EXHIBIT 2.17
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
IXL HOLDINGS, INC.,
iXL-Charlotte , Inc.,
INTOUCH INTERACTIVE, INC.
AND
THE INTOUCH SHAREHOLDERS
Dated as of May 12, 1998
AGREEMENT AND PLAN OF MERGER
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THIS AGREEMENT AND PLAN OF MERGER is entered into this 12th day of May,
1998, by and between INTOUCH INTERACTIVE, INC., a North Carolina corporation
("InTouch"), IXL HOLDINGS, INC., a Delaware corporation ("Parent"), IXL-
CHARLOTTE, INC., a Delaware corporation, or its successors or permitted assigns
("Sub"), and the shareholders of InTouch as listed on the signature page hereto
(the "InTouch Shareholders").
R E C I T A L S:
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A. InTouch is engaged in the business of creation of multimedia
communications and marketing materials (the "InTouch Business").
B. InTouch 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 InTouch Shareholders collectively own 100% of the issued and
outstanding capital stock of InTouch (the "InTouch Stock").
D. The respective Boards of Directors of Parent, Sub and InTouch have
approved the Merger, as have the respective shareholders of Sub and InTouch,
upon the terms and subject to the conditions set forth herein.
E. The parties hereto intend for the Merger to qualify, for federal
income tax purposes, as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the mutual covenants, benefits,
conditions and agreements set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, it
is hereby agreed as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions hereof, at
the Effective Time (as defined in Section 1.3 hereof), (a) InTouch shall be
merged with and into Sub, (b) the separate existence of InTouch 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-Charlotte, 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
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VII hereof, the closing of the Merger (the "Closing") will take place as
promptly as practicable (and in any event within five business days after
satisfaction of the conditions set forth in Sections 7.1 and 7.2 hereof) (the
"Closing Date") at the offices of Xxxxxx & Xxxxxx, A Professional Corporation,
One Buckhead Plaza, 0000 Xxxxxxxxx Xx., Xxx. 0000, Xxxxxxx, XX 00000, unless
another date, time or place is agreed to by the parties.
1.3 EFFECTIVE TIME OF THE MERGER. At the Closing, the parties hereto
shall cause (a) a certificate of merger (the "Delaware Certificate of Merger")
to be filed with the office of the Secretary of State of the State of Delaware
in accordance with the provisions of the Delaware General Corporation Law, as
amended (the "DGCL"); and (b) articles of merger (the "North Carolina
Certificate of Merger;" collectively with the Delaware Certificate of Merger,
the "Certificate of Merger") to be filed with the office of the Secretary of
State of the State of North Carolina in accordance with the provisions of the
North Carolina Business Corporation Act, as amended (the "NBCA"). 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 the States of
Delaware and North Carolina, respectively, or such time as otherwise specified
therein.
1.4 EFFECT OF THE MERGER. The Merger shall, from and after the Effective
Time, have all the effects provided by the DGCL and the NBCA. If at any time
after the Effective Time, any further action is deemed necessary or desirable to
carry out the purposes of this Agreement, the parties hereto agree that the
Surviving Corporation and its proper officers and directors shall be authorized
to take, and shall take, any and all such action.
ARTICLE II
THE SURVIVING CORPORATION
2.1 CERTIFICATE OF INCORPORATION. The Amended and Restated Certificate of
Incorporation of Sub, a form of which is attached hereto on Schedule 5.1, shall
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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 included on Schedule 5.1 hereto.
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2.3 BOARD OF DIRECTORS; OFFICERS. The Board of Directors and officers of
Sub immediately prior to the Effective Time shall be the Board of Directors and
officers, respectively, of the Surviving Corporation, until the earlier of their
respective resignations or the time that their respective successors are duly
elected or appointed and qualified. Immediately prior to the Effective Time,
Parent shall cause the following persons to be elected and appointed to the
following offices of Sub: Xxxxxxx X. Xxxxxx: President; Xxxxxxx X. Xxxxxx:
Senior Vice President; Xxxxxx X. Xxxxxx: Chief Technology Officer.
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ARTICLE III
CONVERSION OF SHARES
3.1 MERGER CONSIDERATION. As of the Effective Time:
(a) All shares of InTouch Stock owned by InTouch shall, by virtue of
the Merger and without any action on the part of any stockholder, officer or
director of InTouch or Sub, be canceled and retired and shall cease to exist,
and no consideration shall be delivered in exchange therefor.
(b) Upon surrender to Sub, at the Closing, of the underlying share
certificates of InTouch Stock (other than any Dissenting Shares, as defined in
Section 3.2 hereof), each such share shall be converted into, and become
exchangeable for such amount of cash, and such number of shares of validly
issued, fully paid and nonassessable Class B Common Stock of Parent, $.01 par
value (the "Parent Stock"), as indicated on Schedule 3.1(b).
(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 stockholder,
officer or director of InTouch 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 InTouch Stock held by a Dissenting Shareholder (as
hereinafter defined) shall not be converted as described in Section 3.1 hereof,
but instead shall be converted into the right to receive the consideration due a
Dissenting Shareholder pursuant to the DGCL or NBCA, as applicable; provided,
however, that if a Dissenting Shareholder shall fail to perfect his demand,
withdraw his demand or otherwise lose his right for appraisal under the terms of
the DGCL or the NBCA, as applicable, the InTouch 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. InTouch
shall not voluntarily make any payment with respect to, settle, or offer to
settle or otherwise negotiate, any such demand. The Surviving Corporation shall
pay all amounts paid to Dissenting Shareholders without interest thereon (to the
extent permitted by applicable law). For purposes hereof, the term "Dissenting
Shareholder" shall mean an InTouch Shareholder who (a) objects to the Merger;
and (b) complies with the applicable provisions of the DGCL or NBCA concerning
dissenter's rights.
3.3 NO FURTHER RIGHTS. From and after the Effective Time, holders of
certificates theretofore evidencing InTouch Stock shall cease to have any rights
as stockholders of InTouch, except as provided herein or by applicable law.
3.4 CLOSING OF INTOUCH'S TRANSFER BOOKS. At the Effective Time, the stock
transfer books of InTouch shall be closed and no transfer of InTouch Stock shall
be made thereafter. If after the Effective Time, certificates for InTouch Stock
are presented to Parent or the Surviving Corporation, they shall be canceled and
exchanged for a consideration as set forth in Section 3.1 hereof, subject to
applicable law in the case of Dissenting Shareholders.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF INTOUCH
InTouch and the InTouch 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. InTouch is a corporation duly
organized, validly existing and in good standing under the laws of the State of
North Carolina. InTouch has the requisite corporate power and authority to
carry on the InTouch Business as it is now being conducted and is duly qualified
or licensed to do business, and is in good standing, in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary. Complete and correct copies of
the Articles of Incorporation and Bylaws of InTouch as in effect on the date
hereof are attached as Schedule 4.1 hereto. The minute book of InTouch, a true
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and complete copy of which has been delivered to Parent, (a) accurately reflects
all action taken by the directors and shareholders of InTouch at meetings of
InTouch's Board of Directors or shareholders, as the case may be; and (b)
contains true and complete copies, or originals, of the respective minutes of
all meetings or consent actions of the directors or shareholders.
4.2 AUTHORITY. InTouch 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 InTouch have been duly and validly
authorized and approved by InTouch's Board of Directors and the InTouch
Shareholders, and no other corporate or shareholder proceedings on the part of
InTouch, its Board of Directors or the InTouch 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
InTouch and each InTouch Shareholder, and assuming the due authorization,
execution and delivery by Parent and Sub, constitutes the valid and binding
obligation of InTouch and each InTouch Shareholder, enforceable against InTouch
and each InTouch Shareholder in accordance with its terms subject, in each case,
to bankruptcy, insolvency, reorganization, moratorium and similar laws of
general application relating to or affecting creditors' rights and to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing.
4.3 CAPITALIZATION.
(a) The authorized capital stock of InTouch consists of 10,000 shares
of common stock, $10.00 par value, of which three shares are validly issued and
outstanding, fully paid and nonassessable. All outstanding capital stock of
InTouch was issued in accordance with applicable federal and state securities
laws. There are no options, warrants, calls, agreements, commitments or other
rights presently outstanding that would obligate InTouch or any of the InTouch
Shareholders to issue, deliver or sell shares of its capital stock, or to grant,
extend or enter into any such option, warrant, call, agreement, commitment or
other right. In addition to
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the foregoing, as of the date hereof, InTouch has no bonds, debentures, notes or
other indebtedness issued or outstanding that have voting rights in InTouch.
Schedule 4.3(a) sets forth a list of all holders of record of InTouch Stock and
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the number of shares held by each InTouch Shareholder.
