree that
the Spinners Shareholders will be entitled, at any time, subject to applicable
provisions of the Stockholders' Agreement, to sell (but not to assign) such
Parent Stock, and Parent will release such pledged Parent Stock upon receipt of
proceeds from such sale in an amount sufficient to satisfy the unpaid balance of
such note.
6.10 PERSONAL GUARANTIES OF SPINNERS LEASES. Parent shall, as soon as is
practicable after the Effective Time, use its best efforts to attempt to
eliminate any personal guaranty made by any Spinners Shareholder for the
obligations of Spinners under the terms of any Spinners Lease, and, subject to
Parent's other obligations, to substitute itself as guarantor of such
obligations. Parent will indemnify and hold Spinners Shareholders harmless
against liability resulting solely from Sub's or Parent's failure to pay such
obligations when due and payable under the terms thereof.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO OBLIGATION OF SPINNERS AND THE SPINNERS SHAREHOLDERS TO
EFFECT THE MERGER. The obligation of Spinners and the Spinners 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 Spinners at the Closing, Parent's Closing Certificate, and (ii) the
appropriate officers of Sub shall have executed and delivered to Spinners 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) Spinners 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 Spinners
Shareholders at the Closing, duly executed by Parent, an Agreement to be Bound
to the Registration Rights Agreement of Parent, dated as of Closing Date (the
"Agreement to be Bound to the Registration Rights Agreement"), substantially in
the form of Exhibit "B" hereto;
----------
(f) Parent shall have executed and delivered at the Closing an
Option Agreement for each of the Persons listed on Schedules 6.6(b) or 6.6(c)
--------------------------
hereto receiving options to purchase Parent Stock, substantially in the form of
Exhibit "C" hereto;
----------
(g) Spinners shall have received, at the Closing, a duly executed
opinion of counsel to Parent and Sub, substantially in the form of Exhibit "D"
----------
hereto; and
(h) Spinners shall have received from Parent and Sub such other
documents as Spinners' counsel shall have reasonably requested, in form and
substance reasonably satisfactory to Spinners' counsel.
7.2 CONDITIONS TO OBLIGATIONS OF PARENT AND SUB TO EFFECT THE MERGER. The
obligations of Parent and Sub to effect the Merger shall be subject to the
fulfillment, at or prior to the Effective Time, of the following conditions:
(a) Spinners and the Spinners 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 Spinners and the Spinners 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 Spinners shall have executed and
delivered to Parent at the Closing, Spinners Closing Certificate;
(c) Spinners and the Spinners 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 Spinners Shareholders, (i) an Agreement to be Bound to
the Stockholders' Agreement, substantially in the form of Exhibit "F" hereto;
----------
and (ii) an Agreement to be Bound to the Registration Rights Agreement;
(e) Parent shall have received a corporate certificate of good
standing for Spinners, and a copy of the Certificate of Incorporation of
Spinners, both as certified by the Secretary of State of Delaware;
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(f) as of the date three business days prior to the Closing Date the
Spinners Debt shall be no greater than $680,000;
(g) Spinners shall have complied with its obligations under Section
6.6(a) hereof;
(h) Parent shall have received, at the Closing, a duly executed
opinion of counsel to Spinners and the Spinners Shareholders, substantially in
the form of Exhibit "G" hereto;
----------
(i) Parent shall have received from Spinners or the Spinners
Shareholders, as the case may be, such other documents as Parent's counsel shall
have reasonably requested, in form and substance reasonably satisfactory to
Parent's counsel, and Parent shall have completed its due diligence review of
Spinners and shall, in its sole and absolute discretion, be satisfied with the
results thereof; and
(j) Parent shall have received evidence satisfactory to it that at
the Closing the assets and properties used in the Spinners Business are free and
clear of all Liens other than Permitted Liens (as hereinafter defined).
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION BY PARENT.
