<PAGE>
As filed with the Securities and Exchange Commission on April 7, 1999
Registration Statement No. 333-71937
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
Amendment No. 1
to
Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
iXL Enterprises, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 7373 58-2234342
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification No.)
incorporation or Classification Code
organization) Number)
----------------
1888 Emery St., NW
Atlanta, GA 30318
(800) 573-5544
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
----------------
U. BERTRAM ELLIS, JR.
Chief Executive Officer
iXL Enterprises, Inc.
1888 Emery St., NW
Atlanta, GA 30318
(404) 267-3800
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------
Copies to:
JAMES S. ALTENBACH MARGARET A. DAVENPORT GREGORY C. SMITH
Minkin & Snyder Debevoise & Plimpton Skadden, Arps, Slate,
One Buckhead Plaza 875 Third Avenue Meagher & Flom LLP
3060 Peachtree Road, New York, NY 10022 525 University Avenue
Suite 1100 (212) 909-6000 Palo Alto, CA 94301
Atlanta, GA 30305 (650) 470-4500
(404) 261-8000
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
----------------
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This Registration Statement contains two forms of prospectus: one to be
used in connection with a U.S. and Canadian offering of the registrant's common
stock and one to be used in a concurrent international offering of the common
stock. The international prospectus will be identical to the U.S. prospectus
except that it will have a different front cover page, underwriting section and
back cover page. The U.S. prospectus is included herein and is followed by the
alternate front cover page, underwriting section and back cover page to be used
in the international prospectus, which have each been labeled "Alternative Page
for International Prospectus."
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion
Preliminary Prospectus dated April 7, 1999
P R O S P E C T U S
6,000,000 Shares
[LOGO]
iXL ENTERPRISES, INC.
Common Stock
------------
This is iXL Enterprises, Inc.'s initial public offering of common stock.
The U.S. underwriters will offer 4,800,000 shares in the United States and
Canada and the international managers will offer 1,200,000 shares outside the
United States and Canada.
We expect the public offering price to be between $10.00 and $12.00 per
share. Currently, no public market exists for the shares. After pricing of the
offering, we expect that the common stock will trade on the Nasdaq National
Market under the symbol "IIXL."
Affiliates of General Electric Company have agreed to purchase an aggregate
of 2,000,000 shares of common stock directly from iXL Enterprises, Inc. in a
private placement transaction. This investment is expected to be completed
concurrently with the closing of this initial public offering if regulatory and
other conditions are satisfied, at a price per share equal to the initial
public offering price.
Investing in the common stock involves risks which are described in the
"Risk Factors" section beginning on page 11 of this prospectus.
------------
<TABLE>
<CAPTION>
Per Share Total
--------- -----
<S> <C> <C>
Public Offering Price........ $ $
Underwriting Discount........ $ $
Proceeds, before expenses, to
iXL Enterprises, Inc. ...... $ $
</TABLE>
The U.S. underwriters may also purchase up to an additional 720,000 shares
at the public offering price, less the underwriting discount, within 30 days
from the date of this prospectus to cover over-allotments. The international
managers may similarly purchase up to an aggregate of an additional 180,000
shares.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
We expect that the shares of common stock will be ready for delivery in New
York, New York, on or about , 1999.
------------
Merrill Lynch & Co. Donaldson, Lufkin & Jenrette
------------
BancBoston Robertson Stephens SG Cowen
------------
The date of this prospectus is , 1999
<PAGE>
{DIAGRAM PORTRAYING A DESCRIPTION OF THE COMPANY, ITS SERVICES, AND ITS
ENGAGEMENT METHODOLOGY. THE LAYOUT AND TEXT CONTAINED IN THIS DOCUMENT IS AS
FOLLOWS:}
{HEADING: TOP OF PAGE:}
{LEFT SIDE: iXL LOGO}
{CENTER: STYLIZED TEXT:}
(Our Vision) "To pioneer the use of digital technology to transform how
business gets done."
{RIGHT SIDE: CFN LOGO}
{SECTION 1: MIDDLE OF PAGE: RIGHT SIDE}
{CAPTION: Services}
Internet Strategy Consulting
Internet-based Business Consulting
. Business Design
. Business Information Management Systems
. E-Commerce Systems and Services
. Interactive Learning Environments
. Digital Media
Solution Sets(TM)
. Pitchman/R/
. Siteman /TM/
Industry Practice Groups
. Banking & Financial Services
. Healthcare
. Media & Entertainment
. Travel
. Telecommunications
{SECTION 2: MIDDLE OF PAGE: RIGHT SIDE}
{CAPTION: iXL}
We are a leading Internet services company that provides Internet strategy
consulting and comprehensive Internet-based business solutions to Fortune 1000
companies and other corporate users of information technology.
We help businesses identify how the Internet can be used to their competitive
advantage and then use our expertise in creative design and systems engineering
to help our clients take advantage of that opportunity - fast.
We create success for our clients by identifying and taking advantage of
emerging business opportunities generated through the application and use of
Internet-based technologies. We use that strength to help our clients create
new relationships through previously unimagined uses of technology in their
business.
Our core competencies include Internet business design, E-Commerce, customer
management, business information management, digital media including the
development of Enhanced Television (E-TV), and the creation of interactive
learning environments.
We succeed by shortening the distance between the creation of ideas and the
realization of their economic benefit for our clients.
{CAPTION: CFN}
CFN is a sophisticated e-commerce platform for marketing financial services and
employee benefits electronically. Through a corporate intranet, the Internet,
as well as through a telesales center, CFN brings together providers of services
and benefits together with employees who want to purchase those services. The
CFN platform allows employees to electronically compare, shop and purchase the
services they need easily and efficiently.
{SECTION 3: BOTTOM OF PAGE}
{CAPTION: iD5 Methodology}
{GRAPHIC OF FIVE POLYGONS DEPICTING iXL's FIVE STAGE ENGAGEMENT METHODOLOGY}
1. Discover Collect information relative to the engagement objective.
2. Define Formulate an Internet business strategy.
3. Design Refine/document specifications of the Internet business
strategy.
4. Develop Build elements required to implement the Internet business.
5. Deploy Deliver the final solution.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Summary.................................................................. 4
Risk Factors............................................................. 11
Forward-looking Statements............................................... 20
Trademarks............................................................... 20
Information in Prospectus................................................ 20
Relationship with General Electric....................................... 21
Use of Proceeds.......................................................... 22
Dividend Policy.......................................................... 22
Capitalization........................................................... 23
Dilution................................................................. 26
Pro Forma Consolidated Financial Information............................. 27
Selected Consolidated Financial Data..................................... 34
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 35
Business................................................................. 46
Management............................................................... 65
Certain Transactions..................................................... 74
Principal Stockholders................................................... 79
Description of Capital Stock............................................. 82
Shares Eligible for Future Sale.......................................... 86
United States Federal Tax Considerations for Non-U.S. Holders............ 88
Underwriting............................................................. 90
Legal Matters............................................................ 93
Experts.................................................................. 94
Additional Information................................................... 94
Index to Financial Statements............................................ F-1
</TABLE>
3
<PAGE>
SUMMARY
This summary may not contain all the information that may be important to
you. You should read the entire prospectus, including the financial data and
related notes, before making an investment decision.
iXL Enterprises, Inc.
We are a leading Internet services company which provides Internet
strategy consulting and comprehensive Internet-based solutions to Fortune 1000
companies and other corporate users of information technology. We help
businesses identify how the Internet can be used to their competitive advantage
and use our expertise in creative design and systems engineering to design,
develop and deploy advanced Internet applications and solutions.
Our service offerings include:
. Internet strategy consulting;
. e-commerce systems and services;
. business information management systems;
. interactive learning environments;
. digital media services;
. traditional website development;
. customized hosting;
. proprietary sales presentation systems; and
. Web publishing technology.
We use our extensive engineering capabilities to deliver complex
Internet-based business solutions by employing proven technologies such as
Java, XML, Perl, CGI, C and C++. To foster the best possible solutions and
service, we have assembled industry practice groups including professionals
with expertise in the business practices and processes of specific industries.
In addition, we utilize an engagement methodology called iD5 which defines and
delineates business procedures and processes to take full advantage of best
practices developed throughout iXL. We offer our services primarily on a fixed-
price basis. In 1998 our clients included BellSouth, Carlson Wagonlit Travel,
Chase Manhattan Bank, First USA, Gateway, GE, Lucent, Time Warner and WebMD.
The Internet represents a revolutionary and powerful new opportunity for
business. International Data Corporation expects dramatic growth in total e-
commerce transaction volume, projecting an increase from $32 billion in 1998 to
$426 billion in 2002. E-commerce refers to the buying and selling of goods and
services on the Internet. Many companies currently do not have the capabilities
required to conduct e-commerce with suppliers and customers. These companies
are looking to independent service providers that can assist them in taking
full advantage of the Internet's ability to improve their business. We expect
this need to drive growth in the worldwide Internet development services
market, which according to International Data Corporation, will grow from $7
billion in 1998 to $44 billion by 2002.
We have expanded rapidly since our founding in March 1996 through a
combination of acquisitions and internal growth. We have completed 34
acquisitions to gain critical mass, experienced professionals, industry
expertise, technical skills and geographic coverage. We have invested in our
management information systems to create a scalable organization capable of
maximizing the sharing of our knowledge base and the utilization of our staff.
As of December 31, 1998, we had approximately 1,300 employees. Our headquarters
is located in Atlanta, Georgia, and we have 17 regional offices located
throughout the United States and in England, Germany and Spain.
4
<PAGE>
In addition to our strategic Internet services offerings, we have
developed Consumer Financial Network, Inc., a sophisticated e-commerce platform
for marketing financial services and employee benefits over corporate intranets
and the Internet, as well as through a telesales center. CFN's equity is owned
77% by iXL and 23% by General Electric after giving effect to General
Electric's expected $50 million equity investment in CFN. CFN has contracted
with competing providers of various financial and other services to create a
platform for comparison shopping and purchase of these services. The CFN
platform currently offers the following services:
. automobile, homeowners and other lines of personal insurance;
. home mortgages;
. home equity loans;
. auto finance;
. long-term care insurance;
. term life insurance; and
. prepaid legal services.
CFN's platform is currently provided at no cost to large companies and
associations for distribution as a human resources benefit to their employees
or members. CFN also intends to make its platform available to the general
public. CFN service providers include Nationwide Mutual Insurance Co., Liberty
Mutual Insurance Co., and Chase Manhattan Mortgage Corporation. Member
companies include Nextel, Coca-Cola, Delta Air Lines and BellSouth. CFN
receives a fee from the service providers for each sale of their services
through the CFN network.
iXL's goal is to become the leading provider of strategic Internet
services and to become a leader in Internet-delivered financial services and
employee benefits. To achieve this goal, we expect to:
. leverage and expand our industry expertise;
. develop our technology capabilities;
. expand our geographic coverage;
. capture and disseminate our knowledge and best practices;
. expand our client relationships;
. attract, train and retain experienced professionals; and
. enhance and extend the CFN platform.
Affiliates of General Electric Company have been iXL investors since
December 1997 and made a first investment in CFN in November 1998. In April
1999, iXL, CFN and affiliates of General Electric Company executed agreements
which if consummated would expand this relationship to include:
. the purchase by affiliates of General Electric Company of
2,000,000 shares of common stock at the initial public offering
price;
. a $50 million equity investment by affiliates of General Electric
Company in CFN;
. an agreement providing for the delivery of strategic Internet
services to General Electric and the related issuance of warrants
to purchase 1,000,000 shares of common stock;
. a marketing campaign by General Electric emphasizing its
relationship with iXL and CFN; and
. the issuance by iXL to an affiliate of General Electric of
warrants to purchase 1,500,000 shares of common stock.
5
<PAGE>
iXL is a Delaware corporation. Our principal executive offices are
located at 1888 Emery St., NW, Atlanta, Georgia 30318, and our telephone number
is (800) 573-5544. We maintain a World Wide Web site, at www.iXL.com. The
reference to our World Wide Web address does not mean we are incorporating by
reference the information contained at the site. In this prospectus, "iXL,"
"we," "us" and "our" refer to iXL Enterprises, Inc. and its subsidiaries, but
not to the underwriters listed in this prospectus. These terms include the
businesses we have acquired, unless the context otherwise requires. "CFN"
refers to iXL's subsidiary, Consumer Financial Network, Inc., and its
subsidiaries.
6
<PAGE>
Prospectus Assumptions
Upon the completion of this offering, the only class of our capital stock
outstanding will be our common stock. Except where otherwise indicated, all
information in this prospectus assumes:
. the sale of the shares of common stock offered by this prospectus
at an assumed offering price of $11.00 per share based on the
midpoint of the range on the cover page of this prospectus;
. the sale and issuance to affiliates of General Electric Company
upon the closing of this offering of an aggregate of 2,000,000
shares of common stock at an assumed purchase price of $11.00 per
share based on the midpoint of the range on the cover page of this
prospectus;
. the issuance to an affiliate of General Electric Company upon the
closing of this offering of warrants to purchase 1,500,000 shares
of common stock at an exercise price per share equal to the initial
public offering price of the common stock;
. the sale and issuance by CFN to affiliates of General Electric
Company of 16,190,475 shares of CFN's Series B Convertible
Preferred Stock for an aggregate purchase price of approximately
$50 million;
. the issuance to an affiliate of General Electric Company of
warrants to purchase 1,000,000 shares of common stock at an
exercise price of $15.00 per share in connection with an agreement
providing for the delivery of strategic Internet services to
General Electric;
. the reclassification of Class A, Class B and Class C Convertible
Preferred Stock, Class D Nonvoting Preferred Stock and Class A and
Class B Common Stock into common stock;
. the automatic conversion of warrants to purchase shares of Class B
Convertible Preferred Stock and Class A and Class B Common Stock
into warrants to purchase shares of common stock;
. the exercise of warrants to purchase 1,246,000 shares of common
stock, for cash consideration upon the closing of this offering;
. the exercise of warrants which are mandatorily exercisable upon the
closing of this offering into 197,459 shares of common stock,
assuming a cashless exercise;
. the underwriters' over-allotment option will not be exercised; and
. for purposes of determining the number of shares of common stock
issuable upon the reclassification of Class D Nonvoting Preferred
Stock a reclassification date of April 30, 1999.
7
<PAGE>
The Offering
The following information excludes:
. 31,000,000 shares of common stock issuable upon exercise of options
either outstanding as of the date of this prospectus or reserved
for grant under iXL's stock option plans;
. 3,500,000 shares of common stock issuable upon exercise of
warrants; and
. 4,000,000 shares of common stock to be registered for use in future
acquisitions.
<TABLE>
<S> <C>
Common stock offered:
U.S. offering............... 4,800,000 shares
International offering...... 1,200,000 shares
Total...................... 6,000,000 shares
Shares outstanding after the
U.S. and international
offerings.................. 63,579,194 shares
Over-allotment option....... 900,000 shares
Use of proceeds............. We estimate that the net proceeds from this offering
without exercise of the over-allotment option will be
approximately $57.5 million assuming an offering price of
$11.00 per share based on the midpoint of the range on
the cover page of this prospectus. We intend to use these
net proceeds for (a) repayment of indebtedness and (b)
general corporate purposes, including working capital
requirements and acquisitions. See "Use of Proceeds."
Risk factors................ See "Risk Factors" for a discussion of factors you should
carefully consider before deciding to invest in the
shares of the common stock.
Proposed Nasdaq National
Market symbol.............. "IIXL"
</TABLE>
8
<PAGE>
Summary Historical and Pro Forma Consolidated Financial Information
The following summary historical and pro forma consolidated financial
information and pro forma as adjusted information should be read in conjunction
with "Pro Forma Consolidated Financial Information," "Selected Consolidated
Financial Data," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and iXL's audited Consolidated Financial Statements
included elsewhere in this prospectus. The Consolidated Statement of Operations
Data set forth below for the years ended December 31, 1997 and 1998 and the
Consolidated Balance Sheet Data at December 31, 1998, are derived from and
qualified by reference to, iXL's audited Consolidated Financial Statements,
which appear elsewhere in this prospectus. All of iXL's acquisitions have been
accounted for using the purchase method and accordingly, the actual
Consolidated Statement of Operations Data reflects the results of operations of
these businesses from their respective acquisition dates. The summary pro forma
and pro forma as adjusted information does not purport to represent what our
results actually would have been if these events had occurred at the dates
indicated, nor does this information purport to project our results for any
future period. The pro forma Consolidated Statement of Operations Data gives
effect to the acquisitions of companies acquired by iXL since January 1, 1998
as if they had occurred on January 1, 1998.
The pro forma Consolidated Balance Sheet Data gives effect to the
following events that occurred after December 31, 1998 as if each occurred on
December 31, 1998:
. the sale and issuance of 22,825 shares of Class A Convertible
Preferred Stock and the application of the net proceeds of $22.7
million, including the repayment of $9.4 million of revolving
debt; and
. the sale and issuance by CFN to affiliates of General Electric
Company of 16,190,475 shares of CFN's Series B Convertible
Preferred Stock and the application of the estimated net proceeds
of $49.8 million.
The pro forma as adjusted Consolidated Balance Sheet Data gives effect to
the following events as if each occurred as of December 31, 1998:
. the reclassification of Class A, Class B and Class C Convertible
Preferred Stock, Class D Nonvoting Preferred Stock and Class A and
Class B Common Stock into common stock upon the closing of this
offering;
. the exercise of warrants to purchase 1,246,000 shares of common
stock for cash consideration upon the closing of this offering;
. the exercise of warrants which are mandatorily exercisable upon
the closing of this offering into 197,459 shares of common stock,
assuming a cashless exercise;
. the sale and issuance to affiliates of General Electric Company of
an aggregate of 2,000,000 shares of common stock and the
application of the estimated net proceeds of $21.5 million; and
. this offering and the application of the estimated net proceeds of
$57.5 million.
9
<PAGE>
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------
1997 1998 1998
Actual Actual Pro Forma
-------- -------- ---------
(in thousands, except per
share data)
<S> <C> <C> <C>
Consolidated Statement of Operations Data:
Revenues........................................ $ 18,986 $ 64,767 $ 87,160
Cost of revenues................................ 11,343 44,242 58,563
-------- -------- --------
Gross profit.................................. 7,643 20,525 28,597
Sales and marketing expenses.................... 3,903 17,325 18,676
General and administrative expenses............. 9,114 30,163 39,648
Research and development expenses............... 4,820 4,408 4,413
Depreciation.................................... 1,408 5,217 5,895
Amortization.................................... 5,531 16,354 29,817
-------- -------- --------
Loss from operations.......................... (17,133) (52,942) (69,852)
Other income (expense), net..................... 116 (28) (138)
Loss on equity investment....................... (1,443) (1,640) (1,640)
Interest income................................. 136 750 777
Interest expense................................ (238) (770) (1,748)
-------- -------- --------
Loss before income taxes...................... (18,562) (54,630) (72,601)
Income tax benefit (expense).................... 1,550 -- (8)
-------- -------- --------
Net loss...................................... (17,012) (54,630) (72,609)
Dividends and accretion on mandatorily
redeemable preferred stock..................... -- (9,099) (9,099)
-------- -------- --------
Net loss available to common stockholders..... $(17,012) $(63,729) $(81,708)
======== ======== ========
Basic and diluted net loss per common share..... $ (2.60) $ (5.41) $ (5.08)
======== ======== ========
Weighted average common shares outstanding...... 6,540 11,777 16,088
</TABLE>
<TABLE>
<CAPTION>
As of December 31, 1998
------------------------------
Pro Forma as
Actual Pro Forma Adjusted
------- --------- ------------
<S> <C> <C> <C>
Consolidated Balance Sheet Data:
Cash and cash equivalents...................... $19,259 $82,354 $158,308
Working capital................................ 27,119 90,214 166,168
Total assets................................... 135,215 198,310 273,117
Debt, including current portion................ 21,420 11,990 2,090
Mandatorily redeemable preferred stock......... 65,679 65,679 --
Mandatorily redeemable preferred stock of
subsidiary.................................... 9,839 59,639 59,639
Stockholders' equity........................... 17,824 40,549 190,935
</TABLE>
10
<PAGE>
RISK FACTORS
Investing in our common stock will provide you with an equity ownership
interest in iXL. As an iXL stockholder, you may be exposed to risks inherent in
our business. The performance of your shares will reflect the performance of
our business relative to competition, industry conditions and general economic
and market conditions. The value of your investment may increase or decline and
could result in a loss. You should carefully consider the following factors as
well as other information contained in this prospectus before deciding to
invest in shares of our common stock.
Risks Related to iXL's Business
Our limited operating history makes it difficult to evaluate our business.
We were founded in March 1996. As a result, we have a limited operating
history on which you can base your evaluation of our business and prospects.
Our business and prospects must be considered in light of the risks and
uncertainties frequently encountered by companies in their early stages of
development. These risks are further amplified by the fact that we are
operating in the new and rapidly evolving strategic Internet services market.
These risks and uncertainties include the following:
. our business model and strategy have evolved and are continually
being reviewed;
. we may not be able to successfully implement our business model
and strategy; and
. our management has not worked together for very long.
We cannot be sure that we will be successful in meeting these challenges
and addressing these risks and uncertainties. If we are unable to do so, our
business will not be successful and the value of your investment in iXL will
decline.
Potential fluctuations in our quarterly results make financial forecasting
difficult and could affect our common stock trading price.
As a result of our limited operating history, rapid growth, numerous
acquisitions and the emerging nature of the markets in which we compete, we
believe that quarter-to-quarter comparisons of results of operations for
preceding quarters are not necessarily meaningful. Also, it is difficult to
forecast our quarterly results due to the difficulty in predicting the amount
and timing of client expenditures, our acquisitions and our employee
utilization. Our quarterly results of operations may fluctuate significantly in
the future as a result of a variety of factors, many of which are outside our
control. You should not rely on the results of any one quarter as an indication
of our future performance. Revenue in the fourth quarter of 1998 was favorably
impacted by several large engagements. We do not expect to experience a
comparable increase in revenue growth during the first quarter of 1999. We may
not experience comparable increases in the remainder of 1999. If in some future
quarter our results of operations were to fall below the expectations of
securities analysts and investors, the trading price of our common stock would
likely decline. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
We have an accumulated deficit, are not currently profitable and expect to
incur future losses.
We have incurred substantial losses since our inception and we anticipate
continuing to incur substantial losses for the foreseeable future. As of
December 31, 1998, we had an accumulated deficit of approximately $73 million.
Additionally, our revenue composition has changed substantially from inception,
and we expect further change as our business develops. Historically, a
substantial majority of our revenue was derived from traditional website
development and implementation of our Solution Sets(TM). Solution Sets are
templated Internet applications which we customize for our clients. To succeed,
we must take advantage of our existing relationships to substantially increase
our revenue derived from more comprehensive strategic Internet services. To
facilitate this increase in revenues, we intend to continue to invest heavily
in acquisitions,
11
<PAGE>
infrastructure, development and marketing. As a result, we may not be able to
achieve or sustain profitability. If we fail to achieve or sustain
profitability, the value of your investment in iXL will decline. See "Selected
Consolidated Financial Data" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
We may be unable to continue to grow at our historical growth rates or to
effectively manage our growth.
Continued, planned growth is a key component of increasing the value of
our common stock. In the past two years our business has grown significantly,
and we anticipate future internal growth and growth through acquisitions. From
January 1, 1997 to December 31, 1998, our staff increased from approximately 90
to approximately 1,300 employees. This rapid growth places a significant demand
on management and operational resources. In order to manage growth effectively,
we must implement and improve our operational systems and controls.
Our growth could also be adversely affected by many other factors,
including economic downturns, as clients would reduce or delay their
expenditures with us. As a result of these concerns, we cannot be sure that we
will continue to grow, or, if we do grow, that we will be able to maintain our
historical growth rate.
Our continued growth is dependent on the successful completion of acquisitions.
Since our inception, we have made 34 acquisitions. We anticipate that a
large portion of our future growth will continue to be accomplished through
acquisitions. The success of this plan depends upon our ability to:
. identify suitable acquisition opportunities;
. effectively integrate acquired personnel, operations, products and
technologies into our organization;
. retain and motivate the personnel of acquired businesses;
. retain customers of acquired businesses; and
. obtain necessary financing on acceptable terms.
Additionally, in pursuing acquisition opportunities we may compete with
other companies with similar growth strategies, some of which may be larger
than we are and have greater financial and other resources than we do.
Competition for acquisition targets could also result in increased prices for
acquisition targets and a diminished pool of companies available for
acquisition.
We may not be able to keep up with the demand for services under our guaranteed
payment services agreements.
We have recently entered into multi-year services agreements with General
Electric and Delta Air Lines for the delivery of strategic Internet services.
These agreements guarantee minimum payments to iXL. We will be required to
commit significant resources to meet the demands of these contracts. If we are
unable to hire enough employees or deploy sufficient resources to meet these
demands, we may not be able to provide these clients with the services
requested by them. This could cause these clients to become dissatisfied with
us and reduce their future demand for our services. It could also harm our
reputation with other clients as well as decrease the resources available to
services those clients. These impacts could harm our financial condition. We
may execute additional agreements of this type in the future. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Certain Transactions--Other Transactions."
12
<PAGE>
Our fixed-price contracts involve financial risk.
Most of our contracts are currently on a fixed-price basis, rather than a
time and materials basis. We assume greater financial risk on fixed-price
contracts than on time and materials engagements. We have a limited history in
estimating our costs for our fixed-price engagements. Further, the average size
of our contracts is currently increasing, resulting in a corresponding increase
in our exposure to the financial risks of fixed-price contracts. If we fail to
estimate costs accurately or encounter unexpected problems, our financial
performance will be adversely effected. To reduce this financial risk, on
larger contracts, we try to price these fixed-price contracts on a three-phase
basis--strategic review, design and implementation. Each phase is priced
separately, immediately prior to its commencement. We may not be able to price
a majority of our larger contracts on a three-phase basis. Currently less than
a third of our revenues are from contracts priced on a three-phase basis. We
have had to commit unanticipated resources to complete some of our projects,
resulting in lower gross margins. We may experience similar situations in the
future. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
If we fail to attract and retain employees, our growth could be limited and our
costs could increase.
Historically we have experienced significant employee turnover. Our
future success will depend in large part upon our ability to attract, train and
retain additional highly skilled executive-level management and creative,
technical, consulting and sales personnel. The competition in the strategic
Internet services industry for such personnel is intense, and we cannot be sure
that we will be successful in attracting, training and retaining such
personnel. Most of our employees and several of our executive officers have
joined us recently, either through acquisitions or otherwise. Our ability to
generate revenues is dependent upon the number and expertise of the personnel
we employ. Most of our employees are not subject to noncompetition agreements.
High turnover resulting in additional training expense would decrease our
profitability. Also, we may have difficulty retaining employees who received
significant amounts of common stock in connection with the acquisition by iXL
of their previous employer once those employees are able to sell their shares
of common stock following this offering.
We depend on our key management personnel for our future success.
Our success depends largely on the skills of our key management and
technical personnel. The loss of one or more of our key management and
technical personnel may materially and adversely affect our business and
results of operations. Currently, our key management and technical personnel
are U. Bertram Ellis, our Chief Executive Officer, William C. Nussey, our
subsidiary iXL, Inc.'s President and Chief Operating Officer, C. Cathleen
Raffaeli, CFN's President and Chief Operating Officer, M. Wayne Boylston, our
Executive Vice President, Chief Financial Officer, Treasurer and Assistant
Secretary, Michael Chlan, CFN's Chief Information Officer, Barry Sikes, our
Executive Vice President for Worldwide Operations, David Clauson, iXL, Inc.'s
Executive Vice President for Worldwide Marketing, and Benjamin Chen, Chief
Information Officer of iXL, Inc. We do not maintain key man insurance for any
of our employees other than Mr. Ellis. We cannot guarantee that we will be able
to replace any of these individuals in the event their services become
unavailable. See "Management."
We generally do not have long-term contracts and need to establish
relationships with new clients.
Our clients generally retain us on a project-by-project basis, rather
than under long-term contracts. As a result, a client may or may not engage us
for further services once a project is completed or may unilaterally reduce the
scope of, or terminate, existing projects. To become profitable, we need to
establish and develop relationships with additional Fortune 1000 companies and
other corporate users of information technology. The absence of long-term
contracts and the need for new clients create an uncertain revenue stream,
which could negatively affect our financial condition.
13
<PAGE>
Failure to raise necessary capital could restrict our growth, limit our
development of new products and services and hinder our ability to compete.
We may need to raise significant additional funds in order to achieve our
business objectives. Failure to raise these funds may:
. restrict our growth;
. limit our development of new products and services; and
. hinder our ability to compete.
Any of these consequences would have a material adverse effect on our business,
results of operations and financial condition.
We may be liable for defects or errors in the solutions we develop.
Many of the solutions we develop are critical to the operations of our
clients' businesses. Any defects or errors in these solutions could result in:
. delayed or lost client revenues;
. adverse customer reaction toward iXL;
. negative publicity;
. additional expenditures to correct the problem; and
. claims against us.
Our standard contracts limit our damages arising from our negligent
conduct in rendering our services. These contractual provisions may not protect
us from liability for damages. In addition, large claims may not be adequately
covered by insurance and may raise our insurance costs.
Year 2000 risks may adversely affect our business.
Many currently installed computer systems and software products are coded
to accept only two-digit entries to identify a year in the date code field.
Consequently, on January 1, 2000, many of these systems could fail or
malfunction because they may not be able to distinguish between 20th century
dates and 21st century dates. Accordingly, in the coming year, many companies,
including our customers, potential customers, vendors and strategic partners,
may need to upgrade their systems to comply with applicable "Year 2000"
requirements. The computer systems we currently rely on to conduct our business
are: programming software, graphics design software, accounting and billing
software, word processing, spreadsheet, project management and presentation
software, communications software, and network, server and personal computing
hardware.
Because we and our clients are dependent, to a very substantial degree,
upon the proper functioning of our and their computer systems, a failure of our
or their systems to correctly recognize dates beyond December 31, 1999 could
materially disrupt our operations, which could materially and adversely affect
our business, results of operations and financial condition. Additionally, our
failure to provide Year 2000 compliant products and services to our clients
could result in financial loss, harm to our reputation and legal liability.
Likewise, the failure of the computer systems and products of the third parties
with which we transact business to be Year 2000 compliant could materially
disrupt their and our operations. For a discussion of our Year 2000 readiness
program, see "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Year 2000 Risks."
14
<PAGE>
Our ability to protect our intellectual property is important to our business.
We have a variety of copyrights, trademarks, trade secrets and other
intellectual property rights which are important to our business because they
provide us with a competitive advantage over our competition. Patent
applications have been filed for the CFN platform and for Siteman(TM), which
may or may not be granted. If these applications are not granted, our
competitors may be able to copy our technology without compensating us. The
steps we take to protect our intellectual property may not be adequate.
Effective protection may not be available in every country. In addition,
although we believe that our intellectual property rights do not infringe on
the intellectual property rights of others, we cannot be sure that other
parties will not assert claims against us. We may expend significant financial
and managerial resources on these claims.
Our investments in iXL Ventures involve risk.
Through iXL Ventures, we have occasionally invested in, and may continue
to invest on an opportunistic basis in, businesses engaged in the "new media
and e-commerce" segment of the technology industry. Our investments in these
types of businesses have typically consisted of the provision of capital and
the devotion of our time and resources in developing these new businesses. The
businesses in which we invest are generally unproven, involve substantial risk
and may never be profitable. See "Business--iXL Ventures."
Our international operations and expansion involve financial and operational
risk.
Revenue from our three European offices was minimal in 1998. We have only
minimal experience in managing international offices and only limited
experience in marketing services to international clients. Revenues from our
international offices may prove inadequate to cover the expenses of
establishing and maintaining our international offices and marketing to
international clients. In addition, there are risks inherent in doing business
on an international level, such as fluctuations in currency exchange rates and
potentially adverse tax consequences, any of which could adversely affect our
international operations. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
Risks Related to the Strategic Internet Services Industry
The developing market for strategic Internet services and the level of
acceptance of the Internet as a business medium will affect our business.
The market for strategic Internet services is relatively new and is
evolving rapidly. Our future growth is dependent upon our ability to provide
strategic Internet services that are accepted by our existing and future
clients as an integral part of their business model. Demand and market
acceptance for recently introduced services are subject to a high level of
uncertainty. The level of demand and acceptance of strategic Internet services
is dependent upon a number of factors, including:
. the growth in consumer access to and acceptance of new interactive
technologies such as the Internet;
. companies adopting Internet-based business models; and
. the development of technologies that facilitate two-way
communication between companies and targeted audiences.
Significant issues concerning the commercial use of these technologies
include security, reliability, cost, ease of use and quality of service. These
issues remain unresolved and may inhibit the growth of Internet business
solutions that utilize these technologies.
15
<PAGE>
Industry analysts and others have made many predictions concerning the
growth of the Internet as a business medium. These predictions should not be
relied upon. If the market for strategic Internet services fails to develop, or
develops more slowly than expected, or if our services do not achieve market
acceptance, our business will not succeed and the value of your investment in
our common stock will decline.
We may not be able to keep up with the continuous technological change in our
market which could harm our business.
Our success will depend, in part, on our ability to respond to
technological advances. We may not be successful in responding quickly, cost-
effectively and sufficiently to these developments. If we are unable, for
technical, financial or other reasons, to adapt in a timely manner in response
to technological advances, we will not be able to compete effectively. In
addition, employee time allocated to responding to technological advances will
not be available for client engagements.
We operate in a highly competitive market with low barriers to entry which
could limit our market share and harm our financial performance.
While the market for strategic Internet services is relatively new, it is
already highly competitive and characterized by an increasing number of
entrants that have introduced or developed products and services similar to
those offered by us. In addition, there are relatively low barriers to entry
into our business. We have no patented or other proprietary technology that
would preclude or inhibit competitors from entering the strategic Internet
services market. We believe that due to the low cost of entering our markets,
competition will intensify and increase in the future. This intense competition
may limit our ability to become profitable or result in the loss of market
share. As a result, our competitors may be better positioned to address
developments in the industry or may react more effectively to industry changes,
which could adversely affect our business.
We are also subject to the risk that our employees may leave us and may
start competing businesses. The emergence of these enterprises will further
increase the level of competition in our markets and could adversely affect our
growth and financial performance. See "Business--Competition."
Risks Related to Our CFN Subsidiary
CFN's business model is new and unproven.
CFN, our 77%-owned subsidiary, generated losses of approximately $13.5
million in 1998 and is expected to generate significant losses for the
foreseeable future. CFN's business model is new and unproven, and its success
will depend on:
. the willingness of consumers to purchase financial and other
services through the CFN platform rather than through traditional
distribution methods;
. CFN's services becoming available to a large number of consumers;
and
. whether providers of services will view participation on the CFN
platform as an attractive opportunity.
To date, the volume of transactions through the CFN platform has been
limited and, accordingly, the revenue recognized by CFN has been minimal. CFN
also intends to make its platform available to the general public over the
Internet and through its telesales center. This expansion is in its early
stages of planning and development. CFN has no experience selling to the
general public. CFN may not be able to expand its agreements with its existing
services providers to include the provision of services to the general public.
Also, none of the providers of services on the CFN platform has a long-term
contract with CFN. The failure of CFN
16
<PAGE>
to successfully implement its business plan could adversely affect our business
results and financial condition. See "Business--Consumer Financial Network."
CFN must expend significant resources to grow its infrastructure.
CFN's performance will depend in large part upon its ability to estimate
accurately its resource requirements. CFN has expended, and will continue to
expend, significant resources:
. to build electronic data interchange interfaces with its provider
network;
. to grow its technology infrastructure;
. to add participating companies and employees to its platform; and
. to establish access to the CFN platform for participating
companies' employees.
CFN incurs these expenses in advance of any recognition of revenue.
CFN has no control over the prices or other aspects of the services
offered through its platform. We do not know if customers will find these
services more attractive than other alternatives available.
CFN's numerous established competitors could harm its prospects.
CFN competes with other Internet-based providers of financial and other
services, as well as traditional providers of these services. We expect CFN to
face competition from an increasing number of sources in the marketplace. If
CFN fails to compete successfully against current or future competitors, it may
not become profitable and our financial condition may be adversely affected.
See "Business--Competition."
Government regulation and legal uncertainties related to CFN could adversely
affect our business.
CFN is subject to extensive regulation under the financial services and
insurance laws of the United States and the states in which it offers services.
The failure to comply with these regulatory requirements can lead to
revocation, suspension or loss of licensing status, termination of contracts
and legal and administrative enforcement actions. Licensing laws and
regulations often differ materially between states and within individual
states. Moreover, the regulatory agencies governing CFN's activities have
substantial discretion in evaluating the permissibility of CFN's current and
future activities. Many aspects of CFN's operations, however, have not been
subject to federal or state regulatory interpretation. Regulatory requirements
are subject to change from time to time and may in the future further restrict
CFN's ability to conduct its business. See "Business--Consumer Financial
Network--Government Regulation of Insurance, Auto Finance and Mortgages."
Risks Related to the Offering
You may encounter volatility in the market price for our common stock.
The stock market has recently experienced significant price and volume
fluctuations that have particularly affected the market prices of equity
securities of many technology companies. These price and volume fluctuations
often have been unrelated to the operating performance of the affected
companies. In the past, following periods of volatility in the market price of
a company's securities, securities class action litigation has often been
instituted against these companies. Also, in connection with our acquisition
strategy and financing activities, we have issued many shares of our common
stock to a large number of people and entities under exemptions from the
relevant securities laws. If the market price of our common stock significantly
decreases, one or more of these investors may file a claim against us for a
refund of their investment or for other damages. These types of litigation,
regardless of the outcome, could result in substantial costs and a diversion of
management's attention and resources, which could adversely affect our
business, results of operations and financial condition.
17
<PAGE>
Kelso and CB Capital Investors will continue to have significant influence over
us.
Upon completion of this offering, the Kelso funds, through Kelso
Investment Associates V, L.P. and Kelso Equity Partners V, L.P., and CB Capital
Investors, L.P., will beneficially own approximately 24.7% and 12.6%,
respectively, of the outstanding common stock, or 24.4% and 12.4%,
respectively, if the underwriters' over-allotment option is exercised in full.
These stockholders have entered into an agreement providing that so long as
they own more than 5% of our common stock, designees of Kelso and CB Capital
Investors will be included on our slate of directors submitted for stockholder
election. As a result of their ownership of common stock and this nomination
agreement, these stockholders will have significant influence over the election
of our directors. Furthermore, given the size of their individual holdings,
these stockholders may be able to exercise significant influence over other
matters requiring stockholder approval, including the approval of significant
corporate transactions. For example, such concentration of ownership may have
the effect of delaying or preventing a change in control of iXL. See
"Management--Amended Stockholders Agreement," "Principal Stockholders,"
"Certain Transactions" and "Description of Capital Stock--Certain Antitakeover
Effects of Provisions of iXL's Certificate of Incorporation and Bylaws and
Delaware Law."
There has been no prior public market for our common stock.
Prior to this offering, you could not buy or sell our common stock
publicly. An active public market for our common stock may not develop or be
sustained after the offering. If such a market does not develop or is not
sustained, it may be difficult for you to sell your shares of common stock at a
price that is attractive to you. We will negotiate and determine the initial
public offering price with the representatives of the underwriters based on
several factors. This price may vary from the market price of our common stock
after the offering. See "Underwriting."
Antitakeover provisions of our Certificate of Incorporation and Bylaws and
Delaware law could prevent or delay a change of control.
Our Board of Directors may issue up to 5 million shares of our preferred
stock and may determine the price, rights, preferences, privileges, and
restrictions, including voting and conversion rights, of these shares of
preferred stock. These determinations may be made without any further vote or
action by our stockholders. The issuance of preferred stock may make it more
difficult for a third party to acquire control of us. In addition, the rights
of the holders of common stock will be subject to, and may be adversely
affected by, the rights of the holders of any preferred stock that may be
issued in the future. Further, provisions of Delaware law, our Certificate of
Incorporation and our Bylaws could delay or impede a merger, tender offer or
proxy contest involving iXL. For example, Section 203 of the Delaware General
Corporation Law could prohibit us from engaging in a business transaction with
large stockholders for a period of three years and our Certificate of
Incorporation and Bylaws require advance notice for stockholder proposals and
director nominations to be considered at a meeting of stockholders. See
"Description of Capital Stock--Blank Check Preferred Stock" and "--Certain
Antitakeover Effects of Provisions of iXL's Certificate of Incorporation and
Bylaws and Delaware Law."
Future sales into the public market could cause the market price of our common
stock to decline.
Our current stockholders hold a substantial number of shares of our
common stock which they will be able to sell in the public market in the near
future. Sales of a substantial number of shares of our common stock in the
public market following this offering could adversely affect the market price
of our common stock. For a description of the availability for sale of shares
of our common stock that are already outstanding or that are sold in this
offering, see "Description of Capital Stock" and "Shares Eligible for Future
Sale."
18
<PAGE>
Our management has broad discretion over the use of proceeds from this offering
and from the private placement to General Electric.
Approximately $10 million of the net proceeds of this offering will be
used to repay outstanding debt. We have not designated any specific uses for
the remaining net proceeds of this offering or the proceeds from the private
placement to General Electric. Therefore, our management will have broad
discretion in how we use these net proceeds, which may include general
corporate purposes, such as working capital requirements and acquisitions. The
failure of management to apply these proceeds effectively would adversely
affect our financial condition and would most likely cause the market price of
our common stock to decline. See "Use of Proceeds."
The net tangible book value of our common stock issued in this offering will be
less than the offering price.
The initial public offering price for this offering is substantially
higher than the net tangible book value per share of the outstanding common
stock immediately after the offering. If you purchase common stock in the
offering, you will incur immediate and substantial dilution. Dilution is a
reduction in the net tangible book value per share from the price you pay per
share for our common stock. We also have outstanding a large number of stock
options and warrants to purchase common stock with exercise prices
significantly below the estimated initial public offering price of the common
stock. To the extent these options or warrants are exercised, there will be
further dilution. In addition, we intend to file a "shelf" Registration
Statement to register 4,000,000 shares of our common stock which will be used
as acquisition consideration for our continuing acquisition program. We intend
to continue to grant substantial stock options to our employees. See "Dilution"
and "Business--Acquisitions."
19
<PAGE>
FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. We have based these
forward-looking statements on our current expectations and projections about
future events, including, among other things:
. implementing our business strategy;
. managing our rapid growth and employee costs;
. managing CFN's expenditures and making CFN profitable;
. expanding CFN's customer base;
. integrating acquired businesses;
. forecasting e-commerce and strategic Internet services market
growth; and
. competing in the strategic Internet services industry.
In some cases, you can identify forward-looking statements by terminology
such as "may," "will," "should," "expects," "plans," "anticipates," "believes,"
"estimates," "predicts," "potential" or "continue" or the negative of such
terms or other comparable terminology.
Forward-looking statements are subject to known and unknown risks,
uncertainties and other factors that may cause our and the strategic Internet
services industry's actual results, levels of activity, performance,
achievements and prospects to be materially different from those expressed or
implied by such forward-looking statements. These risks, uncertainties and
other factors include those identified under "Risk Factors."
We undertake no obligation to publicly update or revise any forward-
looking statements, whether as a result of new information, future events or
otherwise. In light of these risks, uncertainties, and assumptions, the
forward-looking events discussed in this prospectus might not occur. See "Risk
Factors."
TRADEMARKS
iXLTM, the iXL logo, Interactive ExcellenceTM, Internet ExcellenceTM, the
CFN logo, CFNTM, Consumer Financial NetworkTM, CFN.comTM, iD5TM and the names
of products and services offered by iXL and CFN are trademarks, registered
trademarks, service marks or registered service marks of iXL and CFN. This
prospectus also includes product names, trade names and trademarks of other
companies.
INFORMATION IN PROSPECTUS
You should rely only on the information contained in this prospectus. We
have not, and the underwriters have not, authorized any other person to provide
you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the
underwriters are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus is accurate as of the date on the
front cover of this prospectus only. Our business, financial condition, results
of operations and prospects may have changed since that date.
20
<PAGE>
RELATIONSHIP WITH GENERAL ELECTRIC
Affiliates of General Electric have been iXL investors since December
1997 and made their first investment in CFN in November 1998. In April 1999,
iXL, CFN and affiliates of General Electric Company executed agreements which
if consummated would expand this relationship to include:
. the purchase upon the closing of this initial public offering by
affiliates of General Electric Company of an aggregate of
2,000,000 shares of common stock at the initial public offering
price;
. the purchase by affiliates of General Electric Company of
16,190,475 shares of CFN's Series B Convertible Preferred Stock
for an aggregate purchase price of approximately $50 million;
. the issuance to GE Capital Equity Investments, Inc. of warrants to
purchase 1,500,000 shares of common stock at an exercise price per
share equal to the initial public offering price in connection
with (1) a marketing campaign by General Electric to advertise its
relationships with iXL and CFN and improve awareness of iXL and
CFN's services and (2) GE Capital Equity Investments, Inc.'s
reasonable efforts to provide access to CFN's platform to its
employees and to employees of its affiliates including General
Electric Company; and
. an agreement providing for the delivery of strategic Internet
services to General Electric and for guaranteed payments to iXL of
at least $20 million for the first fifteen months of the term of
the contract, together with the issuance by iXL to GE Capital
Equity Investments, Inc. of warrants to purchase 1,000,000 shares
of common stock at an exercise price of $15.00 per share.
The affiliates of General Electric Company primarily involved in these
transactions include GE Capital Equity Investments, Inc. and the General
Electric Pension Trust. References herein to "General Electric" shall include
General Electric Company and these affiliates unless the context indicates
otherwise. iXL and General Electric intend to pursue additional opportunities
together. See "Certain Transactions--Private Placement Investment in iXL," "--
CFN Equity Investments" and "--Other Transactions."
21
<PAGE>
USE OF PROCEEDS
The net proceeds to iXL from the sale of shares of common stock in this
offering are estimated to be $57.5 million, based upon an assumed offering
price of $11.00 per share and after deducting underwriting discounts and
commissions and estimated offering expenses of $8.5 million payable by iXL. If
the underwriters exercise their over-allotment option in full, the net proceeds
to iXL are estimated to be $66.7 million. The principal purposes of this
offering are to obtain additional capital and to create a public market for
iXL's common stock, which will facilitate future access by iXL to the public
equity markets. iXL expects to use approximately $10 million of these net
proceeds to repay all indebtedness under iXL's credit facility, except for a
$10 million revolving credit facility which will remain available. The maturity
date for this indebtedness is June 30, 2001, and as of April 1, 1999, the
interest rate on the outstanding amount was 9.75%. No debt will be outstanding
under this credit facility after this repayment, although the $10 million
revolving credit facility will remain available. iXL will have significant
discretion in the use of the remaining net proceeds of this offering for
general corporate purposes.
The net proceeds to iXL from the sale of an aggregate of 2,000,000 shares
of common stock to General Electric are estimated to be $21.5 million, based
upon an assumed purchase price of $11.00 per share, after deducting advisory
fees of $500,000 payable by iXL. iXL expects to use these net proceeds for
general corporate purposes, and will have significant discretion in their use.
iXL regularly evaluates potential domestic and international acquisition
candidates, and is currently holding preliminary discussions with a number of
candidates. If, after due diligence review and negotiation, companies can be
acquired on a basis considered fair to iXL and its stockholders, iXL may
proceed with an acquisition. No potential acquisitions are currently considered
to be pending or probable. iXL intends to file a "shelf" Registration Statement
on Form S-4 to register 4,000,000 shares of its common stock for use in future
acquisitions. iXL expects most of its future joint ventures or acquisitions to
involve the issuance of additional shares of its common stock. To the extent
iXL chooses to use cash as consideration for future acquisitions, iXL may use
the proceeds from this offering or it may obtain additional financing.
Pending use of the net proceeds for the above purposes, iXL intends to
invest such funds in short-term, interest-bearing, investment-grade
obligations. See "Risk Factors--Risks Related to the Offering--Our management
has broad discretion over the use of proceeds from this offering."
DIVIDEND POLICY
iXL has never declared or paid any cash dividends on the common stock.
iXL does not expect to pay any cash dividends in the foreseeable future. Under
the terms of its credit agreement, iXL is restricted from paying dividends to
its stockholders. iXL may in the future issue shares of preferred stock which
may have different or superior dividend rights than the common stock. Upon the
closing of this offering, all outstanding shares of Class D Nonvoting Preferred
Stock, which have previously accrued dividends at a rate of 12% per annum, will
be reclassified as 7,241,746 shares of common stock.
22
<PAGE>
CAPITALIZATION
The following table sets forth our actual capitalization as of December
31, 1998 pro forma as if the following events that occurred after December 31,
1998 occurred on December 31, 1998:
. the sale and issuance of 22,825 shares of Class A Convertible
Preferred Stock and the application of the net proceeds of $22.7
million, including the repayment of $9.4 million of revolving
debt;
. the sale and issuance by CFN to General Electric of 16,190,475
shares of CFN's Series B Convertible Preferred Stock and the
application of the estimated net proceeds of $49.8 million; and
. the issuance to General Electric of warrants to purchase
1,000,000 shares of common stock at an exercise price of $15.00
per share.
The table is further adjusted pro forma as if the following events
occurred on December 31, 1998:
. the reclassification of Class A, Class B and Class C Convertible
Preferred Stock, Class D Nonvoting Preferred Stock and Class A
and Class B Common Stock into common stock upon the closing of
this offering;
. the exercise of warrants to purchase 1,246,000 shares of common
stock for cash consideration upon the closing of this offering;
. the exercise of warrants which are mandatorily exercisable upon
the closing of this offering into 197,459 shares of common
stock, assuming a cashless exercise;
. the sale and issuance to General Electric upon the closing of
this offering of an aggregate of 2,000,000 shares of common
stock and the application of the estimated net proceeds of $21.5
million;
. the issuance to General Electric upon the closing of this
offering of warrants to purchase 1,500,000 shares of common
stock at an exercise price equal to the initial public offering
price of the common stock; and
. the sale of the shares of common stock offered by this
prospectus and the application of the resulting estimated net
proceeds of $57.5 million.
23
<PAGE>
You should read this capitalization table together with "Selected
Consolidated Financial Data," "Pro Forma Consolidated Financial Information"
and our consolidated financial statements and notes included elsewhere in this
prospectus.
<TABLE>
<CAPTION>
December 31, 1998
----------------------------------------------------
Pro Forma
Actual Pro Forma as Adjusted
--------------- --------------- -----------------
(in thousands except share and per share data)
<S> <C> <C> <C>
Cash and cash equivalents.. $ 19,259 $ 82,354 $ 158,308
=============== =============== ===============
Current portion of long-
term debt................. $ 868 $ 868 $ 868
=============== =============== ===============
Long-term debt............. $ 20,552 $ 11,122 $ 1,222
Mandatorily redeemable
preferred stock:
Class D Nonvoting
Preferred Stock.......... 24,473 24,473 --
Class B Convertible
Preferred Stock.......... 37,683 37,683 --
Class C Convertible
Preferred Stock.......... 3,523 3,523 --
Series A Convertible
Preferred Stock of CFN... 9,839 9,839 9,839
Series B Convertible
Preferred Stock of CFN... -- 49,800 49,800
Stockholders' equity:
Class A Convertible
Preferred Stock.......... 2 2 --
Class A Common Stock...... -- -- --
Common stock.............. 163 163 638
Additional paid-in
capital.................. 94,420 117,145 267,058
Accumulated deficit....... (73,106) (73,106) (73,106)
Treasury stock............ (888) (888) (888)
Note receivable from
stockholder.............. (900) (900) (900)
Unearned compensation..... (1,867) (1,867) (1,867)
--------------- --------------- ---------------
Total stockholders'
equity................. 17,824 40,549 190,935
--------------- --------------- ---------------
Total capitalization.... $ 113,894 $ 176,989 $ 251,796
=============== =============== ===============
</TABLE>
24
<PAGE>
The following provides further information regarding iXL's securities
described in the above table:
. Class D Nonvoting Preferred Stock, $.01 par value, includes:
50,000 shares (at December 31, 1998, and Pro Forma) and 0 shares
(Pro Forma as Adjusted) authorized, respectively; 35,700 shares
(at December 31, 1998 and Pro Forma) and 0 shares (Pro Forma as
Adjusted) issued and outstanding, respectively. Consideration
received upon issuance of Class D Nonvoting Preferred Stock was
allocated to the 35,700 outstanding shares of Class D Nonvoting
Preferred Stock issued to date ($22,465) and the minimum number
of shares of common stock issuable upon the redemption of Class
D Nonvoting Preferred Stock ($13,235) based on their relative
fair values at the time of issuance.
. Class B Convertible Preferred Stock, $.01 par value, includes:
100,000 shares (at December 31, 1998 and Pro Forma) and 0 shares
(Pro Forma as Adjusted) authorized, respectively; 98,767 shares
(at December 31, 1998 and Pro Forma) and 0 shares (Pro Forma as
Adjusted) issued and outstanding, respectively.
. Class C Convertible Preferred Stock, $.01 par value, includes:
15,000 shares (at December 31, 1998 and Pro Forma) and 0 shares
(Pro Forma as Adjusted) authorized, respectively; 9,232 (at
December 31, 1998 and Pro Forma) and 0 shares (Pro Forma as
Adjusted) issued and outstanding, respectively.
. CFN's Series A Convertible Preferred Stock, $.01 par value,
includes: 24,900,000 shares (at December 31, 1998, Pro Forma and
Pro Forma as Adjusted) authorized, respectively; 13,333,334
shares (at December 31, 1998, Pro Forma and Pro Forma as
Adjusted) issued and outstanding, respectively.
. CFN's Series B Convertible Preferred Stock, $.01 per share,
includes: 0 shares (at December 31, 1998) and 16,190,475 shares
(Pro Forma and Pro Forma as Adjusted), authorized, respectively;
0 shares (at December 31, 1998) and 16,190,475 shares (Pro Forma
and Pro Forma as Adjusted), issued and outstanding,
respectively.
. Class A Convertible Preferred Stock, $.01 par value, includes:
250,000 shares (at December 31, 1998 and Pro Forma) and 0 shares
(Pro Forma as Adjusted), authorized, respectively; 177,291 (at
December 31, 1998), 200,116 shares (Pro Forma), and 0 shares
(Pro Forma as Adjusted) issued and outstanding, respectively.
. Class A Common Stock, $.01 par value, includes: 75,000,000
shares (at December 31, 1998 and Pro Forma) and 0 shares (Pro
Forma as Adjusted) authorized, respectively; 0 shares (at
December 31, 1998, Pro Forma, and Pro Forma as Adjusted) issued
and outstanding, respectively. Excludes 500,000 shares of Class
A Common Stock subject to outstanding warrants at an exercise
price of $10.00 per share, which will convert into warrants to
purchase 500,000 shares of common stock at an exercise price of
$10.00 per share upon the closing of this offering.
. Common stock, $.01 par value, was previously designated as the
"Class B Common Stock" and includes: 200,000,000 (at December
31, 1998, Pro Forma and Pro Forma as Adjusted) authorized,
respectively; 16,082,489 shares (at December 31, 1998 and Pro
Forma), and 63,579,194 shares (Pro Forma as Adjusted) issued and
outstanding, respectively. Excludes 3,000,000 shares of common
stock subject to outstanding warrants at a weighted average
exercise price of $12.17 per share, 24,524,157 shares of common
stock reserved for options granted under iXL's stock option
plans at a weighted average exercise price of $7.89 per share,
and 6,475,843 shares of common stock reserved for options to be
granted under iXL's stock option plans. Also excludes 4,000,000
shares of common stock to be registered pursuant to a
Registration Statement on Form S-4 for use in future
acquisitions. "See Risk Factors--Risks Related to the Offering--
The net tangible book value of our common stock issued in this
offering will be less than the offering price."
25
<PAGE>
DILUTION
The pro forma net tangible book value of iXL at December 31, 1998 was
$55,454,000, or $1.00 per share of common stock. Pro forma net tangible book
value per share represents the amount of total tangible assets less total
liabilities and mandatorily redeemable preferred stock divided by 55,579,194,
the number of shares of common stock treated as outstanding on a pro forma
basis. This number includes:
. the sale and issuance of 22,825 shares of Class A Convertible
Preferred Stock that occurred after December 31, 1998;
. the reclassification of Class A, Class B and Class C
Convertible Preferred Stock, Class D Nonvoting Preferred Stock
and Class A and Class B Common Stock into common stock upon the
closing of this offering;
. the exercise of warrants to purchase 1,246,000 shares of common
stock for cash consideration upon the closing of this offering;
and
. the exercise of warrants which are mandatorily exercisable upon
the closing of this offering into 197,459 shares of common
stock, assuming a cashless exercise.
This number excludes:
. shares of common stock issuable upon exercise of options either
outstanding as of the date of this prospectus or reserved for
grant under iXL's stock option plans;
. shares of common stock issuable upon exercise of outstanding
warrants; and
. shares of common stock to be registered pursuant to a
Registration Statement on Form S-4 for use in future
acquisitions.
See "Description of Capital Stock" and "Risk Factors--Risks Related to
the Offering--The net tangible book value of our common stock issued in this
offering will be less than the offering price."
After giving effect to (1) the sale by iXL of 6,000,000 shares of common
stock offered by this prospectus at an assumed public offering price of $11.00
per share and the application of the estimated net proceeds of $57.5 million,
and (2) the sale by iXL to General Electric of 2,000,000 shares of common stock
at an assumed purchase price of $11.00 per share and the application of the
estimated net proceeds of $21.5 million, iXL's pro forma net tangible book
value at December 31, 1998 would have been $134,454,000, or $2.11 per share.
This represents an immediate increase in net pro forma tangible book value to
existing stockholders of $1.11 per share and an immediate dilution of $8.89 per
share to new investors. The following table illustrates the per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share: ................. $11.00
Pro forma net tangible book value per share as of December 31,
1998........................................................... 1.00
Increase per share attributable to new investors................ 1.11
----
Pro forma net tangible book value per share giving effect to this
offering......................................................... 2.11
------
Dilution per share to new investors............................... $ 8.89
======
</TABLE>
The following table summarizes, on a pro forma basis as of December 31,
1998 after giving effect to the inclusions and exclusions listed above, the
differences between existing stockholders and new investors with respect to the
number of shares of common stock purchased from iXL, the total consideration
paid and the average price per share paid:
<TABLE>
<CAPTION>
Shares Purchased Total Consideration Average
------------------ -------------------- Price
Number Percent Amount Percent Per Share
---------- ------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders......... 55,579,194 87% $187,198,733 68% $3.37
Private placement............. 2,000,000 3 22,000,000 8 11.00
New investors................. 6,000,000 10 66,000,000 24 11.00
---------- --- ------------ --- -----
Total......................... 63,579,194 100% $275,198,733 100% $4.33
========== === ============ === =====
</TABLE>
26
<PAGE>
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
Our consolidated financial statements and the historical audited
financial statements of some of the companies we acquired are included
elsewhere in this prospectus. The unaudited pro forma consolidated financial
information presented here should be read together with those financial
statements and related notes.
We adjust our unaudited pro forma condensed consolidated statement of
operations for the year ended December 31, 1998 to reflect the acquisitions we
have made since January 1, 1998 as if they had occurred on January 1, 1998.
We adjust our unaudited pro forma condensed consolidated balance sheet as
of December 31, 1998 pro forma as if the following events that occurred after
December 31, 1998 occurred on December 31, 1998:
. the sale and issuance of 22,895 shares of Class A Convertible
Preferred Stock and the application of the net proceeds of
$22.7 million;
. the repayment of $9.4 million of revolving debt; and
. the sale and issuance by CFN to General Electric of 16,190,475
shares of CFN's Series B Convertible Preferred Stock and the
application of the estimated net proceeds of $49.8 million.
We further adjust to arrive at our unaudited pro forma as adjusted
condensed consolidated balance sheet as if the following events occurred on
December 31, 1998:
. the reclassification of Class A, Class B and Class C
Convertible Preferred Stock, Class D Nonvoting Preferred Stock
and Class A and Class B Common Stock into common stock upon the
closing of this offering;
. the sale and issuance to General Electric upon the closing of
this offering of an aggregate of 2,000,000 shares of common
stock at an assumed purchase price of $11.00 per share;
. the exercise of warrants to purchase to 1,246,000 shares of
common stock for cash consideration upon the closing of this
offering;
. the exercise of warrants which are mandatorily exercisable upon
the closing of this offering into 197,459 shares of common
stock, assuming a cashless exercise; and
. the sale of the shares of common stock offered by this
prospectus and the application of the resulting estimated net
proceeds.
All of iXL's acquisitions have been accounted for using the purchase
method and accordingly, each purchase price has been allocated to the tangible
and identifiable intangible assets acquired and liabilities assumed on the
basis of their fair values on the acquisition dates. The historical carrying
amounts of identified net tangible assets, including cash, accounts receivable,
property and equipment, and accounts payable, approximated their fair values.
Identifiable intangible assets and the purchase price in excess of identified
tangible and intangible net assets acquired have been allocated to goodwill are
being amortized on an entity by entity basis over their estimated useful lives,
primarily two to three years.
The fair value of the common stock issued as consideration for the
companies acquired by iXL since January 1, 1998 was determined based upon
periodic independent appraisals of the common stock.
27
<PAGE>
The Pro Forma Condensed Consolidated Statement of Operations are not
necessarily indicative of the results of operations that would have been
achieved had the transactions occurred on January 1, 1998 and should not be
construed as being representative of future results of operations. Upon
consummation of this offering, the reclassification of the Class D Nonvoting
Preferred Stock will result in a charge to net loss available to common
stockholders equal to the difference between $35.7 million plus accrued
dividends and the carrying value of the Class D Nonvoting Preferred Stock.
28
<PAGE>
Pro Forma Condensed Consolidated Statement of Operations
for the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Companies
Acquired
Historical in Pro Forma Pro Forma
Company 1998(2)(3) Adjustments Pro Forma as Adjusted(6)
---------- ---------- ----------- --------- --------------
(in thousands except per share data)
<S> <C> <C> <C> <C> <C>
Revenues................ $ 64,767 $ 22,393 $ -- $ 87,160 $ 87,160
Cost of revenues........ 44,242 14,321 -- 58,563 58,563
-------- -------- -------- -------- --------
Gross profit.......... 20,525 8,072 -- 28,597 28,597
Sales and marketing
expenses............... 17,325 1,351 -- 18,676 18,676
General and
administrative
expenses............... 30,163 9,485 -- 39,648 39,648
Research and development
expenses............... 4,408 5 -- 4,413 4,413
Depreciation............ 5,217 678 -- 5,895 5,895
Amortization............ 16,354 -- 13,463 (4) 29,817 29,817
-------- -------- -------- -------- --------
Loss from operations.. (52,942) (3,447) (13,463) (69,852) (69,852)
Other expense, net...... (28) (110) -- (138) (138)
Loss on equity
investment............. (1,640) -- -- (1,640) (1,640)
Interest income......... 750 27 -- 777 777
Interest expense........ (770) (332) (646)(5) (1,748) (1,748)
-------- -------- -------- -------- --------
Loss before income
taxes................ (54,630) (3,862) (14,109) (72,601) (72,601)
Income tax expense...... -- (8) -- (8) (8)
-------- -------- -------- -------- --------
Net loss.............. (54,630) (3,870) (14,109) (72,609) (72,609)
-------- -------- -------- -------- --------
Dividends and accretion
on mandatorily
redeemable preferred
stock.................. (9,099) -- -- (9,099) --
-------- -------- -------- -------- --------
Net loss available to
common stockholders.. $(63,729) $ (3,870) $(14,109) $(81,708) $(72,609)
======== ======== ======== ======== ========
Basic and diluted net
loss per common
share(1)............... $ (5.41) $ (5.08) $ (1.30)
======== ======== ========
Weighted average common
shares outstanding(1).. 11,777 16,088 55,962
</TABLE>
29
<PAGE>
Pro Forma Condensed Consolidated Balance Sheet
As of December 31, 1998
<TABLE>
<CAPTION>
Historical Pro Forma Pro Forma
Company Adjustments(7) Pro Forma as Adjusted(6)
---------- -------------- --------- --------------
(in thousands)
<S> <C> <C> <C> <C> <C>
Assets:
Cash and cash
equivalents............ $ 19,259 $63,095 $ 82,354 $158,308
Accounts receivable
(net).................. 17,737 -- 17,737 17,737
Unbilled revenues....... 8,089 -- 8,089 8,089
Prepaid expenses and
other assets........... 3,355 -- 3,355 3,355
-------- ------- -------- --------
Total current
assets............. 48,440 63,095 111,535 187,489
Property and equipment,
net.................... 27,975 -- 27,975 27,975
Intangible assets, net.. 56,481 -- 56,481 56,481
Other non-current
assets................. 2,319 -- 2,319 1,172
-------- ------- -------- --------
Total assets........ $135,215 $63,095 $198,310 $273,117
======== ======= ======== ========
Liabilities and
Stockholders' Equity:
Accounts payable........ $ 6,438 $ -- $ 6,438 $ 6,438
Deferred revenues....... 6,072 -- 6,072 6,072
Accrued liabilities..... 7,943 -- 7,943 7,943
Current portion of long-
term debt.............. 868 -- 868 868
-------- ------- -------- --------
Total current
liabilities........ 21,321 -- 21,321 21,321
Long-term debt.......... 20,552 (9,430) 11,122 1,222
-------- ------- -------- --------
Total liabilities... 41,873 (9,430) 32,443 22,543
Mandatorily redeemable
preferred stock........ 65,679 -- 65,679 --
Mandatorily redeemable
preferred stock of
subsidiary............. 9,839 49,800 59,639 59,639
Stockholders' equity
Class A Convertible
Preferred Stock...... 2 -- 2 --
Common stock.......... 163 -- 163 638
Additional paid-in
capital.............. 94,420 22,725 117,145 267,058
Accumulated deficit... (73,106) -- (73,106) (73,106)
Treasury stock at
cost................. (888) -- (888) (888)
Note receivable from
stockholder.......... (900) -- (900) (900)
Unearned
compensation......... (1,867) -- (1,867) (1,867)
-------- ------- -------- --------
Total stockholders'
equity............. 17,824 22,725 40,549 190,935
-------- ------- -------- --------
Total liabilities,
mandatorily
redeemable
preferred stock and
stockholders'
equity............. $135,215 $63,095 $198,310 $273,117
======== ======= ======== ========
</TABLE>
30
<PAGE>
Notes to Pro Forma Condensed Consolidated Financial Information
The following adjustments were applied to iXL's Consolidated Financial
Statements and the financial data of the companies acquired by iXL since
January 1, 1998 to arrive at the unaudited Pro Forma Consolidated Financial
Information.
(1) Potential common shares consist of Class A, Class B, and Class C
Convertible Preferred Stock using the as-converted method, and stock
options and warrants using the treasury stock method and contingently
issuable shares held in escrow, which are excluded from the computation as
their effect is antidilutive.
(2) During 1998, iXL acquired 24 companies and accounted for them using the
purchase method. The companies acquired and purchase price, including the
shares of common stock and related warrants and options issued, are
presented in the table below individually for those acquisitions with a
purchase price greater than $2.0 million and in the aggregate for those
with a purchase price of less than $2.0 million. The per share fair value
of common stock for each acquisition was determined based upon independent
appraisals obtained by iXL.
<TABLE>
<CAPTION>
Fair Value
Per Share of Net Excess of
Fair Value Shares of Cash Used for Tangible Cost Over
of iXL Common Warrants/ Acquisitions, Total Assets/ Fair Value of
Common Stock Options Net of Cash Purchase (Liabilities) Net Assets
Business Acquired Stock Issued Issued Acquired Price Acquired Acquired
----------------- ---------- --------- --------- ------------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Digital Planet, Inc. ... $5.50 259,584 -- $ 1,962 $ 3,550 $ (39) $ 3,589
Micro Interactive,
Inc. .................. 5.50 740,000 19,500 1,718 5,809 281 5,526
CommerceWAVE, Inc. ..... 5.82 877,898 64,434 117 5,459 (1,037) 6,496
Image Communications,
Inc. .................. 5.82 378,999 125,054 753 3,324 381 2,943
Spinners Incorporated
....................... 5.82 674,132 66,495 1,383 5,543 499 5,044
Tekna, Inc. ............ 4.50 712,622 125,757 611 4,758 527 4,231
Larry Miller
Productions, Inc. .... 4.50 113,823 248,135 1,812 3,490 (143) 3,633
NetResponse ........... 4.50 701,375 73,625 1,719 5,307 1,312 3,995
Ionix Development
Corp. ................. 4.50 358,551 -- 1,059 3,013 231 2,782
Pequot Systems, Inc. ... 4.50 378,066 -- 792 2,501 154 2,347
TwoWay Communications
LLC ................... 4.50 269,421 -- 1,246 2,469 335 2,134
Other Acquisitions...... -- 2,295,530 57,215 3,430 14,129 795 13,336
--------- ------- ------- ------- ------- -------
Total.................. 7,760,001 780,215 $16,602 $59,352 $ 3,296 $56,056
========= ======= ======= ======= ======= =======
</TABLE>
31
<PAGE>
(3) For those companies acquired during 1998 that had a purchase price of
greater than $2.0 million, the following table presents the income
statements for the period January 1, 1998 through the date of acquisition.
Acquisitions with a purchase price less than $2.0 million are aggregated in
the Other Acquisitions column.
<TABLE>
<CAPTION>
Micro Image Larry
Inter- Commun- Spinners Miller
Digital active, Commerce- ications, Incorp- Tekna Product-
Planet Inc. WAVE Inc. Inc. orated Inc. ions, Inc.
------- ------- --------- --------- -------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues.............. $1,262 $ 956 $ 563 $ 847 $1,369 $1,990 $2,040
Cost of revenues...... 748 536 458 601 871 1,058 2,114
------ ----- ----- ----- ------ ------ -------
Gross profit.......... 514 420 105 246 498 932 (74)
Sales and marketing
expenses............. 168 38 159 61 20 271 314
General and
administrative
expenses............. 397 702 457 564 405 983 1,550
Research and
development
expenses............. -- -- 5 -- -- -- --
Depreciation.......... 30 75 34 65 37 80 47
Amortization.......... -- -- -- -- -- -- --
------ ----- ----- ----- ------ ------ -------
Loss from operations.. (81) (395) (550) (444) 36 (402) (1,985)
Other (expense),
income............... -- 1 -- 50 -- (179) 2
Interest income....... -- 6 4 -- -- 5 6
Interest expense...... (35) (17) (26) (37) (6) (8) (36)
------ ----- ----- ----- ------ ------ -------
Loss before income
taxes................ (116) (405) (572) (431) 30 (584) (2,013)
Income tax expense.... -- -- (1) -- -- -- --
------ ----- ----- ----- ------ ------ -------
Net loss.............. $(116) $(405) $(573) $(431) $ 30 $ (584) $(2,013)
====== ===== ===== ===== ====== ====== =======
</TABLE>
<TABLE>
<CAPTION>
Two Way
Pequot Net- Commun- Ionix Companies
Systems, Response, ications, Development Other acquired in
Inc. L.L.C. L.L.C. Corporation Acquisitions 1998
-------- --------- --------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues.............. $1,354 $3,293 $1,400 $1,484 $5,835 $22,393
Cost of revenues...... 1,100 1,560 718 1,007 3,550 14,321
------ ------ ------ ------ ------ -------
Gross profit.......... 254 1,733 682 477 2,285 8,072
Sales and marketing
expenses............. 26 4 -- 2 288 1,351
General and
administrative
expenses............. 549 1,540 667 267 1,404 9,485
Research and
development
expenses............. -- -- -- -- -- 5
Depreciation.......... 19 96 8 10 177 678
Amortization.......... -- -- -- -- -- --
------ ------ ------ ------ ------ -------
Loss from operations.. (340) 93 7 198 416 (3,447)
Other (expense),
income............... -- (2) -- 1 17 (110)
Interest income....... 1 -- -- 5 -- 27
Interest expense...... -- (98) (34) (6) (29) (332)
------ ------ ------ ------ ------ -------
Loss before income
taxes................ (339) (7) (27) 198 404 (3,862)
Income tax expense.... (6) -- -- -- (1) (8)
------ ------ ------ ------ ------ ------- ---
Net loss.............. $ (345) $ (7) $ (27) $ 198 $ 403 $(3,870)
====== ====== ====== ====== ====== =======
</TABLE>
(4) To record amortization expense for the year ended December 31, 1998 related
to the identifiable intangible assets and goodwill acquired in connection
with the acquisitions of companies by iXL since January 1, 1998. Such
amounts are amortized on an entity by entity basis over the estimated
useful life of each asset with goodwill amortized primarily over two to
three years. Some of the shares issuable at the acquisition dates were
placed in escrow. These shares will either be issued to the previous owners
of these companies or returned to iXL based upon whether or not performance
targets of the respective acquired company are achieved. As of December 31,
1998, iXL has excluded 287,304 shares of common stock that had not been
earned under the terms of the acquisition agreements from the recognized
purchase price calculations. Any purchase price adjustments resulting from
the issuance of these escrowed shares to the previous owners of
32
<PAGE>
these companies will be recognized as adjustments to goodwill and will be
amortized over the remaining period of the expected benefit. See Note 3 to
iXL's Consolidated Financial Statements as of and for the year ended
December 31, 1998. Fifty thousand of these shares have since been earned
and have been released from escrow since December 31, 1998. One hundred
thousand of these shares are expected to revert back to iXL, since the
performance target was not achieved. These shares have not yet been
released from escrow as the procedures for release of these shares have not
been completed. The remaining 137,304 shares are to remain in escrow until
October 1999, the deadline for meeting the relevant performance target.
(5) To reflect the following adjustments to interest expense related to iXL's
1998 acquisitions:
. In connection with the acquisition of 14 of the companies acquired
by iXL since January 1, 1998, iXL repaid approximately $7,300,000
in debt. Interest expense was reduced by $371,000, representing
the reversal of the interest expense recorded by the acquired
companies as if the repayments had occurred on January 1, 1998.
The amount was calculated based upon the actual interest expense
recorded by the acquired companies on the related debt from
January 1, 1998 to the respective acquisition date.
. In connection with the acquisition of 17 of the companies acquired
by iXL since January 1, 1998, iXL paid approximately $16,900,000
in cash which was used for a combination of repayment of acquired
company debt and as a component of the purchase price. Interest
expense was increased by $1.0 million, representing the interest
expense iXL would have recorded had the acquisition occurred on
January 1, 1998. This interest expense adjustment was calculated
by applying iXL's incremental borrowing rate to the amount of cash
paid for each acquisition from January 1, 1998 to the respective
acquisition date. The interest rate used was prime plus 2%, which
is the interest rate on iXL's current credit agreement which was
entered into during 1998.
(6) Reflects:
. the reclassification of Class A, Class B, and Class C Convertible
Preferred Stock, into, Class D Nonvoting Preferred Stock and Class
A and Class B Common Stock into common stock and the related
reduction in the dividends and accretion on mandatorily redeemable
preferred stock;
. the sale and issuance to General Electric upon the closing of this
offering of an aggregate of 2,000,000 shares of common stock at an
assumed purchase price of $11.00 per share based on the midpoint
of the range on the cover page of this prospectus;
. the exercise of warrants to purchase 1,246,000 shares of common
stock for cash consideration upon the closing of this offering;
. the exercise of warrants which are mandatorily exercisable upon
the closing of this offering into 197,459 shares of common stock,
assuming a cashless exercise; and
. the sale by iXL of 6,000,000 shares of common stock offered at an
assumed initial public offering price of $11.00 per share after
deducting the estimated underwriting discounts and commissions and
offering expenses payable by iXL as described under "Use of
Proceeds."
(7) Reflects the following events that occurred after December 31, 1998 as if
each occurred on December 31, 1998:
. the sale and issuance of 22,825 shares of Class A Convertible
Preferred Stock for $1,000 per share, net of issuance costs of
$100,000;
. the repayment of $9,430,000 of revolving debt; and
. the sale and issuance by CFN to General Electric of 16,190,475
shares of CFN's Series B Convertible Preferred Stock for a gross
purchase price of approximately $50 million, net of issuance costs
of $200,000. This issuance will occur on the earlier of the
closing of this offering or August 31, 1999 and the estimated net
proceeds have been reflected as an adjustment to cash.
33
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
You should read the following selected Consolidated Financial Data with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and iXL's audited Consolidated Financial Statements included
elsewhere in this prospectus. iXL commenced operations effective May 1, 1996.
All of iXL's acquisitions have been accounted for using the purchase method,
and accordingly, the statement of operations data of iXL for all periods
presented reflect the results of operations from these businesses from their
respective acquisition dates. The Consolidated Statement of Operations Data set
forth below for the eight months ended December 31, 1996, the years ended
December 31, 1997 and 1998 and the Consolidated Balance Sheet Data at December
31, 1996, 1997 and 1998, are derived from and qualified by reference to iXL's
audited Consolidated Financial Statements, which appear elsewhere in this
prospectus.
<TABLE>
<CAPTION>
Eight Months Years Ended
Ended December 31,
December 31, -------------------
1996 1997 1998
------------ -------- ---------
Consolidated Statement of (in thousands, except per share
Operations Data: data)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues...................... $ 5,379 $ 18,986 $ 64,767
Cost of revenues.............. 3,577 11,343 44,242
------- -------- ---------
Gross profit................ 1,802 7,643 20,525
Sales and marketing expenses.. 812 3,903 17,325
General and administrative
expenses..................... 1,247 9,114 30,163
Research and development
expenses..................... -- 4,820 4,408
Depreciation.................. 372 1,408 5,217
Amortization.................. 928 5,531 16,354
------- -------- ---------
Loss from operations........ (1,557) (17,133) (52,942)
Other income (expense), net... 48 116 (28)
Loss on equity investment..... (249) (1,443) (1,640)
Interest income............... 32 136 750
Interest expense.............. (30) (238) (770)
------- -------- ---------
Loss before income taxes.... (1,756) (18,562) (54,630)
Income tax benefit............ 302 1,550 --
------- -------- ---------
Net loss.................... (1,454) (17,012) (54,630)
Dividends and accretion on
mandatorily redeemable
preferred stock.............. -- -- (9,099)
------- -------- ---------
Net loss available to common
stockholders............... $(1,454) $(17,012) $ (63,729)
======= ======== =========
Basic and diluted net loss per
common share................. $ (0.37) $ (2.60) $ (5.41)
======= ======== =========
Weighted average common shares
outstanding.................. 3,972 6,540 11,777
<CAPTION>
As of December 31,
--------------------------------
1996 1997 1998
------------ -------- ---------
Consolidated Balance Sheet
Data: (in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents..... $ 409 $ 23,038 $ 19,259
Working capital............... 217 23,879 27,119
Total assets.................. 16,472 55,640 135,215
Debt, including current por-
tion......................... 691 1,273 21,420
Mandatorily redeemable pre-
ferred stock................. -- 29,930 65,679
Mandatorily redeemable pre-
ferred stock of subsidiary... -- -- 9,839
Stockholders' equity.......... 12,989 19,978 17,824
</TABLE>
34
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
You should read the following discussion of the financial condition and
results of operations of iXL with "Selected Consolidated Financial Data," "Pro
Forma Consolidated Financial Information" and iXL's Consolidated Financial
Statements, including the Notes included elsewhere in this prospectus.
Overview
iXL is a leading Internet services company which provides Internet
strategy consulting and comprehensive Internet-based solutions to Fortune 1000
companies and other corporate users of information technology. iXL helps
businesses identify how the Internet can be used to their competitive advantage
and uses its expertise in creative design and systems engineering to design,
develop and deploy advanced Internet applications and solutions.
iXL was founded in March 1996, and since that time has acquired a total
of 34 companies. All of iXL's acquisitions have been accounted for using the
purchase method. Therefore, the historical financial data include the results
of operations of companies acquired from their respective acquisition dates.
iXL has incurred substantial losses since its inception and anticipates
continuing to incur substantial losses for the foreseeable future. As of
December 31, 1998, iXL had an accumulated deficit of approximately $73 million.
Although iXL has experienced revenue growth, this growth may not be sustainable
or indicative of future results of operations.
iXL's customers generally retain iXL on a project-by-project basis. iXL
typically does not have material contracts that commit a customer to use its
services on a long-term basis. Revenue is recognized primarily using the
percentage of completion method on a contract-by-contract basis. iXL's use of
the percentage of completion method of revenue recognition requires management
to estimate the degree of completion of each project. To the extent these
estimates prove to be inaccurate, the revenues and gross profits reported for
periods during which work on the project is ongoing may not accurately reflect
the final results of the project. Any anticipated losses on projects are
charged to earnings when identified. iXL primarily prices its projects on a
fixed-price basis, rather than on a time and materials basis, and it typically
assumes the fixed-price contracts of companies it acquires. iXL has begun
implementation of an internally developed estimation process to determine the
fixed price for an engagement, and standardize pricing throughout its offices.
This methodology incorporates standard personnel billing rates, project
implementation risks and the overall technical complexity of the project. We
believe that the standardization of pricing throughout our network of offices
will decrease project pricing risk. iXL attempts to price larger, fixed-price
contracts on a three-phase basis--strategic review, design and implementation.
Each phase is priced separately, immediately prior to its commencement. Less
than a third of iXL's revenues are currently derived from contracts priced on a
three-phase basis. See "Risk Factors--Risks Related to iXL's Business--Our
fixed-price contracts involve financial risk."
Through both acquisitions and its directed marketing efforts, iXL has
established a diversified base of clients in a wide range of industries,
including the industries targeted by iXL's marketing efforts.
iXL's revenues are comprised of fees from Internet strategy consulting,
Internet-based business solutions and iXL Solution Sets. iXL's revenue
composition has changed substantially from inception, and iXL expects further
change as its business develops. Historically, a substantial majority of iXL's
revenues have been derived from traditional website development and the
implementation of iXL's Solution Sets. To succeed, iXL must leverage its
existing relationships and establish new relationships in order to
substantially increase the revenues derived from more comprehensive strategic
Internet services.
We have recently entered into multi-year services agreements with General
Electric and Delta Air Lines under which we have agreed to provide strategic
Internet services. These agreements guarantee minimum payments to iXL for
services provided by iXL. In connection with these agreements, we have granted
warrants which will result in non-cash charges that will reduce our reported
revenue.
35
<PAGE>
iXL's expenses include cost of revenues, sales and marketing, general and
administrative, and research and development expenses. Cost of revenues
includes salaries, benefits and related overhead expenses associated with the
generation of revenues. Sales and marketing expenses include promotion, new
business generation expenses and the salary and benefit costs of personnel in
these functions. General and administrative expenses include management,
accounting, legal and human resources costs. Research and development expenses
include salary and benefit costs of technical personnel developing Solution
Sets and component frameworks. iXL's expenses also include non-cash charges
related to option grants and warrant issuances.
In connection with (i) the private placement of common stock to General
Electric, (2) a joint marketing campaign with General Electric and (3) General
Electric using its reasonable efforts to provide the CFN platform to its
employees, iXL will issue warrants to purchase 1,500,000 shares of common stock
to General Electric. Sales and marketing expense and stockholders' equity will
be impacted by non-cash charges related to this warrant issuance.
iXL's future success will depend in large part upon its ability to
attract, train and retain additional highly skilled executive-level management
and creative, technical, consulting and sales personnel. Competition for such
personnel is intense, and iXL is unsure that it will be successful in
attracting, training and retaining such personnel. Historically iXL has
experienced significant employee turnover, and its ability to control employee
turnover will have a significant impact on its profitability.
CFN has expended and will continue to expend significant resources to
build electronic data interchange interfaces with participating institutions,
to grow its technology infrastructure, to add additional participating
companies and employees to the platform, and to establish access to the CFN
platform for participating companies' employees. These expenditures must be
incurred in advance of the recognition of revenue. None of these expenses is
incurred pursuant to long-term vendor contracts. As a result, these expenses
are expensed as incurred, except for fixed asset purchases which are
depreciated over their expected useful lives. CFN recognizes revenue upon
completion of an end-user transaction through the CFN operating network, which
also will require the realization of expenses in advance of related revenue. To
date, the volume of transactions on CFN has been limited and, accordingly, the
revenue recognized has been minimal. As a result, iXL may not be able to
achieve or sustain profitability. See "Risk Factors--Risks Related to Our CFN
Subsidiary--CFN's business model is new and unproven" and "--CFN must expend
significant resources to grow its infrastructure."
iXL incurred non-cash stock compensation expense related to its option
grants for the year ended December 31, 1998, totaling $1.6 million. iXL will
recognize approximately $653,000 in 1999, $651,000 in 2000, $405,000 in 2001
and $158,000 in 2002 in stock compensation expense relating to the grant of
these options to employees in 1998.
Acquisition Program
iXL has acquired a total of 34 businesses since its inception and intends
to continue acquiring similar businesses. iXL evaluates acquisitions based on
numerous quantitative and qualitative factors. Quantitative factors include
historical and projected revenues and profitability, geographic coverage and
contract backlog. Qualitative factors include strategic and cultural fit,
management skills, customer base and technical proficiency. Most of the
consideration paid by iXL for prior acquisitions has been in the form of common
stock. iXL anticipates that common stock and options to acquire common stock
will continue to constitute most of the consideration used to make future
acquisitions. iXL's acquisition program will result in additional ownership
dilution to investors participating in this offering. See "Risk Factors--Risks
Related to the Offering--The net tangible book value of our common stock issued
in this offering will be less than the offering price."
All of iXL's acquisitions have been accounted for using the purchase
method. The results of operations of the acquired entities are consolidated
with those of iXL from the date of the acquisition. For each
36
<PAGE>
acquisition, a portion of the purchase price is allocated to the tangible and
identifiable intangible assets acquired and liabilities assumed based on their
respective fair market values on the acquisition date. A portion of the
purchase price in excess of tangible and identifiable intangible assets and
liabilities assumed is allocated to goodwill and amortized on a straight-line
basis over the estimated period of benefit, which primarily ranges from two to
three years. For the year ended December 31, 1998, amortization expense was
$16.4 million. iXL expects additional acquisition-related amortization expense
as a result of its acquisition program.
We believe our acquisitions have contributed to our growth by rapidly
expanding our employee base, geographic coverage, client base, industry
expertise and technical skills. Our acquisitions with a purchase price
exceeding $5 million are as follows:
In May 1997, we acquired BoxTop Interactive, Inc., a Los Angeles creative
design firm, for a purchase price of $9.6 million and the assumption of $1.5
million of debt which was subsequently repaid. The acquisition of BoxTop
provided media and entertainment industry expertise and geographic presence in
California, and expanded our workforce by approximately 60 skilled employees.
In May 1998, we acquired Micro Interactive, Inc., a New York interactive
media firm, for a purchase price of $5.8 million and the assumption of $426,000
of debt, which was subsequently repaid. The acquisition of Micro Interactive
provided interactive multimedia technical skills and expanded our workforce by
approximately 35 skilled employees.
In July 1998, we acquired CommerceWAVE, Inc., a San Diego e-commerce
firm, for a purchase price of $5.5 million and the assumption of $450,000 of
debt, which was subsequently repaid. The acquisition of CommerceWAVE provided
e-commerce strategy consulting expertise and engineering capabilities and
geographic presence in San Diego, and expanded our workforce by approximately
22 skilled employees.
In July 1998, we also acquired Spinners Incorporated, a Boston,
Massachusetts, software engineering and creative design firm, for a purchase
price of $5.5 million. The acquisition provided software engineering and
creative design expertise, financial service industry knowledge and added to
iXL's client base. The acquisition also added 31 skilled employees.
In September 1998, we acquired NetResponse L.L.C., an Arlington,
Virginia, strategy consulting, software engineering and creative design firm,
for a purchase price of $5.3 million and the assumption of $1.8 million of
debt, which was subsequently repaid. The acquisition provided strategy
consulting expertise, software engineering skills and 36 skilled employees, and
added to iXL's client base.
iXL anticipates that a material portion of its future growth will be
accomplished by acquiring existing businesses. Most of iXL's growth in
personnel has been through acquisitions. The success of this plan depends upon,
among other things, iXL's ability to integrate acquired personnel, operations,
products and technologies into its organization effectively, to retain and
motivate key personnel of acquired businesses and to retain customers of
acquired firms. iXL cannot guarantee that it will be able to identify suitable
acquisition opportunities, obtain any necessary financing on acceptable terms
to finance such acquisitions, consummate such acquisitions or successfully
integrate acquired personnel and operations. See "Risk Factors--Risks Related
to iXL's Business--We may be unable to continue to grow at our historical
growth rates or to effectively manage our growth" and "--Our continued growth
is dependent on the successful completion of acquisitions."
1998 Quarterly Historical Results of Operations
The following table presents the unaudited historical quarterly results
of operations. We believe that our historical financial statements are not
necessarily indicative of future results of operations. You should read
37
<PAGE>
these quarterly historical results of operations with the historical audited
financial statements of iXL and certain of the companies acquired by iXL since
January 1, 1998 and related Notes.
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------------------------------------
March 31, 1998 June 30, 1998 September 30, 1998 December 31, 1998
-------------- ------------- ------------------ -----------------
(in thousands)
<S> <C> <C> <C> <C>
Revenues................ $ 6,864 $ 10,520 $ 18,123 $ 29,260
Cost of revenues........ 4,899 8,086 12,628 18,629
------- -------- -------- --------
Gross profit............ 1,965 2,434 5,495 10,631
Sales and marketing ex-
penses................. 2,036 2,887 4,573 7,829
General and administra-
tive expenses.......... 2,956 5,862 7,021 14,324
Research and development
expenses............... 907 1,322 1,244 935
Depreciation............ 699 955 1,261 2,302
Amortization............ 1,401 2,379 4,730 7,844
------- -------- -------- --------
Loss from operations.... $(6,034) $(10,971) $(13,334) $(22,603)
======= ======== ======== ========
</TABLE>
Comparison of Three Months Ended December 31, 1998 and September 30, 1998
Revenues. Revenues increased $11.2 million, or 62%, to $29.3 million for
the quarter ended December 31, 1998 from $18.1 million for the quarter ended
September 30, 1998. The majority of the increase was attributable to our
acquisition program which expanded our headcount and client base. The increase
was also attributable to an increase in the size of client engagements and the
development and growth of industry practice groups.
Cost of revenues. Cost of revenues increased $6.0 million, or 48%, to
$18.6 million for the quarter ended December 31, 1998 from $12.6 million for
the quarter ended September 30, 1998. As a percentage of revenues, cost of
revenues decreased from 70% for the quarter ended September 30, 1998 to 64% for
the quarter ended December 31, 1998. The dollar increase was primarily
attributable to the integration of the companies acquired by iXL since January
1, 1998, as well as to employee training and the development of the CFN
platform.
Sales and marketing expenses. Sales and marketing expenses increased $3.2
million, or 70%, to $7.8 million for the quarter ended December 31, 1998 from
$4.6 million for the quarter ended September 30, 1998. As a percentage of
revenues, sales and marketing expenses increased from 25% for the quarter ended
September 30, 1998 to 27% for the quarter ended December 31, 1998. The increase
was primarily attributable to the development of iXL's sales and marketing
infrastructure and staff. We increased our sales and marketing headcount by
approximately 10 professionals during the three months ended December 31, 1998.
Also included in this increase was $813,000 of non-cash expense related to
warrant issuances.
General and administrative expenses. General and administrative expenses
increased $7.3 million, or 104%, to $14.3 million for the quarter ended
December 31, 1998 from $7.0 million for the quarter ended September 30, 1998.
As a percentage of revenues, general and administrative expenses increased from
39% for the quarter ended September 30, 1998 to 49% for the quarter ended
December 31, 1998. The increase was primarily attributable to the expansion of
management infrastructure to support the growth in iXL's operations, the
general and administrative costs of the companies acquired by iXL since January
1, 1998 and associated integration costs. Also included in this increase was
$1.4 million of non-cash stock option expense.
Research and development expenses. Research and development expenses
decreased $309,000, or 25%, to $935,000 for the quarter ended December 31, 1998
from $1.2 million for the quarter ended September 30, 1998. As a percentage of
revenues, research and development expenses decreased from 7% for the quarter
ended September 30, 1998 to 3% for the quarter ended December 31, 1998. The
decrease was primarily due to the completion of the final phases of development
of Solution Set products.
38
<PAGE>
Depreciation. Depreciation expenses increased $1.0 million to $2.3
million for the quarter ended December 31, 1998 from $1.3 million for the
quarter ended September 30, 1998. The increase related to the depreciation of
assets of the companies acquired by iXL since January 1, 1997 and investments
in physical infrastructure at these companies after acquisition.
Amortization. Amortization expenses increased $3.1 million to $7.8
million for the quarter ended December 31, 1998 from $4.7 million for the
quarter ended September 30, 1998. The increase was a result of the goodwill
recorded in connection with the 15 acquisitions which took place during the
third quarter of 1998.
1998 Quarterly Pro Forma Results of Operations
The following table presents the unaudited pro forma quarterly results of
operations, which include adjustments to give effect to the acquisitions of
companies by iXL since January 1, 1998 as if they had occurred on January 1,
1998. Primarily because of iXL's large number of acquisitions in 1998, iXL has
included its quarterly results of operations on a pro forma basis to facilitate
the understanding of the effects of business acquisitions on iXL's operations.
Management believes that the pro forma quarterly results of operations may be
useful to investors in evaluating the financial performance of iXL. The pro
forma quarterly results of operations are not necessarily indicative of the
results of operations that would have been achieved had the transactions
occurred at the beginning of the periods presented and should not be construed
as being representative of future results of operations. These pro forma
amounts include the same adjustments that are reflected in the Pro Forma
Consolidated Statement of Operations. You should read these pro forma quarterly
results of operations with the unaudited Pro Forma Condensed Consolidated
Statement of Operations and the historical audited financial statements of iXL
and some of the companies acquired by iXL and related notes included elsewhere
in this prospectus. See "Pro Forma Consolidated Financial Information."