(b) All of the issued and outstanding shares of capital stock of
InTouch are validly issued, fully paid and nonassessable. Except as set forth on
Schedule 4.3(b) hereto, each InTouch Shareholder represents and warrants that
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the InTouch Stock held by such InTouch 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. InTouch 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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InTouch or the InTouch Shareholders, (ii) the consummation by InTouch and the
InTouch Shareholders of the transactions contemplated hereby or (iii) compliance
by InTouch with any of the provisions hereof will:
(a) conflict with or violate the Articles of Incorporation or Bylaws
of InTouch;
(b) result in a violation of any statute, ordinance, rule,
regulation, order, judgment or decree applicable to InTouch or any of the
InTouch Shareholders, or by which InTouch or any of its properties or assets may
be bound or affected;
(c) result in a violation or breach of, or constitute a default (or
an event that, with notice or lapse of time or both, would become a default)
under, or give to any other any right of termination, amendment, acceleration or
cancellation of, any note, bond, mortgage, indenture, or any material contract,
agreement, arrangement, lease, license, permit, judgment, decree, franchise or
other instrument or obligation, to which InTouch is a party or by which InTouch
or any of its properties or assets may be bound or affected (collectively, for
the purposes of this Section 4.5, an "InTouch Agreement");
(d) result in the creation of any Lien on any of the property or
assets of InTouch; or
(e) require any consent, waiver, license, approval, authorization,
order, permit, registration or filing with, or notification to (any of the
foregoing being a "Consent"), (i) any government or subdivision thereof, whether
domestic or foreign, or any administrative, governmental, or regulatory
authority, agency, commission, court, tribunal or body, whether
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domestic, foreign or multinational (any of the foregoing, a "Governmental
Entity"), except for the filing of the Certificate of Merger pursuant to the
DGCL and the NBCA; or (ii) any other individual or Entity (collectively, a
"Person") pursuant to any InTouch Agreement.
4.6 FINANCIAL STATEMENTS. InTouch has heretofore furnished Parent with a
true and complete copy of (a) the unaudited financial statements of InTouch for
the years ended December 31, 1995, 1996 and 1997; and (b) the unaudited
financial statements of InTouch for the month ended March 31, 1998 (all of the
foregoing collectively herein referred to as the "InTouch Financial
Statements"). Except as set forth on Schedule 4.6, the InTouch Financial
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Statements present fairly, in all material respects, the financial position and
operating results of InTouch 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) InTouch 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 InTouch; (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 InTouch in
respect of its stock, whether in cash or property, and (ii) no purchase or
redemption of any share of the capital stock of InTouch; (d) there has been no
declaration, payment, or commitment for the payment, by InTouch, of a bonus or
other additional salary, compensation, or benefit to any employee of InTouch
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 InTouch, or waiver
of any right of InTouch in each case over $10,000; (f) there have been no
capital expenditures in excess of $10,000 for any single item, or $25,000 in the
aggregate; (g) there has been no change in accounting methods or practices or
revaluation of any asset of InTouch (other than InTouch Accounts Receivable (as
defined in Section 4.26 hereof) written down in the ordinary course of business
that are not in excess of $10,000 for any single InTouch Accounts Receivable, or
$25,000 in the aggregate); (h) there has been no material damage, or material
destruction to, or material loss of, material physical property (whether or not
covered by insurance) adversely affecting the InTouch Business or the operations
of InTouch; (i) there has been no loan by InTouch, or guaranty by InTouch of any
loan, to any employee of InTouch; (j) InTouch has not ceased to transact
business with any customer that, as of the date of such cessation, represented
more than 5% of the annual gross revenues of InTouch; (k) there has been no
termination or resignation of any key employee or officer of InTouch, and to the
knowledge of InTouch, 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 InTouch Business, to which InTouch
is a party or by which it is bound, except in the ordinary course of business,
or except as expressly contemplated hereby; (m) InTouch has not failed to
satisfy any of its debts, obligations or liabilities related to the InTouch
Business or the assets of InTouch as the same become due and owing (except for
InTouch 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 InTouch 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 InTouch.
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4.8 UNDISCLOSED LIABILITIES. Except as set forth on Schedule 4.8 hereto,
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InTouch has no debt, liability or obligation of any kind, whether accrued,
absolute or otherwise, including, without limitation, any liability or
obligation on account of taxes or any governmental 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 InTouch; (b) liabilities reflected on the InTouch 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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InTouch has good and marketable title to all tangible property and assets used
in the InTouch Business (other than leased property), and good and valid title
to its leasehold interests, in each case, free and clear of any and all Liens
other than Permitted Liens (as defined in Section 10.11 hereof).
4.10 EQUIPMENT. Attached hereto as Schedule 4.10 is a true and correct
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list of all items of tangible personal property (including, without limitation,
computer hardware) necessary for or used in the operation of the InTouch
Business in the manner in which it has been and is now operated by InTouch ("the
InTouch Equipment"), except for personal property having a net book value of
less than $1,000. Except as set forth on Schedule 4.10 hereto, each material
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item of InTouch Equipment is in adequate condition and repair for its intended
use, ordinary wear and tear excepted.
4.11 INTELLECTUAL PROPERTY.
(a) InTouch has heretofore furnished Parent with a true and complete
list of all material proprietary technology, patents, patent rights, trademarks,
trademark rights, trade names, trade name rights, service marks, service xxxx
rights, and registered copyrights (and all pending applications for any of the
foregoing) used by InTouch in the conduct of the InTouch Business (together with
trade secrets and know how used in the conduct of the InTouch Business, the
"InTouch Intellectual Property Rights"). InTouch owns, or is validly licensed or
otherwise has the right to use or exploit, as currently used or exploited, all
of the InTouch 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 InTouch, threatened, that InTouch is
infringing or otherwise adversely affecting the rights of any Person with regard
to any InTouch Intellectual Property Right. No Person is infringing the rights
of InTouch with respect to any InTouch Intellectual Property Right. To the
knowledge of InTouch, neither InTouch nor any employee, agent or independent
contractor of InTouch, in connection with the performance of such Person's
services with InTouch, 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) InTouch has heretofore furnished Parent with a true and complete
list of all material computer software used by InTouch in the conduct of the
InTouch Business (the "InTouch Software"). Other than incidental software valued
at less than $5,000 in the aggregate, InTouch currently licenses, or otherwise
has the legal right to use, all of the InTouch Software
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(including any upgrade, alteration or enhancement with respect thereto), and all
of the InTouch Software is being used in compliance with any applicable license
or other agreement.
4.12 REAL PROPERTY. Except as set forth on Schedule 4.12 hereto:
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(a) InTouch has a good and valid leasehold interest in all real
property (including all buildings, improvements and fixtures thereon) used in
the operation of the InTouch Business (the "InTouch Real Property"). InTouch
owns no real property. Except for Permitted Liens, and for the items set forth
on Schedule 4.12, there are no Liens on InTouch's interest in any of the InTouch
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Real Property.
(b) There are no parties in possession of any portion of the InTouch
Real Property other than InTouch, whether as sublessees, subtenants at will or
trespassers.
4.13 LEASES. Schedule 4.13 hereto sets forth a list of all leases
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pursuant to which InTouch leases, as lessor or lessee, real or personal property
used in operating the InTouch Business or otherwise (the "InTouch Leases").
Copies of the InTouch Leases, all of which have previously been provided to
Parent, are true and complete copies thereof. Except as set forth on Schedule
4.13, all of the InTouch Leases are valid, binding and enforceable against
InTouch and, to the knowledge of InTouch, against the other parties thereto, in
accordance with their respective terms, and there is not under any such InTouch
Lease any existing default by InTouch, or, to the knowledge of InTouch, by any
other party thereto, or any condition or event that, with notice or lapse of
time or both, would constitute a default with respect to InTouch, or to the
knowledge of InTouch, any other party thereto. InTouch has not received notice
that the lessor of any of the InTouch Leases intends to cancel, suspend or
terminate such InTouch Lease or to exercise or not exercise any option
thereunder.
4.14 CONTRACTS. Schedule 4.14 hereto sets forth a true and complete list
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of all contracts, agreements and commitments (whether written or oral) to which
InTouch 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, without limitation, any service agreements, customer
agreements, supplier agreements, agreements to lend or borrow money, shareholder
agreements, employment agreements, agreements relating to InTouch Intellectual
Property Rights and the like (collectively, but excluding the contracts,
agreements and commitments hereafter excepted, the "InTouch Contracts");
excepting only those contracts, agreements and commitments which involve less
than $10,000 and are cancelable, without penalty, on no more than 90 days'
notice. The aggregate value of all payment obligations and rights to receive
payments, under agreements, contracts and commitments (whether oral or in
writing) to which InTouch is a party or by which it or any of its properties is
otherwise bound, and that are not listed on Schedule 4.14, is less than $50,000
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(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 InTouch Contracts (or a true and complete
narrative description of any oral InTouch Contract) have previously been
provided to Parent. Neither InTouch nor, to the knowledge of InTouch, any other
party to any of the InTouch Contracts (x) is in default under (nor does there
exist any condition that, with notice or lapse of time or both,
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would cause such a default under) any of the InTouch Contracts, or (y) has
waived any right it may have under any of the InTouch Contracts, the waiver of
which would have a material adverse effect on the business, assets or financial
condition of InTouch. All of the InTouch Contracts constitute the valid and
binding obligations of InTouch, enforceable in accordance with their respective
terms, and, to the knowledge of InTouch, of the other parties thereto.