(a) Parent shall indemnify and hold the Spinners Shareholders and
Spinners' directors, officers and employees (collectively, the "Spinners
Indemnified Parties") harmless from and against, and agree promptly to defend
each of the Spinners Indemnified Parties from and reimburse each of the Spinners
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 "Spinners Loss") that
any of the Spinners Indemnified Parties may at any time suffer or incur, or
become subject to, as a result of or in connection with:
(i) any breach or inaccuracy of any of the representations
and warranties made by Parent or Sub in or pursuant hereto, or in any
instrument, certificate or affidavit delivered by Parent or Sub at the Closing
in accordance with the provisions hereof;
(ii) any failure by Parent or Sub to carry out, perform,
satisfy and discharge any of its respective covenants, agreements, undertakings,
liabilities or obligations hereunder or under any of the documents and materials
delivered by Parent pursuant hereto; and
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(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 Spinners 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 $9,000,000 in
the aggregate, and (iii) unless the Spinners 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 Spinners 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 SPINNERS SHAREHOLDERS.
(a) The Spinners 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 Spinners or the Spinners 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 Spinners or any of the Spinners
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 Spinners
pursuant hereto; and
(iii) any suit, action or other proceeding arising out of,
or in any way related to, any of the matters referred to in this Section 8.2.
(b) Notwithstanding the above, none of the Spinners Shareholders
shall have any liability under Section 8.2(a)(i) above (i) unless the aggregate
of all Parent Losses for which the Spinners 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 $9,000,000
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
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years of the Effective Time, except with respect to the matters arising under
(A) Sections 4.18,4.19 or 4.20 hereof, in which event Parent must have asserted
a claim within the applicable statute of limitations; or (B) Section 4.24
hereof, in which event Parent must have asserted a claim within five years of
the Effective Time. Notwithstanding any implication to the contrary contained
herein, the parties acknowledge and agree that a decrease in the value of Parent
Stock would not, by itself, constitute a Parent Loss, unless and to the extent a
decrease in the value of Parent Stock has been demonstrated to be as a result of
any event described in Sections 8.2(a)(i), (ii) or (iii) above.
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 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
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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); provided, however, that
the Spinners Shareholders shall only be entitled to this option to the extent
that they have satisfied an aggregate of $1 million of Parent Losses in cash.
For the purpose of this provision, the value of Parent Stock shall be deemed to
be $10 per share; provided, however, that in the event of a Spinners Loss, the
Spinners Indemnified Parties may request in writing that the value of Parent
Stock instead be determined by Price Waterhouse LLP, whose fees and expenses
will be split evenly by Parent, on the one hand, and the Spinners Shareholders,
on the other, and whose determination will be binding in connection with that
Spinners Loss.
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 Spinners;
(b) by Spinners, upon a material breach hereof on the part of Parent
or Sub which has not been cured and which would cause any condition set forth in
Section 7.1 hereof to be incapable of being satisfied by July 31, 1998;
(c) by Parent, upon a material breach hereof on the part of Spinners
or any of the Spinners Shareholders which has not been cured and which would
cause any condition set forth in Section 7.2 hereof to be incapable of being
satisfied by July 31, 1998;
(d) by Parent or Spinners 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 Spinners if the Merger shall not have been
consummated on or before July 31, 1998 (provided the terminating party is not
otherwise in material breach of its representations, warranties or obligations
hereunder).
9.2 FEES AND EXPENSES.
(a) If the Merger is consummated, all costs and expenses incurred in
connection herewith and the transactions contemplated hereby shall be paid by
the Surviving Corporation; provided, however, that the Spinners Shareholders
shall pay all fees and expenses (including agents, counsel and other advisors)
of Spinners and themselves that are not solely and directly related to the
Merger.
(b) If the Merger is not consummated for a reason other than the
willful and material breach hereof by a party, all fees and expenses incurred in
connection herewith and the transactions contemplated hereby shall be paid by
the party incurring such fees or expenses.
(c) If the Merger is not consummated because of a willful and material
breach hereof by any party, the nonbreaching party or parties shall be entitled
to pursue all legal and equitable remedies against the breaching party for such
breach including specific performance and all fees and expenses incurred by the
nonbreaching party or parties in connection with enforcing its or their rights
hereunder with respect to such breach shall be paid by the breaching party.
9.3 AMENDMENT. This Merger Agreement may be amended by the parties hereto
at any time before or after approval hereof by the Spinners 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 Spinners Shareholders, or
(iii) under applicable law would require approval of the Spinners Shareholders,
in any such case referred to in clauses (i), (ii) and (iii), without the further
approval of the Spinners 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 Spinners 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.