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------------------------------------
March 31, 1998 June 30, 1998 September 30, 1998 December 31, 1998
-------------- ------------- ------------------ -----------------
(in thousands)
<S> <C> <C> <C> <C>
Revenues................ $ 15,437 $ 18,663 $ 23,800 $ 29,260
Cost of revenues........ 10,116 13,251 16,566 18,629
-------- -------- -------- --------
Gross profit.......... 5,321 5,412 7,234 10,631
Sales and marketing ex-
penses................. 2,537 3,377 4,934 7,829
General and administra-
tive expenses.......... 6,147 8,835 10,342 14,324
Research and development
expenses............... 907 1,327 1,244 935
Depreciation............ 982 1,190 1,421 2,302
Amortization............ 7,414 7,424 7,135 7,844
-------- -------- -------- --------
Loss from operations.. $(12,666) $(16,741) $(17,842) $(22,603)
======== ======== ======== ========
</TABLE>
Comparison of Three Months Ended December 31, 1998 and September 30, 1998
Revenues. Revenues increased $5.5 million, or 23% to $29.3 million for
the quarter ended December 31, 1998 from $23.8 million for the quarter ended
September 30, 1998. This increase was primarily attributable to an increased
number of engagements for existing and new customers, as well as an increased
engagement size. In particular, revenues in the fourth quarter were favorably
impacted by several large engagements during this period. Annualized revenue
for our top 100 clients increased from 38% of total pro forma revenue in the
quarter ended September 30, 1998 to 52% for the quarter ended December 31,
1998. iXL does not expect to experience a comparable increase in revenue growth
during the first quarter of 1999, and iXL may not experience comparable
increases in the remainder of 1999.
Cost of revenues. Cost of revenues increased $2.0 million, or 12% to
$18.6 million for the quarter ended December 31, 1998 from $16.6 million for
the quarter ended September 30, 1998. As a percentage of revenues, costs of
revenues decreased from 70% for the quarter ended September 30, 1998 to 63% for
the
39
<PAGE>
quarter ended December 31, 1998. The fourth quarter decrease to 63%, was
primarily attributable to iXL's emphasis on obtaining contracts with higher
gross margins and the absence of any acquisitions in this period. The third
quarter included $532,000 of non-cash stock option expense and the fourth
quarter included $133,000 of non-cash stock option expense.
Sales and marketing expenses. Sales and marketing expenses increased $2.9
million, or 59% to $7.8 million for the quarter ended December 31, 1998 from
$4.9 million for the quarter ended September 30, 1998. As a percentage of
revenues, sales and marketing expenses increased from 21% for the quarter ended
September 30, 1998 to 27% for the quarter ended December 31, 1998. The increase
was primarily attributable to the development of infrastructure and the
creation and expansion of iXL's sales and product management staffs. We
increased our sales and marketing headcount by approximately 10 professionals
during the three months ended December 31, 1998. Also included in this increase
was $813,000 of non-cash expense related to warrant issuances. iXL expects its
sales and marketing expenses to increase as it continues to grow.
General and administrative expenses. General and administrative expenses
increased $4.0 million, or 39% to $14.3 million for the quarter ended December
31, 1998 from $10.3 million for the quarter ended September 30, 1998. As a
percentage of revenues, general and administrative expenses increased from 43%
for the quarter ended September 30, 1998 to 49% for the quarter ended December
31, 1998. The increase was primarily attributable to the expansion of
management infrastructure necessary to support the growth in iXL's operations,
including the development of CFN. We increased our general and administrative
headcount by 35 professionals during the three months ended December 31, 1998.
iXL expects its general and administrative expenses to increase as it continues
to grow. The third quarter included $835,000 of non-cash stock option expense
and the fourth quarter included $1.4 million of non-cash stock option expense.
Research and development expenses. Research and development expenses
decreased $309,000, or 25%, to $935,000 for the quarter ended December 31, 1998
from $1.2 million for the quarter ended September 30, 1998. As a percentage of
revenues, research and development expenses decreased from 5% for the quarter
ended September 30, 1998 to 3% for the quarter ended December 31, 1998. The
decrease was primarily due to the completion of the final phases of development
of Solution Set products.
Depreciation. Depreciation expenses increased $881,000 to $2.3 million
for the quarter ended December 31, 1998 from $1.4 million for the quarter ended
September 30, 1998. The increase was primarily attributable to investments in
physical infrastructure at the acquired companies after acquisition.
Amortization. Amortization expenses increased $709,000 to $7.8 million
for the quarter ended December 31, 1998 from $7.1 million for the quarter ended
September 30, 1998. The increase was attributable to the goodwill recorded in
connection with the twenty-four acquisitions which took place during 1998. See
"--Acquisition Program."
Annual Historical Results of Operations
Years Ended December 31, 1998 and December 31, 1997
The following discussion relates to iXL's actual operating results for
the periods noted. These operating results include the operations of the
companies acquired by iXL during the periods referenced from the date of
acquisition only. As a result, we believe the operating results for the year
ended December 31, 1998 are not comparable to the operating results for the
year ended December 31, 1997. See "Pro Forma Consolidated Financial
Information."
Revenues. Revenues increased $45.8 million, or 241%, to $64.8 million for
the year ended December 31, 1998 from $19.0 million for the year ended December
31, 1997. This increase was attributable to iXL's acquisition program, an
increase in the size and number of client engagements, and, to a lesser extent,
the development and growth of industry practice groups. CFN had no revenue in
1997 and accounted for $251,000 of iXL's 1998 revenues.
40
<PAGE>
Cost of revenues. Cost of revenues increased $32.9 million, or 290%, to
$44.2 million for the year ended December 31, 1998 from $11.3 million for the
year ended December 31, 1997. As a percentage of revenues, cost of revenues
increased from 60% for the year ended December 31, 1997 to 68% for the year
ended December 31, 1998. The increase was primarily attributable to the
integration of the companies acquired by iXL since January 1, 1998 and, to a
lesser extent, employee training and the development of CFN. CFN had no
revenues or cost of revenues during 1997.
Sales and marketing expenses. Sales and marketing expenses increased
$13.4 million, or 343%, to $17.3 million for the year ended December 31, 1998
from $3.9 million for the year ended December 31, 1997. As a percentage of
revenues, sales and marketing expenses increased from 21% for the year ended
December 31, 1997 to 27% for the year ended December 31, 1998. This increase
was primarily attributable to the continued development and expansion of iXL's
sales and marketing infrastructure and staff. Through acquisition and internal
growth, iXL's sales staff increased from 40 employees at the end of 1997 to 105
employees at the end of 1998. In addition, we hired the Executive Vice
President for Worldwide Marketing of iXL, Inc. During 1998 we expanded the
corporate sales and marketing departments and related support staff to provide
corporate oversight and additional support for the iXL offices. We also hired
specialized salespeople in iXL's key industry groups. Also included in this
increase was $813,000 of non-cash expense related to warrant issuances.
General and administrative expenses. General and administrative expenses
increased $21.1 million, or 231%, to $30.2 million for the year ended December
31, 1998 from $9.1 million for the year ended December 31, 1997. As a
percentage of revenues, general and administrative expenses decreased from 48%
for the year ended December 31, 1997 to 47% for year ended December 31, 1998.
The dollar increase was primarily attributable to the companies acquired by iXL
since January 1, 1998, associated integration costs and the expansion of
management infrastructure to support the growth in iXL's operations. Also
included in this increase was $1.4 million of non-cash stock option expense.
Research and development expenses. Research and development expenses
decreased $412,000, or 9%, to $4.4 million for the year ended December 31, 1998
from $4.8 million for the year ended December 31, 1997. As a percentage of
revenues, research and development expenses decreased from 25% for the year
ended December 31, 1997 to 7% for the year ended December 31, 1998. Research
and development costs in 1998 were primarily related to the continued
development of an automated quote system at CFN. The purchase price of BoxTop
Interactive, Inc. included a $2.4 million charge to in-process research and
development expenses in 1997 relating to an Internet-based videoconferencing
product under development which had not reached technological feasibility.
Certain related core technology was valued as existing technology and not
included in the value of the acquired in-process technology. The value of the
purchased in-process technology was determined by estimating the projected net
cash flows including future revenues to be earned upon commercialization of the
product and the costs to complete the development of the technology. Strong
revenue growth was projected for this product through 1999; thereafter, revenue
was expected to increase moderately each year through 2001. The cash flows were
then discounted to present value at 35%, a rate of return that considers the
relative risk of achieving the projected cash flows and the time value of
money. Finally, the present values of the cash flows of the discrete projection
period were summed to determine the fair market value of the purchased in-
process technology. In the fourth quarter of 1998, due to the introduction of
competing products utilizing alternative technologies into the market,
management decided to cease further investment in the development of this
product.
Depreciation. Depreciation expenses increased $3.8 million to $5.2
million for the year ended December 31, 1998 from $1.4 million for the year
ended December 31, 1997. The increase related to the depreciation of assets of
the companies acquired by iXL since January 1, 1997 and investments in physical
infrastructure at these companies after acquisition.
Amortization. Amortization expenses increased $10.9 million to $16.4
million for the year ended December 31, 1998 from $5.5 million for the year
ended December 31, 1997. The increase was a result of the
41
<PAGE>
goodwill recorded in connection with the 24 acquisitions which took place
during 1998 and the four acquisitions which took place during 1997.
Interest expense. Interest expense increased $600,000 to approximately
$800,000 in 1998 primarily due to borrowings under the iXL's credit facility.
Years Ended December 31, 1997 and Eight Months Ended December 31, 1996
The operating results for the eight months ended December 31, 1996 date
from iXL's inception in March 1996. Due to this shorter operating period, iXL's
early stage of development during this period, and the numerous acquisitions
effected during 1996 and 1997, iXL believes the operating results for the year
ended December 31, 1997 are not comparable to the operating results in the
eight months ended December 31, 1996.
Revenues. Revenues increased $13.6 million, or 253%, to $19.0 million for
the year ended December 31, 1997 from $5.4 million for the eight months ended
December 31, 1996. The acquisitions of BoxTop Interactive, Inc., Swan
Interactive Media, Inc. and The Whitley Group, Inc. during 1997 accounted for
$5.1 million of the increase in revenues. A full year of operations and growth
in iXL's Atlanta and Memphis offices accounted for the remaining increase.
Cost of revenues. Cost of revenues increased $7.7 million, or 217%, to
$11.3 million for the year ended December 31, 1997 from $3.6 million for the
eight months ended December 31, 1996. As a percentage of revenues, cost of
revenues decreased from 66% for the eight months ended December 31, 1996 to 60%
for the year ended December 31, 1997. The acquisitions of BoxTop Interactive,
Inc., Swan Interactive Media, Inc. and The Whitley Group, Inc. during 1997
accounted for $2.9 million of the increase in cost of revenues. A full year of
operations and growth in iXL's Atlanta and Memphis offices accounted for the
remaining increase.
Sales and marketing expenses. Sales and marketing expenses increased $3.1
million, or 381%, to $3.9 million for the year ended December 31, 1997 from
$812,000 for the eight months ended December 31, 1996. As a percentage of
revenues, sales and marketing expenses increased from 15% for the eight months
ended December 31, 1996 to 21% for the year ended December 31, 1997. The
acquisitions of BoxTop Interactive, Inc., Swan Interactive Media, Inc. and The
Whitley Group, Inc. during 1997 and CFN in late 1996 accounted for $2.3 million
of the increase in sales and marketing expenses. A full year of operations and
growth in iXL's Atlanta and Memphis offices accounted for the remaining
increase.
General and administrative expenses. General and administrative expenses
increased $7.9 million, or 631%, to $9.1 million for the year ended December
31, 1997 from $1.2 million for the eight months ended December 31, 1996. As a
percentage of revenues, general and administrative expenses increased from 23%
for the eight months ended December 31, 1996 to 48% for the year ended December
31, 1997. The acquisitions of BoxTop Interactive, Swan Media, The Whitley Group
and CFN during 1997 accounted for $5.5 million of the increase in general and
administrative expenses. A full year of operations and growth in iXL's Atlanta
and Memphis offices accounted for the remaining increase.
Research and development expenses. Research and development expenses were
$4.8 million for the year ended December 31, 1997 and zero for the eight months
ended December 31, 1996. This included $2.4 million from the acquisition of
BoxTop Interactive, Inc. which was allocated to in-process technology. The
remaining expense is primarily related to the development of CFN's
infrastructure.
Depreciation. Depreciation expenses increased $1.0 million to $1.4
million for the year ended December 31, 1997 from $372,000 for the eight months
ended December 31, 1996. The increase was related to the depreciation of assets
of the companies acquired by iXL since January 1, 1997 and investments in
physical infrastructure at the companies acquired by iXL since January 1, 1997
after acquisition. iXL made significant investments in the acquired companies
after their acquisition to expand and improve office space and combine multiple
acquisitions within metropolitan areas. We also invested in computer and
telecommunications equipment at the newly acquired offices to provide
interoffice connectivity.
42
<PAGE>
Amortization. Amortization expenses increased $4.6 million to $5.5
million for the year ended December 31, 1997 from $928,000 for the eight months
ended December 31, 1996. The increase primarily was attributable to the
amortization of goodwill and intangible assets recorded in connection with the
four 1997 acquisitions. The increase is also attributable to a charge related
to the discontinued use of a brand name and the result of a full year of
operations in 1997. In connection with the acquisition of BoxTop Interactive,
Inc., in May 1997, $2.1 million of the purchase price was allocated to a brand
name. In December 1998, iXL discontinued use of this brand name and wrote off
the remaining unamortized balance of $1.7 million.
Interest expense. Interest expense from capital leases, building mortgage
and loans from stockholders resulted in the increase in interest expense of
$208,000 in 1997 compared to 1996.
Income tax. The recognition of the income tax benefit of $1.6 million for
1997 is due to the net operating losses incurred by iXL which were utilized to
offset certain long-term deferred tax liabilities acquired in the acquisitions.
As of December 31, 1997 and 1998, iXL had net operating loss
carryforwards for federal income tax purposes of approximately $11.2 million
and $46.6 million, respectively. iXL acquired loss carryforwards of
approximately $1.6 million in 1997 and $3.5 million in 1998. The carryforwards
expire in varying amounts through 2018. The use of acquired net operating loss
carryforwards is restricted in accordance with Internal Revenue Service
regulations. A valuation allowance has been recorded against iXL's net deferred
tax asset as management believes it is more likely than not that they will not
be realized. See Note 10 to iXL's Consolidated Financial Statements.
Liquidity and Capital Resources
Since inception, iXL has financed its operations primarily through
private sales of capital stock, which totaled approximately $132.2 million in
aggregate net proceeds through January 31, 1999, including approximately $22.7
million from the sale of 22,825 shares of Class A Convertible Preferred Stock
in January 1999. CFN also expects to receive net proceeds of approximately
$49.8 million from the sale of 16,190,475 shares of CFN's Series B Convertible
Preferred Stock in the second quarter of 1999. On July 29, 1998, iXL entered
into a credit facility with Chase Manhattan Bank providing for borrowings of up
to $20 million. At December 31, 1998, approximately $20 million of borrowings
were outstanding under this credit facility. In January 1999, iXL repaid all of
the approximately $9.4 million then outstanding under the revolving facility of
the credit facility. Additionally, iXL expects to repay all of the
approximately $10 million outstanding under the term facility of the credit
facility with a portion of the net proceeds of the offering. The $10 million
term facility commitment will terminate upon this payment, and only the
revolving commitment of $10 million will remain available under the credit
facility. iXL's obligations under the credit facility are secured by
substantially all of the assets of iXL and its domestic subsidiaries other than
CFN and CFN's subsidiaries. These obligations are also secured by all of the
stock of iXL's domestic subsidiaries, other than CFN's subsidiaries, and 65% of
the stock of iXL's foreign subsidiaries. Borrowings under the credit facility
accrue interest at a rate of 2% plus the greater of Chase Manhattan Bank's
prime rate or .5% plus the weighted average of the rates on overnight Federal
funds transactions. As of April 1, 1999, the interest rate on the outstanding
balance was 9.75%.
At December 31, 1998, iXL had approximately $19.3 million in cash and
cash equivalents. For the period from inception to December 31, 1998, iXL used
approximately $49.2 million, $27.9 million and $27.7 million to fund operating
activities, acquisition activities, and capital expenditures, respectively.
These expenditures were financed primarily with proceeds of sales of iXL's
capital stock.
In addition, at December 31, 1998, iXL had outstanding commitments for
capital expenditures totaling approximately $5.4 million, primarily related to
the expansion and improvement of its Atlanta, New York and Denver offices. The
remainder of iXL's significant commitments consist of obligations outstanding
under operating leases.
43
<PAGE>
At December 31, 1998, the approximate future minimum lease payments for
noncancelable operating leases are:
<TABLE>
<CAPTION>
Year Amount
---- --------------
(in thousands)
<S> <C>
1999....................................................... $ 6,586
2000....................................................... 5,862
2001....................................................... 5,485
2002....................................................... 5,264
2003....................................................... 4,112
Thereafter................................................. 15,832
-------
$43,141
=======
</TABLE>
iXL believes its available cash resources and credit facilities, combined
with the net proceeds of this offering, the investment by General Electric in
common stock and General Electric's investment in CFN's Series B Convertible
Preferred Stock, will be sufficient to meet its anticipated working capital and
capital expenditure requirements for at least the next 12 months. However, iXL
may need to raise significant additional funds sooner in order to support its
growth, develop new or enhanced services and products, respond to competitive
pressures, acquire complementary businesses or technologies or take advantage
of unanticipated opportunities. See "Risk Factors--Risks Related to iXL's
Business--Failure to raise necessary capital could restrict our growth, limit
our development of new products and services and hinder our ability to
compete."
Year 2000 Risk
Many currently installed computer systems and software products are coded
to accept only two-digit entries to identify a year in the date code field.
Consequently, on January 1, 2000, many of these systems could fail or
malfunction because they may not be able to distinguish between 20th century
dates and 21st century dates. Accordingly, many companies, including iXL and
iXL's customers, potential customers, vendors and strategic partners, may need
to upgrade their systems to comply with applicable "Year 2000" requirements.
Because iXL and its clients are dependent, to a very substantial degree,
upon the proper functioning of its and their computer systems, a failure of its
or their systems to correctly recognize dates beyond December 31, 1999 could
materially disrupt operations, which could materially and adversely affect
iXL's business, results of operations and financial condition. Additionally,
iXL's failure to provide Year 2000 compliant products and services to our
clients could result in financial loss, reputation harm and legal liability.
In 1998, iXL formed a Year 2000 Assessment and Contingency Planning
Committee to review both its information technology systems, hardware and
software, and its non-information technology systems, and where necessary to
plan for and supervise the remediation of those systems. The Y2K Committee is
headed by the Chief Information Officer of iXL, Inc. Other members of the Y2K
Committee include two full-time outside consultants and one full-time and four
part-time company employees. The Y2K Committee, utilizing iXL's iD5 engagement
methodology, has divided iXL's Year 2000 efforts into five phases: discovery
(currently 80% complete), definition (currently 50% complete), design,
development and deployment. Each of these phases is scheduled to be complete by
the end of June 1999. iXL believes it has identified its mission critical
systems. iXL has obtained confirmations from the providers of these systems
that they are Year 2000 compliant. iXL expects to conduct internal tests of
such systems as part of its Year 2000 efforts.
iXL is researching Year 2000 compliance of all existing iXL systems
supplied by third party providers. Where Year 2000 compliance documentation is
not publicly available, iXL is issuing written requests to these providers to
certify Year 2000 compliance. iXL has already obtained written certification
regarding the critical hardware and software systems used to assemble client
solutions or to support iXL's internal electronic infrastructure. iXL has not
yet obtained written certification regarding facilities items such as elevators
and other non-standard applications and systems that are not prevalent
throughout all iXL offices.
44
<PAGE>
iXL is testing all of its other systems internally. Although iXL has not
yet completed this testing, iXL has not yet identified any older systems of the
varieties more likely susceptible to Year 2000 problems. Consequently, iXL
believes its greatest potential exposure will be presented by the failure of
external systems such as utilities and telecommunications. Further, if iXL's
clients experience Year 2000 problems, iXL may be precluded from continuing to
provide services for these clients until the problems are resolved. Internally,
iXL believes its greatest potential exposure would be presented by its
accounting systems, although these functions can be handled manually without
interrupting iXL's business.
iXL does not intend to examine third party readiness, although CFN is
examining the readiness of third parties that provide date sensitive
information critical to CFN's business. iXL is also not researching its
clients' readiness, except to the extent clients request iXL to examine
solutions delivered by iXL.
iXL is developing contingency plans for critical individual information
technology systems and non-information technology systems for implementation,
if required, due to Year 2000 risks not fully resolved by iXL's Year 2000
program. Management currently believes that the Year 2000 risk will not pose
significant operational problems for iXL's computer systems. However, there is
no guarantee that iXL's Year 2000 program, including consulting with third
parties, will avoid any material adverse effect on iXL's operations, customer
relations or financial condition. iXL estimates the total cost of its Year 2000
program to be approximately $165,000, $75,000 of which has been incurred as of
March 30, 1999. However, there is no guarantee that the actual costs incurred
will not be materially higher than this estimate. See "Risk Factors--Risks
Related to iXL's Business--Year 2000 risks may adversely affect our business."
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (FAS 133). This statement establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, and for hedging
activities. iXL will be required to adopt FAS 133 for the quarter ended March
31, 2000. iXL has not entered into any derivative financial instruments.
45
<PAGE>
BUSINESS
Overview
We are a leading Internet services company which provides Internet
strategy consulting and comprehensive Internet-based solutions to Fortune 1000
companies and other corporate users of information technology. We help
businesses identify how the Internet can be used to their competitive advantage
and use our expertise in creative design and systems engineering to design,
develop and deploy advanced Internet applications and solutions.
iXL was founded in March 1996 and in May 1996 made its first acquisitions
through the consolidation of four complimentary multimedia and interactive
services companies. Later in 1996, to implement iXL's move into the Internet
services industry, iXL acquired its first Internet-related business. iXL
acquired four additional complimentary services companies in 1997 and 24 more
in 1998. These acquisitions, as well as substantial hiring of new employees,
resulted in iXL's current composition. iXL is a Delaware corporation.
In late 1996, iXL also acquired CFN, which at that time resembled a
traditional insurance agency that allowed corporate executives to comparison
shop for insurance and mortgages. Under iXL's direction, CFN quickly adopted
Internet strategies which have resulted in CFN's current composition as an e-
commerce platform for marketing financial services via corporate intranets and
the Internet.
Industry Background
Growth of the Internet
The Internet has grown rapidly in recent years, spurred by developments
such as easy-to-use Web browsers, a large and growing installed base of
advanced personal computers, the adoption of faster and more cost-efficient
networks, the emergence of compelling Web-based content and commerce
applications, and the growing sophistication of the user base. According to
International Data Corporation, a leading research firm, the number of Internet
users was 98 million worldwide at the end of 1998, and will continue to grow to
320 million by the end of 2002. The broad acceptance of the Internet has also
led to the emergence of intranets and extranets as new global communications
and commerce environments, representing a significant opportunity for
enterprises to interact in new and different ways with customers, employees,
suppliers and partners. Intranets are secure websites accessible only within a
given company, and extranets are intranets also available to select outsiders.
Growth of E-Commerce
The initial commercial use of the Internet was as an informational and
advertising medium, commonly referred to as "brochureware." From this origin
the Internet is evolving into a platform for conducting transactions and
establishing virtual storefronts and trading networks. Companies have also
begun to expand their use of efficient and low-cost Internet-based technologies
to enhance traditional operations such as customer service, supply chain
management, employee training and communication. In addition, companies such as
eBay, Amazon.com and E*Trade have extended beyond conventional models for the
sale and delivery of goods and services by operating an Internet-only business
and maintaining a limited physical presence. International Data Corporation
expects dramatic growth in total e-commerce transaction volume, projecting an
increase from $32 billion in 1998 to $426 billion in 2002.
Market for Strategic Internet Services
The Internet represents a revolutionary and powerful new opportunity for
business. Many companies that do not currently utilize the Internet are being
forced to reevaluate their business models and to adopt or supplement existing
Internet-based business solutions. The development and implementation of
Internet-based
46
<PAGE>
solutions require the successful integration of strategy consulting, creative
design and systems engineering skills. Historically, expertise in these areas
either has not existed within an organization or has been located in disparate
functional areas. Accordingly, many businesses have chosen to outsource a
significant portion of the development, design and maintenance of their
intranets, extranets, websites and e-commerce applications to independent
service providers who can capitalize on their accumulated strategic, creative
and technical expertise. Such outsourcing needs have generated worldwide demand
for Internet professional services, which International Data Corporation
estimates will grow from $7 billion in 1998 to $44 billion in 2002. See "Risk
Factors--Risks Related to the Strategic Internet Services Industry--The
developing market for strategic Internet services and the level of acceptance
of the Internet as a business medium will affect our business."
Companies increasingly are discovering that many traditional service
providers lack the requisite expertise to implement comprehensive Internet-
based solutions. Many information technology services providers lack the
creative and marketing skills required to build audiences and deliver unique
and compelling content and also lack Internet expertise and implementation
capabilities. Advertising and marketing communications firms typically lack the
extensive technical skills and systems integration expertise required to
produce the increasingly complex solutions demanded by clients. Many strategy
consulting firms lack Internet expertise, marketing perspective and
implementation capabilities to deliver comprehensive solutions.
A number of Internet services firms have emerged to address these needs.
However, many of these smaller providers tend to develop expertise in a limited
number of industry segments because of the relatively small number of Internet
solution engagements they have completed. Furthermore, the ability of many of
these firms to service clients is constrained by their smaller size, limited
geographic scope and lack of capital resources. In addition, many of these
firms lack the depth, management and infrastructure necessary to develop the
capability required to meet the increasingly larger and more complex needs of
an expanding, sophisticated client base. See "Risk Factors--Risks Related to
the Strategic Internet Services Industry--We operate in a highly competitive
market with low barriers to entry which could limit our market share and harm
our financial performance" and "--The developing market for strategic Internet
services and the level of acceptance of the Internet as a business medium will
affect our business."
We believe that as businesses' familiarity and sophistication with
Internet technologies grow, so will the need for Internet services providers
who can help formulate a focused, strategic and integrated approach to the
implementation of Internet-based business solutions that enhance their clients'
businesses. We believe that the rapidly increasing demand for Internet
solutions, combined with the inability of many current providers to integrate
the strategic, creative and technical skills required by clients, has created
significant market opportunities for strategic Internet services providers such
as iXL.
iXL Solution
iXL uses its expertise in strategy consulting, creative design and
systems engineering to provide services that help clients identify and
capitalize on Internet-driven opportunities to improve and expand their
businesses. Key elements of the iXL solution are:
. Comprehensive Strategic Internet Services. We provide a
comprehensive set of strategic Internet services to clients
looking to enhance their existing business model by integrating
their business processes with an Internet strategy. We believe our
advantage lies in our ability to assist clients in the development
of an appropriate Internet strategy and then to deploy the
appropriate Internet services necessary to implement that
strategy. Typical iXL engagements include the strategic
application of e-commerce solutions to enhance existing business
processes, the identification of new business processes and
opportunities created by the Internet, the use of creative design
and marketing to acquire, cross-sell and retain consumers online,
and the integration of Web-based applications with our client's
existing systems. We believe that the breadth and focus of our
service offerings allow us to meet our clients' Internet needs
from strategy to deployment in an efficient and cohesive manner.
47
<PAGE>
. Sophisticated Technology Solutions. We use our extensive
engineering capabilities to deliver complex Internet-based
business solutions. Our engineers provide application development
and systems integration services by employing proven Internet
technologies such as Java, XML, Perl, CGI, C and C++. Typical
solutions include developing Internet-enabled business
applications, integrating web-based applications with our client's
existing systems and databases, and building sophisticated e-
commerce platforms. During 1998, to support our growing technology
development capability, we substantially increased our engineering
staff from approximately 50 to over 300 individuals through
acquisitions and new hires. We have also established strategic
affiliations with leading technology vendors such as Microsoft,
Intel, Sun, and Oracle. These affiliations typically allow us
early access to training, product support and technology developed
by these companies.
. Geographic Coverage and Benefits of Scale. We believe our
geographic coverage allows us to better serve our clients on a
local basis, helping to forge strong, long-term client
relationships and service the widespread offices of its clients
and their customers and vendors. As of December 31, 1998, iXL had
offices in Atlanta, Georgia; New York, New York; Los Angeles, San
Francisco, San Diego, and Santa Clara, California; Washington,
D.C.; Chicago, Illinois; Boston, Massachusetts; Denver, Colorado;
Charlotte, North Carolina; Richmond, Virginia; Memphis, Tennessee;
Norwalk, Connecticut; London, England; Berlin and Hamburg,
Germany; and Madrid, Spain. Our internal information technology
infrastructure links our various offices and leverages the
expertise of our professionals throughout the organization. Our
scale enables us to handle larger, more complex engagements,
expand our base of knowledge and best practices and employ more
experts, spreading their cost and expertise over a larger
enterprise.
. Use of Engagement Methodology (iD5) to Deliver Solutions. We
utilize an engagement methodology known as iD5 which has five
stages: Discover, Define, Design, Develop, Deploy. iD5 governs and
directs all phases of project management from initial engagement
definition to final solutions delivery. These procedures are
updated periodically to reflect new best practices identified
throughout iXL. The goal of iD5 is to provide consistent
procedures for all engagement phases which encourage usage of best
practices, while providing clients with greater clarity of
expectations, regular progress reports, and a higher degree of
project organization. Accordingly, we believe iD5 helps us achieve
on-time and on-budget solutions, capture our best practices and
integrate acquired businesses.
. Multidisciplined Team Approach. We staff engagements with a
multidisciplined team of professionals including project managers,
strategic consultants, creative designers, information
architects--professionals whose expertise includes both artistic
design and technology-- industry experts and software engineers.
By assembling these multidisciplined teams of professionals, we
believe that we provide comprehensive Internet-based solutions to
clients.
. Experienced Senior Executives. Our senior management team is
highly experienced in a variety of disciplines relevant to our
ability to grow and to service the needs of our clients. Our
senior executives have managed both emerging and mature businesses
in a variety of industries, including media and entertainment,
technology, travel and financial services. Our management also
includes an experienced acquisition team that has successfully
acquired and integrated a large number of businesses in various
industries.
48
<PAGE>
iXL Strategy
iXL's goal is to become the leading provider of strategic Internet
services to Fortune 1000 companies and other corporate users of information
technology. To achieve this objective, we are pursuing the following
strategies:
. Leverage and Expand Industry Expertise. We have assembled industry
practice groups including experienced professionals with expertise
in the business practices and
processes of specific industries. We believe our industry
expertise enables us to provide effective Internet strategy
consulting and services tailored to the special needs of our
clients in these industries. In addition, industry expertise
reduces the learning curve on new engagements, improving
efficiency of implementation and reducing project delivery times.
Our strategy is to expand our existing industry practice groups by
recruiting senior professionals from major consulting firms and
companies in the relevant industries. We also acquire companies
with specific industry expertise. We have established practice
groups, which are in varying stages of development and staffing,
in the Banking & Financial Services, Media & Entertainment,
Travel, Telecommunications and Healthcare industries. We believe
that these industries have been leaders in the utilization of
Internet-enabled technologies. See "--iXL Industry Practice
Groups."
. Continue to Develop Technology Capabilities. We have significant
capabilities in systems engineering and applications development
which we use to deliver complex Internet-based business solutions.
We intend to hire additional software engineers and develop new
technology skill-sets to deliver the best possible solutions and
meet the evolving needs of clients. Our research and development
team is dedicated to identifying, testing and defining new
Internet-based technologies. We have developed software
applications that can be re-used for more than one client or for
more than one engagement. This library of reusable applications
continues to grow as projects are completed. We intend to use
these software applications to deliver solutions rapidly and cost-
effectively. We believe this will be a significant advantage when
providing services under fixed-price contracts.
. Expand Geographic Coverage. Since our inception, we have expanded
our geographic presence aggressively through a combination of
acquisitions and internal growth. iXL has 18 offices located
throughout the United States and in England, Germany and Spain. We
believe our broad geographic coverage allows us to serve our
clients on a local basis, helping to forge strong, long-term
client relationships, and to serve the widespread offices of our
clients and their customers and vendors. Our strategy is to
continue our geographic expansion through additional acquisitions
and external hiring.
. Capture and Disseminate Knowledge and Best Practices. Our
employees have developed a broad base of knowledge and best
practices through numerous strategic Internet services engagements
and from prior experience. Our strategy is to capture this broad
range of knowledge and best practices for dissemination throughout
iXL, and to continue to expand these capabilities through
acquisitions and external hiring. During the course of its client
engagements, we also identify distinct solutions which can be
developed into and distributed as new iXL Solution Sets. We
accomplish this dissemination in part through frequent iXL
Summits, where employees within a given discipline meet in person
to receive education and share best practices. Our Technical
Operations Center also plays a critical role in the dissemination
process, linking all of our local offices via a comprehensive
Internet protocol-based network combined with a centralized
knowledge management system.
49
<PAGE>
. Expand Client Relationships. We have established business
relationships with a diverse base of clients. Our strategy is to
leverage our industry expertise, technology skills, and scale by
expanding the scope of existing client relationships into broader
engagements, including Internet strategy consulting, creative
design, systems engineering and application development services.
. Attract, Train and Retain Experienced Professionals. Our growth
and our ability to provide strategic Internet services are based
in large part on our ability to attract, train and retain
experienced professionals. Our strategy is to expand our existing
expertise by recruiting senior professionals from major consulting
firms, creative design firms and information technology services
firms as well as from other strategic Internet services companies.
We maintain an informal, team-driven and results-oriented culture
that is attractive to energetic, talented professionals and
provides incentives for our employees through a competitive
compensation plan, equity ownership and our stock option plans. We
provide training on a continuing basis for our employees through
our iXL University programs, which are designed to address the
rapidly changing technological environment in which our employees
are engaged.
. Pursue Strategic Acquisitions. We intend to continue to pursue
strategic acquisitions that provide additional skilled management,
technical and creative personnel, client relationships,
technological skills, industry expertise and geographic coverage.
iXL Engagement Methodology (iD5)
We have developed an engagement methodology known as "iD5" which governs
and directs all phases of project management from initial engagement definition
to final solutions delivery. iD5 consists of five distinct, clearly delineated
stages which provide our clients with clear expectations of both the engagement
process and the solutions to be provided. The five stages are:
. Discover. Collect information relevant to the engagement
objective.
. Define. Formulate an Internet business strategy.
. Design. Refine and document specifications of the Internet
business strategy.
. Develop. Build elements required to implement the Internet
business strategy.
. Deploy. Deliver final solution(s).
iD5 enables us to effectively serve our clients by:
. clarifying client expectations;
. promoting consistent and efficient service;
. combining strategic, creative and technical capabilities;
. minimizing the time it takes to deliver our services; and
. establishing best practices to be followed throughout iXL.
iD5 is periodically revised and improved to assimilate and deploy new
tools and new best practices developed in the course of iXL's many engagements
throughout all of our offices. Through this process, all iXL offices benefit
from the knowledge gained in the course of engagements by any iXL office.
50
<PAGE>
iXL Services
We believe we offer clients a single source for the comprehensive range
of services required to identify, design, develop and deploy Internet-based
business solutions which complement or expand conventional business processes.
Our services include Internet strategy consulting, Internet-based business
solutions, and our iXL Solution Sets.
Internet Strategy Consulting
We offer consulting services to our clients with the objective of
developing Internet solutions that augment a client's overall business
strategy. We offer Internet strategy consulting that combines our knowledge of
industry dynamics and business processes with an understanding of the client's
specific needs. We have established practice groups, which are in varying
stages of development and staffing, in the Banking & Financial Services, Media
& Entertainment, Travel, Telecommunications and Healthcare industries. We also
employ strategy consultants with general business and Internet expertise. We
presently employ approximately 55 professionals who provide strategy consulting
services.
While Internet strategy consulting directly generates only a small
percentage of our revenues, we believe that Internet strategy consulting will
be an important service offering which will differentiate iXL from many of our
competitors. By offering strategy consulting services, we believe we can
leverage the consulting and strategy planning expertise of our various industry
experts into engagements which will utilize the services provided by other iXL
practice groups.
Internet-Based Business Solutions
Our revenues are principally derived from the design and delivery of
Internet-based business solutions. These solutions typically are Web-based
applications, many of which integrate with a client's existing computer
systems. These solutions can incorporate multiple capabilities including
Internet strategy consulting, creative design, information architecture,
software engineering, project management, and audio, video and animation
production.
Among our Internet-based business solutions, we offer e-commerce systems
and services, business information management systems, interactive learning
environments, digital media services, and website development and hosting
services.
. E-Commerce Systems and Services. We design, develop and deploy
sophisticatede-commerce applications for bringing buyers and
sellers together via the Internet. In 1998, we created over 60
different e-commerce applications on behalf of our clients,
ranging from online retail sites to electronic procurement
systems. Our strength in e-commerce lies in our ability to
integrate third-party software with a client's existing computing
and network infrastructure to create a robust e-commerce
environment for the client's customers and prospects. Our
technology group utilizes a set of core e-commerce enabling
technologies from companies, including:
. Microsoft and Netscape, for e-commerce server applications;
. Oracle, Sybase and Informix, for database platform
development; and
. Sun and Hewlett-Packard, for networking products and
services.
We have created our own e-commerce applications for specific
client needs. We also work with many third-party software
companies, such as CyberCash, Accipiter and NetGravity which have
developed more general applications for conducting different
aspects of e-commerce ranging from security to online transaction
payments processing.
51
<PAGE>
. Business Information Management Systems. We design and develop
sophisticated computer based business information management
systems. These include database-driven websites that help clients
manage their customer, supplier, and vendor relationships more
effectively and provide secure database access. Some of these
websites also have the capacity to recognize and profile the types
of information a user is typically interested in, and to provide
that information automatically to the user during future visits to
the site. As part of our Business Information Management Systems
capability, we develop intranets and extranets which enable our
clients to communicate with employees, customers, suppliers and
vendors, as well as track and store critical business data and
other information.
. Interactive Learning Environments. We have developed expertise in
providing education and training using interactive multimedia and
Web technology. We employ instructional designers who create and
adapt training materials for use in multimedia and online
environments. Interactive learning environments have been
attractive to service industry organizations which are
geographically dispersed, rely on employees with a common base of
skill sets and experience high turnover. We have developed several
customized solutions to meet the needs of our clients and are
developing an additional iXL Solution Set to facilitate the
creation and publication of interactive training courses. iXL's
learning environments utilize RealNetworks G-2 streaming,
Microsoft Media Technologies, Macromedia Dreamweaver, Flash,
TopClass and Podium Web-based training systems. See "--iXL
Solution Sets" and "--Employees."
. Digital Media Services. We have developed solutions that combine
video, audio, animation, graphics and content into digital media
presentations. These media are also frequently utilized to create
Internet-based presentations. We possess expertise in numerous
post-production editing technologies. These technologies are used
for the assembly of video and audio content used in many of our
clients' Internet applications. We also provide video production
services including the design, scripting, production, testing and
distribution of audio and video clips and full broadcast-quality
presentations. In addition, we own the worldwide perpetual rights
to a comprehensive stock video library of over 500,000 clips.
Examples of our work in this area include the development of new
capabilities for delivering audio and video content via the
Internet for Real Networks, developing specialized data management
software for Object Design and the delivery of high resolution
imagery via the Internet for Live Pictures. We also have an
Enhanced Television (E-TV) group that is developing technology,
applications, content and expertise for use in the emerging
industry of digitally delivered Internet Protocol-based
information and entertainment. Currently, we are working with
media, technology and telecommunications companies to design and
build the navigational infrastructures, business models and
strategic relationships required for success in the E-TV
marketplace.
. Traditional Websites and Hosting. To provide complete Internet
solutions, we offer development of traditional websites and state-
of-the-art website hosting services through our Memphis,
Tennessee, and San Jose, California, hosting facilities. Our
hosting capabilities are offered primarily to clients who require
unique and specific hosting technology.
52
<PAGE>
iXL Solution Sets
iXL uses its technology development capabilities to create custom
applications based on a common, reusable framework and component library. These
"iXL Solution Sets" can be customized and implemented quickly and cost-
effectively. We believe that our iXL Solution Sets meet the needs of clients
for fast, replicable and easily implemented solutions for computer-based
presentations and multiple website deployment and content management. iXL's
Solution Sets include:
. Pitchman(R). Pitchman is a presentation tool which combines high-
end graphics, animation, video and audio in an easy-to-transport
and easy-to-display laptop computer format which allows the user
to synchronize with the latest version of the presentation via a
corporate intranet or the Internet. Sales and marketing
professionals are the primary market for Pitchman. We have sold
over 500 Pitchman laptop presentations to various clients
including British Airways, Time Warner, News Corporation and
Scudder Kemper.
. Siteman(TM). Siteman is a state-of-the-art browser-based system
for creating and managing up to thousands of websites that share a
common style and similar look. Siteman allows novice users to
quickly design and build custom websites by selecting from a
library of templates and adding content. It also enables users to
easily edit content online, yet restricts them from modifying
specified content areas and the overall style of the sites. iXL
also provides support for end users who need assistance in
creating sites with this product. We developed Siteman as part of
our iXL Solution Sets strategy. Recently we sold Siteman to a
software manufacturer, retaining a perpetual, worldwide, royalty-
free license on a non-transferable, non-exclusive basis. This
license permits us to continue to offer Siteman as one of our
Solution Sets. Siteman clients have included AutoConnect, Carlson
Wagonlit Travel and WebMD.
. We are also developing an additional iXL Solution Set designed to
facilitate the creation and publication of interactive training
courses.
iXL Industry Practice Groups
iXL has established practice groups in the Banking & Financial Services,
Media & Entertainment, Travel, Telecommunications and Healthcare industries.
These practice groups are in varying stages of development and staffing. We are
also in the process of developing practice groups for the Technology and Retail
industries. To build our industry practice group expertise, we leverage the
experience of our employees who have previously worked for major consulting
firms or companies in the relevant industries. We have utilized its industry
expertise in serving the clients listed below. These clients, included for
illustrative purposes, are not intended to be representative of our clients
generally.
<TABLE>
<CAPTION>
Industry Clients
-------- -------
<S> <C>
Banking & Financial Services................. Chase Manhattan Bank
First USA
Merrill Lynch
Scudder Kemper
Media & Entertainment........................ Cox Enterprises
News Corporation
Time Warner
Universal Studios
Travel....................................... Budget Rent a Car
Carlson Wagonlit Travel
Delta Air Lines
Virgin Atlantic
</TABLE>
53
<PAGE>
Industry Clients
-------- -------
Telecommunications........................... BellSouth
Lucent
Premiere Technologies
Healthcare................................... Eli Lilly
HBOC
WebMD
Sales and Marketing
The role of iXL's marketing program is to create and sustain preference
and loyalty for the iXL brand as a leading provider of strategic Internet
services. Marketing occurs at the corporate and local levels. The corporate
marketing department has overall responsibility for communications,
advertising, public relations and our website, and also engineers and oversees
central marketing and communications programs for use by each of our local
offices. At the local level, each office also has a marketing representative
responsible for building brand awareness within each geographic region. These
local representatives report to the President of each office, with the
Executive Vice President for Worldwide Marketing of iXL, Inc. having overall
responsibility and oversight.
As part of its continuing relationship with iXL and CFN, General Electric
has agreed to undertake a marketing campaign regarding iXL and CFN. This
campaign is intended to emphasize General Electric's relationships with iXL and
CFN and to improve awareness of iXL and CFN's services. General Electric will
also use its reasonable efforts to provide access to CFN's platform to its
employees and to employees of its affiliates.
iXL's sales force totals approximately 105 sales representatives. Each of
iXL's offices has its own sales representatives who sell all services offered
by iXL to the clients and prospects located in their geographical region. These
local representatives report to the President of each office, with the
Executive Vice President for Worldwide Operations of iXL having overall
responsibility and oversight.
Examples of iXL Internet Solutions
iXL is capable of providing a wide range of services tailored to each of
our clients' individual needs and concerns. The following examples illustrate
our diverse strategic Internet service capabilities:
Budget Rent a Car
Budget Rent a Car engaged iXL to implement an Internet strategy,
including an online reservation engine for its drivebudget.com website. iXL's
solution utilized a sophisticated reservations booking engine that integrates
directly with Budget's mainframe-driven customer reservation and inventory
control systems. This integrated system allows Budget to accurately identify
vehicles that are available in rental inventory at a given Budget location. In
addition to pricing and booking reservations via the Internet, Budget's
customers can view available vehicles and access vehicle specifications such as
seating and cargo space. The system also provides travel planning functions
including maps, travel safety tips, and time and distance calculations.
To promote awareness of the site, iXL designed an online marketing
campaign, including an extensive search engine optimization effort, which has
resulted in increasing online bookings and reservations. Through this shift to
an online environment, Budget believes it is realizing significant cost savings
and achieving stronger customer relationships by providing more choice, control
and convenience.
Chase Manhattan Bank
iXL's client relationship with Chase Manhattan Bank began with a single
project in the second quarter of 1998, and has expanded to include projects for
four of Chase Manhattan Bank's six largest divisions and for the bank's
investment company, Chase Capital Partners. We believe our Banking and
Financial Services practice group's industry expertise has enabled iXL to
broaden the scope of its relationship with Chase Manhattan Bank.
54
<PAGE>
Among its current projects for Chase Manhattan Bank, iXL is building an
electronic bill presentment and payment system which will allow Chase Manhattan
Bank customers to view banking statements and pay bills online. The data from
this online system will also drive Chase Manhattan Bank's Value-Added Online
Marketing system, designed by iXL, which profiles Chase Manhattan Bank
customers by the banking services they utilize, their credit profile, and their
Chase Manhattan Bank website browsing habits.
Additionally, iXL is providing Internet services to Chase Manhattan
Bank's small business group and its merchant services division. The focus of
these engagements is to create Internet business and product strategies and
facilitate the implementation of e-commerce. iXL is also working with Chase
Manhattan Bank to overhaul the Chase.com website to make the site more
responsive and effective for Chase Manhattan Bank customers. iXL developed the
strategic plan for this assignment and is designing and developing the
infrastructure and architecture required to support a site that better
integrates Chase Manhattan Bank's online portfolio of products and services.
WebMD
WebMD provides Internet-based services to healthcare professionals and
consumers through its webmd.com website. Since WebMD's inception, iXL has
provided it with a full range of strategic Internet services, including initial
definition of WebMD's Internet-based healthcare services product to be offered
via the webmd.com website. Once defined, systems design, application
development, engineering and hosting of the WebMD service was performed by iXL,
including the integration of over eighty databases capable of online search and
third-party online service offerings. WebMD has a limited operating history and
has minimal revenues at this time.
The webmd.com website provides doctors access to a suite of Internet-
based applications which are designed to enable them to manage their time more
efficiently and to serve patients more effectively. These applications provide
several centrally managed services, including access to electronic data
interchange services, enhanced communications services, healthcare-related
information and other Internet-based services that are useful to healthcare
professionals. WebMD's website is designed to simplify healthcare practices by
integrating multiple administrative, communications and research functions into
a single easy to use Internet-based solution. WebMD's free consumer website
includes access to premium, branded healthcare-related information,
personalized, targeted information about specific health conditions and
content-specific online communities that allow consumers to participate in
real-time discussions and support networks through the Internet. The webmd.com
website is designed to assist consumers in making informed healthcare
decisions.
iXL also created the interactive distance-learning component and
knowledge management systems of WebMD. iXL's Siteman Solution Set was the
platform for the Web publishing component of the WebMD service. Additionally,
iXL developed the marketing programs for WebMD including Pitchman presentations
for the physician, patient and healthcare community.
Acquisitions
The strategic Internet services industry is highly fragmented, consisting
of a large number of small companies providing limited service offerings.
Therefore, an important element of iXL's growth strategy is the acquisition of
selected companies with complementary technologies and capabilities. Our
strategy has been to augment our growth through acquisitions of small, regional
strategic Internet services companies. By obtaining critical mass in a
particular regional market, we believe we are able to provide the
responsiveness and quality of service of a small company with the greater depth
and breadth of services of a large organization. The acquisitions have resulted
in a broad geographic presence, allowing us to compete more effectively for
national accounts. Our post-acquisition strategy is to enhance the
competitiveness and profitability of each acquired company.
55
<PAGE>
We identify acquisition candidates through our ongoing industry searches,
through our business network and through contact initiated by companies seeking
to be purchased. Potential targets are evaluated on numerous quantitative and
qualitative factors. Quantitative factors include historical and projected
revenues and profitability, geographic coverage and contract backlog.
Qualitative factors include strategic and cultural fit, management skill,
customer base and technical proficiency.
These factors are evaluated as part of a four-part assessment process:
. a detailed audit and operating assessment is initiated;
. acquisition pricing models are carefully evaluated;
. specific technology skills and capabilities are ascertained; and
. management qualifications and compatibility are appraised.
Our post-acquisition process includes the integration of all financial
reporting systems, operating procedures, and training programs into the iXL
culture and infrastructure. Integration typically begins before the acquisition
transaction has been closed, with a goal of total integration promptly
following closing. Our Technical Operations Center plays a critical role in
this process, connecting the acquired business's systems to our central
systems. Our goal is to provide each of our offices with all tools and
resources needed to attain the maximum possible growth and profitability.
Accordingly, we have rarely based the purchase price for a company we acquired
on the post-acquisition performance of that company because we believe such
arrangements can impede the integration of multiple acquired businesses in the
same city by motivating them to compete against one another.
Historically, we have used our common stock for substantially all of the
consideration for its acquisitions. We anticipate that this will continue in
the future and intend to register 4,000,000 shares of common stock pursuant to
a "shelf" Registration Statement on Form S-4 for this purpose. By maximizing
the use of stock as acquisition consideration, we believe that the acquired
companies' management has a greater incentive to focus on iXL's long-term
growth through the appreciation of its stock price. We also generally grant
stock options to employees of newly acquired companies as a means of increasing
employee and management retention.
We began our acquisitions in May 1996 when we acquired iXL Interactive
Excellence, Inc., Creative Video Library, Inc., Creative Video Inc., and
Entrepreneur Television, Inc., companies whose focus was to assist corporate
clients in the design and creation of multimedia and video communication
projects. In December 1996, we acquired CFN, which at such time, was a
traditional insurance agent that allowed corporate executives to comparison
shop for insurance and mortgages. CFN was seeking iXL's strategic and technical
assistance to sell insurance services over corporate intranets. Since the CFN
acquisition, iXL has developed and implemented the sophisticated CFN e-commerce
platform for marketing financial services and employee benefits electronically
over the Internet and corporate intranets. iXL has acquired 29 other companies
all engaged in related businesses. See "Risk Factors--Risks Related to iXL's
Business--Our continued growth is dependent on the successful completion of
acquisitions" and "--We may be unable to continue to grow at our historical
growth rates or to effectively manage our growth."
56
<PAGE>
The following table summarizes iXL's other acquisitions since June 1996,
listed in chronological order. This information includes 237,304 shares of
common stock held in escrow that have not been earned under the terms of the
relevant acquisition agreements. See Note 6 to the Pro Forma Consolidated
Financial Information.
<TABLE>
<CAPTION>
Number of Shares issued in
Employees at connection with
Businesses Acquired Primary Capabilities Date Acquired Acquisition Date Acquisition
------------------- -------------------- ------------- ---------------- ----------------
<C> <S> <C> <C> <C>
Memphis On-Line, Inc. ........... Hosting June 5, 1996 15 none
Memphis, TN
Webbed Feet, LLC................. Creative design February 14, 1997 1 40,000
Atlanta, GA
The Whitley Group, Inc. ......... Interactive multimedia April 4, 1997 20 454,400
Charlotte, NC
BoxTop Interactive Inc. ......... Creative design May 30, 1997 60 3,416,700
Los Angeles, CA
Swan Interactive Media, Inc. .... Software engineering July 28, 1997 15 283,800
Atlanta, GA
Small World Software, Inc. ...... Software engineering and January 26, 1998 26 271,356
New York, NY creative design
Green Room Productions, L.L.C. .. Travel expertise, February 5, 1998 28 344,270
San Francisco, CA creative design and
engineering
CCG Online....................... Travel expertise, March 27, 1998 23 266,000
Denver, CO creative design and
software engineering
Spin Cycle Entertainment......... Creative design and May 8, 1998 20 155,200
Los Angeles, CA software engineering
Digital Planet................... Creative design and May 12, 1998 31 359,584
Los Angeles, CA software engineering
InTouch Interactive, Inc. ....... Software engineering May 12, 1998 11 195,834
Charlotte, NC
Micro Interactive, Inc. ......... Interactive multimedia May 14, 1998 35 740,000
New York, NY
CommerceWAVE, Inc. .............. E-commerce July 2, 1998 22 877,898
San Diego, CA
Wissing & Laurence, Inc. ........ Video production July 8, 1998 2 50,000
New York, NY
601 Design, Inc. ................ Video production July 16, 1998 7 200,000
New York, NY
Image Communications, Inc. ...... Creative design July 22, 1998 40 378,999
Vienna, VA
Campana New Media, S.L. and
The Other Media, S.L. .......... Creative design July 28, 1998 8 37,107
Madrid, Spain
Spinners Incorporated............ Creative design, July 30, 1998 31 674,132
Boston, MA software engineering and
financial
services expertise
Tekna, Inc. ..................... Software engineering and September 4, 1998 27 762,622
Richmond, VA creative design
LAVA Gesellschaft fur Digitale
Medien GmbH..................... Software engineering September 7, 1998 28 321,428
Hamburg, Germany
Larry Miller Productions, Inc.... Creative design September 9, 1998 33 113,823
Boston, MA
Denovo New Media Limited......... Creative design September 10, 1998 5 42,852
London, England
Exchange Place Solutions, Inc.... Financial services September 10, 1998 4 275,000
Atlanta, GA consulting
Pantheon Interactive, Inc........ Software engineering September 18, 1998 15 271,787
Santa Clara, CA
Two-Way Communications, L.L.C. .. Creative design and September 18, 1998 23 269,421
Chicago, IL healthcare expertise
NetResponse, L.L.C............... Strategy consulting, September 22, 1998 36 701,375
Arlington, VA software engineering and
creative design
Ionix Development Corporation.... Software engineering September 23, 1998 22 358,551
Chicago, IL
Pequot Systems, Inc.............. Financial services September 24, 1998 12 378,066
Norwalk, CT expertise and software
engineering
</TABLE>
57
<PAGE>
Strategic Alliances and Affiliations
We have entered into, and intend to continue entering into, strategic
alliances and affiliations with a select group of technology service providers.
The primary goals of our strategic alliances and affiliations are:
. to enhance iXL's overall service offerings;
. to create or identify new revenue opportunities through referrals
and the creation of new service offerings; and
. to increase iXL's credibility and visibility in the marketplace
through collaboration in joint marketing.
We have established strategic affiliations with, among others, Microsoft,
Intel, Sun and Oracle. These strategic affiliations provide us early access to
training, product support and technology.
We have also established strategic alliances with companies offering
technologies which serve important roles in the deployment or delivery of iXL
services. These alliances focus on the joint development of integrated
solutions which utilize the technologies offered by iXL's partners to deliver
the services designed by iXL. Our strategic alliances include alliances with
RealNetworks and @radical.media, Inc. Through our strategic alliance with
RealNetworks, a leading provider of media streaming technologies, we will be
presented as a preferred provider of content for events streamed via
RealNetworks technologies. Through our alliance with @radical.media, which
specializes in production and broadcast of high-end commercial advertising
campaigns, we expect to gain access to @radical.media's clients seeking
complementary Internet solutions.
The contracts governing the strategic affiliations and alliances
generally do not have long durations or minimum requirements. In addition, they
are generally terminable by iXL or the other party at will.
Technology
Our Technical Operations Center is our computer systems center which
links all of our local offices with a centralized knowledge management system.
The Technical Operations Center enables us to integrate operations of local
offices into all facets of iXL, including, financial reporting, e-mail, and
dissemination of knowledge and best practices. The Technical Operations Center
allows for the rapid integration of acquired businesses, facilitates collection
and dissemination of knowledge and best practices throughout iXL and supports
enterprise business systems. The Technical Operations Center maintains its
network operations and monitoring in Atlanta, with central data center and
intellectual property transit support from its data center in Memphis,
Tennessee, and co-location facilities in San Jose, California. The Technical
Operations Center manages our general ledger accounting systems, global project
and time tracking systems, sales force automation, electronic messaging,
central data warehouse repository services, wide area network infrastructure,
intellectual property transport services and global digital security. These
functions are closely integrated in a worldwide iXL intranet that additionally
supports human resources and distance learning. We view the Technical
Operations Center as a key strategic asset, providing a platform to permit
rapid growth and a working model of the solutions we can design for our
clients. See "Risk Factors--Risks Related to iXL's Business--We may be unable
to continue to grow at our historical growth rates or to effectively manage our
growth."
While readily available third-party technologies are used to develop
nearly all iXL solutions, iXL does not believe it is not dependent on any given
technology to deliver its solutions. Typically, iXL chooses among multiple
software products to select the most appropriate product for a given use. If
any one product ceased to be available to iXL, other similar products are
generally available. Further, the third-party providers generally license their
products directly to iXL's clients. Consequently, iXL is not at risk of loss of
individual licenses.
Consumer Financial Network
Consumer Financial Network, Inc., or CFN, is a sophisticated e-commerce
platform for marketing financial services and employee benefits over corporate
intranets and the Internet, as well as through a telesales
58
<PAGE>
center. CFN's equity is owned 77% by iXL and 23% by General Electric. CFN has
contracted with competing providers of financial services and employee benefits
to create a platform for the comparison shopping and purchase of these
services. CFN is provided at no cost to large companies and associations, many
with 5,000 or more employees, for distribution as a human resources benefit to
their employees or members. Currently, CFN provides access to the following
services:
<TABLE>
<CAPTION>
Financial Services Employee Benefits
------------------ -----------------
<S> <C>
Auto Insurance Long-Term Care
Homeowners Insurance Individual Life Insurance
Mortgages Vision Services
Home Equity Loans Legal Services
Auto Finance
</TABLE>
Traditionally, the services currently offered by CFN have not been
presented on a standardized or comparable basis. Accordingly, consumers have
often been deterred from obtaining meaningful price comparisons from competing
services providers. Many consumers have been unable or unwilling to devote the
time required to compile comparative quotes and have instead relied on other
factors unrelated to the price or the terms provided in purchasing these
services.
We believe CFN is an attractive offering for consumers because CFN
enables consumers to receive explanatory information and an unbiased comparison
of products, services and quotes based on equivalent terms from multiple
providers of financial services and employee benefits. In addition, because CFN
aggregates employees of multiple major companies and members of associations,
and aggregates a nationwide network of services providers who compete for each
individual member's business, CFN is often able to negotiate discounted pricing
for its customers. Consumers can access CFN online, by telephone or by fax.
We believe the CFN platform is attractive to services providers, because
it is designed to:
. provide access to employed consumers, a highly desirable market
segment;
. allow each provider to directly access its preferred target market
by including multiple providers of similar services;
. provide a lower cost of customer acquisition than traditional
distribution channels due to automated consumer access and bulk
acquisition of consumers through the participation of large
employers and associations;
. allow providers to expand geographically; and
. allow providers to utilize automatic payroll deduction to secure
payment for services sold.
As a result of the benefits outlined above as well as the aggregated
customer base available through CFN, providers contracting with CFN may offer
discounted rates and other features that are more competitive than the
individual rates and features they otherwise may offer through traditional
distribution channels.
CFN earns fees on each sale of services made through its online and
telesales platforms. Currently, the significant majority of consumer inquiries
to CFN for services offered by CFN's providers are made through CFN's telesales
center. Our goal is for the relative volume of online inquiries as well as the
automation of the entire process from inquiry to completed transaction to
increase significantly in the future as intranets become more widespread and as
customers become more familiar with the Internet. We believe that such an
increase in online inquiries in proportion to telesales center inquiries will
reduce CFN's support costs. CFN's performance will depend in large part upon
CFN's ability to estimate accurately the resource requirements and the revenues
generated by customers engaging in the transactions with service providers on
the CFN platform. Expenses and
59
<PAGE>
investments must be incurred well in advance of the potential transactions
intended to generate revenue to justify this cost structure. See "Risk
Factors--Risks Related to Our CFN Subsidiary--CFN's business model is new and
unproven" and "--CFN must expend significant resources to grow its
infrastructure."
Member Companies
We believe CFN is attractive to employers because it enables them to
offer to their employees, at no cost to the employer, a wide range of financial
services and employee benefits at generally discounted rates. Initially, CFN
has chosen to provide its platform to large companies and associations as a no
cost human resources benefit for their employees. Current CFN member companies
include:
<TABLE>
<S> <C>
Advantica Ritz Carlton Hotels
Amerigas Ryder Corporation
BellSouth Society for Human Resource Management
Coca-Cola Company Texas A&M University
Delta Air Lines Thomson Corporation
Nextel Williams Companies
</TABLE>
Once CFN has established a relationship with a participating employer,
CFN's strategy is to become part of the payroll deduction system of the
employer. This arrangement allows employers more flexibility in their payroll
deduction systems, while enabling CFN to provide multiple services to
employees. Becoming part of the payroll deduction system also enhances CFN's
ability to retain employees as customers for its providers. Automatic payroll
deduction allows services providers to offer payment plans that are structured
around the frequency of payroll deductions and is the most desirable form of
payment for CFN's participating services providers.
Provider Network
CFN's platform includes property and casualty insurance, home finance,
automobile finance, legal services, long-term care, term life insurance and
vision plans. Providers available on the CFN platform include:
. American Express Property Casualty companies, Chubb Group of
Insurance Cos., Liberty Mutual Insurance Co., and Nationwide
Mutual Insurance Co. in property and casualty insurance;
. Banc One, Chase Manhattan Mortgage Corporation, Countrywide, First
Union National Bank and Travelers Home Mortgage Service in home
finance;
. debis Financial Services in automobile finance;
. Law Phone in legal services;
. Mass Casualty and Transamerica in long-term care;
. Empire General Life in life insurance; and
. Vision Care Advantage in vision services.
The terms of these contracts range from one to three years. Most
contracts terminate either on or before December 31, 1999 or December 31, 2000,
and some contracts are on a trial basis only. The contracts specify the terms
of the agreement with CFN, generally including information on terms of pricing
to be provided, the fulfillment process, compensation to CFN, necessary
regulatory requirements, restrictions on use of consumer information provided
by CFN, indemnification, and intellectual property protection for CFN. There
are no minimum volume requirements required from CFN to providers. CFN is
currently working to obtain non-residential mortgage brokerage licenses where
necessary. In jurisdictions where CFN is currently not so licensed, CFN
provides mortgages through one of its appropriately licensed providers.
60
<PAGE>
Market Expansion
CFN intends to expand its business beyond its existing corporate employee
market to make its platform available to the general public over the Internet
and through its telesales center. This expansion will likely be effected
primarily by entering into agreements with selected Internet portals and other
retail and informational sites to expand awareness of the CFN platform. This
expansion into the general public arena would broaden the prospective customer
base for both CFN and its services providers.
CFN intends to expand its agreements with its existing services providers
to include the provision of services to the general public. Many of CFN's
corporate providers may elect to not be included in the platform that will be
made available to the general public. The service offerings and the
corresponding prices offered to the general public will likely be different
from those offered to CFN's corporate participants. See "Risk Factors--Risks
Related to Our CFN Subsidiary--CFN's business model is new and unproven."
Technology
CFN's e-commerce platform consists of three component layers. The first,
or top, layer is the Internet website accessed by the consumer which gathers
and displays information. The second component layer is decision software
which takes the employee information and chooses applicable services from the
provider information maintained in this second layer. The third component
layer stores consumer information and integrates the CFN platform with CFN
providers' systems.
The e-commerce technology developed by CFN, for which CFN has two utility
patents pending, is a flexible multi-function comparative quoting system.
While the current application is for the dissemination of information about
financial services and employee benefits, the quoting system has uses in many
industries. CFN believes this technology could be applied to other situations
to allow consumers to compare multiple products from different providers.
For a discussion of risks related to CFN, see "Risk Factors--Risks
Related to Our CFN Subsidiary."
Government Regulation of Insurance, Auto Finance and Mortgages
In most states, there are two broad categories of insurance agency
licenses, one for property and casualty insurance and the other for life and
health insurance. CFN's wholly owned subsidiary, CFN Agency, Inc., a Delaware
corporation, is licensed as a resident insurance agency for both property and
casualty insurance and life and health insurance by the state of Georgia. For
property and casualty insurance business, CFN Agency is licensed as a
nonresident corporate insurance agency or at least one employee of CFN Agency
is individually licensed as a nonresident insurance agent in all 50 states.
For life and health insurance business, CFN Agency is licensed as a
nonresident corporate insurance agency or at least one CFN employee agent is
individually licensed as a nonresident insurance agent in 45 states.
Because of the lack of uniformity in state insurance agency licensing
laws, a corporate insurance agency cannot obtain an insurance agency license
in all fifty states. Some states do not issue insurance agency licenses to
corporations but only issue insurance agent licenses to individuals. Other
states issue corporate insurance agency licenses only if the state of
residence of the applicant for a corporate insurance agency license applicant
reciprocates by issuing corporate insurance agency licenses to insurance
agencies resident in the foreign state. In some states where CFN Agency does
not have a nonresident corporate insurance agency license, a CFN employee
agent is individually licensed in those states as a nonresident insurance
agent and the CFN employee agent transacts the business of CFN Agency where
permitted. If any CFN employee agent's employment with CFN is terminated, CFN
Agency may not be able to transact its business unless and until it has
another employee who is individually licensed as a nonresident insurance agent
in the states where CFN Agency does not hold a nonresident corporate insurance
agency license. If a state in which CFN Agency does not hold a nonresident
corporate insurance agency license determines that CFN Agency is transacting
business in such state as an unlicensed insurance agency, CFN Agency could be
subject to fines and prohibited from doing insurance business in that state.
61
<PAGE>
Some states regulate prepaid legal plan companies as an insurance company
or their products as specialized legal expense products, while other states
regulate prepaid insurance plans as non-insurance services. In states that
regulate prepaid legal plan companies as insurance companies, the product is
usually classified as casualty insurance. Certain states' bar associations
require prepaid legal plans to file periodic information statements. CFN does
not believe it is subject to such requirements.
It is not guaranteed that a state in which CFN Agency does not hold a
nonresident corporate insurance agency license will not assert that CFN Agency
is transacting business in such state as an unlicensed insurance agency.
Generally, commissions payable for the sale of insurance products cannot be
paid to, or received by, a person or entity that is not licensed as an
insurance agent or agency, as applicable. There is no guarantee that a state in
which CFN Agency does not hold a nonresident corporate insurance agency license
will not assert that commissions assigned by the CFN employee agent to CFN
Agency are an assignment of insurance commissions occurring in such state to an
unlicensed corporate insurance agency. In the states in which CFN Agency does
not hold a nonresident corporate insurance agency license, the insurance
companies that have contracted with CFN Agency pay commissions to the CFN
employee agent, who then assigns such commissions to CFN Agency. If a state in
which CFN Agency does not hold a nonresident corporate insurance agency license
determines that CFN Agency is wrongfully receiving an assignment of insurance
commissions in, or with respect to insurance policies sold in, that state as an
unlicensed insurance agency, both CFN Agency and the subject CFN employee agent
could be subject to fines and prohibited from doing business in that state.
CFN Agency operates a telephone call center located in Duluth, Georgia.
Some of the CFN employee agents work in this telephone call center. These call
center agents provide information and education to consumers who are employees
of client companies or members of client affinity groups regarding the
insurance products described on CFN's website. Some of the call center agents
are also licensed in states other than Georgia as nonresident insurance agents;
however, each call center agent is not licensed as an insurance agent in all 50
states. There is no guarantee that a state in which a call center agent is not
licensed as a nonresident insurance agent will not assert that such call center
agent is, by providing information and education to consumers about insurance
products on the CFN website in the state, transacting insurance agent
activities without being licensed by such state as a nonresident insurance
agent. If a state in which a call center agent does not hold a nonresident
insurance agent license determines that a call center agent has transacted the
business of an insurance agent in that state, both CFN Agency and such call
center agent could be subject to fines and prohibited from doing insurance
business in that state.
CFN operates its residential mortgage and auto finance business through
its wholly owned subsidiary, CFN Finance, Inc., a Delaware corporation. There
are numerous federal and state statutes and regulations affecting these
activities including licensing requirements and laws that prohibit
discrimination, unfair and deceptive trade practices, and require disclosure of
basic information to consumers concerning credit terms and settlement costs,
limit fees and charges paid by consumers and lenders, and otherwise regulate
terms and conditions of credit and the procedures by which credit is offered
and administered and that impose fiduciary duties on a person acting as a
broker. CFN Finance is in the process of applying, where necessary, for broker
licenses to permit it to operate its residential mortgage finance and, where
required, its auto finance programs. There is the possibility that some states
may not grant such a license to CFN Finance. Until these licenses are granted,
CFN Finance has entered into a licensing agreement with a Federal savings and
loan association to operate CFN Finance's residential mortgage finance program
in those states which require licenses. CFN Finance's auto finance program is
being offered in states where no licenses are required for CFN Finance. For the
states that require auto finance broker licenses and from which CFN Finance has
not yet received such a license, CFN Finance has entered into a licensing
agreement with a Federal savings bank to operate CFN Finance's auto finance
program pursuant to the authority granted under a Federal charter. Federal law
governing federal savings banks preempts the ability of states to require that
a Federal savings bank be licensed under state law in order to conduct a
finance broker business. There is no guarantee that the residential mortgage
program licensing agreement will be renewed upon its expiration date of October
31, 1999, the auto finance licensing agreement will be renewed upon its
expiration date of November 11, 1999, or that either agreement will not be
terminated sooner and that CFN Finance will have acquired the appropriate
license or
62
<PAGE>
that CFN Finance will be able to find another way to conduct its business in
any state that requires a license if the license agreement terminates in that
state. There also is no guarantee that a state regulatory agency or a consumer
will not challenge the operation of the business under the license agreement.
See "Risk Factors--Risks Related to Our CFN Subsidiary--Government regulation
and legal uncertainties related to CFN could adversely affect our business."
iXL Ventures
As a complement to its core business, iXL has occasionally, on an
opportunistic basis, participated in the development of other Internet-related
businesses through iXL Ventures. iXL seeks to combine its management
experience, technical expertise and financial capital to develop new ideas.
When these new ideas warrant further development, iXL seeks strategic investors
to assist in the full development of these projects into viable stand-alone
businesses. CFN is the first major stand-alone business to emerge from this
process. Currently, other iXL Ventures include:
. FANSonlyTM owned by University Netcasting, Inc., which is a series
of commercial Internet sites for leading colleges and universities;
. Kinzan, Inc., a software and services company that develops,
distributes and hosts Siteman;
. Enhanced Television (E-TV), which is digital interactive television
delivered via the Internet; and
. Last Minute Travel, an online discount travel service.
Competition
While the market for strategic Internet services is relatively new, it is
already highly competitive and characterized by an increasing number of
entrants that have introduced or developed products and services similar to
those offered by iXL. We believe that competition will intensify and increase
in the future. Our target market is rapidly evolving and is subject to
continuous technological change. As a result, iXL's competitors may be better
positioned to address these developments or may react more favorably to these
changes, which could have a material adverse effect on iXL's business, results
of operations and financial condition. iXL competes on the basis of a number of
factors, including the attractiveness of the strategic Internet services
offered, the breadth and quality of these services, creative design,
engineering expertise, pricing, technological innovation, and understanding
clients' strategies and needs. Many of these factors are beyond our control.
Existing or future competitors may develop or offer strategic Internet services
that provide significant technological, creative, performance, price or other
advantages over the services offered by us.
iXL's competitors can be divided into several groups:
. strategic Internet services providers;
. large information technology consulting services providers;
. computer hardware and service vendors;
. strategic consulting firms; and
. interactive advertising agencies.
iXL also may compete with telecommunications companies. Although most of
these types of competitors to date have not offered a full range of Internet
professional services, several have announced their intention to do so. These
competitors at any time could elect to focus their resources in iXL's target
markets, which could adversely affect our business, results of operations and
financial condition. Many of iXL's current and potential competitors have
longer operating histories, larger installed customer bases, longer
relationships with clients and significantly greater financial, technical,
marketing and public relations resources than iXL. Competitors that have
established relationships with large companies but limited expertise in
providing Internet solutions may nonetheless be able to successfully use their
client relationships to enter the Company's target market or prevent iXL's
penetration into their client accounts. We believe that our primary competitors
currently are International Business Machines Corporation, USWeb Corporation,
Sapient Corporation, and smaller Internet service providers.
63
<PAGE>
Additionally, in pursuing acquisition opportunities we may compete with
other companies with similar growth strategies, certain of which competitors
may be larger and have greater financial and other resources than we have.
Competition for these acquisition targets likely could also result in increased
prices of acquisition targets and a diminished pool of companies available for
acquisition.
There are relatively low barriers to entry into the strategic Internet
services industry. iXL has no patented or other proprietary technology that
would preclude or inhibit competitors from entering the Internet professional
services market. Therefore, iXL must rely on the skill of its personnel and the
quality of its client service. The costs to develop and provide Internet
services are low. Therefore, iXL expects that it will continually face
additional competition from new entrants into the market in the future, and iXL
is subject to the risk that its employees may leave iXL and start competing
businesses. The emergence of these enterprises could have a material adverse
effect on our business, results of operations and financial condition. See
"Risk Factors--Risks Related to the Stategic Internet Services Industry--We
operate in a highly competitive market with low barriers to entry which could
limit our market share and harm our financial performance."
The success of CFN will be highly dependent upon CFN's services becoming
available to a large number of participating employees. CFN expects to face
competition from an increasing number of sources in the marketplace. CFN
competes with other Internet-based providers of insurance and other financial
services, as well as traditional insurance companies providing group rates to
corporate employees. CFN believes that its primary and more direct competitors
currently are HomeCom Communications, Inc., ValueSearch, Inc. and Answer
Financial, Inc. CFN also may compete with Microsoft Corporation, which
currently provides comparative quotes from home mortgages on the web. If CFN
fails to compete successfully against current or future competitors, CFN's
business results of operations and financial conditions will be materially and
adversely affected. See "Risk Factors--Risks Related to Our CFN Subsidiary--
CFN's numerous established competitors could harm its prospects".
Employees
As of December 31, 1998, iXL had approximately 1,300 employees, including
approximately 55 strategy consultants, 355 engineers and 300 creative
designers. None of iXL's employees is represented by a labor union. iXL has
experienced no work stoppages and believes its relationship with its employees
is good.
In an ongoing effort to train and develop its professionals, iXL has
established iXL University, a forum to educate its employees on issues ranging
from new technologies to office protocol. Employees may attend iXL University
by attending live presentations in Atlanta, by viewing the live webcast of such
presentations, or by viewing at any time archived versions of presentations
through the iXL University website. In addition, iXL holds regular company-wide
meetings among leaders in specific practice areas. iXL also takes advantage of
its corporate intranet to foster company-wide communications and knowledge
management. See "Risk Factors--Risks Related to iXL's Business--If we fail to
attract and retain employees our growth could be limited and our costs could
increase."
Properties and Facilities
iXL's executive offices are located in Atlanta, consisting of
approximately 138,000 square feet of leased space, the lease for which expires
in 2007. With the exception of IXL-Memphis, Inc., which owns an approximately
15,000 square foot office building and an approximately 5,600 square foot
warehouse, iXL leases space for its regional offices in the following
metropolitan areas: New York, NY; Los Angeles, San Francisco, San Diego, and
Santa Clara, CA; Chicago, IL; Boston, MA; Washington, D.C.; Charlotte, NC;
Richmond, VA; Denver, CO; Norwalk, CT; Hamburg and Berlin, Germany; London,
England; and Madrid, Spain. CFN leases space for its executive offices in
Duluth, Georgia.
Legal Proceedings
iXL currently and from time to time is involved in litigation incidental
to the conduct of its business. iXL is not a party to any lawsuit or proceeding
that, in the opinion of management of iXL, is likely to have a material adverse
effect on iXL.
64
<PAGE>
MANAGEMENT
Executive Officers and Directors
Certain information regarding the executive officers and directors of iXL
as of April 1, 1999 is set forth below:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<C> <C> <S>
U. Bertram Ellis, Jr.(1) 45 Chief Executive Officer and Chairman of the
Board of Directors
Kevin M. Wall 46 Vice Chairman and Director
James R. Rocco 44 Vice Chairman
William C. Nussey 33 President and Chief Operating Officer of iXL,
Inc. and Director
C. Cathleen Raffaeli 42 President and Chief Operating Officer of CFN
Barry T. Sikes 46 Executive Vice President for Worldwide
Operations of iXL, Inc.
M. Wayne Boylston 41 Executive Vice President, Chief Financial
Officer, Treasurer, and Assistant Secretary
David E. Clauson 44 Executive Vice President for Worldwide
Marketing of iXL, Inc.
Thomas R. Wall, IV(2) 40 Director
Frank K. Bynum, Jr.(1)(2)(3) 36 Director
I. Robert Greene(1)(2) 38 Director
Jerome D. Colonna 35 Director
Thomas G. Rosencrants(3) 49 Director
Jeffrey T. Arnold 29 Director
Gary C. Wendt(4) 57 Director
</TABLE>
- --------
(1) Member of the Executive Committee.
(2) Member of the Compensation Committee.
(3) Member of the Audit Committee.
(4) Mr. Wendt has agreed to serve as a Director of iXL shortly after the
closing of the offering.
U. Bertram (Bert) Ellis, Jr. founded iXL in March 1996 and has served as
Chairman of the Board of Directors and Chief Executive Officer since that time.
Prior to founding iXL, Mr. Ellis founded Ellis Communications, Inc., an owner
of television and radio stations, in 1993, and served as its President from
1993 to 1996. Prior to founding Ellis Communications, Inc., Mr. Ellis served as
President, Chief Executive Officer, and Chief Operating Officer of Act III
Broadcasting, Inc., an owner of television stations, from 1986 to 1992. Mr.
Ellis received a Bachelor of Arts degree in Economics from the University of
Virginia and an MBA from the University of Virginia Graduate School of Business
Administration. Mr. Ellis also serves as a Director of WebMD, Inc.
Kevin M. Wall has served as Vice Chairman since April 1998 and as a
director since May 1997. Mr. Wall joined iXL in May 1997 upon the acquisition
by iXL of BoxTop Interactive, Inc., and served as the President and Chief
Executive Officer of BoxTop Interactive, Inc. from its founding in 1995 until
1998. Prior to founding BoxTop Interactive, Inc., Mr. Wall served as Chairman
of BoxTop Entertainment, Inc., a television production company specializing in
network specials, from 1990 until 1995. Prior to forming BoxTop Entertainment,
Inc., Mr. Wall founded Radio Vision International, Inc., a television
production company specializing in network specials and syndication of
television specials, and served as its Chairman from its founding until 1990.
Mr. Wall attended Indiana University-Purdue University Fort Wayne. Mr. Kevin
Wall is not related to Mr. Thomas R. Wall, IV.
James R. Rocco has served as Vice Chairman since August 1998. Mr. Rocco
previously served as a director from April 1996 to February 1999 and as the
President and Chief Operating Officer from April 1996 until August 1998. Mr.
Rocco founded Creative Video, Inc. and served as its President from July 1986
until it was acquired by iXL in April 1996. Mr. Rocco graduated cum laude from
St. John's University in New York in 1976 with Bachelor degrees in
Communications and Business.
65
<PAGE>
William C. Nussey has served as a Director of iXL since December 1997,
and as the President and Chief Operating Officer of iXL, Inc. since joining iXL
in May 1998. From 1996 to May 1998 Mr. Nussey served as an associate with
Greylock Ventures, a private investment firm. From 1994 to 1996, Mr. Nussey
attended Harvard Business School. In 1985, Mr. Nussey co-founded Da Vinci
Systems, Inc., a software and application design company, and served as its
Chief Executive Officer from its founding until its sale in 1994 to ON
Technology, Inc. After its sale, Mr. Nussey served as a consultant to ON
Technology while attending Harvard Business School. Mr. Nussey received a
Bachelor of Science degree in Electrical Engineering from North Carolina State
University and an MBA from Harvard Business School.
C. Cathleen Raffaeli is the President and Chief Operating Officer of CFN,
and has served in such capacity since joining CFN in November 1998. From 1994
through 1998, Ms. Raffaeli held positions of increasing responsibility with
Citicorp, most recently as the Executive Director, Commercial Card Division.
From 1988 through 1994, Ms. Raffaeli held positions of increasing
responsibility with Chemical Bank, last serving as the Senior Vice President,
Mortgage Banking Division. Ms. Raffaeli received a Bachelor of Science degree
in Finance from the University of Baltimore and an MBA from New York
University.
Barry T. Sikes has served as Executive Vice President for Worldwide
Operations since August 1998. Mr. Sikes previously served as Vice President--
Operations from April 1996 until August 1998. From 1991 until 1996, Mr. Sikes
served as the Chief Operating Officer of Creative Video, Inc. Mr. Sikes
received a degree in Electronics Engineering from The Cape Fear Institute.
M. Wayne Boylston has served as Chief Financial Officer, Executive Vice
President, Treasurer and Assistant Secretary since joining iXL in August 1998.
From 1990 to 1995, Mr. Boylston served as Vice President and Corporate
Controller of Healthdyne, Inc. and from 1995 until February 1998, Mr. Boylston
served as Vice President--Finance, Chief Financial Officer and Treasurer of
Healthdyne Technologies, Inc. From February 1998 until July 1998 Mr. Boylston
served as a consultant to Healthdyne Technologies, Inc. following its merger
with Respironics, Inc. Mr. Boylston is a Certified Public Accountant and has a
Bachelor of Business Administration degree from Emory University.
David E. Clauson has served as Executive Vice President for Worldwide
Marketing of iXL, Inc. since joining iXL in August 1998. From 1991 until July
1998, Mr. Clauson served in various positions of increasing responsibility with
subsidiaries of True North Communications, Inc., most recently as the Senior
Vice President/Worldwide Account Director of its Foote, Cone & Belding
subsidiary. Mr. Clauson has a Bachelor of Arts degree in American Urban History
from the University of California at Los Angeles.
Thomas R. Wall, IV has served as a Director of iXL since April 1996. Mr.
Wall has held various positions of increasing responsibility with Kelso &
Company, a private investment firm, since 1983, and currently serves as one of
its Managing Directors. Mr. Wall also serves as a director of AMF Bowling,
Inc., Consolidated Vision Group, Inc., Cygnus Publishing, Inc., Mitchell
Supreme Fuel Company, Mosler, Inc., Peebles Inc., and 21st Century Newspapers,
Inc. Mr. Wall received a Bachelor of Science degree in Business Administration
from Washington & Lee University. Mr. Thomas Wall is not related to Mr. Kevin
M. Wall.
Frank K. Bynum, Jr. has served as a Director of iXL since April 1996. Mr.
Bynum has held various positions of increasing responsibility with Kelso &
Company since 1987, and currently serves as one of its Managing Directors. Mr.
Bynum also serves as a director of Cygnus Publishing, Inc., Hosiery Corporation
of America, Inc., 21st Century Newspapers, Inc. and MJD Communications, Inc.
Mr. Bynum received a Bachelor of Arts degree in History from the University of
Virginia.
I. Robert Greene has served as a Director of iXL since December 1997. Mr.
Greene has served as a General Partner with Chase Capital Partners (formerly
Chemical Venture Partners), an investment firm, since January 1999, and
previously served as a Principal from 1994 through 1998. From 1988 to 1994, Mr.
Greene served as a Director and Principal of Prudential Equity Investors, an
investment firm. Mr. Greene also serves on the Investment Committee of Flatiron
Partners, LLC and the Advisory Board of Techfund Capital, and is the President
of the New York Venture Capital Forum. Mr. Greene received a Bachelor of
Science degree from the Wharton School and an MBA from M.I.T./The Sloan School.
Mr. Greene serves as a Director of Multex.com, Inc.
66
<PAGE>
Jerome D. Colonna has served as a Director of iXL since December 1997.
Mr. Colonna co-founded Flatiron Partners, LLC in August 1996 and has served as
a partner in Flatiron since its founding. Previously, Mr. Colonna co-founded
CMG @ Ventures L.P. in February 1995 and served as a partner until July 1996.
From 1985 to 1995, Mr. Colonna served in various positions with CMP Media,
Inc., including Editorial Director, Interactive Media Group. From 1985 to 1993,
he served in a variety of roles at Information Week, including that of Editor.
Mr. Colonna received a Bachelor of Arts degree from Queens College, City
University of New York. Mr. Colonna serves as a Director of GeoCities, Inc.
Thomas G. Rosencrants has served as a Director of iXL since January 1999.
Mr. Rosencrants founded Greystone Capital Group, LLC in April 1997 and serves
as its Chairman and Chief Executive Officer. Greystone Capital Group, LLC is
the General Partner for Greystone Capital Partners I, L.P. From 1991 to April
1997 he served as Senior Vice President and head of the Insurance Research
Group of The Robinson-Humphrey Company, Inc. Mr. Rosencrants is a Chartered
Financial Analyst, has an MBA from the Roosevelt University in Chicago and a
Bachelor of Arts degree from the University of Dayton.
Jeffrey T. Arnold has served as a Director since February 1999. Mr.
Arnold founded and has served as Chairman of the Board and Chief Executive
Officer of WebMD, Inc. since its inception in October 1996. In addition, Mr.
Arnold served as the President of WebMD, Inc. from its inception until
September 1997. From April 1994 until Endeavor Technologies, Inc.'s merger with
WebMD, Inc. in March 1997, Mr. Arnold served in various capacities at Endeavor
Technologies, Inc., including as Chairman and Chief Executive Officer. Mr.
Arnold received a Bachelor of Arts degree from the University of Georgia.
Gary C. Wendt will become a Director immediately after the closing of
this offering. From 1986 to 1998, Mr. Wendt served as Chairman, Chief Executive
Officer and President of General Electric Capital Services, Inc. and will
continue to serve as a consultant through July 1, 1999. Mr. Wendt received a
Bachelor of Science degree from the University of Wisconsin and an MBA from
Harvard Business School.
iXL believes retention of its management is critical to its success. See
"Risk Factors--Risks Related to iXL's Business--We depend on our key management
personnel for our future success" and "Risk Factors--Risks Related to iXL's
Business--If we fail to attract and retain employees our growth could be
limited and our costs could increase."
Board Committees
The Board of Directors has established an Executive Committee, a
Compensation Committee and an Audit Committee. The Executive Committee,
consisting of Mr. Ellis, Mr. Bynum, and Mr. Greene, is empowered to exercise
all powers and authority of the Board as determined by the Board in the
authorizing resolution. The Compensation Committee, consisting of Mr. Thomas R.
Wall, IV, Mr. Bynum, and Mr. Greene, administers iXL's stock option plans,
including approval of all options granted. The Audit Committee, consisting of
Mr. Bynum and Mr. Rosencrants, will recommend the selection of independent
public accountants to the Board of Directors, review the scope and results of
the audit and other services provided by iXL's independent accountants, and
review iXL's accounting practices and its systems of internal accounting
controls.
Director Compensation
iXL reimburses its directors for all out-of-pocket expenses incurred in
the performance of their duties as directors of iXL. iXL currently does not pay
fees to its directors for attendance at meetings.
Amended Stockholders Agreement
The Third Amended Stockholders Agreement entitles certain stockholders to
designate nominees to iXL's board of directors as follows. The Third Amended
Stockholders Agreement entitles Kelso Investment
67
<PAGE>
Associates V, L.P. and Kelso Equity Partners V, L.P. to jointly designate two
individuals to be included as nominees on the board of directors' slate of
nominees so long as Kelso Investment Associates V, L.P. and Kelso Equity
Partners V, L.P. together hold 5% or more of our outstanding common stock. CB
Capital Investors, L.P. has the right to designate as a nominee one member so
long as it owns at least 5% of our outstanding common stock. The Third Amended
Stockholders Agreement does not obligate any stockholder to vote its common
stock in favor of any nominated directors.
Compensation Committee Interlocks and Insider Participation
No member of iXL's Compensation Committee serves as a member of the board
of directors or compensation committee of any entity that has one or more
executive officers serving as a member of iXL's Board of Directors or
Compensation Committee. See "Certain Transactions" for a description of
transactions between iXL and entities affiliated with members of the
Compensation Committee.
Employment Agreements
iXL has assumed the employment agreement originally executed as of August
1, 1996 between Mr. Kevin Wall and BoxTop Interactive, Inc. Mr. Kevin Wall's
employment agreement was assumed by iXL in April 1998. This agreement has a
four-year term expiring July 31, 2000. Under this agreement, Mr. Kevin Wall's
base annual salary shall be $302,500 for the one-year period from August 1,
1998 through July 31, 1999, and $332,750 for the one-year period from August 1,
1999 through July 31, 2000. Under this agreement, Mr. Kevin Wall is entitled to
an automobile allowance of $1,000 per month and has received grants of options
to purchase 635,900 shares of common stock.
iXL, Inc. has entered into an employment agreement with Mr. Nussey.
Pursuant to this employment agreement, if iXL, Inc. terminates Mr. Nussey's
employment without cause at any time or if Mr. Nussey resigns for good cause,
(i) iXL, Inc. shall, for a period of eighteen months or until Mr. Nussey begins
employment with any other company, continue to pay as payable pursuant to the
employment agreement his salary and bonus as severance pay and continue to
provide benefits to him, and (ii) the vesting of unvested stock options granted
to Mr. Nussey pursuant to his employment agreement shall be immediately
accelerated twelve months, and all options which remain unvested after such
acceleration shall terminate. Upon a termination of his employment by virtue of
his death, Mr. Nussey's estate shall be entitled to all salary payable to him
for the remainder of the year of his death. In addition, upon a termination of
Mr. Nussey's employment by virtue of his death or disability, Mr. Nussey or his
estate shall be entitled to the pro rata portion of his bonus with respect to
the portion of the year prior to his death or disability. The base salary for
Mr. Nussey pursuant to his employment agreement is $250,000 per year, and the
target bonus is $50,000 per year. The base salary and target bonus are to be
reviewed annually, and may be increased from time to time by iXL, Inc. Once
increased, the base salary may not be decreased and the target bonus may not be
set at less than $50,000 per full fiscal year. The employment agreement also
provides that Mr. Nussey shall not compete with iXL, Inc. for a period of one
year following the termination of his employment.
Limitation on Liability and Indemnification Matters
Section 145 of the Delaware General Corporation Law permits the
indemnification of directors, officers, employees and agents of Delaware
corporations. iXL's Certificate of Incorporation and By-Laws provide that iXL
shall indemnify its directors and officers to the fullest extent permitted by
the Delaware General Corporation Law. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers or persons controlling iXL pursuant to the foregoing
provisions, the opinion of the Securities and Exchange Commission is that such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
As permitted by the Delaware General Corporation Law, iXL's Certificate
of Incorporation also limits the liability of directors of iXL for damages in
derivative and third party lawsuits for breach of a director's fiduciary duty
except for liability:
. for any breach of the director's duty of loyalty to iXL or its
stockholders;
68
<PAGE>
. for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
. for unlawful payments of dividends or unlawful stock purchases or
redemptions as provided in Section 174 of the Delaware General
Corporation Law; or
. for any transaction for which the director derived improper
personal benefit.
The limitation of liability applies only to monetary damages and,
presumably, would not affect the availability of equitable remedies such as
injunction or rescission. The limitation of liability applies only to the acts
of omission of directors as directors and does not apply to any such act or
omission as an officer of iXL or to any liabilities imposed under federal
securities laws.
The purchase agreements between iXL and the underwriters with respect to
the offering made hereby provide for indemnification by the underwriters and
their controlling persons, on the one hand, and of iXL and its controlling
persons on the other hand, for certain liabilities arising under the Securities
Act of 1933 and the Securities Exchange Act of 1934 or otherwise.
iXL intends to obtain directors' and officers' insurance providing
indemnification for certain of iXL's directors, officers, affiliates, partners
or employees for certain liabilities.
iXL has entered into agreements to indemnify its directors and executive
officers, in addition to indemnification provided for in iXL's Bylaws. These
agreements, among other things, indemnify iXL's directors and executive
officers for certain expenses, including attorneys' fees, judgments, fines and
settlement amounts incurred by any such person in any action or proceeding,
including any action by or in the right of iXL, arising out of such person's
services as a director or executive officer of iXL, any subsidiary of iXL or
any other company or enterprise to which the person provides services at the
request of iXL. iXL believes that these provisions and agreements are necessary
to attract and retain qualified directors and executive officers.
At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent of iXL where indemnification is expected
to be required or permitted. iXL is not aware of any threatened litigation or
proceeding that might result in a claim for such indemnification.