4.15 DIRECTORS AND OFFICERS. Schedule 4.15 hereto sets forth a list, as
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of the Closing Date, of the name of each director and officer of InTouch and the
position(s) held by each.
4.16 PAYROLL INFORMATION. Attached hereto as Schedule 4.16 is a true
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and complete copy of the payroll report of InTouch dated April 30, 1998, showing
all current employees of InTouch and their current levels of compensation, other
than bonuses and other extraordinary compensation. InTouch has paid all
compensation required to be paid to employees of InTouch on or prior to the date
hereof other than compensation accrued in the current pay period.
4.17 LITIGATION. Except as set forth on Schedule 4.17 hereto, there
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is no suit, action, claim, investigation or proceeding pending or, to the
knowledge of InTouch, threatened against or affecting InTouch or the InTouch
Business, nor is there any judgment, decree, injunction or order of any
applicable Governmental Entity or arbitrator outstanding against InTouch.
4.18 EMPLOYEE BENEFIT PLANS/LABOR RELATIONS.
(a) Except as disclosed in Schedule 4.18 hereto, there are no
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employee benefit plans, agreements or arrangements maintained by InTouch,
including, without limitation, (i) "employee benefit plans" within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"); (ii) current or deferred compensation, pension, profit
sharing, vacation or severance plans or programs; or (iii) medical, hospital,
accident, disability or death benefit plans (collectively, "InTouch Benefit
Plans"). All InTouch 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 InTouch under any InTouch Benefit
Plan.
(b) InTouch 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 InTouch; no representation campaign or election is now in progress
with respect to any employee of InTouch; and there are no labor disputes,
grievances, controversies, strikes or requests for union representation pending,
or, to the knowledge of InTouch, threatened, relating to or affecting the
InTouch Business. To the knowledge of InTouch, no event has occurred that could
give rise to any such dispute, controversy, strike or request for
representation.
4.19 ERISA.
(a) All InTouch 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 InTouch Benefit Plans that is
intended to meet the requirements of
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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 InTouch
Benefit Plan is subject to Title IV of ERISA or Section 412 of the Code. InTouch
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 InTouch
Benefit Plans that would subject InTouch to the penalty or tax imposed under
Section 502(i) of ERISA or Section 4975 of the Code. InTouch has not engaged in
any transaction described in Section 4069 of ERISA within the last five years.
Except as disclosed in Schedule 4.19 hereto or pursuant to the terms of the
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InTouch Benefit Plans, neither the execution and delivery hereof nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including, without limitation, severance, unemployment compensation or
golden parachute) becoming due to any director or other employee of InTouch,
(ii) increase any benefit otherwise payable under any InTouch 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 InTouch 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 InTouch under Section 4001 of ERISA
or Section 414 of the Code, within the 12-month period ending on the Closing
Date. InTouch has not incurred any liability to the Pension Benefit Guaranty
Corporation in respect of any InTouch Benefit Plan that remains unpaid.
4.20 TAXES.
(a) InTouch 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 InTouch on or
prior to the Closing Date. InTouch has duly and timely paid all taxes and other
governmental charges, and all interest and penalties with respect thereto,
required to be paid by InTouch (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 InTouch Financial Statements). As of the Closing Date, all
deficiencies proposed as a result of any audit have been paid or settled.
(b) InTouch is not a party to, or bound by, or otherwise in any
way obligated under, any tax sharing or similar agreement.
(c) InTouch has not consented to have the provisions of Section
341(f)(2) of the Code (or comparable state law provisions) apply to it, and
InTouch 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. Except as set forth on Schedule
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4.21, InTouch holds all material permits, licenses, variances, exemptions,
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orders and approvals of all Governmental Entities necessary to own, lease or
operate all of the assets and properties of
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InTouch, as appropriate, and to carry on the InTouch Business as now conducted
(the "InTouch Permits"). To the knowledge of InTouch, InTouch is in material
compliance with all applicable laws, ordinances and regulations and the terms of
the InTouch Permits. Except as set forth on Schedule 4.21 hereto, all of the
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InTouch Permits are fully assignable by InTouch in connection with the Merger.
Schedule 4.21 hereto sets forth a true and complete list of all InTouch Permits,
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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 InTouch and the InTouch Shareholders have adopted and approved this
Agreement and the transactions contemplated hereby (including, without
limitation, the Merger).
4.23 BROKERS. Except as set forth on Schedule 4.23 hereto, no broker
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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 InTouch.
4.24 ENVIRONMENTAL MATTERS.
(a) To the knowledge of InTouch, no real property currently or
formerly owned or operated by InTouch is contaminated with any Hazardous
Substance (as hereinafter defined);
(b) InTouch is not a party to any litigation or administrative
proceeding nor, to the knowledge of InTouch, is any litigation or administrative
proceeding threatened against it, that, in either case, asserts or alleges that
InTouch (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 InTouch, 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 InTouch 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 InTouch, InTouch is not subject to any
judgment, order or citation related to or arising out of any Environmental Law
and has not been named or listed as a potentially responsible party by any
Governmental Entity in a matter related to or arising out of any Environmental
Law.
(e) For purposes hereof, (i) the term "Environmental Law" means any
federal, state or local law (including statutes, regulations, ordinances, codes,
rules, judicial opinions and other governmental restrictions and requirements)
relating to the discharge of air pollutants, water pollutants, noise, odors or
process waste water, or otherwise relating to the environment or hazardous or
toxic substances; and (ii) the term "Hazardous Substance" means any toxic or
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hazardous substance that is regulated by or under authority of any Environmental
Law, including, without limitation, any petroleum products, asbestos or
polychlorinated biphenyls.
4.25 INTEREST IN CUSTOMERS, SUPPLIERS AND COMPETITORS. Except as
provided in Schedule 4.25 hereto, no officer, director, shareholder or employee
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of InTouch 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 InTouch, or in any
Person from whom or to whom InTouch leases any real or personal property, or in
any other Person with whom InTouch is doing business whether directly or
indirectly (including, without limitation, as a debtor or creditor), whether in
existence as of the Closing Date or proposed, other than the ownership of stock
of publicly traded corporations.
4.26 ACCOUNTS RECEIVABLE. All accounts, notes, contracts and other
receivables of InTouch (collectively, "InTouch Accounts Receivable") were
acquired by InTouch in the ordinary course of business arising from bona fide
transactions. To the knowledge of InTouch, there are no set-offs, counterclaims
or disputes asserted with respect to any InTouch Accounts Receivable that would
result in claims in excess of $10,000 in the aggregate and, to the knowledge of
InTouch and subject to such $10,000 figure, all InTouch Accounts Receivable are
collectible in full. InTouch has previously provided Parent with a true and
complete aging report prepared as of March 31, 1998 which shows the time elapsed
since invoice date for all InTouch Accounts Receivable as of such date.
4.27 ACCOUNTS PAYABLE. All material accounts, notes, contracts and other
amounts payable of InTouch (collectively, "InTouch Accounts Payable") are
currently within their respective terms, and are neither in default nor
otherwise past due by more than 90 days. InTouch has previously provided Parent
with a true and complete aging report prepared as of March 31, 1998 which shows
the time elapsed since invoice date for all InTouch Accounts Payable as of such
date.
4.28 INSURANCE. True and complete copies of the insurance policies listed
on Schedule 4.28 hereto (the "InTouch Insurance Policies") have previously been
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provided to Parent. InTouch (a) is not in default regarding the provisions of
any InTouch 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. InTouch 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 INTOUCH DEBT. As of the date hereof, there is no InTouch Debt.