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ARTICLE X
GENERAL PROVISIONS
10.1 SURVIVAL; RECOURSE. None of the agreements contained herein shall
survive the Merger, except that (i) the agreements contained in Article III
hereof, the covenants contained in Article VI hereof, the obligations to
indemnify contained in Article VIII hereof and the agreements of the Surviving
Corporation referred to in Sections 10.9 and 10.10 hereof, shall survive the
Merger (except to the extent a shorter period of time is explicitly specified
therein) and (ii) the representations and warranties made in Articles IV and V
hereof shall survive the Merger, and shall survive any independent investigation
by the parties, and any dissolution, merger or consolidation of Spinners or
Parent, and shall bind the legal representatives, assigns and successors of
Spinners, the Spinners Shareholders and Parent, for a period of two years after
the Effective Time (other than the representations and warranties contained in
(A) Sections 4.18, 4.19 and 4.20 hereof, which shall survive for the applicable
statute of limitations; and (B) Section 4.24 hereof, which shall survive for a
period of five years after the Effective Time).
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 Spinners: Spinners Incorporated
Athenaeum House, ▇▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇▇▇ ▇▇▇▇, President
Telephone: 617/▇▇▇-▇▇▇▇
Telecopy: 617/225-0902
With copies to: Peabody & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. Crush, P.C.
Telephone: 617/▇▇▇-▇▇▇▇
Telecopy: 617/345-1300
and to: First Albany Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇. V.P.
Telephone: 212/▇▇▇-▇▇▇▇
Telecopy: 212/273-7320
If to the Spinners To the address listed under the signature
Shareholders: line of the applicable Spinners Shareholder
-30-
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 Spinners dated
as of April 23, 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.
-31-
10.5 GOVERNING LAW. This Agreement, except to the extent that the DGCL is
mandatorily applicable to the Merger, or to the rights of the Spinners
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 seven years after the Closing
Date, the Spinners Shareholders and their agents and representatives shall have
reasonable access to the books and records of the Spinners Business; thereafter,
Sub and Parent will cooperate to furnish the Spinners Shareholders with
information as reasonably necessary for tax or other purposes.
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 Spinners Shareholders, the Surviving Corporation shall promptly notify
the affected Spinners 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 Spinners
Real Property or interfering with the ordinary conduct of any of the Spinners
Business; and (e) those Liens listed on Schedule 10.11;
--------------
-32-
(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 Spinners" shall refer to the knowledge,
subject to clause (i) above, of any of the Spinners 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 Spinners or University Netcasting, Inc.
- SIGNATURES ON THE FOLLOWING PAGE -
- 33 -
IN WITNESS WHEREOF, Parent, Sub and Spinners have caused this Agreement to
be signed and delivered by their respective duly authorized officers, and each
Spinners Shareholder has signed and delivered this Agreement, all as of the date
first written above.
"SPINNERS"
Spinners Incorporated, a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------------
Title: President
"PARENT"
IXL Holdings, Inc., a Delaware corporation
By:
------------------------------------------
Title:
---------------------------------------
"SUB"
iXL-Boston, Inc., a Delaware corporation
By:
------------------------------------------
Title:
---------------------------------------
- SIGNATURES CONTINUE ON THE FOLLOWING PAGE -
- 34-
IN WITNESS WHEREOF, Parent, Sub and Spinners have caused this Agreement to
be signed and delivered by their respective duly authorized officers, and each
Spinners Shareholder has signed and delivered this Agreement, all as of the date
first written above.