Executive Compensation
The following table sets forth information concerning the compensation
paid by iXL during the fiscal years ended December 31, 1996, 1997 and 1998 to
iXL's Chief Executive Officer and each of iXL's four other highest paid
executive officers in 1998:
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation
Compensation Awards
----------------- -------------
Name and Options
Principal Position Year Salary Bonus (# of Shares)
------------------ ---- -------- -------- -------------
<S> <C> <C> <C> <C>
U. Bertram Ellis, Jr...................... 1998 $247,000 $100,000 338,889
Chairman and Chief 1997 232,300 -- 550,000
Executive Officer 1996 -- -- 1,000,000
Kevin M. Wall............................. 1998 276,000 -- --
Vice Chairman 1997 167,800 -- 170,000
1996 -- -- --
James R. Rocco............................ 1998 180,600 50,000 106,056
Vice Chairman 1997 163,900 25,000 297,000
1996 105,600 -- --
William C. Nussey......................... 1998 166,500 50,000 1,844,276
President and Chief Operating Officer 1997 -- -- --
of iXL, Inc. 1996 -- -- --
Barry T. Sikes............................ 1998 163,300 45,000 140,500
Executive Vice President for 1997 137,700 25,000 165,000
Worldwide Operations 1996 103,600 -- 255,000
</TABLE>
69
<PAGE>
The above table excludes certain executive officers of iXL whose annual base
salaries exceed salaries reported in the table, but who were hired during 1998,
and consequently during 1998 earned less than the officers reported in the
table above. The 1996 figures are for the eight months ended December 31, 1996.
The annual base salaries for Mr. Ellis, Mr. Rocco, and Mr. Sikes were $0,
$175,000 and $140,000, respectively. The figures listed represent payment for
actual employment during the eight months ended December 31, 1996. Mr. Nussey's
fiscal year 1998 salary is for approximately seven months ended December 31,
1998. Mr. Nussey's annual base salary for fiscal year 1998 was $250,000.
Bonuses are determined at the discretion of the Compensation Committee.
Option Grants and Exercises During Fiscal Year 1998
No stock options were exercised by the Chief Executive Officer or the
four other highest paid executive officers during fiscal year 1998. The
following table below sets forth individual grants of stock options made during
fiscal year 1998 to each of the Chief Executive Officer and the four other
highest paid executive officers:
<TABLE>
<CAPTION>
Potential
Realizable Value at
Assumed Annual
Rates of Stock
Price Appreciation
Annual Compensation for Option Term
----------------------------- -------------------
Number of
Securities % of Total Options
Underlying Granted to Exercise or
Named Executive Officer Options Employees in Base Price Expiration
and Principal Position Granted Fiscal Year Per Share Date 5% 10%
- ----------------------- ---------- ------------------ ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
U. Bertram Ellis, Jr. .. 50,000 0.4% $3.00 02/26/08 $ 171,707 $ 362,264
Chairman and Chief 88,889 0.6% 3.00 02/26/08 305,257 644,026
Executive Officer 50,000 0.4% 3.50 02/26/08 146,707 337,264
50,000 0.4% 4.00 02/26/08 121,707 312,264
50,000 0.4% 4.50 02/26/08 96,707 287,264
50,000 0.4% 5.00 02/26/08 71,707 262,264
--------- ----
338,889 2.6%
========= ====
Kevin M. Wall .......... -- -- -- -- -- --
Vice Chairman
James R. Rocco ......... 500 * 1.00 02/26/08 2,717 4,623
Vice Chairman 5,556 * 3.00 02/26/08 19,080 40,255
100,000 0.8% 3.50 02/26/08 293,413 674,528
--------- ----
106,056 0.8%
========= ====
William C. Nussey ...... 5,176 * 3.50 05/01/08 24,040 49,010
President and Chief
Operating 389,100 2.9% 4.00 05/01/08 1,612,614 3,489,726
Officer of iXL, Inc. 900,000 6.8% 4.50 05/01/08 3,280,028 7,261,841
550,000 4.1% 10.00 05/01/08 -- 1,632,792
--------- ----
1,844,276 13.8%
========= ====
Barry T. Sikes.......... 500 * 1.00 02/26/08 2,717 4,623
Executive Vice President
for 100,000 .8% 3.50 02/26/08 293,413 674,528
Worldwide Operations 40,000 .3% 10.00 11/25/08 -- 118,748
--------- ----
140,500 1.1%
========= ====
</TABLE>
The options described in the above table were granted under iXL's 1996 Stock
Option Plan and generally provide for vesting over either four or five years.
The columns headed "Potential Realizable Value at Assumed Annual Rates of Stock
Price Appreciation for Option Term" show the hypothetical gains or option
spreads of options granted based on 5% or 10% assumed annual rates of
compounded stock price appreciation and do not represent iXL's estimates or
projections of iXL's future common stock prices.
70
<PAGE>
Year-End Option Values
The following table sets forth the number and value of exercisable and
unexercisable options held at December 31, 1998 by each of the Chief Executive
Officer and the four other highest paid executive officers:
<TABLE>
<CAPTION>
Number of Securities
Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
December 31, 1998 December 31, 1998
------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
U. Bertram Ellis, Jr. .... 1,330,000 558,889 $6,925,000 $2,225,001
Chairman and Chief
Executive Officer
Kevin Wall ............... 703,900 102,000 4,505,145 510,000
Vice Chairman
James R. Rocco............ 178,740 225,216 683,070 883,632
Vice Chairman
William C. Nussey......... 521,009 1,323,267 1,153,327 2,929,228
President and Chief
Operating Officer
of iXL, Inc.
Barry T. Sikes............ 252,000 308,500 1,203,000 1,205,250
Executive Vice President
for
Worldwide Operations
</TABLE>
In the above table, the value of unexercised in-the-money options at
December 31, 1998 are calculated by determining the difference between the
deemed fair market value of the securities on December 31, 1998 underlying the
options and the exercise price. The fair market value of the securities as of
December 31, 1998 was based on preliminary valuations of iXL performed by
independent appraisers at the request of iXL. Information for Mr. Kevin Wall
includes 635,900 options granted to him prior to the acquisition of BoxTop
Interactive, Inc. at an exercise price of $0.95 per share.
Stock Option Plans
1996 Stock Option Plan
General. iXL's 1996 Stock Option Plan was established to promote the
success of iXL by providing an additional means to attract and retain key
personnel through added long-term incentives for high levels of performance and
for significant efforts to improve the financial performance of iXL. The 1996
Stock Option Plan authorizes the granting of options for up to an aggregate
maximum of 25 million shares of iXL's common stock to employees of iXL. As
options lapse or terminate without exercise, any unpurchased shares previously
subject to such lapsed or terminated options may be available for further
options under the 1996 Stock Option Plan.
Administration. The 1996 Stock Option Plan is administered by the
Compensation Committee, which as of the date of this prospectus is comprised of
Mr. Thomas R. Wall, Mr. Bynum and Mr. Greene. The Compensation Committee may
delegate administrative functions to individuals who are officers or employees
of iXL.
71
<PAGE>
The Compensation Committee has the authority to construe and interpret
the 1996 Stock Option Plan and any agreements defining the rights and
obligations of iXL and eligible employees who receive options awards under the
1996 Stock Option Plan, to further define the terms used in the 1996 Stock
Option Plan, to prescribe, amend and rescind rules and regulations relating to
administration of the 1996 Stock Option Plan, to determine the duration and
purposes of leaves of absence which may be granted to Participants without
constituting a termination of their employment for purposes of the 1996 Stock
Option Plan and to make all other determinations necessary or advisable for the
administration of the 1996 Stock Option Plan. Determinations of the
Compensation Committee on the foregoing matters are conclusive.
Grant of Options. Awards of options to purchase common stock under the
1996 Stock Option Plan may be granted only to employees of iXL Enterprises,
Inc. and its subsidiaries. Members of the Board of Directors who are not iXL
employees are not eligible to receive awards. Options may be granted to
employees by action of the Compensation Committee. The Compensation Committee
determines the terms of each option and the number of shares of common stock
subject to each option. The terms of each option need not be identical. Each
option is subject to the terms and conditions set forth in the 1996 Stock
Option Plan and such other terms and conditions established by the Compensation
Committee as are not inconsistent with the purpose and provisions of the 1996
Stock Option Plan. Each option granted is designated as either a nonqualified
stock option or an incentive stock option.
iXL expects that most options granted pursuant to the 1996 Stock Option
Plan will be subject to vesting over a period of years, such as 20% increments
each year over a period of five years, during which the optionholder must
continue to be an employee of iXL or one of its subsidiaries. The Compensation
Committee, however, may choose to impose different vesting requirements or none
at all. An optionholder has no rights as a stockholder with respect to any
shares covered by his or her option until the date a stock certificate is
issued for such shares following his or her exercise of such option.
Exercise of Options. Except as otherwise provided in the 1996 Stock
Option Plan, an option may be exercised, in whole or in part, on the date or
dates specified in the Award Agreement executed by and between iXL and an
eligible employee and thereafter shall remain exercisable until the expiration
or earlier termination of the option. Not less than 10 shares of common stock
may be purchased at one time unless the number purchased is the total number at
the time available for purchase under the terms of the option. No option
granted pursuant to the 1996 Stock Option Plan is transferable by an
optionholder other than by will or by the applicable laws of descent and
distribution, and such option is exercisable during the eligible employee's
lifetime only by the eligible employee.
1998 Non-Employee Stock Option Plan
iXL's 1998 Non-Employee Stock Option Plan contains essentially the same
terms as the 1996 Stock Option Plan, except that the 1998 Non-Employee Stock
Option Plan was established for grants to persons who are not employees of the
Company. Persons who may receive grants under the 1998 Non-Employee Stock
Option Plan include outside consultants and members of the Board of Directors
who are not employees of iXL and other non-employees who the Compensation
Committee determines have provided services to iXL. The 1998 Non-Employee Stock
Option Plan authorizes the granting of options for up to an aggregate maximum
of 1 million shares of iXL's common stock.
1999 Employee Stock Option Plan
The Board of Directors has adopted and the stockholders of iXL have
approved the 1999 iXL Enterprises, Inc. Stock Option Plan. The 1999 Stock
Option Plan provides for the grant of stock options, including incentive stock
options.
72
<PAGE>
Grant of Options. Stock options may be granted to key employees,
including executive officers of iXL, its subsidiaries and affiliates as
determined by the Compensation Committee. The number of employees participating
in the 1999 Stock Option Plan will vary from year to year. The shares to be
granted with respect to options under the 1999 Stock Option Plan shall be
shares of common stock, may consist, in whole or in part, of treasury stock or
authorized but unissued stock not reserved for any other purpose and may not
exceed 5 million, as such number may be adjusted to reflect changes in iXL's
capitalization.
If shares subject to an option under the 1999 Stock Option Plan cease to
be subject to the option, such shares will again be available for future grant
under the 1999 Stock Option Plan. In the event of certain changes in iXL's
capital structure affecting the common stock, the Compensation Committee may
make appropriate adjustments in the number and kinds of shares that may be
awarded and in the number and kinds of shares covered by options then
outstanding under the 1999 Stock Option Plan, and, where applicable, exercise
price of outstanding options under the 1999 Stock Option Plan. The 1999 Stock
Option Plan will be administered by the Compensation Committee.
The Compensation Committee may grant options to purchase shares of common
stock that are either "qualified," which includes those awards that satisfy the
requirements of Section 422 of the Internal Revenue Code for incentive stock
options, or "nonqualified," which includes those awards that are not intended
to satisfy the requirements of Section 422 of the Internal Revenue Code. Under
the terms of the 1999 Stock Option Plan, the exercise price of the options
will, unless the Compensation Committee determines otherwise, not be less than
such common stock's fair market value at the time of grant. The exercise price
of the options is payable in cash or its equivalent or by exchanging shares of
common stock owned by the participant, through an arrangement with a broker
approved by iXL where payment of the exercise price is accomplished with the
proceeds of the sale of common stock, or by a combination of the foregoing.
Exercise of Options. The options will generally have a term of ten years,
unless the Compensation Committee specifies a shorter term, and will become
exercisable following the performance of a minimum period of service or the
satisfaction of performance goals, as determined by the Compensation Committee.
If an option holder ceases employment with iXL as a result of the holder's
death, disability or retirement, the holder, or his or her beneficiary or legal
representative, may exercise any then exercisable option for a period of one
year, or a greater or lesser period as determined by the Compensation Committee
at grant, but in no event after the date the option otherwise expires. If an
option holder's employment is terminated for any other reason, the holder may
exercise any then exercisable option for a period of 30 days, or such greater
period not exceeding 90 days as determined by the Compensation Committee, but
in no event after the date the option otherwise expires; provided that if the
holder's employment is terminated for cause all of his or her options will
immediately terminate, regardless of whether then exercisable.
If there is a "change in control," all options that are not then vested
will become vested unless the options are either assumed or substituted for
equivalent options by the new controlling entity following the change in
control.
73
<PAGE>
CERTAIN TRANSACTIONS
iXL Equity Investments
The following table sets forth the purchases of iXL's capital stock by
iXL's executive officers, directors, five percent stockholders and their
respective affiliates and certain related parties prior to this offering and
the private placement to General Electric:
<TABLE>
<CAPTION>
Aggregate
Date of Purchase
Purchaser Transaction Securities Purchased Price
--------- ----------- -------------------- ---------
<S> <C> <C> <C>
CB Capital Investors, December 17, 1997 46,153 shares of Class B Convertible $14,999,725
L.P.
Preferred Stock, and warrants to
purchase 6,390 shares of Class B
Convertible Preferred Stock
December 17, 1997 9,232 shares of Class C Convertible 3,000,400
Preferred Stock
August 14, 1998 9,000 shares of Class D Nonvoting 9,000,000
Preferred Stock
General Electric Capital December 23, 1997 15,384 shares of Class B Convertible 4,999,800
Corporation Preferred Stock, and warrants to
purchase 1,775 shares of Class B
Convertible Preferred Stock
August 31, 1998 2,500 shares of Class D Nonvoting 2,500,000
Preferred Stock
General Electric Capital January 15, 1999 5,000 shares of Class A Convertible 5,000,000
Assurance Company Preferred Stock
(affiliate
of General Electric
Capital
Corporation)
Greystone Capital January 15, 1999 10,000 shares of Class A Convertible 10,000,000
Partners I,
L.P. (affiliate of Preferred Stock
Thomas G.
Rosencrants, director of
iXL)
Kelso Equity Partners, April 30, 1996 5,955 shares of Class A Convertible 595,500
L.P.
(affiliate of Kelso Preferred Stock
Investment
Associates V, L.P.)
April 4, 1997 3,302 shares of Class A Convertible 825,500
Preferred Stock
August 14, 1998 1,000 shares of Class D Nonvoting 1,000,000
Preferred Stock
Kelso Investment April 30, 1996 93,295 shares of Class A Convertible 9,329,500
Associates V,
L.P. Preferred Stock
April 4, 1997 35,818 shares of Class A Convertible 8,954,500
Preferred Stock
August 14, 1998 9,000 shares of Class D Nonvoting 9,000,000
Preferred Stock
David E. Clauson September 18, 1998 1,000 shares of Class A Convertible 1,000,000
Preferred Stock
</TABLE>
- --------
table continued on following page
74
<PAGE>
<TABLE>
<CAPTION>
Aggregate
Date of Purchase
Purchaser Transaction Securities Purchased Price
--------- ----------- -------------------- ---------
<S> <C> <C> <C>
U. Bertram Ellis, Jr. April 30, 1996 1,000 shares of Class A Convertible $ 100,000
Preferred Stock
September 30, 1996 9,000 shares of Class A Convertible 900,000
Preferred Stock
April 4, 1997 4,000 shares of Class A Convertible 400,000
Preferred Stock
August 28, 1998 1,000 shares of Class D Nonvoting 1,000,000
Preferred Stock
William C. Nussey August 25, 1998 100 shares of Class A Convertible 100,000
Preferred Stock
John Rocco (brother of February 20, 1998 615 shares of Class A Convertible 199,875
James R. Preferred Stock
Rocco)
</TABLE>
In connection with each of the issuances described above, the purchasers
listed above were required to execute iXL's stockholders' agreement and
registration rights agreement. Each issuance described above was valued based
on iXL's estimate of its fair market value at the time of each issuance. The
business purpose of each issuance was to raise working capital, except for the
issuance to Mr. Clauson, which was made as a condition to his employment with
iXL. As payment of a portion of the purchase price for his shares, Mr. Clauson
executed in favor of iXL a promissory note in the original principal amount of
$900,000. This note is a non-recourse note secured by a pledge of the 1,000
shares of Class A Convertible Preferred Stock held by Mr. Clauson. This note
accrues simple interest at a rate of 5.48% per annum, and matures on the
earlier of September 18, 2001 or the date on which Mr. Clauson transfers any of
the 1,000 shares of Class A Convertible Preferred Stock held by him.
Each of the issuances described above, other than the issuance to Mr.
Clauson, was made contemporaneous with, and on identical terms as, issuances to
unaffiliated persons. The issuance to Mr. Clauson was also made at about the
same time and on identical terms as issuances made to unaffiliated persons,
with the sole exception that Mr. Clauson, as a condition of the initiation of
his employment, was permitted to pay a portion of the purchase price through
execution of the promissory note described above. This 5.48% interest rate of
the promissory note was determined with reference to the standard federal rate
in effect at the time of the execution of the note. For a description of the
securities issued in these transactions, see "Description of Capital Stock--
Description of Reclassified Securities."
Private Placement Investment in iXL
General Electric has agreed to purchase directly from iXL Enterprises,
Inc., in a private placement transaction expected to be completed concurrently
with the closing of this offering, if regulatory and other conditions are
satisfied, an aggregate of 2,000,000 shares of common stock at a price per
share equal to the initial public offering price. In connection with this
issuance, the investors will enter into iXL's Stockholders Agreement and iXL's
Registration Rights Agreement. The business purpose of this issuance is to
raise working capital. See "Relationship with General Electric."
CFN Equity Investments
On November 3, 1998, General Electric purchased 13,333,334 shares of
CFN's Series A Convertible Preferred Stock for an aggregate purchase price of
$10,000,000. In connection with this issuance, CFN, iXL, and General Electric
executed a Stockholders Agreement and a Registration Rights Agreement with
respect to CFN capital stock. This issuance was valued based on CFN's estimate
of its fair market value at the time of such issuance. The business purpose of
this issuance was to raise working capital for CFN. iXL believes that
75
<PAGE>
this issuance was negotiated at arm's length and was made on terms no less
favorable to iXL and CFN than could have been obtained from unaffiliated third
parties. At the time of this transaction, General Electric beneficially owned
less than 5% of the outstanding common stock of iXL, on an as-converted basis.
General Electric is expected to purchase 16,190,475 shares of CFN's
Series B Convertible Preferred Stock for an aggregate purchase price of $50
million. In connection with this issuance, CFN, iXL, and General Electric will
execute amendments to the existing CFN Stockholders Agreement and to the
existing CFN Registration Rights Agreement, and an Investor Agreement with CFN.
Under the Registration Rights Agreement, iXL and General Electric have the
right to force a registration of CFN's capital stock. The business purpose of
this issuance is to raise working capital. This issuance was valued based on a
negotiated estimate of CFN's fair market value. iXL believes that this issuance
was negotiated at arm's length and was made on terms no less favorable to iXL
and CFN than could have been obtained from unaffiliated third parties. This
issuance is subject to regulatory and other conditions which, if not satisfied,
could result in the termination of the contemplated transaction. See
"Relationship with General Electric."
Acquisitions
In May 1996, iXL acquired Creative Video, Inc., Creative Video Library,
Inc., and Entrepreneur Television, Inc. In connection with that transaction,
Mr. Rocco received $2,478,800 in cash and 1,055,300 shares of common stock,
valued at $1.00 per share for the purpose of such acquisition, in exchange for
his capital stock holdings in such acquired entities, and Mr. Sikes received
$518,775 in cash and 221,100 shares of common stock, valued at $1.00 per share
for the purpose of such acquisition, in exchange for his capital stock holdings
in such acquired entities. Mr. Rocco held 46% of the equity of Creative Video,
Inc., 49% of the equity of Creative Video Library, Inc., and 50% of the equity
of Entrepreneur Television, Inc., and served as the Secretary, President, and
President of each company, respectively. Mr. Rocco also served as a Director of
each company. Mr. Sikes held 10% of the equity of Creative Video, Inc., 7% of
the equity of Creative Video Library, Inc., and 6% of the equity of
Entrepreneur Television, Inc., and served as a Director of each company. Mr.
Sikes also served as the President of Creative Video, Inc. and as the Treasurer
of Creative Video Library, Inc. In May 1997, iXL acquired BoxTop Interactive,
Inc. In connection with that transaction, Mr. Kevin Wall received 1,773,600
shares of common stock, valued at $2.50 per share for the purpose of such
acquisition, in exchange for his capital stock holdings in BoxTop Interactive,
Inc., which represented 52% of the equity.Mr. Wall served as the Chairman of
the Board and Chief Executive Officer of BoxTop Interactive, Inc. The valuation
of the shares issued to Mr. Rocco, Mr. Sikes, and Mr. Wall was determined by
negotiation.
Loans
From February 1997 to August 1998, Mr. Ellis and/or his wife made nine
separate loans to iXL in an aggregate principal amount of $12 million. The
maximum principal balance of these loans at any one time was $6 million. All
such loans accrued interest at a rate of either 10% or 12% per annum. All such
loans have been repaid in full with accrued interest. From September 1997 to
December 1997, Mr. James R. Rocco loaned iXL $300,000. These loans accrued
interest at a rate of 12% per annum, and have been repaid in full with accrued
interest. The purpose of each of the loans described in this paragraph was to
provide working capital to iXL.
From May 30, 1997 to March 30, 1998, Mr. Kevin Wall borrowed, from time
to time, amounts never exceeding $268,753 under a revolving line of credit from
iXL, at an interest rate of 8% per annum. The purpose of this loan was to
provide personal funds to Mr. Wall. This loan was repaid on March 30, 1998 from
the proceeds of the sale by Mr. Kevin Wall to iXL of 184,616 shares of common
stock for a purchase price of $3.25 per share. The valuation of these shares
was determined by negotiation.
Chase Manhattan Bank is the Administrative Agent and sole lender under
iXL's credit facility. Chase Manhattan Bank is a limited partner of CB Capital
Investors, L.P. For a description of the material terms of iXL's credit
facility, see "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources."
76
<PAGE>
Other Transactions
In April 1996, iXL paid Kelso & Company a fee of $150,000 for financial
advisory services and reimbursed Kelso & Company for out-of-pocket expenses
incurred in connection with rendering such services. In addition, iXL agreed to
pay Kelso & Company an annual fee of $15,000 for continuing financial advisory
services and to reimburse Kelso & Company for out-of-pocket expenses incurred,
which in 1998 totaled approximately $85,000. iXL has also agreed to indemnify
Kelso & Company against certain claims, losses, damages, liabilities and
expenses which may arise in connection with rendering such financial advisory
services. Kelso & Company has agreed, other than with respect to such
indemnification and expenses provisions, to terminate its annual financial
services agreement. In connection with consulting services regarding the
offering, iXL has agreed to pay Kelso & Company a fee equal to $750,000 upon
the closing of the offering, payable in shares of common stock, valued at the
gross offering price prior to underwriting and other selling discounts. The
business purpose of these transactions was to secure the advisory services of
Kelso & Company.
iXL has issued to General Electric Capital Corporation warrants to
purchase 500,000 shares of common stock at an exercise price of $10.00 per
share in exchange for marketing services. The business purpose of this
transaction was to promote awareness of iXL's services.
Upon the closing of this offering, iXL is expected to issue to General
Electric warrants to purchase 1,500,000 shares of common stock at an exercise
price per share equal to the initial public offering price. These warrants are
to be issued in exchange for marketing services and as an incentive to make
CFN's platform available to General Electric employees. The business purpose of
this transaction was to promote awareness of iXL's services and to secure
additional eligible employees to CFN's member base. See "Relationship with
General Electric."
The stockholders of iXL Interactive Excellence, Inc. were parties to a
Stock Option Agreement, dated October 24, 1994, pursuant to which Ellis
Communications, Inc. had an option to acquire 100% of the capital stock of iXL
Interactive Excellence, Inc. from such stockholders. In connection with the
proposed sale of Ellis Communications, Ellis Communications and the iXL
Interactive Excellence, Inc. stockholders desired to terminate this Stock
Option Agreement, and pursuant to a Termination Agreement dated March 26, 1996
and a fairness opinion from an investment banking firm, such iXL Interactive
Excellence, Inc. stockholders paid ECI $100,000 as consideration for
termination of this Stock Option Agreement. Ellis Communications, at such time,
was controlled by affiliates of Kelso & Company, and Mr. Ellis was the
President, Chief Executive Officer and Chairman of the Board of Directors of
Ellis Communications.
Mr. Ellis is a limited partner in the partnership that owns the building
in which iXL began leasing space in May 1997. Pursuant to the terms of the
lease, iXL pays rent of approximately $93,000 per month, and the lease expires
December 31, 2008. iXL believes its lease of such space is at fair market value
and was negotiated on an arm's-length basis. iXL's effective lease rate is
$14.64 per square foot, compared to a range of $12.50 to $16.50 per square foot
for comparable space.
In June 1998, iXL, Inc. created a new wholly owned subsidiary,
Permit.Com, Inc., a Delaware corporation. In exchange for additional stock of
Permit.Com, Inc., iXL, Inc. then transferred all of the assets related to the
Permit.Com division and operations of iXL, Inc. to Permit.Com, Inc.
Subsequently, the sole director of iXL, Inc. approved and declared a dividend
of all of the outstanding common stock (100,000 shares) of Permit.Com, Inc. to
iXL as the sole shareholder of iXL, Inc. On June 26, 1998, the Board of
Directors of iXL approved and declared a dividend of the common stock of
Permit.Com, Inc. payable to stockholders of iXL of record as of June 1, 1998.
The aggregate value of this dividend was approximately $420,000, based on an
independent appraisal of the Permit.Com assets.
Each of iXL and CFN provides services in the ordinary course of business
to WebMD, Inc., for which Mr. Jeffrey T. Arnold serves as Chairman and Chief
Executive Officer and Mr. Ellis serves as a Director
77
<PAGE>
and is also a shareholder, CB Capital Investors, L.P., General Electric Capital
Corporation, and Kelso & Company, or their respective affiliates. In 1998 iXL
recognized revenues of approximately $5.6 million, $1.5 million, $300,000 and
$200,000, respectively, from WebMD, Inc., CB Capital Investors, L.P., Kelso &
Company and General Electric Capital Corporation or their respective
affiliates.
iXL-New York, Inc., a wholly owned subsidiary of iXL, and General
Electric have executed a Master Services Agreement under which iXL-New York,
Inc. will provide services in the ordinary course of business to General
Electric Company. Under this agreement, General Electric will be obligated to
pay to iXL-New York, Inc., for the first year of the term of the contract, the
greater of $20 million or the actual billed value of the services provided by
iXL-New York, Inc.. If at the end of the first year, General Electric has not
used $20 million worth of services, it will have an additional three months to
use the remaining balance. This contract has a five-year term and is terminable
by General Electric after the first anniversary of the contract. In partial
consideration of this contract, iXL will issue to GE Capital Equity
Investments, Inc. warrants to purchase 1,000,000 shares of common stock for an
exercise price of $15.00 per share. The business purpose of this transaction
was to help solidify and expand its relationship with General Electric. The
terms of this arrangement are similar to the terms of iXL's arrangement with
Delta Air Lines, Inc. See "Relationship with General Electric."
iXL has entered into a Stockholders' Agreement with its stockholders. iXL
has also entered into a Registration Rights Agreement with its stockholders.
See "Management--Amended Stockholders Agreement" and "Description of Capital
Stock--Registration Rights Agreement."
iXL believes that all of the transactions set forth above were negotiated
at arm's length and were made on terms no less favorable to iXL than could have
been obtained from unaffiliated third parties.
78
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information known to iXL with
respect to the beneficial ownership of the common stock as of April 1, 1999,
giving effect to the events described in "Prospectus Assumptions," and as
adjusted to reflect the sale of common stock offered by iXL hereby for each
stockholder who is known by iXL to beneficially own more than 5% of the common
stock, each of iXL's directors, as its Chief Executive Officer and the other
four highest paid executive officers and all directors and executive officers
of iXL as a group:
<TABLE>
<CAPTION>
Shares of Percentage Ownership
Common Stock ----------------------
Beneficially Prior to the After the
Stockholder Owned Offering Offering
----------- ------------ ------------ ---------
<S> <C> <C> <C>
Kelso Investment Associates V, L.P. and
Kelso Equity Partners V, L.P. ........... 15,733,301 27.3% 24.7%
Joseph S. Schuchert..................... -- -- --
Frank T. Nickell........................ -- -- --
Thomas R. Wall, IV...................... -- -- --
George E. Matelich...................... -- -- --
Michael B. Goldberg..................... -- -- --
David I. Wahrhaftig..................... -- -- --
Frank K. Bynum, Jr. .................... -- -- --
Philip E. Berney........................ 10,000 * *
c/o Kelso & Company
320 Park Avenue
24th Floor
New York, NY 10022
CB Capital Investors, L.P. ............... 8,003,798 13.9% 12.6%
I. Robert Greene........................ -- -- --
380 Madison Avenue
12th Floor
New York, NY 10017-2591
General Electric Capital Corporation and
General Electric Capital Assurance
Company.................................. 5,221,934 9.0% 8.1%
120 Long Ridge Road
Stamford, CT
U. Bertram Ellis, Jr. .................... 2,936,603 5.0% 4.5%
Kevin M. Wall............................. 2,292,884 3.9% 3.6%
James R. Rocco............................ 1,207,040 2.1% 1.9%
William C. Nussey......................... 660,109 1.2% 1.1%
Barry T. Sikes............................ 473,100 * *
Thomas G. Rosencrants..................... 1,000,000 1.7% 1.6%
All Directors and Executive Officers as a
Group (11 persons)....................... 32,685,168 53.6% 48.8%
</TABLE>
- --------
* Less than 1% of the outstanding shares of the class of securities.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Except as indicated by footnote, and subject
to community property laws where applicable, the persons named in the table
above have sole voting and investment power with respect to all shares of
common stock. The number of shares beneficially owned includes shares of common
stock issuable upon the exercise of options or warrants that are currently
exercisable or exercisable within 60 days of April 1, 1999. Percentage of
beneficial ownership is based on 57,579,194 shares of common stock outstanding
as of April 1, 1999, 63,579,194 shares of common stock outstanding after
completion of this offering.
79
<PAGE>
Messrs. Schuchert, Nickell, Wall, Matelich, Goldberg, Wahrhaftig, Bynum
and Berney may be deemed to share beneficial ownership of shares of common
stock owned of record by Kelso Investment Associates V, L.P. and Kelso Equity
Partners V, L.P., by virtue of their status as general partners of the general
partner of Kelso Investment Associates V, L.P. and as general partners of Kelso
Equity Partners V, L.P. Messrs. Schuchert, Nickell, Wall, Matelich, Goldberg,
Wahrhaftig, Bynum and Berney share investment and voting power with respect to
securities owned by Kelso Investment Associates V, L.P. and Kelso Equity
Partners V, L.P., but disclaim beneficial ownership of such securities.
Information for Kelso Investment Associates V, L.P. and Kelso Equity
Partners V, L.P. includes 12,911,300 shares held by Kelso Investment Associates
V, L.P. and 724,600 shares held by Kelso Equity Partners V, L.P, 1,826,298
shares and 202,922 shares issuable to Kelso Investment Associates V, L.P. and
Kelso Equity Partners V, L.P, respectively, upon the reclassification of Class
D Nonvoting Preferred Stock into common stock, and 68,181 shares Kelso Equity
Partners V, L.P. will acquire from Kelso & Company immediately after payment of
the Kelso fee. Kelso Investment Associates V, L.P. and Kelso Equity Partners V,
L.P., due to their common control, could be deemed to beneficially own each of
the other's shares, but disclaim such beneficial ownership. Mr. Nickell could
be deemed to beneficially own 800 shares of common stock owned by trusts of
which Mr. Nickell is the trustee; however, Mr. Nickell disclaims such
beneficial ownership. Mr. Thomas Wall could be deemed to beneficially own
200,300 shares of common stock owned by trusts of which Mr. Wall is the
trustee; however, Mr. Wall disclaims such beneficial ownership.
Information for CB Capital Investors, L.P. includes 639,000 shares of
common stock issuable upon exercise of warrants for cash consideration upon the
closing of this offering, and 1,826,298 shares issuable upon the
reclassification of Class D Nonvoting Preferred Stock as common stock. Mr.
Greene is a general partner of Chase Capital Partners, a New York general
partnership, which is the general partner of CB Capital Investors, L.P.
Accordingly, Mr. Greene could be deemed to beneficially own the shares
beneficially owned by CB Capital Investors, L.P. However, Mr. Greene disclaims
beneficial ownership of all common stock owned by CB Capital Investors, L.P,
except an indeterminate number thereof in which he has a pecuniary interest as
a general partner of Chase Capital Partners.
Information for General Electric Capital Corporation and General Electric
Capital Assurance Company includes (a) for General Electric Capital
Corporation: 1,538,400 shares of common stock currently held, 177,500 shares of
common stock issuable upon the exercise of warrants for cash consideration upon
the closing of this offering, 500,000 shares of common stock issuable upon the
exercise of warrants exercisable within 60 days of the date hereof, an
aggregate of 2,000,000 shares of common stock to be issued to affiliates of
General Electric Company concurrently with the closing of this offering, and
506,034 shares of common stock issuable upon the reclassification of the Class
D Nonvoting Preferred Stock into common stock, and (b) for General Electric
Capital Assurance Company: 500,000 shares of common stock currently held.
Excludes 2,500,000 shares of common stock issuable to GE Capital Equity
Investments, Inc. upon the exercise of warrants which are not exercisable
within 60 days from the date hereof.
Information for U. Bertram Ellis, Jr. includes 1,330,000 shares of common
stock issuable upon exercise of options exercisable within 60 days from the
date hereof and 202,503 shares issuable upon the reclassification of Class D
Nonvoting Preferred Stock into common stock. Excludes 2,058,889 shares of
common stock issuable upon exercise of options which are not exercisable within
60 days from the date hereof.
Information for Kevin M. Wall includes 703,900 shares of common stock
issuable upon exercise of options exercisable within 60 days from the date
hereof. Excludes 102,000 shares of common stock issuable upon exercise of
options which are not exercisable within 60 days from the date hereof.
Information for James R. Rocco includes 178,740 shares of common stock
issuable upon exercise of options exercisable within 60 days from the date
hereof. Excludes 296,260 shares of common stock issuable upon exercise of
options which are not exercisable within 60 days from the date hereof.
Information for William C. Nussey includes 682,384 shares of common stock
issuable upon exercise of options exercisable within 60 days from the date
hereof. Excludes 1,161,892 shares of common stock issuable upon exercise of
options which are not exercisable within 60 days from the date hereof.
80
<PAGE>
Information for Barry T. Sikes includes 252,000 shares of common stock
issuable upon exercise of options exercisable within 60 days from the date
hereof. Excludes 333,500 shares of common stock issuable upon exercise of
options which are not exercisable within 60 days from the date hereof.
Thomas G. Rosencrants is a general partner of Greystone Capital Partners
I, L.P., which holds 1,000,000 shares of common stock. Mr. Rosencrants
disclaims beneficial ownership of such shares.
81
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The following description of the capital stock of iXL and material
provisions of iXL's Certificate of Incorporation and Bylaws is a summary and is
qualified by reference to the provisions of the Certificate of Incorporation
and Bylaws, which have been filed as exhibits to iXL's Registration Statement
of which this prospectus is a part.
Upon the closing of this offering, the authorized capital stock of iXL
will be 205,000,000 shares, consisting of 200,000,000 shares of common stock,
par value $0.01 per share, and 5,000,000 shares of undesignated preferred
stock, par value $0.01 per share.
Common Stock
As of April 1, 1999, giving effect to the events described in "Prospectus
Assumptions," there were 57,579,194 shares of common stock outstanding held of
record by 262 stockholders.
Common stock is entitled to one vote per share on all matters on which
stockholders are entitled to vote. Common stock does not have cumulative voting
rights or other preemptive or subscription rights, and is not redeemable by
iXL. Holders of shares of common stock are entitled to any dividends as may be
declared by the Board of Directors out of legally available funds. Upon
liquidation, dissolution or winding-up of iXL, after required payments to
creditors, the assets of iXL will be divided pro rata on a per share basis
among the holders of the common stock.
Description of Reclassified Securities
Class A, Class B, and Class C Convertible Preferred Stock and Class D
Nonvoting Preferred Stock will be reclassified as common stock upon the closing
of this offering. The following descriptions of these classes of preferred
stock are based upon the provisions in effect immediately prior to
reclassification.
Based on the conversion mechanics in effect immediately prior to the
reclassification of iXL's preferred stock into common stock upon the closing of
this offering:
. each share of Class A, Class B, and Class C Convertible Preferred
Stock converts into 100 shares of Class A Common Stock, each
share of which is in turn convertible into one share of Class B
Common Stock; and
. each share of Class A and Class B Convertible Preferred Stock is
entitled to 1,000 votes; Class C Convertible Preferred Stock is
not entitled to any voting rights.
Class A, Class B, and Class C Convertible Preferred Stock are entitled to
receive dividends pro rata with dividends properly declared and paid with
respect to the common stock, on a basis as if the Class A, Class B, and Class C
Convertible Preferred Stock were converted into Class A Common Stock. Upon a
voluntary or involuntary dissolution, liquidation or winding-up of iXL, after
payments to creditors but prior to any payments in respect of any common stock,
holders of Class A, Class B, and Class C Convertible Preferred Stock are
entitled to receive a liquidation preference equal to the price at which the
stock was originally issued by iXL, subject to proportional adjustment upon any
subdivision or combination of such class of preferred stock occurring after
December 17, 1997. iXL may redeem all outstanding Class A, Class B, and Class C
Convertible Preferred Stock upon a change of control. Holders of Class B and
Class C Convertible Preferred Stock have the right at their option to require
iXL to redeem such stock held by them at any time on or after December
31, 2004.
Class D Nonvoting Preferred Stock has no voting rights. The Class D
Nonvoting Preferred Stock is entitled to receive dividends which accrue on a
daily basis at the rate of 12% per annum. Dividends are not required to be paid
until the earlier of the date occurring three years and six months after August
14, 1998, or
82
<PAGE>
upon the initial public offering of the common stock. Upon a voluntary or
involuntary dissolution, liquidation or winding-up of iXL, after payments to
creditors but prior to any payments in respect of any other preferred stock or
common stock, holders of Class D Nonvoting Preferred Stock are entitled to
receive a liquidation preference equal to $1,000 per share plus any accrued but
unpaid dividends to the date of payment. Holders of Class D Nonvoting Preferred
Stock have the right at their option to require iXL to redeem Class D Nonvoting
Preferred Stock held by them at any time after August 14, 2005, or at any time
after one of the following redemption events, if earlier:
. a breach of the dividend payment provisions of the Class D
Nonvoting Preferred Stock;
. a bankruptcy of iXL or any of its subsidiaries;
. a judgment for payment of money in an amount exceeding
$5,000,000;
. the acceleration of indebtedness in an amount exceeding
$5,000,000;
. a breach of the documents governing the issuance of the Class D
Nonvoting Preferred Stock; and
. a change of control.
iXL may, at its option, redeem all or less than all of the outstanding Class D
Nonvoting Preferred Stock at any time. Upon redemption, the holders of Class D
Nonvoting Preferred Stock will receive $1,000 per share plus any accrued but
unpaid dividends to the date of payment, and assuming the initial public
offering of the common stock occurs prior to August 14, 1999, approximately
104.27 shares of common stock for each share of Class D Nonvoting Preferred
Stock redeemed.
Blank Check Preferred Stock
Effective upon the closing of this offering, the Board of Directors will
have the authority, without further action by the stockholders, to issue up to
5,000,000 shares of preferred stock in one or more series, and
to fix the rights, designations, preferences, privileges, qualifications and
restrictions of the preferred stock, including dividend rights, conversion
rights, voting rights, rights and terms of redemption, liquidation preferences
and sinking fund terms, any or all of which may be greater than the rights of
the common stock. No shares of preferred stock will be outstanding upon the
closing of this offering. The issuance of preferred stock could adversely
affect the voting power of holders of common stock and the likelihood that such
holders will receive dividend payments and payments upon liquidation. Such
issuance could have the effect of decreasing the market price of the common
stock. The issuance of preferred stock may have the effect of delaying,
deterring or preventing a change in control of iXL without any further action
by the stockholders. iXL has no present plans to issue any shares of preferred
stock.
Registration Rights Agreement
iXL, Kelso Investment Associates V, L.P., Kelso Equity Partners V, L.P.
and CB Capital Investors, L.P. and certain other stockholders of iXL are
parties to a Registration Rights Agreement, dated as of April 30, 1996. All
shares of common stock outstanding prior to this offering, as well as (1) all
shares of common stock issuable upon exercise of warrants outstanding prior to
this offering, (2) all shares of common stock issuable upon the
reclassification of the iXL's preferred stock upon the closing of this
offering, and (3) all shares of common stock to be held by Kelso Equity
Partners V, L.P. that are issuable in connection with the fee payable to Kelso
& Company upon the closing of this offering, are subject to the registration
rights agreement. The Registration Rights Agreement, at any time and from time
to time after May 1, 1997, the holder or holders of 50% or more of the common
stock may request that iXL effect a demand registration under the Securities
Act of the common stock held by the majority stockholders. After this request,
iXL must use its best efforts to effect such a registration of all common stock
held by the majority stockholders and all other holders of common stock.
In addition to the demand registration, if iXL at any time proposes to
effect a registration of its equity securities and the type of registration
permits, all holders of common stock may include their shares in that
83
<PAGE>
registration. The number of shares to be registered under a demand registration
or a piggyback registration may be reduced on a pro rata basis if the managing
underwriter in an underwritten offering or the investment banker in a non-
underwritten offering advises iXL that the number of shares requested to be so
included exceeds the number which can be sold in the offering. The registration
rights agreement provides for cross-indemnification by iXL and the sellers of
common stock for losses, claims and damages incurred by the other resulting
from untrue statements or omissions contained in the registration statement.
All expenses incurred in connection with each registration under the
Registration Rights Agreement will be paid by iXL. Additionally, pursuant to
the Registration Rights Agreement, all stockholders who have purchased iXL's
capital stock prior to this offering have agreed not to effect any public sale
or distribution of their stock during the 180 days after the closing of this
offering. For a description of the fee payable to Kelso & Company described
above, see "Certain Transactions."
Certain Antitakeover Effects of Provisions of iXL's Certificate of
Incorporation and Bylawsand Delaware Law
General. Provisions of the Delaware General Corporation Law and iXL's
Certificate of Incorporation and Bylaws could have the effect of making it more
difficult for a third party to acquire, or of discouraging a third party to
acquire, control of iXL. These provisions could limit the price that investors
might be willing to pay in the future for shares of iXL's common stock. These
provisions of Delaware law and iXL's Certificate of Incorporation and Bylaws
may also have the effect of discouraging or preventing certain types of
transactions involving an actual or threatened change of control of iXL,
including unsolicited takeover attempts, even though such a transaction may
offer iXL's stockholders the opportunity to sell their stock at a price above
the prevailing market price. iXL's Certificate of Incorporation allows iXL to
issue preferred stock with rights senior to those of the common stock and other
rights that could adversely affect the interests of holders of common stock,
which could decrease the amount of earnings or assets available for
distribution to the holders of common stock or could adversely affect the
rights and powers, including voting rights, of the holders of common stock. In
some circumstances, this type of issuance could have the effect of decreasing
the market price of the common stock, as well as having the antitakeover effect
discussed above. See "Risk Factors--Risks Related to the Offering--Antitakeover
provisions of our Certificate of Incorporation and Bylaws, and Delaware law
could prevent or delay a change of control."
Delaware Takeover Statute. iXL is subject to Section 203 of the Delaware
General Corporation Law, which prohibits a Delaware corporation from engaging
in a "business combination" with some persons for three years following the
date any of these persons becomes an interested stockholder. Interested
stockholders generally include persons who are the beneficial owners of 15% or
more of the outstanding voting stock of the corporation and persons who are
affiliates or associates of the corporation and who hold 15% or more of the
corporation's outstanding voting stock at any time within three years before
the date on which that person's status as an interested stockholder is
determined. A business combination includes:
. a merger or consolidation;
. the sale, lease, exchange, mortgage, pledge, transfer or other
disposition of assets having an aggregate market value equal to
10% or more of either the aggregate market value of all assets of
the corporation determined on a consolidated basis or the
aggregate market value of all the outstanding stock of the
corporation;
. any transaction that results in the issuance or transfer by the
corporation of any stock of the corporation to the interested
stockholder, except in a transaction that effects a pro rata
distribution to all stockholders of the corporation;
. any transaction involving the corporation that has the effect of
increasing the proportionate share of the stock of any class or
series, or securities convertible into the stock of any class or
series, of the corporation that is owned directly or indirectly by
the interested stockholder; or
. any receipt by the interested stockholder of the benefit of any
loans, advances, guarantees, pledges or other financial benefits
provided by or through the corporation.
84
<PAGE>
Section 203 of the Delaware General Corporation Law does not apply to a
business combination if before a person becomes an interested stockholder, the
board of directors of the corporation approved the transaction in which the
interested stockholder became an interested stockholder or approved the
business combination, or upon completion of the transaction that resulted in
the interested stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, other than the affirmative
vote of the holders of at least two-thirds of the outstanding voting stock of
the corporation not owned by the interested stockholder.
Certificate of Incorporation and Bylaws. iXL's Bylaws also require that
special meetings of the stockholders of iXL may be called only by the Board of
Directors, the Chairman of the Board or the Chief Executive Officer of iXL or
by any person or persons holding shares representing at least 20% of the
outstanding capital stock. iXL's Bylaws also require advance written notice,
which must be received by the Secretary of iXL not less than 90 days prior to
the meeting, by a stockholder of a proposal or directors nomination which such
stockholder desires to present at an annual or special meeting of
stockholders. iXL's Certificate of Incorporation does not include a provision
for cumulative voting in the election of directors. Under cumulative voting, a
minority stockholder holding a sufficient number of shares may be able to
ensure the election of one or more directors. The absence of cumulative voting
may have the effect of limiting the ability of minority stockholders to effect
changes in the Board of Directors and, as a result, may have the effect of
deterring a hostile takeover or delaying or preventing changes in control or
management of iXL.
iXL's Bylaws provide that the authorized number of directors may be
changed only by a resolution adopted by a majority of the entire Board of
Directors. Vacancies in the Board of Directors may be filled by a majority of
directors in office, although less than a quorum. See "Risk Factors--Risks
Related to the Offering--Anti-takeover provisions of our Certificate of
Incorporation and Bylaws, and Delaware law could prevent or delay a change of
control."
No Shareholder Action by Written Consent. The Certificate of
Incorporation will prohibit stockholders from taking action by written consent
in lieu of an annual or special meeting, and thus stockholders will only be
able to take action at an annual or special meeting called in accordance with
the Bylaws.
Transfer Agent and Registrar
SunTrust Bank, Atlanta has been appointed as transfer agent and
registrar for the common stock.
Listing
Application has been made to list the common stock for quotation on the
Nasdaq National Market under the trading symbol "IIXL."
85
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the offering, iXL will have outstanding an aggregate
of 63,579,194 shares of common stock, assuming no exercise of the underwriters'
over-allotment option and no exercise of outstanding options. Of these shares,
all of the shares sold in this offering will be freely tradeable, unless such
shares are purchased by affiliates of iXL, as that term is defined in Rule 144
under the Securities Act of 1933. The remaining 57,579,194 shares of common
stock held by stockholders are "restricted securities," as that term is defined
in Rule 144 under the Securities Act. Restricted securities may be sold in the
public market only if registered or if they qualify for an exemption from
registration under Rule 144 or 701 promulgated under the Securities Act. As a
result of contractual restrictions, the 180-day lock-ups described below and
the provisions of Rules 144 and 701, additional shares will be available for
sale in the public market as follows:
. no restricted securities will be eligible for immediate sale on the
date of this prospectus;
. 1,882,900 restricted securities issuable pursuant to stock options
will be eligible for sale 90 days after the date of this
prospectus;
. restricted securities--plus shares of common stock issuable
pursuant to stock options--will be eligible for sale upon
expiration of the lock-up agreements described below 180 days after
the date of this prospectus; and
. the remainder of the restricted securities will be eligible for
sale from time to time thereafter upon expiration of their
respective one-year holding periods.
In general, under Rule 144 as currently in effect, a person, including an
affiliate, who has beneficially owned restricted shares for at least one year
from the later of the date the restricted securities were acquired from iXL or,
if applicable, from an affiliate on the date on which they were fully paid, is
entitled to sell, within any three-month period, a number of shares that does
not exceed the greater of 1% of the then-outstanding shares of common stock or
the average weekly trading volume of the common stock in the public market as
reported through the Nasdaq National Market during the four calendar weeks
preceding such sale. Sales under Rule 144 are also subject to requirements as
to the manner and notice of sale and the availability of public information
about iXL.
Restricted securities held by affiliates of iXL are subject to the
foregoing volume limitations, holding period and other restrictions under Rule
144. Affiliates may sell shares other than restricted securities in accordance
with the foregoing volume limitations and other restrictions, but without
regard to any holding period.
Further, under Rule 144(k), if a period of at least two years has elapsed
since the later of the date restricted securities were acquired from iXL or
from an affiliate of iXL or the date on which they were fully paid, a holder of
restricted securities who is not an affiliate of iXL at the time of sale, and
has not been an affiliate of iXL for at least three months prior to the sale,
would be entitled to sell the shares immediately without regard to volume
limitations and the other conditions described above.
Prior to this offering, there has been no market for the common stock and
no prediction can be made as to the effect, if any, that the market sales of
shares or the availability of such shares for sale will have on the market
price of the common stock from time to time. Nevertheless, sales of substantial
amounts of common stock in the public market could have an adverse impact on
the market price of our common stock and iXL's ability to raise additional
capital.
In general, under Rule 701 of the Securities Act as currently in effect,
any employee, officer, director, consultant or advisor of iXL who purchased
shares from iXL in connection with a compensatory stock or option plan or
written employment agreement is eligible to resell such shares 90 days after
the effective date of this offering in reliance on Rule 144, but without
compliance with certain restrictions, including the holding period, contained
in Rule 144.
86
<PAGE>
iXL may file a registration statement under the Securities Act to
register shares of common stock reserved for issuance under its stock option
plans after 180 days from the date of this prospectus, thus permitting the
resale of such shares by non-affiliates in the public market without
restriction under the Securities Act. See "Management--Stock Option Plans."
Such registration statement would become effective immediately upon filing. As
of April 1, 1999, options to purchase approximately 24,524,157 shares of common
stock were outstanding under iXL's stock option plans.
iXL intends to register 4,000,000 shares of common stock pursuant to a
"shelf" Registration Statement on Form S-4 for use in future acquisitions.
After issuance, these shares could be sold in the public markets, although it
is anticipated that these shares acquired within 180 days of the date of this
prospectus would be subject to lock-up agreements that would limit their
ability to sell shares of common stock for that 180-day period.
After the closing of this offering, the holders of approximately
57,579,194 shares of common stock, including approximately 3,000,000 shares of
common stock issuable upon exercise of outstanding warrants, will be entitled
to certain rights with respect to the registration of such shares under the
Securities Act. See "Description of Capital Stock--Registration Rights
Agreement."
At the request of iXL, the underwriters have reserved up to not more than
10% of the shares of common stock being offered for sale at the public offering
price to certain employees and friends and certain other persons designated by
iXL. The number of shares of common stock available for sale to the general
public will be reduced to the extent such persons purchase such reserved
shares. Any reserved shares which are not purchased will be offered by the
underwriters to the general public on the same basis as the other shares of
common stock being offered. All purchasers of the shares of common stock
reserved pursuant to this paragraph will be required to enter into agreements
restricting the transferability of such shares for a period of 180 days after
the date of this prospectus.
The holders of substantially all of the shares of common stock, options
and warrants currently outstanding and all executive officers and directors of
iXL have agreed that for a period of 180 days after the date of this prospectus
they will not offer, sell or otherwise dispose of, any shares of common stock,
options or warrants to acquire shares of common stock or securities
exchangeable for or convertible into common stock. However, Merrill Lynch, in
its sole discretion, may release such persons from these lock-up agreements, in
whole or in part, at any time without notice. Stockholders holding a majority
of the common stock outstanding prior to this offering have the right to demand
the registration of their shares for sale to the public market at any time
after the expiration of the 180-day lock-up described above. In addition,
substantially all of the holders of shares of common stock and warrants to
purchase shares of common stock are entitled to certain rights to participate
with respect to registration of such shares for sale to the public market.
There could also be shares of common stock issuable upon the exercise of
certain contingent rights of minority stockholders of CFN to exchange their CFN
capital stock for a currently undeterminable number of shares of common stock.
iXL may also file a Registration Statement on Form S-8 after 180 days of the
date of this prospectus to register shares of common stock reserved for
issuance under its stock option plans, thus permitting the resale of shares of
common stock received upon exercise of stock options by non-affiliates in the
public market without restriction under the Securities Act.
87
<PAGE>
UNITED STATES FEDERAL TAX CONSIDERATIONS FOR NON-U.S. HOLDERS
The following is a summary of certain United States federal income and
estate tax consequences of the ownership and disposition of our common stock by
non-U.S. holders. As used herein, "non-U.S. holder" means any person or entity
that holds our common stock, other than:
. an individual citizen or resident of the United States;
. a corporation created or organized in or under the laws of the
United States, or of any state of the United States or the District
of Columbia; or
. a partnership, trust or estate treated, for United States federal
income tax purposes, as a domestic partnership, trust or estate.
This summary is based on provisions of the U.S. Internal Revenue Code of
1986, as amended, existing, temporary and proposed United States Treasury
regulations promulgated thereunder and administrative and judicial
interpretations of each, all as of the date hereof and all of which are subject
to change, possibly on a retroactive basis.
This summary is for general information only. The tax treatment of a
particular non-U.S. holder may vary depending on the holder's particular
situation. In addition, this summary does not include any description of the
tax laws of any state, local or non-U.S. government that may be applicable to a
particular non-U.S. holder.
Prospective purchasers are urged to consult their own tax advisors with
respect to the particular U.S. federal income and estate tax consequences to
them of the ownership and disposition of our common stock, as well as the tax
consequences under state, local, non-U.S. and other U.S. federal income tax
laws and the possible effects of changes in tax laws.
Income Tax
Dividends
Generally, dividends paid on our common stock to a non-U.S. holder will
be subject to U.S. federal income tax. Except for dividends that are
effectively connected with a non-U.S. holder's conduct of a trade or business
within the United States, this tax is imposed and collected by withholding at
the rate of 30% of the amount of the dividend, unless reduced by an applicable
income tax treaty. Currently, dividends paid to an address in a country other
than the United States are presumed to be paid to a resident of that country in
determining whether a non-U.S. holder can benefit from a reduced withholding
tax rate pursuant to a tax treaty.
However, under United States Treasury regulations applicable to dividend
and other payments made after December 31, 1999, a non-U.S. holder who is the
beneficial owner (within the meaning of the regulations) of dividends paid on
our common stock and who wishes to claim the benefit of an applicable treaty is
generally required to satisfy certification and documentation requirements,
including (in certain cases) the need to make recertifications for periods
after December 31, 2000. Special rules apply to claims for treaty benefits made
by non-U.S. persons that are entities rather than individuals and to beneficial
owners (within the meaning of the regulations) of dividends paid to entities in
which the beneficial owners are interest holders.
Except as may be otherwise provided in an applicable income tax treaty,
dividends paid on our common stock to a non-U.S. holder that are effectively
connected with the holder's conduct of a trade or business within the United
States are subject to tax at ordinary U.S. federal income tax rates. This tax
is not collected by withholding (except as described below under "Backup
Withholding and Information Reporting"). All or part of any effectively
connected dividends received by a non-U.S. corporation may also, under certain
circumstances, be subject to an additional branch profits tax which will be
imposed at a 30% rate or, possibly, a reduced rate under an applicable income
tax treaty. A non-U.S. holder who wishes to claim an exemption from withholding
for effectively connected dividends is generally required to satisfy certain
certification and documentation requirements.
88
<PAGE>
A non-U.S. holder that is eligible for a reduced rate of U.S. withholding
tax pursuant to a tax treaty may obtain a refund of any excess amounts withheld
by filing an appropriate claim for refund with the Internal Revenue Service.
Disposition of Our Common Stock
Generally, non-U.S. holders will not be subject to U.S. federal income
tax (or withholding thereof) in respect of gain recognized on a disposition of
our common stock unless:
<TABLE>
<C> <S>
(i) the gain is effectively connected with the holder's conduct of a
trade or business within the United States (in which case the
branch profits tax described above may also apply if the holder is
a non-U.S. corporation);
(ii) in the case of a holder who is a non-resident alien individual and
holds our common stock as a capital asset, the holder is present in
the United States for 183 or more days in the taxable year of the
sale and other conditions are met;
(iii) we are or have been a "United States real property holding
corporation" for U.S. federal income tax purposes (which we do not
believe we are or have been and do not expect to become in the
future) and certain other conditions are met; or
(iv) the holder is subject to tax pursuant to United States federal
income tax provisions applicable to certain United States
expatriates.
</TABLE>
Estate Tax
If an individual non-U.S. holder owns, or is treated as owning, our
common stock at the time of his or her death, such stock would be includable in
the individual's gross estate for U.S. federal estate tax purposes and may be
subject to U.S. federal estate tax imposed on the estates of nonresident
aliens, in the absence of a contrary provision contained in an applicable tax
treaty.
Backup Withholding and Information Reporting
Dividends
Under current law, dividends paid on our common stock to a non-U.S.
holder at an address outside the United States are generally exempt from backup
withholding tax and U.S. information reporting requirements (but not from
regular withholding tax as discussed above). Under the Treasury regulations
that are applicable to dividends paid after December 31, 1999, a non-U.S.
person must generally provide proper documentation indicating the person's non-
U.S. status to a withholding agent in order to avoid backup withholding tax;
however, dividends paid to certain exempt recipients (not including
individuals) will not be subject to backup withholding even if documentation is
not provided if the withholding agent is allowed to rely on presumptions
concerning the recipient's non U.S. status (including payment to an address
outside the United States).
Broker Sales
Payments of proceeds from the sale of our common stock by a non-U.S.
holder made to or through a U.S. office of a broker are generally subject to
both information reporting and backup withholding at a rate of 31% unless the
holder certifies its non-U.S. status under penalties of perjury or otherwise
establishes entitlement to an exemption. Payments of proceeds from the sale of
our common stock by a non-U.S. holder made to or through a non-U.S. office of a
broker generally will not be subject to information reporting or backup
withholding. However, payments made to or through certain non-U.S. offices,
including the non-U.S. offices of a U.S. broker, are generally subject to
information reporting (but not backup withholding) unless the holder certifies
its non-U.S. status under penalties of perjury or otherwise establishes
entitlement to an exemption.
A non-U.S. holder may obtain a refund of any excess amounts withheld
under the backup withholding rules by filing an appropriate claim for refund
with the I.R.S.
89
<PAGE>
UNDERWRITING
General
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Donaldson, Lufkin &
Jenrette Securities Corporation, BancBoston Robertson Stephens Inc. and SG
Cowen Securities Corporation are acting as representatives of each of the
underwriters named below. Subject to the terms and conditions set forth in a
U.S. purchase agreement among iXL and the U.S. underwriters, and concurrently
with the sale of 1,200,000 shares of common stock to the international
managers, iXL has agreed to sell to the U.S. underwriters, and each of the U.S.
underwriters severally and not jointly has agreed to purchase from iXL the
number of shares of common stock set forth opposite its name below.
<TABLE>
<CAPTION>
Number of
Underwriter Shares
----------- ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................................................
Donaldson, Lufkin & Jenrette Securities Corporation...................
BancBoston Robertson Stephens Inc.....................................
SG Cowen Securities Corporation.......................................
---------
Total............................................................ 4,800,000
=========
</TABLE>
iXL has also entered into an international purchase agreement with
certain underwriters outside the United States and Canada for whom Merrill
Lynch International, Donaldson, Lufkin & Jenrette International, BancBoston
Robertson Stephens Inc. and SG Cowen Securities Corporation are acting as lead
managers. Subject to the terms and conditions set forth in the international
purchase agreement, and concurrently with the sale of 4,800,000 shares of
common stock to the U.S. underwriters pursuant to the U.S. purchase agreement,
iXL has agreed to sell to the international managers, and the international
managers severally have agreed to purchase from iXL, an aggregate of 1,200,000
shares of common stock. The initial public offering price per share and the
total underwriting discount, per share of common stock are identical under the
U.S. purchase agreement and the international purchase agreement.
In the U.S. purchase agreement and the international purchase agreement,
the several U.S. underwriters and the several international managers,
respectively, have agreed, subject to the terms and conditions set forth
therein, to purchase all of the shares of common stock being sold pursuant to
each such agreement if any of the shares of common stock being sold pursuant to
such agreement are purchased. In the event of a default by an underwriter, the
U.S. purchase agreement and the international purchase agreement provide that,
in certain circumstances, the purchase commitments of non-defaulting
underwriters may be increased or the purchase agreements may be terminated. The
closings with respect to the sale of shares of common stock to be purchased by
the U.S. underwriters and the international managers are conditioned upon one
another.
The representatives have advised iXL that the U.S. underwriters propose
initially to offer the shares of common stock to the public at the initial
public offering price set forth on the cover page of this prospectus and to
certain dealers at such price less a concession not in excess of $ per share
of common stock. The U.S. underwriters may allow, and such dealers may reallow,
a discount not in excess of $ per share of common stock to certain other
dealers. After the initial public offering, the public offering price,
concession and discount may change.
Over-allotment Option
iXL has granted options to the U.S. underwriters, exercisable for 30 days
after the date of this prospectus, to purchase up to an aggregate of 720,000
additional shares of common stock at the initial public offering price set
forth on the cover page of this prospectus, less the underwriting discount. The
U.S. underwriters may exercise these options solely to cover over-allotments,
if any, made on the sale of the
90
<PAGE>
common stock offered in this prospectus. To the extent that the U.S.
underwriters exercise these options, each U.S. underwriter will be obligated,
subject to certain conditions, to purchase a number of additional shares of
common stock proportionate to that U.S. underwriter's initial amount reflected
in the above table. iXL has granted options to the international managers,
exercisable for 30 days after the date of this prospectus, to purchase up to an
aggregate of 180,000 additional shares of common stock to cover over-
allotments, if any, on terms similar to those granted to the U.S. underwriters.
Commissions and Discounts
The following table shows the per share and total underwriting discounts
and commissions to be paid by iXL to the underwriters and the proceeds before
expenses to iXL. This information is presented assuming either no exercise or
full exercise by the underwriters of their over-allotment options.
<TABLE>
<CAPTION>
Per Share Without Option With Option
--------- -------------- -----------
<S> <C> <C> <C>
Public Offering Price...................... $ $ $
Underwriting Discount...................... $ $ $
Proceeds, before expenses, to iXL.......... $ $ $
</TABLE>
The expenses of the offering, exclusive of the underwriting discount, are
estimated at $3.9 million and are payable by iXL.
The shares of common stock are being offered by the several underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to approval of certain legal matters by counsel for the underwriters and
certain other conditions. The underwriters reserve the right to withdraw,
cancel or modify such offer and to reject orders in whole or in part.
Reserved Shares
At iXL's request, the underwriters have reserved for sale, at the initial
public offering price, up to 10% of the shares offered hereby for employees,
directors and other persons with relationships with iXL who have expressed an
interest in purchasing shares of common stock in the offering. The number of
shares of common stock available for sale to the general public will be reduced
to the extent such persons purchase such reserved shares. Any reserved shares
not so purchased will be offered by the underwriters to the general public on
the same basis as the other shares offered in this prospectus.
No Sales of Common Stock or Similar Securities
iXL and iXL's executive officers and directors and most existing
stockholders have agreed, subject to certain exceptions, not to directly or
indirectly
. offer, pledge, sell, contract to sell, sell any option or contract
to purchase, purchase any option or contract to sell, grant any
option -- other than options granted by iXL pursuant its stock
options plans -- right or warrant for the sale of or otherwise
dispose of or transfer any shares of common stock or securities
convertible into exchangeable or exercisable for common stock,
whether now owned or thereafter acquired by the person executing
the agreement or with respect to which the person executing the
agreement thereafter acquires the power of disposition, or file a
registration statement under the Securities Act with respect to the
foregoing, other than a registration statement on Form S-4 covering
up to 4,000,000 shares of common stock to be issued in connection
with acquisitions; or
. enter into any swap or other agreement that transfers, in whole or
in part, the economic consequences of ownership of the common stock
whether any such swap or transaction is to be settled by delivery
of common stock or other securities, in cash or otherwise, without
the prior written consent of Merrill Lynch on behalf of the
underwriters for a period of 180 days after the date of this
prospectus. See "Shares Eligible for Future Sale."
91
<PAGE>
Nasdaq National Market Listing
Application has been made to list the common stock for quotation on the
Nasdaq National Market under the trading symbol "IIXL."
Prior to the offering, there has been no public market for iXL's common
stock. The initial public offering price will be determined through
negotiations between iXL and the representatives and the lead managers. The
factors considered in determining the initial public offering price, in
addition to prevailing market conditions, are:
. price-earnings ratio of publicly traded companies that the
representatives and the lead managers believe to be comparable to
iXL;
. certain financial information of iXL;
. the history of, and the prospects for, iXL and the industry in
which it competes; and
. an assessment of (1) iXL's management, (2) its past and present
operations, (3) the prospects for, and timing of, future revenues
of iXL, (4) the present state of iXL's developments, and (5) the
above factors in relation to market values and various valuation
measures of other companies engaged in activities similar to iXL.
There can be no assurance that an active trading market will develop for
the common stock or that the common stock will trade in the public market
subsequent to the offering at or above the initial public offering price.
The underwriters do not expect sales of the common stock to any accounts
over which they exercise discretionary authority to exceed 5% of the number of
shares being offered hereby.
Intersyndicate Agreement
The U.S. underwriters and the international managers have entered into an
intersyndicate agreement that provides for the coordination of their
activities. Pursuant to the intersyndicate agreement, the U.S. underwriters and
the international managers are permitted to sell shares of common stock to each
other for purposes of resale at the initial public offering price, less an
amount not greater than the selling concession. Under the terms of the
intersyndicate agreement, the U.S. underwriters and any dealer to whom they
sell shares of common stock will not offer to sell or sell shares of common
stock to persons who are non-U.S. or non-Canadian persons or to persons they
believe intend to resell to persons who are non-U.S. or non-Canadian persons,
and the international managers any dealer to whom they sell shares of common
stock will not offer to sell or sell shares of common stock to U.S. persons or
to Canadian persons or to persons they believe intend to resell to U.S. or
Canadian persons, except in the case of transactions pursuant to the
intersyndicate agreement.
iXL has agreed to indemnify the underwriters against certain liabilities,
including certain liabilities under the Securities Act, or to contribute to
payments the underwriters may be required to make for those liabilities.
Price Stabilization and Short Positions
Until the distribution of the common stock is completed, rules of the
Securities and Exchange Commission may limit the ability of the underwriters
and certain selling group members to bid for and purchase the common stock. As
an exception to these rules, the representatives are permitted to engage in
certain transactions that stabilize the price of the common stock. Those
transactions consist of bids or purchases for the purpose of pegging, fixing or
maintaining the price of the common stock.
The underwriters may create a short position in the common stock in
connection with the offering. This means that if they sell more shares of
common stock than are set forth on the cover page of this
92
<PAGE>
prospectus. In that case, the representatives and lead managers, respectively,
may reduce that short position by purchasing common stock in the open market.
The representatives and lead managers, respectively, may also elect to reduce
any short position by exercising all or part of the over-allotment option
described above.
Penalty Bids
The representatives and lead managers, respectively, may also impose a
penalty bid on certain underwriters and selling group members. This means that
if the representatives and lead managers, respectively, purchase shares of
common stock in the open market to reduce the underwriters' short position or
to stabilize the price of the common stock, they may reclaim the amount of the
selling concession from the underwriters and selling group members who sold
those shares.
In general, purchases of a security for the purpose of stabilization or
to reduce a short position could cause the price of the security to be higher
than it might be in the absence of such purchases. The imposition of a penalty
bid might also have an effect on the price of the common stock to the extent
that it discourages resales of the common stock.
Neither iXL nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the common stock. In addition, neither
iXL nor any of the underwriters makes any representation that the
representatives or lead managers will engage in such transactions or that such
transactions, once commenced, will not be discontinued without notice.
Other Relationships
iXL provides services to Merrill Lynch and certain of its affiliates in
the ordinary course of business. Donaldson, Lufkin & Jenrette from time to time
provides investment banking services to Kelso & Company and its affiliates.
General Electric has agreed to purchase an aggregate of 2,000,000 shares
of common stock directly from iXL in a private placement transaction. This
investment is expected to be completed concurrently with the closing of this
initial public offering, at a price per share equal to the initial public
offering price. iXL has retained Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Donaldson, Lufkin & Jenrette Securities Corporation to act as
advisors for this private placement and will pay advisory fees of $250,000 to
each. iXL will also indemnify these advisors against certain liabilities
relating to this private placement, including liabilities under the Securities
Act.
LEGAL MATTERS
Certain legal matters with respect to the validity of the issuance of the
shares of common stock offered hereby will be passed upon for iXL by Minkin &
Snyder, a Professional Corporation, Atlanta, Georgia. Attorneys employed by
Minkin & Snyder hold 120,427 shares of common stock and options to purchase
11,449 shares of common stock. From September 1997 to December 17, 1997, Mr.
James S. Altenbach, a member of Minkin & Snyder, loaned $100,000 to iXL at an
interest rate of 12% per annum. Mr. Altenbach currently serves as Secretary of
iXL and its subsidiaries including CFN. Certain other legal matters will be
passed upon for iXL by Debevoise & Plimpton, New York, New York. Certain legal
matters in connection with this offering will be passed upon for the
underwriters by Skadden, Arps, Slate, Meagher & Flom LLP, Palo Alto,
California.
93
<PAGE>
EXPERTS
The financial statements included in this prospectus have been audited by
PricewaterhouseCoopers LLP, independent accountants. The companies and periods
covered by these audits are indicated in the individual reports of
PricewaterhouseCoopers LLP. Such financial statements have been so included in
reliance on the reports of PricewaterhouseCoopers LLP given on the authority of
said firm as experts in auditing and accounting.
ADDITIONAL INFORMATION
iXL has filed with the Securities and Exchange Commission a Registration
Statement on Form S-1 under the Securities Act, and the rules and regulations
promulgated thereunder, with respect to the common stock offered hereby. This
prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement and the
exhibits and schedules to the Registration Statement. For further information
with respect to iXL and the common stock, reference is hereby made to such
Registration Statement and the exhibits and schedules to the Registration
Statement, which may be inspected and copied at the principal office of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional
offices of the Commission located at Seven World Trade Center, Suite 1300, New
York, New York 10048, and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661, and copies of all or any part thereof may be obtained
at prescribed rates from the Commission's Public Reference Section at such
addresses. Also, the Commission maintains a World Wide Web site on the
Internet, at http://www.sec.gov, that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission. Upon approval of the common stock for quotation on the
Nasdaq National Market, such reports, proxy and information statements and
other information also can be inspected at the office of Nasdaq Operations,
1735 K Street, N.W., Washington, D.C. 20006. Statements contained in the
prospectus as to the contents of any contract or other document that is filed
as an exhibit to the Registration Statement are qualified by reference to the
full text of the relevant contract or document.
iXL intends to furnish its stockholders with annual reports containing
financial statements audited by an independent public accounting firm and make
available to its stockholders quarterly reports for the first three quarters of
each fiscal year containing interim unaudited financial information.
94
<PAGE>
iXL ENTERPRISES, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
iXL ENTERPRISES, INC.
Report of Independent Accountants.......................................... F-3
Consolidated Balance Sheet................................................. F-4
Consolidated Statement of Operations....................................... F-5
Consolidated Statement of Changes in Stockholders' Equity.................. F-6
Consolidated Statement of Cash Flows....................................... F-7
Notes to Consolidated Financial Statements................................. F-8
BOXTOP INTERACTIVE, INC.
Report of Independent Accountants.......................................... F-31
Balance Sheet.............................................................. F-32
Statement of Operations.................................................... F-33
Statement of Shareholders' Deficit......................................... F-34
Statement of Cash Flows.................................................... F-35
Notes to Financial Statements.............................................. F-36
GREEN ROOM PRODUCTIONS L.L.C.
Report of Independent Accountants.......................................... F-43
Balance Sheet.............................................................. F-44
Statement of Operations and Change in Members' Deficit..................... F-45
Statement of Cash Flows.................................................... F-46
Notes to Financial Statements.............................................. F-47
DIGITAL PLANET
Report of Independent Accountants.......................................... F-51
Balance Sheet.............................................................. F-52
Statement of Operations.................................................... F-53
Statement of Changes in Shareholders' Deficit.............................. F-54
Statement of Cash Flows.................................................... F-55
Notes to Financial Statements.............................................. F-56
MICRO INTERACTIVE, INC.
Report of Independent Accountants.......................................... F-63
Balance Sheet.............................................................. F-64
Statement of Operations.................................................... F-65
Statement of Changes in Shareholders' Deficit.............................. F-66
Statement of Cash Flows.................................................... F-67
Notes to Financial Statements.............................................. F-68
COMMERCEWAVE, INC.
Report of Independent Accountants.......................................... F-73
Balance Sheet.............................................................. F-74
Statement of Operations.................................................... F-75
Statement of Changes in Shareholders' Equity (Deficit)..................... F-76
Statement of Cash Flows.................................................... F-77
Notes to Financial Statements.............................................. F-78
</TABLE>
F-1
<PAGE>
iXL ENTERPRISES, INC.
INDEX TO FINANCIAL STATEMENTS
(Continued)
<TABLE>
<S> <C>
SPINNERS INCORPORATED
Report of Independent Accountants......................................... F-85
Balance Sheet............................................................. F-86
Statement of Operations................................................... F-87
Statement of Changes in Shareholders' Equity.............................. F-88
Statement of Cash Flows................................................... F-89
Notes to Financial Statements............................................. F-90
TEKNA, INC.
Report of Independent Accountants......................................... F-96
Balance Sheet............................................................. F-97
Statement of Operations................................................... F-98
Statement of Changes in Shareholders' Equity.............................. F-99
Statement of Cash Flows................................................... F-100
Notes to Financial Statements............................................. F-101
LARRY MILLER PRODUCTIONS, INC.
Report of Independent Accountants......................................... F-105
Balance Sheets............................................................ F-106
Statement of Operations................................................... F-107
Statement of Changes in Shareholders' Equity (Deficit).................... F-108
Statement of Cash Flows................................................... F-109
Notes to Financial Statements............................................. F-110
</TABLE>
F-2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
iXL Enterprises, Inc.
In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of operations, of changes in stockholders'
equity and of cash flows present fairly, in all material respects, the
financial position of iXL Enterprises, Inc. and its subsidiaries at December
31, 1997 and 1998, and the results of their operations and their cash flows for
the period from May 1, 1996 (commencement of operations) through December 31,
1996 and the years ended December 31, 1997 and 1998, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Atlanta, Georgia
February 5, 1999
F-3
<PAGE>
iXL ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
Pro Forma
December 31, (Note 1)
----------------- December 31,
1997 1998 1998
------- -------- ------------
(unaudited)
<S> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents.................... $23,038 $ 19,259 $ 82,354
Accounts receivable less allowance for
doubtful accounts of $138 and $796.......... 3,259 17,737 17,737
Unbilled revenues............................ 1,858 8,089 8,089
Prepaid expenses and other assets............ 616 3,355 3,355
------- -------- --------
Total current assets....................... 28,771 48,440 111,535
Property and equipment, net.................. 9,178 27,975 27,975
Intangible assets, net....................... 16,233 56,481 56,481
Equity investment in affiliate, net.......... 1,115 -- --
Other non-current assets..................... 343 2,319 2,319
------- -------- --------
Total assets............................... $55,640 $135,215 $198,310
======= ======== ========
LIABILITIES, MANDATORILY REDEEMABLE PREFERRED
STOCK AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable............................. $ 2,242 $ 6,438 $ 6,438
Deferred revenues............................ 471 6,072 6,072
Accrued liabilities.......................... 1,746 7,943 7,943
Current portion of long-term debt............ 433 868 868
------- -------- --------
Total current liabilities.................. 4,892 21,321 21,321
Long-term debt................................. 840 20,552 11,122
------- -------- --------
Total liabilities............................ 5,732 41,873 32,443
------- -------- --------
Mandatorily redeemable preferred stock......... 29,930 65,679 --
Mandatorily redeemable preferred stock of
subsidiary.................................... -- 9,839 59,639
------- -------- --------
29,930 75,518 59,639
------- -------- --------
Commitments and contingencies (Note 13)
Stockholders' equity
Class A Convertible Preferred Stock, par
value $.01, 250,000 shares authorized;
issued and outstanding 169,260, 177,291 and
0; aggregate liquidation preference of
$25,590 and $31,103......................... 2 2 --
Class A Common Stock, par value $.01,
75,000,000 shares authorized; issued and
outstanding 0, 0 and 0......................
Class B Common Stock, par value $.01,
200,000,000 shares authorized; issued and
outstanding 8,229,800, 16,334,905 and
54,388,151 (including 0, 252,416 and 252,416
shares held in treasury).................... 82 163 544
Additional paid-in capital................... 38,360 94,420 182,445
Accumulated deficit.......................... (18,466) (73,096) (73,096)
Accumulated other comprehensive income....... -- (10) (10)
Note receivable from stockholder............. -- (900) (900)
Unearned compensation........................ -- (1,867) (1,867)
Treasury stock at cost; 0, 252,416 and
252,416 shares.............................. -- (888) (888)
------- -------- --------
Total stockholders' equity................. 19,978 17,824 106,228
------- -------- --------
Total liabilities, mandatorily redeemable
preferred stock and
stockholders' equity...................... $55,640 $135,215 $198,310
======= ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
iXL ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data)
<TABLE>
<CAPTION>
For the period
May 1, 1996 Years ended
through December 31,
December 31, ------------------
1996 1997 1998
-------------- -------- --------
<S> <C> <C> <C>
Revenues................................... $ 5,379 $ 18,986 $ 64,767
Cost of revenues........................... 3,577 11,343 44,242
------- -------- --------
Gross profit............................. 1,802 7,643 20,525
Sales and marketing expenses............... 812 3,903 17,325
General and administrative expenses........ 1,247 9,114 30,163
Research and development expenses.......... -- 4,820 4,408
Depreciation............................... 372 1,408 5,217
Amortization............................... 928 5,531 16,354
------- -------- --------
Loss from operations..................... (1,557) (17,133) (52,942)
Other income (expense), net................ 48 116 (28)
Loss on equity investment.................. (249) (1,443) (1,640)
Interest income............................ 32 136 750
Interest expense........................... (30) (238) (770)
------- -------- --------
Loss before income taxes................. (1,756) (18,562) (54,630)
Income tax benefit......................... 302 1,550 --
------- -------- --------
Net loss................................. (1,454) (17,012) (54,630)
Dividends and accretion on mandatorily
redeemable preferred stock................ -- -- (9,099)
------- -------- --------
Net loss available to common
stockholders............................ $(1,454) $(17,012) $(63,729)
======= ======== ========
Basic and diluted net loss per common
share................................... $ (0.37) $ (2.60) $ (5.41)
======= ======== ========
Weighted average common shares
outstanding............................. 3,972 6,540 11,777
======= ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-5
<PAGE>
iXL ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(in thousands, except share data)
<TABLE>
<CAPTION>
Accumulated Note
Additional Other Receivable
Class A Class B Paid-in Accumulated Comprehensive Comprehensive from Unearned
Preferred Stock Common Stock Capital Deficit Income Income Stockholder Compensation
---------------------------------- ---------- ----------- ------------- ------------- ----------- ------------
Shares Value Shares Value
--------- ----------------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Initial capital
contribution..... 101,500 $ 1 300 $ -- $10,149 $ -- $ -- $ -- $-- $ --
Stock issuance... 10,000 -- 25,000 -- 1,025 -- -- -- -- --
Stock issuance in
connection with
acquisitions..... -- -- 4,009,500 40 3,228 -- -- -- -- --
Net loss......... -- -- -- -- -- (1,454) -- -- -- --
--------- ----- ---------- ---- ------- -------- ------- ---- ------ -------
Balance, December
31, 1996......... 111,500 1 4,034,800 40 14,402 (1,454) -- -- -- --
Stock issuance... 57,760 1 13,619 -- -- -- -- --
Stock issuance in
connection with
acquisitions..... -- -- 4,195,000 42 10,339 -- -- -- -- --
Net loss......... -- -- -- -- -- (17,012) -- -- -- --
--------- ----- ---------- ---- ------- -------- ------- ---- ------ -------
Balance, December
31, 1997......... 169,260 2 8,229,800 82 38,360 (18,466) -- -- -- --
--------- ----- ---------- ---- ------- -------- ------- ---- ------ -------
Stock issuance... 8,031 -- -- -- 5,512 -- -- -- (900) --
Stock issuance in
connection with
acquisitions..... -- -- 8,047,305 81 41,663 -- -- -- -- --
Treasury stock
acquired......... -- -- (252,416) -- -- -- -- -- -- --
Stock options ex-
ercised.......... -- -- 57,800 -- -- -- -- -- -- --
Dividends and ac-
cretion on
mandatorily re-
deemable pre-
ferred stock..... -- -- -- -- (8,671) -- -- -- -- --
Common Stock to
be issued in con-
nection with
Class D Pre-
ferred........... -- -- -- -- 13,235 -- -- -- -- --
Issuance of stock
options and war-
rants............ -- -- -- -- 3,508 -- -- -- -- (3,508)
Stock compensa-
tion and warrant
expenses......... -- -- -- -- 813 -- -- -- -- 1,641
Comprehensive in-
come:
Net loss........ -- -- -- -- -- (54,630) (54,630) -- -- --
Foreign currency
translation ad-
justment........ -- -- -- -- -- -- (10) (10) -- --
-------
Other comprehen-
sive income..... -- -- -- -- -- -- (10) -- -- --
-------
Comprehensive in-
come............. (54,640)
--------- ----- ---------- ---- ------- -------- ------- ---- ------ -------
Balance, December
31, 1998......... 177,291 $ 2 16,082,489 $163 $94,420 $(73,096) $(10) $(900) $(1,867)
========= ===== ========== ==== ======= ======== ==== ====== =======
<CAPTION>
Total
Treasury Stockholders'
Stock Equity
-------- -------------
<S> <C> <C>
Initial capital
contribution..... $ -- $ 10,150
Stock issuance... -- 1,025
Stock issuance in
connection with
acquisitions..... -- 3,268
Net loss......... -- (1,454)
-------- -------------
Balance, December
31, 1996......... -- 12,989
Stock issuance... -- 13,620
Stock issuance in
connection with
acquisitions..... -- 10,381
Net loss......... -- (17,012)
-------- -------------
Balance, December
31, 1997......... -- 19,978
-------- -------------
Stock issuance... -- 4,612
Stock issuance in
connection with
acquisitions..... -- 41,744
Treasury stock
acquired......... (888) (888)
Stock options ex-
ercised.......... -- --
Dividends and ac-
cretion on
mandatorily re-
deemable pre-
ferred stock..... -- (8,671)
Common Stock to
be issued in con-
nection with
Class D Pre-
ferred........... -- 13,235
Issuance of stock
options and war-
rants............ -- --
Stock compensa-
tion and warrant
expenses......... -- 2,454
Comprehensive in-
come:
Net loss........ -- (54,630)
Foreign currency
translation ad-
justment........ -- (10)
Other comprehen-
sive income..... -- --
Comprehensive in-
come.............
-------- -------------
Balance, December
31, 1998......... $(888) $ 17,824
======== =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
iXL ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
For the period
May 1, 1996 Years ended
through December 31,
December 31, ------------------
1996 1997 1998
-------------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities
Net loss.................................... $(1,454) $(17,012) $(54,630)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation ............................. 372 1,408 5,217
Amortization.............................. 928 5,531 16,354
Provision for bad debts................... 134 118 1,227
Acquired in-process technology............ -- 2,400 --
Deferred income taxes..................... (344) (1,550) --
Non-cash investment and losses in equity
affiliate and amortization............... (168) 807 1,365
Stock option and warrant expense.......... -- -- 2,454
Changes in assets and liabilities, net of
effects from purchase of
subsidiaries
Accounts receivable..................... (249) (1,538) (9,840)
Unbilled revenues....................... (112) (1,597) (5,328)
Prepaid expenses and other assets....... (5) (684) (4,669)
Accounts payable and accrued liabili-
ties................................... (332) 1,534 5,523
Deferred revenues....................... 195 (156) 4,888
------- -------- --------
Net cash used in operating activities... (1,035) (10,739) (37,439)
------- -------- --------
Cash flows from investing activities
Purchases of property and equipment....... (666) (6,704) (20,304)
Purchases of subsidiaries, net of cash ac-
quired................................... (7,833) (3,433) (16,602)
Investment in equity affiliate............ (1,129) (625) --
Loan to equity affiliate.................. -- (250) --
------- -------- --------
Net cash used in investing activities... (9,628) (11,012) (36,906)
------- -------- --------
Cash flows from financing activities
Proceeds from borrowings.................. 250 6,849 23,428
Repayment of borrowings................... (119) (6,259) (6,729)
Proceeds from issuance of mandatorily re-
deemable preferred stock................. -- 29,930 40,314
Proceeds from issuance of stock........... 10,941 13,860 4,612
Proceeds from issuance of mandatorily re-
deemable preferred stock of subsidiary... -- -- 9,839
Acquisition of treasury stock............. -- -- (888)
------- -------- --------
Net cash provided by financing activi-
ties 11,072 44,380 70,576
------- -------- --------
Effect of exchange rate changes on cash and
cash equivalents........................... -- -- (10)
Net increase (decrease) in cash and cash
equivalents............................ 409 22,629 (3,779)
Cash and cash equivalents at beginning of
period..................................... -- 409 23,038
------- -------- --------
Cash and cash equivalents at end of period.. $ 409 $ 23,038 $ 19,259
======= ======== ========
Supplemental disclosure of cash flow infor-
mation
Cash paid for interest.................... $ 29 $ 168 $ 797
======= ======== ========
Non-cash investing and financing activities
Acquisition of equipment through capital
leases................................... $ 112 $ 289 $ 569
======= ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-7
<PAGE>
iXL ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
1. Background and Summary of Significant Accounting Policies
iXL Enterprises, Inc. (the "Company") is an Internet services company,
which provides Internet strategy consulting and comprehensive Internet-based
solutions to Fortune 1000 companies and other corporate users of information
technology. The Company helps businesses identify how the Internet can be used
to their competitive advantage and provides expertise in creative design and
systems engineering to design, develop and deploy advanced Internet
applications and solutions. In addition to its Internet services offerings, the
Company operates Consumer Financial Network, Inc. ("CFN"), a sophisticated e-
commerce platform for marketing financial services and employee benefits over
corporate intranets and the Internet, as well as through a telesales center.
iXL Enterprises, Inc. is a Delaware corporation formed in March 1996.
Since its inception, iXL Enterprises, Inc. has acquired 34 companies (see Note
3).
Principles of consolidation
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries after the elimination of all significant
intercompany accounts and transactions. The Company accounts for its investment
in University Netcasting, Inc. ("UNI") using the equity method.
The Company owns 100% of the common stock of CFN. In addition to its
common stock, CFN has mandatorily redeemable convertible preferred stock of
which 13,333,334 shares are issued and outstanding as of December 31, 1998 and
are owned by a third party. The Company owns 88% of CFN on an as-converted
basis. As the Company owns 100% of the common stock of CFN, it will continue to
reflect in its consolidated financial statements all of the operating results
of CFN until such time the CFN mandatorily redeemable convertible preferred
stock is converted into CFN common stock.
Revenue recognition
Revenues are recognized for fixed fee contracts using the percentage of
completion method based on costs incurred. Revenues are recognized as services
are performed for time and materials contracts. CFN recognizes revenues upon
completion of an end-user transaction through the CFN operating network.
Revenues related to software development contracts, including planning,
installation, implementation and training that require significant
customization or modification are recognized using the percentage of completion
method. Revenues from sales of software that do not require customization or
modification are recognized upon delivery, or when all essential elements have
been delivered, in accordance with the American Institute of Certified Public
Accountants ("AICPA") Statement of Position 97-2, "Software Revenue
Recognition."
Unbilled revenues represent revenues earned under contracts in advance of
billings. Such amounts are normally converted into accounts receivable within
90 days. Deferred revenues represent billings made or cash received in advance
of services performed or costs incurred under contracts. Any anticipated losses
on contracts are charged to earnings when identified. Revenues from post-
contract support are recorded as services are provided.
Cash and cash equivalents
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
Property and equipment
Property and equipment is recorded at cost, less accumulated
depreciation. Expenditures for renewals and improvements that significantly add
to the productive capacity or extend the useful life of an asset are
F-8
<PAGE>
iXL ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
capitalized. Expenditures for maintenance and repairs are charged to operations
as incurred. Depreciation expense is provided using the straight-line method
over the estimated useful lives for purchased assets. Equipment held under
capital leases is amortized using the straight-line method over the lesser of
the useful life or the lease term. Leasehold improvements are amortized over
the shorter of the useful lives of the assets or the remaining term of the
lease.
Intangible assets
Intangible assets, primarily excess of cost over fair value of net assets
acquired ("goodwill"), are stated at cost less accumulated amortization.
Intangible assets are being amortized using the straight-line method over
estimated useful lives ranging from 2 to 15 years, primarily 2 to 3 years.
The carrying value of the excess of cost over fair value of net assets
acquired and other intangible assets are reviewed if facts and circumstances
suggest that they may be impaired. If this review indicates goodwill or other
intangibles will not be recoverable, as determined based on future expected
cash flows or other fair market value determinations, the Company's carrying
value of the goodwill or other intangibles is reduced to fair value.
Software developments costs
In accordance with Statement of Financial Accounting Standards No. 86,
"Accounting for the Costs of Computer Software to Be Sold, Leased or Otherwise
Marketed," software development costs are expensed as incurred until
technological feasibility has been established, at which time such costs are
capitalized until the product is available for general release to customers. To
date, the establishment of technological feasibility of the Company's products
and general release of such software have substantially coincided. As a result,
software development costs qualifying for capitalization have been
insignificant and therefore, have not been capitalized.
Internal use computer software
The Company adopted the AICPA Statement of Position 98-1 "Accounting for
the Costs of Computer Software Developed or Obtained for Internal Use"
effective January 1, 1998. The Company capitalizes external costs related to
software and implementation services in connection with its internal use
software systems.
Income taxes
The Company has applied the asset and liability approach of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes," for
financial accounting and reporting purposes. The Company accounts for certain
items of income and expense in different time periods for financial reporting
and income tax purposes. Provisions for deferred income taxes are made in
recognition of such temporary differences, where applicable. A valuation
allowance is established against deferred tax assets unless the Company
believes it is more likely than not that the benefit will be realized.
Stock-based compensation plans
The Company accounts for stock-based compensation using the intrinsic
value method prescribed in Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25") and related
Interpretations and elects the disclosure option of Statement of Financial
Accounting Standards No. 123,
F-9
<PAGE>
iXL ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
"Accounting for Stock-Based Compensation" ("FAS 123"). Accordingly,
compensation cost for stock options is measured as the excess, if any, of the
fair value of the Company's stock at the date of the grant over the amount an
employee must pay to acquire the stock.
Basic and diluted net loss per share
Basic net loss per common share is based on the weighted average number
of shares of Common Stock outstanding during the period. No potential common
shares have been included in the diluted earnings per share calculation as they
would have been antidilutive due to the net loss reported by the Company. The
convertible securities outstanding and the number of common shares into which
they are convertible are as follows:
<TABLE>
<CAPTION>
Number of Common Shares into
which they are convertible at
each year-end
--------------------------------
Security 1996 1997 1998
-------- ---------- ---------- ----------
<S> <C> <C> <C>
Stock Options.......................... 1,915,500 5,549,200 18,226,112
Warrants............................... -- 1,295,900 2,486,006
Class A Convertible Preferred Stock.... 11,150,000 16,926,000 17,729,100
Class B Mandatorily Redeemable
Convertible Preferred................. -- 8,307,500 9,876,700
Class C Mandatorily Redeemable
Convertible Preferred ................ -- 923,200 923,200
</TABLE>
The Class D Mandatorily Redeemable Nonvoting Preferred Stock is not a
convertible security, but provides for certain amounts of Common Stock to be
issued upon redemption. The minimum aggregate number of shares to be issued
upon redemption is 3,722,502.
CFN has outstanding mandatorily redeemable preferred stock that is
exchangeable into Common Stock of the Company upon the occurrence of certain
events ("CFN Mandatorily Redeemable Preferred") (see Note 8). These
contingently issuable shares have not been included in diluted earnings per
share as they would be antidilutive.
Net loss available to common stockholders used in calculating basic and
diluted earnings per share includes charges related to dividends and accretion
on mandatorily redeemable preferred stock.
Stock split
In January 1998, the Board of Directors declared a stock split of the
Class B Common Stock effected in the form of a dividend distribution of 99
shares of Class B Common Stock for each share of Class B Common Stock held as
of January 9, 1998. The accompanying consolidated financial statements give
retroactive effect for this stock dividend as if it occurred at inception of
the Company.
Foreign currency translation
The financial position and results of operations of foreign subsidiaries
are measured using the currency of the respective countries as the functional
currency. Assets and liabilities are translated into the reporting currency
(U.S. dollars) at the foreign exchange rate in effect at the balance sheet
date, while revenue and expenses for the year are translated at the average
exchange rate in effect during the year. Translation gains and losses are not
included in determining net income or loss but are accumulated and reported as
a separate component of stockholders' equity. The Company has not entered into
any hedging contracts during any of the periods presented.
F-10
<PAGE>
iXL ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
Fair value of financial instruments
The carrying amounts of financial instruments, including cash, cash
equivalents, accounts receivable, accounts payable and accrued expenses,
approximate fair value. The carrying amount of long-term debt approximates fair
value based on current rates of interest available to the Company for loans of
similar maturities.