4.31 INVESTMENT PURPOSE; ACCREDITED INVESTORS OR PURCHASER REPRESENTATIVE.
(a) Each InTouch Shareholder receiving Parent Stock in the Merger represents
that he (i) is acquiring the Parent Stock solely for his own account for
investment and not with a view to, or
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for sale in connection with, any distribution thereof; and (ii) will not,
directly or indirectly, offer, transfer, sell, pledge, hypothecate or otherwise
dispose of any Parent Stock (or solicit any offers to buy, purchase or otherwise
acquire or take a pledge of any such shares) except in compliance with the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations thereunder, other applicable laws, rules and regulations, and the
Second Amended and Restated Stockholders' Agreement of Parent, dated December
17, 1997 (as amended, the "Stockholders' Agreement"); (b) Each InTouch
Shareholder receiving Parent Stock in the Merger and listed on Schedule 4.31(b)
----------------
hereto further represents that he is an "accredited investor" as such term is
defined in Rule 501 of Regulation D promulgated by the Securities and Exchange
Commission under the Securities Act; and (c) Each InTouch Shareholder receiving
Parent Stock in the Merger and listed on Schedule 4.31(c) hereto further
----------------
represents that (i) Xxxxxx Xxxxxxx is his Purchaser representative (the
"Purchaser representative") as such term is defined in Rule 501 of Regulation D
under the Securities Act; and (ii) the Purchaser representative (A) is not an
affiliate, director, officer or other employee of Parent, or beneficial owner of
10% or more of any class of the equity securities of, or 10% or more of the
equity interest in, Parent; (B) has such knowledge and experience in financial
and business matters that he is capable of evaluating, alone, or together with
such InTouch Shareholder, the merits and risks of the prospective investment in
Parent Stock; (C) has been acknowledged by such InTouch Shareholder in writing,
during the course of the Merger, to be his purchaser representative in
connection with evaluating the merits and risks of the prospective investment in
Parent Stock; and (D) has disclosed to such InTouch Shareholder in writing a
reasonable time prior to the Closing any material relationship between the
Purchaser representative or his affiliates and Parent or its affiliates that
exists, is mutually understood to be contemplated, or has existed at any time
during the previous two years, and any compensation received or to be received
as a result of such relationship.
4.32 RESTRICTIONS ON TRANSFER. Each InTouch Shareholder receiving Parent
Stock in the Merger acknowledges that (a) the Parent Stock received by him
hereunder has not been registered under the Securities Act; (b) the Parent Stock
may be required to be held indefinitely, and he must continue to bear the
economic risk of the investment in such shares unless such shares are
subsequently registered under the Securities Act or an exemption from such
registration is available; (c) there may not be any public market for the Parent
Stock in the foreseeable future; (d) Rule 144 promulgated under the Securities
Act is not presently available with respect to sales of any securities of
Parent, and such Rule is not anticipated to be available in the foreseeable
future; (e) when and if Parent Stock may be disposed of without registration in
reliance upon Rule 144, such disposition can be made only in limited amounts and
in accordance with the terms and conditions of such Rule; (f) if the exemption
afforded by Rule 144 is not available, public sale without registration will
require the availability of an exemption under the Securities Act; (g) the
Parent Stock is subject to the terms and conditions of the Stockholders'
Agreement; (h) restrictive legends shall be placed on the certificates
representing Parent Stock; and (i) a notation shall be made in the appropriate
records of Parent indicating that Parent Stock is subject to restrictions on
transfer and, if Parent should in the future engage the services of a stock
transfer agent, appropriate stop-transfer instructions will be issued to such
transfer agent with respect to Parent Stock.
4.33 ABILITY TO BEAR RISK; ACCESS TO INFORMATION; SOPHISTICATION. (a) Each
InTouch Shareholder receiving Parent Stock in the Merger represents and warrants
that (i) his financial
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situation is such that he can afford to bear the economic risk of holding Parent
Stock acquired by him hereunder for an indefinite period; and (ii) he can afford
to suffer the complete loss of such Parent Stock.; (b) Each InTouch Shareholder
receiving Parent Stock in the Merger and listed on Schedule 4.31(b) hereto
----------------
further represents that (i) he has been granted the opportunity to ask questions
of, and receive answers from, representatives of Parent concerning the terms and
conditions of the Parent Stock and to obtain any additional information that he
deems necessary; (ii) his knowledge and experience in financial business matters
is such that he is capable of evaluating the merits and risk of ownership of the
Parent Stock; (iii) he has carefully reviewed the terms of the Stockholders'
Agreement and has evaluated the restrictions and obligations contained therein;
and (iv) he (A) has reviewed the Private Placement Memorandum of Parent dated
May 7, 1998 (the "Memorandum"); (B) has carefully examined the Memorandum and
has had an opportunity to ask questions of, and receive answers from,
representatives of Parent, and to obtain additional information concerning
Parent and its Subsidiaries (as hereinafter defined); and (C) does not require
additional information regarding Parent or its Subsidiaries in connection with
the merger; and (c) Each InTouch Shareholder receiving Parent Stock in the
Merger and listed on Schedule 4.31(c) hereto further represents that, either
----------------
alone or with the Purchaser representative, (i) he has been granted the
opportunity to ask questions of, and receive answers from, representatives of
Parent concerning the terms and conditions of the Parent Stock and to obtain any
additional information that he deems necessary; (ii) his knowledge and
experience in financial business matters is such that he is capable of
evaluating the merits and risk of ownership of the Parent Stock; (iii) he has
carefully reviewed the terms of the Stockholders' Agreement and has evaluated
the restrictions and obligations contained therein; and (iv) he (A) has reviewed
the Memorandum; (B) has carefully examined the Memorandum and has had an
opportunity to ask questions of, and receive answers from, representatives of
Parent, and to obtain additional information concerning Parent and its
Subsidiaries; and (C) does not require additional information regarding Parent
or its Subsidiaries in connection with the Merger.
4.34 DISCLOSURE. No statement of fact by InTouch or any InTouch
Shareholder contained herein and no written statement of fact furnished by
InTouch or any InTouch 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; provided, that no representation or warranty is made with
respect to any projections provided by InTouch to Parent or Sub.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Each of Parent and Sub jointly and severally represents and warrants
to InTouch and the InTouch 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
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is duly qualified or licensed to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary. Complete and
correct copies of the Certificates of Incorporation and Bylaws of Parent and Sub
as in effect on the date hereof are attached as Schedule 5.1 hereto.
------------
5.2 AUTHORITY. Each of Parent and Sub has the necessary corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery hereof and the
consummation of the transactions contemplated hereby by each of Parent and Sub
have been duly and validly authorized and approved by their respective board of
directors and Sub's sole shareholder, and no other corporate or shareholder
proceedings on the part of either Parent or Sub, or their respective board of
directors or shareholders, are necessary to authorize or approve this Agreement
or to consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by each of Parent and Sub, and assuming the due
authorization, execution and delivery by InTouch and the InTouch Shareholders,
constitutes the valid and binding obligation of each of Parent and Sub,
enforceable against each of Parent and Sub in accordance with its terms,
subject, in each case, to bankruptcy, insolvency, reorganization, moratorium and
similar laws of general application relating to or affecting creditors' rights
and to general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing.
5.3 NO CONFLICTS, REQUIRED FILINGS AND CONSENTS. Except as set forth on
Schedule 5.3 hereto, none of the execution and delivery of this Agreement by
------------
Parent or Sub, the consummation by Parent and Sub of the transactions
contemplated hereby, or compliance by Parent and Sub with any of the provisions
hereof, will:
(a) conflict with or violate the Certificate of Incorporation or
Bylaws of Parent or Sub, or the organizational documents of any other
Subsidiaries;
(b) result in a violation of any statute, ordinance, rule,
regulation, order, judgment or decree applicable to Parent or its Subsidiaries,
or by which Parent, any of its Subsidiaries, or their respective properties or
assets may be bound or affected;
(c) result in a violation or breach of, or constitute a default (or
an event that, with notice or lapse of time or both, would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any note, bond, mortgage, indenture, or any material contract,
agreement, arrangement, lease, license, permit, judgment, decree, franchise or
other instrument or obligation to which Parent or any of its Subsidiaries is a
party or by which Parent, any of its Subsidiaries or their respective properties
may be bound or affected;
(d) result in the creation of any Lien on any of the property or
assets of Parent or any of its Subsidiaries; or
(e) require any Consent of (i) any Governmental Entity (except for
(x) compliance with any applicable requirements of any applicable securities
laws, and (y) the filing of the Certificate of Merger pursuant to the DGCL and
the NBCA); or (ii) any other Person.
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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 9,024,210 shares are
validly issued and outstanding (without taking into account any shares of Parent
Stock to be issued (I) pursuant to this Agreement, (II) pursuant to the
Agreement and Plan of Merger, dated on or about May 12, 1998 among Parent, iXL-
Los Angeles, Inc., Digital Planet, a California corporation ("Digital") and the
shareholders of Digital identified therein (the "Digital Merger"), which
agreement is anticipated to close on or about May 12, 1998, or (III) pursuant to
the Agreement and Plan of Merger, dated as of May 4, 1998 among Parent, iXL-New
York, Inc., Micro Interactive, Inc. ("Micro") and the shareholders of Micro
identified therein (the "Micro Merger"), which agreement is anticipated to close
on or about May 15, 1998), 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 172,452 shares are validly issued and
outstanding, fully paid and nonassessable, (B) 200,000 of which have been
designated as Class B Convertible Preferred Stock, of which 98,767 shares are
validly issued and outstanding, fully paid and nonassessable, and (C) 15,000 of
which have been designated as Class C Convertible Preferred Stock, of which
9,232 shares are validly issued and outstanding, fully paid and nonassessable.