"SPINNERS"
Spinners Incorporated, a Delaware corporation
By:
------------------------------------------
Title:
---------------------------------------
"PARENT"
IXL Holdings, Inc., a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
Title: Executive Vice President
"SUB"
iXL-Boston, Inc., a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
Title: Executive Vice President
- SIGNATURES CONTINUE ON THE FOLLOWING PAGE -
-34-
"SPINNERS SHAREHOLDERS"
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ #▇
-------------------------------------------
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-------------------------------------------
___________________________________________
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Address: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇. #▇▇
-------------------------------------------
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-------------------------------------------
___________________________________________
-35-
EXHIBITS
--------
Parent's Closing Certificate...................................... Exhibit A-1
Sub's Closing Certificate......................................... Exhibit A-2
Agreement to be Bound to Registration Rights Agreement............ Exhibit B
Option Agreement.................................................. Exhibit C
Opinion of Counsel to Parent and Sub.............................. Exhibit D
Spinner's Closing Certificate..................................... Exhibit E
Agreement to be Bound to Stockholders' Agreement.................. Exhibit F
Opinion of Counsel to Spinners.................................... Exhibit G
Certificate of Merger............................................. Exhibit H
SCHEDULE 3.1(B)
---------------
MERGER CONSIDERATION
(See Schedule 3.1(B) attached hereto)
SCHEDULE 4.3(A)
---------------
CAPITALIZATION OF SPINNERS
SCHEDULE 4.3(B)
---------------
LIENS ON STOCK
SCHEDULE 4.5
------------
CONFLICTS, REQUIRED FILINGS AND CONSENTS OF SPINNERS
SCHEDULE 4.7
------------
EXCEPTIONS TO ABSENCE OF CHANGES OF SPINNERS
SCHEDULE 4.8
------------
UNDISCLOSED LIABILITIES OF SPINNERS
SCHEDULE 4.9
------------
EXCEPTIONS TO TITLE TO PROPERTIES OF SPINNERS
SCHEDULE 3.1(b)
---------------
PRO FORMA CALCULATION OF MERGER CONSIDERATION
---------------------------------------------
PS = (900,000 + X) - (D + $1 million)
--- ----------------
$10 $10
--------------------------------
S + O
Assuming: O=690,500 Spinners options, each at $.25 exercise price
X=1/2 of (690,500 x $.25)=$86,321.50
D=$680,000
S=7 million shares
PS = (900,000 + 8,631.25) - (168,000)
--------------------------------
7,690,500
PS = .0963 IXL shares per Spinners share
Total IXL shares = 674,132 (based on foregoing assumptions)
SCHEDULE 4.10
-------------
EQUIPMENT OF SPINNERS
SCHEDULE 4.11(A)
----------------
INTELLECTUAL PROPERTY OF SPINNERS
SCHEDULE 4.11(B)
----------------
MATERIAL COMPUTER SOFTWARE
SCHEDULE 4.12
-------------
REAL PROPERTY OF SPINNERS
SCHEDULE 4.13
-------------
LEASES OF SPINNERS
SCHEDULE 4.14
-------------
CONTRACTS OF SPINNERS
SCHEDULE 4.15
-------------
DIRECTORS AND OFFICERS OF SPINNERS
SCHEDULE 4.16
-------------
PAYROLL INFORMATION OF SPINNERS
SCHEDULE 4.17
-------------
LITIGATION
SCHEDULE 4.18
-------------
EMPLOYEE BENEFIT PLANS/LABOR RELATIONS OF SPINNERS
SCHEDULE 4.19
-------------
ERISA ISSUES OF SPINNERS
SCHEDULE 4.21
-------------
SPINNERS PERMITS
SCHEDULE 4.23
-------------
SPINNERS BROKERS
SCHEDULE 4.25
-------------
INTEREST IN CUSTOMERS, SUPPLIERS, COMPETITORS
SCHEDULE 4.28
-------------
INSURANCE OF SPINNERS
SCHEDULE 5.3
------------
CONFLICTS, REQUIRED FILINGS AND CONSENTS OF PARENT AND SUB
SCHEDULE 5.4
------------
PARENT LITIGATION
SCHEDULE 5.5
------------
PARENT AND SUB BROKERS
SCHEDULE 5.6
------------
OUTSTANDING OBLIGATIONS TO ISSUE OPTIONS, WARRANTS
OR OTHER PARENT STOCK RIGHTS
SCHEDULE 5.7
------------
SUBSIDIARIES OF PARENT
SCHEDULE 5.9
------------
PARENT UNDISCLOSED LIABILITIES
SCHEDULE 5.13
-------------
EXCEPTIONS TO ABSENCE OF CHANGES
SCHEDULE 6.6(B)
---------------
PARENT OPTIONS TO HOLDERS OF SPINNERS STOCK RIGHTS
SCHEDULE 6.6(C)
---------------
PARENT OPTIONS TO THOSE PERSONS DESIGNATED BY SPINNERS
SCHEDULE 7.1(C)
----------------
PARENT CONSENTS
SCHEDULE 7.2(C)
---------------
SPINNERS AND SPINNERS SHAREHOLDERS CONSENTS
SCHEDULE 10.11
--------------
PERMITTED LIENS OF SPINNERS