Comprehensive income
Effective January 1, 1998, the Company implemented Statement of Financial
Accounting Standards No. 130 "Reporting Comprehensive Income." This standard
requires that the total changes in equity resulting from revenue, expenses, and
gains and losses, including those which do not affect the accumulated deficit,
be reported. Accordingly, those amounts which are comprised solely of foreign
currency translation adjustments, are included in other comprehensive income in
the consolidated statements of stockholders' equity.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses and disclosure of contingent assets and liabilities. The estimates
and assumptions used in the accompanying consolidated financial statements are
based upon management's evaluation of the relevant facts and circumstances as
of the date of the financial statements. Actual results could differ from those
estimates.
Unaudited Pro Forma Information
The pro forma consolidated balance sheet as of December 31, 1998 is
unaudited. However, in the opinion of management, such information has been
prepared on the same basis as the audited financial statements and includes
adjustments to reflect (i) the net proceeds of $22,725 from the issuance of
22,825 shares of Class A Convertible Preferred Stock ("Class A Preferred"), the
repayment of approximately $9,430 of revolving debt that occurred subsequent to
December 31, 1998; (ii) the assumed net proceeds of $49,800 from a commitment
to issue 16,190,475 shares of CFN Series B mandatorily redeemable convertible
preferred stock upon the earlier of the initial public offering date or August
31, 1999; (iii) the conversion of the Class A Preferred, the Class B
Mandatorily Redeemable Convertible Preferred Stock ("Class B Preferred"), and
the Class C Mandatorily Redeemable Convertible Preferred Stock ("Class C
Preferred") into Common Stock; and (iv) the issuance of Common Stock issuable
upon the exchange of the Class D Mandatorily Redeemable Preferred Stock ("Class
D Preferred") which includes the Common Stock issuable in lieu of cash for the
liquidation value and accrued dividends, such number of common shares has been
estimated assuming an initial public offering price of $11.00, as if such
events occurred on December 31, 1998.
New accounting pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (aFAS 133). This statement establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, and for hedging
activities. The Company will be required to adopt FAS 133 for the quarter ended
March 31, 2000. The Company has not entered into any significant derivative
financial instrument transactions.
F-11
<PAGE>
iXL ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
2. Property and Equipment
Property and equipment are summarized as follows:
<TABLE>
<CAPTION>
Estimated
Useful December 31,
Lives In ---------------
Years 1997 1998
--------- ------ -------
<S> <C> <C> <C>
Land.......................................... N/A $ 100 $ 100
Building...................................... 40 550 550
Improvements.................................. 5-10 1,456 4,852
Furniture and fixtures........................ 5-7 1,286 5,472
Computer equipment and software............... 3-5 5,496 19,883
Equipment..................................... 5-10 2,247 6,068
------ -------
11,135 36,925
Less: Accumulated depreciation and
amortization................................. (1,957) (8,950)
------ -------
$9,178 $27,975
====== =======
</TABLE>
At December 31, 1997 and 1998, the Company had approximately $961 and
$2,570, respectively, of vehicles and equipment under capital leases included
in property and equipment and related accumulated amortization of approximately
$335 and $889, respectively. Amortization of these assets recorded under
capital leases is included in depreciation expense.
F-12
<PAGE>
iXL ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
3. Acquisitions
During the two-year period ended December 31, 1998, the Company acquired
28 companies. The companies acquired and purchase price, including the shares
of Class B Common Stock and related warrants and options issued are as follows:
<TABLE>
<CAPTION>
Fair Value
Per Share of Net Excess of
Fair Value Shares of Cash Used for Tangible Cost Over
of iXL Common Warrants/ Acquisitions, Total Assets Fair Value of
Date Common Stock Options Net of Cash Purchase (Liabilities) Net Assets
Business Acquired Acquired Stock Issued Issued(1) Acquired Price Acquired Acquired
----------------- -------------- ---------- --------- --------- ------------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BoxTop Interactive,
Inc.--
Los Angeles, CA(3).... May 1997 $2.10 3,416,700 1,236,800 $ 1,182 $ 9,644 $(1,635) 6,958
Other Acquisitions
(aggregated 1997)..... Various 778,300 179,800 2,251 2,804 26 2,778
--------- --------- ------- ------- ------- -------
Total of 1997
Acquisitions......... 4,195,000 1,416,600 $ 3,433 $12,448 $(1,609) $ 9,736
========= ========= ======= ======= ======= =======
Digital Planet, Inc.--
Los Angeles,
CA(3)(4).............. May 1998 5.50 259,584 -- $ 1,962 $ 3,550 $ (39) $ 3,589
Micro Interactive,
Inc.--
New York, NY(2)....... May 1998 5.50 740,000 19,500 1,718 5,809 281 5,526
CommerceWAVE, Inc.--
San Diego, CA(6)...... July 1998 5.82 877,898 64,434 117 5,459 (1,037) 6,496
Image Communications,
Inc.--
Vienna, VA(3)......... July 1998 5.82 378,999 125,054 753 3,324 381 2,943
Spinners Incorporated--
Boston, MA(3)(4)(8)... July 1998 5.82 674,132 66,495 1,383 5,543 499 5,044
Tekna, Inc.--
Richmond, VA(3)(4).... September 1998 4.50 712,622 125,757 611 4,758 527 4,231
Larry Miller
Productions, Inc.--
Boston, MA(3)......... September 1998 4.50 113,823 248,135 1,812 3,490 (143) 3,633
NetResponse--
Arlington,
VA(3)(4)(10).......... September 1998 4.50 701,375 73,625 1,719 5,307 1,312 3,995
Ionix Development
Corp.--
Chicago, IL(4)........ September 1998 4.50 358,551 -- 1,059 3,013 231 2,782
Pequot Systems, Inc.--
Norwalk, CT(4)(8)..... September 1998 4.50 378,066 -- 792 2,501 154 2,347
TwoWay Communications
LLC--Chicago,
IL(3)(9).............. September 1998 4.50 269,421 -- 1,246 2,469 335 2,134
Other Acquisitions
(aggregated 1998)..... Various 2,295,530 57,215 3,430 14,129 795 13,336
--------- --------- ------- ------- ------- -------
Total of 1998
acquisitions......... 7,760,001 780,215 $16,602 $59,352 $ 3,296 $56,056
========= ========= ======= ======= ======= =======
</TABLE>
- --------
(1) Amounts equal the number of Class B Common Stock shares to be issued upon
exercise of the warrants and options.
Primary capabilities: (2)Interactive multimedia (3)Creative design (4)Software
engineering (5)Travel expertise (6)E-Commerce (7)Video production
(8)Financial Services Consulting (9)Healthcare expertise (10)Strategy
consulting.
F-13
<PAGE>
iXL ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
Individual acquisitions with a purchase price of $2,000 or less have been
aggregated in Other Acquisitions in the schedule above and consist of the
following:
<TABLE>
<CAPTION>
Per Share
Fair Value
of iXL
Date Common
Business Acquired Acquired Stock
- ----------------- -------------- ----------
<S> <C> <C>
Webbed Feet, LLC--Atlanta, GA(3).................... February 1997 $2.00
The Whitley Group, Inc.--Charlotte, NC(2)........... April 1997 2.00
Swan Interactive Media, Inc.--Atlanta, GA(4)........ July 1997 2.25
Small World Software, Inc.--New York, NY(3)(4)...... January 1998 3.23
Green Room Productions, L.L.C.--San Francisco,
CA(3)(4)(5)........................................ February 1998 3.23
CCG Online--Denver, CO(3)(4)(5)..................... March 1998 4.60
Spin Cycle Entertainment, Inc.--Los Angeles,
CA(3)(4)........................................... May 1998 5.50
InTouch Interactive, Inc.--Charlotte, NC(4)......... May 1998 5.50
Campana New Media, S.L. and The Other Media, S.L.--
Madrid, Spain(3)................................... July 1998 5.82
601 Design, Inc.--New York, NY(7)................... July 1998 5.82
Wissing & Laurence, Inc.--New York, NY(7)........... July 1998 5.82
LAVA--Hamburg, Germany(4)........................... September 1998 4.50
Denovo New Media, Ltd.--London, England(3).......... September 1998 4.50
Exchange Place Solutions, Inc.--Atlanta, GA(8)...... September 1998 4.50
Pantheon Interactive, Inc.--Santa Clara, CA(4)...... September 1998 4.50
</TABLE>
All acquisitions have been accounted for using the purchase method, and
accordingly, the purchase price has been allocated to the tangible and
identifiable intangible assets acquired and liabilities assumed on the basis of
their fair value on the acquisition dates. The historical carrying amounts of
tangible net assets acquired approximated their fair values. The fair value of
identifiable intangible assets acquired were based on independent appraisals or
management estimates. Since the date of acquisition, the results of operations
of the acquired companies have been included in the Consolidated Statement of
Operations.
The allocation of the purchase price of BoxTop Interactive, Inc. resulted
in a $2,400 charge to in-process research and development expenses in 1997
relating to an Internet-based video conferencing product under development
which had not reached technological feasibility. Such charge has been included
in research and development expenses in the Consolidated Statement of
Operations. Certain related core technology was valued as existing technology
and not included in the value of the acquired technology in-process. The value
of the purchased in-process technology was determined by estimating the
projected net cash flows including future revenues to be earned upon
commercialization of the product and the costs to complete the development of
the technology. Strong revenue growth was projected for this product through
1999; thereafter, revenue was expected to increase moderately each year through
2001. The cash flows were then discounted to present value at 35%, a rate of
return that considers the relative risk of achieving the projected cash flows
and the time value of money. Finally, the present values of the cash flows of
the discrete projection period were summed to determine the fair market value
of the purchased in-process technology. In the fourth quarter of 1998, due to
the introduction of competing products utilizing alternative technologies into
the market, management decided to cease further investment in the development
of this product.
F-14
<PAGE>
iXL ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
For acquisitions made in 1997 and 1998, the purchase price in excess of
identifiable tangible and intangible assets acquired and liabilities assumed of
$9,736 and $56,056, respectively, was allocated to goodwill and is being
amortized over estimated useful lives ranging from 2 to 3 years.
The Company discontinued the use of a brandname acquired in the purchase
of BoxTop Interactive, Inc. and charged the remaining book value of that
intangible asset, approximately $1,700, to amortization expense in 1997.
The purchase price of the acquisitions consists of the consideration
provided to the selling stockholders, which includes Common Stock, options,
warrants and cash. The fair value of the Company's Common Stock issued as
consideration for the acquisitions was determined based primarily upon
independent appraisals. The fair value of options and warrants issued in
connection with the 1998 acquisitions was determined using the Black-Scholes
option pricing model using the following assumptions: dividend yield of 0%,
expected volatility 60%, risk free interest rate of 5.37% and an expected life
of 2-5, depending on the terms of the specific acquisition.
The terms of three of the Company's 1998 acquisition agreements provide
for additional consideration if the acquired entities' revenues exceed certain
levels. Such additional consideration is payable in shares of the Company's
Common Stock and will be recorded, if earned, as additional purchase price. For
two of the acquired companies, the contingency period ended December 31, 1998;
for the other entity, the contingency period ends October 31, 1999. As of
December 31, 1998, a total of 287,304 shares of the Company's Class B Common
Stock were held in escrow in relation to these agreements.
The targeted revenues were achieved at one of the acquired entities whose
contingency period ended December 31, 1998. As such, 50,000 shares of the
Company's Common Stock will be released from escrow in March 1999 and have been
accounted for as additional purchase price as of December 31, 1998.
For those acquisitions that have been structured as tax-free exchanges of
stock, the differences between the fair value of the acquired assets, including
intangible assets, and their historical tax bases is not deductible for income
tax purposes.
The following unaudited pro forma financial information reflects the
results of operations for the years ended December 31, 1997 and 1998, as if the
acquisitions had occurred on January 1, 1997. These unaudited pro forma results
have been prepared for comparative purposes only and do not purport to be
indicative of what operating results would have been had the acquisitions
actually taken place on January 1, 1997 and may not be indicative of future
operating results. The unaudited pro forma results are summarized as follows:
<TABLE>
<CAPTION>
Years ended
December 31,
------------------
1997 1998
-------- --------
<S> <C> <C>
Revenues.............................................. $ 55,301 $ 87,160
======== ========
Net loss.............................................. $(45,389) $(72,609)
======== ========
Net loss available to common stockholders............. $(45,389) $(81,708)
======== ========
Basic and diluted net loss per common share........... $ (2.79) $ (5.08)
======== ========
</TABLE>
F-15
<PAGE>
iXL ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
4. Intangible Assets
Intangible assets are comprised of the following:
<TABLE>
<CAPTION>
December 31,
----------------
1997 1998
------- -------
<S> <C> <C>
Excess of cost over fair
value of net assets ac-
quired................. $17,067 $73,123
Other................... 3,496 3,892
------- -------
20,563 77,015
Less--accumulated amor-
tization............... (4,330) (20,534)
------- -------
$16,233 $56,481
======= =======
</TABLE>
5.Equity Investment in Affiliate
Effective August 27, 1996, the Company acquired a 22% equity interest in
the outstanding convertible preferred stock of UNI for $750 in cash. UNI
develops and manages sports information websites for colleges, universities and
athletic associations. Pursuant to agreements with UNI, the Company performed
Internet development and financial consulting services and payment for these
services has been made in shares of UNI convertible preferred stock valued at
$1 per share.
The Company accounts for its investment in UNI under the equity method.
The Company's investments in UNI have been accounted for as excess of cost over
fair value of net assets acquired and were being amortized over five years as a
reduction to the investment account together with the Company's share of UNI
losses. The Company's investment balance in UNI reached zero in the fourth
quarter of 1998. Because the Company has no obligation to fund UNI's operations
or deficit, the Company has discontinued recording its share of UNI's losses.
The Company will not recognize its share of any future earnings from UNI until
UNI earnings are sufficient to recover the unrecognized losses.
The following is a summary of the activity in the investment in UNI:
<TABLE>
<CAPTION>
For the
period
May 1, 1996 Years Ended
through December 31,
December 31, ----------------
1996 1997 1998
------------ ------- -------
<S> <C> <C> <C>
Net investment in UNI balance, beginning
of period............................... $ -- $ 1,298 $ 1,115
Additional investment in UNI............. 1,547 1,260 525
Equity in UNI net loss................... (174) (1,001) (1,010)
Amortization of goodwill................. (75) (442) (630)
------ ------- -------
Net investment in UNI balance, end of pe-
riod.................................... $1,298 $ 1,115 $ --
====== ======= =======
</TABLE>
F-16
<PAGE>
iXL ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
The following is a summary of certain unaudited financial information of
UNI as of and for the years ended December 31, 1997 and 1998:
<TABLE>
<CAPTION>
December 31,
--------------
1997 1998
------ ------
<S> <C> <C>
Current assets............................................. $ 467 $2,703
Non current assets......................................... 176 333
Current liabilities........................................ 543 1,295
Non current liabilities.................................... 560 --
Stockholders' equity....................................... (460) 1,741
Net revenues............................................... 795 1,559
Net loss................................................... (2,919) (5,071)
</TABLE>
As of December 31, 1998, the Company owned a 23% interest in UNI. UNI has
certain outstanding stock options and warrants which, if exercised, would not
materially reduce the Company's investment ownership percentage in UNI.
6. Accrued Liabilities
Accrued liabilities consist of the following:
<TABLE>
<CAPTION>
December 31,
-------------
1997 1998
------ ------
<S> <C> <C>
Accrued compensation and related costs...................... $ 709 $3,244
Other accrued liabilities................................... 1,037 4,699
------ ------
$1,746 $7,943
====== ======
</TABLE>
7. Long-Term Debt
The Company's long-term debt is comprised of the following:
<TABLE>
<CAPTION>
December 31,
--------------
1997 1998
----- -------
<S> <C> <C>
Borrowings under Credit Agreement........................ $ -- $19,328
8.25% note payable to bank in monthly installments
through January 2002, collateralized by land and
building................................................ 484 465
Notes payable to banks and a former shareholder at
interest rates from 8.9% to 10.4%; all repaid in 1998... 183 --
Capital lease obligations, at interest rates from 4% to
24% expiring from 1998 to 2003.......................... 606 1,627
----- -------
Total debt............................................. 1,273 21,420
Less current portion of long-term debt................... (433) (868)
----- -------
Long-term debt........................................... $ 840 $20,552
===== =======
</TABLE>
In July 1998, the Company entered into a credit agreement (the "Credit
Agreement") with a bank providing for borrowings of up to $20,000. The Credit
Agreement expires June 30, 2001. The Credit Agreement includes a $10,000 term
loan and a $10,000 revolving line of credit and bears interest payable
quarterly at the higher of the prime rate plus 2% or the federal funds
effective rate plus 2.5%. The Credit Agreement is secured by liens on
substantially all of the assets of the Company's domestic subsidiaries, except
F-17
<PAGE>
iXL ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
CFN, including a pledge of the capital stock of the same subsidiary companies.
The Credit Agreement provides for borrowings based upon a borrowing base
formula. Borrowings under the term loan portion of the Credit Agreement are
payable $50 each quarter, commencing September 30, 1998, with the balance due
upon expiration. A 0.5% annual commitment fee is charged on the average unused
portion of the revolving line of credit. At December 31, 1998, the Company's
borrowing rate under the Credit Agreement was 9.75%.
Under the terms of the Credit Agreement and notes payable to banks, the
Company is required to maintain certain financial covenants related to
consolidated earnings, consolidated debt to capital and working capital, among
others. At December 31, 1998, the Company was in compliance with, or has
received a waiver of all covenants.
As of December 31, 1998, the Company had letters of credit outstanding,
totaling $1,740. Certificates of deposits in the same amount, which are
included in prepaid expenses and other assets, are pledged as collateral for
these letters of credit.
As of December 31, 1998, aggregate principal maturities of notes payable
and capital lease obligations are as follows:
<TABLE>
<CAPTION>
December 31,
Year 1998
---- ------------
<S> <C>
1999.......................................................... $ 868
2000.......................................................... 674
2001.......................................................... 19,220
2002.......................................................... 627
2003.......................................................... 31
-------
$21,420
=======
</TABLE>
8. Mandatorily Redeemable Preferred Stock; Mandatorily Redeemable Preferred
Stock of Subsidiary; and Warrants
A total of 265,000 shares of mandatorily redeemable convertible preferred
stock have been designated for issuance; 200,000, 15,000 and 50,000 of such
shares have been designated as Class B, Class C and Class D, respectively.
In December 1997, for net consideration of approximately $26,900 and
$2,990, the Company issued 83,075 shares of Class B Preferred, par value $.01,
and 9,232 shares of Class C Preferred, par value $.01. In conjunction with this
equity transaction, the Company issued warrants to purchase 10,650 shares of
Class B Preferred for $458 per share.
In February 1998, for net consideration of approximately $4,935 the
Company issued 15,692 shares of Class B Preferred and warrants to purchase
1,810 shares of Class B Preferred for $458 per share.
In August 1998, for net consideration of approximately $35,400, the
Company issued 35,700 shares of Class D Preferred, $.01 par value.
In November 1998, the Company issued warrants to purchase 500,000 shares
of Class A Common Stock at $10 per share. The warrants expire three years from
the date of grant and were issued upon the Company's approval of a marketing
plan. The fair value of the warrants was measured on the date the warrants
F-18
<PAGE>
iXL ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
were earned, using the Black-Scholes option pricing model and was recorded as
an expense of approximately $815 in the fourth quarter of 1998. The assumptions
utilized by the Company in determining the fair value of these warrants were as
follows: dividend yield 0%, risk-free interest rate 5.0%, expected volatility
72%, and expected life of 3 years.
In December 1998, the Company issued warrants to purchase 500,000 shares
of Class B Common Stock at $10 per share. The warrants expire the later of
eighteen months from the date of grant or twelve months after an initial public
offering of the Company's Common Stock. The warrants were granted in
conjunction with a contract that will generate revenue for the Company
beginning in 1999 and are exercisable immediately. The fair value of the
warrants was measured at the grant date using the Black-Scholes option pricing
model and the related charge will be recorded as contra-revenue as the services
are provided to the customer. The assumptions utilized by the Company in
determining the fair value of these warrants were as follows: dividend yield
0%, risk free interest rate 5.0%, expected volatility 82%, and expected life of
18 months.
The Company has accounted for the Class B, Class C and Class D Preferred
as mandatorily redeemable preferred stock. Accordingly, the Company is accruing
dividends and amortizing any difference between the carrying value and the
redemption value over the redemption period with a charge to additional paid-in
capital ("APIC").
The Class D Preferred provides that, upon redemption the holders will
receive $1,000 per share plus any accrued and unpaid dividends and a certain
number of shares of Class B Common Stock of the Company. The aggregate number
of shares of Class B Common Stock to be issued varies based on the timing of a
Qualified Public Offering, but at a minimum, equals 3,722,502 shares. The
proceeds from the issuance of the Class D Preferred have been allocated to the
Class D Preferred (included in mandatorily redeemable preferred stock) and
Class B Common Stock to be issued (included in additional paid-in-capital),
based on the relative fair values of the securities as of the date of issuance.
Of the approximately $35,400 total proceeds from the issuance of the Class D
Preferred, $22,165 was allocated to the Class D Preferred and the remaining
$13,235 was allocated to Class B Common Stock to be issued. The amount
allocated to the Class B Common Stock to be issued was based on the fair value
of the guaranteed minimum number of shares (3,722,502) to be issued. The number
of shares of Class B Common Stock to be issued increases depending on the
timing of a Qualified Public Offering, up to a maximum of 5,279,293 shares. The
fair value of the additional 1,556,791 potentially issuable shares of Class B
Common Stock is determined at the end of each reporting period and is ratably
charged to net loss available to common stockholders, over the 7-year
redemption period. The Company is accruing the 12% dividend on the Class D
Preferred and accreting any difference between the carrying value and the
redemption value over the 7-year redemption period with a charge to APIC.
The amount charged to APIC related to the Class B and Class C Preferred
was $5,449 and $926, respectively, for the year ended December 31, 1998. The
Company has reserved 18,817 Class B Preferred shares for exercise of warrants
and conversion of 10,799,020 Class A Common Shares.
The rights, preferences and privileges with respect to the Class B, Class
C and Class D Preferred are as follows:
Voting
Class B Preferred has the same number of votes as each share of Class A
Common Stock into which such preferred stock may be converted. Class C and
Class D Preferred have no voting rights.
F-19
<PAGE>
iXL ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
Dividends
The Company may make distributions to Class B and Class C Preferred;
however, there is no requirement for dividends. If a distribution is made to
common stockholders, Class A, Class B and Class C Preferred stockholders will
receive a similar per share amount based on the number of shares of Class A
Common Stock into which the Class A, Class B and Class C Preferred will
convert. The Class D Preferred accrues dividends at the rate of 12% per annum.
Conversion
Each share of Class B and Class C Preferred is convertible at the option
of the holder into 100 shares of Class A Common Stock. This conversion rate is
subject to change if certain events occur that would otherwise dilute the
conversion rights of the Class B and Class C Preferred. Such conversion is
automatic upon the effective date of an initial public offering of the
Company's Common Stock with a per share price of at least $7 and for which the
aggregate proceeds to the Company equal at least $30,000 (a "Qualified Public
Offering"). The Class D Preferred is not convertible.
Redemption
The Company has the right to redeem the Class B and Class C Preferred
prior to December 31, 2004 only upon a change in control. The Class B and Class
C Preferred stockholders have the right, at their option, to require the
Company to redeem any or all of the stock on or after December 31, 2004. The
redemption amount will be the fair value per share of the Class B and Class C
Preferred, as of the date of redemption, plus an amount equal to all declared
and unpaid dividends. The Company is accreting the carrying value of the Class
B and Class C Preferred up to the redemption price over the period from
issuance until December 31, 2004.
The Company has the right to redeem the Class D Preferred at any time
prior to its mandatory redemption date of August 2005. The Class D Preferred
stockholders have the right to require the Company to redeem the shares only
upon the occurrence of certain events. Holders of Class D Preferred have the
right at their option to require the Company to redeem the Class D Preferred
held by them at any time after August 2005, or at any time after one of the
following redemption events, if earlier: a breach of the dividend payment
provisions of the Class D Preferred; a bankruptcy of the Company or any of its
subsidiaries; a judgment for payment of money in an amount exceeding $5,000;
the acceleration of indebtedness in an amount exceeding $5,000; a breach of the
documents governing the issuance of the Class D Preferred; or a change of
control. The redemption amount is equal to the liquidation preference amount
plus all accrued and unpaid dividends plus a certain number of shares of Class
B Common Stock, which varies depending on the timing of a Qualified Public
Offering, as follows:
<TABLE>
<CAPTION>
Number of Class B
Common Stock Shares
Date of Qualified Public Offering to be issued
--------------------------------- -------------------
<S> <C>
prior to or on August 14, 1999......................... 3,722,502
August 15, 1999-February 14, 2000...................... 4,647,602
after February 14, 2000................................ 5,279,293
</TABLE>
Liquidation
The Class D Preferred has liquidation preference over the Class A, Class
B and Class C Preferred, which all have the same liquidation preference based
on their respective liquidation values. All classes of preferred stock have
liquidation preference over the Class A and Class B Common Stock. The
liquidation value equals $325 per share for the Class B and Class C Preferred
and $1,000 per share for the Class D Preferred plus any declared and unpaid
dividends, subject to adjustment.
F-20
<PAGE>
iXL ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
The following is a summary of the carrying value of the mandatorily
redeemable preferred stock:
<TABLE>
<CAPTION>
December 31,
-----------------------------------------------
1997 1998
------------------- -------------------
Redemption Carrying Redemption Carrying
Value Value Value Value
---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Class B Preferred............... $27,000 $26,937 $93,829 $37,683
Class C Preferred............... 3,000 2,993 8,770 3,523
Class D Preferred............... -- -- 50,552 24,473
------- -------
$29,930 $65,679
======= =======
</TABLE>
The rights, preferences and privileges with respect to the mandatorily
redeemable preferred stock of subsidiary, CFN Mandatorily Redeemable Preferred,
are as follows:
Authorized number of shares
As of December 31, 1998, there were 24,900,000, 13,333,334 and 13,333,334
shares of CFN Mandatorily Redeemable Preferred shares authorized, issued and
outstanding, respectively. There were no shares authorized, issued or
outstanding as of December 31, 1997.
Voting
Each share of CFN Mandatorily Redeemable Preferred is entitled to one
vote on issues that are subject to a vote of the CFN stockholders.
Dividends
CFN may make distributions to CFN Mandatorily Redeemable Preferred
stockholders; however, there is no requirement for dividends. If a distribution
is made to the common stockholder of CFN, CFN Mandatorily Redeemable Preferred
stockholders will receive a similar per share amount based on the number of CFN
common shares into which the CFN Mandatorily Redeemable Preferred is then
convertible.
Conversion
Each share of CFN Mandatorily Redeemable Preferred is convertible into
one share of CFN Common Stock. This conversion rate is subject to change if
certain events occur that would otherwise dilute the conversion rights of the
CFN Mandatorily Redeemable Preferred stockholders. Such conversion is automatic
upon the effective date of an initial public offering of at least 15% of CFN's
Common Stock with a per share price of at least $2 (the "CFN Qualified Public
Offering").
Liquidation
The CFN Mandatorily Redeemable Preferred has liquidation preference over
the CFN Common Stock. The Liquidation Value is equal to $0.75 per share and is
subject to adjustment if certain events occur that would otherwise dilute the
liquidation rights of the CFN Mandatorily Redeemable Preferred. The amount to
be paid to the CFN Mandatorily Redeemable Preferred stockholders equals the
liquidation value plus any declared and unpaid dividends as of the liquidation
date. CFN Mandatorily Redeemable Preferred stockholders will not participate in
any balance remaining after such amounts have been paid.
F-21
<PAGE>
iXL ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
Redemption
CFN Mandatorily Redeemable Preferred stockholders have the right at their
option, to require CFN to redeem any or all of the CFN Mandatorily Redeemable
Preferred on or after December 31, 2005. Such redemption will be a redemption
price per share equal to the Liquidation Value plus all declared and unpaid
dividends. As of December 31, 1998, the carrying value of the CFN Mandatorily
Redeemable Preferred equaled its redemption value.
Exchange into Common Stock of the Company
Pursuant to the terms of the CFN stockholders' agreement each of the CFN
Mandatorily Redeemable Preferred stockholders has the right to exchange all,
but not less than all, of their CFN Mandatorily Redeemable Preferred into the
Company's Common Stock under two separate exchange rights. First, an exchange
may be made upon a change in control of CFN, unless (a) the change in control
occurs in the context of a tag-along, drag-along, or sale of CFN governed by
the CFN stockholders agreement, (b) the change in control transaction involves
the issuance of securities of CFN and the holders of CFN Mandatorily Redeemable
Preferred choose to exercise their preemptive rights with respect to such
issuance, or (c) the transaction effecting the change in control is a CFN
Qualified Public Offering. Second, the CFN Mandatorily Redeemable Preferred
stockholders have a one-time right to exchange on November 3, 2001, unless the
Company is no longer a stockholder of CFN and no CFN Qualified Public Offering
has occurred. In either case, the exchange rate will be based on the relative
fair values of CFN and the Company. The value of CFN Mandatorily Redeemable
Preferred upon a change in control transaction will be the price per share paid
in connection with such transaction. The value of CFN Mandatorily Redeemable
Preferred under the exchange right available on November 3, 2001 will be the
greater of the Liquidation Value of such stock or the appraised fair market
value of such stock assuming a conversion of such stock into the Common Stock
of CFN. CFN Mandatorily Redeemable Preferred will then be exchanged into an
equivalent value of the Company's Common Stock based on a trailing average of
closing prices of the Company's Common Stock, if such stock is publicly traded,
or the most recent appraisal of the Company, if such stock is not publicly
traded.
Commitment to Purchase CFN Mandatorily Redeemable Preferred
If as of November 3, 1999, CFN has sold fewer than 24,900,000, shares of
CFN Mandatorily Redeemable Preferred (including the 13,333,334 sold as of
December 31, 1998), the Company will purchase the number of shares of CFN
Mandatorily Redeemable Preferred equal to the difference between 24,900,000 and
the number of shares theretofore sold by CFN for $0.75 per share.
9. Stockholders' Equity
The Company's capital stock consists of $.01 par value Class A Common
Stock, $.01 par value Class B Common Stock, and $.01 par value Class A
Preferred. At December 31, 1997 and 1998, there were no outstanding shares of
Class A Common Stock.
During the year ended December 31, 1998, for consideration of
approximately $5,510, which includes a $900 note receivable, the Company issued
8,031 shares of Class A Preferred.
The rights, preferences and privileges with respect to the Common Stock
and Class A Preferred are as follows:
Voting
Holders of shares of Class A Common Stock are entitled to ten votes per
share, holders of Class B Common Stock are entitled to one vote per share and
holders of Class A Preferred are entitled to voting rights as if the stock had
been converted into Class A Common Stock.
F-22
<PAGE>
iXL ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
Dividends
Holders of shares of Class A and Class B Common Stock are entitled to
share, on an as converted basis with the Class A Preferred, Class B Preferred
and Class C Preferred any dividends declared by the Board of Directors.
Conversion
Holders of shares of Class A Common Stock are entitled to convert their
shares into Class B Common Stock at any time on a share-for-share basis. Each
share of Class A Preferred is convertible into 100 shares of Class A Common
Stock. This conversion rate is subject to change if certain events occur that
would otherwise dilute the conversion rights of the Class A Preferred. Such
conversion is automatic upon the effective date of a Qualified Public Offering.
The Company has reserved 25,000,000 shares of Class B Common Stock for issuance
upon conversion of Class A Preferred.
Redemption
The Class A Preferred stockholders have no option to require the Company
to redeem their stock. The Company has the right to an early redemption, at the
liquidation value, only upon a change in control, as defined.
Liquidation
The Class A Preferred has liquidation preference over the Class A and
Class B Common Stock. The liquidation value for the Class A Preferred will
equal the amount invested, which ranges from $100 to $1,000 per share, plus any
declared and unpaid dividends.
Other
Under certain limited circumstances as described in the Stockholders'
Agreement ("Agreement"), management can put their preferred and/or common
shares back to the Company at fair value, as defined in the Agreement. The
Company is obligated to pay for the shares in cash, or at the option of the
Board of the Directors, with a promissory note. The Agreement terminates upon
the effective date of a Qualified Public Offering.
Treasury stock
During February and March 1998, the Company purchased a total of 242,416
shares of Class B Common Stock from two employees at a purchase price of $3.25
per share. During September 1998, the Company purchased a total of 10,000
shares of Class B Common Stock from one employee at a price of $10 per share.
F-23
<PAGE>
iXL ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
10. Income Taxes
The components of the benefit (provision) for income taxes consist of the
following:
<TABLE>
<CAPTION>
For the period
May 1, 1996 Years ended
through December 31,
December 31, --------------
1996 1997 1998
-------------- ------- ------
<S> <C> <C> <C>
Current:
State....................................... $(42) $ -- $ --
---- ------- -----
Deferred:
State....................................... 101 --
Federal..................................... 243 1,550 --
---- ------- -----
344 1,550 --
---- ------- -----
$302 $ 1,550 $ --
==== ======= =====
</TABLE>
As of December 31, 1997 and 1998, the Company had net operating loss
carryforwards for federal income tax purposes of approximately $11,200 and
$46,560, respectively. The Company acquired loss carryforwards of approximately
$1,100 in 1996, $1,560 in 1997 and $3,510 in 1998. The carryforwards expire in
varying amounts through 2018. The use of acquired net operating loss
carryforwards is restricted in accordance with Internal Revenue Service
regulations.
In addition, under the Tax Reform Act of 1986, the amounts of, and the
benefits from, net operating loss carryforwards may be impaired or limited in
certain circumstances. These circumstances include, but are not limited to, a
cumulative stock ownership change of greater than 50% over a three-year period.
A valuation allowance has been recorded against the Company's net deferred tax
asset as management believes it is more likely than not that they will not be
realized.
A reconciliation of the federal statutory rate and the effective income
tax rate follows:
<TABLE>
<CAPTION>
For the period
May 1, 1996 Years ended
through December 31,
December 31, -----------------
1996 1997 1998
-------------- ------- --------
<S> <C> <C> <C>
Statutory federal tax rate (34%)......... $ 597 $ 6,311 $ 18,574
Nondeductible amortization............... (315) (1,800) (4,627)
State income tax......................... 24 252 743
Losses of foreign subsidiaries........... -- -- (860)
Valuation allowance...................... (312) (3,391) (13,427)
Other.................................... 308 178 (403)
----- ------- --------
$ 302 $ 1,550 $ --
===== ======= ========
</TABLE>
F-24
<PAGE>
iXL ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
Deferred tax (assets) liabilities are comprised of the following:
<TABLE>
<CAPTION>
December 31,
-----------------
1997 1998
------- --------
<S> <C> <C>
Gross deferred tax assets
Allowance for doubtful accounts...................... $ (28) $ (349)
Loss in equity investment............................ (643) (750)
Intangibles.......................................... -- (967)
Net operating loss carryforward...................... (4,330) (16,923)
Valuation allowance.................................. 3,703 17,130
------- --------
$(1,298) $ (1,859)
======= ========
Gross deferred tax liabilities
Property and equipment............................... 242 842
Intangible assets.................................... 840 840
Conversion from S Corporation to C Corporation....... 116 77
Other................................................ 100 100
------- --------
1,298 1,859
------- --------
Net deferred tax asset................................. $ -- $ --
======= ========
</TABLE>
11. Stock-Based Compensation
The Company's 1996 Stock Option Plan (the "1996 Stock Option Plan") was
established to promote the success of the Company by providing an additional
means to attract and retain key personnel. Pursuant to the terms of the 1996
Stock Option Plan, a committee of the Board of Directors is authorized to grant
options to purchase Class B Common Stock not to exceed an aggregate maximum of
25,000,000 shares to officers and employees. The committee is further
authorized to establish the exercise price and the vesting terms.
In December 1998, the Board of Directors of the Company adopted the 1998
Non-Employee Stock Option Plan (the "1998 Stock Option Plan"), which contains
essentially the same terms as the 1996 Stock Option Plan, except that the 1998
Stock Option Plan was established for grants to persons who are not employees
of the Company. The 1998 Stock Option Plan authorizes the granting for up to an
aggregate maximum of 1,000,000 options, of which 290,464 were outstanding as of
December 31, 1998.
The Company expects that most options granted pursuant to the plans will
be subject to vesting over a period of 4 to 5 years, such as 20% increments
each year over a period of five years, during which the optionee must continue
to be an employee of the Company. The committee, however, may choose to impose
different vesting requirements or none at all. Options outstanding under the
Plan generally have a term of ten years.
The Company applies APB 25 and related Interpretations in accounting for
the Plan. During 1997 and 1998, $0 and $1,641, respectively, of compensation
expense was recognized. Stock options issued in connection with acquisitions
were accounted for as purchase price.
F-25
<PAGE>
iXL ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
Had compensation expense for the Company's Plan been determined under the
provisions of FAS 123 based on the fair value at the grant date, the Company's
net loss and loss per share would have been increased to the pro forma amounts
indicated below:
<TABLE>
<CAPTION>
For the period
May 1, 1996 For the years ended
through December 31,
December 31, --------------------
1996 1997 1998
-------------- --------- ---------
<S> <C> <C> <C>
Net loss
As reported....................... $(1,454) $ (17,012) $ (54,630)
Pro forma......................... $(1,481) $(17,073) $(56,152)
Basic and diluted net loss per
common share
As reported....................... $ (0.37) $ (2.60) $ (5.41)
Pro forma......................... $ (0.37) $ (2.61) $ (5.54)
</TABLE>
The minimum value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted-
average assumptions used for grants during the 1996, 1997 and 1998 periods,
respectively; dividend yield of 0% for all periods; expected volatility of 0%
for all periods, risk free interest rate of 6.3%, 5.7% and 5.0%, expected life
of 5 years, 4 years and 4 years.
A summary of stock options as of December 31, 1996, 1997 and 1998 and
activity during the period ending on those dates is as follows:
<TABLE>
<CAPTION>
1996 1997 1998
------------------- ------------------- --------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Options Price Options Price Options Options
--------- -------- --------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning
of period.............. -- -- 1,915,500 $1.77 5,549,200 $2.35
Granted................. 1,920,500 $1 .77 3,847,200 $2.59 13,310,331 $7.31
Exercised............... -- -- -- -- (57,800) $0.01
Forfeited............... (5,000) $ 1.00 (213,500) $1.03 (575,619) $5.39
--------- ------ --------- ----- ---------- -----
Outstanding at the end
of period.............. 1,915,500 $ 1.77 5,549,200 $2.35 18,226,112 $5.89
--------- ------ --------- ----- ---------- -----
Options exercisable at
end of period.......... 1,183,100 $ 1.93 3,045,300 $2.03 7,833,247 $3.88
--------- ------ --------- ----- ---------- -----
Weighted average fair
value of options
granted during the
period.................
<CAPTION>
1996 1997 1998
------------------- ------------------- --------------------
Weighted Weighted Weighted Weighted Weighted Weighted
Average Fair Average Fair Average Fair
Options Granted During Exercise Market Exercise Market Exercise Market
the Year Price Value Price Value Price Price
---------------------- --------- -------- --------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Option price>fair market
value $ 0.70 $ 1.77 $ 2.13 $3.45 $ 9.91 $ --
Option price=fair market
value -- -- $ 2.50 $2.50 $ 5.00 $0.91
Option price<fair market
value -- -- $ 2.13 $0.90 $ 3.49 $2.10
</TABLE>
F-26
<PAGE>
iXL ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
The following table summarizes information about stock options
outstanding at December 31, 1998:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
-------------------------------- --------------------
Number Number
Outstanding Weighted Weighted Exercisable Weighted
at Average Average at Average
December Remaining Exercise December Exercise
Range of 31, Contractual Price 31, Price
Exercise Prices 1998 Life $ 1998 $
--------------- ----------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$0.01-$0.75 537,954 9.30 $ 0.19 531,460 $ 0.18
$0.95-$1.32 1,423,665 8.15 $ 0.97 1,217,835 $ 0.97
$1.84-$2.60 2,533,004 7.91 $ 2.18 1,866,974 $ 2.12
$3.00-$4.50 4,575,339 9.05 $ 3.97 2,102,997 $ 3.87
$5.00-$6.00 1,904,351 9.18 $ 5.08 818,487 $ 5.06
$8.00-$10.00 7,251,799 9.78 $10.00 1,295,494 $10.00
---------- ---------
18,226,112 7,833,247
========== =========
</TABLE>
12. Employee Benefit Plans
Employees of the Company can elect to participate in the iXL
Enterprises, Inc. Savings Plan (the "Plan") which is intended to be qualified
and exempt from tax under Section 401(k) of the Internal Revenue Code.
Employees are eligible to participate in the Plan after one month of service
and can elect to invest 1% to 16% of their pre-tax earnings. All employee
contributions are fully vested and there have not been material contributions
to the Plan by the Company.
13. Commitments and Contingencies
Certain operating facilities and equipment are leased under non-
cancelable agreements. Operating lease expense charged to operations was
approximately $184 in 1996, $956 in 1997 and $3,844 in 1998. As of December
31, 1998, the approximate future minimum lease payments for noncancelable
operating leases are as follows:
<TABLE>
<S> <C>
1999............................................................... $ 6,586
2000............................................................... 5,862
2001............................................................... 5,485
2002............................................................... 5,264
2003............................................................... 4,112
Thereafter......................................................... 15,832
-------
$43,141
=======
</TABLE>
As of December 31, 1998, the Company has commitments for capital
expenditures of approximately $5,400, primarily in connection with expansion
and improvement of its Atlanta, New York and Denver offices.
The Company is subject to legal proceedings and claims that arise in the
ordinary course of its business. In the opinion of the management, the amount
of the ultimate outcome of these actions will not materially affect the
Company's financial position, results of operations or cash flows.
F-27
<PAGE>
iXL ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
14. Business Segments
The Company operates in two business segments: strategic Internet
services, which includes Internet strategy consulting, Internet-based business
solutions and solution sets; and CFN, an e-commerce platform for marketing
financial services and employee benefits.
iXL's reportable segments are strategic business units that offer
different products and services. They are managed separately because each
segment requires different technology, strategic competencies, and marketing
strategies.
A summary of the Company's two business segments for the two years ended
December 31, 1998 is set forth below. For the year ended December 31, 1997,
CFN's information includes the period from December 20, 1996 (date of
acquisition) through December 31, 1997:
<TABLE>
<CAPTION>
Strategic
Internet
1998 Services CFN Total
---- --------- ------- -------
<S> <C> <C> <C>
Revenues....................................... $64,516 $ 251 $64,767
Loss from operations........................... (39,400) (13,542) (52,942)
Loss on equity investment...................... (1,640) -- (1,640)
Interest income................................ 713 37 750
Interest expense............................... 750 20 770
Amortization................................... 16,298 56 16,354
Depreciation................................... 4,542 675 5,217
Identifiable assets............................ 125,519 9,696 135,215
Capital expenditures........................... 18,082 2,222 20,304
</TABLE>
<TABLE>
<CAPTION>
1997
----
<S> <C> <C> <C>
Revenues......................................... $18,986 $ -- $18,986
Loss from operations............................. (12,466) (4,667) (17,133)
Loss on equity investment........................ (1,443) -- (1,443)
Interest income.................................. 136 -- 136
Interest expense................................. 238 -- 238
Amortization..................................... 5,475 56 5,531
Depreciation..................................... 1,328 80 1,408
Identifiable assets.............................. 54,186 1,454 55,640
Capital expenditures............................. 5,795 909 6,704
</TABLE>
15. Related Party Transactions
In January 1997, the Company entered into an agreement to lease its
headquarters office space from Park Place Emery, L.L.C. ("PPE") commencing
April 1, 1997 for a term of eleven years. The Chief Executive Officer and
Chairman of the Board of Directors (the "Chairman") of the Company is a limited
partner in PPE. The Company paid $441 and $628 under this lease in 1997 and
1998, respectively.
During 1997, certain executive officers of the Company loaned the Company
a total of $6,600. The loans bore interest at 12% and were repaid during the
year. Interest expense recognized in 1997 related to these borrowings was
approximately $88. In June 1998, the Chairman's spouse loaned the Company
$4,000 at an interest rate of 10%. The principal and interest on this note were
repaid in July 1998.
F-28
<PAGE>
iXL ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
In April 1996, the Company paid Kelso & Company a fee of $150 for
financial advisory services. In addition, the Company agreed to pay Kelso &
Company an annual fee of $15 for financial advisory services. The Company has
also agreed to indemnify Kelso & Company against certain claims, losses,
damages, liabilities and expenses which may arise in connection with rendering
such financial advisory services.
In June 1998, the Company created a wholly owned subsidiary, Permit.Com,
Inc. On June 26, 1998, the Board of Directors of the Company approved and
declared a dividend of the common stock of Permit.Com, Inc. payable to
stockholders of the Company of record as of June 1, 1998. The carrying value of
the assets of Permit.Com, Inc. were $0.
The Company recognized revenues in 1996, 1997 and 1998 from providing
services to certain of its investors, and entities related to its investors, of
$0, $100 and $2,177, respectively.
16. Subsequent Events
In January 1999, for net consideration of approximately $22,725, the
Company issued 22,825 shares of Class A Preferred. A portion of the proceeds
were used to repay approximately $9,430 of the borrowings under the revolving
line of credit portion of the Credit Agreement.
The Company's Board of Directors authorized the Company to file a Form S-
1 with the Securities and Exchange Commission under the Securities Act of 1933
with respect to an initial public offering of the Company's Common Stock. In
connection with the offering, the Company has agreed to pay Kelso & Company a
fee equal to $750 payable in shares of Common Stock, valued at the offering
price.
In February 1999, the Company's Board of Directors adopted the 1999
Employee Stock Option Plan (the "1999 Stock Option Plan"). The 1999 Stock
Option Plan authorizes the granting of options to purchase up to an aggregate
maximum of 5,000,000 shares of Class B Common Stock.
Prior to the closing of the Company's initial public offering, the
Company's shareholders will approve an amendment to the Company's Certificate
of Incorporation which will take effect upon such closing. Pursuant to such
amendment, upon the closing of the initial public offering, all outstanding
shares of Class A, Class B and Class C Convertible Preferred Stock, Class D
Nonvoting Preferred Stock, and Class A and Class B Common Stock will be
reclassified as common stock. This reclassification will preclude the automatic
conversion feature of the Class A, Class B and Class C Convertible Preferred
Stock.
The Class D Preferred Stockholders will, as a result of the
reclassification, receive in the aggregate 3,722,502 shares of common stock
plus a number of shares equal to the Class D Preferred Stock liquidation value
of $35,700 plus accrued dividends divided by the gross initial public offering
price of common stock before deducting any underwriting or other selling
discounts. This transaction will result in a charge to net loss available to
common shareholders equal to the difference between $35,700 plus accrued
dividends and the carrying value of the Class D Preferred Stock.
Subsequent Event (unaudited)
In April 1999, the Company entered into several agreements with
affiliates of the General Electric Company ("GE") whereby (1) GE committed to
purchase 16,190,475 shares of CFN series B mandatorily redeemable convertible
preferred stock (12.5% of CFN, on an as converted basis) for a purchase price
of approximately $50,000 payable upon the earlier of the initial public
offering date or August 31, 1999 (2) GE entered into a services agreement that
provides that GE will purchase
F-29
<PAGE>
iXL ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
$20,000 of services from the Company and in exchange for entering into such
agreement the Company will grant GE warrants to purchase 1 million shares of
the Company's common stock at an exercise price of $15 per share (3) GE commits
to purchase 2 million shares of the Company's common stock at a price per share
equal to the initial public offering price in a private placement that will be
concurrent with the proposed initial public offering and (4) the Company will
grant GE warrants to purchase 1.5 million shares of the Company's common stock
at an exercise price equal to the initial public offering price in
consideration for GE (a) entering into a marketing campaign to advertise its
relationships with the Company and CFN, and (b) entering into an agreement to
use reasonable efforts to provide access to CFN's platform to its employees.
In conjunction with the above agreements, the exchangeability feature of
the CFN Mandatorily Redeemable Preferred, as described in Note 8, was
eliminated. In addition, the commitment of the Company to purchase additional
shares of CFN Mandatorily Redeemable Preferred, as described in Note 8, was
also eliminated.
F-30
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholder of
BoxTop Interactive, Inc.
In our opinion, the accompanying balance sheet and the related statements
of operations, of changes in shareholders' deficit and of cash flows present
fairly, in all material respects, the financial position of BoxTop Interactive,
Inc. (the "Company") at September 30, 1996 and May 31, 1997, and the results of
its operations and its cash flows for the period November 6, 1995 (inception)
through September 30, 1996 and the period October 1, 1996 through May 31, 1997,
in conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
PricewaterhouseCoopers LLP
Atlanta, Georgia
October 3, 1997
F-31
<PAGE>
BOXTOP INTERACTIVE, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
September 30, May 31,
1996 1997
------------- -----------
<S> <C> <C>
ASSETS
Current assets
Cash.............................................. $ 2,288 $ --
Accounts receivable............................... 241,007 319,869
Prepaid expenses and other assets................. 2,255 81,139
---------- -----------
Total current assets............................ 245,550 401,008
---------- -----------
Property and equipment, net......................... 313,876 391,454
Advances to shareholder............................. 18,945 79,565
Intangible asset, net of accumulated amortization of
$10,415 at May 31, 1997............................ -- 239,585
Other noncurrent assets............................. 25,751 27,373
---------- -----------
Total assets.................................... $ 604,122 $ 1,138,985
========== ===========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities
Accounts payable.................................. $ 502,476 $ 604,007
Accrued expenses.................................. 606,663 319,861
Current portion of long-term debt................. 223,718 1,493,836
Current portion of capital lease obligations...... 37,024 41,351
Due to affiliate.................................. 60,052 208,835
---------- -----------
Total current liabilities....................... 1,429,933 2,667,890
---------- -----------
Long-term debt...................................... 36,620 24,413
Capital lease obligations........................... 81,844 50,854
---------- -----------
Total liabilities............................... 1,548,397 2,743,157
---------- -----------
Shareholders' deficit
Common stock, $.01 par value; Authorized
50,000,000 shares; issued and outstanding
3,200,000 and 3,350,000 shares, respectively..... 32,000 33,500
Additional paid-in capital........................ 2,490 89,490
Accumulated deficit............................... (978,765) (1,727,162)
---------- -----------
Total shareholders' deficit..................... (944,275) (1,604,172)
---------- -----------
Total liabilities and shareholders' deficit..... $ 604,122 $ 1,138,985
========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-32
<PAGE>
BOXTOP INTERACTIVE, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the period
November 6, 1995 For the period
(inception) October 1, 1996
through through
September 30, 1996 May 31, 1997
------------------ ---------------
<S> <C> <C>
Revenues..................................... $1,746,022 $2,759,993
---------- ----------
Costs and expenses
Direct cost of revenues.................... 684,013 1,113,615
Selling, general and administrative........ 1,935,205 2,231,895
Depreciation and amortization.............. 74,234 114,467
---------- ----------
Total operating expenses................. 2,693,452 3,459,977
---------- ----------
Loss from operations..................... (947,430) (699,984)
---------- ----------
Interest expense............................. (30,535) (56,338)
Other income................................. -- 8,725
---------- ----------
Loss before income taxes................. (977,965) (747,597)
Income taxes................................. (800) (800)
---------- ----------
Net loss................................. $ (978,765) $ (748,397)
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-33
<PAGE>
BOXTOP INTERACTIVE, INC.
STATEMENT OF SHAREHOLDERS' DEFICIT
<TABLE>
<CAPTION>
Common stock Additional Total
----------------- Paid-in Accumulated Shareholders'
Shares Amount Capital Deficit Deficit
--------- ------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Initial capital
contribution........... 1,000 $ 10 $ 2,490 $ -- $ 2,500
Issuance of common
stock................ 3,199,000 31,990 -- -- 31,990
Net loss.............. -- -- -- (978,765) (978,765)
--------- ------- ------- ----------- -----------
Balance, September 30,
1996................... 3,200,000 32,000 2,490 (978,765) (944,275)
Issuance of common
stock................ 150,000 1,500 17,000 -- 18,500
Issuance of stock
options and
warrants............. -- -- 70,000 -- 70,000
Net loss.............. -- -- -- (748,397) (748,397)
--------- ------- ------- ----------- -----------
Balance, May 31, 1997... 3,350,000 $33,500 $89,490 $(1,727,162) $(1,604,172)
========= ======= ======= =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-34
<PAGE>
BOXTOP INTERACTIVE, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the period
November 6, 1995 For the period
(inception) October 1, 1996
through through
September 30, 1996 May 31, 1997
------------------ ---------------
<S> <C> <C>
Cash flows from operating activities
Net loss................................... $(978,765) $ (748,397)
Adjustments to reconcile net loss to net
cash used for operating activities
Stock compensation expense................ 31,990 88,500
Depreciation and amortization............. 74,234 114,467
Changes in assets and liabilities
Accounts receivable...................... (241,007) (78,862)
Prepaid expenses and other assets........ 13,745 (78,884)
Advances to shareholder.................. (18,945) (60,620)
Other noncurrent assets.................. (25,751) (1,622)
Accounts payable......................... 502,476 101,531
Accrued expenses......................... 606,663 (286,802)
Due to affiliate......................... (5,854) (101,217)
--------- ----------
Net cash used for operating activities.. (41,214) (1,051,906)
--------- ----------
Cash flows from investing activities
Purchase of property and equipment......... (135,409) (181,630)
--------- ----------
Net cash used for investing activities.. (135,409) (181,630)
--------- ----------
Cash flows from financing activities
Borrowings from long-term debt............. 200,000 1,375,000
Repayments of long-term debt............... (15,770) (117,089)
Repayments of capital lease obligations.... (7,819) (26,663)
--------- ----------
Net cash provided by financing
activities............................. 176,411 1,231,248
--------- ----------
Net decrease in cash.................... (212) (2,288)
Cash, beginning of period................... 2,500 2,288
--------- ----------
Cash, end of period......................... $ 2,288 $ --
========= ==========
Supplemental disclosure of cash flow
information
Cash paid during the period for interest... $ 16,655 $ 17,334
========= ==========
Cash paid during the period for income
taxes..................................... $ 800 $ --
========= ==========
Non-cash activities
Cost of licensing agreement................ $ -- $ 250,000
Assets acquired under capital lease........ $ 126,686 $ --
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-35
<PAGE>
BOXTOP INTERACTIVE, INC.
NOTES TO FINANCIAL STATEMENTS
1. Business
BoxTop Interactive, Inc. (the "Company") develops, maintains and hosts
interactive web sites for clients in a variety of industries. The Company also
develops interactive audio and visual communication applications for use with
personal and business computers. The Company is a California corporation and
was incorporated on November 6, 1995.
2. Summary of Significant Accounting Policies
Revenue recognition
Revenues from website development, hosting and maintenance services are
recognized as the services are performed. Sales to customers representing 10%
or more of revenues for the eight months ended May 31, 1997 are as follows:
customer A--$900,000 and customer B--$451,000. Sales to customers representing
10% or more of revenues for the eleven months ended September 30, 1996 are as
follows: customer C--$262,000, customer D--$175,000, customer E--$248,000, and
customer F--$168,000.
Property and equipment
Property and equipment are recorded at cost, less accumulated
depreciation and amortization. Expenditures for renewals and improvements that
significantly add to the productive capacity or extend the useful life of an
asset are capitalized. Expenditures for maintenance and repairs are charged to
operations as incurred. Depreciation expense is provided using the straight-
line method over the estimated useful lives of the assets, which ranges from
three to five years. Leasehold improvements are amortized using the straight-
line method over the lesser of the lease term or the estimated useful life.
Equipment held under capital lease is recorded at the lower of the fair market
value of the lease or the present value of future minimum lease payments. These
leased assets are amortized using the straight-line method over the lesser of
the lease term or the estimated useful life.
Intangible asset
The intangible asset balance represents the cost of a licensing agreement
between BoxTop Entertainment, Inc. (an affiliate company) and the Company. The
licensing agreement is for the indefinite use of the BoxTop tradename and logo.
The intangible asset is stated at cost less accumulated amortization.
Amortization expense is provided using the straight-line method over ten years.
The carrying value of the intangible asset is reviewed periodically for
impairment based on future expected cash flows. Based on its review, the
Company does not believe that an impairment has occurred.
Software development costs
Software development costs incurred in connection with the Company's
licensed software products are accounted for in accordance with the provisions
of Financial Accounting Standards No. 86, "Accounting for the Costs of Computer
Software to be Sold, Leased, or Otherwise Marketed" (FAS 86). Capitalization of
such costs begins only upon establishment of technological feasibility as
defined in FAS 86 and ends when the resulting product is available for sale.
All costs incurred to establish the technological feasibility of software
products are classified as research and development and are expensed as
incurred. No products had reached technological feasibility during the period
from November 6, 1995 (inception) through May 31, 1997. Research and
development costs included in selling, general and administrative expense
approximated $78,000 and
F-36
<PAGE>
BOXTOP INTERACTIVE, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
$224,000 for the period November 6, 1995 (inception) through September 30,
1996, and the period October 1, 1996 through May 31, 1997, respectively.
Income taxes
The Company has applied the asset and liability approach of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" (FAS
109), for financial accounting and reporting purposes. The Company accounts for
certain items of income and expense in different time periods for financial
reporting and income tax purposes. Provisions for deferred income taxes are
made in recognition of such temporary differences, where applicable. A
valuation allowance is established against deferred tax assets unless the
Company believes it is more likely than not that the benefit will be realized.
Stock-based compensation
The Company has elected to continue to account for stock-based
compensation using the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
(APB 25), and related Interpretations and to elect the disclosure option of
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation" (FAS 123). Accordingly, compensation cost for stock options
is measured as the excess, if any, of the fair market value of the Company's
stock at the date of the grant over the amount an employee must pay to acquire
the stock.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
Fair value of financial instruments
The carrying amounts of financial instruments including cash, accounts
receivable, accounts payable and accrued expenses approximate fair value. The
carrying amount of long-term debt approximates fair value based on current
rates of interest available to the Company for loans of similar maturities.
3. Property and Equipment
Property and equipment consist of the following:
<TABLE>
<CAPTION>
September 30, May 31,
1996 1997
------------- ---------
<S> <C> <C>
Furniture and fixtures............................. $ 16,394 $ 31,388
Computer equipment................................. 376,017 502,826
Leasehold improvements............................. 1,438 21,260
Computer software.................................. -- 20,005
-------- ---------
393,849 575,479
Less accumulated depreciation and amortization..... (79,973) (184,025)
-------- ---------
Property and equipment, net...................... $313,876 $ 391,454
======== =========
</TABLE>
F-37
<PAGE>
BOXTOP INTERACTIVE, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
At September 30, 1996 and May 31, 1997, the Company had approximately
$127,000 of equipment under capital lease included in property and equipment in
the accompanying financial statements.
4. Accrued Expenses
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
September 30, May 31,
1996 1997
------------- --------
<S> <C> <C>
Payroll taxes payable................................ $402,972 $ --
Customer advances.................................... 165,419 180,994
Accrued vacation..................................... 28,000 40,952
Deferred rent........................................ -- 31,603
Accrued interest..................................... -- 36,016
Other................................................ 10,272 30,296
-------- --------
$606,663 $319,861
======== ========
</TABLE>
5. Long-term Debt
Long-term debt consists of the following:
<TABLE>
<CAPTION>
September 30, May 31,
1996 1997
------------- -----------
<S> <C> <C>
Notes payable to shareholders (see Note 11),
accruing monthly interest based on an annual rate
of 8%. Outstanding principal and accrued interest
are due 120 days after demand. These notes are
secured by substantially all of the assets of the
Company and are guaranteed by the principal
shareholder of the Company. These notes require a
late payment penalty of 5.0% of the outstanding
principal and accrued interest should payment not
be received within 120 days after demand........... $200,000 $ 100,000
Notes payable accruing monthly interest based on an
annual rate of 8%. Outstanding principal and
accrued interest are due on the earlier of demand
or July 1, 1997. These notes are secured by
substantially all of the assets of the Company and
are guaranteed by the principal shareholders of the
Company............................................ -- 750,000
Notes payable accruing monthly interest based on an
annual rate of 15%. Outstanding principal and
accrued interest are due on July 1, 1997. These
notes are secured by substantially all of the
assets of the Company and are guaranteed by the
principal shareholder of the Company. In connection
with these borrowings the Company issued warrants
to acquire 375,000 shares of the Company's common
stock at $1.00 per share exercisable on demand..... -- 375,000
Note payable to IXL Enterprises, Inc. (see note 12),
accruing monthly interest based on an annual rate
of 8%. Outstanding principal and accrued interest
are due on June 17, 1997. The note is guaranteed by
the principal shareholder of the Company........... -- 250,000
Bank equipment note payable bearing interest at the
Bank's prime rate plus 2%. This note requires
monthly principal payments of $1,526 plus interest
through September 1999............................. 54,930 42,723
Other............................................... 5,408 526
-------- -----------
Total debt...................................... 260,338 1,518,249
Less current portion of long-term debt............ (223,718) (1,493,836)
-------- -----------
Long-term debt.................................... $ 36,620 $ 24,413
======== ===========
</TABLE>
F-38
<PAGE>
BOXTOP INTERACTIVE, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
Future maturities of principal payments under long-term debt are as
follows:
<TABLE>
<CAPTION>
Year ending
May 31,
-----------
<S> <C>
1998............................................................ $1,493,836
1999............................................................ 24,413
----------
$1,518,249
==========
</TABLE>
In June 1997, the Company was acquired by iXL Enterprises, Inc. (see Note
12). A portion of the proceeds from the acquisition was used to repay the
Company's outstanding debt and accrued interest of approximately $1,600,000 at
the date of acquisition.
6. Shareholders' deficit
Stock
The Company is authorized to issue two classes of stock designated
respectively as "common stock" and "preferred stock." The number of shares of
common stock and preferred stock authorized for issuance is 50,000,000 and
5,000,000, respectively.
Any liquidation preferences, dividends, voting rights and convertible
features of the preferred stock are to be determined by the Company's Board of
Directors at the time of issuance. From November 6, 1995 (inception) through
May 31, 1997, there was no preferred stock issued or outstanding.
During the period November 6, 1995 (inception) through September 30, 1996
and the period October 1, 1996 through May 31, 1997, the Company recognized
stock compensation expense of approximately $32,000 and $19,000, respectively,
related to the issuance of its common stock to employees and consultants. The
Company estimated the fair value of its stock at the date it was issued to
employees and consultants taking into consideration the Company's results of
operations, a stock repurchase, the sale of the Company to iXL and certain
other transactions.
Warrants
In connection with borrowings made by the Company during the period
October 1, 1996 through May 31, 1997, the Company issued warrants to acquire
375,000 shares of the Company's common stock at $1.00 per share exercisable on
demand. The fair value of the warrants at the date of grant was estimated to be
less than $1,000 and accordingly no amounts were allocated to them.
In December 1996 and May 1997, the Company issued warrants to consultants
to acquire 30,000 shares of the Company's common stock at an exercise price of
$1.10 per share and 40,000 shares of the Company's common stock at an exercise
price of $1.50 per share, respectively. Such warrants were exercisable
immediately. The Company recognized expense of approximately $38,000 in
connection with the issuance of warrants in May 1997. These warrants remained
outstanding as of May 31, 1997.
In connection with a customer making a $500,000 cash deposit with the
Company in October 1996 for future services, the Company issued warrants to
acquire 712,500 shares of the Company's common stock at $.90 per share
exercisable on demand. As of May 31, 1997, the Company has customer advances of
approximately $180,000 related to remaining services to be performed under the
agreement. These warrants remained outstanding as of May 31, 1997. The fair
value of the warrants at the date of grant was estimated to be less than $1,000
and accordingly no amounts were allocated to them.
F-39
<PAGE>
BOXTOP INTERACTIVE, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
The fair value of each warrant issued during the period October 1, 1996
through May 31, 1997 was estimated on the date of the grant using the Black-
Scholes option pricing model with the following weighted-average assumptions:
dividend yield of 0%; expected volatility of 20%; risk free interest rate of
6%; expected life of 3 years.
7. Income Taxes
The Company's income tax expense for the period November 6, 1995
(inception) through September 30, 1996 and the period October 1, 1996 through
May 31, 1997, consists entirely of the California State minimum income tax of
$800.
The Company had net deferred tax assets consisting primarily of federal
and state net operating loss carryforwards. The Company has no items which give
rise to significant deferred tax liabilities. At September 30, 1996 and May 31,
1997, the Company has recorded a full valuation allowance offsetting the net
deferred tax assets as management believes it is more likely than not that some
portion or all of the deferred tax assets will not be realized.
At May 31, 1997, the Company had net operating loss carryforwards for
federal income tax purposes of approximately $1,560,000 expiring in 2012. The
Internal Revenue Code can impose certain limitations on the future availability
of net operating loss carryforwards, including annual limitations on the amount
of the carryforwards which could be utilized following substantial changes in a
company's ownership.
The difference between the Company's effective income tax rate and
multiplying the Company's loss before income taxes by the Federal statutory
income tax rate for each of the periods presented in the financial statements
is due primarily to the recording of a valuation allowance to offset the
Company's net deferred tax asset.
8. Stock Option Plan
The Board of Directors has adopted a stock option plan (the Plan).
Pursuant to the terms of the Plan, the Board of Directors is authorized to
grant options to purchase common stock not to exceed 3,000,000 shares to
officers, employees and nonemployees. The Board of Directors is further
authorized to establish the exercise price and the vesting terms.
Pro forma information regarding net loss is required by FAS 123, and has
been determined as if the Company had accounted for its employee stock options
under the fair value method. Had compensation cost for the Company's Plan been
determined based on the fair value at the grant date consistent with the
provisions of FAS 123, the Company's net loss would have been increased to the
pro forma amounts indicated below:
<TABLE>
<CAPTION>
September 30, May 31,
1996 1997
------------- ---------
<S> <C> <C>
Net loss
As reported....................................... $(978,765) $(748,397)
Pro forma......................................... (978,865) (810,397)
</TABLE>
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted-
average assumptions used for grants during the 1996 and 1997 periods,
respectively: dividend yield of 0% for both periods; expected volatility of 0%
for both periods; risk free interest rate of 6.3% for both periods; expected
life of 3.2 years and 3.0 years.
F-40
<PAGE>
BOXTOP INTERACTIVE, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
A summary of stock options as of September 30, 1996 and May 31, 1997,
and changes during the periods ending on those dates is as follows:
<TABLE>
<CAPTION>
September 30, 1996 May 31, 1997
-------------------- ----------------
Weighted Weighted
Average Average
Exercise Exercise
Options Price Options Price
---------- --------- ------- --------
<S> <C> <C> <C> <C>
Outstanding at beginning of period.. -- $ -- 405,000 $0.97
Granted............................. 405,000 $ 0.97 465,000 $1.10
---------- -------
Outstanding at end of period........ 405,000 $ 0.97 870,000 $1.04
========== =======
Weighted average fair value of
options granted during the period:
Exercise price exceeds fair value
of stock......................... $ -- $0.13
Exercise price equals fair value
of stock......................... $ -- $ --
Exercise price is less than fair
value of stock................... $ -- $0.99
</TABLE>
No options were exercised or forfeited during the period from November
6, 1995 (inception) through May 31, 1997.
The following table summarizes information about stock options
outstanding at May 31, 1997:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
----------------------------------------- --------------------
Weighted
Weighted Average Weighted
Number Average Remaining Number Average
Exercise Outstanding Exercise Contractual Exercisable Exercise
Prices at 5/31/97 Price Life at 5/31/97 Price
-------- ----------- -------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
$1.10 550,000 $1.10 9.60 250,000 $1.10
$1.10 270,000 $1.10 4.50 145,000 $1.10
$0.01 50,000 $0.01 4.20 16,668 $0.01
</TABLE>
In May 1997, the Company granted certain employees options to acquire
40,000 shares of the Company's common stock at $1.10 per share. These options
vested immediately. The Company recognized approximately $32,000 of stock
compensation expense related to the issuance of these options.
9. Commitments
The Company is obligated under various capital leases for computer
equipment that expire at various dates through 1999. The gross amount of
computer equipment and related accumulated amortization included in property
and equipment and recorded under capital lease is as follows:
<TABLE>
<CAPTION>
September 31, May 31,
1996 1997
------------- --------
<S> <C> <C>
Computer Equipment................................. $126,686 $126,686
Less accumulated amortization.................... (23,226) (40,117)
-------- --------
$103,460 $ 86,569
======== ========
</TABLE>
Amortization of assets held under capital lease for the period November
6, 1995 (inception) through September 30, 1996 and the period October 1, 1996
through May 31, 1997 of approximately $23,000 and $17,000, respectively, is
included with depreciation expense.
F-41
<PAGE>
BOXTOP INTERACTIVE, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
Future minimum lease payments under non-cancelable operating leases and
future minimum capital lease payments as of May 31, 1997 are as follows:
<TABLE>
<CAPTION>
Year Ending Capital Operating
May 31, Leases Leases
----------- -------- ---------
<S> <C> <C>
1998.................................................. $ 52,500 $212,208
1999.................................................. 52,500 212,208
2000.................................................. 4,015 212,208
2001.................................................. -- 123,788
-------- --------
Total minimum lease payments............................ $109,015 $760,412
======== ========
</TABLE>
Rental expense under operating leases, primarily the Company's office
facility, for the period November 6, 1995 (inception) through September 30,
1996 and the period October 1, 1996 through May 31, 1997 totaled approximately
$96,000 and $154,000, respectively.
10. Employee Benefit Plan
During the period October 1, 1996 through May 31, 1997, the Company
established a 401(k) plan (the Plan) under Section 401(k) of the Internal
Revenue Code. The Plan permitted the Company to make discretionary
contributions to employees' 401(k) accounts, subject to IRS limitations on
maximum contributions. During the period from October 1, 1996 through May 31,
1997, the Company made no contributions to this plan.
11. Related Party Transactions
The amounts due to affiliate represent monies owed to BoxTop
Entertainment, Inc., an affiliated company who provided non-interest bearing
advances to the Company. During the period November 6, 1995 through September
30, 1996, certain shared operating expenses including payroll, rent and other
costs were allocated between BoxTop Entertainment, Inc. and the Company. Costs
allocated to the Company were approximately $280,000, and are reflected in
general and administrative expenses in the accompanying financial statements.
The Company made non-interest bearing advances to its principal
shareholder. Amounts outstanding at September 30, 1996 and May 31, 1997 were
$18,945 and $79,565, respectively.
At September 30, 1996 and May 31, 1997, the Company had outstanding loans
of $200,000 and $100,000, respectively, due to certain of its shareholders. The
loans bear interest at 8% per annum.
12. Subsequent Events
On May 30, 1997, the Company was acquired by iXL Enterprises, Inc.
F-42
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of iXL Enterprises, Inc.
In our opinion, the accompanying balance sheet and the related statements
of operations and change in members' deficit and of cash flows present fairly,
in all material respects, the financial position of Green Room Productions
L.L.C. at December 31, 1997, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit of these statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for the opinion expressed above.
PricewaterhouseCoopers LLP
Atlanta, Georgia
September 3, 1998
F-43
<PAGE>
GREEN ROOM PRODUCTIONS L.L.C.
BALANCE SHEET
<TABLE>
<CAPTION>
December 31,
1997
------------
<S> <C>
ASSETS
Current assets
Cash............................................................ $ 37,532
Accounts receivable............................................. 282,573
Cost and estimated earnings in excess of billings on uncompleted
contracts...................................................... 39,660
Due from bank for factored accounts receivable.................. 10,878
----------
Total current assets.......................................... 370,643
Equipment, net.................................................... 123,388
Other assets...................................................... 3,000
----------
Total assets.................................................. $ 497,031
==========
LIABILITIES AND MEMBERS' EQUITY
Current liabilities
Accounts payable................................................ $ 82,888
Accrued expenses................................................ 77,727
Short-term borrowings........................................... 118,170
Current portion of capital lease obligations.................... 55,367
Billings in excess of costs and estimated earnings on
uncompleted contracts.......................................... 43,073
----------
Total current liabilities..................................... 377,225
Capital lease obligations......................................... 20,583
----------
Total liabilities............................................. 397,808
----------
Members' equity
Members' Units, no par value; 1,000,000 units issued and
outstanding....................................................
Unallocated capital............................................. 1,093,411
Members' deficit................................................ (994,188)
----------
Total members' equity......................................... 99,223
----------
Commitments.......................................................
----------
Total liabilities and members' equity......................... $ 497,031
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-44
<PAGE>
GREEN ROOM PRODUCTIONS L.L.C.
STATEMENT OF OPERATIONS AND CHANGE IN MEMBERS' DEFICIT
<TABLE>
<CAPTION>
For the year
ended
December 31,
1997
------------
<S> <C>
Revenues.......................................................... $1,483,003
Cost of revenues.................................................. 948,011
----------
Gross profit.................................................... 534,992
Selling, general and administrative expenses...................... 970,143
Depreciation and amortization..................................... 58,894
----------
Loss from operations............................................ (494,045)
Interest expense and other, net................................... (16,672)
----------
Net loss........................................................ (510,717)
Members' deficit, beginning of year............................... (483,471)
----------
Members' deficit, end of year..................................... $ (994,188)
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-45
<PAGE>
GREEN ROOM PRODUCTIONS L.L.C.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the year
ended
December 31,
1997
------------
<S> <C>
Cash flows from operating activities
Net loss......................................................... $(510,717)
Adjustments to reconcile net loss to net cash provided by (used
in) operating activities
Depreciation and amortization................................... 58,894
Changes in operating assets and liabilities
Accounts receivable............................................ (215,909)
Costs and estimated earnings in excess of billings on
uncompleted contracts......................................... (21,912)
Other assets................................................... 23,164
Accounts payable and accrued expenses.......................... 95,723
Billings in excess of costs and estimated earnings on
uncompleted contracts......................................... 43,073
---------
Net cash used in operating activities......................... (527,684)
---------
Cash flows from investing activities
Capital expenditures............................................. (9,182)
---------
Net cash used in investing activities......................... (9,182)
---------
Cash flows from financing activities
Net proceeds from factored account receivables................... 54,391
Payments on capital leases....................................... (42,752)
---------
Net cash provided by financing activities..................... 11,639
---------
Net decrease in cash.......................................... (525,227)
Cash, beginning of year........................................... 562,759
---------
Cash, end of year................................................. $ 37,532
=========
Supplemental disclosure of cash flow information
Cash paid during the period for interest......................... $ 29,662
=========
Non-cash investing and financing activities
Acquisition of equipment through capital leases.................. $ 65,503
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-46
<PAGE>
GREEN ROOM PRODUCTIONS L.L.C.
NOTES TO FINANCIAL STATEMENTS
1. Nature of Business and Summary of Significant Accounting Policies
Nature of business
Green Room Productions L.L.C. (the "Company") creates consumer-oriented
content for the World Wide Web (the "Web"). The content developed for the Web
consists of informative and promotional websites with a focus on the travel
industry. The Company's customers are located throughout the United States.
Significant accounting policies
Revenue recognition
Revenue from service contracts is recognized over the contractual period
using the percentage-of-completion method based on when services are performed.
Advance billings in excess of costs represent deferred revenue and are recorded
as billings in excess of costs and estimated earnings on uncompleted contracts.
Unbilled receivables in excess of billings represent earned revenues and are
recorded as costs and estimated earnings in excess of billings on uncompleted
contracts. Operating expenses, including indirect costs and administrative
expenses, are charged to income as incurred and are not allocated to contract
costs. At the time a loss on a contract becomes known, the entire amount of the
estimated loss is accrued.
Equipment
Equipment is recorded at cost, less accumulated depreciation.
Expenditures for renewals and improvements that significantly add to the
productive capacity or extend the useful life of an asset are capitalized.
Expenditures for maintenance and repairs are charged to operations as incurred.
Depreciation expense is provided on the straight-line method over the estimated
useful lives for purchased assets, which range from 3 to 7 years. Equipment
held under capital lease is amortized on the straight-line method over the
lesser of the useful life or the lease term.
Income taxes
The Company is organized as a limited liability corporation (L.L.C.). As
such, the Company's income, or losses, are passed through directly to the
shareholders of the Company. As a result, no provision for income taxes has
been made in the accompanying financial statements.
Stock-based compensation
The Company has elected to continue to account for stock-based
compensation using the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
(APB 25) and related Interpretations and has elected the disclosure option of
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation" (FAS 123). Accordingly, compensation cost for stock options
is measured as the excess, if any, of the fair value of the Company's stock at
the date of the grant over the amount an employee must pay to acquire the
stock.
Fair value of financial instruments
The carrying amounts of financial instruments including cash, accounts
receivable, accounts payable and accrued expenses approximate fair value. The
carrying amounts of borrowings approximate fair value based on current rates of
interest available to the Company for loans of similar maturities.
F-47
<PAGE>
GREEN ROOM PRODUCTIONS L.L.C.
NOTES TO FINANCIAL STATEMENTS--(Continued)
Comprehensive income
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" requires entities to report comprehensive income, which
represents the change in equity during a period from non-owner sources. The
Company has not incurred any such activity other than the net loss for all
periods presented.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses during the reporting period. Actual results could differ from
those estimates and could materially affect the reported amounts of assets,
liabilities and future operating results.
2. Equipment
Equipment consists of the following:
<TABLE>
<CAPTION>
December 31,
1997
------------
<S> <C>
Computer equipment.............................................. $147,279
Computer software............................................... 21,577
Furniture and fixtures.......................................... 35,058
--------
203,914
Less accumulated depreciation and amortization.................. (80,526)
--------
Equipment, net.................................................. $123,388
========
</TABLE>
At December 31, 1997, the Company had equipment under capital lease, net
of amortization, of $75,486.
3. Borrowings
Borrowings consist of the following:
<TABLE>
<CAPTION>
December 31,
1997
------------
<S> <C>
Capital lease obligations, payable in monthly installments of
$137 to $1,738 expiring from 1998 to 2000, collateralized by
equipment with a net book value of $75,486 as of December
31, 1997.................................................... $ 75,950
Borrowing, secured by factored accounts receivable........... 54,391
Note payable to a member, unsecured, which provides for
quarterly interest only payments at 11%..................... 9,423
Note payable to a member, unsecured, which provides for
quarterly interest only payments at 11%..................... 27,416
Note payable to a member, unsecured, which provides for
quarterly interest only payments at 11%..................... 26,940
---------
194,120
Less current maturities...................................... (173,537)
---------
Long-term portion............................................ $ 20,583
=========
</TABLE>
F-48
<PAGE>
GREEN ROOM PRODUCTIONS L.L.C.
NOTES TO FINANCIAL STATEMENTS--(Continued)
Total interest expense recognized for the year ended December 31, 1997
was $18,785, including $8,048 owed to related parties.
During 1996 the Company entered into an agreement with a bank whereby
the Company sold certain qualified accounts receivable to the bank, with
recourse, for the amount of the accounts receivable less fees and interest.
Fees were calculated at 1% of the amount of the receivable at the date of
sale. Interest is calculated as 0.2% of the amount of the outstanding balance
for each day the receivable is outstanding. As of December 31, 1997, the
Company had an outstanding factored balance of $54,391.
The aggregate maturities required on notes payable and capital lease
obligations are as follows:
<TABLE>
<CAPTION>
Year ending
December 31,
------------
<S> <C>
1998........................................................... $173,537
1999........................................................... 26,761
2000........................................................... 1,637
Less amounts representing interest on capital leases........... (7,815)
--------
$194,120
========
</TABLE>
4. Employee Benefits
Unit plan
During 1996, the Company adopted an employee unit plan which provides
for the granting of member units to officers and other key employees of the
Company. These awards vest over a three-year period. The plan terminates on
December 31, 2007. All new awards of units are withdrawn from the three
original members.
The Company applies APB Opinion No. 25 and related Interpretations in
accounting for the plan. During the years ended December 31, 1997, no
compensation cost was recognized for issuance of 15,750 units under the
Company's plan.
401(k) savings plan
Effective April 1, 1997, the Company established a 401(k) plan for
substantially all employees over the age of 21 and with more than six months
of services as defined by the plan. The plan allows for discretionary employer
matching contributions up to 15% of the employees' compensation, subject to
limitations. The matching contributions made during the year ended December
31, 1997 were not significant.
F-49
<PAGE>
GREEN ROOM PRODUCTIONS L.L.C.
NOTES TO FINANCIAL STATEMENTS--(Continued)
5. Concentrations of Credit Risk
Net sales for the year ended December 31, 1997 for several major
customers, together with the receivable due from each customer, are presented
below. The Company does not obtain, nor require, any collateral or other
security instruments related to these balances.
<TABLE>
<CAPTION>
December 31,
1997
---------------------
Accounts
Amount of Receivable
Customer Net Sales Balance
-------- ---------- ----------
<S> <C> <C>
A.................................................. $ 506,557 $ 39,998
B.................................................. 201,637 30,682
C.................................................. 177,245 12,529
D.................................................. 139,500 59,433
E.................................................. 127,901 45,009
---------- --------
$1,152,840 $187,651
========== ========
</TABLE>
6. Commitments
Future minimum lease payments under non-cancelable operating leases as of
December 31, 1997 are as follows:
<TABLE>
<CAPTION>
Year ending
December 31,
------------
<S> <C>
1998............................................................. $64,000
1999............................................................. 2,000
-------
Total minimum lease payments..................................... $66,000
=======
</TABLE>
The Company's operating leases are primarily for office equipment and the
Company's office facility. Rental expense under operating leases for the year
ended December 31, 1997 totaled approximately $139,000.
7. Subsequent Event
On February 5, 1998, the Company was acquired by iXL Enterprises, Inc.
F-50
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
iXL Enterprises, Inc.
In our opinion, the accompanying balance sheet and the related statements
of operations, of changes in shareholders' deficit, and of cash flows present
fairly, in all material respects, the financial position of Digital Planet at
September 30, 1997, and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit of these statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for the opinion expressed above.
PricewaterhouseCoopers LLP
Atlanta, Georgia
July 13, 1998
F-51
<PAGE>
DIGITAL PLANET
BALANCE SHEET
<TABLE>
<CAPTION>
September 30, March 31,
1997 1998
------------- -----------
(unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash.............................................. $ 87,355 $ 98,302
Accounts receivable............................... 482,997 651,770
Cost and estimated earnings in excess of billings
on uncompleted contracts......................... 92,091 --
Other current assets.............................. 48,162 21,977
----------- -----------
Total current assets............................ 710,605 772,049
Equipment, net...................................... 188,559 450,776
Other assets........................................ 19,632 26,474
----------- -----------
Total assets.................................... $ 918,796 $ 1,249,299
=========== ===========
LIABILITIES, MANDATORILY REDEEMABLE CONVERTIBLE
PREFERRED STOCK AND SHAREHOLDERS' DEFICIT
Current liabilities
Accounts payable.................................. $ 227,597 $ 258,779
Accrued expenses.................................. 228,218 173,530
Short-term borrowings............................. 762,225 1,096,502
Current portion of capital lease obligations...... 9,936 26,179
Billings in excess of costs and estimated earnings
on uncompleted contracts......................... 32,874 83,912
----------- -----------
Total current liabilities....................... 1,260,850 1,638,902
Deferred rent....................................... -- 28,131
Capital lease obligations........................... 8,006 100,506
----------- -----------
Total liabilities............................... 1,268,856 1,767,539
----------- -----------
Series A mandatorily redeemable convertible
preferred stock, 1,966,163 shares designated;
811,597 shares issued and outstanding.............. 613,567 613,567
----------- -----------
Series A preferred stock warrants, 1,154,566
outstanding........................................ 161,639 161,639
----------- -----------
Shareholders' deficit
Common stock, no par value; 40,000,000 shares
authorized; 9,579,500 and 9,580,000 shares issued
and outstanding at September 30, 1997 and March
31, 1998, respectively........................... 9,580 9,830
Additional paid-in capital.......................... 48,838 48,838
Accumulated deficit................................. (1,183,684) (1,352,114)
----------- -----------
Total shareholders' deficit..................... (1,125,266) (1,293,446)
----------- -----------
Commitments
----------- -----------
Total liabilities and shareholders' deficit..... $ 918,796 $ 1,249,299
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-52
<PAGE>
DIGITAL PLANET
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the
Year For the Six Months
Ended Ended
September March 31,
30, ---------------------- --- ---
1997 1997 1998
---------- ---------- ----------
(unaudited)
<S> <C> <C> <C> <C> <C>
Revenues.......................... $3,745,947 $1,921,302 $1,598,868
Cost of revenues.................. 2,031,531 1,037,503 1,006,664
---------- ---------- ----------
Gross profit.................... 1,714,416 883,799 592,204
Selling, general and
administrative expenses.......... 1,209,550 513,647 625,766
Depreciation and amortization..... 45,277 11,319 36,658
---------- ---------- ----------
Income (loss) from operations... 459,589 358,833 (70,220)
Interest expense, net............. (56,824) (11,867) (97,410)
---------- ---------- ----------
Income (loss) before income
taxes.......................... 402,765 346,966 (167,630)
Income tax provision.............. 800 800 800
---------- ---------- ----------
Net income (loss)............... 401,965 346,166 (168,430)
Accretion on Series A mandatorily
redeemable convertible preferred
stock.......................... (149,646) (149,646) --
---------- ---------- ----------
Net income (loss) available to
common shareholders.............. $ 252,319 $ 196,520 $ (168,430)
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-53
<PAGE>
DIGITAL PLANET
STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIT
<TABLE>
<CAPTION>
Common Stock
------------------ Additional
Shares Paid-in Accumulated
Outstanding Amount Capital Deficit Total
----------- ------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, September 30,
1996................... 9,579,500 $9,580 $48,838 $(1,436,003) $(1,377,585)
Accretion on Series A
mandatorily redeemable
convertible preferred
stock.................. -- -- -- (149,646) (149,646)
Net income............ -- -- -- 401,965 401,965
--------- ------ ------- ----------- -----------
Balance, September 30,
1997................... 9,579,500 9,580 48,838 (1,183,684) (1,125,266)
Exercise of stock
options (unaudited).... 500 250 -- -- 250
Net loss (unaudited).. -- -- -- (168,430) (168,430)
--------- ------ ------- ----------- -----------
Balance, March 31, 1998
(unaudited)............ 9,580,000 $9,830 $48,838 $(1,352,114) $(1,293,446)
========= ====== ======= =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-54
<PAGE>
DIGITAL PLANET
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the six months
For the year ended
ended March 31,
September 30, --------------------
1997 1997 1998
------------- --------- ---------
(unaudited)
<S> <C> <C> <C>
Cash flows from operating activities
Net income (loss)......................... $ 401,965 $ 346,166 $(168,430)
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities
Depreciation and amortization............ 45,277 11,319 36,658
Changes in operating assets and
liabilities
Accounts receivable..................... (194,908) (81,190) (168,773)
Costs and estimated earnings in excess
of billings on uncompleted contracts... (92,091) -- 92,091
Other assets............................ (44,429) (2,537) 19,222
Accounts payable and accrued expenses... 263,579 (12,357) (23,506)
Billings in excess of costs and
estimated earnings on uncompleted
contracts.............................. (819,073) (239,143) 51,038
Deferred rent........................... -- -- 28,131
--------- --------- ---------
Net cash (used in) provided by
operating activities.................. (439,680) 22,258 (133,569)
--------- --------- ---------
Cash flows from investing activities
Capital expenditures...................... (97,679) (10,855) (185,810)
Other..................................... (8,060) -- --
--------- --------- ---------
Net cash used in investing activities.. (105,739) (10,855) (185,810)
--------- --------- ---------
Cash flows from financing activities
Proceeds from factored accounts
receivable............................... 167,081 -- 87,250
Payments on revolving line of credit...... (50,000) -- --
Payments on capital leases................ (10,353) (2,588) (4,202)
Payments on short-term borrowings......... (85,846) (24,711) (2,972)
Proceeds from short-term borrowings....... 500,000 -- 250,000
Proceeds from exercise of stock options... -- -- 250
--------- --------- ---------
Net cash provided by (used in)
financing activities.................. 520,882 (27,299) 330,326
--------- --------- ---------
Net (decrease) increase in cash........ (24,537) (15,896) 10,947
Cash, beginning of period.................. 111,892 111,892 87,355
--------- --------- ---------
Cash, end of period........................ $ 87,355 $ 95,996 $ 98,302
========= ========= =========
Supplemental disclosures of cash flow
information
Cash paid during the period for interest.. $ 38,898 $ 11,867 $ 65,023
========= ========= =========
Cash paid during the period for income
taxes.................................... $ 800 $ -- $ --
========= ========= =========
Non-cash investing and financing activities
Accretion on Series A mandatorily
redeemable convertible preferred stock... $ 149,646 $ 149,646 $ --
========= ========= =========
Acquisition of equipment through capital
leases.................................... $ -- $ -- $ 112,944
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-55
<PAGE>
DIGITAL PLANET
NOTES TO FINANCIAL STATEMENTS
1. Nature of Business and Summary of Significant Accounting Policies
Nature of business
Digital Planet (the "Company") was incorporated on October 26, 1994 in
California and is engaged in the development of consumer-oriented content for
the World Wide Web and other media. The Company's customers are located
throughout the United States.
Significant accounting policies
Revenue recognition
Revenue from service contracts is recognized over the contractual period
using the percentage-of-completion method based on when services are performed.
Advance billings in excess of costs represent deferred revenue and are recorded
as billings in excess of costs and estimated earnings on uncompleted contracts.
Unbilled receivables in excess of billings represent earned revenues and are
recorded as costs and estimated earnings in excess of billings on uncompleted
contracts. Revenue for services in which reasonable estimates to complete could
not be made is recognized upon completion and when all remaining obligations
are not significant. Operating expenses, including indirect costs and
administrative expenses, are charged to income as incurred and are not
allocated to contract costs. Any anticipated losses on contracts are charged to
earnings when identified.
Equipment
Equipment is recorded at cost, less accumulated depreciation.
Expenditures for renewals and improvements that significantly add to the
productive capacity or extend the useful life of an asset are capitalized.
Expenditures for maintenance and repairs are charged to operations as incurred.
Depreciation expense is provided on the straight-line method over the estimated
useful lives for purchased assets, which range from 3 to 7 years. Equipment
held under capital lease is amortized on the straight-line method over the
lesser of the useful life or the lease term. Leasehold improvements are
amortized using the straight-line method over the lesser of the useful life or
the lease term.
Income taxes
The Company has applied the asset and liability approach of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes," for
financial accounting and reporting purposes. The Company accounts for certain
items of income and expense in different time periods for financial reporting
and income tax purposes. Provisions for deferred income taxes are made in
recognition of such temporary differences, where applicable. A valuation
allowance is established against deferred tax assets unless the Company
believes it is more likely than not that the benefit will be realized.
Stock-based compensation
The Company has elected to continue to account for stock-based
compensation using the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
(APB 25) and related Interpretations and has elected the disclosure option of
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation" (FAS 123).
F-56
<PAGE>
DIGITAL PLANET
NOTES TO FINANCIAL STATEMENTS--(Continued)
Accordingly, compensation cost for stock options is measured as the excess, if
any, of the fair value of the Company's stock at the date of the grant over the
amount an employee must pay to acquire the stock.
Fair value of financial instruments
The carrying amounts of financial instruments including cash, accounts
receivable, accounts payable, accrued expenses and mandatorily redeemable
convertible preferred stock approximate fair value. The carrying amount of
borrowings approximate fair value based on current rates of interest available
to the Company for loans of similar maturities.
Comprehensive income
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" requires entities to report comprehensive income, which
represents the change in equity during a period from non-owner sources. The
Company has not incurred any such activity other than the net income (loss) for
all periods presented.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses during the reporting period. Actual results could differ from
those estimates and could materially affect the reported amounts of assets,
liabilities and future operating results.
Interim financial information
The accompanying financial statements and related notes as of March 31,
1998 and for the six months ended March 31, 1997 and 1998 are unaudited. In the
opinion of management, the unaudited interim financial statements have been
prepared on the same basis as the audited financial statements and include all
adjustments, consisting of only normal recurring adjustments, necessary to
present fairly the Company's financial position as of March 31, 1998 and the
results of the Company's operations and its cash flows for the six months ended
March 31, 1997 and 1998. The results for the six months ended March 31, 1998
are not necessarily indicative of the results to be expected for the year
ending September 30, 1998.
2. Equipment
Equipment consists of the following:
<TABLE>
<CAPTION>
September 30, March 31,
1997 1998
------------- -----------
(unaudited)
<S> <C> <C>
Computer equipment................................ $253,608 $468,297
Computer software................................. 20,483 24,982
Leasehold improvements............................ 12,361 91,926
-------- --------
286,452 585,205
Less accumulated depreciation and amortization.... (97,893) (134,429)
-------- --------
Equipment, net.................................... $188,559 $450,776
======== ========
</TABLE>
F-57
<PAGE>
DIGITAL PLANET
NOTES TO FINANCIAL STATEMENTS--(Continued)
At September 30, 1997 and March 31, 1998, the Company had equipment under
capital lease, net of amortization, of $25,066 and $131,518, respectively.