Except as set forth on Schedule 5.6 hereto, there are no options, warrants,
------------
calls, agreements, commitments or other rights presently outstanding that would
obligate Parent to issue, deliver or sell shares of its capital stock, or to
grant, extend or enter into any such option, warrant, call, agreement,
commitment or other right. In addition to the foregoing, as of the Closing
Date, Parent has no bonds, debentures, notes or other indebtedness issued or
outstanding that have voting rights in Parent.
(b) The outstanding shares of capital stock of Parent at the
Effective Time are set forth on a pro forma basis on Schedule 5.6 hereto.
------------
(c) When delivered to the InTouch Shareholders in accordance with the
terms hereof, the Parent Stock will be (i) duly authorized, fully paid and
nonassessable, and (b) free and clear of all Liens other than restrictions
imposed by the Stockholders' Agreement and by federal and state securities laws.
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5.7 SUBSIDIARIES. Except as set forth on Schedule 5.7 hereto, Parent has
------------
no subsidiaries and does not otherwise own or control, directly or indirectly,
any equity interest in, or any security convertible into an equity interest in,
any Entity. Schedule 5.7 hereto lists the name of each of the Subsidiaries of
------------
Parent, and indicates their respective jurisdictions of incorporation. All of
the issued and outstanding shares of capital stock of each of the Subsidiaries
of Parent is duly authorized, validly issued, fully paid and non-assessable and
is owned by Parent free and clear of all Liens; and there are no voting trusts,
voting agreements or similar understandings applicable to such shares. There are
no outstanding subscriptions, options, rights, warrants, puts, calls,
registration or other agreements or commitments of any type (i) obligating
Parent or any of its Subsidiaries to issue, sell or transfer any shares of
capital stock of any Subsidiary, any securities convertible into or exchangeable
for shares of capital stock of any Subsidiary or any right to acquire capital
stock of any Subsidiary; (ii) obligating Parent to grant, offer or enter into
any of the foregoing; or (iii) relating to the voting or control of any shares
of capital stock of any Subsidiary.
5.8 FINANCIAL STATEMENTS. Parent has heretofore furnished InTouch 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)
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; (d)
the audited consolidated financial statements for Parent and its Subsidiaries,
dated December 31, 1997; and (e) the unaudited consolidated financial statements
for Parent and its Subsidiaries dated 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
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the knowledge of Parent, Parent and its Subsidiaries are in material compliance
with all applicable laws, ordinances and regulations and the terms of the Parent
Permits.
5.11 BOARD OF DIRECTORS/SHAREHOLDER CONSENT. Both the Board of Directors of
Parent and the Board of Directors and shareholder of Sub have, by unanimous
written consent, adopted and approved this Agreement and the transactions
contemplated hereby (including, without limitation, the Merger).
5.12 BANKRUPTCY. Neither Parent nor any of its Subsidiaries has filed a
petition or request for reorganization or protection or relief under the
bankruptcy laws of the United States or any state or territory thereof, made any
general assignment for the benefit of creditors, or consented to the appointment
of a receiver or trustee, including a custodian under the United States
bankruptcy laws, whether such receiver or trustee is appointed in a voluntary or
involuntary proceeding.
5.13 ABSENCE OF CHANGES. Except as provided in Schedule 5.13 hereto, since
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December 31, 1997, there has not been (a) any transaction, commitment, dispute
or other event or condition (financial or otherwise) of any character (whether
or not in the ordinary course of business) individually or in the aggregate that
has had, or would reasonably be expected to have, a material adverse effect on
the business, properties, assets, condition (financial or otherwise),
liabilities or results of operations of Parent and its Subsidiaries, taken as a
whole; (b) any damage, destruction or loss, whether or not covered by insurance,
which has had, or would reasonably be expected to have, a material adverse
effect on the business, properties, assets, condition (financial or otherwise),
liabilities or results of operations of Parent and its Subsidiaries, taken as a
whole; (c) any entry into any commitment or transaction material to Parent and
its Subsidiaries, taken as a whole (including any borrowing or sale of assets)
except in the ordinary course of business consistent with past practice; (d) any
declaration, setting aside or payment of any dividend or distribution (whether
in cash, stock or property) with respect to Parent's capital stock; (e) any
material change in Parent's accounting principles, practices or methods; (f) any
split, combination or reclassification of any of Parent's capital stock, or the
issuance or authorization of any issuance of any other securities in respect of,
in lieu of or in substitution for, shares of Parent's capital stock; or (g) any
agreement (whether or not in writing), arrangement or understanding to do any of
the foregoing.
5.14 TAXES. Parent and its Subsidiaries have duly and timely filed all
federal, state and local income, franchise, excise, real and personal property
and other tax returns and reports, including extensions, required to have been
filed by Parent and its Subsidiaries on or prior to the Closing Date. Parent and
its Subsidiaries have duly and timely paid all taxes and other governmental
charges, and all interest and penalties with respect thereto, required to be
paid by Parent and its Subsidiaries (whether by way of withholding or otherwise)
to any federal, state, local or other taxing authority (except to the extent the
same are being contested in good faith, and adequate reserves therefor have been
provided in the applicable Parent Financial Statement). As of the Closing Date,
all deficiencies proposed as a result of any audits have been paid or settled.
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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
InTouch in connection herewith (including, without limitation, statements
contained in the Memorandum) contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary in order
to make the statements herein or therein contained not misleading.
5.16 TAX FREE REORGANIZATION.
(a) At all times prior to the Merger, Parent has owned all of the
outstanding equity interests in Sub (including rights to acquire an equity
interest in Sub, if any). Accordingly, both prior to and immediately after the
Merger, Parent will be in control of Sub within the meaning of Section 368(c) of
the Code. "Control" for these purposes means the ownership of stock possessing
at least eighty percent (80%) of the total combined voting power of all classes
of stock entitled to vote and at least eighty percent (80%) of the total number
of shares of each class of nonvoting stock. Following the Merger, Parent has no
plan or intention to cause Sub to issue additional equity interests that would
result in Parent losing "Control," as defined above, of Sub.
(b) After the Merger, Parent will own 100% of the outstanding equity
interest in Sub (including the right to acquire such an equity interest). Parent
has no plan or intention to liquidate Sub, to merge Sub with or into another
operation (including Parent), to sell, transfer ownership, or otherwise dispose
of or transfer any portion of its assets (including those assets acquired from
InTouch) to any person or entity (including Parent), except for dispositions
made in the ordinary course of business or transfers of assets to a corporation
controlled by Sub (including payments to dissenters ("Permissible Transfers").
(c) Parent intends that, following the Merger, it will cause Sub
either to continue InTouch's historic business or to continue to use a
significant portion of InTouch's historic business assets in a business;
provided, however, to the extent that the business or assets of InTouch are
subject to a Permissible Transfer, Parent intends that the transferee will
continue the historic business of InTouch or use a significant portion of
InTouch's assets in a business.
(d) Neither Parent nor Sub is an "investment company" as defined in
Section 368(a)(2)(F)(ii) and (iv) of the Code.
(e) Neither Parent nor Sub is under the jurisdiction of a court in a
Title 11 or similar case within the meaning of Section 368 (a)(3)(A) of the
Code.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 CONDUCT OF BUSINESS BY INTOUCH 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, InTouch 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
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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 InTouch to the end that
its goodwill and on-going businesses shall not be impaired in any material
respect at the Effective Time. Without limiting the generality of the foregoing,
and except as contemplated hereby, unless Parent shall otherwise agree in
writing, prior to the Effective Time, InTouch shall not, directly or indirectly:
(a) (i) declare, set aside, or pay any dividend on, or make any other
distribution in respect of, any of its capital stock, (ii) split, combine or
reclassify any of its capital stock, or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock, or (iii) purchase, redeem or otherwise acquire, any share of
capital stock of InTouch 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 InTouch or any security
convertible into, or any right, warrant or option to acquire any such share or
voting security;
(c) amend its Articles of Incorporation, Bylaws or other
comparable organizational documents;
(d) acquire or agree to acquire (i) by merging or consolidating with,
or by purchasing a substantial portion of the assets of, or by any other manner,
any business or any Entity or division thereof, or (ii) any assets that are
material, individually or in the aggregate, to InTouch;
(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 InTouch,
guarantee any debt security of another Person or enter into any "keep well" or
other agreement to maintain the financial condition of another Person, make any
loan, advance or capital contribution to, or investment in, any other Person, or
settle or compromise any material claim or litigation; or
(g) authorize any of, or commit or agree to take any of, the
foregoing actions.
6.2 ACCESS TO INFORMATION. From the date hereof through the
Effective Time, InTouch shall afford to Parent and Parent's accountants, counsel
and other representatives reasonable access during normal business hours (and at
such other times as the parties may mutually agree) upon reasonable prior notice
and approval of InTouch, which shall not be unreasonably withheld, to its
properties, books, contracts, commitments, records and personnel and, during
such period, shall furnish promptly to Parent all information concerning its
business, properties and personnel as Parent may reasonably request. Parent and
its accountants, counsel and other representatives shall, in the exercise of the
rights described in this Section 6.2, not unduly interfere with the operation of
the business of InTouch.