3. Borrowings
Borrowings consist of the following:
<TABLE>
<CAPTION>
September 30, March 31,
1997 1998
------------- -----------
(unaudited)
<S> <C> <C>
Note payable, unsecured, due March 1, 1998 which
provides for payment of the principal balance,
plus interest accrued at prime plus 2%......... $ 500,000 $ 500,000
Note payable, unsecured, due April 15, 1998
which provides for payment of the principal
balance plus interest accrued at 12%........... -- 250,000
Capital lease obligations, payable in monthly
instalments of $156 to $1,083 expiring from
1998 to 2003, collateralized by equipment with
a net book value of $25,066 and $131,518 at
September 30, 1997 and March 31, 1998,
respectively................................... 17,942 126,685
Borrowing, secured by factored accounts
receivable..................................... 167,081 254,331
Note payable to shareholder, unsecured, which
provides for periodic principal payments of
$500 to $1,500 plus interest at 10%. The note
was repaid in May 1998......................... 55,659 56,014
Note payable to an officer, unsecured, which
provides for monthly interest only payments at
10%. The note was repaid in May 1998........... 10,786 8,339
Note payable to shareholder, unsecured, which
provides for monthly interest only payments at
10%. The note was repaid in May 1998........... 28,699 27,818
--------- -----------
780,167 1,223,187
Less current maturities......................... (772,161) (1,122,681)
--------- -----------
Long-term portion............................... $ 8,006 $ 100,506
========= ===========
</TABLE>
Total interest expense recognized by the Company for the year ended
September 30, 1997 and the six months ended March 31, 1998 was $60,639 and
$97,902, respectively, including $34,905 and $38,381, respectively, recognized
with respect to related party borrowings. The Company maintained a $50,000 line
of credit which expired and was repaid on July 1, 1997.
The $500,000 note payable was issued pursuant to an agreement with a
private investor and included a detachable warrant to purchase up to 166,667
shares of the Company's common stock for $3 per share through April 2000 (see
Note 6). The value of the warrants was not material. The note was repaid with
proceeds from the sale of the Company to iXL Enterprises, Inc. (see Note 11).
The warrant was not exercised. On July 25, 1997, the Company entered into an
agreement with a bank whereby the Company sold certain qualified accounts
receivable to the bank, with recourse, for the amount of the accounts
receivable less fees and interest. Fees are calculated at 1% of the amount of
the accounts receivable at the date of sale. Interest is calculated as 0.1% of
the amount of the outstanding balance for each day the accounts receivable are
outstanding. As of May 12, 1998, all of the factored accounts receivable had
been collected from the customer.
On January 14, 1998, the Company entered into an agreement with iXL
Enterprises, Inc. to borrow $250,000 pursuant to a note which accrues interest
at 12% per year.
F-58
<PAGE>
DIGITAL PLANET
NOTES TO FINANCIAL STATEMENTS--(Continued)
The aggregate maturities required on borrowings including capital lease
obligations are as follows:
<TABLE>
<CAPTION>
Year ending September 30,
-------------------------
<S> <C>
1998............................................................. $774,500
1999............................................................. 7,625
2000............................................................. 1,271
--------
783,396
Less amounts representing interest on capital leases............... (3,229)
--------
$780,167
========
</TABLE>
4. Income Taxes
At September 30, 1997, the Company had net operating loss carryforwards
for federal income tax purposes of approximately $204,000. The carryforwards
expire in varying amounts in 2003 through 2013. A valuation allowance has been
established against the benefit of the net operating loss carryforwards and
other deferred tax assets which the Company does not believe are more likely
than not to be realized. Under the Tax Reform Act of 1986, the amount of and
the benefit from federal net operating losses that can be carried forward may
be limited in certain circumstances. Events which may cause changes in the
Company's tax carryovers include, but are not limited to, a cumulative
ownership change of more than 50% over a three-year period.
The income tax provision differs from the amount of income tax
determined by applying the U.S. federal income tax rate to pretax income for
the year ended September 30, 1997 due to the utilization of net operating loss
carryforwards which had been previously reserved for.
5. Series A Mandatorily Redeemable Convertible Preferred Stock
In June 1996, the Company entered into an agreement to issue 811,597
shares of Series A 8% Mandatorily Redeemable Convertible Preferred Stock and
1,154,566 Preferred Stock Warrants in return for the termination of a loan,
advances and the cancellation of previously issued warrants with a combined
carrying value totaling $511,306. The aggregate authorized number of preferred
shares is 10,000,000 of which 1,966,163 are designated as Series A Mandatorily
Redeemable Convertible Preferred Stock ("Series A Preferred Stock") with
811,597 shares issued and outstanding at September 30, 1997 and March 31,
1998.
Each share of Series A Preferred Stock outstanding is convertible at the
option of the holder into one share of common stock, subject to certain
adjustments, and automatically converts upon the completion of an underwritten
public offering of common stock with gross proceeds of at least $7.5 million
and a public offering price of not less than $2.52 per share.
The holders of the Series A Preferred Stock are entitled to receive
their original issuance price of $0.63 per share in liquidation, plus an
amount equal to all declared but unpaid dividends, prior and in preference to
any distribution to the holders of common stock. At September 30, 1997 and
March 31, 1998, the aggregate liquidation value of the Series A Preferred
Stock is $511,306. Each share of preferred stock is redeemable at the option
of the holder for $613,567 (120% of its original issuance price) any time
after January 1, 1997.
F-59
<PAGE>
DIGITAL PLANET
NOTES TO FINANCIAL STATEMENTS--(Continued)
The holders of the preferred stock are entitled to elect two members to
the Board of Directors and have voting rights equal to common stock on an if-
converted basis. Preferred stockholders also are entitled to receive
noncumulative dividends in preference to any dividends on common stock at a
rate per share equal to 8% of the original per share value. No dividends have
been declared as of September 30, 1997 or March 31, 1998. The Company is
restricted from authorizing or creating any new class or series of stock which
has a preference over or is equal to the preferred stock.
The 1,154,566 Preferred Stock Warrants allow the holders to purchase
1,154,566 shares of the Company's Series A Preferred Stock at $0.63 per share
subject to adjustment upon the occurrence of certain events as defined in the
agreement. The warrants are exercisable through the earlier of July 10, 1999 or
a public offering, as defined, and provide for certain registration rights.
In May 1998, the Company purchased all of the outstanding Series A
Preferred Stock and Preferred Stock Warrants from the holders.
The combined carrying value of $511,306 was allocated between the Series
A Preferred Stock and the Preferred Stock Warrants based upon the relative fair
value of each instrument. The value allocated to the warrants was $161,639 and
the amount allocated to the stock was $349,667. The Series A Preferred Stock
carrying value was increased such that at January 1, 1997, when the stock can
be redeemed, it is stated at its redemption value. The Company has recorded
this accretion using the effective interest method by increasing the value of
the Series A Preferred Stock and increasing the accumulated deficit.
Mandatorily redeemable preferred stock activity consists of the following
for the year ended September 30, 1997:
<TABLE>
<S> <C>
Balance at September 30, 1996...................................... $463,921
Accretion to redemption value.................................... 149,646
--------
Balance at September 30, 1997...................................... $613,567
========
</TABLE>
6. Common Stock Warrants
As of both September 30, 1997 and March 31, 1998, the Company had
warrants outstanding held by a customer and a private lender (see Note 3) which
allowed the holders to purchase 348,842 and 166,667 shares of the Company's
common stock, respectively, at a weighted-average price of $1.18 and $3.00 per
share, respectively. The customer warrants were issued in May 1996 and were
allocated a value of approximately $49,000.
7. Employee Benefits
Stock option plan
In June 1996, the Company adopted a stock option plan which provides for
the grant of incentive and nonqualified options to officers, other key
employees of the Company and certain directors and consultants to purchase up
to 421,500 shares of the Company's common stock. On January 1, 1998, the number
of authorized shares was increased to 1,000,000. Options are granted at prices
equal to at least 100% of the fair market value of the stock at the date of
grant, expire no later than ten years from the date of grant and become
exercisable as the Board of Directors determines. At September 30, 1997 and
March 31, 1998, respectively, 387,457 and 990,700 stock options were
outstanding with exercise prices ranging from $0.50 to $6.00 per share.
F-60
<PAGE>
DIGITAL PLANET
NOTES TO FINANCIAL STATEMENTS--(Continued)
The following table summarizes stock option activity for the year ended
September 30, 1997:
<TABLE>
<CAPTION>
September 30,
1997
-----------------
Weighted
Average
Exercise
Options Price
------- --------
<S> <C> <C>
Outstanding, beginning of year............................. 290,457 $0.55
Granted.................................................... 145,000 $2.00
Exercised.................................................. -- --
Forfeited.................................................. (48,000) $1.24
Outstanding, end of year................................... 387,457 $1.01
------- -----
Options exercisable at end of year......................... 58,091 $0.55
======= =====
</TABLE>
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
---------------------------------- ----------------------
Number Weighted Number
Outstanding Average Weighted Exercisable Weighted
at Remaining Average at Average
September 30, Contractual Exercise September 30, Exercise
Range of Exercise Prices 1997 Life Price 1997 Price
------------------------ ------------- ----------- -------- ------------- --------
<S> <C> <C> <C> <C> <C>
$0.50................... 175,000 3.66 $0.50 35,000 $0.50
$0.63................... 115,457 3.92 $0.63 23,091 $0.63
$1.24................... 55,000 2.16 $1.24 -- --
$3.00................... 30,000 4.54 $3.00 -- --
$6.00................... 12,000 4.58 $6.00 -- --
------- ------
387,457 58,091
======= ======
</TABLE>
The Company granted 729,200 options during the six months ended March 31,
1998. The Company applies APB Opinion No. 25 and related Interpretations in
accounting for the plan. During the year ended September 30, 1997 and the six
months ended March 31, 1998, no compensation cost was recognized for the
issuance of stock options under the Company's plan. Had compensation cost for
the Company's stock option plan been determined based on the fair value method
as described in Financial Accounting StandardsNo. 123, "Accounting for Stock-
Based Compensation," there would not be a material difference from the
Company's reported results of operations.
401(k) savings plan
Effective January 1, 1996, the Company established a 401(k) plan for
substantially all employees over the age of 21 with more than six months of
service as defined by the plan. The plan allows for discretionary employer
matching contribution up to 4% of the employees' compensation, subject to
limitations. The matching contributions made during the year ended September
30, 1997 and the six months ended March 31, 1998 were not material.
F-61
<PAGE>
DIGITAL PLANET
NOTES TO FINANCIAL STATEMENTS--(Continued)
8. Related Party Transactions
During the year ended September 30, 1997 and the six months ended March
31, 1998, the Company performed services for one of its Series A Preferred
Stock investors and recognized revenue in the amount of $615,640 and $40,000,
respectively.
9. Concentrations of Credit Risk
Net sales for the year ended September 30, 1997 for several major
customers, together with the receivable due from each customer, are presented
below. The Company does not obtain, nor require, any collateral or other
security instruments related to these balances.
<TABLE>
<CAPTION>
September 30, 1997
---------------------
Accounts
Amount of Receivable
Customer Net Sales Balance
-------- ---------- ----------
<S> <C> <C>
A.................................................... $ 458,400 $ --
B (related party, see Note 8)........................ 615,640 5,000
C.................................................... 1,082,537 139,323
D.................................................... 1,143,973 315,899
---------- --------
$3,300,550 $460,222
========== ========
</TABLE>
10. Commitments
Future minimum lease payments under non-cancelable operating leases as of
September 30, 1997 are as follows:
<TABLE>
<CAPTION>
Year ending September 30,
-------------------------
<S> <C>
1998.............................................................. $118,806
1999.............................................................. 183,450
2000.............................................................. 195,483
2001.............................................................. 207,510
2002.............................................................. 219,543
Thereafter........................................................ 55,638
--------
Total minimum lease payments...................................... $980,430
========
</TABLE>
The Company's operating leases are primarily for office equipment and the
Company's office facility. Rental expense under operating leases for the year
ended September 30, 1997 and the six months ended March 31, 1998 totaled
approximately $223,000 and $127,000, respectively.
11. Subsequent Events
On May 12, 1998, the Company was acquired by iXL Enterprises, Inc.
F-62
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
iXL Enterprises, Inc.
In our opinion, the accompanying balance sheet and the related statements
of operations, of changes in shareholders' deficit, and of cash flows present
fairly, in all material respects, the financial position of Micro Interactive,
Inc. at December 31, 1997, and the results of its operations and its cash flows
for the year then ended in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit of these statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for the opinion expressed above.
PricewaterhouseCoopers LLP
Atlanta, Georgia
June 26, 1998
F-63
<PAGE>
MICRO INTERACTIVE, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
December 31, March 31,
1997 1998
------------ -----------
(unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash................................................ $ 203,414 $ 91,994
Accounts receivable................................. 651,239 521,407
Costs and estimated earnings in excess of billings
on uncompleted contracts........................... 371,300 300,133
Prepaid expenses.................................... 56,944 69,569
---------- ----------
Total current assets.............................. 1,282,897 983,103
Property and equipment, net........................... 113,936 106,248
Other assets.......................................... 49,617 49,617
---------- ----------
Total assets...................................... $1,446,450 $1,138,968
========== ==========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities
Accounts payable.................................... $ 139,399 $ 94,954
Accrued expenses.................................... 79,758 40,450
Accrued payroll..................................... 80,900 80,900
Borrowings under line of credit..................... -- 25,000
Current portion of long-term debt................... 244,444 215,277
Billings in excess of costs and estimated earnings
on uncompleted contracts........................... 675,000 441,372
Current portion of capital lease obligations........ 29,000 31,000
---------- ----------
Total current liabilities......................... 1,248,501 928,953
Due to related parties................................ 250,000 250,000
Deferred rent......................................... 89,713 89,713
Capital lease obligations............................. 16,000 14,000
---------- ----------
Total liabilities................................. 1,604,214 1,282,666
---------- ----------
Shareholders' deficit
Common stock, $.01 par value; 3,000,000 shares
authorized; 796,000 shares issued and outstanding.. 7,960 7,960
Additional paid-in capital.......................... 350,240 350,240
Accumulated deficit................................. (515,964) (501,898)
---------- ----------
Total shareholders' deficit....................... (157,764) (143,698)
---------- ----------
Commitments
---------- ----------
Total liabilities and shareholders' deficit....... $1,446,450 $1,138,968
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-64
<PAGE>
MICRO INTERACTIVE, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the three
For the year months ended March
ended 31,
December 31, -------------------
1997 1997 1998
------------ ---------- --------
(unaudited)
<S> <C> <C> <C>
Revenues..................................... $3,220,300 $1,116,206 $870,837
Cost of revenues............................. 1,788,706 679,279 506,968
---------- ---------- --------
Gross profit............................... 1,431,594 436,927 363,869
Selling, general and administrative
expenses.................................... 1,466,786 297,090 291,431
Depreciation and amortization................ 88,455 40,700 45,357
---------- ---------- --------
(Loss) income from operations.............. (123,647) 99,137 27,081
Interest expense, net........................ 37,549 2,751 10,648
---------- ---------- --------
(Loss) income before income taxes.......... (161,196) 96,386 16,433
Income tax provision......................... 3,900 855 2,367
---------- ---------- --------
Net (loss) income.......................... $ (165,096) $ 95,531 $ 14,066
========== ========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-65
<PAGE>
MICRO INTERACTIVE, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIT
<TABLE>
<CAPTION>
Common Stock
------------------ Additional
Shares Paid-in Accumulated
Outstanding Amount Capital Deficit Total
----------- ------ ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Balance, December 31,
1996.................... 750,000 $7,500 $ 17,500 $(288,268) $(263,268)
Distributions to
shareholders............ -- -- -- (62,600) (62,600)
Issuance of common stock,
net of stock issuance
costs................... 46,000 460 332,740 -- 333,200
Net loss............... -- -- -- (165,096) (165,096)
------- ------ -------- --------- ---------
Balance, December 31,
1997.................... 796,000 7,960 350,240 (515,964) (157,764)
Net income
(unaudited)........... -- -- -- 14,066 14,066
------- ------ -------- --------- ---------
Balance, March 31, 1998
(unaudited)............. 796,000 $7,960 $350,240 $(501,898) $(143,698)
======= ====== ======== ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-66
<PAGE>
MICRO INTERACTIVE, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the
three months
For the ended
year ended March 31,
December 31, ------------------
1997 1997 1998
------------ -------- --------
(unaudited)
<S> <C> <C> <C>
Cash flows from operating activities
Net (loss) income............................ $(165,096) $ 95,531 $ 14,066
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities
Depreciation and amortization............... 88,655 40,700 45,357
Non cash charge to operations............... 33,280 -- --
Changes in operating assets and liabilities
Accounts receivable........................ (105,604) 253,849 129,832
Costs and estimated earnings in excess of
billings on uncompleted contracts......... (125,300) 215,604 71,167
Accounts payable and accrued expenses...... (66,557) (137,908) (83,753)
Deferred rent.............................. 42,113 -- --
Billings in excess of costs and estimated
earnings on uncompleted contracts......... 235,700 (385,022) (233,628)
Other assets............................... (41,705) 51 (12,625)
--------- -------- --------
Net cash provided by (used in) operating
activities............................... (104,514) 82,805 (69,584)
--------- -------- --------
Cash flows from investing activities
Capital expenditures......................... (46,060) (13,431) (27,319)
--------- -------- --------
Net cash used in investing activities..... (46,060) (13,431) (27,319)
--------- -------- --------
Cash flows from financing activities
Proceeds (payments) on revolving line of
credit, net................................. (128,000) -- 25,000
Payments on long-term debt................... (75,000) (8,333) (29,167)
Proceeds from issuance of debt............... 250,000 -- --
Proceeds from issuance of common stock....... 299,920 -- --
Payments on capital leases................... (54,375) (10,200) (10,350)
Distributions to shareholders................ (62,600) (43,600) --
--------- -------- --------
Net cash provided by (used in) financing
activities............................... 229,945 (62,133) (14,517)
--------- -------- --------
Net increase (decrease) in cash........... 79,371 7,241 (111,420)
Cash, beginning of period..................... 124,043 124,043 203,414
Cash, end of period .......................... $ 203,414 $131,284 $ 91,994
========= ======== ========
Supplemental disclosures of cash flow
information
Cash paid during the period for interest..... $ 44,763 $ 4,931 $ 5,075
========= ======== ========
Non-cash investing and financing activities
Acquisition of equipment through capital
leases...................................... $ 18,175 $ 5,400 $ 9,500
========= ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-67
<PAGE>
MICRO INTERACTIVE, INC.
NOTES TO FINANCIAL STATEMENTS
1. Nature of Business and Summary of Significant Accounting Policies
Nature of business
Micro Interactive, Inc. (the Company) designs and produces interactive
multimedia software applications, primarily on CD-ROM, for use by worldwide
companies in connection with corporate communications, marketing, sales
publicity and training.
Significant accounting policies
Revenue recognition
The Company records revenues based on the completed contract method.
Accordingly, revenue is recognized only when all remaining obligations are not
significant. All related billings and costs for uncompleted contracts have been
deferred as billings on uncompleted contracts and costs on uncompleted
contracts.
Cash and cash equivalents
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
Equipment
Equipment is recorded at cost, less accumulated depreciation.
Expenditures for renewals and improvements that significantly add to the
productive capacity or extend the useful life of an asset are capitalized.
Expenditures for maintenance and repairs are charged to operations as incurred.
Depreciation expense is provided on the straight-line method over the estimated
useful lives for purchased assets, which range from 5 to 7 years. Equipment
held under capital leases is amortized on the straight-line method over the
lesser of the useful life or the lease term.
Income taxes
The Company has elected to be taxed as an S Corporation for Federal and
State tax purposes, whereby the Company's taxable income accrues directly to
the shareholders. The Company remains subject to New York City and New York
State S Corporation taxes.
Stock-based compensation
The Company has elected to account for stock-based compensation using the
intrinsic value method prescribed in Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" (APB 25) and related
Interpretations and has elected to elect the disclosure option of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (FAS 123). Accordingly, compensation cost for stock options is
measured as the excess, if any, of the fair value of the Company's stock at the
date of the grant over the amount an employee must pay to acquire the stock.
F-68
<PAGE>
MICRO INTERACTIVE, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
Fair value of financial instruments
The carrying amounts of financial instruments including cash, cash
equivalents, accounts receivable, accounts payable and accrued expenses
approximate fair value. The carrying amount of long-term debt approximates fair
value based on current rates of interest available to the Company for loans of
similar maturities.
Comprehensive income
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" requires entities to report comprehensive income which
represents the change in equity during a period from non-owner sources. The
Company has not incurred any such activity other than its net income (loss) for
all periods presented.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses during the reporting period. Actual results could differ from
those estimates and could materially affect the reported amounts of assets,
liabilities and future operating results.
Interim Financial Information
The accompanying financial statements and related notes as of March 31,
1998 and for the three months ended March 31, 1997 and 1998 are unaudited. In
the opinion of management, the unaudited interim financial statements have been
prepared on the same basis as the audited financial statements and reflect all
adjustments, consisting of only normal recurring adjustments, necessary to
present fairly the financial position as of March 31, 1998, and the results of
the Company's operations and its cash flows for the three months ended March
31, 1997 and 1998. The results for the three months ended March 31, 1998 are
not necessarily indicative of the results to be expected for the year ending
December 31, 1998.
2. Equipment
Equipment consists of the following:
<TABLE>
<CAPTION>
December 31, March 31,
1997 1998
------------ -----------
(unaudited)
<S> <C> <C>
Furniture and fixtures............................. $ 76,668 $ 77,229
Computers and related equipment.................... 349,545 363,778
Leasehold improvements............................. 21,815 21,815
--------- ---------
448,028 462,822
Less accumulated depreciation and amortization..... (334,092) (356,574)
--------- ---------
Equipment, net..................................... $ 113,936 $ 106,248
========= =========
</TABLE>
At December 31, 1997, the Company had equipment under capital lease, net
of related amortization, of $27,300.
F-69
<PAGE>
MICRO INTERACTIVE, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
3. Concentrations of Credit Risk
For the year ended December 31, 1997, two customers (one through multiple
operating divisions located in various countries worldwide) accounted for
approximately 37.5% and 10.5% of total revenues, respectively.
4. Borrowings
Borrowings consist of the following:
<TABLE>
<CAPTION>
December 31, March 31,
1997 1998
------------ -----------
(unaudited)
<S> <C> <C>
Term loans due to bank payable in monthly
principal instalments of $9,722 through January
1999, thereafter $6,944 through June 2000...... $244,444 $215,277
Notes payable to related parties due March 22,
2000........................................... 250,000 250,000
-------- --------
$494,444 $465,277
======== ========
</TABLE>
Revolving line of credit
The Company had a line of credit with the Bank of New York as of December
31, 1996 which allowed for advances up to $250,000 and expired on May 30, 1997.
On May 30, 1997, the Company entered into a new agreement with the same bank
which increased the line of credit to $500,000 allowing for advances in
increments of $25,000 and expiring on May 30, 1998. The line of credit is
payable on demand and bears interest at the bank's prime rate plus 1 3/4% (10
1/4% at December 31, 1997). The line of credit is secured by the Company's
assets. Amounts outstanding under the agreement at December 31, 1997 and March
31, 1998 were $0 and $25,000, respectively.
Term loans
On January 25, 1996, the Company entered into an agreement with the bank
of New York to borrow $100,000. The note is secured by the Company's assets and
bears interest at the bank's prime rate plus 1 3/4% and is payable in monthly
instalments of $2,778 through January 1999.
On May 30, 1997, the Company entered into an agreement with the Bank of
New York to increase its borrowings to $250,000. The note is secured by the
Company's assets and bears interest at the bank's prime rate plus 1 3/4%. The
loan is payable in monthly instalments of $6,944 through June 2000. The Company
is subject to certain covenants under the bank debt agreement, including
maintaining working capital and tangible net worth requirements, among others.
As of December 31, 1997, the Company had violated certain of these covenants.
The Company did not obtain waivers for these violations; however, the Company
repaid these borrowings subsequent to year end. As a result of the covenant
violation, the amount of the term loans outstanding as of December 31, 1997 is
classified as current.
Related party debt
In 1995, the Company entered into loan agreements with two related
parties. These loans in the amounts of $137,500 and $112,500 bear interest at
rates of 6 1/8% and 8 3/4%, respectively, and are due March 22, 2000. These
loans are subordinate to the term loans and line of credit with Bank of New
York.
F-70
<PAGE>
MICRO INTERACTIVE, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
Interest expense recognized with respect to these borrowings for the year
ended December 31, 1997 was $21,098.
The aggregate maturities required on borrowings and capital lease
obligations as of December 31, 1997 are as follows:
<TABLE>
<CAPTION>
Year ending December 31,
------------------------
<S> <C>
1998........................................................... $276,237
1999........................................................... 11,694
2000........................................................... 254,385
2001........................................................... 1,461
Less amounts representing interest on capital leases........... (4,333)
--------
$539,444
========
</TABLE>
5. Private Placement Offering
In June 1997, the Company sold 46,000 shares of common stock for
$299,920. Five of the six investors purchased shares of stock at $8.33 per
share with the remaining investor (a related party) purchasing 16,000 shares at
$6.25 per share pursuant to a warrant issued contemporaneously with the
offering. The Company has recorded a charge to operations of $33,280 to reflect
the lower share price paid by this investor. The Company issued 6,000 of the
46,000 shares to its legal counsel as payment for legal services rendered in
connection with the offering. Such costs have been netted against the proceeds
raised.
6. 1996 Stock Option Plan
The Company's 1996 Stock Option Plan provides for the granting to certain
employees as incentive stock options the purchase of up to 50,000 shares of the
Company's common stock. Options are exercisable over the exercise period (which
shall not exceed ten years from the date of grant) at such times and upon such
conditions as the stock option committee may determine. Options are granted at
fair market value as determined by the stock option committee except for stock
options to 10% or more shareholders, for whom the option price must be at least
110% of the fair market value.
Had compensation cost for the Company's plan been determined based on the
fair value at the grant date consistent with the provisions of FAS 123, the
Company's net loss would have been increased to the pro forma amounts indicated
below:
<TABLE>
<CAPTION>
December 31,
1997
------------
<S> <C>
Net loss
As reported................................................. $(131,816)
Pro forma................................................... $(146,824)
</TABLE>
The minimum value of each option is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted average
assumptions used for grants during 1997; dividend yield of 0% for the period;
expected volatility of 0% for the period; average risk free interest rate 6.4%;
expected life of 4.5 years for the period.
F-71
<PAGE>
MICRO INTERACTIVE, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
A summary of stock option activity as of and for the year ended December
31, 1997, is as follows:
<TABLE>
<CAPTION>
December 31,
1997
-----------------
Weighted
Average
Exercise
Options Price
------- --------
<S> <C> <C>
Outstanding at beginning of year......................... 11,000 $10.00
Granted.................................................. 16,500 $ 8.33
Forfeited................................................ (7,000) $10.00
------
Outstanding at end of year............................... 20,500 $ 9.06
======
Options exercisable at end of year....................... 6,500 $ 8.59
------
</TABLE>
The following table summarizes information about stock options
outstanding at December 31, 1997:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
----------------------------- --------------------------
Weighted
Average Weighted
Number Remaining Number Average
Range of Outstanding at Contractual Exercisable at Exercise
Exercise Prices December 31, 1997 Life December 31, 1997 Price
--------------- ----------------- ----------- ----------------- --------
<S> <C> <C> <C> <C>
$ 8.33 11,500 9.58 5,500 $ 8.33
$10.00 9,000 8.64 1,000 $10.00
------ -----
20,500 6,500 $ 8.59
====== =====
</TABLE>
7. Commitments
The Company leases its office under an operating lease which expires
December 2001. The lease provides for escalations for increases in real estate
taxes and operating expenses. Operating lease expense charged for the year
ended December 31, 1997 (consisting of the office lease) was $178,280. The
aggregate minimum rentals remaining through dates of expiration payable over
the next four years are as follows:
<TABLE>
<CAPTION>
Year ending December 31,
------------------------
<S> <C>
1998........................................................... $184,900
1999........................................................... 184,900
2000........................................................... 184,900
2001........................................................... 184,900
--------
Total minimum lease payments................................... $739,600
========
</TABLE>
8. Subsequent Event
On May 8, 1998, the Company was acquired by iXL Enterprises, Inc.
F-72
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
iXL Enterprises, Inc.
In our opinion, the accompanying balance sheet and the related statements
of operations, of changes in shareholders' equity (deficit), and of cash flows
present fairly, in all material respects, the financial position of
CommerceWave, Inc. at December 31, 1997, and the results of its operations and
its cash flows for the year then ended in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Atlanta, Georgia
August 21, 1998
F-73
<PAGE>
COMMERCEWAVE, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
December 31, June 30,
1997 1998
------------ -----------
(unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash................................................ $ 277,080 $ 1,251
Accounts receivable less allowance for doubtful
accounts of $64,750 and $54,331, respectively...... 399,903 195,250
Other current assets................................ 12,131 2,400
--------- ---------
Total current assets.............................. 689,114 198,901
Equipment, net........................................ 167,086 150,614
Other assets.......................................... 22,929 14,719
--------- ---------
Total assets...................................... $ 879,129 $ 364,234
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable.................................... $ 225,225 $ 188,142
Accrued expenses.................................... 122,508 143,781
Current portion of notes payable and capital lease
obligations........................................ 402,510 372,401
Advances from related parties....................... 27,770 71,276
--------- ---------
Total current liabilities......................... 778,013 775,600
Notes payable and capital lease obligations........... 24,659 25,454
--------- ---------
Total liabilities................................. 802,672 801,054
--------- ---------
Shareholders' equity (deficit)
Preferred stock, Series A, no par value; 4,050,405
shares authorized, issued and outstanding.......... 861,000 861,000
Common stock, no par value; 24,000,000 shares
authorized; 8,000,000 shares issued and
outstanding........................................ 20,000 20,000
Additional paid-in capital.......................... (613,663) (554,663)
Accumulated deficit................................. (190,880) (763,157)
--------- ---------
Total shareholders' equity (deficit).............. 76,457 (436,820)
--------- ---------
Commitments
--------- ---------
Total liabilities and shareholders' equity
(deficit)........................................ $ 879,129 $ 364,234
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-74
<PAGE>
COMMERCEWAVE, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the six months ended
For the year ended June 30,
December 31, 1997 1997 1998
------------------ ------------ ------------
(unaudited)
<S> <C> <C> <C>
Revenues....................... $1,636,614 $ 669,644 $ 563,438
Cost of revenues............... 760,673 335,300 438,866
---------- ------------ ------------
Gross profit................. 875,941 334,344 124,572
Selling, general and
administrative expenses....... 1,093,551 510,251 635,111
Depreciation and amortization.. 65,294 28,129 33,971
Research and development
expenses...................... 151,568 118,380 5,147
---------- ------------ ------------
Loss from operations......... (434,472) (322,416) (549,657)
Interest expense, net.......... (55,044) (32,303) (21,820)
Other income................... 32,204 12,451 --
---------- ------------ ------------
Loss before income taxes..... (457,312) (342,268) (571,477)
Income tax provision........... 800 800 800
---------- ------------ ------------
Net loss..................... $ (458,112) $ (343,068) $ (572,277)
========== ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-75
<PAGE>
COMMERCEWAVE, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Common Stock Preferred Stock
------------------- -------------------- Additional
Shares Shares Paid-in Accumulated
Outstanding Amount Outstanding Amount Capital Deficit Total
----------- ------- ----------- -------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1996................... 8,000,000 $20,000 -- -- -- $(346,431) $(326,431)
Sale of preferred stock,
net of issuance costs.. -- -- 4,050,405 $861,000 -- -- 861,000
Net loss under S
Corporation tax status
(January 1, 1997
through July 31,
1997).................. -- -- -- -- -- (267,232) (267,232)
S Corporation to C
Corporation conversion
effective August 1,
1997................... -- -- -- -- $(613,663) 613,663 --
Net loss under C
Corporation tax status
(August 1, 1997 through
December 31, 1997)..... -- -- -- -- -- (190,880) (190,880)
--------- ------- --------- -------- --------- --------- ---------
Balance, December 31,
1997................... 8,000,000 20,000 4,050,405 861,000 (613,663) (190,880) 76,457
Stock compensation
(unaudited)............ -- -- -- -- 59,000 -- 59,000
Net loss (unaudited).... -- -- -- -- -- (572,277) (572,277)
--------- ------- --------- -------- --------- --------- ---------
Balance, June 30 1998
(unaudited)............ 8,000,000 $20,000 4,050,405 $861,000 $(554,663) $(763,157) $(436,820)
========= ======= ========= ======== ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-76
<PAGE>
COMMERCEWAVE, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the six months
For the year ended
ended June 30,
December 31, --------------------
1997 1997 1998
------------ --------- ---------
(unaudited)
<S> <C> <C> <C>
Cash flows from operating activities
Net loss................................... $(458,112) $(343,068) $(572,277)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities
Depreciation and amortization............. 65,294 28,129 33,971
Stock compensation expense................ -- -- 59,000
Change in operating assets and liabilities
Accounts receivable...................... (174,711) 105,197 204,653
Other assets............................. (7,304) (4,821) 9,209
Accounts payable and accrued expenses.... 76,830 22,832 (15,809)
--------- --------- ---------
Net cash used in operating activities... (498,003) (191,731) (281,253)
--------- --------- ---------
Cash flows from investing activities
Capital expenditures....................... (19,072) (3,469)
--------- --------- ---------
Net cash used in investing activities... (19,072) -- (3,469)
--------- --------- ---------
Cash flows from financing activities
Payments on notes payable and capital
leases.................................... (114,973) (43,784) (34,614)
Proceeds from sale of preferred stock...... 861,000 -- --
Proceeds from advances from related
parties................................... 17,770 222,609 43,506
--------- --------- ---------
Net cash provided by financing
activities............................. 763,797 178,825 8,892
--------- --------- ---------
Net increase (decrease) in cash......... 246,722 (12,906) (275,830)
Cash, beginning of period................... 30,358 30,358 277,081
--------- --------- ---------
Cash, end of period......................... $ 277,080 $ 17,452 $ 1,251
========= ========= =========
Supplemental disclosures of cash flow
information
Cash paid during the period for interest... $ 17,733 $ 8,867 $ 7,975
========= ========= =========
Cash paid during the period for income
taxes..................................... $ 800 $ -- $ --
========= ========= =========
Non-cash investing and financing activities
Acquisition of equipment through capital
leases.................................... $ 34,366 $ 12,553 $ 5,299
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-77
<PAGE>
COMMERCEWAVE, INC.
NOTES TO FINANCIAL STATEMENTS
1. Nature of Business and Summary of Significant Accounting Policies
Nature of business
CommerceWave, Inc. (the "Company") offers products and consulting
services related to electronic commerce. The Company markets a suite of
commerce solutions ranging from an Internet-based interactive commerce software
for merchants to transaction processing systems. The Company provides
consulting services in transaction processing, point-of-sale terminal
applications and Internet commerce solutions. Effective September 30, 1996, the
Board of Directors of the Company elected to change the Company's name
(formerly Professional Business Solutions, Inc.) to CommerceWave, Inc.
Significant accounting policies
Revenue recognition
Revenue from consulting services is recognized based on actual time
incurred which is billed at an agreed-upon hourly rate. Revenue from product
sales is recognized upon shipment of the product when the Company has no
significant obligations remaining. Revenue from software customizations is
recorded as services are provided. Maintenance revenue is recognized on a pro
rata basis over the terms of the maintenance agreements.
Equipment
Equipment is recorded at cost, less accumulated depreciation.
Expenditures for renewals and improvements that significantly add to the
productive capacity or extend the useful life of an asset are capitalized.
Expenditures for maintenance and repairs are charged to operations as incurred.
Depreciation expense is provided on the straight-line method over the estimated
useful lives for purchased assets, which range from 3 to 5 years. Equipment
held under capital lease is amortized on the straight-line method over the
lesser of the useful life or the lease term.
Software development costs
In accordance with Statement of Financial Accounting Standards No. 86,
"Accounting for the Costs of Computer Software to Be Sold, Leased, or otherwise
Marketed," software development costs are expensed as incurred until
technological feasibility has been established, at which time such costs are
capitalized until the product is available for general release to customers. To
date, the establishment of technological feasibility of the Company's products
and general release of such software have substantially coincided. As a result,
software development costs qualifying for capitalization have been
insignificant, and therefore, the Company has not capitalized any software
development costs.
Income taxes
The Company has applied the asset and liability approach of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" for
financial accounting and reporting purposes. The Company accounts for certain
items of income and expense in different time periods for financial reporting
and income tax purposes. Provisions for deferred income taxes are made in
recognition of such temporary differences, where applicable. A valuation
allowance is established against deferred tax assets unless the Company
believes it is more likely than not that the benefit will be realized.
F-78
<PAGE>
COMMERCEWAVE, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
Stock-based compensation
The Company has elected to continue to account for stock-based
compensation using the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
(APB 25) and related Interpretations and has elected the disclosure option of
Statement of Financial Accounting Standards No 123, "Accounting for Stock-Based
Compensation" (FAS 123). Accordingly, compensation cost for stock options is
measured as the excess, if any, of the fair value of the Company's stock at the
date of the grant over the amount an employee must pay to acquire the stock.
Fair value of financial instruments
The carrying amounts of financial instruments including cash, accounts
receivable, accounts payable and accrued expenses approximate fair value. The
carrying amounts of convertible notes payable and other borrowings approximate
fair value based on current rates of interest available to the Company for
loans of similar maturities.
Comprehensive income
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" requires entities to report comprehensive income, which
represents the change in equity during a period from non-owner sources. The
Company has not incurred any such activity other than the net loss for all
periods presented.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses during the reporting period. Actual results could differ from
those estimates and could materially affect the reported amounts of assets,
liabilities and future operating results.
Interim financial information
The accompanying financial statements and related notes as of June 30,
1998 and for the six months ended June 30, 1997 and 1998 are unaudited. In the
opinion of management, these statements have been prepared on the same basis as
the audited financial statements and reflect all adjustments, which include
only normal recurring adjustments, necessary to present fairly the Company's
financial position as of June 30, 1998 and the results of the Company's
operations and its cash flows for the six months ended June 30, 1997 and 1998.
The results for the six months ended June 30, 1998 are not necessarily
indicative of the results to be expected for the year ending December 31, 1998.
F-79
<PAGE>
COMMERCEWAVE, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
2. Equipment
Equipment consists of the following:
<TABLE>
<CAPTION>
December 31, June 30,
1997 1998
------------ -----------
(unaudited)
<S> <C> <C>
Office furniture and equipment................... $ 45,103 $ 46,427
Computer equipment............................... 196,512 203,956
Computer software................................ 47,784 47,784
--------- ---------
289,399 298,167
Less accumulated depreciation and amortization... (122,313) (147,553)
--------- ---------
Equipment, net................................... $ 167,086 $ 150,614
========= =========
</TABLE>
Equipment held under capital lease is as follows:
<TABLE>
<CAPTION>
December 31, June 30,
1997 1998
------------ -----------
(unaudited)
<S> <C> <C>
Office furniture and equipment.................... $ 23,228 $ 23,228
Computer equipment................................ 119,324 124,623
Computer software................................. 25,117 25,117
-------- --------
167,669 172,968
Less accumulated amortization..................... (67,008) (77,788)
-------- --------
Equipment, net.................................... $100,661 $ 95,180
======== ========
</TABLE>
Several of the Company's capital leases contain purchase options by which
the Company can purchase the equipment at the end of the lease term for $1.00.
3. Accrued Expenses
Accrued expenses consists of the following:
<TABLE>
<CAPTION>
December 31, June 30,
1997 1998
------------ -----------
(unaudited)
<S> <C> <C>
Accrued vacation.................................. $ 43,936 $ 36,168
Accrued salaries.................................. 27,662 27,662
Accrued interest.................................. 37,825 53,688
Other............................................. 13,085 26,263
-------- --------
$122,508 $143,781
======== ========
</TABLE>
F-80
<PAGE>
COMMERCEWAVE, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
4. Borrowings
Borrowings consist of the following:
<TABLE>
<CAPTION>
December 31, June 30,
1997 1998
------------ -----------
(unaudited)
<S> <C> <C>
Convertible note payable, unsecured, which
accrues interest at 8%.......................... $ 150,000 $ 150,000
Convertible note payable, unsecured, which
accrues interest at 8%.......................... 150,000 150,000
Convertible note payable, unsecured, which
accrues interest at 8%.......................... 50,000 50,000
Note payable to bank, which accrues interest at
prime plus 2% (10.5% at December 31, 1997) and
matures on February 15, 1998.................... 8,558 --
Capital leases, payable in monthly instalments of
$178 to $783 expiring from 1998 to 2000
collateralized by equipment with a net book
value of $100,661 and $95,180 at December 31,
1997 and June 30, 1998, respectively............ 68,611 47,855
--------- ---------
427,169 397,855
Less current maturities.......................... (402,510) (372,401)
--------- ---------
Long-term portion................................ $ 24,659 $ 25,454
========= =========
</TABLE>
In 1996 the Company issued three notes payable, as indicated in the table
above, for total proceeds to the Company of $350,000. The notes are convertible
into common stock upon the closing of an equity transaction in which the
consideration received by the Company is greater than $1,000,000 (the Equity
Transaction). The conversion rate is calculated as 80%, 83%, and 90%,
respectively, of the per share price paid by the investors in the Equity
Transaction but shall be no less than $8.45 per share. The notes payable were
repaid in conjunction with the Company's acquisition by iXL Enterprises, Inc.
(see Note 12).
The Company recognized interest expense of $64,250 and $28,148 for the
year ended December 31, 1997 and for the six months ended June 30, 1998,
respectively.
The aggregate maturities required on notes payable and capital leases as
of December 31, 1997 are as follows:
<TABLE>
<CAPTION>
Notes Capital
Year ending December 31, Payable Leases Total
------------------------ -------- ------- --------
<S> <C> <C> <C>
1998......................................... $358,558 $53,898 $412,456
1999......................................... -- 22,901 22,901
2000......................................... -- 4,472 4,472
-------- ------- --------
358,558 81,271 439,829
Less amounts representing interest........... -- (12,660) (12,660)
-------- ------- --------
$358,558 $68,611 $427,169
======== ======= ========
</TABLE>
F-81
<PAGE>
COMMERCEWAVE, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
5. Concentrations of Credit Risk
Net sales for the year ended December 31, 1997 for several major
customers, together with the receivable due from each customer, are presented
below. The Company does not obtain, nor require, any collateral or other
security instruments related to these balances.
<TABLE>
<CAPTION>
December 31, 1997
---------------------
Accounts
Amount of Receivable
Customer Net Sales Balance
-------- ---------- ----------
<S> <C> <C>
A.................................................. $ 176,387 $100,019
B.................................................. 470,887 137,682
C.................................................. 266,719 116,083
D.................................................. 239,184 23,554
E.................................................. -- --
---------- --------
$1,153,177 $377,338
========== ========
</TABLE>
6. 1997 Stock Option Plan
The Company's stock option plan provides for the granting of options to
acquire up to 1,000,000 shares of the Company's common stock. The options may
either be incentive stock options or non-qualified stock options as defined in
the Internal Revenue Code. The Board of Directors will govern the terms of each
option grant and will determine the exercise price, the vesting period and the
exercise period of each option. The exercise period may not exceed ten years
from the date of grant.
For the year ended December 31, 1997, no compensation costs were
recognized in connection with option grants. In June 1998, the Company granted
308,600 options to certain employees with exercise prices below the estimated
fair value of the Company's common stock. These options vested immediately. As
a result, the Company recorded compensation costs of $59,000.
Had compensation cost for the Company's option plan been determined based
on the fair value method as described in Financial Accounting Standards No.
123, "Accounting for Stock Based Compensation," the Company's net loss would
have been increased to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
December 31, June 30,
1997 1998
------------ -----------
(unaudited)
<S> <C> <C>
Net loss
As reported..................................... $(458,112) $(572,277)
Pro forma....................................... $(480,195) $(596,439)
</TABLE>
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted
average assumptions used for grants during the December 31, 1997 and June 30,
1998 periods, respectively: dividend yield of 0% for all periods; expected
volatility of 0% for all periods; risk free interest rate of 5.71% and 5.52%;
expected life of five years and two years. The weighted average fair value of
the options granted for the year ended December 31, 1997 and the six months
ended June 30, 1998 is $0.05 and $0.13, respectively.
F-82
<PAGE>
COMMERCEWAVE, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
The following table summarizes stock option activity for the year ended
December 31, 1997:
<TABLE>
<CAPTION>
December 31, 1997
--------------------
Weighted
Average
Exercise
Options Price
--------- ---------
<S> <C> <C>
Outstanding, beginning of year.......................... -- $ 0.00
Granted................................................. 718,500 0.22
Exercised............................................... -- 0.00
Forfeited............................................... (9,900) 0.22
---------
Outstanding, end of year................................ 708,600 0.22
---------
Options exercisable at end of year...................... 176,660 $ 0.22
=========
</TABLE>
The stock options outstanding at December 31, 1997 have a weighted
average remaining contractual life of 4 years.
7. Shareholders' Equity (Deficit)
Preferred stock
In August 1997, the Company issued 4,050,405 of Series A convertible
preferred stock at $0.22 per share for total proceeds of $861,000, net of
issuance cost of $39,000. Two preferred stock investors advanced the Company a
total of $200,000 in June and April of 1997, respectively, prior to the
issuance of the shares and final settlement of the price in August 1997. The
holders of the preferred stock are entitled to elect two members to the Board
of Directors and have voting rights equal to common stock on an if-converted
basis. Preferred stockholders also are entitled to receive noncumulative
dividends in preference to any dividends on common stock at a rate of $0.01 per
share. No dividends have been declared for the year ended December 31, 1997 nor
for the six months ended June 30, 1998.
The holders of the preferred stock are entitled to receive their original
issuance price of $0.22 per share in liquidation, plus an amount equal to all
declared but unpaid dividends, prior and in preference to any distribution to
the holders of common stock. Each share of preferred stock is convertible into
one share of common stock.
Stock split
In 1997, the Company approved a 10 for 1 split of its common stock. The
Company restated the share data for this transaction as if it occurred at
inception of the Company.
8. 401(k) Savings Plan
Effective October 1, 1996, the Company established a 401(k) plan for
substantially all of its employees over the age of 21 with an employment date
prior to the effective date of the plan or with more than one year of service,
as defined in the plan. The plan allows for discretionary employer matching
contributions, subject to limitations. The matching contributions made during
the year ended December 31, 1997 and the six months ended June 30, 1998 were
not material.
F-83
<PAGE>
COMMERCEWAVE, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
9. Commitments
Future minimum lease payments under non-cancelable operating leases as of
December 31, 1997 are as follows:
<TABLE>
<CAPTION>
Year ending December 31,
------------------------
<S> <C>
1998........................................................... $ 78,948
1999........................................................... 52,835
--------
Total minimum lease payments................................... $131,783
========
</TABLE>
The Company's operating leases are primarily for office equipment and the
Company's office facility. Rental expense under operating leases for the year
ended December 31, 1997 and for the six months ended June 30, 1998 totaled
approximately $102,000 and $43,000, respectively.
10. Income Taxes
From inception through July 31, 1997 the Company elected to be taxed as
an S Corporation for federal and state tax purposes, whereby the Company's
taxable income accrues directly to the shareholders. The Company elected to be
taxed as a C Corporation for federal and state tax purposes effective August 1,
1997. Due to the change in tax status, the Company has transferred its
accumulated deficit as of July 31, 1997 of $613,663 to additional paid in
capital.
The provision for income taxes results from a minimum state tax
liability. No other current provision for income tax expense or benefit has
been provided by the Company for the year ended December 31, 1997 or for the
six months ended June 30, 1998 due to a net loss being recognized for income
tax purposes. Further, no deferred income tax expense or benefit has been
provided as changes in net deferred tax assets, consisting primarily of net
operating loss carryforwards, and liabilities have been fully offset by a
valuation allowance.
11. Related Party Transactions
On June 29, 1998, the Company received an advance from iXL Enterprises,
Inc. (iXL) in the amount of $50,000. The advance was used for working capital.
The advance was considered as part of the purchase price when the Company was
acquired by iXL (see Note 12). The Company also recognized $22,913 of revenues
for the six months ended June 30, 1998 in connection with providing
professional services to iXL prior to the acquisition. The amount was included
in accounts receivable at June 30, 1998.
12. Subsequent Event
On July 2, 1998, the Company was acquired by iXL Enterprises, Inc.
F-84
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
iXL Enterprises, Inc.
In our opinion, the accompanying balance sheet and the related statements
of operations, of changes in shareholders' equity, and of cash flows present
fairly, in all material respects, the financial position of Spinners
Incorporated at December 31, 1997, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Atlanta, Georgia
September 4, 1998
F-85
<PAGE>
SPINNERS INCORPORATED
BALANCE SHEET
<TABLE>
<CAPTION>
December 31, June 30,
1997 1998
------------ -----------
(unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash................................................ $107,361 $176,317
Accounts receivable................................. 333,300 281,420
Costs and estimated earnings in excess of billings
on uncompleted contracts........................... 51,000 67,264
Investment--held-to-maturity........................ 81,413 --
Other current assets................................ 46,436 1,115
-------- --------
Total current assets.............................. 619,510 526,116
Property and equipment, net........................... 231,447 403,817
Other assets.......................................... 27,489 49,898
-------- --------
Total assets...................................... $878,446 $979,831
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable.................................... $ 3,543 $ 52,266
Accrued expenses.................................... 45,934 73,029
Billings in excess of costs and estimated earnings
on uncompleted contracts........................... 106,750 52,975
Current portion of capital lease obligations........ 49,540 85,532
-------- --------
Total current liabilities......................... 205,767 263,802
Capital lease obligations............................. 41,576 146,761
-------- --------
Total liabilities................................. 247,343 410,563
-------- --------
Shareholders' equity
Common stock, $.01 par value; 10,000,000 shares
authorized; 7,000,000 shares issued and
outstanding........................................ 70,000 70,000
Additional paid-in capital.......................... 161,000 161,000
Unearned compensation............................... (144,000) (124,000)
Retained earnings................................... 544,103 462,268
-------- --------
Total shareholders' equity........................ 631,103 569,268
-------- --------
Commitments
-------- --------
Total liabilities and shareholders' equity........ $878,446 $979,831
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-86
<PAGE>
SPINNERS INCORPORATED
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Year For the Six Months
Ended Ended June 30,
December 31, -------------------
1997 1997 1998
------------ -------- ----------
(unaudited)
<S> <C> <C> <C>
Revenues.................................... $1,742,439 $747,138 $1,104,261
Cost of revenues............................ 798,942 316,467 727,238
---------- -------- ----------
Gross profit.............................. 943,497 430,671 377,023
Selling, general and administrative
expenses................................... 489,028 139,526 343,956
Depreciation and amortization............... 38,182 12,193 36,814
---------- -------- ----------
Income (loss) from operations............. 416,287 278,952 (3,747)
Interest income (expense), net.............. (8,684) 1,912 (6,088)
---------- -------- ----------
Net income (loss)......................... $ 407,603 $280,864 $ (9,835)
========== ======== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-87
<PAGE>
SPINNERS INCORPORATED
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock
------------------- Additional Unearned
Shares Paid-in Compensation Retained
Outstanding Amount Capital Expense Earnings Total
----------- ------- ---------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1996................... 7,000,000 $70,000 -- -- $173,100 $243,100
Distributions......... -- -- -- -- (36,600) (36,600)
Issuance of stock
options.............. -- -- $161,000 $(161,000) -- --
Stock compensation.... -- -- -- 17,000 -- 17,000
Net income............ -- -- -- -- 407,603 407,603
--------- ------- -------- --------- -------- --------
Balance, December 31,
1997................... 7,000,000 70,000 161,000 (144,000) 544,103 631,103
Distributions
(unaudited).......... -- -- -- -- (72,000) (72,000)
Stock compensation
(unaudited).......... -- -- -- 20,000 -- 20,000
Net loss (unaudited).. -- -- -- -- (9,835) (9,835)
--------- ------- -------- --------- -------- --------
Balance, June 30, 1998
(unaudited)............ 7,000,000 $70,000 $161,000 $(124,000) $462,268 $569,268
========= ======= ======== ========= ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-88
<PAGE>
SPINNERS INCORPORATED
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the Year For the Six Months Ended
Ended June 30,
December 31, --------------------------
1997 1997 1998
------------ ------------ ------------
(unaudited)
<S> <C> <C> <C>
Cash flows from operating activities
Net income (loss).................... $ 407,603 $ 280,864 $ (9,835)
Adjustments to reconcile net income
(loss) to net cash provided by (used
in) operating activities
Depreciation and amortization....... 38,182 12,193 36,814
Stock compensation expense.......... 17,000 -- 20,000
Changes in operating assets and
liabilities
Accounts receivable................ (216,505) (10,579) 51,880
Costs and estimated earnings in
excess of billings on uncompleted
contracts......................... (51,000) (63,000) (16,264)
Other assets....................... (57,677) (1,850) 22,912
Accounts payable and accrued
expenses.......................... 35,030 26,057 75,818
Billings in excess of costs and
estimated earnings on uncompleted
contracts......................... 106,750 2,000 (53,775)
--------- ------------ ------------
Net cash provided by operating
activities....................... 279,383 245,685 127,550
--------- ------------ ------------
Cash flows from investing activities
Capital expenditures................. (84,945) (54,539) (28,142)
Proceeds from (purchase of)
investment securities............... (81,413) (81,413) 81,413
--------- ------------ ------------
Net cash provided by (used in)
investing activities............. (166,358) (135,952) 53,271
--------- ------------ ------------
Cash flows from financing activities
Payments on capital leases........... (22,230) (4,900) (39,865)
Distributions to shareholders........ (36,600) (36,600) (72,000)
--------- ------------ ------------
Net cash used in financing
activities....................... (58,830) (41,500) (111,865)
--------- ------------ ------------
Net increase in cash.............. 54,195 68,233 68,956
Cash, beginning of period............. 53,166 53,166 107,361
--------- ------------ ------------
Cash, end of period................... $ 107,361 $ 121,399 $ 176,317
========= ============ ============
Supplemental disclosures of cash flow
information
Cash paid during the period for
interest............................ $ 12,894 $ 365 $ 10,271
========= ============ ============
Non-cash investing and financing
activities
Acquisition of property and equipment
through capital leases.............. $ 100,896 $ 32,706 $ 181,042
========= ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-89
<PAGE>
SPINNERS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
1. Nature of Business and Summary of Significant Accounting Policies
Nature of business
Spinners Incorporated (the "Company" or "Spinners") specializes in
providing integrated technology and design services that allow organizations to
successfully incorporate internet technology as a core component of their
business. Spinners' clients are located in the northeast United States.
Significant accounting policies
Revenue recognition
Revenue from service contracts is recognized over the contractual period
using the percentage-of-completion method based on when services are performed.
Advance billings for services in excess of costs represent deferred revenue and
are recorded as billings in excess of costs and estimated earnings on
uncompleted contracts. Unbilled receivables in excess of billings represent
earned revenues and are recorded as costs and estimated earnings in excess of
billings. Operating expenses, including indirect costs and administrative
expenses, are charged to operations as incurred and are not allocated to
contract costs. Any anticipated losses on contracts are charged to earnings
when identified. There were no loss contracts at December 31, 1997.
Cash and cash equivalents
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
Investment securities
The Company's investment securities consist of a U.S. treasury bill with
the face amount of $85,000 that is classified as a held-to-maturity security.
Held-to-maturity securities are stated at amortized cost with gains recognized
in earnings as required by FAS No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." The maturity date for the U.S. treasury bill is
January 8, 1998.
Property and equipment
Property and equipment are recorded at cost, less accumulated
depreciation. Depreciation and amortization are provided using the straight-
line method over the estimated useful life. Equipment is depreciated over five
years. Equipment held under capital lease is recorded at the lower of the fair
market value of the lease or the present value of future minimum lease
payments. The leased assets are depreciated over the lesser of the lease term
or the estimated useful life. Leasehold improvements are amortized over the
lesser of the lease term or the estimated useful life.
Income taxes
The Company has elected to be taxed as an S Corporation for federal and
state tax purposes, whereby the Company's taxable income accrues directly to
the shareholders. As a result, no provision for income taxes has been made in
the accompanying financial statements.
F-90
<PAGE>
SPINNERS INCORPORATED
NOTES TO FINANCIAL STATEMENTS--(Continued)
Stock-based compensation
The Company has elected to account for stock-based compensation using the
intrinsic value method prescribed in Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" (APB 25) and related
Interpretations and has elected the disclosure option of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (FAS
123). Accordingly, compensation cost for stock options is measured as the
excess, if any, of the fair value of the Company's stock at the date of the
grant over the amount an employee must pay to acquire the stock.
Fair value of financial instruments
The carrying amounts of financial instruments including cash, accounts
receivable, accounts payable, held-to-maturity securities, and accrued expenses
approximate fair value. The carrying amounts of borrowings approximate fair
value based on current rates of interest available to the Company for loans of
similar maturities.
Comprehensive income
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" requires entities to report comprehensive income, which
represents the change in equity during a period from non-owner sources. The
Company has not incurred any comprehensive income components other than the net
income (loss) for all periods presented.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses during the reporting period. Actual results could differ from
those estimates and could materially affect the reported amounts of assets,
liabilities and future operating results.
Interim financial information
The accompanying financial statements and related notes as of June 30,
1998 and for the six months ended June 30, 1997 and 1998 are unaudited. In the
opinion of management these statements have been prepared on the same basis as
the audited financial statements and reflect all adjustments, consisting of
only normal recurring adjustments, necessary to present fairly the Company's
financial position as of June 30, 1998 and the results of the Company's
operations and its cash flows for the six months ended June 30, 1997 and 1998.
The results for the six months ended June 30, 1998 are not necessarily
indicative of the results to be expected for the year ending December 31, 1998.
F-91
<PAGE>
SPINNERS INCORPORATED
NOTES TO FINANCIAL STATEMENTS--(Continued)
2. Equipment
Equipment consists of the following:
<TABLE>
<CAPTION>
December 31, June 30,
1997 1998
------------ -----------
(unaudited)
<S> <C> <C>
Equipment........................................ $273,829 $353,000
Furniture and fixtures........................... 12,250 124,163
Leasehold improvements........................... -- 18,100
-------- --------
286,079 495,263
Less accumulated depreciation and amortization... (54,632) (91,446)
-------- --------
Equipment, net................................... $231,447 $403,817
======== ========
At December 31, 1997 and June 30, 1998, the Company had property and
equipment under capital lease as follows:
<CAPTION>
December 31, June 30,
1997 1998
------------ -----------
(unaudited)
<S> <C> <C>
Property and equipment under capital lease....... $120,951 $281,859
Less accumulated amortization.................... (11,863) (29,579)
-------- --------
$109,088 $252,280
======== ========
3. Borrowings
Borrowings consist of the following:
<CAPTION>
December 31, June 30,
1997 1998
------------ -----------
(unaudited)
<S> <C> <C>
Capital lease obligations payable in monthly
installments of $5,792 to $10,459 expiring from
1998 to 2003, collateralized by equipment with a
net book value of $124,011 and $305,053,
respectively.................................... $ 91,116 $232,293
Less current maturities.......................... (49,540) (85,532)
-------- --------
Long-term portion................................ $ 41,576 $146,761
======== ========
</TABLE>
Total interest expense for the year ended December 31, 1997 and the six
months ended June 30, 1997 and 1998 was $12,894, $365 and $10,271,
respectively.
F-92
<PAGE>
SPINNERS INCORPORATED
NOTES TO FINANCIAL STATEMENTS--(Continued)
The aggregate maturities required on capital lease obligations as of
December 31, 1997 are as follows:
<TABLE>
<CAPTION>
Year ending December 31,
------------------------
<S> <C>
1998........................................................... $ 65,319
1999........................................................... 39,298
2000........................................................... 7,549
2001........................................................... 926
Less amounts representing interest............................. (21,976)
--------
$ 91,116
========
</TABLE>
4. Shareholders' Equity
From inception until June 10, 1997, the Company had 1,054 shares of no
par value common stock outstanding. On June 10, 1997, the Company canceled the
1,054 shares of no par value common stock and in its place issued 7,000,000
shares of $0.01 par value common stock (10,000,000 shares authorized) to
existing shareholders based on their proportionate interest. The Company has
accounted for this transaction as a stock split and, accordingly, has restated
share data in the accompanying financial statements as if it occurred at
inception of the Company.
5. Employee Benefits
1997 stock option plan
In June 1997, the Company adopted a stock option plan (the "Plan") which
provides for the grant of incentive and nonqualified stock options to
directors, officers, employees of the Company and certain consultants to
purchase up to 1,000,000 shares of the Company's common stock. Options expire
not later than ten years from the date of grant and other terms are determined
by the Board of Directors. At December 31, 1997 and June 30, 1998 outstanding
stock options totaled 696,500 and 690,500, respectively, with exercise prices
at $.25 per share.
The following table summarizes stock option activity for the year ended
December 31, 1997:
<TABLE>
<CAPTION>
December 31,
1997
-----------------
Weighted
Average
Exercise
Options Price
------- --------
<S> <C> <C>
Outstanding beginning of year............................ -- --
Granted.................................................. 706,500 $.25
Exercised................................................ -- --
Forfeited................................................ (20,000) .25
------- ----
Outstanding end of year.................................. 686,500 $.25
======= ====
</TABLE>
During the year ended December 31, 1997, the Company recorded
compensation expense of $17,000 related to the granting of stock options to
employees with exercise prices below the estimated fair market value of the
common stock at the date of grant. There were no options exercisable at
December 31, 1997.
F-93
<PAGE>
SPINNERS INCORPORATED
NOTES TO FINANCIAL STATEMENTS--(Continued)
In addition, during the year ended December 31, 1997 the Company granted
10,000 stock options to a non-employee consultant for services. The fair value
of the options issued has been determined to be insignificant.
The Company has adopted the disclosure only provision of FAS 123. Had
compensation cost for the Company's stock option grants described above been
determined based on the fair value at the grant date for awards in 1997
consistent with the provision of FAS 123, the Company's net income would have
been decreased to the pro forma amounts indicated below.
<TABLE>
<CAPTION>
December 31,
1997
------------
<S> <C>
Net income
As reported................................................... $407,603
Pro forma..................................................... $397,942
</TABLE>
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted
average assumptions used for grants in 1997: dividend yield of 0%, weighted
average risk free interest rate of 6.41%, volatility of 0% and expected life
of 4 years.
The following table summarizes information about stock options
outstanding at December 31,1997.
<TABLE>
<CAPTION>
Options Outstanding
-------------------------------------------------------------------------------
Weighted
Average Weighted
Number Remaining Average
Outstanding Contractual Exercise
at 12/31/97 Life Price
----------- ----------- --------
<S> <C> <C>
686,500 10 years $.25
</TABLE>
401(k) profit sharing plan
Effective January 1, 1996, the Company established a 401(k) plan for
substantially all employees over the age of 21 with no requirement of minimum
services. The plan allows for discretionary employer qualified contributions.
For the year ended December 31, 1997, the Company made no contribution to the
plan.
6. Concentrations of Credit Risk
Net sales for the year ended December 31, 1997, of three major
customers, together with the receivable due from each customer, are presented
below. The Company does not obtain, nor require, any collateral or other
security instruments related to these balances.
<TABLE>
<CAPTION>
December 31, 1997
---------------------
Accounts
Amount of Receivable
Customer Net Sales Balance
-------- ---------- ----------
<S> <C> <C>
A...................................................... $ 702,040 $ 76,838
B...................................................... 280,834 185,400
C...................................................... 183,096 --
---------- --------
$1,165,970 $262,238
========== ========
</TABLE>
F-94
<PAGE>
SPINNERS INCORPORATED
NOTES TO FINANCIAL STATEMENTS--(Continued)
7. Commitments
The Company leases its office facility under a noncancelable operating
lease expiring in May 1998 with monthly payments of $12,923. Rental expense
charged for the year ended December 31, 1997 and for the six-month period ended
June 30, 1998 was $137,802 and $107,192, respectively.
As of December 31, 1997, future minimum lease payments under non-
cancelable operating leases due over the next year total $64,614.
8. Subsequent Events
On July 30, 1998, the Company was acquired by iXL Enterprises, Inc.
F-95
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
iXL Enterprises, Inc.
In our opinion, the accompanying balance sheet and the related statements
of operations, of changes in shareholders' equity, and of cash flows present
fairly, in all material respects, the financial position of Tekna, Inc. at
December 31, 1997, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for the
opinion expressed above.
PricewaterhouseCoopers LLP
Atlanta, Georgia
September 24, 1998
F-96
<PAGE>
TEKNA, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
December 31, June 30,
1997 1998
------------ -----------
(unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash................................................ $ 175,420 $ 45,919
Accounts receivable................................. 274,793 654,960
Related party receivables........................... 7,675 5,063
--------- ----------
Total current assets.............................. 457,888 705,942
Equipment, net........................................ 268,313 295,708
Other assets.......................................... 103 9,345
--------- ----------
Total assets...................................... $ 726,304 $1,010,995
========= ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable.................................... $ 46,501 $ 124,672
Accrued expenses.................................... 54,736 42,887
Accrued interest.................................... 4,913 26,637
Notes payable to shareholder........................ 424,203 424,203
--------- ----------
Total current liabilities......................... 530,353 618,399
Shareholders' equity
Common stock, $1.00 par value; 1,000,000 shares
authorized; 850,000 shares issued and outstanding.. 850,000 850,000
Additional paid-in capital.......................... -- 664,000
Unearned compensation............................... -- (398,380)
Accumulated deficit................................. (654,049) (723,024)
--------- ----------
Total shareholders' equity........................ 195,951 392,596
--------- ----------
Commitments.........................................
--------- ----------
Total liabilities and shareholders' equity........ $ 726,304 $1,010,995
========= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-97
<PAGE>
TEKNA, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the six
For the year months
ended ended
December 31, June 30,
1997 1998
------------ -----------
(unaudited)
<S> <C> <C>
Revenues.............................................. $239,776 $1,183,663
Cost of revenues...................................... 129,375 609,223
-------- ----------
Gross profit........................................ 110,401 574,440
Selling, general and administrative expenses.......... 111,723 618,217
Depreciation and amortization......................... 17,397 29,513
-------- ----------
Loss from operations................................ (18,719) (73,290)
Interest income, net.................................. 2,167 4,315
-------- ----------
Net loss............................................ $(16,552) $ (68,975)
======== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-98
<PAGE>
TEKNA, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock
-------------------- Additional
Shares Paid-in Unearned Accumulated
Outstanding Amount Capital Compensation Deficit Total
----------- -------- ---------- ------------ ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1996................... 1,000 $ 1,000 $ 24,000 $ -- $ (23,497) $ 1,503
Issuance of common
stock.................. 587 587 74,413 -- 75,000
Capital contributions... -- -- 136,000 -- -- 136,000
Net income............ -- -- -- -- (16,552) (16,552)
Common stock split...... 848,413 848,413 (234,413) -- (614,000) --
------- -------- --------- --------- --------- --------
Balance, December 31,
1997................... 850,000 850,000 -- -- (654,049) 195,951
Issuance of options
(unaudited)............ -- -- 664,000 (664,000) -- --
Stock compensation
(unaudited)............ -- -- -- 265,620 -- 265,620
Net loss (unaudited).. -- -- -- -- (68,975) (68,975)
------- -------- --------- --------- --------- --------
Balance, June 30, 1998
(unaudited)............ 850,000 $850,000 $ 664,000 $(398,380) $(723,024) $392,596
======= ======== ========= ========= ========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-99
<PAGE>
TEKNA, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the
For the year six months
ended ended
December 31, June 30,
1997 1998
------------ -----------
(unaudited)
<S> <C> <C>
Cash flows from operating activities
Net loss............................................. $ (16,552) $ (68,975)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities
Depreciation and amortization....................... 17,397 29,513
Stock compensation.................................. -- 265,620
Changes in operating assets and liabilities
Accounts receivable................................ (213,793) (380,167)
Other assets....................................... (7,675) (6,630)
Accounts payable and accrued expenses.............. 106,150 88,046
--------- ---------
Net cash used in operating activities............. (114,473) (72,593)
--------- ---------
Cash flows from investing activities
Capital expenditures................................. (60,107) (56,908)
--------- ---------
Net cash used in investing activities............. (60,107) (56,908)
--------- ---------
Cash flows from financing activities
Proceeds from capital contribution................... 75,000 --
Proceeds from note payable to shareholder............ 200,000 --
Proceeds from issuance of common stock............... 75,000 --
--------- ---------
Net cash provided by financing activities......... 350,000 --
--------- ---------
Net increase (decrease) in cash................... 175,420 (129,501)
Cash, beginning of period............................. -- 175,420
--------- ---------
Cash, end of period................................... $ 175,420 $ 45,919
========= =========
Non-cash investing and financing activities
Acquisition of equipment through note payable to
shareholder......................................... $ 224,203 $ --
========= =========
Receivable contributed by shareholder for acquired
service contract.................................... $ 61,000 $ --
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-100
<PAGE>
TEKNA, INC.
NOTES TO FINANCIAL STATEMENTS
1. Nature of Business and Summary of Significant Accounting Policies
Nature of business
Tekna, Inc. (the "Company") is a provider of internet related development
services. Its primary service lines are Web-enabled business applications,
object-oriented development, multimedia and Internet-based training for varied
clientele ranging from small entities to major Fortune 500 corporations. The
Company's customers are located throughout the United States.
Tekna, Inc. (formerly Booth Technologies, Inc.) was formed in 1994 as a
subchapter S corporation. Effective November 1, 1997, the Company acquired
certain assets and assumed certain liabilities through issuance of a note
payable of $224,203 to its sole shareholder at the time based on the carrying
amount of the assets acquired.
Significant accounting policies
Revenue recognition
Revenue from service contracts is recognized over the contractual period
using the percentage-of-completion method based on when services are performed.
Advance billings for services in excess of costs, represent deferred revenue
and are recorded as billings in excess of costs and estimated earnings on
uncompleted contracts. Unbilled receivables in excess of billings represent
earned revenues and are recorded as costs and estimated earnings in excess of
billings. Operating expenses, including indirect costs and administrative
expenses, are charged to income as incurred and are not allocated to contract
costs. At the time a loss on a contract becomes known, the entire amount of the
estimated loss is accrued. As of December 31, 1997 there are no unbilled
receivables or deferred revenue amounts.
Equipment
Equipment is recorded at cost, less accumulated depreciation.
Expenditures for renewals and improvements that significantly add to the
productive capacity or extend the useful life of an asset are capitalized.
Expenditures for maintenance and repairs are charged to operations as incurred.
Depreciation expense is provided on the straight-line method over the estimated
useful lives for purchased assets, which range from 5 to 7 years.
Income taxes
The Company has elected to be taxed as an S corporation for federal and
state tax purposes, whereby the Company's taxable income accrues directly to
the shareholders. As a result, no provision for income taxes has been made in
the accompanying statements.
Stock split
On December 15, 1997, the shareholders of the Company approved an
increase in the number of authorized shares of common stock from 5,000 to
1,000,000. On January 1, 1998, the Company issued 848,413 shares to its two
existing shareholders in proportion to their then existing common stock
ownership interests. Because the Company elected to retain the $1.00 par value
of its common stock, the transaction resulted in a
F-101
<PAGE>
TEKNA, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
transfer of $234,413 and $614,000 from additional paid-in capital and
accumulated deficit, respectively, to common stock in the December 31, 1997
balance sheet.
Stock-based compensation
The Company has elected to continue to account for stock-based
compensation using the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
(APB 25) and related interpretations and has elected the disclosure option of
Statement of Financial Accounting Standards No 123, "Accounting for Stock-Based
Compensation" (FAS 123). Accordingly, compensation cost for stock options is
measured as the excess, if any, of the fair value of the Company's stock at the
date of the grant over the amount an employee must pay to acquire the stock.
Fair value of financial instruments
The carrying amounts of financial instruments including cash, accounts
receivable, accounts payable and accrued expenses approximate fair value. The
carrying amounts of borrowings approximate fair value based on current rates of
interest available to the Company for loans of similar maturities.
Comprehensive income
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" requires entities to report comprehensive income, which
represents the change in equity during a period from non-owner sources. The
Company has not incurred any such activity other than the net loss for all
periods presented.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses during the reporting period. Actual results could differ from
those estimates and could materially affect the reported amounts of assets,
liabilities and future operating results.
Interim financial information
The accompanying financial statements and related notes as of June 30,
1998 and for the six months ended June 30, 1998 are unaudited. In the opinion
of management, the unaudited interim financial statements have been prepared on
the same basis as the annual financial statements and reflect all adjustments,
consisting of only normal recurring adjustments, necessary to present fairly
the Company's financial position as of June 30, 1998, and the results of the
Company's operations and its cash flows for the six months then ended. Results
of operations for the six months ended June 30, 1997 were not material. The
results for the six months ending June 30, 1998 are not necessarily indicative
of the results to be expected for the year ending December 31, 1998.
F-102
<PAGE>
TEKNA, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
2. Equipment
Equipment consists of the following:
<TABLE>
<CAPTION>
December 31, June 30,
1997 1998
------------ -----------
(unaudited)
<S> <C> <C>
Furniture and fixtures............................. $ 64,445 $ 73,160
Computer equipment................................. 217,316 241,670
Computer software.................................. 6,490 11,620
Leasehold improvements............................. -- 18,709
-------- --------
288,251 345,159
Less accumulated depreciation and amortization..... (19,938) (49,451)
-------- --------
Equipment, net..................................... $268,313 $295,708
======== ========
</TABLE>
3. Notes Payable to Shareholder
<TABLE>
<CAPTION>
December 31, June 30,
1997 1998
------------ -----------
(unaudited)
<S> <C> <C>
Note payable to a shareholder, secured by all
equipment and a second priority interest in
accounts receivable, which provides for payment
of the principal balance on demand plus
interest accrued at 10%........................ $224,203 $224,203
Note payable to a shareholder, secured by all
equipment and a second priority interest in
accounts receivable, which provides for payment
of the principal balance on demand plus
interest accrued at 10%........................ 200,000 200,000
-------- --------
$424,203 $424,203
======== ========
</TABLE>
Total interest expense incurred with respect to these borrowings was
$4,913 for the year ended December 31, 1997.
4. 401(k) Savings Plan
Effective January 1, 1998, the Company established a 401(k) savings plan
for substantially all of its employees with more than three months of service
as defined by the plan. The employer has no obligation under the plan to make a
contribution.
F-103
<PAGE>
TEKNA, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
5. Concentrations of Credit Risk
Net sales for the year ended December 31, 1997 for several major
customers, together with the receivable due from each customer, are presented
below. The Company does not obtain, nor require, any collateral or other
security instruments related to these balances.
<TABLE>
<CAPTION>
December 31, 1997
-------------------
Amount Accounts
of Net Receivable
Customer Sales Balance
-------- -------- ----------
<S> <C> <C>
A...................................................... $ 60,742 $121,742
B...................................................... 52,739 37,073
C...................................................... 50,260 50,260
D...................................................... 35,000 35,000
-------- --------
$198,741 $244,075
======== ========
</TABLE>
6. Commitments
Future minimum lease payments under non-cancelable operating leases as of
December 31, 1997 are as follows:
<TABLE>
<CAPTION>
Year ending December 31,
------------------------
<S> <C>
1998............................................................. $144,416
1999............................................................. 154,185
2000............................................................. 151,976
2001............................................................. 31,223
--------
Total minimum lease payments..................................... $481,800
========
</TABLE>
The Company's operating leases are primarily for office equipment and the
Company's office facility. Rental expense under operating leases for the year
ended December 31, 1997 totaled $7,809.
7. Subsequent Events
In April 1998, the Company entered into a line of credit agreement with a
bank. The line of credit allows for borrowings of up to $500,000 at the bank's
prime rate plus 2% and any borrowings are payable to the bank on demand. No
borrowings have been made on the line as of June 30, 1998.
In June 1998 the Company granted stock options to certain of its
employees. The Company recorded a charge to compensation expense of $265,620
for the six months ended June 30, 1998 related to these options.
On September 4, 1998, the Company was acquired by iXL Enterprises, Inc.
F-104
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
iXL Enterprises, Inc.
In our opinion, the accompanying balance sheet and the related statements of
operations, of changes in shareholders' deficit, and of cash flows present
fairly, in all material respects, the financial position of Larry Miller
Productions, Inc. at December 31, 1997, and the results of its operations and
its cash flows for the year ended December 31, 1997, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our
audit of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Atlanta, Georgia
November 10, 1998
F-105
<PAGE>
LARRY MILLER PRODUCTIONS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, June 30,
1997 1998
------------ -----------
(unaudited)
<S> <C> <C>
Assets
Current assets:
Cash................................................ $ 435,442 $ 274,956
Accounts receivable................................. 571,806 476,856
Costs and estimated earnings in excess of billings
on uncompleted contracts........................... 72,800 33,389
Refundable income taxes............................. 96,454 --
Other current assets................................ 26,793 15,093
---------- -----------
Total current assets............................. 1,203,295 800,294
Furniture, fixtures and equipment, net............... 158,220 129,213
Other assets......................................... -- 89,764
---------- -----------
Total assets..................................... $1,361,515 $ 1,019,271
========== ===========
Liabilities, and Shareholders' Deficit
Current liabilities:
Accounts payable.................................... $ 522,158 $ 273,611
Accrued expenses and other liabilities.............. 170,925 197,729
Prebillings......................................... 248,777 295,630
Line of credit...................................... 250,000 250,000
Stock repurchase obligation......................... 61,561 61,561
Current portion of capital lease obligations........ 49,745 46,259
Current portion on notes payable.................... -- 100,000
---------- -----------
Total current liabilities........................ 1,303,166 1,224,790
Capital lease obligations........................... 62,568 55,265
Notes payable....................................... -- 200,000
---------- -----------
Total liabilities................................ 1,365,734 1,480,055
---------- -----------
Shareholders' deficit
Common stock
Class A voting stock, $.01 par value, 1,000 shares
authorized; 1,000 shares issued................... 10 10
Class B non-voting stock, $.01 par value, 1,000 and
2,000 shares authorized, respectively; 350 shares
issued............................................ 3 3
Treasury stock
Class A voting stock, 550 shares (Note 6).......... (61,561) (61,561)
Class B non-voting stock, 100 shares at cost....... (5,000) (5,000)
Additional paid-in capital.......................... 14,298 105,356
Retained earnings (accumulated deficit)............. 48,031 (499,592)
---------- -----------
Total shareholders' deficit...................... (4,219) (460,784)
---------- -----------
Total liabilities and shareholders' deficit...... $1,361,515 $ 1,019,271
---------- -----------
</TABLE>
The accompanying notes are an integral part of these financial
statements.
F-106
<PAGE>
LARRY MILLER PRODUCTIONS, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the year ended For six months ended
December 31, June 30,
------------------ ----------------------
1997 1997 1998
------------------ ---------- ----------
(unaudited)
<S> <C> <C> <C>
Gross sales........................ $4,195,024 $1,837,634 $1,678,015
Cost of sales...................... 2,964,601 1,235,540 1,470,792
---------- ---------- ----------
Gross profit..................... 1,230,423 602,094 207,223
Selling, general and administrative
expenses.......................... 1,637,026 692,611 684,824
Depreciation and amortization
expenses.......................... 104,100 46,455 47,871
---------- ---------- ----------
Loss from operations............. (510,703) (136,972) (525,472)
Interest income (expense), net..... (28,225) (8,846) (22,151)
Miscellaneous income............... 6,521 -- --
---------- ---------- ----------
Loss before income tax benefit... (532,407) (145,818) (547,623)
Income tax benefit from loss
carryback......................... 75,359 20,640 --
---------- ---------- ----------
Net loss......................... $ (457,048) $ (125,178) $ (547,623)
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-107
<PAGE>
LARRY MILLER PRODUCTIONS, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Class A Class B Class A Class B Retained
Common Stock Common Stock Treasury Stock Treasury Stock Earnings
------------- ------------- Paid-in --------------- -------------- (Accumulated
Shares Amount Shares Amount Capital Shares Amount Shares Amount Deficit) Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
December 31,
1996........... 1,000 $ 10 350 $ 3 $ 14,298 550 $(61,561) 50 $(2,500) $ 505,079 $ 455,329
Purchase of
treasury stock
at cost........ -- -- -- -- -- -- -- 50 (2,500) -- (2,500)
Net loss........ -- -- -- -- -- -- -- -- -- (457,048) (457,048)
----- ---- ---- ---- -------- ---- -------- --- ------- --------- ---------
Balance at
December 31,
1997........... 1,000 10 350 3 14,298 550 (61,561) 100 (5,000) 48,031 (4,219)
Issuance of
warrants in
connection with
debt
(unaudited).... -- -- -- -- 91,058 -- -- -- -- -- 91,058
Net loss
(unaudited).... -- -- -- -- -- -- -- -- -- (547,623) (547,623)
----- ---- ---- ---- -------- ---- -------- --- ------- --------- ---------
Balance at June
30, 1998
(unaudited).... 1,000 $ 10 350 $ 3 $105,356 550 $(61,561) 100 $(5,000) $(499,592) $(460,784)
===== ==== ==== ==== ======== ==== ======== === ======= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-108
<PAGE>
LARRY MILLER PRODUCTIONS, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the year For six months
ended ended June 30,
December 31, --------------------
1997 1997 1998
------------ --------- --------------
(unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net loss............................... $(457,048) $(125,178) $(547,623)
Adjustments to reconcile net loss to
net cash provided by operating
activities
Depreciation and amortization......... 104,100 46,455 47,871
Changes in assets and liabilities
Accounts receivable.................. (200,705) (204,615) 94,950
Costs and estimated earnings in
excess of billings on uncompleted
contracts........................... 13,503 (52,297) 39,411
Other assets......................... (106,127) (31,560) 108,154
Accounts payable .................... 362,714 135,497 (248,547)
Accrued expenses and other
liabilities......................... 54,600 (97,310) 26,804
Prebillings.......................... 4,270 (105,282) 46,853
--------- --------- ---------
Net cash used in operating
activities......................... (224,693) (434,290) (432,127)
--------- --------- ---------
Cash flows from financing activities
Borrowings on line of credit........... 303,880 303,880 --
Proceeds from issuance of notes
payable............................... -- -- 300,000
Payments on line of credit and capital
lease obligations..................... (103,439) (75,249) (28,359)
Purchase of treasury stock............. (2,500) -- --
--------- --------- ---------
Net cash provided by financing
activities......................... 197,941 228,631 271,641
--------- --------- ---------
Net decrease in cash................ (26,752) (205,659) (160,486)
Cash, beginning of period............... 462,194 462,194 435,442
--------- --------- ---------
Cash, end of period..................... $ 435,442 $ 256,535 $ 274,956
--------- --------- ---------
Supplemental Disclosures of Cash Flow
Information
Cash paid during the period for
interest.............................. $ 35,365 $ 10,824 $ 25,735
--------- --------- ---------
Non-cash financing and investing
activities
Acquisition of property and equipment
through capital leases................ $ 91,174 $ 79,248 $ 17,570
--------- --------- ---------
Warrants issued in connection with
debt.................................. $ -- $ -- $ 91,058
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these financial
statements.
F-109
<PAGE>
LARRY MILLER PRODUCTIONS, INC.
NOTES TO FINANCIAL STATEMENTS
1.Nature of Business and Summary of Significant Accounting Policies
Nature of business
Larry Miller Productions, Inc. (the "Company") provides marketing
strategy and planning, consulting, multimedia presentation design,
evaluation, management, and website development. The Company services
clients in the northeastern United States.
Significant accounting policies
Revenue recognition
For program design, multimedia creation and Web development contracts,
revenues are recognized using the percentage of completion method over
the period of contracts based on costs incurred. For event management
contracts, revenues are recognized as the services are performed or on a
percentage of completion basis for fixed fee arrangements. Website
maintenance revenues are billed and recognized monthly over the term of
agreements. Billings for services in excess of costs represent deferred
revenue and are recorded as prebillings and earned revenue in excess of
billings are recorded as costs and estimated earnings in excess of
billings on uncompleted contracts in the balance sheet. Operating
expenses, including indirect costs and administrative expenses, are
charged to operations as incurred and are not allocated to contract
costs. Any anticipated losses on contracts are charged to earnings when
identified.
Cash and cash equivalents
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
Furniture, fixtures and equipment
Furniture, fixtures and equipment are stated at cost less accumulated
depreciation, which is computed using an accelerated method over the
estimated useful lives of the related assets; generally five to seven
years. Equipment held under capital lease is recorded at the lower of
the fair market value of the leased property or the present value of
future minimum lease payments. Leasehold improvements are amortized over
the lesser of the remaining lease term or the estimated useful life of
the assets. Upon sale, retirement or other disposition of these assets,
the cost and the related accumulated depreciation are removed from the
respective accounts and any gain or loss on the disposition is included
in operations.
Income taxes
The Company has applied the asset and liability approach of Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes" for
financial accounting and reporting purposes. The Company accounts for
certain items of income and expense in different time periods for
financial reporting and income tax purposes.
F-110
<PAGE>
LARRY MILLER PRODUCTIONS, INC.
Notes to Financial Statements
A reconciliation of the federal statutory rate and the effective income
tax rate follows:
<TABLE>
<CAPTION>
Year ended
December 31,
1997
------------
<S> <C>
Statutory federal income tax rate (34%)...................... $(181,019)
Permanent differences........................................ 2,705
Benefit of state income taxes................................ (24,750)
Increase in valuation allowance.............................. 127,706
---------
Income tax (benefit) provision.............................. $ (75,359)
=========
The significant components of the Company's net deferred tax assets were
as follows:
<CAPTION>
December 31,
1997
------------
<S> <C>
Deferred tax assets..........................................
Deferred revenue............................................ $ 94,436
Loss contract accrual....................................... 11,008
Net operating loss carryforwards............................ 22,261
---------
Net deferred tax assets...................................... 127,705
Valuation allowance.......................................... (127,705)
---------
$ --
=========
</TABLE>
At December 31, 1997, the Company had net operating loss carryforwards
for income tax purposes of approximately $58,643, expiring in the year 2012.
Realization of these assets is contingent on having future taxable earnings.
Based on the loss incurred in 1997 and the fundamental change in the strategic
direction of the Company, management believes that a full valuation allowance
should be recorded against the deferred tax assets. The refundable income taxes
at December 31, 1997 of $96,454 is the result of estimated tax payments made in
excess of amount owed and the carryback of net operating losses. The Company
received this refund in cash in 1998.
In addition, under the Tax Reform Act of 1986, the amounts of, and the
benefits from, net operating loss carryforwards may be impaired or limited in
certain circumstances. The company experienced an ownership change as defined
under Section 368(a) of the Internal Revenue Code in September 1998. As a
result of the ownership change, net operating loss carryforwards, which were
incurred prior to the date of change, are subject to annual limitation on their
future use.
Fair value of financial instruments
The carrying amounts of financial instruments including cash, accounts
receivable, accounts payable, accrued expenses, line of credit and notes
payable approximate fair value. The carrying amounts of capital lease
obligations approximate fair value based on monthly lease payments, lease term,
interest available to the Company for similar leases and cost of leased assets.
F-111
<PAGE>
LARRY MILLER PRODUCTIONS, INC.
NOTES TO FINANCIAL STATEMENTS
Comprehensive income
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" requires entities to report comprehensive income,
which represents the change in equity during a period from non-owner
sources. The Company has not incurred any comprehensive income
components other than the net income for all periods presented.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those
estimates and could materially affect the reported amount of assets,
liabilities and future operating results.
2.Unaudited Interim Financial Information
The accompanying balance sheet as of June 30, 1998, the statement of
changes in shareholders' equity (deficit) for the six-month period ended
June 30, 1998 and the statements of operations and of cash flows for the
six-month periods ended June 30, 1997 and 1998 are unaudited. In the
opinion of management these statements have been prepared on the same
basis as the audited financial statements and include all adjustments,
consisting only of normal recurring adjustments, necessary for the fair
presentation of the results of the interim periods. The financial data
and other information disclosed in these notes to financial statements
related to these periods are unaudited. The results for the six months
ended June 30, 1998 are not necessarily indicative of the results to be
expected for the year ending December 31, 1998.
3.Concentration of Credit Risk
As of December 31, 1997, three customers accounted for 47% of accounts
receivable. As of June 30, 1997 and 1998, three customers accounted for
52% of accounts receivable and two customers accounted for 43% of
accounts receivable, respectively. The Company did not obtain or require
any collateral or other security instruments related to the balances.
For the year ended December 31, 1997, net sales from one customer were
$474,730, which accounted for 11% of the Company's total net sales.
F-112
<PAGE>
LARRY MILLER PRODUCTIONS, INC.
NOTES TO FINANCIAL STATEMENTS
4.Furniture, Fixtures and Equipment
Furniture, fixtures and equipment consists of the following:
<TABLE>
<CAPTION>
December 31, June 30,
1997 1998
------------ -----------
(unaudited)
<S> <C> <C>
Equipment........................................ $390,844 $390,844
Equipment under capital leases................... 186,757 204,326
Furniture and fixtures........................... 57,515 57,515
Leasehold improvements........................... 20,406 20,406
-------- --------
655,522 673,091
Less accumulated depreciation and amortization... (497,302) (543,878)
-------- --------
Furniture, fixtures and equipment, net........... $158,220 $129,213
======== ========
</TABLE>
5.Revolving Line of Credit, Notes Payable and Capital Lease Obligations
Revolving line of credit
On April 11, 1997, the Company obtained a line of credit allowing
borrowings up to $250,000. Borrowings bear interest at the prime rate
(8.5% at December 31, 1997) plus 1.0% per annum. The amounts borrowed
are due on demand and collateralized by substantially all of the
Company's assets and the shareholder's personal guarantee. The Company
has borrowed $250,000 under the line of credit at December 31, 1997 and
June 30, 1998, respectively.
Notes payable and capital lease obligations
Notes payable and capital lease obligations consist of the following:
<TABLE>
<CAPTION>
December 31, June 30,
1997 1998
------------ -----------
(unaudited)
<S> <C> <C>
Capital leases payable in monthly instalments of
$6,468 to $6,031 expiring from 1998 to 2002,
collateralized by equipment with a net book
value of $177,231 and $174,601, respectively.... $112,313 $101,524
Notes payable to an individual creditor with an
interest rate at 12% per annum, due August 1,
1998, collateralized by pledge of stocks owned
by Class A Common stockholders and a
shareholder's personal guarantee................ -- 100,000
Notes payable to individual creditors in
quarterly interest only installments until May
1, 2000, and subsequently in monthly instalments
of $4,250 through May 1, 2005, with an interest
rate of 10% per annum, subordinated to the line
of credit....................................... -- 200,000
-------- --------
112,313 401,524
Less current portion............................. 49,745 148,259
-------- --------
Long-term portion................................ $ 62,568 $255,265
======== ========
</TABLE>
F-113
<PAGE>
LARRY MILLER PRODUCTIONS, INC.
NOTES TO FINANCIAL STATEMENTS
Total interest expense for the year ended December 31,1997 and the six
months ended June 30, 1997 and 1998 was $35,365, $10,824 and, $25,735,
respectively.
The aggregate maturities required over the next five years on capital
lease obligations are as follows:
<TABLE>
<CAPTION>
Year ending December 31, Total
------------------------ --------
<S> <C>
1998........................................................... $ 67,405
1999........................................................... 41,445
2000........................................................... 24,010
2001........................................................... 3,384
2002........................................................... 2,820
Less amounts representing interest............................. (26,751)
--------
$112,313
--------
</TABLE>
6.Stock Repurchase Agreement
On January 1, 1994, the Company entered into an agreement with its major
shareholder to repurchase all of the Company's stock held by the said
shareholder for a purchase price of $61,561. The total price will be
paid by monthly installments of $1,710 for a period of 36 months
starting on January 1, 1998. The repurchase price may be prepaid by the
Company only upon the unanimous agreement of the voting Trustees of the
said shareholder's Voting Trust. Until all these payments are made in
full on December 1, 2000, the said shareholder shall retain all rights
of ownership with respect to shares owned by him. On July 13, 1998, the
Company obtained the approval from the voting Trustees of the said
shareholder's Voting Trust and repurchased all of 550 shares of Class A
Common Stock held by the said shareholder for a lump sum payment of
$100,000.
7.Treasury Stock
During the year ended December 31, 1997, the Company acquired 50 shares
of its Class B Non-Voting Common Stock at a cost of $50 per share for an
aggregate amount of $2,500.
8.401(k) Retirement Plan
Effective January 1, 1996, the Company established a 401(k) plan for
substantially all employees over the age of 21 with no requirement of
minimum services. The plan allows the Company to make discretionary
contributions to the Plan. For the year ended December 31, 1997 and for
the six-month periods ended June 30, 1997 and 1998, the Company made no
contributions to the plan.
9.Commitments
The Company leases its office facility and vehicles under noncancelable
operating leases expiring through January 2001 with aggregate monthly
payments of $12,598. Rental expense charged for the year ended December
31, 1997 and for the six-month periods ended June 30, 1997 and 1998 was
$163,037, $78,891 and $104,477 respectively.
F-114
<PAGE>
LARRY MILLER PRODUCTIONS, INC.
Notes to Financial Statements
As of December 31, 1997, future minimum lease payments under the non-
cancelable operating leases over the next four years are as follows:
<TABLE>
<CAPTION>
For the year ended December 31,
-------------------------------
<S> <C>
1998........................................................... $ 147,984
1999........................................................... 140,004
2000........................................................... 140,004
2001........................................................... 23,334
---------
Total minimum lease payments................................... $ 451,326
---------
</TABLE>
10.Subsequent Events
Stock purchase warrants
On May 13, 1998, the Company issued stock purchase warrants to two
individual creditors in connection with the issuance of $200,000 in the
form of Promissory Notes. The stock purchase warrants allow the
creditors to purchase up to 40 shares of Class B Non-Voting Common
Stock, par value $.01 per share of the Company at the price of $.01 per
share at any time through May 1, 2005. The Company has recorded deferred
debt issuance cost of $91,058 for the estimated fair value at the grant
date of these warrants.
Settlement agreement
On June 15, 1998, the Company entered into an agreement with another
party to settle a dispute between the two parties with respect to
consulting services. The Company has agreed to pay an aggregate amount
of $51,500 on an installment basis over a five-month period beginning in
June 1998.
Non-qualified stock options
In August 1998, the board of directors granted fully vested stock
options to certain employees and directors to purchase up to 1,300
shares of Class B Non-Voting Common Stock, $.01 par value, at an
exercise price of $25 per share. The options expire ten years from the
date of grant.
Merger
On September 10, 1998, the Company was acquired by iXL Enterprises, Inc.
F-115
<PAGE>
{DIAGRAM LISTING LOGOS OF PROMINENT iXL CLIENTS}
{CAPTION: Representative Clients}
{Logo of America Online}
{Logo of Budget}
{Logo of Carlson Wagonlit}
{Logo of Chase}
{Logo fo Cox}
{Logo of Delta}
{Logo of Eli Lilly}
{Logo of FedEx}
{Logo of First Union}
{Logo of GE}
{Logo of McKesson HBOC}
{Logo of HealthQuest}
{Logo of Monsanto}
{Logo of Sun Microsystems}
{Logo of WebMD}
Pending:
(Disclaimer)
The above trademarks are the sole and exclusive property of their
respective owners. The above companies do not endorse or otherwise
except responsibility for the information contained in this document.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Through and including (the 25th day after the date of this
prospectus), all dealers effecting transactions in these securities, whether or
not participating in this offering, may be required to deliver a prospectus.
This is in addition to the dealers' obligation to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
6,000,000 Shares
iXL ENTERPRISES, INC.
Common Stock
----------------
PROSPECTUS
----------------
Merrill Lynch & Co.
Donaldson, Lufkin & Jenrette
----------------
BancBoston Robertson Stephens
SG Cowen
, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ +
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
[Alternative Page for International Prospectus]
Subject to Completion
Preliminary Prospectus dated April 7, 1999
PROSPECTUS
6,000,000 Shares
iXL ENTERPRISES, INC.
Common Stock
-----------
This is iXL Enterprises, Inc.'s initial public offering of common stock.
The international managers will offer 1,200,000 shares outside the United
States and Canada and the U.S. underwriters will offer 4,800,000 shares in the
United States and Canada.
We expect the public offering price to be between $10.00 and $12.00 per
share. Currently, no public market exists for the shares. After pricing of the
offering, we expect that the common stock will trade on the Nasdaq National
Market under the symbol "IIXL."
Affiliates of General Electric Company have agreed to purchase an aggregate
of 2,000,000 shares of common stock directly from iXL Enterprises, Inc. in a
private placement transaction. This investment is expected to be completed
concurrently with the closing of this initial public offering if regulatory and
other conditions are satisfied, at a price per share equal to the initial
public offering price.
Investing in the common stock involves risks which are described in the
"Risk Factors" section beginning on page 11 of this prospectus.
-----------
<TABLE>
<CAPTION>
Per Share Total
--------- -----
<S> <C> <C>
Public Offering Price........................... $ $
Underwriting Discount........................... $ $
Proceeds, before expenses, to iXL Enterprises,
Inc. .......................................... $ $
</TABLE>
The international managers may also purchase up to an additional 180,000
shares at the public offering price, less the underwriting discount, within 30
days from the date of this prospectus to cover over-allotments. The U.S.
underwriters may similarly purchase up to an aggregate of an additional 720,000
shares.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
We expect that the shares of common stock will be ready for delivery in New
York, New York, on or about , 1999.
-----------
Merrill Lynch International Donaldson, Lufkin & Jenrette
-----------
BancBoston Robertson Stephens
SG Cowen
-----------
The date of this prospectus is , 1999
<PAGE>
[Alternate Page for International Prospectus]
UNDERWRITING
General
Merrill Lynch International, Donaldson, Lufkin & Jenrette International,
BancBoston Robertson Stephens Inc. and SG Cowen Securities Corporation are
acting as lead managers for each of the international managers named below.
Subject to the terms and conditions set forth in an international purchase
agreement among iXL and the international managers, and concurrently with the
sale of 4,800,000 shares of common stock to the U.S. underwriters, iXL has
agreed to sell to the international managers, and each of the international
managers severally and not jointly has agreed to purchase from iXL the number
of shares of common stock set forth opposite its name below.
<TABLE>
<CAPTION>
Number of
International Manager Shares
--------------------- ---------
<S> <C>
Merrill Lynch International.....................................
Donaldson, Lufkin, & Jenrette International.....................
BancBoston Robertson Stephens Inc. .............................
SG Cowen Securities Corporation.................................
---------
Total........................................................... 1,200,000
=========
</TABLE>
iXL has also entered into a U.S. purchase agreement with certain
underwriters in the United States and Canada for whom Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Donaldson, Lufkin & Jenrette Securities
Corporation, BancBoston Robertson Stephens Inc. and SG Cowen Securities
Corporation are acting as representatives. Subject to the terms and conditions
set forth in the U.S. purchase agreement, and concurrently with the sale of
1,200,000 shares of common stock to the international managers pursuant to the
international purchase agreement, iXL has agreed to sell to the U.S.
underwriters, and the U.S. underwriters severally have agreed to purchase from
iXL, an aggregate of 4,800,000 shares of common stock. The initial public
offering price, and the total underwriting discount, per share of common stock
are identical under the international purchase agreement and the U.S. purchase
agreement.
In the international purchase agreement and the U.S. purchase agreement,
the several international managers and the several U.S. underwriters,
respectively, have agreed, subject to the terms and conditions set forth
therein, to purchase all of the shares of common stock being sold pursuant to
each such agreement if any of the shares of common stock being sold pursuant to
such agreement are purchased. In the event of a default by an underwriter, the
international purchase agreement and the U.S. purchase agreement provide that,
in certain circumstances, the purchase commitments of non-defaulting
underwriters may be increased or the purchase agreements may be terminated. The
closings with respect to the sale of shares of common stock to be purchased by
the international managers and the U.S. underwriters are conditioned upon one
another.
The lead managers have advised iXL that the international managers
propose initially to offer the shares of common stock to the public at the
initial public offering price set forth on the cover page of this prospectus
and to certain dealers at such price less a concession not in excess of $
per share of common stock. The international managers may allow, and such
dealers may reallow, a discount not in excess of $ per share of common stock
to certain other dealers. After the initial public offering, the public
offering price, concession and discount may change.
Over-allotment Option
iXL has granted options to the international managers, exercisable for 30
days after the date of this prospectus, to purchase up to an aggregate of
180,000 additional shares of common stock at the initial public offering price
set forth on the cover page of this prospectus, less the underwriting discount.
The international managers may exercise these options solely to cover over-
allotments, if any, made on the sale of the common stock offered hereby. To the
extent that the international managers exercise these options, each
international managers will be obligated, subject to certain conditions, to
purchase a number of additional shares of
Alt-2
<PAGE>
[Alternate Page for International Prospectus]
common stock proportionate to that international manager's initial amount
reflected in the above table. iXL has granted options to the U.S. underwriters,
exercisable for 30 days after the date of this prospectus, to purchase up to an
aggregate of 720,000 additional shares of common stock to cover over-
allotments, if any, on terms similar to those granted to the international
managers.
Commissions and Discounts
The following table shows the per share and total underwriting discounts
and commissions to be paid by iXL to the underwriters and the proceeds before
expenses to iXL. This information is presented assuming either no exercise or
full exercise by the underwriters of their over-allotment options.
<TABLE>
<CAPTION>
Per Share Without Option With Option
--------- -------------- -----------
<S> <C> <C> <C>
Public Offering Price.................... $ $ $
Underwriting Discount.................... $ $ $
Proceeds, before expenses, to the
Company................................. $ $ $
</TABLE>
The expenses of the offering, exclusive of the underwriting discount, are
estimated at $3.9 million and are payable by iXL.
The shares of common stock are being offered by the several underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to approval of certain legal matters by counsel for the underwriters and
certain other conditions. The underwriters reserve the right to withdraw,
cancel or modify such offer and to reject orders in whole or in part.
Reserved Shares
At iXL's request, the underwriters have reserved for sale, at the initial
public offering price, up to 10% of the shares offered hereby for employees,
directors and other persons with relationships with iXL who have expressed an
interest in purchasing shares of common stock in the offering. The number of
shares of common stock available for sale to the general public will be reduced
to the extent such persons purchase such reserved shares. Any reserved shares
not so purchased will be offered by the underwriters to the general public on
the same basis as the other shares offered in this prospectus.
No Sales of Common Stock or Similar Securities
iXL and iXL's executive officers and directors and most existing
stockholders have agreed, subject to certain exceptions, not to directly or
indirectly
. offer, pledge, sell, contract to sell, sell any option or contract
to purchase, purchase any option or contract to sell, grant any
option -- other than options granted by iXL pursuant its stock
options plans -- right or warrant for the sale of or otherwise
dispose of or transfer any shares of common stock or securities
convertible into exchangeable or exercisable for common stock,
whether now owned or thereafter acquired by the person executing the
agreement or with respect to which the person executing the
agreement thereafter acquires the power of disposition, or file a
registration statement under the Securities Act with respect to the
foregoing -- other than a registration statement on Form S-4
covering up to 4,000,000 shares of common stock to be issued in
connection with acquisitions; or
. enter into any swap or other agreement that transfers, in whole or
in part, the economic consequences of ownership of the common stock
whether any such swap or transaction is to be settled by delivery of
common stock or other securities, in cash or otherwise, without the
prior written consent of Merrill Lynch on behalf of the underwriters
for a period of 180 days after the date of this prospectus. See
"Shares Eligible for Future Sale."
Nasdaq National Market Listing
Application has been made to list the common stock for quotation on the
Nasdaq National Market under the trading symbol "IIXL."
Alt-3
<PAGE>
[Alternate Page for International Prospectus]
Prior to the offering, there has been no public market for iXL's common
stock. The initial public offering price will be determined through
negotiations between iXL and the lead managers and the representatives. The
factors considered in determining the initial public offering price, in
addition to prevailing market conditions, are:
. price-earnings ratio of publicly traded companies that the lead
managers and the representatives believe to be comparable to iXL;
. certain financial information of iXL;
. the history of, and the prospects for, iXL and the industry in which
it competes; and
. an assessment of (1) iXL's management, (2) its past and present
operations, (3) the prospects for, and timing of, future revenues of
iXL, (4) the present state of iXL's developments, and (5) the above
factors in relation to market values and various valuation measures
of other companies engaged in activities similar to iXL.
There can be no assurance that an active trading market will develop for
the common stock or
that the common stock will trade in the public market subsequent to the
offering at or above the initial public offering price.
The underwriters do not expect sales of the common stock to any accounts
over which they exercise discretionary authority to exceed 5% of the number of
shares being offered hereby.
Intersyndicate Agreement
The U.S. underwriters and the international managers have entered into an
intersyndicate agreement that provides for the coordination of their
activities. Pursuant to the intersyndicate agreement, the U.S. underwriters and
the international managers are permitted to sell shares of common stock to each
other for purposes of resale at the initial public offering price, less an
amount not greater than the selling concession. Under the terms of the
intersyndicate agreement, the U.S. underwriters and any dealer to whom they
sell shares of common stock will not offer to sell or sell shares of common
stock to persons who are non-U.S. or non-Canadian persons or to persons they
believe intend to resell to persons who are non-U.S. or non-Canadian persons,
and the international managers and any dealer to whom they sell shares of
common stock will not offer to sell or sell shares of common stock to U.S.
persons or to Canadian persons or to persons they believe intend to resell to
U.S. or Canadian persons, except in the case of transactions pursuant to the
intersyndicate agreement.
iXL has agreed to indemnify the underwriters against certain liabilities,
including certain liabilities under the Securities Act, or to contribute to
payments the underwriters may be required to make in respect of those
liabilities.
Price Stabilization and Short Positions
Until the distribution of the common stock is completed, rules of the
Securities and Exchange Commission may limit the ability of the underwriters
and certain selling group members to bid for and purchase the common stock. As
an exception to these rules, the lead managers are permitted to engage in
certain transactions that stabilize the price of the common stock. Those
transactions consist of bids or purchases for the purpose of pegging, fixing or
maintaining the price of the common stock.
The underwriters may create a short position in the common stock in
connection with the offering. This means that if they sell more shares of
common stock than are set forth on the cover page of this prospectus.In that
case, the representatives and lead managers, respectively, may reduce that
short position by purchasing common stock in the open market. The
representatives and lead managers, respectively, may also elect to reduce any
short position by exercising all or part of the over-allotment option described
above.
Alt-4
<PAGE>
[Alternate Page for International Prospectus]
Penalty Bids
The representatives and lead managers, respectively, may also impose a
penalty bid on certain underwriters and selling group members. This means that
if the representatives and lead managers, respectively, purchase shares of
common stock in the open market to reduce the underwriters' short position or
to stabilize the price of the common stock, they may reclaim the amount of the
selling concession from the underwriters and selling group members who sold
those shares.
In general, purchases of a security for the purpose of stabilization or
to reduce a short position could cause the price of the security to be higher
than it might be in the absence of such purchases. The imposition of a penalty
bid might also have an effect on the price of the common stock to the extent
that it discourages resales of the common stock.
Neither iXL nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the common stock. In addition, neither
iXL nor any of the underwriters makes any representation that the
representatives or lead managers will engage in such transactions or that such
transactions, once commenced, will not be discontinued without notice.
Sales in Certain Jurisdictions
Each international manager has agreed that:
. it has not offered or sold and, prior to the expiration of the
period of six months from the closing date, will not offer or sell
any shares of common stock to persons in the United Kingdom, except
to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments, as principal or
agent, for the purposes of their businesses or otherwise in
circumstances which do not constitute an offer to the public in the
United Kingdom for the purposes of the Public Offers of Securities
Regulations 1995;
. it has complied and will comply with all applicable provisions of
the Public Offers of Securities Regulations 1995 and of the
Financial Services Act 1986 with respect to anything done by it in
relation to the shares of Common Stock in, from or otherwise
involving the United Kingdom; and
. it has only issued or passed on and will only issue or pass on in
the United Kingdom any document received by it in connection with
the issue or sale of shares of common stock to a person who is of a
kind described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1996 (as amended) or
is a person to whom such document may otherwise lawfully be issued
or passed on.
No action has been or will be taken in any jurisdiction -- except in the
United States -- that would permit a public offering of the shares of common
stock, or the possession, circulation or distribution of this prospectus or any
other material relating to iXL or shares of common stock in any jurisdiction
where action for that purpose is required. Accordingly, the shares of common
stock may not be offered or sold, directly or indirectly, and neither this
prospectus nor any other offering material or advertisements in connection with
the shares of common stock may be distributed or published, in or from any
country or jurisdiction except in compliance with any applicable rules and
regulations of any such country or jurisdiction.
Purchasers of the shares offered hereby may be required to pay stamp
taxes and other charges in accordance with the laws and practices of the
country of purchase in addition to the offering price set forth on the cover
page hereof.
Other Relationships
iXL provides services to Merrill Lynch and certain of its affiliates in
the ordinary course of business. Donaldson, Lufkin & Jenrette from time to time
provides investment banking services to Kelso & Company and its affiliates.
Alt-5
<PAGE>
General Electric has agreed to purchase an aggregate of 2,000,000 shares
of common stock directly from iXL in a private placement transaction. This
investment is expected to be completed concurrently with the closing of this
initial public offering, at a price per share equal to the initial public
offering price. iXL has retained Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Donaldson, Lufkin & Jenrette Securities Corporation to act as
advisors for this private placement and will pay advisory fees of $250,000 to
each. iXL will also indemnify these advisors against certain liabilities
relating to this private placement, including liabilities under the Securities
Act.
Alt-6
<PAGE>
[Alternative Page for International Prospectus]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Through and including (the 25th day after the date of this
prospectus), all dealers effecting transactions in these securities, whether or
not participating in this offering, may be required to deliver a prospectus.
This is in addition to the dealers' obligation to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
6,000,000 Shares
iXL ENTERPRISES, INC.
Common Stock
----------------
PROSPECTUS
----------------
Merrill Lynch International
Donaldson, Lufkin & Jenrette
----------------
BancBoston Robertson Stephens
SG Cowen
, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
Item 13. Other Expenses of Issuance and Distribution.
The following table indicates the expenses to be incurred in connection
with the offering described in this Registration Statement, all of which will
be paid by iXL. All amounts are estimates, other than the registration fee, the
NASD fee, and the NASDAQ listing fee.
<TABLE>
<S> <C>
Registration fee.................................................... $23,978
NASD fee............................................................ 9,125
NASDAQ listing fee.................................................. *
Accounting fees and expenses........................................ *
Legal fees and expenses............................................. *
Director and officer insurance expenses............................. *
Printing and engraving.............................................. *
Transfer Agent fees and expenses.................................... *
Blue sky fees and expenses.......................................... *
Miscellaneous expenses.............................................. *
-------
Total............................................................. $
=======
</TABLE>
- --------
* To be completed by amendment.
Item 14. Indemnification of Directors and Officers.
iXL's Certificate of Incorporation and Bylaws provide that officers and
directors who are made a party to or are threatened to be made a party to or is
otherwise involved in any action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (hereinafter a "proceeding"), by reason of the
fact that he or she, or a person of whom he or she is the legal representative,
is or was an officer or a director of iXL or is or was serving at the request
of iXL as a director or an officer of another corporation or of a partnership,
joint venture, trust, or other enterprise, including service with respect to an
employee benefit plan (an "indemnitee"), whether the basis of such proceeding
is alleged action in an official capacity as a director or officer or in any
other capacity while serving as a director or officer, shall be indemnified and
held harmless by iXL to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits iXL
to provide broader indemnification rights than permitted prior thereto),
against all expense, liability, and loss (including, without limitation,
attorneys' fees, judgments, fines, excise taxes or penalties, and amounts paid
or to be paid in settlement) incurred or suffered by such indemnitee in
connection therewith and such indemnification shall continue with respect to an
indemnitee who has ceased to be a director or officer and shall inure to the
benefit of the indemnitee's heirs, executors and administrators; provided,
however, that iXL shall indemnify any such indemnitee in connection with a
proceeding initiated by such indemnitee only if such proceeding was authorized
by the Board of Directors. The right to indemnification includes the right to
be paid by iXL for expenses incurred in defending any such proceeding in
advance of its final disposition. Officers and directors are not entitled to
indemnification if such persons did not meet the applicable standard of conduct
set forth in the Delaware General Corporation Law for officers and directors.
Section 145 of the Delaware General Corporation Law provides, among other
things, that iXL may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding (other than an action by or in the right of iXL) by reason
of the fact that the person is or was a director, officer, agent or employee of
iXL or is or was serving at the iXL's request as a director, officer, agent, or
employee of another corporation, partnership, joint venture, trust or other
enterprise,
II-1
<PAGE>
against expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by the person in connection with
such action, suit or proceeding. The power to indemnify applies if such person
is successful on the merits or otherwise in defense of any action, suit or
proceeding, or if such person acted in good faith and in a manner he reasonably
believed to be in the best interest, or not opposed to the best interest, of
iXL, and with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. The power to indemnify applies to
actions brought by or in the right of iXL as well, but only to the extent of
defense expenses (including attorneys' fees but excluding amounts paid in
settlement) actually and reasonably incurred and not to any satisfaction of a
judgment or settlement of the claim itself, and with the further limitation
that in such actions no indemnification shall be made in the event of any
adjudication of negligence or misconduct in the performance of his duties to
iXL, unless the court believes that in light of all the circumstances
indemnification should apply.
The indemnification provisions contained in iXL's Certificate of
Incorporation and Bylaws are not exclusive of any other rights to which a
person may be entitled by law, agreement, vote of stockholders or disinterested
directors or otherwise. In addition, iXL maintains insurance on behalf of its
directors and executive officers insuring them against any liability asserted
against them in their capacities as directors or officers or arising out of
such status.
Item 15. Recent Sales of Unregistered Securities.
The following is a summary of transactions by iXL since its inception
involving sales of iXL's securities that were not registered under the
Securities Act of 1933.
1. On April 12, 1996, iXL issued and sold 300 shares of common stock in a
private placement to U. Bertram Ellis, Jr., James V. Sandry and James S.
Altenbach, each a founder of iXL for an aggregate of $300 in reliance on the
exemption from registration provided by Section 4(2) of the Securities Act and
Rule 506 of Regulation D promulgated thereunder.
2. On April 30, 1996, iXL issued and sold 101,500 shares of its Class A
Convertible Preferred Stock, in a private placement to eight investors for an
aggregate of $10,150,000 in reliance on the exemption from registration
provided by Section 4(2) of the Securities Act and Rule 506 of Regulation D
promulgated thereunder. The eight investors were Kelso Investment Associates
V, L.P., Kelso Equity Partners V, L.P., U. Bertram Ellis, Jr., James V. Sandry,
James S. Altenbach and three other investors.
3. On April 30, 1996, iXL issued and sold 3,959,500 shares of common
stock in a private placement to ten investors in connection with the
acquisition of iXL Interactive Excellence, Inc., Creative Video Library, Inc.,
Creative Video, Inc. and Entrepreneur Television, Inc. Each of the investors
was a stockholder of one of the acquired corporations. The issuance of common
stock was made in reliance on Section 4(2) of the Securities Act and Rule 506
of Regulation D promulgated thereunder.
4. During the period from April 30, 1996 through March 30, 1999, iXL
granted options for no consideration to purchase an aggregate of 23,943,693
shares of common stock to 1,549 employees pursuant to the IXL Holdings, Inc.
1996 Stock Option Plan in reliance on Rule 701 promulgated under the Securities
Act and under Section 4(2) of the Securities Act. Options issued for 15,819,965
shares of common stock cannot be exercised prior to the earlier of the
registration of the underlying common stock under the Securities Act or six
years from the date of issuance.
5. On September 30, 1996, iXL issued and sold 10,000 shares of its Class
A Convertible Preferred Stock for $1,000,000 in a private placement to U.
Bertram Ellis, Jr., James V. Sandry and James S. Altenbach, and 25,000 shares
of common stock for $25,000 in a private placement to one additional executive
officer of iXL, each in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated
thereunder.
II-2
<PAGE>
6. On December 16, 1996, iXL issued and sold 50,000 shares of common
stock in a private placement to one stockholder of Consumer Financial Network,
Inc. in connection with the acquisition of that corporation by iXL. This
issuance of common stock was made in reliance on Section 4(2) of the Securities
Act and Rule 506 of Regulation D promulgated thereunder.
7. On February 15, 1997, iXL issued and sold 40,000 shares of common
stock in a private placement to two members of Webbed Feet, LLC in connection
with the acquisition of that company by iXL. This issuance of common stock was
made in reliance on Section 4(2) of the Securities Act and Rule 506 of
Regulation D promulgated thereunder.
8. On April 4, 1997, iXL issued and sold 454,400 shares of its common
stock in a private placement to one stockholder of The Whitley Group, Inc. in
connection with the acquisition of that corporation by iXL. This issuance of
common stock was made in reliance on Section 4(2) of the Securities Act and
Rule 506 of Regulation D promulgated thereunder.
9. From April 4, 1997 through August 29, 1997, iXL issued and sold an
aggregate of 57,760 shares of its Class A Convertible Preferred Stock for an
aggregate of $14,440,000 to 38 investors in reliance on Section 4(2) of the
Securities Act and Rule 506 of Regulation D promulgated thereunder. The 38
investors were Kelso Investment Associates V, L.P., Kelso Equity Partners V,
L.P., six directors or executive officers of iXL and 30 other persons.
10. On May 31, 1997, iXL issued and sold 3,416,700 shares of common
stock, and warrants to purchase 230,900 shares of common stock in a private
placement to 11 stockholders of BoxTop Interactive, Inc. in connection with the
acquisition of that corporation by iXL. This issuance of securities was made in
reliance on Section 4(2) of the Securities Act and Rule 506 of Regulation D
promulgated thereunder.
11. On July 28, 1997, iXL issued and sold 283,900 shares of common stock
in a private placement to five stockholders of Swan Interactive Media, Inc. in
connection with the acquisition of that corporation by iXL. This issuance of
common stock was made in reliance on Section 4(2) of the Securities Act and
Rule 506 of Regulation D promulgated thereunder.
12. From December 17, 1997 through December 23, 1997, iXL issued and sold
in a private placement to four investors (i) 83,075 shares of its Class B
Convertible Preferred Stock, and warrants to purchase 10,650 shares of Class B
Convertible Preferred Stock for an aggregate of $26,999,375 and (ii) 9,232
shares of its Class C Convertible Preferred Stock, for an aggregate of
$3,000,400 in reliance on Section 4(2) of the Securities Act and Rule 506 of
Regulation D promulgated thereunder. The investors were Chase Venture Capital
Associates, L.P., Flatiron Partners, LLC, Greylock IX Limited Partnership and
General Electric Capital Corporation.
13. On January 23, 1998, iXL issued and sold 271,356 shares of common
stock in a private placement to two stockholders of Small World Software, Inc.
in connection with the acquisition of that corporation. This issuance of common
stock was made in reliance on Section 4(2) of the Securities Act and Rule 506
of Regulation D promulgated thereunder.
14. On February 5, 1998, iXL issued and sold 344,270 shares of common
stock in a private placement to 18 members of Green Room Productions, L.L.C. in
connection with the acquisition of that company by iXL. This issuance of common
stock was made in reliance on Section 4(2) of the Securities Act and Rule 506
of Regulation D promulgated thereunder.
15. From February 19, 1998 through February 27, 1998, iXL issued and sold
in a private placement an aggregate of (a) 3,192 shares of its Class A
Convertible Preferred Stock and (b) 15,692 shares of its Class B Convertible
Preferred Stock plus warrants to purchase 1,810 shares of Class B Convertible
Preferred Stock for
II-3
<PAGE>
an aggregate of $6,137,300 to 13 investors in reliance on the exemption from
registration provided by Section 4(2) of the Securities Act and Rule 506 of
Regulation D promulgated thereunder. The investors were Mellon Ventures II,
L.P., Thomson U.S. Inc. and 11 other persons who were either then executive
officers or employees of iXL, family members of executive officers or employees
of iXL or existing stockholders of iXL.
16. On March 27, 1998, iXL issued and sold 266,000 shares of common stock
in a private placement to Continental Communications Group, Inc. in connection
with the acquisition of certain assets of that corporation by iXL. This
issuance of common stock was made in reliance on Section 4(2) of the Securities
Act and Rule 506 of Regulation D promulgated thereunder.
17. On May 8, 1998, iXL issued and sold 155,200 shares of common stock in
a private placement to five stockholders of Spin Cycle Entertainment, Inc. in
connection with the acquisition of that corporation by iXL. This issuance of
common stock was made in reliance on Section 4(2) of the Securities Act and
Rule 506 of Regulation D promulgated thereunder.
18. On May 12, 1998, iXL issued and sold 195,834 shares of common stock
in a private placement to three stockholders of InTouch Interactive, Inc. in
connection with the acquisition of that corporation by iXL. This issuance of
common stock was made in reliance on Section 4(2) of the Securities Act and
Rule 506 of Regulation D promulgated thereunder.
19. On May 12, 1998, iXL issued and sold 359,584 shares of common stock
in a private placement to four stockholders of Digital Planet in connection
with the acquisition of that corporation by iXL. This issuance of common stock
was made in reliance on Section 4(2) of the Securities Act and Rule 506 of
Regulation D promulgated thereunder.
20. On May 14, 1998, iXL issued and sold 740,000 shares of common stock
in a private placement to two stockholders of Micro Interactive, Inc. in
connection with the acquisition of that corporation by iXL. This issuance of
common stock was made in reliance on Section 4(2) of the Securities Act and
Rule 506 of Regulation D promulgated thereunder.
21. On May 20, 1998, iXL issued and sold an aggregate of 539 shares of
Class A Convertible Preferred Stock in a private placement to four investors
for an aggregate consideration of $175,175. This issuance of common stock was
made in reliance on Section 4(2) of the Securities Act and Rule 506 of
Regulation D promulgated thereunder.
22. From June 29, 1998 through September 18, 1998, iXL issued and sold an
aggregate of 4,300 shares of Class A Convertible Preferred Stock in a private
placement to 53 investors, including David E. Clauson and William C. Nussey,
for an aggregate consideration of $4,300,000. This issuance was made in
reliance on Section 4(2) of the Securities Act and Rule 506 of Regulation D
promulgated thereunder.
23. On July 2, 1998, iXL issued and sold 877,898 shares of common stock
in a private placement to six stockholders of CommerceWAVE, Inc. in connection
with the acquisition of that corporation by iXL. This issuance of common stock
was made in reliance on Section 4(2) of the Securities Act and Rule 506 of
Regulation D promulgated thereunder.
24. On July 8, 1998, iXL issued and sold 50,000 shares of common stock in
a private placement to two stockholders of Wissing & Laurence, Inc. in
connection with the acquisition of that corporation by iXL. This issuance of
common stock was made in reliance on Section 4(2) of the Securities Act and
Rule 506 of Regulation D promulgated thereunder.
II-4
<PAGE>
25. On July 16, 1998, iXL issued and sold 200,000 shares of common stock
in a private placement to two stockholders of 601 Design, Inc. in connection
with the acquisition by iXL of certain assets of the 601 Design business. This
issuance of common stock was made in reliance on Section 4(2) of the Securities
Act and Rule 506 of Regulation D promulgated thereunder.
26. On July 22, 1998, iXL issued and sold 378,999 shares of common stock
in a private placement to six stockholders of Image Communications, Inc. in
connection with the acquisition of that corporation by iXL. This issuance of
common stock was made in reliance on Section 4(2) of the Securities Act and
Rule 506 of Regulation D promulgated thereunder.
27. On July 28, 1998, iXL issued and sold 37,107 shares of common stock
in a private placement to two Spanish stockholders of Campana New Media, S.L.
and The Other Media, S.L. This issuance of common stock was made in reliance on
Section 4(2) of the Securities Act or, in the alternative, on the Securities
Act not being applicable to this transaction.
28. On July 30, 1998, iXL issued and sold 674,132 shares of common stock
in a private placement to two stockholders of Spinners Incorporated in
connection with the acquisition of that corporation by iXL. This issuance of
common stock was made in reliance on Section 4(2) of the Securities Act and
Rule 506 of Regulation D promulgated thereunder.
29. From August 14, 1998 through August 31, 1998, iXL issued and sold an
aggregate of 35,700 shares of Class D Nonvoting Preferred Stock, par value $.01
per share, in a private placement to 10 accredited investors for an aggregate
consideration of $35,700,000 in reliance on Section 4(2) of the Securities Act.
The investors were CB Capital Investors, LP, The Flatiron Fund 1998/99, LLC,
Friends of Flatiron, LLC, Mellon Ventures II, L.P., Thomson U.S. Inc., General
Electric Capital Corporation, Kelso Investment Associates V, L.P., Kelso Equity
Partners V, L.P., U. Bertram Ellis, Jr. and James S. Altenbach.
30. On September 4, 1998, iXL issued and sold 762,622 shares of common
stock in a private placement to two stockholders of Tekna, Inc. in connection
with the acquisition of that corporation by iXL. This issuance of common stock
was made in reliance on Section 4(2) of the Securities Act and Rule 506 of
Regulation D promulgated thereunder.
31. On September 7, 1998, iXL issued and sold 321,428 shares of common
stock in a private placement to four German stockholders of LAVA Gesellschaft
fur Digitale Medien GmbH in connection with the acquisition of that corporation
by iXL. This issuance of common stock was made in reliance on Section 4(2) of
the Securities Act or, in the alternative, on the Securities Act not being
applicable to this transaction.
32. On September 9, 1998, iXL issued and sold 113,823 shares of common
stock and warrants to purchase 9,106 shares of common stock in a private
placement to four securities holders of Larry Miller Productions, Inc. in
connection with the acquisition of that corporation by iXL. This issuance of
common stock was made in reliance on Section 4(2) of the Securities Act and
Rule 506 of Regulation D promulgated thereunder.
33. On September 10, 1998, iXL issued and sold 42,852 shares of common
stock in a private placement to one British stockholder of Denovo New Media
Limited in connection with the acquisition of that corporation by iXL. This
issuance of common stock was made in reliance on Section 4(2) of the Securities
Act or in the alternative, on the Securities Act not being applicable to this
transaction.
34. On September 10, 1998, iXL issued and sold 275,000 shares of common
stock in a private placement to one stockholder of Exchange Place Solutions,
Inc. in connection with the acquisition of that corporation by iXL. This
issuance of common stock was made in reliance on Section 4(2) of the Securities
Act and Rule 506 of Regulation D promulgated thereunder.
35. On September 18, 1998, iXL issued and sold 271,787 shares of common
stock in a private placement to three stockholders of Pantheon Interactive,
Inc. in connection with the acquisition of that
II-5
<PAGE>
corporation by iXL. This issuance of common stock was made in reliance on
Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated
thereunder.
36. On September 18, 1998, iXL issued and sold 269,421 shares of common
stock in a private placement to six members of Two-Way Communications, L.L.C.
in connection with the acquisition of that company by iXL. This issuance of
common stock was made in reliance on Section 4(2) of the Securities Act and
Rule 506 of Regulation D promulgated thereunder.
37. On September 22, 1998, iXL issued and sold 701,375 shares of common
stock in a private placement to one member of NetResponse, L.L.C. in connection
with the acquisition of that company by iXL. This issuance of common stock was
made in reliance on Section 4(2) of the Securities Act and Rule 506 of
Regulation D promulgated thereunder.
38. On September 23, 1998, iXL issued and sold 358,551 shares of common
stock in a private placement to one stockholder of Ionix Development
Corporation in connection with the acquisition of that corporation by iXL. This
issuance of common stock was made in reliance on Section 4(2) of the Securities
Act and Rule 506 of Regulation D promulgated thereunder.
39. On September 24, 1998, iXL issued and sold 378,066 shares of common
stock in a private placement to three stockholders of Pequot Systems, Inc. in
connection with the acquisition of that corporation by iXL. This issuance of
common stock was made in reliance on Section 4(2) of the Securities Act and
Rule 506 of Regulation D promulgated thereunder.
40. On October 15, 1998, iXL issued and sold 2,000 shares of common stock
in a private placement to one investor for an aggregate consideration of
$20,000 in connection with a joint marketing relationship. This issuance of
common stock was made in reliance on Section 4(2) of the Securities Act.
41. On December 14, 1998, iXL issued for no cash consideration warrants
to purchase 500,000 shares of common stock in a private placement to General
Electric Capital Corporation in reliance on Section 4(2) of the Securities Act.
42. During the period from December 10, 1998 through March 26, 1999, iXL
granted options to purchase an aggregate of 580,464 shares of common stock to
30 non-employee directors or consultants of iXL pursuant to the iXL
Enterprises, Inc. 1998 Non-Employee Stock Option Plan in reliance on the
exemption from registration provided by Section 4(2) of the Securities Act.
Options issued for 433,064 shares of common stock cannot be exercised prior to
the earlier of the registration of the underlying common stock under the
Securities Act or six years from the date of issuance.
43. On December 31, 1998, iXL issued for no cash consideration warrants
to purchase 500,000 shares of common stock in a private placement to Delta Air
Lines, Inc., in reliance on the exemption from registration provided by Section
4(2) of the Securities Act. These warrants were issued in connection with a
services agreement between iXL, Inc. and Delta Air Lines, Inc.
44. From January 15, 1999 through January 19, 1999, iXL issued and sold
22,825 shares of Class A Convertible Preferred Stock in a private placement to
Greystone Capital Partners I, L.P., Trigon Healthcare, Inc., Cox Technology
Investments, Inc., General Electric Capital Assurance Company and 23 other
investors, for an aggregate consideration of $22,825,000 in reliance on the
exemption from registration provided by Section 4(2) of the Securities Act and
Rule 506 of Regulation D promulgated thereunder.
45. On or about April 30, 1999, iXL expects to issue for no cash
consideration warrants to purchase 1,000,000 shares of common stock in a
private placement to General Electric Capital Corporation in reliance on the
exemption from registration provided by Section 4(2) of the Securities Act and
Rule 506 of Regulation D promulgated thereunder. These warrants were issued in
connection with a services agreement between iXL-New York, Inc. and General
Electric Capital Corporation.
II-6
<PAGE>
Item 16. Exhibits and Financial Statement Schedules.
a. Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
1.1 Form of U.S. Purchase Agreement*
1.2 Form of International Purchase Agreement*
2.1 Exchange Agreement, dated April 30, 1996, between iXL Enterprises,
Inc., Creative Video Library, Inc. and its stockholders for the
purchase of all of the issued and outstanding capital stock of
Creative Video Library, Inc.+
2.2 Exchange Agreement, dated April 30, 1996, between iXL Enterprises,
Inc., Creative Video, Inc. and its stockholders for the purchase of
all of the issued and outstanding capital stock of Creative Video,
Inc.+
2.3 Exchange Agreement, dated April 30, 1996, between iXL Enterprises,
Inc., IXL Interactive Excellence, Inc. and its stockholders for the
purchase of all of the issued and outstanding Stock of IXL Interactive
Excellence, Inc.+
2.4 Exchange Agreement, dated April 30, 1996, between iXL Enterprises,
Inc., Entrepreneur Television, Inc. and its stockholders for the
purchase of all of the issued and outstanding capital stock of
Entrepreneur Television, Inc.+
2.5 Purchase and Sale Agreement, dated as of June 5, 1996, by and among
IXL Acquisition Corp., Memphis On Line, Inc. Southern On Line Systems,
Inc., and Southern Tel Supply, Inc.+
2.6 Agreement and Plan of Merger, dated as of December 13, 1996, by and
among IXL Merger Corp., the Registrant, Consumer Financial Network,
Inc., Mellett, Reene & Smith, LLC, Derek V. Smith, Michael W. Reene
and Edwin R. Mellett.+
2.7 Asset Purchase Agreement, dated as of February 14, 1997, by and
between iXL Enterprises, Inc., iXL, Inc., Webbed Feet, LLC, F. Blair
Schmidt-Fellner and Michael Brendon Dowdle.+
2.8 Agreement and Plan of Merger, dated as of April 4, 1997, by and
between iXL Enterprises, Inc., IXL Merger Corp. II, Inc., The Whitley
Group, Inc. and William C. Whitley.+
2.9 Agreement of Plan of Merger, dated as of May 30, 1997, by and between
iXL Enterprises, Inc., IXL Merger Corp. III, Inc., BoxTop Interactive,
Inc., and the Shareholders of Boxtop Interactive, Inc.+
2.10 Agreement and Plan of Merger, dated as of July 28, 1997, by and
between iXL Enterprises, Inc., IXL Merger Corp. IV, Inc., Mark
Swanson, N. Blake Patton, Marc Sirkin, Edwin Davis, Estate of Robert
H. Kriebel and Swan Interactive Media, Inc.+
2.11 Agreement and Plan of Merger, dated as of January 23, 1998, by and
between iXL Enterprises, Inc., iXL-New York, Inc., Small World
Software, Inc., and the Shareholders of Small World.+
2.12 Asset Purchase Agreement, dated as of February 5, 1998, by and between
iXL Enterprises, Inc., iXL-San Francisco, Inc., Green Room
Productions, L.L.C. and the Controlling Members.+
2.13 Asset Purchase Agreement, dated as of March 27, 1998, by and between
iXL Enterprises, Inc., iXL-Denver, Inc., Continental Communications
Group, Inc., d/b/a Customer Communications Group, Inc. and John R.
Klug.+
2.14 Agreement and Plan of Merger, dated as of May 4, 1998, by and between
iXL Enterprises, Inc., iXL-New York, Inc., Micro Interactive, Inc. and
the Micro Shareholders.+
2.15 Agreement and Plan of Merger, dated as of May 8, 1998, by and between
iXL Enterprises, Inc., iXL-Los Angeles, Inc., Spin Cycle Entertainment
and the SCE Shareholders.+
2.16 Agreement and Plan of Merger, dated as of May 12, 1998, by and between
iXL Enterprises, Inc., iXL-Los Angeles, Inc., Digital Planet and the
Digital Shareholders.+
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
2.17 Agreement and Plan of Merger, dated as of May 12, 1998, by and between
InTouch Interactive, Inc., iXL Enterprises, Inc., iXL-Charlotte, Inc.,
and the InTouch Shareholders.+
2.18 Share Sale and Purchase Agreement dated as of 11 May, 1998 between,
iXL London Limited, and Derek Scanlon.+
2.19 Agreement and Plan of Merger, dated as of July 2, 1998, by and between
CommerceWAVE, Inc., iXL Enterprises, Inc., iXL-San Diego, Inc., and
the CommerceWAVE shareholders.+
2.20 Agreement and Plan of Merger, dated as of July 8, 1998, by and between
iXL Enterprises, Inc., iXL-New York, Inc., Wissing & Laurence, Inc.
and the W&L Shareholders.+
2.21 Asset Purchase Agreement, dated as of July 16, 1998, by and among
Robert Ortiz and John Tierney, iXL Enterprises, Inc. and iXL-New York,
Inc.+
2.22 Agreement and Plan of Merger, dated as of July 22, 1998, by and
between Image Communications, Inc., iXL Enterprises, Inc., iXL-DC,
Inc., and the Image Shareholders.+
2.23 Share Purchase Agreement, dated as of July 28, 1998, by and among iXL
Enterprises, Inc., iXL-Madrid, S.A., Campana New Media, S.L, The Other
Media, S.L., the Campana Companies Beneficial Owners and the Campana
Companies Shareholders.+
2.24 Agreement and Plan of Merger, dated as of July 30, 1998, by and among
Spinners Incorporated, iXL Enterprises, Inc., iXL-Boston, Inc. and the
Spinners Shareholders.+
2.25 Agreement and Plan of Merger, dated as of September 4, 1998, by and
among iXL Enterprises, Inc., iXL-Richmond, Inc., Tekna, Inc., and the
Tekna Shareholders.+
2.26 Share Sale and Purchase Agreement, dated as of September 7, 1998, by
and between iXL Enterprises, Inc., Jens Bley, Manfred Otterbreit,
Stephan Balzerand Matthias Oelmann.
2.27 Agreement and Plan of Merger dated as of September 9, 1998 by and
among iXL Enterprises, Inc., iXL-Boston, Inc., Larry Miller
Productions, Inc., and the LMP Principals.+
2.28 Agreement and Plan of Merger, dated as of September 10, 1998, by and
between iXL Enterprises, Inc., iXL, Inc., Exchange Place Solutions,
Inc., and the Exchange Place Shareholder.+
2.29 Agreement and Plan of Merger, dated as of September 18, 1998, by and
among iXL Enterprises, Inc., iXL-San Francisco, Inc., Pantheon
Interactive, Inc., and the Pantheon Shareholders.+
2.30 Agreement and Plan of Merger, dated as of September 18, 1998, by and
among iXL Enterprises, Inc., iXL-Chicago, Inc., Two-Way
Communications, L.L.C., and the TWC Members.+
2.31 Agreement and Plan of Merger, dated as of September 22, 1998, by and
between iXL Enterprises, Inc., iXL-DC, Inc., NetResponse, L.L.C., and
Next Century Communications Corp.+
2.32 Agreement and Plan of Merger, dated as of September 23, 1998, by and
among iXL Enterprises, Inc., iXL-Chicago, Inc., Ionix Development,
Corporation, and the Ionix Shareholder.+
2.33 Agreement and Plan of Merger, dated as of September 24, 1998, by and
between iXL Enterprises, Inc., iXL-Connecticut, Inc., Pequot Systems,
Inc. and the Pequot Shareholders.+
3.1 Form of Amended and Restated Certificate of Incorporation.
3.2 Form of Amended and Restated Bylaws.
4.1 Form of Common Stock Certificate.
4.2 Form of Mandatorily Exercisable Common Stock Warrant Agreement.
4.3 Form of Class B Convertible Preferred Stock Warrant Agreement.
</TABLE>
II-8
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
4.4 Form of Class A Common Stock Warrant Agreement.
4.5 Form of Class B Common Stock Warrant Agreement.
4.6 Investor Stockholders Agreement, dated as of April 30, 1996, as
amended.+
4.7 Form of Third Amended and Restated Stockholders' Agreement.
5.1 Opinion of Minkin & Snyder, a Professional Corporation.*
10.1 Employment Agreement between Boxtop Interactive, Inc. and Kevin Wall,
dated as of August 1, 1996, as amended, together with related
agreements.+
10.2 Employment Agreement dated as of May 1, 1998 between iXL, Inc. and
William C. Nussey.+
10.3 Employment Agreement dated August 17, 1998 between iXL, Inc. and David
Clauson.+
10.4 Form of Employment Agreement between Consumer Financial Network, Inc.
and C. Cathleen Raffaeli.
10.5 iXL Enterprises, Inc. 1996 Stock Option Plan, together with related
agreements.
10.6 iXL Enterprises, Inc. 1998 Non-Employee Stock Option Plan, together
with related agreements.
10.7 iXL Enterprises, Inc. 1999 Employee Stock Option Plan.
10.8 Advisory Agreement dated as of April 30, 1996 by and between IXL
Holdings, Inc. and Kelso & Company, together with form of amendment.
10.9 Consulting Agreement dated as of February 5, 1999 by and between iXL
Enterprises, Inc. and Kelso & Company.
10.10 Promissory Note, dated as of January 14, 1997, made by IXL-Memphis,
Inc. in favor of First Tennessee Bank National Association, in the
original principal amount of $499,000 and agreements related thereto.
10.11 Promissory Note, dated as of May 30, 1997, in the principal aggregate
amount of $50,000 in favor of the Registrant from Kevin Wall.+
10.12 Promissory Note, dated as of September 15, 1997, in the principal
aggregate amount of $500,000 in favor of U. Bertram Ellis from iXL
Enterprises, Inc.+
10.13 Promissory Note, dated as of September 18, 1997, in the principal
aggregate amount of $300,000 in favor of James Rocco from iXL
Enterprises, Inc.+
10.14 Promissory Note, dated as of September 29, 1997, in the principal
aggregate amount of $100,000 in favor of James S. Altenbach from iXL
Enterprises, Inc.+
10.15 Promissory Note, dated as of October 10, 1997, in the principal
aggregate amount of $1,000,000 in favor of U. Bertram Ellis, Jr. from
iXL Enterprises, Inc.+
10.16 Promissory Note, dated as of October 30, 1997, in the principal
aggregate amount of $1,000,000 in favor of U. Bertram Ellis, Jr. from
iXL Enterprises, Inc.+
10.17 Promissory Note, dated as of November 25, 1997, in the principal
aggregate amount of $1,000,000 in favor of U. Bertram Ellis, Jr. from
iXL Enterprises, Inc.+
10.18 Promissory Note, dated as of December 3, 1997, in the principal
aggregate amount of $1,300,000 in favor of U. Bertram Ellis, Jr. from
iXL Enterprises, Inc.+
10.19 Promissory Note, dated as of June 19, 1998, in the principal aggregate
amount of $4,000,000 in favor of Deborah Hicks Ellis from iXL
Enterprises, Inc. and certain of its subsidiaries and related
agreements.+
10.20 Promissory Note, dated as of July 20, 1998, in the principal aggregate
amount of $2,000,000 in favor of U. Bertram Ellis, Jr. from iXL
Enterprises, Inc.+
10.21 Credit Agreement, dated as of July 29, 1998, as amended and restated
as of November 30, 1998, among iXL Enterprises, Inc., the Lenders
party thereto and The Chase Manhattan Bank as Administrative Agent and
related agreements.+
</TABLE>
II-9
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
10.22 Promissory Note, dated as of September 18, 1998, between David Clauson
(as Maker) and iXL Enterprises, Inc. together with Stock Pledge
Agreement.+
10.23 Subscription Agreement for Common Stock dated April 12, 1996 between
iXL Enterprises, Inc. and U. Bertram Ellis, Jr.+
10.24 Subscription Agreement for Common Stock dated April 12, 1996 between
iXL Enterprises, Inc. and James S. Altenbach.+
10.25 Subscription Agreement for Class A Convertible Preferred Stock dated
April 30, 1996 between iXL Enterprises, Inc. and U. Bertram Ellis,
Jr.+
10.26 Subscription Agreement for Class A Convertible Preferred Stock dated
April 30, 1996 between iXL Enterprises, Inc. and U. Bertram Ellis,
Jr., James V. Sandry and James S. Altenbach.+
10.27 Subscription Agreement for Class A Convertible Preferred Stock dated
June 3, 1996 between iXL Enterprises, Inc. and James S. Altenbach.+
10.28 Subscription Agreement for Class A Convertible Preferred Stock dated
April 4, 1997 between iXL Enterprises, Inc. and Kelso Investment
Associates V, L.P.+
10.29 Subscription Agreement for Class A Convertible Preferred Stock dated
April 4, 1997 between iXL Enterprises, Inc. and Kelso Equity Partners
V, L.P.+
10.30 Subscription Agreement for Class A Convertible Preferred Stock dated
April 4, 1997 between iXL Enterprises, Inc. and U. Bertram Ellis, Jr.+
10.31 Subscription Agreement for Class A Convertible Preferred Stock dated
April 4, 1997 between iXL Enterprises, Inc. and James S. Altenbach.+
10.32 Intentionally Omitted.
10.33 Subscription Agreement for Class A Convertible Preferred Stock dated
August 25, 1998 between iXL Enterprises, Inc. and William C. Nussey.+
10.34 Subscription Agreement for Class A Convertible Preferred Stock dated
September 18, 1998 between iXL Enterprises, Inc. and David Clauson.+
10.35 Exchange Agreement, dated April 30, 1996, between iXL Enterprises,
Inc., Creative Video Library, Inc. and its stockholders for the
purchase of all of the issued and outstanding capital stock of
Creative Video Library, Inc. (contained in Exhibit 2.1).+
10.36 Exchange Agreement, dated April 30, 1996, between iXL Enterprises,
Inc., Creative Video, Inc. and its stockholders for the purchase of
all of the issued and outstanding capital stock of Creative Video,
Inc. (contained in Exhibit 2.2).+
10.37 Exchange Agreement, dated April 30, 1996, between iXL Enterprises,
Inc., Entrepreneur Television, Inc. and its stockholders for the
purchase of all of the issued and outstanding capital stock of,
Entrepreneur Television, Inc. (contained in Exhibit 2.3).+
10.38 Agreement and Plan of Merger, dated May 30, 1997, by and among iXL
Enterprises, Inc., iXL Merger Corp. III, Inc., Boxtop Interactive,
Inc., and the Stockholders of Boxtop Interactive, Inc. (contained in
Exhibit 2.9).+
10.39 Securities Purchase Agreement, dated December 17, 1997, among iXL
Enterprises, Inc. and Chase Venture Capital Associates, L.P., Flatiron
Partners, LLC and Greylock IX Limited Partnership and related
agreement.+
10.40 Warrant Agreement, dated as of December 17, 1997, by and among iXL
Enterprises, Inc., Chase Venture Capital Associates, L.P., Flatiron
Partners, L.L.C., and Greylock IX Limited Partnership.+
10.41 Securities Purchase Agreement, dated December 23, 1997, among iXL
Enterprises, Inc. and General Electric Capital Corporation.
</TABLE>
II-10
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
10.42 Warrant Award Agreement dated as of December 23, 1997 by and between
iXL Enterprises, Inc. and General Electric Capital Corporation.+
10.43 Warrant Agreement, dated as of December 23, 1997, by and between iXL
Enterprises, Inc. and General Electric Capital Corporation.+
10.44 Warrant Award Agreement dated as of March 12, 1998 by and between iXL
Enterprises, Inc. and Chase Venture Capital Associates, L.P., and
related agreement.
10.45 Securities Purchase Agreement, dated March 30, 1998, between iXL
Enterprises, Inc. and Kevin Wall for the purchase of shares of iXL
Enterprises, Inc.'s Common Stock.+
10.46 Securities Purchase Agreement, dated August 14, 1998, among iXL
Enterprises, Inc. and CB Capital Investors, L.P., The Flatiron Fund
1998/99, LLC, Friends of Flatiron, LLC, and Mellon Ventures II, L.P.+
10.47 Securities Purchase Agreement, dated January 15, 1999, among iXL
Enterprises, Inc. and the Purchasers listed therein for the purchase
of shares of iXL Enterprises, Inc.'s Class A Convertible Preferred
Stock.+
10.48 Stock Purchase Agreement dated November 3, 1998, between Consumer
Financial Network, Inc. and General Electric Capital Corporation for
the purchase of shares of Series A Convertible Preferred Stock, $.01
par value per share, of Consumer Financial Network, Inc.
10.49 Warrant Agreement, dated as of November 3, 1998, among iXL
Enterprises, Inc. and General Electric Capital Corporation.+
10.50 Stockholders' Agreement dated November 3, 1999 among Consumer
Financial Network, Inc., iXL Enterprises, Inc. and General Electric
Capital Corporation.+
10.51 Guaranty of License Agreement dated April 27, 1998 between Consumer
Financial Network, Inc. and Charter Federal Savings & Loan Association
of West Point, Georgia.+
10.52 Lease Agreement dated January 8, 1997 between Park Place Emery, L.L.C.
and iXL, Inc., as amended.
10.53 Registration Rights Agreement dated as of April 30, 1996 among iXL
Enterprises, Inc. and Kelso Investment Associates V, L.P., Kelso
Equity Partners V, L.P., Kelso Equity Partners V, L.P., and certain
other stockholders of the Registrant.
10.54 Form of Indemnification Agreement.
10.55 Form of Amended and Restated Registration Rights Agreement by and
among iXL Enterprises, Inc., Consumer Financial Network, Inc., GE
Capital Equity Investments, Inc., General Electric Pension Trust and
General Electric Capital Corporation.
10.56 Master Services Agreement dated April 7, 1999 by and between iXL-New
York, Inc. and General Electric Capital Corporation.
10.57 Warrant Agreement dated April 7, 1999 by and between iXL Enterprises,
Inc. and GE Capital Equity Investments, Inc.
10.58 Stock Purchase Agreement dated April 7, 1999 by and between Consumer
Financial Network, Inc., GE Capital Equity Investments, Inc., and
General Electric Pension Trust.
10.59 Securities Purchase Agreement dated April 7, 1999 by and among iXL
Enterprises, Inc., GE Capital Equity Investments, Inc., and the
General Electric Pension Trust.
10.60 Form of Warrant Agreement by and between iXL Enterprises, Inc. and GE
Capital Equity Investments, Inc.
10.61 Form of Investor Agreement by and between GE Capital Equity
Investments, Inc., the General Electric Pension Trust, iXL
Enterprises, Inc. and Consumer Financial Network, Inc.
</TABLE>
II-11
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
10.62 Form of Amended and Restated Stockholders' Agreement among Consumer
Financial Network, Inc., iXL Enterprises, Inc., GE Capital Equity
Investments, Inc., the General Electric Pension Trust and General
Electric Capital Corporation, as amended.
21.1 Subsidiaries of the Company.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Minkin & Snyder, a Professional Corporation (contained in
Exhibit 5.1).
24.1 Power of Attorney.**
27.1 Financial Data Schedule.+
99.1 Consent to be Named in Registration Statement
</TABLE>
- --------
+ Filed previously.
* To be provided by amendment.
** With respect to Jeffrey T. Arnold included on signature pages hereto; with
respect to all other signatures included on the signature page to the
initial filing of this Form S-1 on February 5, 1999.
b. Financial Statement Schedules
Schedule II--Valuation and Qualifying Accounts
Item 17. Undertakings.
The undersigned registrant hereby undertakes to provide to the
underwriters at the closing certificates in such denominations and registered
in such names as required by the underwriters to permit prompt delivery to each
purchaser.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the registrant pursuant to the provisions described in Item 14, or otherwise,
the registrant has been informed that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable. In the event that a claim
for indemnification by the registrant against such liabilities (other than the
payment by the registrant of express incurred or paid by a director, officer,
or controlling person of the registrant in the successful defense of any
action, suit, or proceeding) is asserted by such director, or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b) (1) or
(4) or 497 (h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Amendment No. 1 to registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Atlanta, State of Georgia, on April 7, 1999.
iXL Enterprises, Inc.,
a Delaware corporation
/s/ M. Wayne Boylston
By: _________________________________
Name:M. Wayne Boylston
Title:Chief Financial Officer
Each person whose signature appears below hereby constitutes and appoints
U. Bertram Ellis, Jr. and M. Wayne Boylston, and each of them, his true and
lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place, and stead, in any and all
capacities, to sign any and all (i) amendments (including post-effective
amendments) and additions to this Registration Statement and (ii) Registration
Statements, and any and all amendments thereto (including post-effective
amendments), relating to the offering contemplated pursuant to Rule 462(b)
under the Securities Act of 1933, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, and hereby grants to such attorneys-in-fact and agents
full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents or his substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to registration statement has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ U. Bertram Ellis, Jr.* Chief Executive Officer
______________________________________ (Principal Executive
U. Bertram Ellis, Jr. Officer)
/s/ M. Wayne Boylston Chief Financial Officer April 7, 1999
______________________________________ (Principal Financial
M. Wayne Boylston Officer)
/s/ Jeffrey T. Arnold Director April 7, 1999
______________________________________
Jeffrey T. Arnold
/s/ Frank K. Bynum, Jr.* Director
______________________________________
Frank K. Bynum, Jr.
/s/ Jerome D. Colonna* Director
______________________________________
Jerome D. Colonna
/s/ I. Robert Greene* Director
______________________________________
I. Robert Greene
/s/ William C. Nussey* Director
______________________________________
William C. Nussey
</TABLE>
II-13
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ James R. Rocco* Director
______________________________________
James R. Rocco
/s/ Thomas G. Rosencrants* Director
______________________________________
Thomas G. Rosencrants
/s/ Kevin M. Wall* Director
______________________________________
Kevin M. Wall
/s/ Thomas R. Wall, IV* Director
______________________________________
Thomas R. Wall, IV
/s/ M. Wayne Boylston April 7, 1999
______________________________________
*By: M. Wayne Boylston
</TABLE>
Attorney-in-Fact
II-14
<PAGE>
Schedule II--Valuation and Qualifying Accounts
(in thousands)
<TABLE>
<CAPTION>
Balance at Charges to Deductions Balance
beginning costs and and at end
Description of period expenses Reclassifications (1) Other (2) of period
----------- ---------- ---------- --------------------- --------- ---------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful
accounts
For the year ended
December 31,
- ------------------
1998.................. $138 $1,227 $(765) $196 $796
1997.................. 150 118 (130) -- 138
1996.................. -- 134 (14) 30 150
</TABLE>
- --------
(1)Amounts represent write-offs.
(2) Amounts represent the beginning balances of the allowance for doubtful
accounts for the companies acquired during the respective periods.
S-1
<PAGE>
EXHIBIT 2.26
URKUNDENROLLE NR. 1986/1998P
-----------------------------------
DONE
AT HAMBURG ON THIS 7TH SEPTEMBER 1998
BEFORE ME THE UNDERSIGNED NOTARY PUBLIC
PROF. DR. HANS-JOACHIM PRIESTER
WITH REGISTERED OFFICE AT HAMBURG
THE FOLLOWING PARTIES APPEARED TODAY:
1. Mr Jens Bley, resident at 22587 Hamburg, Falkenthaler Weg 3 a,
demonstrating identity to the notary public by means of his personal
identity card;
2. Mr Manfred Ottenbreit, resident at 22846 Norderstedt, Frans-HalsRing 51,
demonstrating identity to the notary public by means of his personal
identity card;
3. Mr Stephan Balzer, resident at 10557 Berlin, Thomasiusstrabe 10,
demonstrating identity to the notary public by means of his personal
identity card;
4. Mr Matthias Oelmann, resident at 20359 Hamburg, Reeperbahn 130,
demonstrating identity to the notary public by means of his personal
identity card;
<PAGE>
Purchase Agreement "LAVA GmbH" page 2
5. Detlef Ruskamp, Esquire, with business address c/o Knopf, Tulloch &
Partner, 60486 Frankfurt am Main, Hamburger Allee 1, demonstrating
identity to the notary public by means of his personal identity card;
hereinafter not acting on his own behalf but representing IXL Holdings,
Inc., with business address at Two Park Place, 1888 Emery St., 2nd
Floor, Atlanta, GA 30318, USA, authorized by written Power of Attorney,
issued on June 26, 1998, bearing the seal of Alison Cerul, notary
public, being certified by Apostille. The Power of Attorney was produced
to the notary in its original form and a notarized copy hereof is
attached as SCHEDULE 1 hereto.
At the request of the persons appearing this notarial deed is executed in the
English language, which the persons appearing are sufficiently capable of.
The persons appearing requested notarization of the following
AGREEMENT
for the sale and purchase of the entire shares in
LAVA GESELLSCHAFT FUR DIGITALE MEDIEN GmbH
<PAGE>
Purchase Agreement "LAVA GmbH" page 3
Table of Contents
<TABLE>
<S> <C>
1 INTRODUCTION...................................................... 5
2 INTERPRETATION.................................................... 6
3 LIABILITY......................................................... 7
4 SALE AND ASSIGNMENT, EFFECTIVE DATE............................... 7
5 REPAYMENT OF SELLERS' LOAN........................................ 8
6 BASE CONSIDERATION I.............................................. 8
7 BASE CONSIDERATION II............................................. 10
8 ADDITIONAL CONSIDERATION.......................................... 10
9 PUT AND CALL...................................................... 12
10 GENERAL........................................................... 12
11 REPRESENTATIONS AND WARRANTIES OF SELLERS WITH RESPECT
TO THE SHARES, LAVA AND THE LAVA BUSINESS........................ 13
12 REPRESENTATIONS AND WARRANTIES OF PURCHASER WITH RESPECT
TO THE ACQUISITION CONSIDERATION................................. 27
13 REPRESENTATIONS AND WARRANTIES OF SELLERS
WITH RESPECT TO THE ACQUISITION CONSIDERATION.................... 33
14 INDEMNIFICATION BY THE SELLERS, PAYMENT........................... 35
15 INDEMNIFICATION BY THE PURCHASER, PAYMENT......................... 37
16 NOTIFICATION OF CLAIMS; ELECTION TO DEFEND........................ 39
17 RIGHT OF FIRST REFUSAL............................................ 40
18 NOTIFICATION OF TRANSFER OF SHARES................................ 41
</TABLE>
<PAGE>
Purchase Agreement "LAVA GmbH" page 4
<TABLE>
<S> <C>
19 SUPPLEMENTARY CONTRACTS, ANCILLARY DOCUMENTATION.................. 42
20 PERSONAL GUARANTEES OF LAVA OVERDRAFT FACILITIES.................. 43
21 CONSENT........................................................... 43
22 NOTICES........................................................... 43
23 GOVERNING LAW, LANGUAGE, PLACE OF JURISDICTION.................... 44
24 ANNOUNCEMENTS..................................................... 45
25 FEES AND EXPENSES................................................. 45
26 HEADINGS.......................................................... 45
27 ENTIRE AGREEMENT.................................................. 45
28 SEVERABILITY...................................................... 46
ORDERS TO SUPPLIERES.................................................. 68
CONTRACTS WITH CUSTOMERS.............................................. 68
SHAREHOLDER AGREEMENTS................................................ 69
BANK CONTRACTS........................................................ 69
EMPLOYEE CONTRACTS.................................................... 69
</TABLE>
<PAGE>
Purchase Agreement "LAVA GmbH" page 5
ARTICLE I
---------
RECITALS
1 INTRODUCTION
1.1 LAVA Gesellschaft fur Digitale Medien GmbH, which has its corporate
domicile in 20457 Hamburg, Dienerreihe 2, and is registered in the
Commercial Register of the municipal court of Hamburg under Ref.-No. HRB
61171 ("LAVA"), is engaged in the business of developing internet sites and
furnishing internet services, including website design and maintenance,
further media production in particular in the area of online publishing,
and consulting, conception, design, editorial and project management,
development of userspecific software, the marketing of the foregoing as
well as trading with Computer Hard- and Software for system solutions in
the area of Client-Server-Technologies (the "LAVA BUSINESS").
1.2 Mr. Jens Bley, Mr. Manfred Ottenbreit, Mr. Stephan Balzer and Mr. Matthias
Oelmann (collectively, the "SELLERS") collectively own 100% of the issued
share capital of LAVA, which is in the total amount of 50.000 DM (the "LAVA
SHARE CAPITAL"). Each Seller holds property in the following number of
shares of the LAVA Share Capital:
Mr Jens Bley
------------
(a) one share in the nominal amount of 10.000 DM, and
(b) a second share in the nominal amount of 2.500 DM,
Mr Manfred Ottenbreit
---------------------
(a) one share in the nominal amount of 10.000 DM, and
(b) a second share in the nominal amount of 2.500 DM,
Mr Stephan Balzer
-----------------
<PAGE>
Purchase Agreement "LAVA GmbH" page 6
(a) one share in the nominal amount of 10.000 DM, and
(b) a second share in the nominal amount of 2.500 DM, and
Mr Matthias Oelmann
-------------------
(a) one share in the nominal amount of 10.000 DM, and
(b) a second share in the nominal amount of 2.500 DM.
1.3 The aforementioned shares represent 100 % of the totally paid up share
capital of LAVA.
1.4 IXL Holdings, Inc., (the "PURCHASER' or "IXL") wishes to acquire all the
shares referred to in Section 1.2 hereof (the "SHARES") from the Sellers by
means of this purchase agreement (the "PURCHASE AGREEMENT") pursuant to the
terms and conditions hereof.
2 INTERPRETATION
2.1 In this Purchase Agreement (including the Introduction and the Schedules),
the following expressions shall have the following meanings:
Cash means any amount in U.S. Dollars, unless
expressly stated to the contrary
hereinafter
Business Days means German business days
Exchange Rate is 1,79 DM to 1 U.S. Dollar
BGB means the German Civil Code
HGB means the German Commercial Code
Domestic means the Federal Republic of Germany
Acquisition Consideration means the Base Consideration (I and II)
and the Additional Consideration
<PAGE>
Purchase Agreement "LAVA GmbH" page 7
3 LIABILITY
3.1 The Sellers shall assume collective liability for their respective
obligations incurred under the terms of this Purchase Agreement according
to Section 427 BGB; this shall apply to any delay in performance, liability
for fault, impossibility of performance or statute of limitations, if any
of those circumstances occurs in only one or some, but not all of the
Sellers. Declarations by the Purchaser pursuant to this Purchase Agreement
and performance of the Purchaser under this Purchase Agreement vis-a-vis
one of the Sellers shall at the same time be effective vis-a-vis all the
Sellers; any one Seller may only call for the performance being provided to
all of them according to Section 432 BGB.
NOW, THEREFORE, in consideration of the mutual covenants, benefits, conditions
and agreements set forth herein, it is hereby agreed as follows:
ARTICLE II
----------
SALE AND PURCHASE
4 SALE AND ASSIGNMENT, EFFECTIVE DATE
4.1 The Sellers hereby sell their respective Shares to the Purchaser who agrees
to hereby Purchase the respective Shares. The Sellers hereby assign their
respective Shares to the Purchaser with effect from September 7, 1998, (the
"EFFECTIVE DATE"). The Purchaser hereby assumes the respective Shares with
effect from the Effective Date.
4.2 Each Seller hereby undertakes with the Purchaser at the request of the
Purchaser and at the expense of the Purchaser to do or procure to be done
all such further acts and things and execute or procure to be exe-
<PAGE>
Purchase Agreement "LAVA GmbH" page 8
cuted all such further deeds and documents as may be necessary or desirable
fully and effectively to vest in the Purchaser the legal and beneficial
ownership of the Shares and the benefits of this Purchase Agreement and any
document specified herein and, pending such vesting, a Seller shall hold
such Shares and benefits in trust for the Purchaser and shall receive all
monies in connection therewith as trustee of the Purchaser and shall
account to the Purchaser forthwith on receipt.
5 REPAYMENT OF SELLERS' LOAN
5.1 The parties agree that the Sellers' loan which they have granted to LAVA
and which as of the Determination Date is in the amount of 225,797 DM shall
be repaid to the Sellers within 15 business days following the notice to
LAVA of the transfer of the Shares in accordance with Section 18.1 hereof
provided such loan is at the date of repayment not in excess of 225,797 DM,
and if so, the exceeding amount shall not be repayable.
ARTICLE III
-----------
ACQUISITION CONSIDERATION
6 BASE CONSIDERATION I
6.1 In consideration for the sale and assignment of the Shares to the Purchaser
the Purchaser shall procure the issue to the Sellers in proportion of their
respective shareholdings in LAVA of that number of whole shares of
Purchaser Class B Common Stock, $.01 par value (the "IXL STOCK") valued as
at the Effective Date at $10 per share, as determined in accordance with
the following equation (the "BASE CONSIDERATION I"):
<PAGE>
Purchase Agreement "LAVA GmbH" page 9
SIXL= (T x 1.5) -- {(D+[(AP+AE) -- (AR x 90%)]}
-----------------------------------------
$10
where:
SIXL= the total number of shares of IXL Stock for which the Shares
shall be exchanged pursuant to this Purchase Agreement,
notwithstanding the entitlement of the Sellers to cash pursuant
to Sections 6.2 and 9 hereof, and assuming no LAVA Stock Rights
(as defined in Section 11.4 hereof)
D = the outstanding indebtedness of LAVA (the "LAVA DEBT") pursuant
to Section 266 par. 3 C. HGB, including debt for borrowed money
and accrued interest thereon, capital leases and any debt to
shareholders, but not including - for the purpose of the above
equation - AP and AE
AP = the Accounts Payable of LAVA (including accounts payable trade)
pursuant to Section 266 par. 3 C. HGB but except for the LAVA
Debt
AE = the accrued expenses of LAVA (including accrued expenses tax)
pursuant to Section 266 par. 3 B. HGB
AR = the Accounts Receivable (as defined in Section 11.29) of LAVA
less than 60 days old; provided, however, that for the purpose of
the above equation, [(AP + AE) --(AR x 90%)] may not be a
negative number
T = the trailing turnover of LAVA for the twelve month period prior
to the Determination Date in accordance with Section 277 par. 1
HGB
with each of the variables T, D, AP, AE and AR to be determined as at July 31,
1998 (the "DETERMINATION DATE"), in U.S. Dollars at the Exchange
<PAGE>
Purchase Agreement "LAVA GmbH" page 10
Rate, and in accordance with U.S. generally accepted accounting principles
("GAAP"). The determination of the Base Consideration I pursuant to the
above equation is set forth in SCHEDULE 2 hereto.
6.2 The Sellers are entitled to receive in proportion of their respective
shareholdings in LAVA and the Purchaser is due to pay, twenty five per
cent (25 %) of the Base Consideration 1 in cash as set forth in SCHEDULE 2
in lieu of IXL Stock.
6.3 At the Effective Date the Purchaser shall pay to the Sellers the Base
Consideration I by means of delivery of the respective share certificates
to the Sellers and by writing a cheque payable to the Sellers in the cash
amount.
7 BASE CONSIDERATION II
7.1 In consideration for the sale and assignment of the Shares to the Purchaser
the Purchaser shall procure the issue to the Sellers of an additional
number of 40,000 whole shares of IXL Stock valued as at the Effective Date
at $ 10 per share, allotted to each Seller as follows:
- Mr Jens Bley: 9,000 shares,
- Mr Manfred Ottenbreit: 9,000 shares,
- Mr Stephan Balzer: 9,000 shares,
- Mr Matthias Oelmann: 13,000 shares.
7.2 At the Effective Date the Purchaser shall pay to the Sellers the Base
Consideration II by means of delivery of the respective share certificates
to the Sellers.
8 ADDITIONAL CONSIDERATION
8.1 As additional consideration (the "ADDITIONAL CONSIDERATION"), IXL will
place in escrow, at the Effective Date and until fifteen (15) months after
<PAGE>
Purchase Agreement "LAVA GmbH" page 11
the Effective Date, 137,304 additional shares of IXL Stock (the
"ESCROWED STOCK"), as determined by multiplying, by fifty per cent (50%),
LAVA's good faith projected twelve (12) month turnover after 1 August 1998
as set forth in the business plan of LAVA attached hereto as SCHEDULE 3
(the "PROJECTED TURNOVER"), and dividing the outcome by $ 10 per share. The
Escrowed Stock will be escrowed pursuant to the terms of the Escrow
Agreement attached hereto as SCHEDULE 4 between the Sellers, SunTrust Bank,
Atlanta (the "ESCROW AGENT"), and the Purchaser (the "ESCROW AGREEMENT").
The Sellers may be entitled to all or a portion of the Escrowed Stock,
fifteen (15) month after 1 August 1998, depending on the performance of
LAVA for the twelve (12) month period after 1 August 1998 (the "ACTUAL
TURNOVER'), as reflected on LAVA's books as certified by the auditors of
LAVA at that time, relative to the Projected Turnover. For all purposes of
this Section, LAVA's Projected Turnover and Actual Turnover shall be
converted into U.S. Dollars at the Exchange Rate and adjusted by Price
Waterhouse GmbH Wirtschaftsprufungsgesellschaft, Hamburg, in accordance
with GAAP, which adjustment has binding force to both Purchaser and
Sellers. If the Actual Turnover is 100 % or more of the Projected Turnover,
then the Sellers will be entitled to 100 % of the Escrow Stock; if the
Actual Turnover is between 75 % and 100 % of the Projected Turnover, then
the Sellers will be entitled to a pro rata portion of the Escrowed Stock,
e.g. if the Actual Turnover is 87,5 % of the Projected Turnover, then the
Sellers will be entitled to 87,5 % of the Escrowed Stock; if the Actual
Turnover falls below 75 % of the Projected Turnover, then the Sellers shall
not be entitled to any of the Escrowed Stock.
8.2 The Purchaser and the Sellers shall notify the Escrow Agent accordingly
and, pursuant to the Escrow Agreement, (I) the portion of the Escrowed
Stock to which the Sellers are entitled, as determined with binding force
to the Sellers by the Purchaser in the foregoing manner, will be delivered
to them, pro rate in accordance with their respective LAVA shareholdings
referred to in Section 1.2 above; and (ii) any remaining Escrowed Stock
shall be returned to the Purchaser.
<PAGE>
Purchase Agreement "LAVA GmbH" page 12
9 PUT AND CALL
9.1 It within 18 months after the Effective Date, the Purchaser does not file
with the U.S. Securities and Exchange Commission, under the Securities Act
of 1933, as amended (the "SECURITIES ACT"), a registration statement with
respect to IXL Common Stock, or such registration statement does not become
effective, then the Sellers collectively will be entitled to put to IXL for
cash (independent of their entitlement to receive 25 % of the Base
Consideration 1 in cash pursuant to Section 6.2 hereof), at $ 10 per share,
up to 25 % of the Acquisition Consideration (including any Escrowed Stock
to which they are entitled) pursuant to Article III hereof. If the Sellers
exercise this right to put IXL Stock to Purchaser, then the Purchaser shall
be entitled to call from Sellers, which notice must be given within 60 days
from having received notice of Seller's put, at $ 10 per share, up to the
balance of their IXL Stock so received as Base Consideration I and II and
Escrowed Stock.
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES
10 GENERAL
10.1 Each representation and warranty in this Purchase Agreement is a separate
and independent representation and warranty in relation to each of the
statements in the representation and warranty and no such statement shall
be limited by reference to any other such statement or by the other terms
of this Purchase Agreement.
10.2 Unless expressly stated to the contrary, each representation and warranty
in this Purchase Agreement shall be deemed given as of the Effective
<PAGE>
Purchase Agreement "LAVA GmbH" page 13
Date. The same shall apply to the contents of and listings in the Schedules
attached hereto.
11 REPRESENTATIONS AND WARRANTIES OF SELLERS W1TH RESPECT TO THE SHARES, LAVA
AND THE LAVA BUSINESS
11.1 The Sellers, jointly and severally, represent and warrant to Purchaser each
of the representations and warranties contained in this Section 11, each of
which shall constitute an independent liability to the Sellers
(selbstandiges Garantieversprechen).
11.2 LAVA is a limited liability corporation duly organized and validly existing
under the German GmbH Act. LAVA has the requisite corporate power and
authority to carry on the LAVA Business as it is currently conducted and is
duly qualified or licensed to do the LAVA Business, 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 Certificate of Incorporation (Handelsregisterauszug)
and the Articles of Incorporation of LAVA as in effect on the date hereof
are attached as SCHEDULE 5 hereto.
The documentation which has been delivered to Purchaser,
(a) accurately reflects all actions taken by the managers and shareholders
of LAVA at meetings of LAVA's management board or shareholders, as the
case may be; and
(b) contains true and complete copies, or originals, of the respective
minutes of all such meetings or consents to the actions of the
directors or shareholders.
11.3 The Sellers have the necessary power and authority to execute and deliver
this Purchase Agreement and to perform the transactions contemplated
hereby. The execution and delivery hereof and the performance of the
transactions contemplated hereby by the Sellers have been duly
<PAGE>
Purchase Agreement "LAVA GmbH" page 14
authorized and approved by LAVA's shareholders, and no other corporate or
shareholder proceedings on the part of LAVA, its management board or the
shareholders of LAVA is necessary to authorize or approve this Purchase
Agreement or to perform the transactions contemplated hereunder. This
Purchase Agreement constitutes a valid and binding obligation on each
Seller, enforceable against each Seller in accordance with the terms
contained herein.
11.4 The LAVA Share Capital consists of eight (8) shares, all of which are
validly issued and legally and beneficially held by the Sellers. All the
LAVA Share Capital was issued in accordance with applicable laws, in
particular the German GmbH Act. Except as set forth on SCHEDULE 6 hereto,
there are no options, warrants, calls, convertible notes, agreements,
commitments or other rights (the "STOCK RIGHTS") outstanding or coming
into effect after the Effective Date that would obligate any of the
Sellers to issue, deliver or sell shares of the LAVA Share Capital, or to
grant, extend or enter into any such Stock Right. In addition to the
foregoing, as of the date hereof, LAVA has no bonds, debentures, notes or
other indebtedness issued or outstanding that have voting rights in
respect of LAVA.
11.5 Each Seller represents and warrants that, except as set forth on SCHEDULE
7, all of the Shares are (i) validly issued and fully paid up and (ii)
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 (any of the foregoing, a "Lien"), as at
the Effective Date or coming into effect after the Effective Date, and no
redemption of share capital pursuant to Section 30 of the German GmbH Act
of any kind whatsoever has occured from the time of incorporation of LAVA
to the Effective Date.
11.6 Except as set forth on SCHEDULE 8, LAVA 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,
part-
<PAGE>
Purchase Agreement "LAVA GmbH" page 15
nership, limited liability company, joint venture, association or other
business entity (any of the foregoing, an "ENTITY").
11.7 Except as provided in SCHEDULE 9 hereto, none of the Sellers or their own
family members respectively (including a spouse, or lineal descendent of
any of the foregoing), has any direct or indirect interest or shareholding
in any Person (as hereinafter defined) or material customer, supplier or
competitor of LAVA, or in any Person from whom or to whom LAVA leases any
real or personal property, or in any other Person with whom LAVA is doing
business whether directly or indirectly (including as a debtor or
creditor), whether in existence as of the Effective Date or proposed,
other than the ownership of stock of a company which is listed on a
recognised stock exchange.
11.8 Except as set forth on SCHEDULE 10 hereto, neither (i) the execution and
delivery of this Purchase Agreement by the Sellers, (ii) the consummation
by the Sellers of the transaction contemplated hereby nor (iii) compliance
by the Sellers with any of the provisions hereof will
(a) conflict with or violate the Articles of Incorporation of LAVA;
(b) 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 party any right of termination,
amendment, acceleration or cancellation of, any contract, agreement,
arrangement, lease, license, permit, judgment, decree, franchise or
other instrument or obligation, to which LAVA is a party or by which
LAVA or any of its properties or assets may be bound or affected;
nor, so far as the Sellers are aware after having made all due and careful
enquiry to ascertain, will
(c) result in a violation of any statute, ordinance, rule, regulation,
order, judgment or decree applicable to LAVA or any of the Sellers, or
by which LAVA or any of its properties or assets may be bound or
affected; nor
<PAGE>
Purchase Agreement "LAVA GmbH" page 16
(d) save of the provisions in Section 21 hereof, 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 domestic government or subdivision thereof or any
domestic administrative, governmental, or regulatory authority,
agency, commission, court, tribunal or body, (any of the foregoing, a
"GOVERNMENTAL ENTITY"); or (ii) any other individual or Entity
(collectively, a "PERSON").
11.9 Sellers have heretofore furnished the Purchaser with a true and complete
copy of
(a) the unaudited financial statements of LAVA for the years ended 31
December 1996 and 1997 including a statement of accuracy by LAVA's
accountant;
and
(b) the unaudited financial statements of LAVA for the six month period
ended 30 June 1998
(all of the foregoing collectively herein referred to as the "LAVA
FINANCIAL STATEMENTS").
Except as disclosed therein, the LAVA Financial Statements have been
prepared in accordance with German accounting principles (Grundsatze
ordnungsgemaBer Buchfuhrung und Bilanzierung) consistently followed
throughout the periods indicated, and represent fairly, in all material
respects, the financial position and operating results of LAVA as at the
specified above dates, and for the financial periods indicated.
11.10 Except as provided in SCHEDULE 11 hereto and except as contemplated
hereby, since 31 December 1997
(a) LAVA has not entered into any transaction that was not in the ordinary
course of business (gewohnlicher Geschaftsgang);
(b) except for sales of services and licenses of software in the ordinary
course of business, there has been no sale, assignment, transfer,
<PAGE>
Purchase Agreement "LAVA GmbH" page 17
mortgage, pledge, encumbrance or lease of any material asset or
property of LAVA;
(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 Seller in respect of his share, whether in cash in DM or in
property, and (ii) no purchase or redemption of any share of the share
capital of LAVA;
(d) there has been no declaration, payment, or commitment for the payment
by LAVA of a bonus or other additional salary, compensation, or
benefit to any employee of LAVA that was not in the ordinary course of
business, except for normal year-end bonuses paid in the ordinary
course of business and disclosed in writing to the Purchaser;
(e) there has been no release, compromise, waiver or cancellation of any
debt to or claim by LAVA, or waiver of any right of LAVA in excess of
1.000 DM in the aggregate;
(f) there have been no capital expenditures in excess of 5.000 DM for any
single item, or 25.000 DM in the aggregate;
(g) so far as the Sellers are aware after having made all due and careful
enquiry to ascertain, there has been no change in accounting methods
or practices or revaluation of any asset of LAVA (other than LAVA's
Accounts Receivable as defined in Section 11.29 hereof written down in
the ordinary course of business) in excess of 5.000 DM for any single
asset, or 25.000 in the aggregate;
(h) there has been no material damage, or destruction to, or loss of,
physical property (whether or not covered by insurance) adversely
affecting the LAVA Business or the operations of LAVA;
(i) there has been no loan by LAVA, or guarantee by LAVA of any loan, to
any employee, manager or officer of LAVA;
(j) LAVA has not ceased to transact business with any customer that was
subject to a continuing obligation that, as of the date of such
<PAGE>
Purchase Agreement "LAVA GmbH" page 18
cessation, represented more than 5% of the annual gross revenues of
LAVA;
(k) there has been no termination of employment or resignation of any key
employee or key freelancer, manager or officer of LAVA, and, so far as
the Sellers are aware after having made all due and dareful enquiry to
ascertain, no such termination or resignation is likely or threatened;
(l) there has been no amendment or termination of any material oral or
written contract, agreement or license related to the LAVA Business,
to which LAVA is a party or by which it is bound, except in the
ordinary course of business, or except as expressly contemplated
hereby;
(m) LAVA has not failed to satisfy any of its debts, obligations or
liabilities related to the LAVA Business or the assets of LAVA as the
same become due and owing (except for LAVA Accounts Payable (as
defined in Section 11.30 hereof) payable in accordance with past
practices and in the ordinary course of business);
(n) there has been no agreement or commitment by LAVA to do any of the
foregoing; and
(o) so far as the Sellers are aware after having made all due and careful
enquiry to ascertain, there has been no other event or condition of
any character pertaining to and materially and adversely affecting the
assets, business or financial position of LAVA.
11.11 Except as set forth on SCHEDULE 12 hereto, LAVA has no debt, liability or
obligation of any kind, whether accrued, absolute or otherwise, including,
but not limited to, any liability or obligation on account of taxes, to
the social security system or any governmental charge or penalty, interest
or fine, except
(a) the liabilities incurred in the ordinary course of business after 31
December 1997, that would not, whether individually or in the aggre-
<PAGE>
Purchase Agreement "LAVA GmbH" page 19
gate, have a material adverse impact on the business or financial
position of LAVA; and
(b) the liabilities reflected in the LAVA Financial Statements.
11.12 LAVA was granted two subsidies of 98,000 DM each at 26 August 1997 and 11
December 1997 respectively by the economic authority of Freie und
Hansestadt Hamburg, for the project of Hypermedia Production Environment
("HPE"). The terms and conditions relating to the subsidies were and
continue to be met by LAVA, the subsidies continue to be available to
LAVA and the economic authority of Freie und Hansestadt Hamburg is at
present not entitled to a recollection or refusal of any or both of the
subsidies pursuant to the terms and conditions thereof. The Sellers have
furnished the Purchaser with due and proper information relating to both
of the subsidies.
11.13 Except as set forth on SCHEDULE 13 hereto, LAVA has good and marketable
title to all tangible property and assets used in the LAVA Business, and
good and valid title to its leasehold interests in such property and
assets, in each case, free and clear of any and all Liens.
11.14 The Sellers have furnished to the Purchaser in contemplation of the
entering into of this Purchase Agreement a true, correct and up to date
list of all items of tangible personal property (including computer
hardware) necessary for or used in the operation of the LAVA Business in
the manner in which it has been and is now operated by LAVA (the "LAVA
EQUIPMENT"), except for personal property having a net book value of less
than 1.000 DM. Except as set forth on SCHEDULE 14 hereto, each material
item of LAVA Equipment is in good condition and repair, ordinary wear and
tear excepted.
11.15 The Sellers have furnished to the Purchaser in contemplation of the
entering into of this Purchase Agreement a true, complete and up to date
list of all material proprietary technology, patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, service
marks, service
<PAGE>
Purchase Agreement "LAVA GmbH" page 20
mark rights, and copyrights (and all pending applications for any of
the foregoing) used by LAVA in the conduct of the LAVA Business
together with trade secrets and know how used in the conduct of the
LAVA Business (the "LAVA INTELLECTUAL PROPERTY RIGHTS"). So far as
the Sellers are aware after having made all reasonable enquiry to
ascertain and except as set forth in SCHEDULE 15 hereto, LAVA owns,
or is validly licensed or otherwise has the right to use or exploit,
as currently used or exploited, all of the LAVA Intellectual Property
Rights, free of any obligation to make any payment (whether of a
royalty, license fee, compensation or otherwise). Except as set forth
in SCHEDULE 15 hereto, no claims are pending or, so far as the
Sellers are aware after having made all reasonable enquiry to
ascertain, are threatened that LAVA is infringing or otherwise
adversely affecting the rights of any Person with regard to any LAVA
Intellectual Property Right. So far as the Sellers are aware after
having made all reasonable enquiry to ascertain, no Person is
infringing the rights of LAVA with respect to any LAVA Intellectual
Property Right. Neither the Sellers, nor LAVA or so far as the
Sellers are aware after having made all due and careful enquiry to
ascertain, any employee, agent or independent contractor of LAVA, in
connection with the performance of such Person's services with LAVA,
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.
11.16 The Sellers have furnished to the Purchaser in contemplation of the
entering into of this Purchase Agreement a true, complete and up to
date list of all material computer software used by LAVA in the
conduct of the LAVA Business (the "LAVA SOFTWARE"). LAVA currently
licenses, or otherwise has the legal right to use, all of the LAVA
Software (including any upgrade, alteration or enhancement with
respect thereto), and all of the LAVA Software is being used in
compliance with any applicable license or other agreement.
<PAGE>
Purchase Agreement "LAVA GmbH" page 21
11.17 The LAVA HPE-Software is able, without upgrade or alteration and without
loss of performance or functionality or loss of or adverse effect on any
data to correctly receive, process and provide information regarding or
containing dates prior to, during and after the year 2000.
11.18 Except as set forth on SCHEDULE 16 hereto:
(a) LAVA has a good and valid leasehold interest in all real property
(including all buildings, improvements and fixtures thereon) used in
the operation of the LAVA Business (the "LAVA REAL PROPERTY").
LAVA owns no real property. Except for the items set forth on
SCHEDULE 17, there are no Liens on LAVA's interest in any of the
LAVA Real Property.
(b) There are no parties in possession of any portion of the LAVA Real
Property other than LAVA, whether as sublessees, subtenants at will
or trespassers.
(c) So far as the Sellers are aware after having made all due and careful
enquiry to ascertain, there is no law, ordinance, order, regulation
or requirement now in existence or under active consideration by any
Governmental Entity, that would require, under the provisions of any
of the LAVA Leases (as hereinafter defined), any material expenditure
by LAVA to modify or improve any of the LAVA Real Property to bring
it into compliance therewith.
11.19 SCHEDULE 18 hereto sets forth a list of all leases pursuant to which LAVA
leases, as lessor or lessee, real or personal property used in operating
the LAVA Business or otherwise (the "LAVA LEASES"). Copies of the LAVA
Leases, all of which have previously been provided to Purchaser, are
true, complete and up to date copies thereof. All of the LAVA Leases are
valid, binding and enforceable against LAVA and, so far as the Sellers
are aware after having made all due and careful enquiry to ascertain,
against the other parties thereto, in accordance with their respective
terms, and there is not under any such LAVA Lease any existing default by
LAVA, or, so far as the Sellers are aware after having made all due and
careful en-
<PAGE>
Purchase Agreement "LAVA GmbH" page 22
quiry to ascertain, by any other party thereto, or any condition or event
that, with notice or lapse of time or both, would constitute a default.
LAVA has not received notice that the lessor of any of the LAVA Leases
intends to cancel, suspend or terminate such LAVA Lease or to exercise or
not exercise any option thereunder.
11.20 SCHEDULE 19 hereto sets forth a true and complete list of all contracts,
agreements and commitments (whether written or oral) to which LAVA is,
directly or indirectly, a party (in its own name or as a successor in
title), 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
LAVA Intellectual Property Rights (collectively, the "LAVA CONTRACTS");
excepting only those LAVA Contracts which involve less than 10.000 DM and
are cancellable, 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 LAVA is a party or by which it or any of its properties
or assets is otherwise bound, which are not listed on SCHEDULE 19, is
less than 50.000 DM (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 LAVA Contracts (or a true and complete
narrative description of any oral LAVA Contract) have previously been
provided to the Purchaser. Neither LAVA nor, so far as the Sellers
currently are aware, any other party to any of the LAVA Contracts are in
default under (nor does there exist any condition that, with notice or
lapse of time or both, would cause such a default under) any of the LAVA
Contracts. Neither LAVA nor, so far as the Sellers currently are aware
after having made all reasonable enquiry to ascertain, any other party to
any of the LAVA Contracts have waived any right they may have under any
of the LAVA Contracts, the waiver of which would have a material adverse
effect on the business, assets or financial condition or prospects of
LAVA.
<PAGE>
Purchase Agreement "LAVA GmbH" page 23
All of the LAVA Contracts constitute valid and binding obligations of
LAVA, enforceable in accordance with their respective terms, and, so far
as the Sellers currently are aware after having made all reasonable
enquiry to ascertain, of the other parties thereto.
11.21 SCHEDULE 20 hereto sets forth a list of the name of each manager and
officer of LAVA and the position(s) held by each.
11.22 The Sellers have previously provided the Purchaser with a true and
complete copy of the payroll report of LAVA dated 31 May 1998, showing
all employees of LAVA and their levels of compensation as at such date,
other than bonuses and other extraordinary payments, all of such bonuses
and extraordinary payments are set forth in SCHEDULE 21 hereto. LAVA has
paid all compensation required to be paid to employees of LAVA on or
prior to the Effective Date other than compensation accrued in the
current pay period as specified in SCHEDULE 22 hereto.
11.23 Except as set forth on SCHEDULE 23 hereto, there is no suit, action,
claim, investigation or proceeding, pending or, so far as the Sellers are
aware after having made all due and careful enquiry to ascertain,
threatened against or affecting LAVA or the LAVA Business, nor is there
any judgment, decree, injunction or order of any applicable domestic
Governmental Entity or arbitrator outstanding against LAVA.
11.24 Except as disclosed in SCHEDULE 24 hereto, there are no employee benefit
plans, agreements or arrangements maintained by LAVA, including (i)
pension schemes (Pensionszusagen); (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, "LAVA BENEFIT PLANS"). All LAVA 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 LAVA under any LAVA Benefit Plan.
<PAGE>
Purchase Agreement "LAVA GmbH" page 24
11.25 Except as disclosed in Schedule 25 hereto, there are no labor disputes,
grievances, controversies, strikes or requests for union representation
pending, or, so far as the Sellers are currently aware, threatened,
relating to or affecting the LAVA Business. So far as the Sellers are
aware after having made all due and careful enquiry to ascertain, no
event has occurred that could give rise to any such dispute, controversy,
strike or request for representation.
11.26 LAVA has duly and timely filed all federal, state and local income, wage,
franchise, excise, real and personal property and other tax and social
security returns and reports, including extensions, required to have been
filed by LAVA on or prior to the Effective Date. LAVA has duly and timely
paid all taxes and other governmental or social security charges, and all
interest and penalties with respect thereto, required to be paid by LAVA
on or prior to the Effective Date (whether by way of withholding or
otherwise) to any federal, state, local or other taxing or social
security authority (except to the extent the same are being contested in
good faith, and adequate reserves therefor have been provided in the LAVA
Financial Statements). LAVA was duly and timely eligible to any and all
VAT-input tax (Vorsteuer nach (S) 15 Umsatzsteuergesetz) whether
resulting in a VAT-refund or in a reduction of LAVA's VAT liability filed
in preliminary or annual VAT-returns of LAVA on or prior to the Effective
Date. As of the Effective Date, all deficiencies proposed as a result of
any audit have been paid or settled.