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6.3 FILINGS; TAX ELECTIONS. InTouch shall promptly provide Parent with
copies of all filings made by InTouch with any Governmental Entity in connection
herewith and the transactions contemplated hereby. InTouch shall, before
settling or compromising any material income tax liability of InTouch, 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, except as required by law, shall not disclose the financial terms
of the transaction. None of the InTouch 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. At the Effective Time, Parent will issue options to purchase
30,000 shares of validly issued, fully paid and nonassessable Parent Stock, at
an exercise price of $10.00 per share and subject to a five year, 20% per year
vesting schedule, to those Persons listed on Schedule 6.6 hereto (provided that
------------
they become employees of Sub; or to such other individuals as are selected by
InTouch and approved by Parent), pursuant to the Parent's 1996 Stock Option
Plan, as amended.
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 PURCHASER REPRESENTATIVE. With respect to the InTouch Shareholders
receiving Parent Stock in the Merger and listed on Schedule 4.31(c) as not being
----------------
accredited investors, (a) the Purchaser representative shall furnish to Parent,
to Parent's satisfaction, a completed Purchaser Representative Questionnaire,
substantially in the form of Exhibit "H" hereto; and (b) each such InTouch
-----------
Shareholder shall furnish to Parent a signed Purchaser Acknowledgement in
connection therewith.
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ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO OBLIGATION OF INTOUCH AND THE INTOUCH SHAREHOLDERS TO
EFFECT THE MERGER. The obligation of InTouch and the InTouch Shareholders to
effect the Merger shall be subject to the fulfillment at or prior to the
Effective Time of the following conditions:
(a) Parent and Sub shall have performed in all material respects
their respective agreements contained herein required to be performed at or
prior to the Effective Time, and the representations and warranties of Parent
and Sub contained herein shall be true in all material respects when made and
(except for representations and warranties made as of a specified date, which
need only be true as of such date) at and as of the Effective Time as if made at
and as of such time, except as contemplated hereby;
(b) (i) the appropriate officers of Parent shall have executed and
delivered to InTouch at the Closing, a closing certificate and incumbency
certificate, substantially in the form of Exhibit "A-1" hereto, and (ii) the
------------
appropriate officers of Sub shall have executed and delivered to InTouch at the
Closing, a closing certificate and incumbency certificate, substantially in the
form of Exhibit "A-2" hereto;
-------------
(c) Parent shall have obtained all of the Consents, if any, listed on
Schedule 7.1(c) hereto;
--------------
(d) InTouch 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 InTouch
Shareholders at the Closing, duly executed by Parent, an Agreement to be Bound
to the Registration Rights Agreement of Parent, dated as of Closing Date (the
"Agreement to be Bound to the Registration Rights Agreement"), substantially in
the form of Exhibit "B" hereto;
-----------
(f) Parent shall have executed and delivered at the Closing an Option
Agreement for each of the Persons listed on Schedule 6.6 hereto receiving
------------
options to purchase Parent Stock, substantially in the form of Exhibit "C"
-----------
hereto;
(g) InTouch 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) InTouch shall have received from Parent and Sub such other
documents as InTouch's counsel shall have reasonably requested, in form and
substance reasonably satisfactory to InTouch's counsel.
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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) InTouch and the InTouch 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 InTouch and the InTouch Shareholders contained herein shall be
true in all material respects when made and (except for representations and
warranties made as of a specified date, which need only be true as of such date)
at and as of the Effective Time as if made at and as of such time, except as
contemplated hereby;
(b) the appropriate officers of InTouch shall have executed and
delivered to Parent at the Closing, a closing certificate and incumbency
certificate, substantially in the form of Exhibit "E" hereto;
----------
(c) InTouch and the InTouch Shareholders shall have obtained or
caused to be obtained all of the Consents, if any, listed on Schedule 7.2(d)
---------------
hereto;
(d) there shall have been delivered to Parent at the Closing, duly
executed by each of the InTouch Shareholders receiving Parent Stock in the
Merger, (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, substantially in the form of Exhibit
-------
"B" hereto;
---
(e) Parent shall have received a corporate certificate of good
standing for InTouch, and a copy of the Articles of Incorporation of InTouch,
both as certified by the Secretary of State of North Carolina;
(f) as of the date three business days prior to the Closing Date
there shall be no InTouch Debt;
(g) InTouch shall have furnished evidence to Parent's satisfaction of
performance under Section 6.8 hereof;
(h) Parent shall have received, at the Closing, a duly executed
opinion of counsel to InTouch and the InTouch Shareholders, substantially in the
form of Exhibit "G" hereto;
-----------
(i) Parent shall have received from InTouch a duly authorized tax
clearance certificate, in form and substance acceptable to Parent, indicating
that no taxes are owed by InTouch to state or local taxing authorities in the
State of North Carolina;
(j) Parent shall have received from InTouch or the InTouch
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
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(k) Parent shall have received evidence satisfactory to it that at
the Closing the assets and properties used in the InTouch Business are free and
clear of all Liens other than Permitted Liens.
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION BY PARENT.
(a) Parent shall indemnify and hold the InTouch Shareholders and
InTouch's directors, officers and employees (collectively, the "InTouch
Indemnified Parties") harmless from and against, and agree promptly to defend
each of the InTouch Indemnified Parties from and reimburse each of the InTouch
Indemnified Parties for, any and all losses, damages, costs, expenses,
liabilities, obligations and claims of any kind (including, without limitation,
reasonable attorney fees and other legal costs and expenses) (collectively, an
"InTouch Loss") that any of the InTouch Indemnified Parties may at any time
suffer or incur, or become subject to, as a result of or in connection with:
(i) any breach or inaccuracy of any of the representations and
warranties made by Parent or Sub in or pursuant hereto, or in any instrument,
certificate or affidavit delivered by Parent or Sub at the Closing in accordance
with the provisions hereof;
(ii) any failure by Parent or Sub to carry out, perform, satisfy
and discharge any of its respective covenants, agreements, undertakings,
liabilities or obligations hereunder or under any of the documents and materials
delivered by Parent pursuant hereto; and
(iii) any suit, action or other proceeding arising out of, or in
any way related to, any of the matters referred to in this Section 8.1(a).
(b) Notwithstanding any other provision hereof to the contrary,
Parent shall not have any liability under Section 8.1(a)(i) above (i) unless the
aggregate of all InTouch Losses for which Parent would be liable but for this
sentence exceeds, on a cumulative basis, an amount equal to $50,000, and then
only to the extent of such excess, (ii) for amounts in excess of $1,200,000 in
the aggregate, and (iii) unless the InTouch 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 InTouch 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.
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8.2 INDEMNIFICATION BY THE INTOUCH SHAREHOLDERS.
(a) The InTouch Shareholders shall, jointly and severally, 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, without limitation, reasonable
attorneys' fees and other reasonable 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 InTouch or the InTouch 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 InTouch or any of the InTouch 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 InTouch 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 InTouch Shareholders shall
have any liability under Section 8.2(a) above (i) unless the aggregate of all
Parent Losses for which the InTouch Shareholders would be liable but for this
sentence exceeds, on a cumulative basis, an amount equal to $75,000, and then
only to the extent of such excess, (ii) for amounts in excess of $1,200,000 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 (ii), or 8.2(a)(iii) (to the extent
applicable to Section 8.2(a)(i) or (ii) within two years of the Effective Time,
except with respect to the matters arising under Sections 4.19 or 4.24 hereof,
in which event Parent must have asserted a claim within three years of the
Effective Time, and matters arising under Section 4.20 hereof, in which event
Parent must have asserted a claim within forty-two months of the Effective Time.
Notwithstanding any implication to the contrary contained herein, the parties
acknowledge and agree that a decrease in the value of Parent Stock would not, by
itself, constitute a 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 seeking to be indemnified pursuant to Section 8.1 or 8.2
hereof, as the case may be (the "Indemnified Party"), shall notify the other
party (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, including in its notice a description of the
facts that are the basis of the claim. The Indemnifying Party shall satisfy its
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obligations under this Article VIII 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(a). 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 10% 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, the Indemnifying
Party shall have the right, at its sole cost and expense, to employ counsel of
its own choosing to defend and settle any such Claim asserted against the
Indemnified Party. Notwithstanding anything to the contrary in the preceding
sentence, if the Indemnified Party (i) has received advice from legal counsel
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). In the event that within 10 days
after notice of any such third party Claim, the Indemnifying Party has not
notified the Indemnified Party of its intention to defend the third party Claim,
the Indemnified Party shall have the right to undertake the defense or
settlement of such Claim. In such event, (i) the Indemnifying Party may elect to
participate in such defense or any settlement negotiations at its sole expense
and (ii) the Indemnified Party may not settle such third party Claim without the
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld or delayed. Notwithstanding the foregoing, the Indemnifying Party may
not settle any third party Claim without the consent of the Indemnified Party,
which consent shall not be unreasonably withheld or delayed; provided, that the
Indemnified Party shall be deemed to have consented to a proposed settlement if
such settlement (i) includes as an unconditional term thereof a release of the
Indemnified Party from all liability in respect of such Claim, and (ii) involves
as the sole relief the payment by the Indemnifying Party of money damages. The
Indemnified Party shall cooperate with the Indemnifying Party in connection with
any such defense and shall make available to the Indemnifying Party or its
agents all records and other materials in the Indemnified Party's possession
reasonably required by it for its use in contesting any third party Claim;
provided, however, that the Indemnifying Party shall have agreed, in writing, to
keep such records and other materials confidential except (i) to the extent
required for defense of the relevant Claim, or (ii) as required by law or court
order. Whether or not the Indemnifying Party elects to defend any such Claim,
the Indemnified Party shall have no obligations to do so. Within 30 days after a
final determination (including a settlement) has been reached with respect to
any Claim contested pursuant to this Section 8.3(b), the Indemnifying Party
shall satisfy its obligations hereunder with respect thereto. Any amount paid
thereafter shall include interest thereon for the period commencing at the end
of such 30-day period and ending on the actual date of payment, at a rate of 10%
per annum, or, if lower, at the highest rate of interest permitted by applicable
law at the time of such payment.