11.27 LAVA holds all material permits, licenses, variances, exemptions, orders
and approvals of all domestic Governmental Entities necessary to own,
lease or operate all of the assets and properties of LAVA, as
appropriate, and to carry on the LAVA Business as now conducted (the
"LAVA PERMITS"). So far as the Sellers are aware after having made all
due and careful enquiry to ascertain, LAVA in all material respects
complies with all applicable laws, ordinances and regulations and the
terms of the LAVA Permits. SCHEDULE 26 hereto sets forth a true, complete
and up to date list of all LAVA Permits, true and complete copies of
which have previously
<PAGE>
Purchase Agreement "LAVA GmbH" page 25
been provided by the Sellers to the Purchaser, and unless otherwise
indicated, none of the LAVA Permits are affected by the entering into of
this Purchase Agreement and the performance of the transactions
contemplated hereunder.
11.28 Except as set forth on SCHEDULE 27 hereto, no broker or finder is
entitled to any broker's or finder's fee or other commission payable by
LAVA in connection with the transactions contemplated hereunder.
11.29 All accounts, notes, contracts and other receivables of LAVA
(collectively, "LAVA ACCOUNTS RECEIVABLE") (alle Vermogensgegenstande des
Umlaufvermogens gemaB (S) 266 Abs. 2 B. II, III 3. und IV. HGB von
LAVA) were acquired by LAVA in the ordinary course of business arising
from bona fide transactions. So far as the Sellers are currently aware,
there are no set-offs, counterclaims or disputes asserted with respect to
any LAVA Accounts Receivable that would result in claims in excess of the
reserve for bad debts set forth on the LAVA Financial Statements and,
subject to such reserve, and so far as the Sellers are aware after having
made internal enquiry to ascertain, all LAVA Accounts Receivable are
collectible in full. The Sellers have previously provided the Purchaser
with a true and complete aged debtor report prepared as at 30 June 1998
which shows the time elapsed since each invoice date for all LAVA
Accounts Receivable as at that date.
11.30 All material accounts, notes, contracts and other amounts payable of LAVA
(collectively, "LAVA ACCOUNTS PAYABLE") (alle Verbindlichkeiten gemaB (S)
266 Abs. 3 C. HGB von LAVA) are currently within their respective terms,
and are neither in default nor otherwise overdue by more than 90 days.
The Sellers have previously provided the Purchaser with a true and
complete aged debtor report prepared as of 30 June 1998 which shows the
time elapsed since the invoice date for all LAVA Accounts Payable as at
that date.
11.31 The insurance policies of LAVA, in full force and effect, (the "LAVA
INSURANCE POLICIES") are listed on SCHEDULE 28 hereto, and true, complete
and
<PAGE>
Purchase Agreement "LAVA GmbH" page 26
up to date copies of all LAVA Insurance Policies have previously been
provided by the Sellers to the Purchaser. LAVA
(a) is not in default regarding the provisions of any LAVA 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.
11.32 LAVA has not filed a petition or request for reorganization or protection
or relief under the bankruptcy laws of the Federal Republic of Germany,
made any general assignment for the benefit of creditors, or consented to
the appointment of a receiver or trustee, whether such receiver or
trustee is appointed in a voluntary or involuntary proceeding.
11.33 As of the Effective Date, the LAVA Debt is not in excess of 1.737.095,00
DM as set out in more detail in Schedule 28a.
11.34 For the period commencing on 1 August 1998 and ending on the Effective
Date LAVA has not directly or indirectly incurred any debt or made any
guarantee outside its ordinary course of business exceeding the amount of
5.000 DM in the aggregate.
11.35 The Schedule 3 sets out a good faith Projected Turnover of LAVA for the
period of twelve (12) months after 1 August 1998 in the amount of
4,915,500 DM.
11.36 No statement of fact by any Seller contained herein and no written
statement of fact furnished by LAVA or any Seller to Purchaser 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.
<PAGE>
Purchase Agreement "LAVA GmbH" page 27
12 REPRESENTATIONS AND WARRANTIES OF PURCHASER WITH RESPECT TO THE
ACQUISITION CONSIDERATION
12.1 The Purchaser represents and warrants, to each of the Sellers
individually, the following representations and warranties contained in
this Section 12.
12.2 The Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation. The
Purchaser has the requisite corporate power and authority to carry on its
business as it is currently 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 Certificate of Incorporation and Bylaws of Purchaser as in
effect on the date hereof are attached to the Purchaser's Closing
Certificate which is attached as SCHEDULE 34 hereto.
12.3 The Purchaser has the necessary corporate power and authority to execute
and deliver this Purchase Agreement and to perform the transactions
contemplated hereby. The execution and delivery hereof and the
performance of the transactions contemplated hereby by Purchaser have
been duly and validly authorized and approved by its board of directors,
and no other corporate or shareholder proceedings on the part of the
Purchaser, or its board of directors or shareholders, are necessary to
authorize or approve this Purchase Agreement or to perform the
transactions contemplated hereby. This Purchase Agreement constitutes a
valid and binding obligation on the Purchaser, enforceable against the
Purchaser 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.
<PAGE>
Purchase Agreement "LAVA" GmbH" page 28
12.4 Except as set forth on SCHEDULE 29 hereto, the execution and delivery of
this Purchase Agreement by the Purchaser, the performance by the Purchaser
of the transactions contemplated hereby, or compliance by the Purchaser
with any of the provisions hereto will not:
(a) conflict with or violate the Certificate of Incorporation or Bylaws of
the Purchaser;
(b) result in a violation of any statute, ordinance, rule, regulation,
order, judgment or decree applicable to the Purchaser, or by which the
Purchaser or its properties or assets may be bound or affected;
(c) result in a violation or breach of, or constitute a default (or an
event that, with notice or lapse of time or both, would become a
default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any note, bond, mortgage,
indenture, or any material contract, agreement, arrangement, lease,
license, permit, judgment, decree, franchise or other instrument or
obligation to which the Purchaser is a party or by which the Purchaser
or its properties may be bound or affected;
(d) result in the creation of any Lien on any of the property or assets of
the Purchaser; 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 notification described in Section 18.1
hereof;
- or (ii) any other Person.
12.5 Except as set forth on SCHEDULE 30 hereto, there is no suit, action,
claim, investigation or proceeding pending or, to the knowledge of
Purchaser, threatened against or affecting Purchaser, nor is there any
judgment, decree, injunction or order of any applicable Governmental
Entity or arbitrator outstanding against Purchaser that, either
individually or in the aggregate, would have a material adverse effect on
the assets, business or financial condition of Purchaser.
<PAGE>
Purchase Agreement "LAVA GmbH" page 29
12.6 As of the date hereof, the authorized capital stock of Purchaser consists
of (1) (A) 75,000,000 shares of Class A Common Stock, $.01 par value, of
which no shares are validly issued and outstanding, and (B) 100,000,000
shares of Class B Common Stock, $.01 par value, of which 12,537,764 shares
are validly issued and outstanding (without taking into account any shares
of IXL Stock to be issued pursuant hereto or to the potential acquisition
of Tekna, Inc.), fully paid and nonassessable; (ii) 750,000 shares of
blank check preferred stock, (A) 250,000 of which have been designated as
Class A Convertible Preferred Stock, of which 176,291 shares are validly
issued and outstanding, fully paid and nonassessable, (B) 200,000 of which
have been designated as Class B Convertible Preferred Stock, of which
98,767 shares are validly issued and outstanding, fully paid and
nonassessable, (C) 15,000 of which have been designated as Class C
Convertible Preferred Stock, of which 9,232 shares are validly issued and
outstanding, fully paid and nonassessable, and (D) 50,000 of which have
been designated as Class D Nonvoting Preferred Stock, of which 35,700
shares are validly issued and outstanding, fully paid and nonassessable.
Attached to Purchaser's Closing Certificate, attached hereto as SCHEDULE
34, is a description of the Class D Nonvoting Preferred Stock (the "CLASS
D CERTIFICATE OF DESIGNATION"). As of the date hereof, each share of Class
D Nonvoting Preferred Stock is entitled, upon the earlier of February 14,
2002 or an Initial Public Offering (as defined in the Class D Certificate
of Designation), to receive dividends accruing daily at the rate of 12 %
per annum. Each such share is further entitled to receive, upon
liquidation (with certain preferences), or upon redemption, $ 1,000 plus
any accrued but unpaid dividends. Upon redemption, each such share is also
entitled to receive a number of shares of Common Stock, within a range
based on a formula set forth in the Class D Certificate of Designation. As
of the date hereof, each share of Class A, B or C Preferred Stock is
convertible into 100 shares of Class A Common Stock; and each share of
Class A Common Stock is convertible into one share of Class B Common Stock
at the option of the holder.
12.7 When delivered to the Sellers in accordance with the terms hereof the IXL
Stock will be (i) duly authorized, fully paid and nonassessable, and (ii)
free
<PAGE>
Purchase Agreement "LAVA GmbH" page 30
and clear of all Liens other than restrictions imposed by the
Stockholders' Agreement (as defined in Section 13.1) and by federal and
state securities laws.
12.8 Purchaser has heretofore furnished Sellers with a true and complete copy
of
(a) the audited financial statements of Purchaser for the years ended
December 31, 1995, 1996 and 1997; and
(b) the unaudited financial statements for Purchaser for the six month
period ended June 30, 1998 (all of the foregoing, collectively,
"PURCHASER FINANCIAL STATEMENTS").
The Purchaser Financial Statements present fairly in all material respects
the financial position, results of operations, shareholders' equity and
cash flow of Purchaser 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).
12.9 Except as set forth on SCHEDULE 31 hereto, Purchaser has no debt,
liability or obligation of any kind, whether accrued, absolute or
otherwise, including any liability or obligation on account of taxes or
any governmental 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 Purchaser;
(b) liabilities reflected on the Purchaser Financial Statements; and
(c) liabilities incurred as a result of the transaction contemplated
hereby.
<PAGE>
Purchase Agreement "LAVA GmbH" page 31
12.10 Purchaser holds all material permits, licenses, variances, exemptions,
orders and approvals of all Governmental Entities necessary to own, lease
or operate all of the assets and properties of Purchaser, as appropriate,
and to carry on Purchaser's business as now conducted (the "PURCHASER
PERMITS"). To the knowledge of Purchaser, Purchaser is in material
compliance with all applicable laws, ordinances and regulations and the
terms of the Purchaser Permits.
12.11 The board of directors of Purchaser has, by unanimous written consent or
other action, adopted and approved this Purchase Agreement and the
transaction contemplated hereby.
12.12 Purchaser 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.
12.13 Except as provided in SCHEDULE 32 hereto, since 31 December 1997 to date,
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 Purchaser;
(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
Purchaser;
<PAGE>
Purchase Agreement "LAVA GmbH" page 32
(c) any entry into any commitment or transaction material to Purchaser
(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
Purchaser's capital stock;
(e) any material change in Purchaser's accounting principles, practices
or methods;
(f) any split, combination or reclassification of any of Purchaser'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 Purchaser's capital stock; or
(g) any agreement (whether or not in writing), arrangement or
understanding to do any of the foregoing.
12.14 Purchaser 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 Purchaser
on or prior to the Effective Date. Purchaser has duly and timely paid all
taxes and other governmental charges, and all interest and penalties with
respect thereto, required to be paid by Purchaser (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 Purchaser Financial Statement). As of the Effective Date, all
deficiencies proposed as a result of any audits have been paid or
settled.
12.15 No statement of fact by Purchaser contained herein and no written
statement of fact furnished or to be furnished by Purchaser to Sellers in
connection herewith contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary in
order to make the statements herein or therein contained not misleading.
<PAGE>
Purchase Agreement "LAVA GmbH" page 33
13 REPRESENTATIONS AND WARRANTIES OF SELLERS WITH RESPECT TO THE ACQUISITION
CONSIDERATION
13.1 Each Seller represents that he
(a) is a German national and not a "U.S. person" as such term is defined
in the Securities Act;
(b) has been offered and is acquiring the IXL Stock outside the United
States and solely for his own account and benefit for investment and
not with a view to, or for sale in connection with, any distribution
hereof and
(c) will not, directly or indirectly, offer, transfer, sell, pledge,
hypothecate or otherwise dispose of any IXL Stock (or solicit any
offers to buy, purchase or otherwise acquire or take a pledge of any
such shares) in the United States or to or for the benefit or account
of any U.S. person, or otherwise, or conduct any hedging transaction
involving IXL Stock, except in compliance with the Securities Act and
Regulation S or the other rules and regulations thereunder, other
applicable laws, rules and regulations, and the Second Amended and
Restated Stockholders' Agreement of Purchaser, dated December 17, 1997
(the "STOCKHOLDERS' AGREEMENT").
It is understood and agreed by the parties hereto that IXL is required
to refuse to register any transfer of IXL Stock not made in accordance
with the provisions of said Regulation 5, or pursuant to registration
under the Securities Act or to an exemption therefrom.
13.2 Each Seller acknowledges that
(a) the IXL Stock received by him hereunder has not been registered under
the Securities Act;
(b) the IXL 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
<PAGE>
Purchase Agreement "LAVA GmbH" page 34
Act or Regulation S or another exemption from such registration is
available;
(c) there may not be any public market for the IXL 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 the Purchaser,
and such Rule is not anticipated to be available in the foreseeable
future;
(e) when and if the IXL 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 IXL Stock is subject to the terms and conditions of the
Stockholders' Agreement;
(h) restrictive legends shall be placed on the certificates representing
IXL Stock; and
(i) a notation shall be made in the appropriate records of the Purchaser
indicating that IXL Stock is subject to restrictions on transfer and,
if the Purchaser 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 the IXL Stock.
13.3 Each Seller represents and warrants that
(a) his financial situation is such that he can afford to bear the
economic risk of holding the IXL Stock acquired by him hereunder for
an indefinite period;
(b) he can afford to suffer the complete loss of such IXL Stock;
<PAGE>
Purchase Agreement "LAVA GmbH" page 35
(c) he has been granted the opportunity to ask questions of, and receive
answers from, representatives of the Purchaser concerning the terms
and conditions of the IXL Stock and to obtain any additional
information that he deems necessary;
(d) his knowledge and experience in financial business matters is such
that he is capable of evaluating the merits and risk of ownership of
the IXL Stock;
(e) he has carefully reviewed the terms of the Stockholders' Agreement and
has evaluated the restrictions and obligations contained therein; and
(f) he (i) has reviewed the Private Placement Memorandum of the Purchaser
dated July 16, 1998, as amended (the "MEMORANDUM"), (ii) has carefully
examined the Memorandum and has had an opportunity to ask questions
of, and receive answers from, representatives of the Purchaser, and to
obtain additional information concerning the Purchaser, and (iii) does
not require additional information regarding the Purchaser in
connection with the transactions contemplated hereby.
ARTICLE V
---------
INDEMNIFICATION
14 INDEMNIFICATION BY THE SELLERS, PAYMENT
14.1 The Sellers, jointly and severally, shall indemnify and hold the Purchaser
and/or, at the discretion of Purchaser, LAVA harmless from and against,
and agree to defend promptly the Purchaser and/or, at the discretion of
Purchaser, LAVA from and reimburse the Purchaser and/or, at the discretion
of Purchaser, LAVA, for, any and all losses, damages, costs, expenses,
<PAGE>
Purchase Agreement "LAVA GmbH" page 36
liabilities, obligations and claims of any kind (including reasonable
attorneys' fees according to domestic standards and other legal costs and
expenses) that the Purchaser and/or LAVA may at any time suffer or incur,
or become subject to (collectively, the "PURCHASER LOSS") [Schadensersatz
gema(3 (S)(S) 249 ff BGB], as a result of or in connection with:
(a) any breach or any inaccuracy of any of the representations and
warranties [sollte em garantierter oder gewahrleisteter Umstand
nicht, nicht im angegebenen Umfang oder zu dem vorausgesetzten
Zeitpunkt vorilegen] made by the Sellers in or pursuant hereto, or in
any instrument, certificate or affidavit delivered by any of the same
in accordance with the provisions hereof;
(b) any failure by the Sellers 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 the Sellers pursuant hereto; and
(c) any suit, action or other proceeding arising out of, or in any way
related to, any of the matters referred to in this Section 14.1.
Any Purchaser Loss shall be indemnified with respect to the amount due in
cash in DM, except such Purchaser Loss incurred as a result of or in
connection with any of the circumstances described in par. a), b) and c)
above arising with respect to the Shares, in which case the Sellers shall
pay the indemnification due in cash in U.S. Dollars.
14.2 Notwithstanding the above, none of the Sellers shall incur a liability
under Section 14.1 (a) above (i) unless the aggregate of all but such
Purchaser Losses deriving from a representation given in Section 11.12 and
11.26, respectively, for which the Sellers would be liable but for this
Section exceeds, on a cumulative basis, an amount equal to 140,000 DM and
then only to the extent of such excess, (ii) for amounts in excess of an
amount equal to the Base Consideration I and II in the aggregate, and
(iii) unless the Purchaser has asserted a claim with respect to the
matters set forth in Sections 14.1 (a), or 14.1 (c) (to the extent
applicable to Sections 14.1 (a)),
<PAGE>
Purchase Agreement "LAVA GmbH" page 37
within two years of the Effective Date, except with respect to the matters
arising under Section 11.26 hereof, in which event the Purchaser must have
asserted a claim within six (6) month after such assessments had come into
force both formally and substantively. Notwithstanding any implication to
the contrary contained herein, the parties acknowledge and agree that a
decrease in the value of IXL Stock would not, by itself, constitute a
Purchaser Loss, unless and to the extent a decrease in the value of IXL
Stock has been demonstrated to be as a result of any event described in
Section 14.1 above.
14.3 Those Sellers called to indemnify the Purchaser may, at the discretion of
each Seller so called, pay all or part of any amount due under Section 14
hereof by delivery to the Purchaser of shares of IXL Stock having a value
equal to the amount due (to the extent that the shares to be delivered
have been received by the Seller originally as Base Consideration I and II
according to Sections 6 and 7 hereof or as Additional Consideration
according to Section 8 hereof following release to the Seller from
Escrow). For the purpose of this provision, the value of IXL Stock shall
be deemed to be $10 per share.
15 INDEMNIFICATION BY THE PURCHASER, PAYMENT
15.1 The Purchaser shall indemnify and hold each of the Sellers harmless from
and against, and agree promptly to defend each of the Sellers from and
reimburse each of the Sellers for, any and all losses, damages, costs,
expenses, liabilities, obligations and claims of any kind (including
reasonable attorney fees according to domestic standards and other legal
costs and expenses) (collectively, the "SELLERS LOSS") that any of the
Sellers may at any time suffer or incur, or become subject to, as a result
of or in connection with:
(a) any breach or any inaccuracy of any of the representations and
warranties made by the Purchaser in or pursuant hereto, or in any in-
<PAGE>
Purchase Agreement "LAVA GmbH" page 38
strument, certificate or affidavit delivered by the Purchaser at the
Effective Date in accordance with the provisions hereof;
(b) any failure by the Purchaser 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 the Purchaser pursuant hereto; and
(c) any suit, action or other proceeding arising out of, or in any way
related to, any of the matters referred to in this Section 15.1.
Any Sellers Loss shall be indemnified with respect to the amount due in
cash in U.S. Dollars.
15.2 Notwithstanding any other provision hereof to the contrary, the Purchaser
shall not incur a liability under Section 15.1 (a) above (i) unless the
aggregate of all Sellers Losses for which Purchaser would be liable but
for this sentence exceeds, on a cumulative basis, an amount equal to
140,000 DM, and then only to the extent of such excess, (ii) for amounts
in excess of an amount equal to the Base Consideration 1 and II in the
aggregate, and (iii) unless the Sellers have asserted a claim with respect
to the matters set forth in Section 15.1 (a), or 15.1 (c) (to the extent
applicable to Section 15.1(a)), within two years of the Effective Date.
Notwithstanding any implication to the contrary contained herein, the
parties acknowledge and agree that a decrease in the value of IXL Stock
would not, by itself, constitute a Sellers Loss, unless and to the extent
a decrease in the value of IXL Stock has been demonstrated to be as a
result of any event described in Section 15.1 above.
15.3 The Purchaser called to indemnify the Sellers may, at its sole discretion,
pay all or part of any amount due under Section 15 hereof by delivery of
shares of IXL Stock having a value equal to the amount due (to the extent
that the Purchaser owns sufficient shares of IXL Stock). For the purpose
of this provision, the value of IXL Stock shall be deemed to be $ 10 per
share.
<PAGE>
Purchase Agreement "LAVA GmbH" page 39
16 NOTIFICATION OF CLAIMS; ELECTION TO DEFEND
16.1 A party entitled to be indemnified pursuant to Section 14 or 15 hereof as
the case may be (the "INDEMNIFIED PARTY"), shall notify the party liable
for such indemnification (the "INDEMNIFYING PARTY") in writing of any
claim or demand (a "CLAIM") that the Indemnified Party has determined, has
given or could give rise to a right of indemnification hereunder. Subject
to the Indemnifying Party's right to defend in good faith third party
claims as hereinafter provided, the Indemnifying Party shall satisfy its
obligations under this Article V within 30 days after the receipt of
written notice thereof from the Indemnified Party. Any amounts paid
thereafter shall include interest thereon for the period commencing at the
end of such 30-day period and ending on the actual date of payment, at a
rate of 10% per annum.
16.2 If the Indemnified Party shall notify the Indemnifying Party of any Claim
pursuant to Section 16.1 hereof and if such Claim relates to a Claim
asserted by a third party against the Indemnified Party that the
Indemnifying Party acknowledges is a Claim for which it must indemnify or
hold harmless the Indemnified Party under Section 14 or 15 hereof as the
case may be, the Indemnifying Party shall have the right, at its sole cost
and expense, to employ counsel of its own choosing to defend any such
Claim asserted against the Indemnified Party. Notwithstanding anything to
the contrary in the preceding sentence, if the Indemnified Party (i)
reasonably believes that its interests with respect to a Claim (or any
material portion thereof) are in conflict with the interests of the
Indemnifying Party with respect to such Claim (or portion thereof), and
(ii) promptly notifies the Indemnifying Party, in writing, of the nature
of such conflict, then the Indemnified Party shall be entitled to choose,
at the sole cost and expense of the Indemnifying Party, independent
counsel to defend such Claim (or the conflicting portion thereof). The
Indemnified Party shall have the right to participate in the defense of
any Claim at its own expense (except to the extent provided in the
preceding sentence), but the Indemnifying Party shall retain control over
such litigation (except as provided in the preceding sentence). The
Indemnifying Party shall notify the Indemnified Party in writing, as
promptly as possible
<PAGE>
Purchase Agreement "LAVA GmbH" page 40
(but in any case before the due date for the answer or response to a
Claim) after receipt of the notice of Claim given by the Indemnified Party
to the Indemnifying Party under Section 16.1 hereof of its election to
defend in good faith any such third party Claim. For so long as the
Indemnifying Party is defending in good faith any such Claim asserted by a
third party against the Indemnified Party, the Indemnified Party shall not
settle or compromise such Claim without the prior written consent of the
Indemnifying Party. The Indemnified Party shall cooperate with the
Indemnifying Party in connection with any such defense and shall make
available to the Indemnifying Party or its agents all records and other
materials in the Indemnified Parties 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 16.2, 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.
ARTICLE VI
----------
ADDITIONAL AGREEMENTS
17 RIGHT OF FIRST REFUSAL
17.1 It prior to the end of the 15-month escrow period as described in Section
4 hereof, the Purchaser receives a written offer from a third party
<PAGE>
Purchase Agreement "LAVA GmbH" page 41
to purchase the Shares, then the Purchaser will furnish the Sellers notice
thereof (including, subject to any non-disclosure obligations that the
Purchaser may have to such third party, the name of such third party, the
prospective purchase price and all other material terms and conditions
contained in such third party offer), providing them a right of first
negotiation. The Purchaser may accept such third party offer unless (i)
within 15 business days of such notice, it has received a written offer
from the Sellers which matches each term of such third party offer; and
(ii) in accordance with the terms of that matching offer, the transaction
with the Sellers actually closes within 30 days thereafter. This right of
Sellers shall not apply to any transfer of the Shares to an affiliate or
subsidiary of the Purchaser.
18 NOTIFICATION OF TRANSFER OF SHARES
18.1 The notary public is hereby instructed by the parties to notify the sale
and purchase of the Shares to LAVA pursuant to Section 16 of the German
GmbH Act.
18.2 Prior to the above notification, the Sellers shall not, directly or
indirectly, adopt any shareholder resolutions in LAVA or make any such
resolutions, actions or the like, in particular but not limited to shall
they not
(a) resolve on the payment of, or pay, any dividend on, or make any other
distribution in respect of, any of the Shares, or split, combine,
redeem or reclassify any of the Shares, or issue or authorize the
issuance of any other securities in respect of in lieu of or in
substitution for, the Shares;
(b) issue, deliver, sell, pledge or otherwise encumber any of the Shares,
any other voting security issued by LAVA or any security convertible
into, or any right, warrant or option to acquire any such share or
voting security;
<PAGE>
Purchase Agreement "LAVA GmbH" page 42
(c) amend the Articles of Incorporation of LAVA or any other comparable
organizational document;
(d) subject to a Lien or sell, lease or otherwise dispose of any of its
properties or assets;
(e) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another Person or issue or sell any debt security of
LAVA or guarantee any debt security 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
(f) authorize any ot or commit or agree to take any ot the foregoing
actions.
19 SUPPLEMENTARY CONTRACTS, ANCILLARY DOCUMENTATION
19.1 Following the consummation of this Purchase Agreement each Seller hereby
agrees to enter into an employment contract with LAVA according to the
terms set out in the master employment contract attached in SCHEDULE 33
hereto.
19.2 At the date of signing of this Purchase Agreement the parties shall sign
and deliver the following documents which are to be attached hereto as
SCHEDULE 34, and only subject to that delivery the obligation of the
Purchaser under the terms of this Purchase Agreement shall be effective:
a) Purchaser's Closing Certificate;
b) Agreement to be Bound by Registration Rights Agreement;
c) Agreement to Bound to Stockholders' Agreement;
d) Escrow Agreement (attached as SCHEDULE 4 hereto);
<PAGE>
Purchase Agreement "LAVA GmbH" page 43
20 PERSONAL GUARANTEES OF LAVA OVERDRAFT FACILITIES
20.1 The Purchaser will, promptly after the Effective Date, use its best
efforts to attempt to eliminate any personal guaranty made by the Sellers
for the obligations of LAVA under the terms of overdraft facilities
furnished by the Vereins- und Westbank AG of Hamburg and, subject to the
Purchaser's other obligations (including under its senior debt), to
substitute itself as guarantor of such obligations or, in the Purchaser's
discretion, to terminate or limit such overdraft facilities. The Purchaser
will indemnify and hold the Sellers harmless against liability resulting
solely from the Purchaser's failure to pay such obligations when due and
payable under the terms thereof.
21 CONSENT
21.1 The Board of Directors of Purchaser has approved this Purchase Agreement,
upon the terms and subject to the conditions set forth herein.
21.2 The Sellers, hereby acting in their capacity of being the sole
shareholders in LAVA, adopt a shareholder resolution and unanimously
declare their respective consent to this Purchase Agreement, as required
by law and by Section 5 of LAVA's Articles of Incorporation.
21.3 The Sellers hereby waive all and any preemption rights or other rights
which they have in respect of the Shares and in accordance with Section 16
of LAVA's Articles of Incorporation.
22 NOTICES
22.1 All notices or other communications under this Purchase 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), by courier service, or by registered or certified mail, postage
pre-
<PAGE>
Purchase Agreement "LAVA GmbH" page 44
paid, return receipt requested, at the address specified on the first and
second page of this notarial deed or to such other address as any party
may have furnished to the other parties in writing in accordance with this
Section.
23 GOVERN1NG LAW, LANGUAGE, PLACE OF JURISD1CTION
23.1 This Purchase Agreement and all documents supplemental thereto are
governed in all respects by and are to be construed in accordance with the
laws of the Federal Republic of Germany, except for the provisions in this
Purchase Agreement covering the Acquisition Consideration (other than
Purchaser's warranties and representations in this regard), including, but
not limited to, the Escrow Agreement and the Agreements to be Bound to
Stockholder's and Registration Rights Agreements, which shall be governed
in all respects by and are to be construed in accordance with the laws of
the State of Georgia, USA (without giving effect to the provisions thereof
relating to conflicts of law).
23.2 The English language text of this Purchase Agreement is definitive,
provided, however, that German wording or a legal term which is
incorporated in parentheticals in the terms of this Purchase Agreement
shall be for the avoidance of doubt regarded as a definition of any
English language or term to which the German wording or legal term is
adhered to and such German wording or legal term shall prevail the English
language or term in order to determine the applicable German legal
principles and rules.
23.3 The place of delivery of all obligations under this Purchase Agreement
shall be Hamburg with regard to the Sellers, and Atlanta, Georgia, USA
with regard to the Purchaser. The place of jurisdiction shall be at the
discretion of the appealing party; however, the Sellers may only be sued
at the court in Hamburg or the place of residence of either Seller,
respectively.
<PAGE>
Purchase Agreement "LAVA GmbH" page 45
24 ANNOUNCEMENTS
24.1 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 or any announcement to a third party
shall be made only upon or after the consummation of this Purchase
Agreement. Any such disclosure or announcement shall be coordinated by
Purchaser, and none of the Sellers or LAVA shall make any such disclosure
or announcement without the prior written consent of Purchaser.
25 FEES AND EXPENSES
25.1 All costs and expenses incurred in connection with this Purchase Agreement
and the transaction contemplated hereby shall be paid by Purchaser, except
as otherwise expressly set forth in this Purchase Agreement or in the
Schedules attached hereto; provided, however, that the Sellers shall pay
all fees and expenses (including agents, counsel and other advisors) of
themselves or LAVA.
26 HEADINGS
26.1 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.
27 ENTIRE AGREEMENT
27.1 This Purchase 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
hereto, and
<PAGE>
Purchase Agreement "LAVA GmbH" page 46
supersede all other prior agreements and understandings, both written and
oral, among the parties, or any of them, with respect to the subject
matter hereof, except for the non-disclosure letter agreement between
Purchaser and Sellers dated as of June 2 and June 10, 1998, as amended by
agreement dated June 26, 1998. There are no other representations or
warranties, whether written or oral, between the parties in connection
with the subject matter hereof, except as expressly set forth herein.
28. SEVERABILITY
28.1. 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 invalid, illegal or
incapable term or other provision is substituted by such valid, legal or
capable term or other provision 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.
28.2. The provisions in Section 28.1. shall apply accordingly should this
Purchase Agreement contain any lacuna. In order to fill the lacuna any
such legal or capable term or other provision shall apply that comes
nearest to what the parties have agreed upon or would have agreed upon had
they considered this fact.
<PAGE>
Purchase Agreement "LAVA GmbH" page 47
The document No. 1985/1998P of the acting Notary Public, the original of which
was available upon recording of this deed is referred to. Its contents, which
are known to the deponents, are made a part of th present deed. The deponents
waived their right to have the reference-document read out or to have it made an
attachment to the present deed.
THIS NOTARIAL DEED was read out in the presence of the notary public to the
persons present, the contents of which was approved by them, and then signed by
them and the notary public, each in his own hand.
gez. J. Bley gez. Ottenbreit
- ----------------------- ---------------------------
Jens Bley Manfred Ottenbreit
gez. Stephan Balzer gez. Matthias Oelmann
- ----------------------- ---------------------------
Stephan Balzer Matthias Oelmann
gez. Detlef Ruskamp
- -----------------------
Detlef Ruskamp
on behalf of
IXL Holdings, Inc.
(L.S. not.) Dr. Priester
---------------------------
notary public
<PAGE>
GEORGIA SUPERIOR COURT
CLERKS' COOPERATIVE AUTHORITY
Notary Division
1875 Century Boulevard, Suite 100
Atlanta, Georgia 30345
APOSTILLE
(Convention de La Haye de 5 Octobre 1961)
1. Country: United States of America
This public document
2. has been signed by ALISON CERUL
3. acting in the capacity of NOTARY PUBLIC, STATE OF GEORGIA
4. bears the seal/stamp of ALISON CERUL
NOTARY PUBLIC
DEKALB COUNTY, GEORGIA
CERTIFIED
5. at ATLANTA, GEORGIA
6. the 30TH DAY OF JUNE, 1998
7. by GEORGIA SUPERIOR COURT CLERKS' COOPERATIVE AUTHORITY
8. No. 1-002310
9. Seal/Stamp: 10. SIGNATURE:
[SEAL/STAMP APPEARS HERE]
/s/ David R. Williams
DAVID R. WILLIAMS
EXECUTIVE DIRECTOR
NOTARY PUBLIC
(404) 327-6023
<PAGE>
VOLLMACHT POWER OF ATTORNEY
Herrn Rechtsanwalt Detlef Ruskamp Detlef Ruskamp Esq. and Stephan Schmidt
und Herrn Rechtsanwalt Stephan Esq. (hereinafter THE PROXIES) with
Schmidt (im folgenden: DIE their resprective business addresses at
BEVOLLMACHTIGTEN), beide 60325 Frankfurt am Main, Schumannstr. 34
geschaftsansassig in 60325 b (from Juli 1st, 1998: 60486 Frankfurt
Frankfurt am Main, Schumannstr. am Main, Hamburger Allee 1) are hereby
34 b (ab 1. Juli 1998: 60486 each granted power of attorney by IXL
Frankfurt am Main, Hamburger Allee Holdings, Inc., Two Park Place, 1822
1) wird hiermit jedem einzeln von Emery St., 2/nd/ Floor, Atlanta, GA
der IXL Holdings, Inc., Two Park 30318 USA (hereinafter IXL) to represent
Place, 1822 Emery St., 2/nd/ Floor, IXL in connection with the conclusion
Atlanta, GA 30318 USA (im folgenden: and implementation of all necessary and
IXL) Vollmacht erteilt, IXL beim appropriate agreements to be carried out
AbschluB und bei der Durchfuhrung with regard to the intention of IXL to
aller erforderlichen und acquire either by itself or by a German
zweckdienlichen Vereinbarungen, die subsidiary of IXL, the entire shares in
im Hinblick auf den beabsichtigten LAVA Gesellschaft fur Digitale Medien
Erwerb aller Geschaftsanteile durch mbH at Hamburg, registered in the
sie selbst oder durch eine deutsche Commercial Register at Hamburg
Tochtergesellschaft von IXL an der (hereinafter LAVA).
LAVA Gesellschaft fur Digitale
Medien mbH in Hamburg, eingetragen
im Handelsregister Hamburg (im This Power of Attorney refers in
folgenden: LAVA), getroffen particular but not exclusively to the
werden, zu vertreten. following legal acts and actions, which
are directly or indirectly connected
Die Vollmacht bezieht sich with the intended investment described
insbesondere, aber nicht above:
ausschlieBlich, auf folgende
unmittelbar oder mittelbar mit dem
genannten Vorhaben
<PAGE>
LAVA/IXL Power of Attorney for German incorporation (MS10405.DOC;1) vom 22. Juni
1998 Seite 2
verbundenen Rechtsgeschafte
und Handlungen: 1. to set up a German subsidiary of
IXL by way of either incorporating
1. Errichtung einer deutschen a Gesellschaft mit beschrankter
Tochtergesellschaft von IXL im Haftung (GmbH) or acquiring the
Wege der Grundung einer entire shares in an off-the-shelf
Gesellschaft mit beschrThkter GmbH and to carry out all legal
Haftung oder durch Erwerb aller acts, perform any action and make
Geschaftsanteile an einer any declaration related hereto,
vorgegrundeten Mantel-GmbH in particular but not exclusively
einschlieBlich aller hiermit to appoint and dismiss the
verbundenen Rechtsgeschafte, managing board, "Prokuristen" and
Handlungen und Erklarungen, holders of a commercial power of
insbesondere die Bestellung und attorney of the company, to
Abberufung von Geschaftsfuhrern, conclude or alter the Articles of
Prokuristen und Incorporation and to exercise all
Handlungsbevollmachtigten der shareholders' rights in
Gesellschaft, den AbschluB sowie shareholders' meetings of such
die Anderungen des company;
Gesellschaftsvertrages und die
Ausubung samtlicher
Gesellschafterrechte in 2. to conclude any contract
Gesellschafterversammlung en appropriate on the occasion of
dieser Gesellschaft; the purchase by IXL or its
subsidiary of the shares in LAVA,
2. AbschluB von Vertragen anlaBlich in particular but not exclusively
der Beteiligung von IXL oder ihrer to conclude a notarial deed on the
Tochtergesellschaft an LAVA, purchase of the entire
insbesondere, jedoch nicht shareholding in LAVA;
ausschlieBlich den AbschluB eines
3. to conclude all contracts
<PAGE>
LAVA/IXL Power of Attorney for German incorporation (MS10405.DOC;1) vom 22. Juni
1998 Seite 3
notariellen Kaufvertrages Ober and legal transactions to
samtliche Geschaftsanteile an consummate the above-mentioned
LAVA; acquisition of LAVA;
3. AbschluB von Vertragen und 4. to exercise all shareholders'
Rechtsgeschaften zur rights in shareholders'
Ausfuhrung des genannten Erwerbs meetings of LAVA, in particular
der Geschaftsanteile an LAVA; but not exclusively
4. Ausubung samtlicher
Gesellschafterrechte in - to adopt any shareholder
Gesellschafterversammlung resolution and make any
en von LAVA, insbesondere aber declaration to amend or
nicht abschlieBend im Hinblick alter the Articles of
auf Incorporation of LAVA;
- die Fassung samtlicher
Beschlusse und die Abgabe - to appoint and dismiss the
samtlicher Erklarungen zur managing board, "Prokuristen"
Anderung oder ErgThzung der and holders of a commercial
Satzung von LAVA; power of attorney of LAVA;
- to adopt any shareholder
- die Bestellung und resolution and make any
Abberufung von declaration in connection
Geschaftsfuhrern, with a merger or change of
Prokuristen und the legal form of LAVA.
Handlungsbevollmachtigt en
von LAVA;
- die Fassung samtlicher This Power of Attorney includes
Beschlusse und die Abgabe the power to conclude all
samtlicher Erklarungen agreements and to adopt all
anlaBlich einer shareholder resolutions which
Verschmelzung oder eines
<PAGE>
LAVA/IXL Power of Attorney for German incorporation (MS10405.DOC;1) vom 22. Juni
1998 Seite 4
Rechtsformwechsels von LAVA. are necessary or in the proxies'
opinion appropriate in this context
and to give consent to all
Die Bevollmachtigten sind alterations of these agreements or
ermachtigt, alle in diesem shareholder resolutions, as well as
Zusammenhang erforderlichen the power to make and receive any
oder nach ihrer Auffassung declaration and to take any action
sachdienlichen Vertrage which are necessary or in the proxies'
abzuschlieBen oder Beschlusse opinion appropriate in this context
zu fassen und samtlichen for the transaction contemplated
Anderungen solcher Vertrage hereby.
oder Beschlusse zuzustimmen
sowie alle Erklarungen The Power of Attorney shall be broadly
abzugeben und zu empfangen construed in order to serve its
und Handlungen vorzunehmen, purpose.
die in diesem Zusammenhang
erforderlich oder dem This Power of Attorney shall be subject
Bevollmachtigten sachdienlich subject to and construed in accordance
erscheinen, um die hier with the laws of the Federal Republic
beschriebenen Geschafte of Germany. Only the German version of
durchzufOhren. the Power of Attorney is authoritative.
Die Vollmacht soll umfassend The proxies are each authorised to
ausgelegt werden, um den enter into legal transactions in the
Zweck ihrer Erteilung zu name of IXL with themselves in their
verwirklichen. own name or as the representatives
of a third party. They are authorised
Die Auslegung und der Bestand to delegate the powers under this
dieser Vollmacht richten sich Power of Attorney to the same extent
nach dem Recht der and to authorise the sub-proxies to
Bundesrepublik Deutschland. enter into legal transactions in the
MaBgeblich ist die deutsche name of IXL with themselves in their
Fassung dieser Vollmacht. own name or as the
Die Bevollmachtigten sind jeder
einzeln ermachtigt, im Namen
von IXL mit sich im eigenen
<PAGE>
LAVMXL Power of Attorney for German incorporation (MS10405.DOC;1) vom 26. Juni
1998 Seite 5
Namen oder als Vertreter eines representatives of a third party.
Dritten Rechtsgeschafte
abzuschlieBen. Sie sind
bevollmachtigt, Untervollmacht
zu erteilen und
Unterbevollmachtigten zu
gestatten, im Namen des IXL mit
sich im eigenen Namen oder als
Vertreter eines Dritten
Rechtsgeschafte abzuschlieBen.
Atlanta, GA, USA, June 26, 1998
IXL Holdings, Inc.
/s/ U. Bertram Ellis, Jr.
-----------------------------------
By: U. Bertram Ellis, Jr., Chairman
Signed, sealed and delivered
this 30/th/ day of June, 1998
in the presence of:
/s/ Robert A Portnoy
-------------------------
Unofficial Witness
/s/ Alison Cerul
-------------------------
Notary Public
My Commission expires:
[STAMP APPEARS HERE]
[Notary Seal]
<PAGE>
This - s i x t h - official counterpart, which is a complete copy of the
original, is destined for
the Buyer
Hamburg, this 09th day of September
1998 (nineteennintyeight)
[SEAL]
<PAGE>
Exhibit 3.1
FORM OF
RESTATED CERTIFICATE OF INCORPORATION
OF
iXL ENTERPRISES, INC.
iXL ENTERPRISES, INC., a corporation organized and existing under the laws
of the State of Delaware, hereby certifies as follows:
1. The name of the corporation is iXL Enterprises, Inc. (the
"Corporation").
2. The Corporation was originally incorporated in Delaware under the name
of IXL Holdings, Inc. pursuant to a Certificate of Incorporation filed with the
Delaware Secretary of State on March 21, 1996.
3. This Restated Certificate of Incorporation was duly adopted in
accordance with the requirements of Sections 242 and 245 (and Section 228, by a
written consent given in accordance with said section) of the General
Corporation Law of the State of Delaware and restates and integrates and further
amends the provisions of the existing Certificate of Incorporation of the
Corporation.
4. The Corporation's Certificate of Incorporation is hereby amended and
restated so as to read in its entirety in the form attached hereto as Exhibit A
and incorporated herein by this reference (Exhibit A and this Certificate
collectively constituting the Corporation's Restated Certificate of
Incorporation).
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
_____ day of ______________, 1999 and hereby affirm and acknowledge under
penalty of perjury that the filing of the Restated Certificate of Incorporation
is the act and deed of the Corporation.
_____________________________________
M. Wayne Boylston
Executive Vice President
<PAGE>
EXHIBIT A
---------
RESTATED CERTIFICATE OF INCORPORATION
OF
iXL ENTERPRISES, INC.
---------------------
ARTICLE I
NAME
The name of the Corporation is iXL Enterprises, Inc.
ARTICLE II
REGISTERED OFFICE
The address of the registered office of the Corporation in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle
County, Delaware 19801. The registered agent at this address is the Corporation
Trust Company.
ARTICLE III
PURPOSE
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of the
State of Delaware.
ARTICLE IV
CAPITAL STOCK
4.1 Authorized Capital Stock. The total number of shares of capital stock
------------------------
of all classes which the Corporation has authority to issue is two hundred and
five million (205,000,000), two hundred million (200,000,000) shares of which
shall be Common Stock, par value one cent ($.01) per share, and five million
(5,000,000) shares of which shall be Preferred Stock, par value one cent ($.01)
per share.
4.2 Preferred Stock. (a) The Preferred Stock may be issued at any time
---------------
and from time to time, in one or more series. The Board of Directors is hereby
authorized to provide for the issuance of shares of Preferred Stock in series
and, by filing a certificate of designation pursuant to the applicable
provisions of the General Corporation Law of the State of Delaware (hereinafter
referred to as a "Preferred Stock Certificate of Designation"), to establish
------------------------------------------
from time to time the number of shares to be included in each such series, and
to fix the designation, powers, preferences and rights of shares of each such
series and the qualifications, limitations and restrictions thereof.
-1-
<PAGE>
(b) The authority of the Board of Directors with respect to each series of
Preferred Stock shall include, but not be limited to, determination of the
following:
(i) the designation of the series, which may be by distinguishing
number, letter or title;
(ii) the number of shares of the series, which number the Board
of Directors may thereafter (except where otherwise provided in the
applicable Preferred Stock Certificate of Designation) increase or
decrease (but not below the number of shares thereof then
outstanding);
(iii) whether dividends, if any, shall be cumulative or
noncumulative and the dividend rate of the series;
(iv) whether dividends, if any, shall be payable in cash, in kind
or otherwise;
(v) the dates on which dividends, if any, shall be payable;
(vi) the redemption rights and price or prices, if any, for
shares of the series;
(vii) the terms and amount of any sinking fund provided for the
purchase or redemption of shares of the series;
(viii) the amounts payable on shares of the series in the event
of any voluntary or involuntary liquidation, dissolution or winding up
of the affairs of the Corporation;
(ix) whether the shares of the series shall be convertible or
exchangeable into shares of any other class or series, or any other
security, of the Corporation or any other corporation, and, if so, the
specification of such other class or series or such other security,
the conversion or exchange price or prices or rate or rates, any
adjustments thereof, the date or dates as of which such shares shall
be convertible or exchangeable and all other terms and conditions upon
which such conversion or exchange may be made;
(x) restrictions on the issuance of shares of the same series or
of any other class or series; and
(xi) whether or not the holders of the shares of such series
shall have voting rights, in addition to the voting rights provided by
law, and if so, the terms of such voting rights, which may provide,
among other things and subject to the other provisions of this
Certificate of Incorporation, that each share of such series shall
carry one vote or more or less than one vote per share, that the
holders of such series shall be entitled to vote on certain matters as
a separate class (which
-2-
<PAGE>
for such purpose may be comprised solely of such series or of such
series and one or more other series or classes of stock of the
Corporation) and that all the shares of such series entitled to vote
on a particular matter shall be deemed to be voted on such matter in
the manner that a specified portion of the voting power of the shares
of such series or separate class are voted on such matter.
(c) The Common Stock shall be subject to the express terms of the Preferred
Stock and any series thereof.
4.3 Conversion, Reclassification and Modification of Outstanding Capital
--------------------------------------------------------------------
Stock. The capital stock of the Corporation outstanding on the date hereof is
- -----
modified or converted as follows:
(a) The Class B Common Stock, par value $.01 per share, is hereby renamed
"Common Stock," which such Common Stock is the same Common Stock defined in
Section 4.1, above.
(b) Upon this Restated Certificate of Incorporation of the Corporation
becoming effective in accordance with the General Corporation Law of the State
of Delaware (the "Effective Time"):
(i) each share of Class A Common Stock, par value $.01 per share,
of the Corporation ("Class A Common Stock"), Class A Convertible
Preferred Stock, par value $.01 per share, of the Corporation ("Class
A Preferred"), Class B Convertible Preferred Stock, par value $.01 per
share, of the Corporation ("Class B Preferred"), and Class C
Convertible Preferred Stock, par value $.01 per share, of the
Corporation ("Class C Preferred") issued and outstanding (or held in
the treasury of the Corporation) immediately prior to the Effective
Time shall be automatically reclassified as 1, 100, 100, and 100,
respectively, validly issued, fully paid and nonassessable shares of
Common Stock, par value $.01 per share, of the Corporation ("Common
Stock"); and
(ii) each share of Class D Nonvoting Preferred Stock, par value
$.01 per share, of the Corporation ("Class D Preferred") issued and
outstanding (or held in the treasury of the Corporation) immediately
prior to the Effective Time shall be automatically reclassified as
such number of validly issued, fully paid and nonassessable shares of
Common Stock as results from the formula set forth below:
N = (D + $1000) + 104.271982377686
-----------
P
where
N = the number of shares of Common Stock into which each
issued and outstanding (or treasury) share of
-3-
<PAGE>
Class D Preferred shall be automatically
reclassified as at the Effective Time
D = the dollar amount of the accrued but unpaid dividends
with respect to each share of Class D Preferred
Stock as of the Effective Time
P = the initial public offering price, prior to any
underwriting or other selling discounts, of the
Common Stock in the initial public offering of the
Common Stock occurring contemporaneously with the
Effective Time.
Each stock certificate that, immediately prior to the Effective Time,
represented shares of Class A Common Stock, Class A Preferred, Class B
Preferred, Class C Preferred or Class D Preferred shall, from and after the
Effective Time, automatically and without the necessity of presenting the same
for exchange, represent that number of shares of Common Stock into which the
shares formerly represented by such certificate shall have been reclassified,
provided, however, that each person holding of record a certificate that
represented shares of capital stock so reclassified shall receive, upon
surrender of such certificate, a new certificate evidencing and representing the
number of shares of Common Stock into which the shares formerly represented by
such certificate shall have been reclassified.
4.4 Designation of Director Nominees.
--------------------------------
(a) Definitions. "Affiliate" shall mean, with respect to any Person, any
other Person directly or indirectly, through one or more intermediaries,
controlling, controlled by, or under common control with such Person. "Person"
shall mean an individual, corporation, partnership, limited liability company,
association, trust or other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof.
(b) For so long as Kelso Investment Associates V, L.P. ("KIA V"), Kelso
-----
Equity Partners V, L.P. ("KEP V", and together with KIA V, "Kelso") or their
-----
respective Affiliates, hold 5% or more in the aggregate of the outstanding
Common Stock of the Corporation, Kelso shall (i) have the right to designate two
individuals as Board of Directors nominees for election to the Board of
Directors of the Corporation, and (ii) have the exclusive right to designate for
election an individual to fill any vacancy created by the removal or death of or
resignation by a director originally designated for election by Kelso.
(c) For so long as CB Capital Investors, L.P. ("CB") or its Affiliates,
hold 5% or more in the aggregate of the outstanding Common Stock of the
Corporation, CB shall (i) have the right to designate one individual as a Board
of Directors nominee for election to the Board of Directors of the Corporation,
and (ii) have the exclusive right to designate for election an individual to
fill any vacancy created by the removal or death of or resignation by a director
originally designated for election by CB.
-4-
<PAGE>
(d) If Kelso transfers 100% of the shares of Common Stock owned by it as of
the date hereof (immediately after the reclassification of capital stock
effectuated by Section 4.3 of this Restated Certificate of Incorporation) to one
Person or a group of Affiliates, its transferees shall be deemed to be Kelso for
purposes of this Section 4.4. If Kelso transfers 50% or more, but less than
100%, of the shares of Common Stock owned by it as of the date hereof
(immediately after the reclassification of capital stock effectuated by Section
4.3 of this Restated Certificate of Incorporation) to one Person or a group of
Affiliates, then such transferees shall have the rights and obligations of Kelso
under this Section 4.4 to the extent set forth in an instrument executed by
Kelso and such transferees. If CB transfers 100% of the shares of Common Stock
owned by it as of the date hereof (immediately after the reclassification of
capital stock effectuated by Section 4.3 of this Restated Certificate of
Incorporation) to one Person or a group of Affiliates, its transferees shall be
deemed to be CB for purposes of this Section 4.4.
ARTICLE V
BOARD OF DIRECTORS:
MANAGEMENT OF THE CORPORATION
The following provisions are inserted for the management of the business
and for the conduct of the affairs of the Corporation and for the purpose of
creating, defining, limiting and regulating the powers of the Corporation and
its directors and stockholders:
5.1 Notice for Nomination. Advance notice of nominations for the election
---------------------
of directors shall be given in the manner and to the extent provided in the By-
laws of the Corporation.
5.2 Election. The election of directors need not be by written ballot.
--------
5.3 Management of Business. (a) All corporate powers and authority of the
----------------------
Corporation (except as at the time otherwise provided by law or by this Restated
Certificate of Incorporation) shall be vested in and exercised by or under the
direction of the Board of Directors.
(b) The Board of Directors shall have the power without the assent or vote
of the stockholders to adopt, amend, alter or repeal the By-Laws of the
Corporation.
5.4 Liability. A director of the Corporation shall not be liable to the
---------
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent such exemption from liability or
limitation thereof is not permitted under the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended. Any
amendment, modification or repeal of the foregoing sentence shall not adversely
affect any right or protection of a director of the Corporation hereunder in
respect of any act or omission occurring prior to the time of such amendment,
modification or repeal.
-5-
<PAGE>
5.5 Indemnification. The Corporation shall indemnify to the full extent
---------------
possible under its Bylaws, as amended from time to time, any person who is or
was a director, officer, employee or agent of the Corporation.
5.6 No Stockholder Action by Written Consent. Except as otherwise
----------------------------------------
provided for or fixed pursuant to the provisions of Section 4.2 of this Restated
Certificate of Incorporation relating to the rights of holders of any series of
Preferred Stock, no action required to be taken or which may be taken at any
annual or special meeting of stockholders of the corporation may be taken
without a meeting, and the power of stockholders to consent in writing, without
a meeting, to the taking of any action is specifically denied.
ARTICLE VI
NO PREEMPTIVE RIGHTS
No stockholder shall have any statutory preemptive right to acquire
unissued shares of capital stock of the Corporation.
ARTICLE VII
AMENDMENT
The Corporation reserves the right to amend or repeal any provision
contained in this Restated Certificate of Incorporation in the manner now or
hereafter prescribed by the laws of the State of Delaware, and all rights herein
conferred upon stockholders or directors (in the present form of this Restated
Certificate of Incorporation or as hereinafter amended) are granted subject to
this reservation; provided, however, that any amendment or repeal of Section 5.4
or 5.5 of Article V of this Restated Certificate of Incorporation shall not
adversely affect any right or protection existing hereunder immediately prior to
such amendment or repeal.
-6-
<PAGE>
EXHIBIT 3.2
================================================================================
FORM OF
iXL ENTERPRISES, INC.
AMENDED AND RESTATED BYLAWS
---------------------------
As adopted on _______________ ____, 1999
================================================================================
<PAGE>
Draft--March 29, 1999
iXL ENTERPRISES, INC.
AMENDED AND RESTATED BYLAWS
---------------------------
TABLE OF CONTENTS
ARTICLE I STOCKHOLDERS
Section 1.01. Annual Meetings......................................... 1
Section 1.02. Special Meetings........................................ 1
Section 1.03. Notice of Meetings; Waiver.............................. 2
Section 1.04. Quorum.................................................. 2
Section 1.05. Voting.................................................. 3
Section 1.06. Voting by Ballot........................................ 3
Section 1.07. Adjournment............................................. 3
Section 1.08. Proxies................................................. 3
Section 1.09. Organization; Procedure................................. 4
Section 1.10. Notice of Nominations and Stockholder Business.......... 5
Section 1.11. Inspectors of Elections................................. 8
Section 1.12. Opening and Closing of Polls............................ 9
ARTICLE II BOARD OF DIRECTORS
Section 2.01. General Powers.......................................... 9
Section 2.02. Number of Directors..................................... 9
Section 2.03. Term.................................................... 9
Section 2.04. Annual and Regular Meetings............................. 9
Section 2.05. Special Meetings; Notice................................ 10
Section 2.06. Quorum; Voting.......................................... 10
Section 2.07. Adjournment............................................. 10
Section 2.08. Action Without a Meeting................................ 11
Section 2.09. Regulations; Manner of Acting........................... 11
Section 2.10. Action by Telephonic Communications..................... 11
Section 2.11. Resignations............................................ 11
Section 2.12. Designation of Director Nominees........................ 11
Section 2.13. Removal of Directors.................................... 12
Section 2.14. Vacancies and Newly Created Directorships............... 13
Section 2.15. Compensation............................................ 13
Section 2.16. Reliance on Accounts and Reports, etc................... 13
<PAGE>
Draft--March 29, 1999
ARTICLE III EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 3.01. How Constituted......................................... 13
Section 3.02. Powers.................................................. 14
Section 3.03. Proceedings............................................. 14
Section 3.04. Quorum and Manner of Acting............................. 14
Section 3.05. Action by Telephonic Communications..................... 14
Section 3.06. Absent or Disqualified Members.......................... 15
Section 3.07. Resignations............................................ 15
Section 3.08. Removal................................................. 15
Section 3.09. Vacancies............................................... 15
ARTICLE IV OFFICERS
Section 4.01. Number.................................................. 15
Section 4.02. Election................................................ 15
Section 4.03. Salaries................................................ 16
Section 4.04. Removal and Resignation; Vacancies...................... 16
Section 4.05. Authority and Duties of Officers........................ 16
Section 4.06. The Chairman............................................ 16
Section 4.07. The Vice Chairman....................................... 16
Section 4.08. The Chief Executive Officer............................. 16
Section 4.09. The President........................................... 17
Section 4.10. The Executive Vice President............................ 17
Section 4.11. The Secretary........................................... 18
Section 4.12. The Chief Financial Officer............................. 19
Section 4.13. The Treasurer........................................... 20
Section 4.14. Additional Officers..................................... 20
Section 4.15. Security................................................ 20
ARTICLE V CAPITAL STOCK
Section 5.01. Certificates of Stock, Uncertificated Shares............ 20
Section 5.02. Signatures; Facsimile................................... 21
Section 5.03. Lost, Stolen or Destroyed Certificates.................. 21
Section 5.04. Transfer of Stock....................................... 21
Section 5.05. Record Date............................................. 22
Section 5.06. Registered Stockholders................................. 22
Section 5.07. Transfer Agent and Registrar............................ 22
ii
<PAGE>
Draft--March 29, 1999
ARTICLE VI INDEMNIFICATION
Section 6.01. Nature of Indemnity..................................... 23
Section 6.02. Determination that Indemnification is Proper............ 24
Section 6.03. Advance Payment of Expenses............................. 24
Section 6.04. Procedure for Indemnification of Directors and Officers. 24
Section 6.05. Survival; Preservation of Other Rights.................. 25
Section 6.06. Insurance............................................... 26
Section 6.07. Severability............................................ 26
ARTICLE VII OFFICES
Section 7.01. Registered Office....................................... 26
Section 7.02. Other Offices........................................... 26
ARTICLE VIII GENERAL PROVISIONS
Section 8.01. Dividends............................................... 27
Section 8.02. Reserves................................................ 27
Section 8.03. Execution of Instruments................................ 27
Section 8.04. Corporate Indebtedness.................................. 27
Section 8.05. Deposits................................................ 28
Section 8.06. Checks.................................................. 28
Section 8.07. Sale, Transfer, etc. of Securities...................... 28
Section 8.08. Voting as Stockholder................................... 28
Section 8.09. Fiscal Year............................................. 29
Section 8.10. Seal.................................................... 29
Section 8.11. Books and Records; Inspection........................... 29
ARTICLE IX AMENDMENT OF BYLAWS
Section 9.01. Amendment............................................... 29
ARTICLE X CONSTRUCTION
Section 10.01. Construction............................................ 30
iii
<PAGE>
Draft--March 29, 1999
iXL ENTERPRISES, INC.
AMENDED AND RESTATED BYLAWS
---------------------------
As adopted on , 1999
------------------
ARTICLE I
---------
STOCKHOLDERS
------------
Section 1.01 Annual Meetings. If an annual meeting is required by
---------------
applicable law, the annual meeting of the stockholders of the Corporation for
the election of Directors and for the transaction of such other business as
properly may come before such meeting shall be held at such place, either within
or without the State of Delaware, and on such date and at such time, as may be
fixed from time to time by resolution of the Board of Directors and set forth in
the notice or waiver of notice of the meeting.
Section 1.02 Special Meetings. Special meetings of the stockholders
----------------
may be called at any time by the Chairman of the Board or the Chief Executive
Officer or, in the event of the Chief Executive Officer's absence or disability,
by the President or any Director who is also an officer (hereafter, an "Officer
-------
Director"). In addition, a special meeting shall be called by the Chief
- --------
Executive Officer (or, in the event of his or her absence or disability, by the
President or any Officer Director), or by the Secretary (i) pursuant to a
resolution approved by a majority of the entire Board of Directors, (ii)
subject to the procedures set forth in the second paragraph of this Section
1.02, upon receipt of a written request therefor by stockholders holding in the
aggregate not less than twenty percent (20%) of the outstanding shares of the
Corporation at the time entitled to vote at any meeting of the stockholders or
(iii) so long as the Third Amended and Restated Stockholders' Agreement, dated
as of ___________ ___, 1999, by and among the Corporation and the parties listed
on the signature pages thereto (as such may be amended from time to time, the
"Stockholders' Agreement") shall remain in effect, and subject to the procedures
set forth in the second paragraph of this Section 1.02, at the request of Kelso
Investment Associates V, L.P. ("KIA V"), Kelso Equity Partners V, L.P. ("KEP V",
and together with KIA V, "Kelso") or CB Capital Investors, L.P. ("CB") for the
purpose of voting on directors designated for election by Kelso or CB, as the
case may be, pursuant to Section 2.12 hereof.
<PAGE>
Draft--March 29, 1999
If such officers shall fail to call such meeting within one hundred (100) days
after receipt of such stockholder request, the stockholder executing such
request may call such meeting. Special meetings of the stockholders shall be
held at such places, within or without the State of Delaware, as shall be
specified in the respective notices or waivers of notice thereof.
Upon request in writing sent by registered mail to the Chief Executive
Officer or the Secretary by any stockholder or stockholders entitled to call a
special meeting of stockholders pursuant to this Section 1.02, the Board of
Directors shall determine a place and time for such meeting, which time shall be
not less than ninety (90) nor more than one hundred (100) days after the receipt
and determination of the validity of such request, and a record date for the
determination of stockholders entitled to vote at such meeting in the manner set
forth in Section 5.05 hereof. Following such receipt and determination, it
shall be the duty of the Secretary or any Assistant Secretary to cause notice to
be given to the stockholders entitled to vote at such meeting, in the manner set
forth in Section 1.03 hereof, that a meeting will be held at the time and place
so determined.
Section 1.0 Notice of Meetings; Waiver. The Secretary or any
--------------------------
Assistant Secretary shall cause written notice of the place, date and hour of
each meeting of the stockholders, and, in the case of a special meeting, the
purpose or purposes for which such meeting is called, to be given personally or
by mail, not less than ten (10) nor more than sixty (60) days prior to the
meeting, to each stockholder of record entitled to vote at such meeting. If
such notice is mailed, it shall be deemed to have been given to a stockholder
when deposited in the United States mail, postage prepaid, directed to the
stockholder at his or her address as it appears on the record of stockholders of
the Corporation, or, if he or she shall have filed with the Secretary of the
Corporation a written request that notices to him or her be mailed to some other
address, then directed to him or her at such other address. Such further notice
shall be given as may be required by law.
A written waiver of any notice of any annual or special meeting signed
by the person entitled thereto shall be deemed equivalent to notice. Neither
the business to be transacted at, nor the purpose of, any regular or special
meeting of the stockholders need be specified in a written waiver of notice.
Attendance of a stockholder at a meeting of stockholders shall constitute a
waiver of notice of such meeting, except when the stockholder attends a meeting
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
2
<PAGE>
Draft--March 29, 1999
Section 1.04 Quorum. Except as otherwise required by law or by the
------
Certificate of Incorporation, the presence in person or by proxy of the holders
of record of a majority of the shares entitled to vote at a meeting of
stockholders shall constitute a quorum for the transaction of business at such
meeting.
Section 1.05 Voting. At all meetings of stockholders for the election
------
of directors a plurality of the votes cast shall be sufficient to elect
directors. Except as otherwise required by the Restated Certificate of
Incorporation, these Bylaws, the rules or regulations of any stock exchange
applicable to the Corporation, or applicable law or pursuant to any regulation
applicable to the Corporation or its securities, the vote of a majority of the
shares represented in person or by proxy at any meeting at which a quorum is
present shall be sufficient for the transaction of any business at such meeting.
Section 1.06 Voting by Ballot. No vote of the stockholders need be
----------------
taken by written ballot unless otherwise required by law. Any vote not required
to be taken by ballot may be conducted in any manner approved at the meeting at
which such vote is taken.
Section 1.07 Adjournment. If a quorum is not present at any meeting
-----------
of the stockholders, the stockholders present in person or by proxy shall have
the power to adjourn any such meeting from time to time until a quorum is
present. Notice of any adjourned meeting of the stockholders of the Corporation
need not be given if the place, date and hour thereof are announced at the
meeting at which the adjournment is taken, provided, however, that if the
adjournment is for more than thirty days, or if after the adjournment a new
record date for the adjourned meeting is fixed pursuant to Section 5.05 of these
Bylaws, a notice of the adjourned meeting, conforming to the requirements of
Section 1.03 hereof, shall be given to each stockholder of record entitled to
vote at such meeting. At any adjourned meeting at which a quorum is present,
any business may be transacted that might have been transacted at the original
meeting.
3
<PAGE>
Draft--March 29, 1999
Section 1.08 Proxies. Any stockholder entitled to vote at any meeting
-------
of the stockholders may authorize another person or persons to vote at any such
meeting for him or her by proxy. A stockholder may authorize a valid proxy by
executing a written instrument, or by causing his or her signature to be affixed
to such writing by any reasonable means including, but not limited to, by
facsimile signature, or by transmitting or authorizing the transmission of a
telegram, cablegram, electronic mail or other means of electronic transmission
to the person designated as the holder of the proxy, a proxy solicitation firm
or a like authorized agent. No such proxy shall be voted or acted upon after
the expiration of three (3) years from the date of such proxy, unless such proxy
provides for a longer period. Every proxy shall be revocable at the pleasure of
the stockholder executing it, except in those cases where applicable law
provides that a proxy shall be irrevocable. A stockholder may revoke any proxy
which is not irrevocable by attending the meeting and voting in person or by
filing an instrument in writing revoking the proxy or by submitting another
proxy bearing a later date to the Secretary. Proxies by telegram, cablegram,
electronic mail or other electronic transmission must either set forth or be
submitted with information from which it can be determined that such telegram,
cablegram, electronic mail or other electronic transmission was authorized by
the stockholder. Any copy, facsimile telecommunication or other reliable
reproduction of a writing or transmission created pursuant to this section may
be substituted or used in lieu of the original writing or transmission for any
and all purposes for which the original writing or transmission could be used,
provided that such copy, facsimile telecommunication or other reproduction shall
be a complete reproduction of the entire original writing or transmission.
Section 1.09 Organization; Procedure. (a) At every meeting of
-----------------------
stockholders the presiding officer shall be the Chairman or, in the event of his
or her absence or disability, the Chief Executive Officer or, in the event of
their absences or disabilities, the President or any Executive Vice President
chosen by resolution of the Board of Directors. The Secretary, or in the event
of his or her absence or disability, any Assistant Secretary designated by the
presiding officer, if any, or if there be no Assistant Secretary, in the absence
of the Secretary, an appointee of the presiding officer, shall act as Secretary
of the meeting.
(b) Conduct of Meetings. The date and time of the opening and the
-------------------
closing of the polls for each matter upon which the stockholders will vote at a
meeting shall be announced at the meeting by the person presiding over the
meeting. The Board of Directors may adopt by resolution such rules
4
<PAGE>
Draft--March 29, 1999
and regulations for the conduct of the meeting of stockholders as it shall deem
appropriate. Except to the extent inconsistent with such rules and regulations
as adopted by the Board of Directors, the chairman of any meeting of
stockholders shall have the right and authority to convene and to adjourn the
meeting, to prescribe such rules, regulations and procedures and to all such
acts as, in the judgment of such chairman, are appropriate for the proper
conduct of the meeting. Such rules, regulations or procedures, whether adopted
by the Board of Directors or prescribed by the chairman of the meeting, may
include, without limitation, the following: (i) the establishment of an agenda
or order of business for the meeting; (ii) rules and procedures for maintaining
order at the meeting and the safety of those present; (iii) limitations on
attendance at or participation in the meeting to stockholders of record of the
Corporation, their duly authorized and constituted proxies or such other persons
as the chairman of the meeting shall determine; (iv) restrictions on entry to
the meeting after the time fixed for the commencement thereof; and (v)
limitations on the time allotted to questions or comments by participants.
Unless and to the extent determined by the Board of Directors or the chairman of
the meeting, meetings of stockholders shall not be required to be held in
accordance with the rules of parliamentary procedure.
Section 1.10 Notice of Nominations and Stockholder Business.
----------------------------------------------
(a) Annual Meetings of Stockholders. (i) Nominations of persons for
-------------------------------
election to the Board of Directors of the Corporation and the proposal of
business to be considered by the stockholders may be made at an annual meeting
of stockholders (A) by or at the direction of the Board of Directors or the
-
Chairman, (B) by any stockholder of the Corporation who is entitled to vote at
-
the meeting, who complies with the notice procedures set forth in clauses (ii)
and (iii) of this paragraph and who was a stockholder of record at the time such
notice is delivered to the Secretary of the Corporation or (C) so long as the
-
Stockholders' Agreement shall remain in effect, by Kelso or CB pursuant to the
rights granted to them under such Stockholders' Agreement.
(ii) For nominations or other business to be properly brought before
an annual meeting by a stockholder pursuant to clause (B) of paragraph (a)(i) of
this Section 1.10, the stockholder must have given timely notice thereof in
writing to the Secretary of the Corporation and any such other business must
otherwise be a proper matter for stockholder action. To be timely, a
stockholder's notice shall be delivered to the Secretary at the principal
executive offices of the Corporation not later than the close of business on the
ninetieth (90th) day nor earlier than the close of business on the one hundred
twentieth (120th) day prior to the first anniversary of the preceding year's
annual meeting (provided, however, that in the event
5
<PAGE>
that the date of the annual meeting is more than thirty (30) days before or more
than seventy (70) days after such anniversary date, notice by the stockholder
must be so delivered not earlier than the close of business on the one hundred
twentieth (120th) day prior to such annual meeting and not later than the close
of business on the later of the ninetieth (90th) day prior to such annual
meeting or the tenth (10th) day following the day on which public announcement
of the date of such meeting is first made by the Corporation). In no event shall
an adjournment or postponement of an annual meeting (or the public announcement
thereof) commence a new time period (or extend any time period) for the giving
of a stockholder's notice as described above. Such stockholder's notice shall
set forth in writing (A) as to each person whom the stockholder proposes to
-
nominate for election or reelection as a Director all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of Directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Se curities Exchange Act of 1934, as amended (the
"Exchange Act"), and Rule 14A-11 thereunder, including such person's written
------------
consent to being named in the proxy statement as a nominee and to serving as a
Director if elected; (B) as to any other business that the stockholder proposes
-
to bring before the meeting, a brief description of the business desired to be
brought before the meeting, the text of the proposal or business (including the
text of any resolutions proposed for consideration and in the event that such
business includes a proposal to amend the Bylaws of the Corporation, the
language of the proposed amendment), the reasons for conducting such business at
the meeting and any material interest in such business of such stockholder and
of any beneficial owner on whose behalf the proposal is made; and (C) as to the
-
stockholder giving the notice and any beneficial owner on whose behalf the
nomination or proposal is made, (1) the name and address of such stockholder, as
-
it appears on the Corporation's books, and of such beneficial owner, (2) the
-
class and number of shares of the Corporation which are owned beneficially and
of record by such stockholder and such beneficial owner, (3) a representation
-
that the stockholder is a holder of record of stock of the Corporation entitled
to vote at such a meeting and intends to appear in person or by proxy at the
meeting to propose such business or nomination, and (4) a representation whether
-
the stockholder or the beneficial owner, if any, intends or is part of a group
which intends to (a) deliver a proxy statement and/or form of proxy to holders
-
of at least the percent of the Corporation's outstanding capital stock required
to approve or adopt the proposal or elect the nominee and/or (b) otherwise
-
solicit proxies from stockholders in support of such proposal or nomination. The
Corporation may require any proposed nominee to furnish such other information
as it may reasonably require to determine the eligibility of such proposed
nominee to serve as a director of the Corporation.
6
<PAGE>
Draft--March 29, 1999
(iii) Notwithstanding anything in the second sentence of paragraph
(a)(ii) of this Section 1.10 to the contrary, in the event that the number of
Directors to be elected to the Board of Directors of the Corporation at an
annual meeting is increased and there is no public announcement naming all of
the nominees for Director or specifying the size of the increased Board of
Directors made by the Corporation at least one hundred (100) days prior to the
first anniversary of the preceding year's annual meeting, a stockholder's notice
under this paragraph shall also be considered timely, but only with respect to
nominees for any new positions created by such increase, if it shall be
delivered to the Secretary at the principal executive offices of the Corporation
not later than the close of business on the tenth (10th) day following the day
on which such public announcement is first made by the Corporation.
(b) Special Meetings of Stockholders. Only such business as shall
--------------------------------
have been brought before the special meeting of the stockholders pursuant to the
Corporation's notice of meeting pursuant to Section 1.03 of these Bylaws shall
be conducted at such meeting. Nominations of persons for election to the Board
of Directors may be made at a special meeting of stockholders at which Directors
are to be elected pursuant to the Corporation's notice of meeting (1) by or at
-
the direction of the Board of Directors, (2) by any stockholder of the
-
Corporation who is entitled to vote at the meeting, who complies with the notice
procedures set forth in this Section 1.10 and who is a stockholder of record at
the time such notice is delivered to the Secretary of the Corporation or (3) so
-
long as the Stockholders' Agreement shall remain in effect with respect to
either Kelso or CB, by Kelso or CB to the extent such right exists under the
terms of the Stockholders' Agreement. Nominations by stockholders of persons
for election to the Board of Directors may be made at such special meeting of
stockholders if the stockholder's notice as required by paragraph (a)(ii) of
this Section 1.10 shall be delivered to the Secretary at the principal executive
offices of the Corporation not earlier than the close of business on the one
hundred twentieth (120th ) day prior to such special meeting and not later than
the close of business on the later of (x) ninety (90) days prior to such special
-
meeting and (y) or the tenth (10th) day following the day on which public
-
announcement is first made of the date of the special meeting and of the
nominees proposed by the Board of Directors to be elected at such meeting;
provided that no advance notice shall be required for any nominations made
- --------
pursuant to clause (3) of the second sentence of this paragraph. In no event
shall the adjournment or postponement of a special meeting (or the public
announcement thereof) commence a new time period for the giving of a
stockholder's notice as described above.
7
<PAGE>
Draft--March 29, 1999
(c) General. (i) Only persons who are nominated in accordance with
-------
the procedures set forth in this Section 1.10 shall be eligible to serve as
Directors and only such business shall be conducted at a meeting of stockholders
as shall have been brought before the meeting in accordance with the procedures
set forth in this Section 1.10. Except as otherwise provided by law, the
Restated Certificate of Incorporation or these Bylaws, the presiding officer of
the meeting shall have the power and duty to determine whether a nomination or
any business proposed to be brought before the meeting was made or proposed in
accordance with the procedures set forth in this Section 1.10 and, if any
proposed nomination or business is not in compliance with this Section 1.10, to
declare that such defective proposal or nomination shall be disregarded.
(ii) For purposes of this Section 1.10, "public announcement" shall
-------------------
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant to
Section 13, 14, or 15(d) of the Exchange Act.
(iii) Notwithstanding the foregoing provisions of this Section 1.10,
a stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this Section 1.10. Nothing in this Section 1.10 shall be deemed to
affect any rights (A) of stockholders to request inclusion of proposals in the
-
Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act, (B)
-
of the holders of any class or series of preferred stock, if any, to elect
Directors if so provided under any applicable preferred stock certificate of
designation, or (C) so long as the Stockholders' Agreement shall remain in
-
effect, of Kelso or CB thereunder.
Section 1.11 Inspectors of Elections. (a) If required by applicable
-----------------------
law, preceding any meeting of the stockholders, the Board of Directors shall
appoint one or more persons to act as Inspectors of Elections, and may designate
one or more alternate inspectors. In the event no inspector or alternate is
able to act, the person presiding at the meeting shall appoint one or more
inspectors to act at the meeting. Each inspector, before entering upon the
discharge of the duties of an inspector, shall take and sign an oath faithfully
to execute the duties of inspector with strict impartiality and according to the
best of his or her ability. The inspector shall:
(i) ascertain the number of shares outstanding and the voting power
of each;
8
<PAGE>
Draft--March 29, 1999
(ii) determine the shares represented at the meeting and the validity
of proxies and ballots;
(iii) count all votes and ballots;
(iv) determine and retain for a reasonable period a record of the
disposition of any challenges made to any determination by the inspectors;
and
(v) certify his or her determination of the number of shares
represented at the meeting, and his or her count of all votes and ballots.
(b) The inspector may appoint or retain other persons or entities to
assist in the performance of the duties of inspector.
(c) When determining the shares represented and the validity of
proxies and ballots, the inspector shall be limited to an examination of the
proxies, any envelopes submitted with those proxies, any proxies or other
information provided in accordance with Section 1.08 of these Bylaws, ballots
and the regular books and records of the Corporation. The inspector may
consider other reliable information for the limited purpose of reconciling
proxies and ballots submitted by or on behalf of banks, brokers or their
nominees or a similar person which represent more votes than the holder of a
proxy is authorized by the record owner to cast or more votes than the
stockholder holds of record. If the inspector considers other reliable
information as outlined in this section, the inspector, at the time of his or
her certification pursuant to (a)(v) of this Section 1.11, shall specify the
precise information considered, the person or persons from whom the information
was obtained, when this information was obtained, the means by which the
information was obtained, and the basis for the inspector's belief that such
information is accurate and reliable.
Section 1.12 Opening and Closing of Polls. The date and time for the
----------------------------
opening and the closing of the polls for each matter to be voted upon at a
stockholder meeting shall be announced at the meeting. The inspector of the
election shall be prohibited from accepting any ballots, proxies or votes or any
revocations thereof or changes thereto after the closing of the polls, unless
the Delaware Court of Chancery upon application by a stockholder shall determine
otherwise.
9
<PAGE>
Draft--March 29, 1999
ARTICLE II
----------
BOARD OF DIRECTORS
------------------
Section 2.01 General Powers. Except as may otherwise be provided by
--------------
law or by the Restated Certificate of Incorporation, the property, affairs and
business of the Corporation shall be managed by or under the direction of the
Board of Directors and the Board of Directors may exercise all the powers of the
Corporation.
Section 2.02 Number of Directors. Subject to the rights of the
-------------------
holders of any class or series of preferred stock, if any, the number of
Directors shall be fixed from time to time exclusively pursuant to a resolution
adopted by a majority of the entire Board, provided that the Board shall at no
--------
time consist of fewer than three (3) Directors.
Section 2.03 Term. Each director shall hold office for a term
----
expiring at the annual meeting of stockholders held in the [year] following the
year of his or her election.
Section 2.04 Annual and Regular Meetings. The annual meeting of the
---------------------------
Board of Directors for the purpose of electing officers and for the transaction
of such other business as may come before the meeting shall be held as soon as
possible following adjournment of the annual meeting of the stockholders at the
place of such annual meeting of the stockholders. Notice of such annual meeting
of the Board of Directors need not be given. The Board of Directors from time
to time may by resolution provide for the holding of regular meetings and fix
the place (which may be within or without the State of Delaware) and the date
and hour of such meetings. Notice of regular meetings need not be given;
provided, however, that if the Board of Directors shall fix or change the time
- -------- -------
or place of any regular meeting, notice of such action shall be mailed promptly,
or sent by telephone, including a voice messaging system or other system or
technology designed to record and communicate messages, telegraph, facsimile,
electronic mail or other means of electronic transmission, to each Director who
shall not have been present at the meeting at which such action was taken,
addressed or transmitted to him or her at his or her usual place of business, or
shall be delivered or transmitted to him or her personally. Notice of such
action need not be given to any Director who attends the first regular meeting
after such action is taken without protesting the lack of notice to him or her,
prior to or at the
10
<PAGE>
Draft--March 29, 1999
commencement of such meeting, or to any Director who submits a signed waiver of
notice, whether before or after such meeting.
Section 2.05 Special Meetings; Notice. Special meetings of the Board
------------------------
of Directors shall be held whenever called by the Chief Executive Officer (or,
in the event of his or her absence or disability, by the President) or by any
Officer Director or by the Chairman, at such place (within or without the State
of Delaware), date and hour as may be specified in the respective notices or
waivers of notice of such meetings. Special meetings of the Board of Directors
may be called on twenty-four (24) hours' notice, if notice is given to each
Director personally or by telephone, including a voice messaging system or other
system or technology designed to record and communicate messages, telegraph,
facsimile, electronic mail or other means of electronic transmission, or on five
(5) days' notice, if notice is mailed to each Director, addressed or transmitted
to him or her at his or her usual place of business or other designated
location. Notice of any special meeting need not be given to any Director who
attends such meeting without protesting the lack of notice to him or her, prior
to or at the commencement of such meeting, or to any Director who submits a
signed waiver of notice, whether before or after such meeting, and any business
may be transacted thereat.
Section 2.06 Quorum; Voting. At all meetings of the Board of
--------------
Directors, the presence of a majority of the total authorized number of
Directors shall constitute a quorum for the transaction of business. Except as
otherwise required by law, the vote of a majority of the Directors present at
any meeting at which a quorum is present shall be the act of the Board of
Directors.
Section 2.07 Adjournment. A majority of the Directors present,
-----------
whether or not a quorum is present, may adjourn any meeting of the Board of
Directors to another time or place. No notice need be given of any adjourned
meeting unless the time and place of the adjourned meeting are not announced at
the time of adjournment, in which case notice conforming to the requirements of
Section 2.05 of these Bylaws shall be given to each Director.
Section 2.08 Action Without a Meeting. Any action required or
------------------------
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if all members of the Board of Directors consent thereto in
writing, and such writing or writings are filed with the minutes of proceedings
of the Board of Directors.
Section 2.09 Regulations; Manner of Acting. To the extent consistent
-----------------------------
with applicable law, the Restated Certificate of Incorporation and these Bylaws,
the Board
11
<PAGE>
Draft--March 29, 1999
of Directors may adopt such rules and regulations for the conduct of meetings of
the Board of Directors and for the management of the property, affairs and
business of the Corporation as the Board of Directors may deem appropriate. The
Directors shall act only as a Board, and the individual Directors shall have no
power as such.
Section 2.10 Action by Telephonic Communications. Members of the
-----------------------------------
Board of Directors may participate in any meeting of the Board of Directors by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in any meeting pursuant to this provision shall constitute
presence in person at such meeting.
Section 2.11 Resignations. Any Director may resign at any time by
------------
delivering a written notice of resignation, signed by such Director, to the
Chairman or the Secretary. Unless otherwise specified therein, such resignation
shall take effect upon delivery.
Section 2.12 Designation of Director Nominees. (a) Definitions.
-------------------------------- -----------
"Affiliate" shall mean, with respect to any Person, any other Person directly or
indirectly, through one or more intermediaries, controlling, controlled by, or
under common control with such Person. "Person" shall mean an individual,
corporation, partnership, limited liability company, association, trust, or
other entity or organization, including a government or political subdivision or
an agency or instrumentality thereof.
(b) For so long as Kelso and its Affiliates hold 5% or more in the
aggregate of the outstanding Common Stock of the Corporation, Kelso shall have
(A) the right to designate two individuals as Board of Directors nominees for
election to the Board of Directors of the Corporation, and (B) the exclusive
right to designate for election an individual to fill any vacancy created by the
removal or death of or resignation by a director originally designated for
election by Kelso.
(c) For so long as CB and its Affiliates hold 5% or more in the
aggregate of the outstanding Common Stock of the Corporation, CB shall have (A)
the right to designate two individuals as Board of Directors nominees for
election to the Board of Directors of the Corporation, and (B) the exclusive
right to designate for election an individual to fill any vacancy created by the
removal or death of or resignation by a director originally designated for
election by CB.
(d) If Kelso transfers 100% of the shares of common stock owned by it
as of the date of the filing of the Restated Certificate of Incorporation of the
Corporation
12
<PAGE>
Draft--March 29, 1999
(immediately after the reclassification of capital stock effectuated by the
Restated Certificate of Incorporation of the Corporation) to one Person
or a group of Affiliates, its transferees shall be deemed to be Kelso for
purposes of this Section 2.12. If Kelso transfers 50% or more, but not less
than 100 %, of the shares of Common Stock owned by it as of the date of filing
of the Restated Certificate of Incorporation of the Corporation (immediately
after the reclassification of capital stock effectuated by the Restated
Certificate of Incorporation of the Corporation) to one Person or a group of
Affiliates, then such transferees shall have the rights and obligations of Kelso
under this Section 2.12 to the extent set forth in an instrument executed by
Kelso and such transferees. If CB transfers 100% of the shares of common stock
owned by it as of the date of the filing of the Restated Certificate of
Incorporation of the Corporation (immediately after the reclassification of
capital stock effectuated by the Restated Certificate of Incorporation of the
Corporation), to one Person or a group of Affiliates, its transferees shall be
deemed to be CB for purposes of this Section 2.12.
Section 2.13 Removal of Directors. Subject to the rights of the
--------------------
holders of any class or series of preferred stock, if any, to elect additional
Directors under specified circumstances, any Director may be removed at any
time, either for or without cause, upon the affirmative vote of the holders of a
majority of the outstanding shares of stock of the Corporation entitled to vote
generally in the election of Directors; provided that for so long as the
--------
Stockholders' Agreement shall remain in effect with respect to either Kelso or
CB, as the case may be, no director originally designated by Kelso or CB, as the
case may be, pursuant to the Stockholders' Agreement, may be removed from office
without cause without the prior written consent of Kelso or CB, as the case may
be. Any vacancy in the Board of Directors caused by any such removal may be
filled at such meeting by the stockholders entitled to vote for the election of
the Director so removed; provided that for so long as the Stockholders'
--------
Agreement shall remain in effect with respect to either Kelso or CB, as the case
may be, Kelso or CB, as the case may be, shall have the exclusive right to
designate for election an individual to fill any vacancy created by the removal
or death of or resignation by a director originally designated for election by
Kelso or CB, as the case may be. A Director filling any such vacancy shall hold
office until his or her successor shall have been elected and qualified or until
his or her earlier death, resignation or removal. If such stockholders do not
fill such vacancy at such meeting, such vacancy may be filled in the manner
provided in Section 2.14 of these Bylaws.
Section 2.14 Vacancies and Newly Created Directorships. Subject to:
-----------------------------------------
(i) the rights of the holders of any class or series of preferred stock, if any,
to elect additional Directors under specified circumstances and (ii) to the
rights of Kelso and CB
13
<PAGE>
Draft--March 29, 1999
as set forth in Section 2.12, and except as provided in Section 2.13, if any
vacancies shall occur in the Board of Directors, by reason of death,
resignation, removal or otherwise, or if the authorized number of Directors
shall be increased, the Directors then in office shall continue to act,
and such vacancies and newly created directorships may be filled by a
majority of the Directors then in office, although less than a quorum. A
Director elected to fill a vacancy or a newly created directorship shall hold
office until his or her successor has been elected and qualified or until his or
her earlier death, resignation or removal.
Section 2.15 Compensation. The amount, if any, which each Director
------------
shall be entitled to receive as compensation for his or her services as such
shall be fixed from time to time by resolution of the Board of Directors.
Section 2.16 Reliance on Accounts and Reports, etc. A Director, and
-------------------------------------
any member of any committee designated by the Board of Directors shall, in the
performance of such Director's duties, be fully protected in relying in good
faith upon the records of the Corporation and upon information, opinions,
reports or statements presented to the Corporation by any of the Corporation's
officers or employees, or Committees designated by the Board of Directors, or by
any other person as to the matters the member reasonably believes are within
such other person's professional or expert competence and who has been selected
with reasonable care by or on behalf of the Corporation.
ARTICLE III
-----------
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
----------------------------------------
Section 3.01 How Constituted. The Board of Directors may, by
---------------
resolution adopted by a majority of the whole Board, designate one or more
committees, including an Executive Committee, each such committee to consist of
such number of Directors as from time to time may be fixed by the Board of
Directors. The Board of Directors may designate one or more Directors as
alternate members of any such committee, who may replace any absent or
disqualified member or members at any meeting of such committee. Thereafter,
members (and alternate members, if any) of each such committee may be designated
at the annual meeting of the Board of Directors. Any such committee may be
abolished or re-designated from time to time by the Board of Directors. Each
member (and each alternate member) of any such committee (whether designated at
an annual meeting of the Board of Directors or to fill a vacancy or
14
<PAGE>
Draft--March 29, 1999
otherwise) shall hold office until his or her successor shall have been
designated or until he or she shall cease to be a Director, or until his or her
earlier death, resignation or removal.
Section 3.02 Powers. Each committee, except as otherwise provided by
------
the General Corporation Law, shall have and may exercise such powers of the
Board of Directors as may be provided by resolution or resolutions of the Board
of Directors establishing such committee.
15
<PAGE>
Draft--March 29, 1999
Section 3.03 Proceedings. Each committee may fix its own rules of
-----------
procedure and may meet at such place (within or without the State of Delaware),
at such time and upon such notice, if any, as it shall determine from time to
time. Each committee shall keep minutes of its proceedings and shall report
such proceedings to the Board of Directors at the meeting of the Board of
Directors next following any such proceedings.
Section 3.04 Quorum and Manner of Acting. Except as may be otherwise
---------------------------
provided in the resolution creating such committee, at all meetings of any
committee the presence of members (or alternate members) constituting a majority
of the total authorized membership of such committee shall constitute a quorum
for the transaction of business. The act of the majority of the members present
at any meeting at which a quorum is present shall be the act of such committee.
Any action required or permitted to be taken at any meeting of any such
committee may be taken without a meeting, if all members of such committee shall
consent to such action in writing and such writing or writings are filed with
the minutes of the proceedings of the committee. The members of any such
committee shall act only as a committee, and the individual members of such
committee shall have no power as such.
Section 3.05 Action by Telephonic Communications. Members of any
-----------------------------------
committee designated by the Board of Directors may participate in a meeting of
such committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this provision shall
constitute presence in person at such meeting.
16
<PAGE>
Draft--March 29, 1999
Section 3.06 Absent or Disqualified Members. In the absence or
------------------------------
disqualification of a member of any committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he, she
or they constitute a quorum, may unanimously appoint another member of the Board
of Directors to act at the meeting in the place of any such absent or
disqualified member.
Section 3.07 Resignations. Any member (and any alternate member) of
------------
any committee may resign at any time by delivering a written notice of
resignation, signed by such member, to the Chairman, the Chief Executive Officer
or the President. Unless otherwise specified therein, such resignation shall
take effect upon delivery.
Section 3.08 Removal. Any member (and any alternate member) of any
-------
committee may be removed from his or her position as a member (or alternate
member, as the case may be) of such committee at any time, either for or without
cause, by resolution adopted by a majority of the whole Board of Directors.
Section 3.09 Vacancies. If any vacancy shall occur in any committee,
---------
by reason of disqualification, death, resignation, removal or otherwise, the
remaining members (and any alternate members) shall continue to act, and any
such vacancy may be filled by the Board of Directors.
ARTICLE IV
----------
OFFICERS
--------
Section 4.01 Number. The officers of the Corporation shall be elected
------
by the Board of Directors and shall be a Chairman, one or more Vice Chairmen, a
Chief Executive Officer, a President, one or more Executive Vice Presidents, a
Chief Financial Officer, a Secretary and a Treasurer. The Board of Directors
also may elect one or more Assistant Secretaries and Assistant Treasurers in
such numbers as the Board of Directors may determine. Any number of offices may
be held by the same person. No officer need be a Director of the Corporation.
Section 4.02 Election. Unless otherwise determined by the Board of
--------
Directors, the officers of the Corporation shall be elected by the Board of
Directors at the annual meeting of the Board of Directors, and shall be elected
to hold office until the next succeeding annual meeting of the Board of
Directors. In the event of the failure to elect officers at such annual
meeting, officers may be elected at any regular or special meeting of the Board
of Directors. Each Officer shall hold office until his or her successor has
17
<PAGE>
Draft--March 29, 1999
been elected and qualified, or until his or her earlier death, resignation or
removal at any regular or special meeting of the Board of Directors. Each
officer shall hold office until his or her successor has been elected and
qualified, or until his or her earlier death, resignation or removal.
Section 4.03 Salaries. The salaries of all officers of the
--------
Corporation shall be fixed by the Board of Directors, provided that the Board of
--------
Directors may authorize the President, the Chief Executive Officer, any other
officer or a Committee of the Board of Directors to fix the salaries of some or
all of the officers of the Corporation.
Section 4.04 Removal and Resignation; Vacancies. Any officer may be
----------------------------------
removed for or without cause at any time by the Board of Directors, but such
removal shall be without prejudice to the contractual rights of such officer, if
any, with the Corporation. Any officer may resign at any time by delivering a
written notice of resignation, signed by such officer, to the Board of Directors
or the Chief Executive Officer. Unless otherwise specified therein, such
resignation shall take effect upon delivery. Any vacancy occurring in any
office of the Corporation by death, resignation, removal or otherwise, shall be
filled by the Board of Directors.
Section 4.05 Authority and Duties of Officers. The officers of the
--------------------------------
Corporation shall have such authority and shall exercise such powers and perform
such duties as may be specified in these Bylaws, except that in any event each
officer shall exercise such powers and perform such duties as may be required by
law.
Section 4.06 The Chairman. The Directors shall elect from among the
------------
members of the Board a Chairman of the Board. The Chairman shall have such
duties and powers as set forth in these Bylaws or as shall otherwise be
conferred upon the Chairman from time to time by the Board. The Chairman shall
preside over all meetings of the stockholders and the Board.
Section 4.07 The Vice Chairman. Each Vice Chairman shall have such
-----------------
duties and powers as shall be conferred upon such Vice Chairman from time to
time by the Chairman. No Vice Chairman need be a Director of the Corporation.