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8.4 OTHER INDEMNIFICATION MATTERS.
(a) An Indemnified Party under this Article VIII shall act in good
faith and in a commercially reasonable manner to mitigate any damages that it
may suffer. Notwithstanding anything in this Agreement to the contrary, in no
event shall any party be liable to any other party for punitive damages or for
any loss, expense, damage or deficiency related to such other party's negligence
or willful misconduct.
(b) The amount of any loss suffered by a party under this Agreement
shall be reduced by the amount, if any, of any insurance benefit or recovery or
the present value of any tax benefit or recovery (net of reasonable expenses,
taxes and other costs incurred in obtaining any such benefit or recovery) that
the Indemnified Party under this Agreement shall have received with respect
thereto; and if such recovery or benefit is received by an Indemnified Party
after it receives payment or other credit under this Agreement with respect to a
loss, then a refund equal in aggregate amount of the recovery, net of reasonable
expenses and taxes and other costs incurred in obtaining any such benefit or
recovery, shall be made to the Indemnifying Party. For purposes of the
foregoing, the present value of any tax benefit shall be determined solely with
respect to those future tax benefits that can be reasonably estimated by the
Indemnified Party at the time the claim is being determined and shall take into
account only those tax benefits reasonably expected to be utilized by the
Indemnified Party or an affiliate during the five taxable years following the
Effective Time (counting the taxable year in the Effective Time occurs as one of
such taxable years). The present value shall be calculated using the prevailing
interest rates established under the Code.
8.5 EXCLUSIVE REMEDY. After the Closing, the right of each party hereto to
assert indemnification claims and receive indemnification payments pursuant to
this Article VIII shall be the sole and exclusive remedy exercisable by such
party with respect to any damage, expense, claim, demand, suit, lien, penalty,
liability, judgment, or other cost or loss of any kind arising out of any breach
by the other party hereto of any representation, warranty, covenant or
obligation set forth in this Agreement, any matter of a type covered by such
indemnification, and/or any matter relating in any manner to any Hazardous
Substance or Environmental Law, and no party hereto shall have any other remedy
(statutory, equitable, common law or other) against another party hereto with
respect thereto, all such other remedies hereby being waived; provided, that the
foregoing shall not restrict the exercise of any rights or remedies with respect
to a claim or cause of action the gravamen of which is fraud.
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 InTouch;
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(b) by InTouch, 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 May 29, 1998;
(c) by Parent, upon a material breach hereof on the part of InTouch
or any of the InTouch 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 May 29, 1998;
(d) by Parent or InTouch if any court of competent jurisdiction shall
have issued, enacted, entered, promulgated or enforced any order, judgment,
decree, injunction or ruling which restrains, enjoins or otherwise prohibits the
Merger and such order, judgment, decree, injunction or ruling shall have become
final and nonappealable; or
(e) by either Parent or InTouch if the Merger shall not have been
consummated on or before May 29, 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 (including the fees
of the InTouch Shareholders) shall be paid by the Surviving Corporation.
(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 InTouch 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 InTouch Shareholders, or
(iii) under applicable law would require approval of the InTouch Shareholders,
in any such case referred to in clauses (i), (ii) and (iii), without the further
approval of the InTouch 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 InTouch 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
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obligations or other acts of any other party hereto, (ii) waive any inaccuracies
in the representations and warranties by any other party contained herein or in
any documents delivered by any other party pursuant hereto and (iii) waive
compliance with any of the agreements of any other party or with any conditions
to its own obligations contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
ARTICLE X
GENERAL PROVISIONS
10.1 SURVIVAL; RECOURSE. None of the agreements contained herein shall
survive the Merger, except that (i) the agreements contained in Article III
hereof, the covenants contained in Article VI hereof, the obligations to
indemnify contained in Article VIII hereof, the confidentiality obligations
contained in the first sentence of Section 10.12(b) 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
InTouch or Parent, and shall bind the legal representatives, assigns and
successors of InTouch, the InTouch Shareholders and Parent, for a period of two
years after the Closing Date (other than the representations and warranties
contained in Sections 4.19 and 4.24 hereof, which shall survive for three years
after the Effective Time, and the representations and warranties contained in
Section 4.20 hereof, which shall survive for forty-two months 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 InTouch : InTouch Interactive, Inc.
000 Xxxx Xxxx., Xxx. 0
Xxxxxxxxx, XX 00000-0000
Attention: Xx. Xxxxx Xxxxxx
Telephone: 704/000-0000
Telecopy: 704/376-4139
With a copy to: Xxxxxxxx, Xxxxxxxx & Xxxxxx, P.A.
000 X. Xxxxx Xx., Xxx. 0000
Xxxxxxxxx, XX 00000-0000
Attention: Xxxxxx Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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If to the InTouch To the address listed under the signature
Shareholders: line of the applicable InTouch Shareholder
If to Parent or Sub: IXL Holdings, Inc.
Two Park Place
0000 Xxxxx Xx., 0xx Xxxxx
Xxxxxxx, XX 00000
Attention: Xx. Xxxxx X. Xxxxxx, Exec. V.P. and CFO
Telecopy: 404/267-3801
Telephone: 404/000-0000
With copies to: Xxxxxx & Xxxxxx, A Professional Corporation
One Buckhead Plaza
0000 Xxxxxxxxx Xx., Xxx. 0000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Telecopy: 404/233-5824
Telephone: 404/000-0000
and to: Xxxxx & Company
000 Xxxx Xxx., 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, XX, Esq.
Telecopy: 212/223-2379
Telephone: 212/000-0000
or to such other address as any party may have furnished to the other parties in
writing in accordance with this Section.
10.3 ENTIRE AGREEMENT. This Agreement and the documents, schedules and
instruments referred to herein and to be delivered pursuant hereto constitute
the entire agreement between the parties pertaining to the subject matter
hereof, and supersede all other prior agreements and understandings, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof. There are no other representations or warranties, whether
written or oral, between the parties in connection the subject matter hereof,
except as expressly set forth herein.
10.4 ASSIGNMENTS; PARTIES IN INTEREST. Neither this Agreement nor any of
the rights, interests or obligations hereunder may be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that the rights, interests, and
obligations of Sub hereunder may be assigned to any direct wholly owned Delaware
subsidiary of Parent without such prior consent. Subject to the preceding
sentence, this Agreement shall be binding upon and inure solely to the benefit
of each party hereto, and nothing herein, express or implied, is intended to or
shall confer upon any Person not a party hereto any right, benefit or remedy of
any nature whatsoever under or by reason hereof, except as otherwise provided
herein.
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10.5 GOVERNING LAW. This Agreement, except to the extent that the NBCA or
the DGCL is mandatorily applicable to the Merger or the rights of the InTouch
Shareholders or the other parties hereto with respect to the Merger, shall be
governed in all respects by the laws of the State of Georgia (without giving
effect to the provisions thereof relating to conflicts of law).
10.6 HEADINGS. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation hereof.
10.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute a single agreement.
10.8 SEVERABILITY. If any term or other provision hereof is invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions hereof shall nevertheless remain in full force
and effect so long as the economics or legal substance of the transactions
contemplated hereby are not affected in any manner materially adverse to any
party. Upon determination that any term or other provision hereof is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible to the fullest extent permitted by applicable law
in an acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
10.9 POST-CLOSING ACCESS. For a period of three years after the Closing
Date, the InTouch Shareholders and their agents and representatives shall have
reasonable access to the books and records of the InTouch Business.
10.10 POST-CLOSING NOTICE. To the extent the Surviving Corporation
receives written notice of any event or circumstance that materially affects any
of the InTouch Shareholders, the Surviving Corporation shall promptly notify the
affected InTouch 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 InTouch
Real Property or interfering with the ordinary conduct of any of the InTouch
Business; and (e) those Liens listed on Schedule 10.11;
--------------
-31-
(b) any representation or warranty stated to be made "to the
knowledge" of a party shall refer to such party's actual knowledge following
reasonable inquiry as to the matter in question, provided that any
representation or warranty stated to be made "to the knowledge of InTouch" shall
refer solely to the actual knowledge, following reasonable inquiry as to the
matter in question, of any of the InTouch 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, without limitation,
Sub); provided, however, that with respect to the Parent, the terms "Subsidiary"
and "Subsidiaries" shall not include InTouch or University Netcasting, Inc.
10.12 CONFIDENTIALITY.
(a) Parent agrees that, prior to the Effective Time, it and its
agents and representatives shall not use for its or their own benefit, except in
connection with the transactions contemplated herein and the investigation and
review of InTouch, the InTouch Business and the InTouch Shareholders, and will
hold in strict confidence and not disclose (except when required by law, rule,
regulation or court order), (i) any data or information relating to InTouch, its
affiliates, or the InTouch Business obtained from InTouch or its directors,
officers, employees, agents or representatives in connection herewith, or (ii)
any data or information relating to the business, customers, financial
statements or operations of the InTouch Business which is confidential in nature
and not generally known to the public (clauses (i) and (ii) together, "InTouch's
Information"). If the transactions contemplated herein are not consummated for
any reason, then Parent shall return to InTouch all data, information and any
other written material obtained by Parent from InTouch in connection herewith,
and any copies, summaries or extracts thereof, and shall refrain from disclosing
any of InTouch's Information to any third party or using any of InTouch's
Information for its own benefit or that of any other Person.
(b) InTouch and the InTouch Shareholders agree that they and their
agents and representatives shall not use for their own benefit, except in
connection with investigation and review of Parent in connection herewith), and
shall hold in strict confidence and not disclose (except when required by law,
rule, regulation or court order), (i) any data or information relating to
Parent, Sub, their subsidiaries or affiliates, obtained from any of them or any
of their directors, officers, employees, agents or representatives in connection
herewith, or (ii) any data or information relating to the business, customers,
financial statements, securities or operations of Parent which is confidential
in nature and not generally known to the public (clauses (i) and (ii) together,
"Parent's Information"). If the transactions contemplated herein are not
consummated for any reason, then InTouch and the InTouch Shareholders shall
return to Parent all data, information and any other written material obtained
by or on behalf of InTouch or any of the InTouch Shareholders in connection
herewith, and any copies, summaries or extracts thereof, and shall refrain from
disclosing any of Parent's Information to any third party or using any of
Parent's Information for their own benefit or that of any other Person.
- SIGNATURES ON THE FOLLOWING PAGE -
-32-
IN WITNESS WHEREOF, Parent, Sub and InTouch have caused this Agreement to
be signed and delivered by their respective officers thereunder duly authorized,
and each InTouch Shareholder has signed and delivered this Agreement, all as of
the date first written above.
"INTOUCH"
INTOUCH INTERACTIVE, INC., a North Carolina corporation
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------
Title: President
--------------------------
"PARENT"
IXL HOLDINGS, INC., a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx
-----------------------------
Title: Executive Vice President
--------------------------
"SUB"
iXL - CHARLOTTE, INC., A DELAWARE CORPORATION
BY: /s/ Xxxxx X. Xxxxxx
-----------------------------
TITLE: Executive Vice President
--------------------------
- SIGNATURES CONTINUE ON THE FOLLOWING PAGE -
-33-
"INTOUCH SHAREHOLDERS"
/s/ Xxxxxxx X. Xxxxxx
---------------------------------
Xxxxxxx X. Xxxxxx
Address: InTouch Interactive, Inc.
000 Xxxx Xxxx., Xxx. 0
Xxxxxxxxx, XX 00000-0000
/s/ Xxxxxxx X. Xxxxxx
----------------------------------
Xxxxxxx X. Xxxxxx
Address: InTouch Interactive, Inc.
000 Xxxx Xxxx., Xxx. 0
Xxxxxxxxx, XX 00000-0000
/s/ Xxxxxx X. Xxxxxx
----------------------------------
Xxxxxx X. Xxxxxx
Address: InTouch Interactive, Inc.
000 Xxxx Xxxx., Xxx. 0
Xxxxxxxxx, XX 00000-0000
-34-
EXHIBITS
--------
Parent's Closing Certificate.................................... Exhibit A-1
Sub's Closing Certificate....................................... Exhibit A-2
Agreement to Be Bound to the Registration Rights Agreement...... Exhibit B
Option Agreement................................................ Exhibit C
Legal Opinion of Parent and Sub................................. Exhibit D
InTouch Closing Certificate..................................... Exhibit E
Agreement to be Bound to the Stockholders' Agreement............ Exhibit F
Legal Opinion of InTouch........................................ Exhibit G
Purchaser Representative Questionnaire and Acknowledgement...... Exhibit H
SCHEDULE 3.1(B)
---------------
MERGER CONSIDERATION
(See attached Schedule 3.1(B)
SCHEDULE 4.1
------------
ARTICLES AND BYLAWS OF INTOUCH
SCHEDULE 4.3(A)
---------------
CAPITALIZATION OF INTOUCH
SCHEDULE 4.3(B)
---------------
LIENS ON STOCK OF INTOUCH
SCHEDULE 4.5
------------
Conflicts/Consents of InTouch
SCHEDULE 4.6
------------
EXCEPTIONS TO ACCURACY OF FINANCIAL STATEMENTS OF INTOUCH
SCHEDULE 4.7
------------
EXCEPTIONS TO ABSENCE OF CHANGES OF INTOUCH
SCHEDULE 3.1(b)
---------------
MICRO SHAREHOLDERS RECEIVING CASH
Micro Shareholders IXL Shares Cash
------------------------ ---------------------- --------------------
Xxxxxx Xxxxxxxxx 0 $ 79,968.00
Xxxxx Xxxx 0 $ 104,522.00
Xxx XxXxxxxxxx 0 $ 19,992.00
Xxxx Xxxxxxxx 0 $ 99,960.00
Xxxxx X. Xxxxx 0 $ 49,980.00
-------------
total: $ 354,422.00
SCHEDULE 4.8
------------
UNDISCLOSED LIABILITIES OF INTOUCH
SCHEDULE 4.9
------------
LIENS OF INTOUCH
SCHEDULE 4.10
-------------
TANGIBLE PERSONAL PROPERTY OF INTOUCH
SCHEDULE 4.12
-------------
LIENS ON REAL PROPERTY OF INTOUCH
SCHEDULE 4.13
-------------
LEASES OF INTOUCH
SCHEDULE 4.14
-------------
CONTRACTS OF INTOUCH
SCHEDULE 4.15
-------------
DIRECTORS AND OFFICERS OF INTOUCH
SCHEDULE 4.16
-------------
PAYROLL OF INTOUCH
SCHEDULE 4.17
-------------
LITIGATION OF INTOUCH
SCHEDULE 4.18
-------------
EMPLOYEE BENEFIT PLANS/LABOR RELATIONS OF INTOUCH
SCHEDULE 4.19
-------------
ERISA OF INTOUCH
SCHEDULE 4.21
-------------
PERMITS OF INTOUCH
SCHEDULE 4.23
-------------
BROKERS OF INTOUCH
SCHEDULE 4.25
-------------
INTEREST IN CUSTOMERS, SUPPLIERS & COMPETITORS OF INTOUCH
SCHEDULE 4.28
-------------
INSURANCE POLICIES OF INTOUCH
SCHEDULE 4.31(B)
----------------
ACCREDITED INVESTORS OF INTOUCH
SCHEDULE 4.31(C)
----------------
NON-ACCREDITED INVESTORS OF INTOUCH
SCHEDULE 5.1
------------
CERTIFICATE OF INCORPORATION AND BYLAWS OF PARENT AND SUB
SCHEDULE 5.3
------------
CONFLICTS, REQUIRED FILINGS AND CONSENTS OF PARENT AND SUB
SCHEDULE 5.4
------------
PARENT LITIGATION
SCHEDULE 5.5
------------
PARENT AND SUB BROKERS
SCHEDULE 5.6
------------
CAPITALIZATION OF PARENT
SCHEDULE 5.7
------------
SUBSIDIARIES OF PARENT
SCHEDULE 5.9
------------
PARENT UNDISCLOSED LIABILITIES
SCHEDULE 5.13
-------------
EXCEPTIONS TO ABSENCE OF CHANGES OF PARENT
SCHEDULE 6.6
------------
PARENT OPTIONS' RECIPIENTS
SCHEDULE 7.1(C)
---------------
PARENT CONSENTS
SCHEDULE 7.2(D)
---------------
INTOUCH CONSENTS
SCHEDULE 10.11
--------------
PERMITTED LIENS OF INTOUCH