Section 4.08 The Chief Executive Officer. The Chief Executive Officer
---------------------------
shall have general control and supervision of the policies and operations of the
Corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect. He or she shall manage and administer the
Corporation's business and affairs and shall also perform all duties and
exercise all powers usually pertaining to the
18
<PAGE>
Draft--March 29, 1999
office of a chief executive officer of a corporation. He or she shall have the
authority to sign, in the name and on behalf of the Corporation, checks, orders,
contracts, leases, notes, drafts and other documents and instruments in
connection with the business of the Corporation. He or she shall have the
authority to cause the employment or appointment of such employees and agents of
the Corporation as the conduct of the business of the Corporation may require,
to fix their compensation, and to remove or suspend any employee or agent
elected or appointed by the Chief Executive Officer or the Board of Directors.
The Chief Executive Officer shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe. In the event
the office of the President is vacant, the Chief Executive Officer shall carry
out the duties of the President described herein.
Section 4.09 The President. The President, subject to the authority
-------------
of the Chief Executive Officer, shall be the Chief Operating Officer of the
Corporation and shall have primary responsibility for, and authority with
respect to, the management of the day-to-day business and affairs of the
Corporation. The President shall have the authority to sign, in the name and on
behalf of the Corporation, checks, orders, contracts, leases, notes, drafts and
other documents and instruments. The President shall have the authority to
cause the employment or appointment of such employees and agents of the
Corporation as the conduct of the business of the Corporation may require, to
fix their compensation, and to remove or suspend any employee or agent elected
or appointed by the President.
Section 4.10 The Executive Vice President. In the absence of the
----------------------------
Chief Executive Officer and the President or in the event of the Chief Executive
Officer and the President's inability to act, the Executive Vice President, if
any (or in the event there be more than one Executive Vice President, the
Executive Vice Presidents in the order designated by the Board, or in the
absence of any designation, then in the order of their election), shall perform
the duties of the Chief Executive Officer and the President, and when so acting,
shall have all the powers of and be subject to all the restrictions upon the
Chief Executive Officer and the President. The Executive Vice Presidents, if
any, shall have such designations and shall perform such other duties and have
such other powers as the Board or the Chief Executive Officer or President may
from time to time prescribe.
Section 4.11 The Secretary. The Secretary shall have the following
-------------
powers and duties:
(a) he or she shall keep or cause to be kept a record of all the
proceedings of the meetings of the stockholders and of the Board of
Directors in books provided for that purpose;
19
<PAGE>
Draft--March 29, 1999
(b) he or she shall cause all notices to be duly given in accordance
with the provisions of these Bylaws and as required by law;
(c) whenever any committee shall be appointed pursuant to a
resolution of the Board of Directors, he or she shall furnish a copy of
such resolution to the members of such committee;
(d) he or she shall be the custodian of the records and of the seal
of the Corporation and cause such seal (or a facsimile thereof) to be
affixed to all certificates representing shares of the Corporation prior to
the issuance thereof and to all instruments the execution of which on
behalf of the Corporation under its seal shall have been duly authorized in
accordance with these Bylaws, and when so affixed he or she may attest the
same;
(e) he or she shall properly maintain and file all books, reports,
statements, certificates and all other documents and records required by
law, the Restated Certificate of Incorporation or these Bylaws;
(f) he or she shall have charge of the stock books and ledgers of the
Corporation and shall cause the stock and transfer books to be kept in such
manner as to show at any time the number of shares of stock of the
Corporation of each class issued and outstanding, the names and the
addresses of the holders of record of such shares, the number of shares
held by each holder and the date as of which each became such holder of
record;
(g) he or she shall sign (unless the Chief Financial Officer, the
Treasurer, an Assistant Treasurer or an Assistant Secretary shall have
signed) certificates representing shares of the Corporation, the issuance
of which shall have been authorized by the Board of Directors; and
(h) he or she shall perform, in general, all duties incident to the
office of secretary and such other duties as may be specified in these
Bylaws or as may be assigned to him or her from time to time by the Board
of Directors, or the President.
Section 4.12 The Chief Financial Officer. The Chief Financial Officer
---------------------------
of the Corporation shall have the following powers and duties:
20
<PAGE>
Draft--March 29, 1999
(a) he or she shall have charge and supervision over and be
responsible for the moneys, securities, receipts and disbursements of the
Corporation, and shall keep or cause to be kept full and accurate records
of all receipts of the Corporation;
(b) he or she shall cause the moneys and other valuable effects of
the Corporation to be deposited in the name and to the credit of the
Corporation in such bank companies or with such bankers or other
depositaries as shall be selected in accordance with Section 8.05 of these
Bylaws;
(c) he or she shall cause the moneys of the Corporation to be
disbursed by checks or drafts (signed as provided in Section 8.06 of these
Bylaws) upon the authorized depositaries of the Corporation and cause to be
taken and preserved proper vouchers for all moneys disbursed;
(d) he or she shall render to the Board of Directors, the Chief
Executive Officer or the President, whenever requested, a statement of the
financial condition of the Corporation and of all his or her transactions
as Chief Financial Officer, and render a full financial report at the
annual meeting of the stockholders, if called upon to do so;
(e) he or she shall be empowered from time to time to require from
all officers or agents or employees of the Corporation reports or
statements giving such information as he or she may desire with respect to
any and all financial transactions of the Corporation;
(f) he or she shall sign (unless the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary shall have signed)
certificates representing stock of the Corporation, the issuance of which
shall have been authorized by the Board of Directors; and
(g) he or she shall perform, in general, all duties incident to the
office of treasurer and such other duties as may be specified in these
Bylaws or as may be assigned to him or her from time to time by the Board
of Directors or the Chief Executive Officer.
Section 4.13 The Treasurer. The Treasurer shall perform such duties
-------------
and exercise such powers as may be assigned to him or her from time to time by
the Chief Financial Officer. In the absence of the Chief Financial Officer, the
duties of the Chief
21
<PAGE>
Draft--March 29, 1999
Financial Officer shall be performed and his or her powers may be exercised by
the Treasurer, subject in any case to review and superseding action by the Board
of Directors or the Chief Executive Officer.
Section 4.14 Additional Officers. The Board of Directors may appoint
-------------------
such other officers and agents as it may deem appropriate, and such other
officers and agents shall hold their offices for such terms and shall exercise
such powers and perform such duties as may be determined from time to time by
the Board of Directors. The Board of Directors from time to time may delegate
to any officer or agent the power to appoint subordinate officers or agents and
to prescribe their respective rights, terms of office, authorities and duties.
Any such officer or agent may remove any such subordinate officer or agent
appointed by him or her, for or without cause, but such removal shall be without
prejudice to the contractual rights of such subordinate officer or agent, if
any, with the Corporation.
Section 4.15 Security. The Board of Directors may require any
--------
officer, agent or employee of the Corporation to provide security for the
faithful performance of his or her duties, in such amount and of such character
as may be determined from time to time by the Board of Directors.
ARTICLE V
---------
CAPITAL STOCK
-------------
Section 5.01 Certificates of Stock, Uncertificated Shares. The shares
--------------------------------------------
of the Corporation shall be represented by certificates, provided that the Board
of Directors may provide by resolution or resolutions that some or all of any or
all classes or series of the stock of the Corporation shall be uncertificated
shares. Any such resolution shall not apply to shares represented by a
certificate until each certificate is surrendered to the Corporation.
Notwithstanding the adoption of such a resolution by the Board of Directors,
every holder of stock in the Corporation represented by certificates, and upon
request every holder of uncertificated shares shall be entitled to have a
certificate signed by, or in the name of, the Corporation, by the Chief
Executive Officer, the President or an Executive Vice President, and by the
Chief Financial Officer, the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary, representing the number of shares
registered in certificate form. Such certificate shall be in such form as the
Board of Directors may determine, to the extent consistent with applicable law,
the Restated Certificate of Incorporation and these Bylaws.
22
<PAGE>
Draft--March 29, 1999
Section 5.02 Signatures; Facsimile. All of such signatures on the
---------------------
certificate referred to in Section 5.01 of these Bylaws may be a facsimile,
engraved or printed, to the extent permitted by law. In case any officer,
transfer agent or registrar who has signed, or whose facsimile signature has
been placed upon a certificate representing shares of the Corporation shall have
ceased to be such officer, transfer agent or registrar before such certificate
is issued, it may be issued by the Corporation with the same effect as if he or
she were such officer, transfer agent or registrar at the date of issue.
Section 5.03 Lost, Stolen or Destroyed Certificates. The Board of
--------------------------------------
Directors may direct that a new certificate be issued in place of any
certificate theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon delivery to the Board of Directors of an affidavit of
the owner or owners of such certificate, setting forth such allegation. The
Board of Directors may require the owner of such lost, stolen or destroyed
certificate, or his or her legal representative, to give the Corporation a bond
sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of any such new certificate.
Section 5.04 Transfer of Stock. Upon surrender to the Corporation or
-----------------
the transfer agent of the Corporation of a certificate for shares, duly endorsed
or accompanied by appropriate evidence of succession, assignment or authority to
transfer, the Corporation shall issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Within a reasonable time after the transfer of uncertificated stock, the
Corporation shall send to the registered owner thereof a written notice
containing the information required to be set forth or stated on certificates
pursuant to Sections 151, 156, 202(a) or 218(a) of the General Corporation Law
of the State of Delaware. Subject to the provisions of the Restated Certificate
of Incorporation and these Bylaws, the Board of Directors may prescribe such
additional rules and regulations as it may deem appropriate relating to the
issue, transfer and registration of shares of the Corporation.
Section 5.05 Record Date. In order to determine the stockholders
-----------
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix, in advance, a record date,
which record date shall not precede the date on which the resolution fixing the
record date is adopted by the Board of Directors, and which shall not be more
than sixty (60) nor less than ten (10) days before the date of such meeting. If
no record date is fixed the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice
23
<PAGE>
Draft--March 29, 1999
is waived, at the close of business on the day next preceding the day on
which the meeting is held. A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
-------- -------
fix a new record date for the adjourned meeting.
In order that the Corporation may determine the stockholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights of the stockholders entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty (60) days prior to
such action. If no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
Section 5.06 Registered Stockholders. Prior to due surrender of a
-----------------------
certificate for registration of transfer, the Corporation may treat the
registered owner as the person exclusively entitled to receive dividends and
other distributions, to vote, to receive notice and otherwise to exercise all
the rights and powers of the owner of the shares represented by such
certificate, and the Corporation shall not be bound to recognize any equitable
or legal claim to or interest in such shares on the part of any other person,
whether or not the Corporation shall have notice of such claim or interests,
except as otherwise required by applicable law. Whenever any transfer of shares
shall be made for collateral security, and not absolutely, it shall be so
expressed in the entry of the transfer if, when the certificates are presented
to the Corporation for transfer or uncertificated shares are requested to be
transferred, both the transferor and transferee request the Corporation to do
so.
Section 5.07 Transfer Agent and Registrar. The Board of Directors may
----------------------------
appoint one or more transfer agents and one or more registrars, and may require
all certificates representing shares to bear the signature of any such transfer
agents or registrars.
24
<PAGE>
Draft--March 29, 1999
ARTICLE VI
----------
INDEMNIFICATION
---------------
Section 6.01 Nature of Indemnity. The Corporation shall indemnify any
-------------------
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (a "Proceeding"),
----------
whether civil, criminal, administrative or investigative, by reason of the fact
that he or she is or was or has agreed to become a director or officer of the
Corporation, or is or was serving or has agreed to serve at the request of the
Corporation as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other entity or enterprise, including
service with respect to employee benefit plans, or by reason of any action
alleged to have been taken or omitted in such capacity, against costs, charges,
expenses, liabilities and losses (including attorneys' fees, judgments, fines,
ERISA excise taxes or penalties and amounts paid or to be paid in settlement)
actually and reasonably incurred by him or her or on his or her behalf in
connection with such Proceeding and any appeal therefrom, if he or she acted in
good faith and in a manner he or she reasonably believed to be in or not opposed
to the best interests of the Corporation and, with respect to any criminal
action or proceeding, had no reasonable cause to believe that his or her conduct
was unlawful; except that in the case of an action or suit by or in the name of
the Corporation to procure a judgment in its favor (1) such indemnification
-
shall be limited to expenses (including attorneys' fees) actually and reasonably
incurred by such person in the defense or settlement of such action or suit, and
(2) no indemnification shall be made in respect of any claim, issue or matter as
-
to which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Delaware Court of Chancery or the court
in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Delaware Court of Chancery or such other court shall deem
proper. Notwithstanding the foregoing, but subject to Section 6.04 of these
Bylaws, the Corporation shall not be obligated to indemnify a director or
officer of the Corporation in respect of a Proceeding (or such part thereof)
instituted by such director or officer, unless such Proceeding (or such part
thereof) has been authorized by the Board of Directors. The Corporation may, by
action of its Board of Directors, provide indemnification to employees and
agents of the Corporation with the same scope and effect as the foregoing
indemnification of directors and officers.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
---- ----------
shall not, of
25
<PAGE>
Draft--March 29, 1999
itself, create a presumption that the person did not act in good faith and in a
manner which he or she reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his or her conduct was
unlawful.
Section 6.02 Determination that Indemnification is Proper. Unless
--------------------------------------------
ordered by a court, no indemnification of a present or former director or
officer of the Corporation under Section 6.01 hereof shall be made by the
Corporation if a determination is made by the Corporation that indemnification
of the present or former director or officer is not proper in the circumstances
because he or she has not met the applicable standard of conduct set forth in
Section 6.01 hereof.
Section 6.03 Advance Payment of Expenses. Expenses (including
---------------------------
attorneys' fees) incurred by a present or former director or officer in
defending any Proceeding shall be paid by the Corporation in advance of the
final disposition of such Proceeding upon receipt of an undertaking by or on
behalf of the director or officer to repay such amount if it shall ultimately be
determined that such person is not entitled to be indemnified by the Corporation
as authorized in this Article. Such expenses (including attorneys' fees)
incurred by former directors and officers may be so paid upon such terms and
conditions, if any, as the Corporation deems appropriate. If the director or
officer agrees to such representation, the Board of Directors may authorize the
Corporation's counsel to represent such director or officer in any Proceeding,
whether or not the Corporation is a party to such Proceeding.
Section 6.04 Procedure for Indemnification of Directors and Officers.
-------------------------------------------------------
Any indemnification of a director or officer of the Corporation under Section
6.01, or advance of costs, charges and expenses to a director or officer under
Section 6.03 of these Bylaws, shall be made promptly, and in any event within
thirty (30) days, upon the written request of the director or officer. If a
determination by the Corporation that the director or officer is entitled to
indemnification pursuant to this Article VI is required, and the Corporation
fails to respond within sixty (60) days to a written request for indemnity, the
Corporation shall be deemed to have approved such request. If the Corporation
denies a written request for indemnity or advancement of expenses, in whole or
in part, or if payment in full pursuant to such request is not made within
thirty (30) days, the right to indemnification or advances as granted by this
Article VI shall be enforceable by the director or officer in any court of
competent jurisdiction. Such person's costs and expenses incurred in connection
with successfully establishing his or her right to
26
<PAGE>
Draft--March 29, 1999
indemnification or advances, in whole or in part, in any such action shall also
be indemnified by the Corporation. It shall be a defense to any such action
(other than an action brought to enforce a claim for the advance of costs,
charges and expenses under Section 6.03 of these Bylaws where the required
undertaking, if any, has been tendered to the Corporation) that the claimant has
not met the standard of conduct set forth in Section 6.01 of these Bylaws, but
the burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its Board of Directors, its independent
legal counsel, and its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in Section 6.01 of these Bylaws, nor the fact that there has been an
actual determination by the Corporation (including its Board of Directors, its
independent legal counsel, and its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that the claimant has not met the applicable standard of conduct.
Section 6.05 Survival; Preservation of Other Rights. The foregoing
--------------------------------------
indemnification and advancement provisions shall be deemed to be a contract
between the Corporation and each director or officer who serves in any such
capacity at any time while these provisions as well as the relevant provisions
of the General Corporation Law of the State of Delaware are in effect and any
repeal or modification thereof shall not affect any right or obligation then
existing with respect to any state of facts then or previously existing or any
action, suit or proceeding previously or thereafter brought or threatened based
in whole or in part upon any such state of facts. Such a "contract right" may
not be modified retroactively without the consent of such director or officer.
The indemnification and advancement provided by this Article VI shall
not be deemed exclusive of any other rights to which those indemnified may be
entitled under any by-law, agreement, vote of stockholders or disinterested
Directors or otherwise, both as to action in such person's official capacity and
as to action in another capacity while holding such office, and, once an event
has occurred with respect to which a Director or Officer is or may be entitled
to indemnification under this Article, such entitlement shall continue as to a
person who has ceased to be a director or officer and shall inure to the benefit
of the heirs, executors and administrators of such a person.
Section 6.06 Insurance. The Corporation may purchase and maintain
---------
insurance on behalf of any person who is or was or has agreed to become a
director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director or officer of another corporation, partnership,
joint venture or other entity against
27
<PAGE>
Draft--March 29, 1999
any liability asserted against such person and incurred by such person or on
such person's behalf in any such capacity, or arising out of such person's
status as such, whether or not the Corporation would have the power to indemnify
him or her against such liability under the provisions of this Article VI;
provided that such insurance is available on acceptable terms, which
- --------
determination shall be made by a vote of a majority of the entire Board of
Directors.
Section 6.07 Severability. If this Article VI or any portion hereof
------------
shall be invalidated on any ground by any court of competent jurisdiction, then
the Corporation shall nevertheless advance expenses and indemnify each director
or officer as to costs, charges and expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement with respect to any Proceeding
to the fullest extent permitted by any applicable portion of this Article VI
that shall not have been invalidated and to the fullest extent permitted by
applicable law.
ARTICLE VII
-----------
OFFICES
-------
Section 7.01 Registered Office. The registered office of the
-----------------
Corporation in the State of Delaware shall be located at Corporation Center,
1209 Orange Street in the City of Wilmington, County of New Castle.
Section 7.02 Other Offices. The Corporation may maintain offices or
-------------
places of business at such other locations within or without the State of
Delaware as the Board of Directors may from time to time determine or as the
business of the Corporation may require.
ARTICLE VII
-----------
GENERAL PROVISIONS
------------------
Section 8.01 Dividends. Subject to any applicable provisions of law
---------
and the Restated Certificate of Incorporation, dividends upon the shares of
capital stock of the Corporation may be declared by the Board of Directors at
any regular or special meeting
28
<PAGE>
Draft--March 29, 1999
of the Board of Directors and any such dividend may be paid in cash, property or
shares of the Corporation's capital stock.
A member of the Board of Directors, or a member of any committee
designated by the Board of Directors shall be fully protected in relying in good
faith upon the records of the Corporation and upon such information, opinions,
reports or statements presented to the Corporation by any of its officers or
employees, or committees of the Board of Directors, or by any other person as to
matters the Director reasonably believes are within such other person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Corporation, as to the value and amount of the assets,
liabilities and/or net profits of the Corporation, or any other facts pertinent
to the existence and amount of surplus or other funds from which dividends might
properly be declared and paid.
Section 8.02 Reserves. There may be set aside out of any funds of the
--------
Corporation available for dividends such sum or sums as the Board of Directors
from time to time, in its absolute discretion, thinks proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation or for such other purpose as the
Board of Directors shall think conducive to the interests of the Corporation,
and the Board of Directors may similarly modify or abolish any such reserve.
Section 8.03 Execution of Instruments. The Chief Executive Officer,
------------------------
the President, any Executive Vice President, the Secretary, the Chief Financial
Officer or the Treasurer may enter into any contract or execute and deliver any
instrument in the name and on behalf of the Corporation. The Board of Directors
or the Chief Executive Officer may authorize any other officer or agent to enter
into any contract or execute and deliver any instrument in the name and on
behalf of the Corporation. Any such authorization may be general or limited to
specific contracts or instruments.
Section 8.04 Corporate Indebtedness. No loan shall be contracted on
----------------------
behalf of the Corporation, and no evidence of indebtedness shall be issued in
its name, unless (i) authorized by the Board of Directors, the Executive
Committee or the Chief Executive Officer, or (ii) entered into in the ordinary
course of business and for an amount less than $20,000. Such authorization may
be general or confined to specific instances. Loans so authorized may be
effected at any time for the Corporation from any bank company or other
institution, or from any firm, corporation or individual. All bonds,
debentures, notes and other obligations or evidences of indebtedness of the
Corporation issued for such loans shall be made, executed and delivered as the
Board of Directors, the
29
<PAGE>
Executive Committee or the Chief Executive Officer shall authorize. When so
authorized by the Board of Directors or the Chief Executive Officer, any part of
or all the properties, including contract rights, assets, business or good will
of the Corporation, whether then owned or thereafter acquired, may be mortgaged,
pledged, hypothecated or conveyed or assigned as security for the payment of
such bonds, debentures, notes and other obligations or evidences of indebtedness
of the Corporation, and of the interest thereon, by instruments executed and
delivered in the name of the Corporation.
Section 8.05 Deposits. Any funds of the Corporation may be deposited
--------
from time to time in such bank companies or with such bankers or other
depositaries as may be determined by the Board of Directors, the Chief Executive
Officer, the Treasurer or the Chief Financial Officer or by such officers or
agents as may be authorized by the Board of Directors or the Chief Executive
Officer, the Treasurer or the Chief Financial Officer to make such
determination.
Section 8.06 Checks. All checks or demands for money and notes of the
------
Corporation shall be signed by such officer or officers or such agent or agents
of the Corporation, and in such manner, as the Board of Directors or the Chief
Executive Officer from time to time may determine.
Section 8.07 Sale, Transfer, etc. of Securities. To the extent
----------------------------------
authorized by the Board of Directors or by the Chief Executive Officer, the
President, any Executive Vice President, the Secretary, the Chief Financial
Officer or the Treasurer or any other officers designated by the Board of
Directors or the Chief Executive Officer may sell, transfer, endorse, and assign
any shares of stock, bonds or other securities owned by or held in the name of
the Corporation, and may make, execute and deliver in the name of the
Corporation, under its corporate seal (if required), any instruments that may be
appropriate to effect any such sale, transfer, endorsement or assignment.
Section 8.08 Voting as Stockholder. Unless otherwise determined by
---------------------
resolution of the Board of Directors, the Chief Executive Officer, the President
or any Executive Vice President shall have full power and authority on behalf of
the Corporation to attend any meeting of stockholders of any corporation in
which the Corporation may hold stock, and to act, vote (or execute proxies to
vote) and exercise in person or by proxy all other rights, powers and privileges
incident to the ownership of such stock. Such officers acting on behalf of the
Corporation shall have full power and authority to execute any instrument
expressing consent to or dissent from any action of any such corporation without
a meeting. The Board of Directors may by resolution from time to time confer
such power and authority upon any other person or persons.
30
<PAGE>
Draft--March 29, 1999
Section 8.09 Fiscal Year. The fiscal year of the Corporation shall
-----------
commence on the first day of January of each year (except for the Corporation's
first fiscal year which shall commence on the date of incorporation) and shall
terminate in each case on December 31.
Section 8.10 Seal. The seal of the Corporation shall be circular in
----
form and shall contain the name of the Corporation, the year of its
incorporation and the words "Corporate Seal" and "Delaware." The form of such
seal shall be subject to alteration by the Board of Directors. The seal may be
used by causing it or a facsimile thereof to be impressed, affixed or
reproduced, or may be used in any other lawful manner.
Section 8.11 Books and Records; Inspection. Except to the extent
-----------------------------
otherwise required by law, the books and records of the Corporation shall be
kept at such place or places within or without the State of Delaware as may be
determined from time to time by the Board of Directors.
ARTICLE IX
----------
AMENDMENT OF BYLAWS
-------------------
Section 9.01 Amendment. Subject to the provisions of the Restated
---------
Certificate of Incorporation, these Bylaws may be amended, altered or repealed:
(a) by resolution adopted by a majority of the Board of Directors at
any special or regular meeting of the Board if, in the case of such special
meeting only, notice of such amendment, alteration or repeal is contained
in the notice or waiver of notice of such meeting; or
(b) at any regular or special meeting of the stockholders upon the
affirmative vote of the holders of a majority of the combined voting power
of the outstanding shares of the Corporation entitled to vote generally in
the election of Directors if, in the case of such special meeting only,
notice of such amendment, alteration or repeal is contained in the notice
or waiver of notice of such meeting.
31
<PAGE>
Draft--March 29, 1999
ARTICLE X
---------
CONSTRUCTION
------------
Section 10.01 Construction. In the event of any conflict between the
------------
provisions of these Bylaws as in effect from time to time and the provisions of
the Restated Certificate of Incorporation of the Corporation as in effect from
time to time, the provisions of such Restated Certificate of Incorporation shall
be controlling.
32
<PAGE>
EXHIBIT 4.1
- --------------------------------------------------------------------------------
AMERICAN BANK NOTE COMPANY PRODUCTION COORDINATOR: LISA MARTIN: 215-830-2155
680 BLAIR MILL ROAD PROOF OF FEBRUARY 23, 1999
HORSHAM, PA 19044 IXL ENTERPRISES, INC.
(215) 657-3480 H 59034face
- --------------------------------------------------------------------------------
SALES: A. HOBBS: 404-525-1455 OPERATOR: eg/HJ
- --------------------------------------------------------------------------------
/NET/BANKNOTE/HOME 12/IXL/H59034 REV.3
- --------------------------------------------------------------------------------
Number Shares
COMMON STOCK COMMON STOCK
iXL ENTERPRISES, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE CUSIP 450718 10 1
This Certifies that
SEE REVERSE FOR
CERTAIN DEFINITIONS
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, PAR VALUE OF
$0.01 PER SHARE, OF
iXL ENTERPRISES, INC. transferable on the books of the Corporation by the holder
hereof in person or by duly authorized attorney upon surrender of this
certificate properly endorsed.
This certificate is not valid unless countersigned and registered by the
Transfer Agent and Registrar.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed with the facsimile signatures of its duly authorized officers and its
facsimile seal affixed.
Dated:
COUNTERSIGNED AND REGISTERED:
SUNTRUST BANK, ATLANTA
TRANSFER AGENT
AND REGISTRAR
BY
AUTHORIZED SIGNATURE:
[SEAL]
/s/ James S. Altenbach /s/ U. Bertram Ellis, Jr.
SECRETARY CHAIRMAN AND CHIEF EXECUTIVE OFFICER
<PAGE>
iXL ENTERPRISES, INC.
The Corporation has more than one class of capital stock authorized to be
issued. The Corporation will furnish without charge to each stockholder who so
requests the powers, designations, preferences and relative, participating,
optional or other special rights of each class of stock or series thereof
authorized to be issued and the qualifications, limitations or restrictions of
such preferences and/or rights.
The following abbreviations, when used in the Inscription on the face of
this certificate, shall be construed as though they were written out in its
entirety according to applicable laws or regulations;
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT-..........................as Custodian for
TEN ENT - as tenants by the entireties ..........................................
JT TEN - as joint tenants with right of (Minor)
survivorship and not as tenants under Uniform Gifts to Minors Act of
in common ........................................
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, ___________________ hereby sell, assign and transfer
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
INDENTIFYING NUMBER OF ASSIGNEE
______________________________________
______________________________________
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING ZIP CODE OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
__________________________________________________________________________Shares
of the common stock represented by this Certificate, and do hereby irrevocably
constitute and appoint
________________________________________________________________________Attorney
to transfer such stock on the books of the Corporation with full power of
substitution in the premises.
Dated______________________________
___________________________________________
NOTICE THE SIGNATURE(S) TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT, OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed:___________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION SUCH AS A
SECURITIES BROKER/DEALER, COMMERCIAL BANK,
TRUST COMPANY, SAVINGS ASSOCIATION OR A
CREDIT UNION PARTICIPATING IN A MEDALLION
PROGRAM.
<TABLE>
<S> <C>
- ---------------------------------------------------- ----------------------------------------------------
AMERICAN BANK NOTE COMPANY PRODUCTION COORDINATION: LISA MARTIN; 215-830-2155
680 BLAIR MILL ROAD PROOF OF FEBRUARY 23, 1999
HORSHAM, PA 19044 IXL ENTERPRISES, INC,
(215) 657-3480 H 59034BACK
- ---------------------------------------------------- ----------------------------------------------------
SALES: A. HOBBS: 404-525-1455 OPERATION: G/HJ
- ---------------------------------------------------- ----------------------------------------------------
/NET/BANKNOTE/HOME 12/IXI./H59034 REV. 2
- ---------------------------------------------------- ----------------------------------------------------
</TABLE>
<PAGE>
Exhibit 4.2
FORM OF MANDATORILY
EXERCISABLE COMMON
STOCK WARRANT AGREEMENT
Void after 5:00 p.m. Atlanta, Georgia Time,
on ___________________
Warrant to Purchase ___________ Shares of Common Stock
THIS WARRANT AND THE SHARES OF COMMON STOCK UNDERLYING THIS WARRANT
(collectively, the "Securities") HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (the "Act") AND MAY NOT BE SOLD OR
TRANSFERRED, UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT OR EXEMPTION
FROM SUCH REGISTRATION UNDER THE ACT IS APPLICABLE.
_________________________________
WARRANT TO PURCHASE COMMON STOCK
OF
IXL ENTERPRISES, INC.
a Delaware Corporation
This is to certify that, FOR VALUE RECEIVED, ______________________
("Holder"), is entitled to purchase, subject to the provisions of this Warrant,
from IXL Enterprises, Inc., a Delaware Corporation (the "Company"),
_____________ (____) fully paid, validly issued and non-assessable Shares of
Class B common stock, $0.01 par value, of the Company (the "Common Stock") at
any time through and including ____________ ("Exercise Period"). The Warrant
Exercise Price shall be $___ for each share of Common Stock. The number of
shares of Common Stock to be received upon the exercise of this Warrant and the
price to be paid for each share of Common Stock may be adjusted from time to
time as hereinafter set forth. The shares of Common Stock deliverable upon such
exercise, and as adjusted from time to time, are hereinafter sometimes referred
to as "Warrant Shares" and the exercise price of a share of common stock in
effect at any time and as adjusted from time to time is hereinafter sometimes
referred to as the "Exercise Price."
1. Conditions of Exercise. This Warrant, subject to the provisions
----------------------
hereof, may be exercised in whole or in part at any time by Holder during the
Exercise Period, if Holder:
(a) presents and surrenders this Warrant to the Company at its principal
office, or at the office of its stock transfer agent, if any, with the
Purchase Form annexed hereto (the "Purchase Form"), duly executed and
accompanied by payment in full of the Exercise Price for the number of
Warrant Shares specified in such Purchase form (unless Holder elects a
Cashless Exercise in accordance with Section 2(c) hereof);
-1-
<PAGE>
(b) executes and delivers to the Company an Agreement To Be Bound,
substantially in the form of EXHIBIT "A" attached hereto and made a
-----------
part hereof, evidencing Holder's agreement to become a party to, and
become bound by the terms and conditions of, that certain Second
Amended and Restated Stockholders' Agreement among the stockholders of
the Company, dated as of December 17, 1997, as amended, as the same
may be amended from time to time (the "Stockholders' Agreement"); and
(c) executes and delivers to the Company an Agreement To Be Bound,
substantially in the form of EXHIBIT "B" attached hereto and made a
-----------
part hereof, evidencing Holder's agreement to become a party to, and
become bound by the terms and conditions of, that certain Registration
Rights Agreement among the stockholders of the Company, dated as of
April 30, 1996, as the same may be amended from time to time (the
"Registration Rights Agreement").
In addition to the foregoing, if an exercise occurs in connection with a
Company Transaction (as defined in Section 11 hereof), Holder shall execute and
deliver to the Company any documents or instruments that may be reasonably
requested by the Company or any holder of Common Stock to evidence Holder's
participation in the Company Transaction by selling those Warrant Shares
required to be sold by Holder under the terms and conditions of Section 2.2 or
2.3 of the Stockholders' Agreement, as applicable.
The Company shall not be obligated to honor or accept any attempted exercise
by Holder in which Holder fails, for any reason whatsoever, to comply with any
of the conditions of exercise set forth in this Section 1, including, without
limitation, the inability of Holder to make truthfully the representations
required to be made by Holder in the Purchase Form. In event of such failure to
comply, the Company promptly shall provide written notice of such failure to
Holder, specifying in reasonable detail the cause of such failure.
2. Delivery of Stock Certificates; Partial Exercise; Cashless Exercise.
-------------------------------------------------------------------
(a) As soon as reasonably practicable after each valid exercise of the
Warrant, but not later than three (3) business days from the date of
such exercise, the Company shall issue and deliver to Holder a
certificate or certificates for the Warrant Shares issuable upon such
exercise, registered in the name of Holder or its designee. The
Common Stock and any Warrants issued in exchange for this Warrant
shall be issued with such restrictive legends as are required by the
Act or the Regulations thereunder, and by the Stockholders' Agreement.
(b) If this Warrant should be exercised in part only, the Company shall,
upon surrender of this Warrant for cancellation, execute and deliver a
new Warrant evidencing the rights of Holder thereof to purchase the
balance of the Warrant Shares purchasable thereunder.
-2-
<PAGE>
(c) At the election of Holder, in lieu of paying the Exercise Price in
cash, this Warrant may be exercised by reducing the number of shares
of Common Stock received upon such exercise (a "Cashless Exercise").
The number of shares of Common Stock received upon a Cashless Exercise
shall be determined based on the formula:
N = E
-----------
FMV
where:
N = the number of Warrant Shares received upon a Cashless
Exercise
E = the aggregate Exercise Price for the number of Warrants
being exercised that would have been paid without the
Cashless Exercise
FMV = the per share Fair Market Value (as such term is defined
in the Stockholders' Agreement) of the Common Stock as of
the date of exercise; provided, however, that if exercise
occurs in connection with a Mandatory Exercise Transaction,
the Fair Market Value shall be equal to the consideration
paid for the Common Stock in connection with such Mandatory
Exercise Transaction (which, in the case of a public
offering of the Common Stock, shall be the offering price
thereof)
(d) Upon receipt by the Company of this Warrant at its office, or by the
stock transfer agent of the Company at its office, in proper form for
exercise, accompanied by payment of the Exercise Price (unless Holder
elects to exercise this Warrant in accordance with subsection (c)
above) and any other documents or instruments required hereunder for a
valid exercise of this Warrant, Holder shall be deemed to be the
holder of record of the shares of Common Stock issuable upon such
exercise, notwithstanding that the stock transfer books of the Company
shall then be closed or that certificates representing such shares of
Common Stock shall not then be physically delivered to Holder.
3. Reservation of Shares. The Company shall at all times reserve for
---------------------
issuance and/or delivery upon exercise of this Warrant such number of shares of
Common Stock as shall be required for issuance and delivery upon exercise of the
Warrant.
4. Fractional Shares. No fractional shares or script representing fractional
-----------------
shares shall be issued upon the exercise of this Warrant. With respect to any
fraction of a share called for upon any exercise hereof, the Company shall pay
to Holder an amount in cash equal to such fraction multiplied by the current
market value of a share, as reasonably determined by the Company.
5. Exchange, Transfer, Assignment or Loss of Warrant. This Warrant is
-------------------------------------------------
exchangeable, without expense, at the option of Holder, upon presentation and
surrender hereof to the Company or at the office of its stock transfer agent, if
any, for other warrants of different denominations entitling
-3-
<PAGE>
the holder thereof to purchase in the aggregate the same number of shares of
Common Stock purchasable hereunder. In addition, upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Warrant, if mutilated, the Company will execute and deliver a new Warrant of
like tenor and date. Any such new Warrant executed and delivered shall
constitute an additional contractual obligation on the part of the Company,
whether or not this Warrant so lost, stolen, destroyed or mutilated shall be at
any time enforceable by anyone. Notwithstanding any implication to the contrary
contained herein, this Warrant may not be transferred by Holder prior to
exercise, and any attempt to transfer this Warrant shall be void and of no force
and effect. The term "Warrant" as used herein includes any Warrants into which
this Warrant may be divided or exchanged.
6. Rights of Holder. Except as expressly provided to the contrary in the
----------------
Stockholders' Agreement, Holder shall not, by virtue hereof, be entitled to any
rights of a shareholder in the Company, either at law or equity, and the rights
of Holder are limited to those expressed in the Warrant and are not enforceable
against the Company except to the extent set forth herein.
7. Anti-Dilution Provisions. The Exercise Price in effect at any time and
------------------------
the number and kind of securities purchasable upon the exercise of the Warrants
shall be subject to adjustment from time to time upon the happening of certain
events as follows:
(a) In case the Company shall (i) declare a stock dividend or make a
distribution on its outstanding shares of Common Stock in shares of
Common Stock, (ii) subdivide or reclassify its outstanding shares of
Common Stock into a greater number of shares, or (iii) combine or
reclassify its outstanding share of Common Stock into a smaller number
of shares, the Exercise Price in effect at the time of the record date
for such dividend or distribution or of the effective date of such
subdivision, combination or reclassification shall be adjusted so that
it shall equal the price determined by multiplying the Exercise Price
by a fraction, the denominator of which shall be the number of shares
of Common Stock outstanding after giving effect to such action, and
the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such action. Such adjustment shall
be made successively whenever any event listed above shall occur.
(b) Whenever the Exercise Price payable upon exercise of each Warrant is
adjusted pursuant to Subsection (a) above, the number of shares
purchasable upon exercise of this Warrant (the "Warrant Number") shall
simultaneously be adjusted by multiplying the number of shares
initially issuable upon exercise of this Warrant by the Exercise Price
in effect on the date hereof and dividing the product so obtained by
the Exercise Price, as adjusted.
(c) Whenever the Exercise Price is adjusted, as herein provided, the
Company shall promptly cause a notice setting forth the adjusted
Exercise Price and adjusted Warrant Number to be mailed to Holder, at
Holder's last address appearing in the Warrant Register, and shall
cause a certified copy thereof to be mailed to its transfer agent, if
any. The Company may retain a firm of independent certified public
-4-
<PAGE>
accountants selected by the Board of Directors (who may be the regular
accountants employed by the Company) to make any computation required
by this Section 7, and a certificate signed by such firm shall be
conclusive evidence of the correctness of such adjustment.
(d) In the event that at any time, as a result of an adjustment made
pursuant to Subsection (a) above, Holder thereafter shall become
entitled to receive any shares of the Company, other than Common
Stock, thereafter the number of such other shares so receivable upon
exercise of this Warrant shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to the Common Stock contained in
Subsection (a) above.
(e) Irrespective of any adjustments in the Exercise Price or the number or
kind of shares purchasable upon exercise of this Warrant, Warrants
theretofore or thereafter issued may continue to express the same
price and number and kind of shares as are stated in the similar
Warrants initially issuable pursuant to this Agreement.
(f) In addition to the foregoing, if the Company distributes any rights,
options or warrants (whether or not immediately exercisable) to all
holders of the Common Stock entitling them to purchase shares of
Common Stock at a price per share less than the Fair Market Value (as
determined under the Stockholders' Agreement) per share on the record
date relating to such distribution, the Warrant Number shall be
adjusted in accordance with the formula:
W' = W x O + N
--------------
O + (N x P)/M
where:
W' = the adjusted Warrant Number.
W = the Warrant Number immediately prior to the record
date for any such distribution.
O = the number of shares of Common Stock outstanding
on the record date for any such distribution.
N = the number of additional shares of Common Stock
issuable upon exercise of such rights, options
or warrants.
P = the exercise price per share of such rights, options
or warrants.
M = the Fair Market Value per share of Common
Stock on the record date for any such distribution.
-5-
<PAGE>
The adjustment shall be made successively whenever any such
rights, options or warrants are issued and shall become effective
immediately after the record date for the determination of
stockholders entitled to receive the rights, options or warrants. If
at the end of the period during which such rights, options or warrants
are exercisable, not all rights, options or warrants shall have been
exercised, the adjusted Warrant Number shall be immediately readjusted
to what it would have been if "N" in the above formula had been the
number of shares actually issued.
8. Officer's Certificate. Whenever the Exercise Price or the Warrant Number
---------------------
shall be adjusted as required by the provisions of Section 7, the Company shall
forthwith file in the custody of its Secretary or an Assistant Secretary at its
principal office and with its stock transfer agent, if any, an officer's
certificate showing the adjusted Exercise Price determined as herein provided,
setting forth in reasonable detail the facts requiring such adjustment,
including a statement of the number of additional shares of Common Stock, if
any, and such other facts as shall be necessary to show the reason for and the
manner computing such adjustment. Each such officer's certificate shall be made
available at all reasonable times for inspection by Holder and the Company shall
forthwith, after each such adjustment, mail a copy by certified mail of such
certificate to Holder.
9. Notices to Warrant Holders. So long as this Warrant shall be outstanding,
--------------------------
(a) if the Company shall pay any dividend or make any distribution upon the
Common Stock or (b) if the Company shall offer to all the holders of Common
Stock for subscription or purchase by them any share of any class or any other
rights or (c) if the capital reorganization of the Company, reclassification of
the capital stock of the Company, consolidation or merger of the Company with or
into another corporation, sale of all or substantially all of the property and
assets of the Company to another corporation or voluntary or involuntary
dissolution, liquidation or winding up of the Company shall be effected, then in
any such case, the Company shall cause to be mailed by certified mail to the
holder, at least ten days prior to the date specified in (x) or (y) below, as
the case may be, a notice containing a brief description of the proposed action
and stating the date on which (x) a record is to be taken for the purpose of
such dividend, distribution or rights, or (y) such reclassification,
reorganization, consolidation, merger, sale, dissolution, liquidation or winding
up is to take place and date, if any is to be fixed, as of which the holders of
the Common Stock or other securities shall receive cash or other property
deliverable upon such reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up. Notwithstanding the above,
the failure to give such notice shall not affect the validity of any transaction
for which the notice was required to be given.
10. Reclassifications or Reorganizations. In case of any reclassification,
------------------------------------
capital reorganization or other change of outstanding shares of Common Stock of
the Company that does not constitute a Mandatory Exercise Transaction as defined
in Section 11 hereinbelow (a "Conversion Transaction"), the Company shall, as a
condition precedent to any such Conversion Transaction, cause effective
provisions to be made so that Holder shall have the right thereafter by
exercising this Warrant at any time prior to the expiration of the Warrant, to
purchase the kind and amount of shares of stock and other securities and
property receivable upon the consummation of such Conversion Transaction by a
holder of the number of shares of Common Stock which might have been purchased
upon exercise of this Warrant immediately prior to such Conversion
-6-
<PAGE>
Transaction. Any such provision shall include provision for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Warrant. The foregoing provisions of this Section 10 shall similarly
apply to successive Conversion Transactions. In the event that in connection
with any such Conversion Transaction any shares of Common Stock shall be issued
in exchange, conversion, substitution or payment, in whole or in part, for a
security of the Company other than Common Stock, any such issue shall be treated
as an issue of Common Stock covered by the provisions of Subsection (a) of
Section 7 hereof. Notwithstanding any implication to the contrary, any
transaction that constitutes a Mandatory Exercise Transaction under Section 11
hereof shall not be deemed to constitute a Conversion Transaction.
11. Mandatory Exercise of Warrant Rights. So long as this Warrant shall be
------------------------------------
outstanding, if the Company proposes to enter into a Mandatory Exercise
Transaction (as hereinafter defined), then in any such case, the Company shall
cause to be mailed by certified mail to Holder, at least twenty (20) days prior
to the date such proposed Mandatory Exercise Transaction is to be effectuated, a
notice containing (a) a brief description of the proposed Mandatory Exercise
Transaction; and (b) the date upon which such proposed Mandatory Exercise
Transaction is to take place. Any such notice delivered under this Section 11
shall be deemed to satisfy the notice requirements of Section 9 hereof. The
failure to give such notice, however, shall not affect the validity of any
proposed Mandatory Exercise Transaction for which the notice was required to be
given. During the period beginning on the date of Holder's receipt of such
notice and ending on the date which is five (5) days prior to the date upon
which such proposed Mandatory Exercise Transaction is to take place, as set
forth in the notice (the "Mandatory Exercise Period"), Holder must exercise his
right, in accordance with the applicable conditions of exercise set forth in
Section 1 hereof, to purchase all of the Warrant Shares which Holder is entitled
to purchase hereunder. If Holder fails to so exercise such right within the
Mandatory Exercise Period, this Warrant shall immediately become canceled, null
and void, and of no further legal force or effect. For purposes hereof, a
"Mandatory Exercise Transaction" shall mean any of the following:
(a) any merger or consolidation of the Company with or into any
corporation or other entity that is not a wholly-owned subsidiary of
the Company, other than a merger in which the Company or a wholly-
owned subsidiary of the Company is the surviving corporation;
(b) any sale or disposition of all or substantially all of the assets of
the Company to a person or entity other than a wholly-owned subsidiary
of the Company;
(c) any transaction involving (i) the Drag Along Rights set forth in
Section 2.2 of the Stockholders' Agreement, or (ii) a Sale of the
Company in accordance with Section 2.3 of the Stockholders' Agreement
(either, a " Company Transaction");
(d) any transaction where Holder elects to exercise his Tag Along rights
set forth in Section 2.1 of the Stockholders' Agreement; or
(e) any public offering by the Company of Common Stock.
-7-
<PAGE>
12. Registration Rights. Upon exercise of this Warrant, Holder shall be
-------------------
entitled to all of the rights set forth in the Registration Rights Agreement.
13. Non-Callable Warrant. This Warrant may not be called by the Company at
--------------------
any time.
14. Representations of Holder. By accepting delivery of this Warrant, the
-------------------------
Holder hereby represents, warrants and covenants as follows:
(a) Holder is an "accredited investor" as such term is defined in Rule 501
of Regulation D promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Securities Act").
(b) Holder is acquiring the Warrant Shares solely for his own account for
investment and not with a view to, or for sale in connection with, any
distribution thereof. Holder acknowledges and agrees that (i) this
Warrant is not transferable, and (ii) he will not, directly or
indirectly, offer, transfer, sell, pledge, hypothecate or otherwise
dispose of any Warrant Shares (or solicit any offers to buy, purchase
or other acquire or take a pledge of any such Warrant Shares) except
in compliance with the Securities Act and the rules and regulations
thereunder, other applicable laws, rules and regulations, and the
Stockholders' Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed the
undersigned, as of the date set forth below.
IXL ENTERPRISES, INC., a Delaware corporation
Date:______________________ By:___________________________
Name:
Title:
-8-
<PAGE>
PURCHASE FORM
(to be executed only upon exercise of Warrant)
Dated: _________________
The undersigned hereby (i) irrevocably elects to exercise the within Warrant
to the extent of purchasing _____________ (______) shares of the Common Stock
(the "Warrant Shares") on the terms and conditions specified in this Warrant;
(ii) surrenders this Warrant; and (iii) directs that the Warrant Shares be
registered or placed in the name of Holder and at the address specified below
and delivered thereto.
The undersigned, by its exercise of this Warrant, acknowledges, represents to
and agrees with the Company as follows:
(1) The undersigned 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 of 1933, as amended (the
"Securities Act").
(2) The undersigned further represents that he is acquiring the Warrant Shares
solely for his own account for investment and not with a view to, or for
sale in connection with, any distribution thereof. The undersigned agrees
that he will not, directly or indirectly, offer, transfer, sell, pledge,
hypothecate or otherwise dispose of any Warrant Shares (or solicit any
offers to buy, purchase or other acquire or take a pledge of any such
Warrant Shares) except in compliance with the Securities Act and the rules
and regulations thereunder, other applicable laws, rules and regulations,
and the Stockholders' Agreement.
(3) The undersigned further represents that (A) he has received the
Confidential Memorandum dated _____________, 1997 (the "Memorandum"); (B)
he has carefully examined the Memorandum, and has had an opportunity to ask
questions of, and receive answers from, representatives of the Company, and
to obtain additional information concerning the Company; and (C) he does
not require additional information regarding the Company in connection with
the Warrant Shares.
(4) The undersigned acknowledges that the Company reserves the right prior to
any offer, sale or other transfer pursuant to an exemption from the
registration requirements of the federal and state securities laws to
require the delivery of an opinion of counsel, certifications or other
information satisfactory to the Company of the applicability and
effectiveness of such exemptions.
- SIGNATURES ON THE FOLLOWING PAGE -
-9-
<PAGE>
IN WITNESS WHEREOF, this Purchase Form has been executed and delivered by Holder
as of the date first above written.
Name of Holder: ________________________________________
(Please type or print in block letters)
Address of Holder: ________________________________________
________________________________________
________________________________________
Signature of Holder: ________________________________________
-10-
<PAGE>
EXHIBIT "A"
-----------
AGREEMENT TO BE BOUND
The undersigned hereby joins in and signifies adoption of and agreement to
be bound, as a Stockholder, by the terms and conditions of
_________________________, dated _____________, and all amendments thereto (the
"Stockholders' Agreement"), and authorizes the attachment of this signature page
to a duplicate original of the Stockholders' Agreement.
The undersigned acknowledges receipt of a copy of the Stockholders'
Agreement. The undersigned acknowledges that he has read the Stockholders'
Agreement and understands that by signing this document, he shall thereby assume
all of the duties and obligations of a Stockholder thereunder.
Capitalized terms herein have the meanings set forth in the Stockholders'
Agreement.
Date:_____________ ________________________________________
(Signature)
Number of Shares held:
______________________ ________________________________________
(Name)
_________________________________________
_________________________________________
_________________________________________
(Address)
-11-
<PAGE>
EXHIBIT "B"
-----------
AGREEMENT TO BE BOUND TO REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT TO BE BOUND BY REGISTRATION RIGHTS AGREEMENT (the "Agreement"),
dated as of _______________, ____ between IXL ENTERPRISES, INC., a Delaware
corporation (the "Company"), Kelso Investment Associates V, L.P., a Delaware
limited partnership ("Majority Shareholder") and _______________ ("Holder").
RECITALS
--------
A. The Company has entered into a Registration Rights Agreement, dated as of
April 30, 1996 among the Company and certain other parties, a copy of which is
attached hereto and incorporated herein as Exhibit "A" (the "Registration Rights
-----------
Agreement"), which addresses the registration of Registrable Securities.
B. The Company has agreed to issue warrants to purchase an aggregate of _____
shares of validly issued, fully paid and nonassessable Class B Common Stock of
the Company, $.01 par value (the "IXL Stock"), valued at $_______ per share as
of the date hereof to Holder contemporaneously herewith pursuant to an Agreement
and Plan of Merger dated of even date herewith (the "Agreement of Merger") by
and among the Company, IXL MERGER CORP. III, INC., a Delaware corporation, or
its successors or assigns ("Sub"), BOXTOP INTERACTIVE, INC., a California
corporation ("BII"), and the shareholders of BII listed on the signature page
thereto.
C. The Company and Holder Shareholders desire to make Holder a party to the
Registration Rights Agreement.
In consideration of the parties entering into the agreements and carrying out
the transactions described in the Registration Rights Agreement, and for other
good and valuable consideration, the parties agree as follows:
1. Agreement by Holder. Holder hereby accepts and agrees to be bound by all
-------------------
of the terms and conditions of the Registration Rights Agreement, as if he or
she were an original party thereto. Holder further covenants and agrees that he
will comply with all of the terms and conditions of the Registration Rights
Agreement, as if he were an original party thereto.
2. Agreement by Company. The Company hereby accepts Holder as a party to the
--------------------
Registration Rights Agreement as if Holder were original an party thereto. The
Company further covenants and agrees that it will treat Holder as if he were
original party to the Registration Rights Agreement, affording Holder all
applicable rights and privileges thereunder. The Company represents and
warrants that the Registration Rights Agreement attached hereto as Exhibit "A"
-----------
is a true and correct copy of the Registration Rights Agreement.
3. Consent by Majority Shareholder. The Majority Shareholder hereby consents
-------------------------------
to this Agreement to be Bound to Registration Rights Agreement.
-12-
<PAGE>
4. Holder Deemed a Party. Holder is hereby deemed to be a party to the
---------------------
Registration Rights Agreement as if originally named therein.
5. Definitions. Unless otherwise indicated, each capitalized term used
-----------
herein shall have the meaning specified in the Registration Rights Agreement.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
-13-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered as of the date first above written.
IXL ENTERPRISES, INC.
By:_________________________________
Name:
Title:
HOLDER
Date:____________________ ____________________________________
(Signature)
Number of Shares held:
__________________ ____________________________________
(Name)
____________________________________
____________________________________
____________________________________
(Address)
Agreed and consented to
this ___ day of ___________, ____
KELSO INVESTMENT ASSOCIATES V, L.P.
By:______________________________
Title:___________________________
-14-
<PAGE>
EXHIBIT 4.3
- --------------------------------------------------------------------------------
FORM OF CLASS B CONVERTIBLE
PREFERRED STOCK WARRANT
AGREEMENT
WARRANT AGREEMENT
among
IXL HOLDINGS, INC.
and the other
PARTIES NAMED HEREIN
Dated as of
_______________
- -------------------------------------------------------------------------------
<PAGE>
WARRANT AGREEMENT
-----------------
This WARRANT AGREEMENT is dated as of ________________ (the "Agreement")
---------
and entered into by and among IXL Holdings, Inc., a Delaware corporation (the
"Company"), and the purchasers party hereto (each, an "Investor" and
-------
collectively, the "Investors"). All capitalized terms used but not defined
---------
herein shall have the meanings ascribed to them in the Purchase Agreement (as
hereinafter defined).
WHEREAS, pursuant to a Securities Purchase Agreement, dated as of _________
________ (the "Purchase Agreement") by and among the Company and the Investors,
------------------
the Company is issuing to the Investors certain Warrants, as hereinafter
described (the "Warrants"), to purchase an aggregate of _____ shares (subject to
--------
adjustment as provided herein) of Class B Convertible Preferred Stock, par value
$.01 per share (the "Class B Preferred Stock"), of the Company (the shares of
-----------------------
Class B Preferred Stock issuable upon exercise of the Warrants being referred to
herein as the "Warrant Shares");
----------------
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
SECTION 1. Warrant Certificates. The Company will issue and deliver a
certificate or certificates evidencing the Warrants (the "Warrant Certificates")
--------------------
pursuant to the terms of the Purchase Agreement. Such certificate or
certificates shall be substantially in the form set forth as Exhibit A attached
hereto. Warrant Certificates shall be dated the date of issuance by the Company.
SECTION 2. Execution of Warrant Certificates. Warrant Certificates shall be
signed on behalf of the Company by its Chairman of the Board or its Chief
Executive Officer, President or any Vice President. Each Warrant Certificate
shall also be signed on behalf of the Company by its Secretary or an Assistant
Secretary.
SECTION 3. Restrictions on Transfer; Registration of Transfers and
Exchanges. Prior to any proposed transfer of the Warrants or the Warrant Shares,
unless such transfer is made pursuant to an effective registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), the
---------- ---
transferring Holder will deliver to the Company an opinion of counsel,
reasonably satisfactory in form and substance to the Company, to the effect that
the Warrants or Warrant Shares, as applicable, may be sold or otherwise
transferred without registration under the Securities Act; provided, however,
that, with respect to transfers by the Investors or their Affiliates and Related
Persons, no such opinion shall be required in connection with any transfer to
the Company or to a Permitted Transferee. Upon original issuance thereof, and
until such time as the same shall have been registered under the Securities Act
or sold pursuant to Rule 144
1
<PAGE>
promulgated thereunder (or any similar rule or regulation) each Warrant
Certificate shall bear the legend included on the first page of Exhibit A,
unless in such opinion of counsel, such legend is no longer required by the Act.
Subject to the conditions to transfer contained in the Second Amended and
Restated Stockholders Agreement of the Company, as such agreement may be amended
from time to time (the "Stockholders Agreement") which shall apply to the
Holders of the Warrants as if such Holders were "Chase Investors," as defined in
the Stockholders Agreement, the Company shall from time to time register the
transfer of any outstanding Warrant Certificates in the Warrant Register to be
maintained by the Company upon surrender thereof accompanied by a written
instrument or instruments of transfer in form reasonably satisfactory to the
Company, duly executed by the registered Holder or Holders thereof or by the
duly appointed legal representative thereof or by a duly authorized attorney.
Upon any such registration of transfer, a new Warrant Certificate shall be
issued to the transferee Holder(s) and the surrendered Warrant Certificate shall
be canceled and disposed of by the Company. Any attempted transfer in violation
of the Stockholders Agreement shall be null and void.
SECTION 4. Warrants; Exercise of Warrants. Subject to the terms of this
Agreement, each Holder shall have the right, which may be exercised at any time
during the period commencing on the date hereof and ending at 5:00 p.m., New
York City time, on _________________ (the "Expiration Date"), to receive from
---------- ------
the Company the number of fully paid and nonassessable Warrant Shares (and such
other consideration) which the Holder may at the time be entitled to receive on
exercise of such Warrants and payment of the Exercise Price for such Warrant
Shares. Each Warrant not exercised prior to 5:00 p.m., New York time, on the
Expiration Date shall become void and all rights thereunder and all rights in
respect thereof under this Agreement shall cease as of such time. No adjustments
as to dividends will be made upon exercise of the Warrants, except as otherwise
expressly provided herein.
The price at which each Warrant shall be exercisable (the "Exercise Price")
---------------
shall be equal to $_______ per share of Class B Preferred Stock.
A Warrant may be exercised upon surrender to the Company at its office
designated for such purpose of the Warrant Certificate or Certificates to be
exercised with the form of election to purchase attached thereto duly filled in
and signed, and upon payment to the Company of the Exercise Price for the number
of Warrant Shares in respect of which such Warrants are then exercised Payment
of the aggregate Exercise Price shall be made, at the election of the Holder,
(i) in cash, by certified or official bank check payable to the order of the
Company, (ii) by delivering for surrender and cancellation to the Company
Warrants with an aggregate Surrender Value, as of the date of such exercise,
equal to the Exercise Price for the Warrants being exercised, or (iii) any
combination thereof. For the purposes of this paragraph, the "Surrender Value"
of any Warrant is equal to the Fair Market Value (as defined in the
Stockholders'
2
<PAGE>
Agreement), as of the date of such surrender, of the Warrant Shares issuable
upon the exercise of such Warrant, minus the Exercise Price of such Warrant.
Subject to the provisions of Section 5 hereof, upon such surrender of
Warrant Certificates and payment of the Exercise Price, the Company shall issue
and cause to be delivered, as promptly as practicable, to or upon the written
order of the Holder and in such name or names as such Holder may designate a
certificate or certificates for the number of full Warrant Shares issuable upon
the exercise of such Warrants (and such other consideration as may be
deliverable upon exercise of such Warrants) together with cash for fractional
Warrant Shares as provided in Section 10. The certificate or certificates for
such Warrant Shares shall be deemed to have been issued and the person so named
therein shall be deemed to have become a holder of record of such Warrant Shares
as of the date of the surrender of such Warrants and payment of the Exercise
Price, irrespective of the date of delivery of such certificate or certificates
for Warrant Shares.
Each Warrant shall be exercisable, at the election of the Holder thereof,
either in full or from time to time in part and, in the event that a Warrant
Certificate is exercised in respect of fewer than all of the Warrant Shares
issuable on such exercise at any time prior to the date of expiration of the
Warrants, a new certificate evidencing the remaining Warrant or Warrants will be
issued and delivered pursuant to the provisions of this Section and of Section 2
hereof.
All Warrant Certificates surrendered upon exercise of Warrants shall be
canceled and disposed of by the Company. The Company shall keep copies of this
Agreement and any notices given or received hereunder available for inspection
by the Holders during normal business hours at its office.
SECTION 5. Payment of Taxes. The Company will pay all documentary stamp
taxes and other governmental charges (excluding all foreign, federal or state
income, franchise, property, estate, inheritance, gift or similar taxes) in
connection with the issuance or delivery of the Warrants hereunder, as well as
all such taxes attributable to the initial issuance or delivery of Warrant
Shares upon the exercise of Warrants and payment of the Exercise Price. The
Company shall not, however, be required to pay any tax that may be payable in
respect of any subsequent transfer of the Warrants or any transfer involved in
the issuance and delivery of Warrant Shares in a name other than that in which
the Warrants to which such issuance relates were registered, and, if any such
tax would otherwise be payable by the Company, no such issuance or delivery
shall be made unless and until the person requesting such issuance has paid to
the Company the amount of any such tax, or it is established to the reasonable
satisfaction of the Company that any such tax has been paid
SECTION 6. Dividends. At any time and from time to time that the Fair
Market Value (as defined in the Stockholders' Agreement) of a Warrant Share
exceeds the Exercise Price per share, the Company shall not make any
distributions on the Common Stock or the Preferred
3
<PAGE>
Stock (as such terms are defined in the Stockholders' Agreement) unless there is
contemporaneously declared and paid a dividend on each Warrant equal to the
distribution paid per share of Class B Preferred Stock.
SECTION 7. Mutilated or Missing Warrant Certificates. If a mutilated
Warrant Certificate is surrendered to the Company, or if the Holder of a Warrant
Certificate claims and submits an affidavit or other evidence satisfactory to
the Company to the effect that the Warrant Certificate has been lost, destroyed
or wrongfully taken, the Company shall issue a replacement Warrant Certificate.
If reasonably required by the Company, such Holder must provide an indemnity
bond, or other form of indemnity, sufficient in the reasonable judgment of the
Company to protect the Company from any loss which it may suffer if a Warrant
Certificate is replaced. If any Investor or any other institutional Holder (or
nominee thereof) is the owner of any such lost, stolen or destroyed Warrant
Certificate, then the affidavit of an authorized officer of such owner, setting
forth the fact of loss, theft or destruction and of its ownership of the Warrant
Certificate at the time of such loss, theft or destruction shall be accepted as
satisfactory evidence thereof and no further indemnity shall be required as a
condition to the execution and delivery of a new Warrant Certificate other than
the unsecured written agreement of such owner to indemnify the Company.
SECTION 8. Reservation of Warrant Shares. The Company shall at all times
reserve and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued Class B Preferred Stock or its authorized and issued
Class B Preferred Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of Warrants, the
maximum number of shares of Class B Preferred Stock which may then be
deliverable upon the exercise of all outstanding Warrants.
The Company or, if appointed, any transfer agent for the Preferred Stock
and each transfer agent for any shares of the Company's capital stock issuable
upon the exercise of any of the Warrants (collectively, the "Transfer Agent")
-------- ------
will be irrevocably authorized and directed at all times to reserve such number
of authorized shares as shall be required for such purpose. The Company shall
keep a copy of this Agreement on file with any such Transfer Agent. The Company
will supply any such Transfer Agent with duly executed certificates for such
purposes and will provide or otherwise make available all other consideration
that may be deliverable upon exercise of the Warrants. The Company will furnish
any such Transfer Agent a copy of all notices of adjustments and certificates
related thereto, transmitted to each Holder pursuant to Section 11 hereof.
Before taking any action which would cause an adjustment pursuant to
Section 9 hereof to reduce the Exercise Price below the then par value of the
Warrant Shares, the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares at the Exercise Price
as so adjusted.
4
<PAGE>
The Company covenants that all Warrant Shares and other capital stock
issued upon exercise of Warrants will, upon payment of the Exercise Price
therefor and issue thereof, be validly authorized and issued, fully paid,
nonassessable, free of preemptive rights and free, subject to Section 5 hereof,
from all taxes, liens, charges and security interests with respect to the issue
thereof, but such Warrant Shares shall be subject to the applicable terms and
conditions of the Stockholders Agreement.
SECTION 9. Adjustment of Exercise Price and Warrant Number. The number of
shares of Class B Preferred Stock issuable upon the exercise of each Warrant
(the "Warrant Number") is initially one. The Warrant Number is subject to
------- -------
adjustment from time to time upon the occurrence of the events enumerated in, or
as otherwise provided in, this Section 9.
(a) Adjustment for Change in Capital Stock
If the Company:
(1) pays a dividend or makes a distribution on its Class B
Preferred Stock in shares of its Class B Preferred Stock;
(2) subdivides or reclassifies its outstanding shares of Class B
Preferred Stock into a greater number of shares;
(3) combines or reclassifies its outstanding shares of Class B
Preferred Stock into a smaller number of shares; or
(4) issues by reclassification of its Class B Preferred Stock any
shares of its capital stock (other than reclassification arising
solely as a result of a change in the par value or no par value of the
Class B Preferred Stock);
then the Warrant Number and the Exercise Price in effect immediately prior to
such action shall be proportionately adjusted so that the holder of any Warrant
thereafter exercised shall receive the aggregate number and kind of shares of
capital stock of the Company which it would have received immediately following
such action if such Warrant had been exercised immediately prior to such action
for the same aggregate consideration that such holder would have paid if such
Warrant had been exercised immediately prior to such action.
The adjustment share become effective immediately after the
record date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification
5
<PAGE>
Such adjustment shall be made successively whenever any event
listed above shall occur.
The Company shall not issue shares of Class B Preferred Stock as
a dividend or distribution on any class of capital stock other than Class B
Preferred Stock unless the Warrant Holders also receive such dividend or
distribution on a ratable basis or the appropriate adjustment to the Warrant
Number and Exercise Price is made under this Section 9.
(b) Notice of Adjustment
--------------------
Whenever the Warrant Number is adjusted, the Company shall
provide the notices required by Section 11 hereof.
(c) Voluntary Increase
------------------
The Company from time to time may increase the Warrant Number by
any amount for any period of time (including, without limitation, permanently)
if the period is at least 20 Business Days and if the increase is irrevocable
during the period. Whenever the Warrant Number is increased, the Company shall
mail to the Holders a notice of the increase. The Company shall mail the notice
at least 15 days before the date the increased Warrant Number takes effect. The
notice shall state the increased Warrant Number and the period it will be in
effect.
An increase of the Warrant Number under this Subsection (c)
(other than a permanent increase) does not change or adjust the Warrant Number
otherwise in effect for purposes of subsection (a) of this Section 9.
(d) Reorganizations
---------------
In case of any capital reorganization, other than in the cases
referred to in Section 9(a) hereof, or the consolidation or merger of the
Company with or into another corporation (other than a merger or consolidation
in which the Company is the continuing corporation and which docs not result in
any reclassification of the outstanding shares of Preferred Stock or Common
Stock into shares of other stock or other securities or property), or the sale
of the property of the Company as an entirety or substantially as an entirety
(collectively, such actions being hereinafter referred to as "Reorganizations"),
-----------------
there shall thereafter be deliverable upon exercise of any Warrant (in lieu of
the number of shares of Class B Preferred Stock theretofore deliverable) the
number of shares of stock or other securities or property to which a holder of
the number of shares of Class B Preferred Stock that would otherwise have been
deliverable upon the exercise of such Warrant would have been entitled upon such
Reorganization if such Warrant had been exercised in full immediately prior to
such Reorganization In case of any Reorganization, appropriate adjustment, as
determined in good
6
<PAGE>
faith by the Board of Directors of the Company, whose determination shall be
described in a duly adopted resolution certified by the Company's Secretary or
Assistant Secretary, shall be made in the application of the provisions herein
set forth with respect to the rights and interests of Holders so that the
provisions set forth herein shall thereafter be applicable, as nearly as
possible, in relation to any shares or other property thereafter deliverable
upon exercise of Warrants.
The Company shall not effect any such Reorganization unless prior
to or simultaneously with the consummation thereof, (i) notice of such
Reorganization shall be given to each of the Holders of the Warrants, and (ii)
the successor corporation (if other than the Company) resulting from such
Reorganization or the corporation purchasing or leasing such assets or other
appropriate corporation or entity shall expressly assume, by a supplemental
Warrant Agreement or other acknowledgement executed and delivered to the
Holder(s), the obligation to deliver to each such Holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
Holder may be entitled to purchase, and all other obligations and liabilities
under this Agreement.
(e) Form of Warrants
----------------
Irrespective of any adjustments in the Exercise Price or the
number or kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement but shall nevertheless be exercisable for the
adjusted number of Warrant Shares at the adjusted Exercise Price.
SECTION 10. Fractional Interests. The Company shall not be required to
issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be presented for exercise in full at the same time by the same
Holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 10,
be issuable on the exercise of any Warrants (or specified portion thereof), the
Company shall, pay an amount in cash equal to the fair market value (as
determined in good faith by the Board of Directors) of the Warrant Share so
issuable, multiplied by such fraction
SECTION 11. Notices to Warrant Holders. Upon any adjustment pursuant to
Section 9 hereof, the Company shall promptly thereafter (i) cause to be filed
with the Company a certificate of an officer of the Company setting forth the
Warrant Number and Exercise Price after such adjustment and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculations are based, and (ii) cause to be given to each of the Holders at its
address appearing on the Warrant Register written notice of such adjustments.
Where appropriate, such notice may be given in advance and included as a part of
the notice required to be mailed under the other provisions of this Section 11.
7
<PAGE>
In case:
(a) The Company shall authorize the issuance to all holders of shares
of Class B Preferred Stock of rights, options or warrants to subscribe for or
purchase shares of Class B Preferred Stock or of any other subscription rights
or warrants;
(b) The Company shall authorize the distribution to all holders of
shares of Class B Preferred Stock of assets, including cash, evidences of its
indebtedness, or other securities;
(c) of any consolidation or merger to which the Company is a party and
for which approval of any shareholders of the Company is required, or of the
conveyance or transfer of the properties and assets of the Company substantially
as an entirety, or of any reclassification or change of Class B Preferred Stock
issuable upon exercise of the Warrants (other than a change in par value, or
from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), or a tender offer or exchange offer for
shares of Class B Preferred Stock;
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) the Company proposes to take any action that would require an
adjustment to the Warrant Number pursuant to Section 9 hereof;
then the Company shall cause to be given to each of the Holders at its address
appearing on the Warrant Register, at least 20 days prior to the applicable
record date hereinafter specified, or the date of the event in the case of
events for which there is no record date, in accordance with the provisions of
Section 12 hereof, a written notice stating (i) the date as of which the holders
of record of shares of Preferred Stock or Common Stock to be entitled to receive
any such rights, options, warrants or distribution are to be determined, or (ii)
the initial expiration date set forth in any tender offer or exchange offer for
shares of Preferred Stock or Common Stock, or (iii) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up is expected to become effective or consummated, and the date as of which it
is expected that holders of record of shares of Preferred Stock or Common Stock
shall be entitled to exchange such shares for securities or other property, if
any, deliverable upon such reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up. The failure to give the notice
required by this Section 11 or any defect therein shall not affect the legality
or validity of any distribution, right, option, warrant, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up, or the vote upon
any action
Nothing contained in this Agreement or in any Warrant Certificate
shall be construed as conferring upon the Holders (prior to the exercise of such
Warrants) the right to
8
<PAGE>
vote or to consent or to receive notice as shareholder in respect of the
meetings of shareholders or the election of Directors of the Company or any
other matter, or any rights whatsoever as shareholders of the Company; provided,
however, that nothing in the foregoing provision is intended to detract from any
rights explicitly granted to any Holder hereunder.
SECTION 12. Notices to the Company and Warrant Holders. All notices and
other communications provided for or permitted hereunder shall be made by hand-
delivery, first-class mail, telex, telecopier, or overnight air courier
guaranteeing next day delivery:
(a) if to Investors, to the address specified on the signature page
executed by each such Investor, with a copy to Paul, Hastings, Janofsky & Walker
LLP, 399 Park Avenue, New York, New York 10022, telecopy No.: (212) 319-4090,
Attention: William Schwitter, Esq.; and
(b) if to the Company, IXL Holdings, Inc., 1888 Emery Street, Suite
200, Atlanta, Georgia, 30318, Telecopy no. (404) 267-380l, Attention: James V.
Sandry, with a copy to Minkin & Snyder PC, One Buckhead Plaza, 3060 Peachtree
Road, N.E., Suite 1100, Atlanta, Georgia 30305, Telecopy No.(404)233-5064,
Attention: James S. Altenbach, Esq., and with an additional copy to Kelso &
Company, 320 Park Avenue, Suite 2400, New York, New York 10022, Attention: James
J. Connors II, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed (so long as a
fax copy is sent and receipt acknowledged within two business days after
mailing); when answered back if telexed; when receipt acknowledged, if
telecopied; and the next business day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery. The parties may
change the addresses to which notices are to be given by giving five days' prior
written notice of such change in accordance herewith.
SECTION 13. Certain Supplements and Amendments. The Company may from time
to time supplement or amend this Agreement without the approval of any Holders
in order to cure any ambiguity or to correct or supplement any provision
contained herein which may be defective or inconsistent with any other provision
herein; provided that any such supplement or amendment shall not in any way
adversely affect the interests of the Holders.
SECTION 14. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company shall bind and inure to the benefit of its
respective successors and assigns hereunder.
SECTION 15. Termination. This Agreement shall terminate if all Warrants
have been exercised or share have expired or been canceled pursuant to this
Agreement.
9
<PAGE>
SECTION 16. GOVERNING LAW; SUBMISSION TO JURISDICTION; Waiver of Jury
Trial. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITh THE
INTERNAL LAWS OF THE STATE OF NEW YORK (PROVIDED THAT DETERMINATIONS RELATING TO
CORPORATE LAW SHALL BE CONSTRUED IN ACCORDANCE WITH THE DELAWARE GENERAL
CORPORATION LAW). THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
3URISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT AND THE WARRANTS, ANY IRREVOCABLY ACCEPTS FOR
ITSELF ANY IN RESPECT OF ITS PROPERTY, GENERALLY ANY UNCONDITIONALLY,
JURISDICTION OF THE AFORESAID COURTS. THE COMPANY AGREES THAT IT WILL NOT
COMMENCE ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY OTHER JURISDICTION. THE
COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. NOTWITHSTANDING THE FOREGOING, NOTHING HEREIN SHALL AFFECT
THE RIGHT OF ANY HOLDER OF A WARRANT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE COMPANY IN ANY OTHER JURISDICTION.
EACH OF THE PARTIES HERETO HEREBY WAIVES THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE OTHER DOCUMENTS, OR ANY DEALINGS BETWEEN THEM REALTING
RELATING TO THE SUBJECT MATTER OF THE INVESTORS' INVESTMENT IN THE COMPANY
CONTEMPLATED HEREBY. THE SCOPE OF THIS JURY TRIAL WAIVER SHALL BE LIMITED TO
DISPUTES BETWEEN THE COMPANY AND THE INVESTORS AND SHALL NOT EXTEND TO DISPUTES
BETWEEN THE COMPANY AND ANY OTHER PERSON.
SECTION 17. Benefit of This Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Holders any legal or equitable right, remedy or claim under this Agreement; but
this Agreement shall be for the sole and exclusive benefit of the Company and
the Holders.
10
<PAGE>
SECTION 18. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
SECTION 19. Amendments and Waivers. Subject to Section 13, the Company
agrees it will not solicit, request or negotiate for or with respect to any
proposed waiver or amendment of any of the provisions of this Agreement or any
Warrant unless each Holder (irrespective of the amount of Warrants then owned by
it) shall substantially concurrently be informed thereof by the Company and
shall be afforded the opportunity of considering the same and shall be supplied
by the Company with sufficient information (including any offer of remuneration)
to enable it to make an informed decision with respect thereto which information
shall be the same as that supplied to each other Holder. The Company will not,
directly or indirectly, pay or cause to be paid any remuneration whether by way
of supplement or additional interest fee or otherwise, to any Holder as
consideration for or as an inducement to the entering into by any Holder of any
waiver or amendment of any of the terms and provisions of this Agreement or any
Warrant unless such remunerations is concurrently paid on the same terms,
ratably to each Holder whether or not such Holder signs such waiver or consent,
provided that the foregoing is not intended to preclude the adoption of any
amendment or the giving of any waiver by the Holders of a majority of the
Warrants to the extent permitted by the other provisions of this Section 19.
[Signature pages follow]
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement
to be duly executed as of the day and year first above written.
IXL HOLDINGS, INC.
By:
-----------------------------
Title:
-----------------------------
By:
-----------------------------
Title:
-----------------------------
12
<PAGE>
EXHIBIT A
[Form of Warrant Certificate]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON
_________________, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR
OTHERWISE DISTRIBUTED EXCEPT IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE ACT, OR IN COMPLIANCE WITH RULE 144 OR
PURSUANT TO ANOTHER EXEMPTION THEREFROM. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO A WARRANT AGREEMENT AND A SECURITIES PURCHASE
AGREEMENT, DATED AS OF _________________, AMONG THE ISSUER OF SUCH SECURITIES
(THE "COMPANY"), THE INVESTORS REFERRED TO THEREIN AND THE OTHER PARTIES
THERETO. THE TRANSFER OF THIS CERTIFICATE IS SUBJECT TO THE CONDITIONS SPECIFIED
IN SUCH AGREEMENTS AND THE COMPANY RESERVES THE RIGHT TO REFUSE THE TRANSFER OF
THIS CERTIFICATE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH
TRANSFER. A COPY OF SUCH AGREEMENTS WILL BE FURNISHED WITHOUT CHARGE BY THE
COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST.
THE SHARES ISSUABLE UPON EXERCISE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE PREFERENCES, POWERS, QUALIFICATIONS AND RIGHTS OF
EACH CLASS AND SERIES AS SET FORTH IN THE COMPANY'S CERTIFICATE OF
INCORPORATION. THE COMPANY WILL FURNISH A COPY OF THE CERTIFICATE OF
INCORPORATION TO THE HOLDER OF THIS CERTIFICATE UPON WRITTEN REQUEST.
No.____ ______ Warrants
Warrant Certificate
IXL HOLDINGS, INC.
This Warrant Certificate certifies that _________________, or registered
assigns, is the registered holder of the number of Warrants (the "Warrants") set
---------
forth above to purchase Class B Preferred Stock, par value $.01 per share (tile
"Class B Preferred Stock"), of IXL Holdings, Inc., a Delaware corporation (the
----- - --------- -------
"Company"). Each Warrant entitles the Holder upon exercise to receive from the
Company one fully paid and nonassessable share of Class B Preferred Stock (a
"Warrant Share"), at an exercise price (the "Exercise Price") of $______ payable
- -------- ---------------
in lawful money of the United States of America, upon surrender of this Warrant
Certificate and payment of the Exercise
13
<PAGE>
Price at the office of the Company designated for such purpose, but only subject
to the conditions set forth herein and in the Warrant Agreement referred to
hereinafter. The number of Warrant Shares issuable upon exercise of the Warrants
is subject to adjustment upon the occurrence of certain events, as set forth in
the Warrant Agreement. Each Warrant is exercisable at any time during the period
commencing and ending at 5:00 p.m., New York City time, on ________________.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants, and are issued or to be issued pursuant to a
Warrant Agreement dated as of ________________ (the "Warrant Agreement"), duly
-------------------
executed and delivered by the Company, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Company and the holders (the words
"holders or holder" meaning the registered holders or registered holder) of the
------- ------
Warrants. A copy of the Warrant Agreement may be obtained by the holder hereof
upon written request to the Company. Capitalized terms used and not defined
herein shall have the meaning ascribed thereto in the Warrant Agreement.
The holder of Warrants evidenced by this Warrant Certificate may exercise
such Warrants under and pursuant to the terms and conditions of the Warrant
Agreement by surrendering this Warrant Certificate, with the form of election to
purchase set forth hereon (and by this reference made a part hereof) properly
completed and executed, together with payment of the Exercise Price made, at the
election of the Holder, (i) in cash, by certified or official bank check payable
to the order of the Company, (ii) by delivering for surrender and cancellation
to the Company Warrants with an aggregate Surrender Value (as defined in Section
4 of the Warrant Agreement), as of the date of such exercise, equal to the
Exercise Price for the Warrants being exercised, or (iii) any combination
thereof. In the event that upon any exercise of Warrants evidenced hereby the
number of Warrants exercised shall be less than the total number of Warrants
evidenced hereby, there shall be issued by the Company to the holder hereof or
its registered assignee a new Warrant Certificate evidencing the number of
Warrants not exercise.
Warrant Certificates, when surrendered at the office of the Company by the
registered holder thereof in person or by legal representative or attorney duly
authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Subject to the terms and conditions of the Warrant Agreement, upon due
presentation for registration of transfer of this Warrant Certificate at the
office of the Company a new Warrant Certificate or Warrant Certificates of like
tenor and evidencing in the aggregate a like number of Warrants shall be issued
to the transferee(s) in exchange for this Warrant Certificate, subject to the
limitations provided in the Warrant Agreement, without charge except for any tax
or other governmental charge imposed in connection therewith.
14
<PAGE>
The Company may deem and treat the registered holder(s) thereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
Neither the Warrants nor this Warrant Certificate entitles any holder hereof to
any rights of a stockholder of the Company.
IN WITNESS WHEREOF, IXL Holdings, Inc. has caused this Warrant Certificate
to be signed by its Chairman of the Board, President or Vice President and by
its Secretary or Assistant Secretary.
Dated: [ ], ____
IXL HOLDINGS, INC.
By _______________________________
Name:
Title:
By _______________________________
Name:
Title:
15
<PAGE>
FORM OF ELECTION TO PURCHASE
(To Be Executed Upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive ________ shares of Class B
Preferred Stock and herewith tenders payment for such shares to the Company in
the form of [a certified or official bank check payable to the order of the
Company in the amount of $____, [and] Warrants to purchase_______ Warrant Shares
with an aggregate Surrender Value (as defined in Section 4 of the Warrant
Agreement) of $___________].
The undersigned requests that a certificate for such shares be registered
in the name of __________, whose address is ___________________ and that such
shares be delivered to ____________________, whose address is_________________.
If said number of shares is less than all of the shares of Class B
Preferred Stock purchasable hereunder, the undersigned requests that a new
Warrant Certificate representing the remaining balance of such shares be
registered in the name of ____________________, whose address is
_____________________________, and that such Warrant Certificate be delivered to
______________________,whose address is_____________________.
Signature(s): __________________________________________
NOTE: The above signature(s) must correspond with
the name written upon the face of this Warrant
Certificate in every particular, without
alteration or enlargement or any change
whatever. If this Warrant is held of record by
two or more joint owners, all such owners must
sign.
Date:________
16
<PAGE>
FORM OF ASSIGNMENT
(To be signed only upon assignment of Warrant Certificate)
FOR VALUE RECEIVED, hereby sells, assigns and transfers unto
____________________ whose address is _________________________ and whose social
security number or other identifying number is _____________, the within Warrant
Certificate, together with all right, title and interest therein and to the
Warrants represented thereby, and does hereby irrevocably constitute and appoint
_____________________, attorney, to transfer said Warrant Certificate on the
books of the within-named Company, with full power of substitution in the
premises.
Signature(s): __________________________________________
NOTE: The above signature(s) must correspond with
the name written upon the face of this
Warrant Certificate in every particular,
without alteration or enlargement or any
change whatever. If this Warrant is held of
record by two or more joint owners, all such
owners must sign.
Date: ____________
17
<PAGE>
Exhibit 4.4
- --------------------------------------------------------------------------------
FORM OF CLASS A
COMMON STOCK
WARRANT AGREEMENT
WARRANT AGREEMENT
among
iXL Enterprises, Inc.
and
________________________________
Dated as of
_________________________
- --------------------------------------------------------------------------------
<PAGE>
WARRANT AGREEMENT
-----------------
This WARRANT AGREEMENT is dated as of _________________ (the "Agreement")
---------
and entered into by and among iXL Enterprises, Inc., a Delaware corporation (the
"Company"), and ___________ ("___" and together with subsequent holders of the
-------
Warrants subject hereto, a "Holder").
WHEREAS, for good and valuable consideration, the Company is issuing to
______ Warrants (the "Warrants") to purchase an aggregate of ____________ shares
--------
(subject to adjustment as provided herein) of the Company's Class B Common
Stock, par value $.01 per share (the "Class B Common Stock") (the shares of
--------------------
Class B Common Stock issuable upon exercise of the Warrants being referred to
herein as the "Warrant Shares");
--------------
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
SECTION 1. Warrant Certificates. Simultaneously with the execution
hereof, the Company will issue and deliver to ___________ a certificate or
certificates evidencing the Warrants (the "Warrant Certificates"). Such
--------------------
certificate or certificates shall be substantially in the form set forth as
Exhibit A attached hereto. Warrant Certificates shall be dated the date of
issuance by the Company.
SECTION 2. Execution of Warrant Certificates. Warrant Certificates shall
be signed on behalf of the Company by its Chairman of the Board or its Chief
Executive Officer, President or any Vice President. Each Warrant Certificate
shall also be signed on behalf of the Company by its Secretary or an Assistant
Secretary.
SECTION 3. Restrictions on Transfer; Registration of Transfers and
Exchanges. Prior to any proposed transfer of the Warrants or the Warrant
Shares, unless such transfer is made pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "Securities Act"),
--------------
the transferring Holder will deliver to the Company an opinion of counsel,
reasonably satisfactory in form and substance to the Company, to the effect that
the Warrants or Warrant Shares, as applicable, may be sold or otherwise
transferred without registration under the Securities Act. Upon original
issuance thereof, and until such time as the same shall have been registered
under the Securities Act or sold pursuant to Rule 144 promulgated thereunder (or
any similar rule or regulation) each Warrant Certificate shall bear the legend
included on the first page of Exhibit A, unless in such opinion of counsel, such
legend is no longer required by the Act.
Subject to the conditions to transfer contained in the Second Amended and
Restated Stockholders' Agreement of iXL Enterprises, Inc. dated December 17,
1997, as amended (the "Stockholders' Agreement"), which shall apply to the
Holders of the Warrants as if such Holders were "Outside Investors," as defined
in the Stockholders' Agreement, the Company shall from time to time register the
transfer of any outstanding Warrant Certificates in the Warrant Register to be
maintained by the Company upon surrender thereof accompanied by a written
instrument
-1-
<PAGE>
or instruments of transfer in form reasonably satisfactory to the Company, duly
executed by the registered Holder or Holders thereof or by the duly appointed
legal representative thereof or by a duly authorized attorney. Upon any such
registration of transfer, a new Warrant Certificate shall be issued to the
transferee Holder(s) and the surrendered Warrant Certificate shall be canceled
and disposed of by the Company. Any attempted transfer in violation of the
Stockholders Agreement shall be null and void.
SECTION 4. Warrants; Exercise of Warrants. Subject to the terms of this
Agreement, each Holder shall have the right, which may be exercised at any time
during the period commencing on the date hereof and ending at 5:00 p.m., New
York City time, on the later of (i) __________ or (ii) the date which is one
year after the effective date of a Qualified Public Offering (as defined in the
Stockholders' Agreement (the "Expiration Date"), to receive from the Company the
---------------
number of fully paid and nonassessable Warrant Shares (and such other
consideration) which the Holder may at the time be entitled to receive on
exercise of such Warrants and payment of the Exercise Price for such Warrant
Shares. Each Warrant not exercised prior to 5:00 p.m., New York time, on the
Expiration Date shall become void and all rights thereunder and all rights in
respect thereof under this Agreement shall cease as of such time. No
adjustments as to dividends will be made upon exercise of the Warrants, except
as otherwise expressly provided herein.
The price at which each Warrant shall be exercisable (the "Exercise Price")
--------------
shall be equal to $________ per share of Class B Common Stock.
A Warrant may be exercised upon surrender to the Company at its office
designated for such purpose of the Warrant Certificate or Certificates to be
exercised with the form of election to purchase attached thereto duly filled in
and signed, and upon payment to the Company of the Exercise Price for the number
of Warrant Shares in respect of which such Warrants are then exercised. Payment
of the aggregate Exercise Price shall be made, at the election of the Holder,
(i) in cash, by certified or official bank check payable to the order of the
Company, (ii) by delivering for surrender and cancellation to the Company
Warrants with an aggregate Surrender Value (as hereinafter defined), as of the
date of such exercise, equal to the Exercise Price for the Warrants being
exercised, or (iii) any combination thereof. For the purposes of this
paragraph, the "Surrender Value" of any Warrant is equal to the Fair Market
Value (as defined in the Stockholders' Agreement), as of the date of such
surrender, of the Warrant Shares issuable upon the exercise of such Warrant,
minus the Exercise Price of such Warrant.
Subject to the provisions of Section 5 hereof, upon such surrender of
Warrant Certificates and payment of the Exercise Price, the Company shall issue
and cause to be delivered, as promptly as practicable, to or upon the written
order of the Holder and in such name or names as such Holder may designate a
certificate or certificates for the number of full Warrant Shares issuable upon
the exercise of such Warrants (and such other consideration as may be
deliverable upon exercise of such Warrants) together with cash for fractional
Warrant Shares as provided in Section 9. The certificate or certificates for
such Warrant Shares shall be deemed to have been issued and the person so named
therein shall be deemed to have become a holder of record of such Warrant Shares
as of the date of the surrender of such Warrants and payment of the
-2-
<PAGE>
Exercise Price, irrespective of the date of delivery of such certificate or
certificates for Warrant Shares.
Each Warrant shall be exercisable, at the election of the Holder thereof,
either in full or from time to time in part and, in the event that a Warrant
Certificate is exercised in respect of fewer than all of the Warrant Shares
issuable on such exercise at any time prior to the date of expiration of the
Warrants, a new certificate evidencing the remaining Warrant or Warrants will be
issued and delivered pursuant to the provisions of this Section and of Section 2
hereof.
All Warrant Certificates surrendered upon exercise of Warrants shall be
canceled and disposed of by the Company. The Company shall keep copies of this
Agreement and any notices given or received hereunder available for inspection
by the Holders during normal business hours at its office.
SECTION 5. Payment of Taxes. The Company will pay all documentary stamp
taxes and other governmental charges (excluding all foreign, federal or state
income, franchise, property, estate, inheritance, gift or similar taxes) in
connection with the issuance or delivery of the Warrants hereunder, as well as
all such taxes attributable to the initial issuance or delivery of Warrant
Shares upon the exercise of Warrants and payment of the Exercise Price. The
Company shall not, however, be required to pay any tax that may be payable in
respect of any subsequent transfer of the Warrants or any transfer involved in
the issuance and delivery of Warrant Shares in a name other than that in which
the Warrants to which such issuance relates were registered, and, if any such
tax would otherwise be payable by the Company, no such issuance or delivery
shall be made unless and until the person requesting such issuance has paid to
the Company the amount of any such tax, or it is established to the reasonable
satisfaction of the Company that any such tax has been paid.
SECTION 6. Mutilated or Missing Warrant Certificates. If a mutilated
Warrant Certificate is surrendered to the Company, or if the Holder of a Warrant
Certificate claims and submits an affidavit or other evidence satisfactory to
the Company to the effect that the Warrant Certificate has been lost, destroyed
or wrongfully taken, the Company shall issue a replacement Warrant Certificate.
If reasonably required by the Company, such Holder must provide an indemnity
bond, or other form of indemnity, sufficient in the reasonable judgment of the
Company to protect the Company from any loss which it may suffer if a Warrant
Certificate is replaced. If ____________ or any other institutional Holder (or
nominee thereof) is the owner of any such lost, stolen or destroyed Warrant
Certificate, then the affidavit of an authorized officer of such owner, setting
forth the fact of loss, theft or destruction and of its ownership of the Warrant
Certificate at the time of such loss, theft or destruction shall be accepted as
satisfactory evidence thereof and no further indemnity shall be required as a
condition to the execution and delivery of a new Warrant Certificate other than
the unsecured written agreement of such owner to indemnify the Company.
SECTION 7. Reservation of Warrant Shares. The Company shall at all times
reserve and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued Class B Common Stock or its authorized and issued
Class B Common Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon
-3-
<PAGE>
exercise of Warrants, the maximum number of shares of Class B Common Stock which
may then be deliverable upon the exercise of all outstanding Warrants.
The Company or, if appointed, any transfer agent for the Class B Common
Stock and each transfer agent for any shares of the Company's capital stock
issuable upon the exercise of any of the Warrants (collectively, the "Transfer
--------
Agent") will be irrevocably authorized and directed at all times to reserve such
- -----
number of authorized shares as shall be required for such purpose. The Company
shall keep a copy of this Agreement on file with any such Transfer Agent. The
Company will supply any such Transfer Agent with duly executed certificates for
such purposes and will provide or otherwise make available all other
consideration that may be deliverable upon exercise of the Warrants. The
Company will furnish any such Transfer Agent a copy of all notices of
adjustments and certificates related thereto, transmitted to each Holder
pursuant to Section 10 hereof.
Before taking any action which would cause an adjustment pursuant to
Section 8 hereof to reduce the Exercise Price below the then par value of the
Warrant Shares, the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares at the Exercise Price
as so adjusted.
The Company covenants that all Warrant Shares and other capital stock
issued upon exercise of Warrants will, upon payment of the Exercise Price
therefor and issue thereof, be validly authorized and issued, fully paid,
nonassessable, free of preemptive rights and free, subject to Section 5 hereof,
from all taxes, liens, charges and security interests with respect to the issue
thereof, but such Warrant Shares shall be subject to the applicable terms and
conditions of the Stockholders Agreement.
SECTION 8. Adjustment of Exercise Price and Warrant Number. The number of
shares of Class B Common Stock issuable upon the exercise of each Warrant (the
"Warrant Number") is initially one. The Warrant Number is subject to adjustment
- ---------------
from time to time upon the occurrence of the events enumerated in, or as
otherwise provided in, this Section 8.
(a) Adjustment for Change in Capital Stock
If the Company:
(1) pays a dividend or makes a distribution on its Class B Common
Stock in shares of its Class B Common Stock;
(2) subdivides or reclassifies its outstanding shares of Class B
Common Stock into a greater number of shares;
(3) combines or reclassifies its outstanding shares of Class B
Common Stock into a smaller number of shares; or
-4-
<PAGE>
(4) issues by reclassification of its Class B Common Stock any
shares of its capital stock (other than reclassification arising
solely as a result of a change in the par value or no par value of the
Class B Common Stock);
then the Warrant Number and the Exercise Price in effect immediately prior to
such action shall be proportionately adjusted so that the holder of any Warrant
thereafter exercised shall receive the aggregate number and kind of shares of
capital stock of the Company which it would have received immediately following
such action if such Warrant had been exercised immediately prior to such action
for the same aggregate consideration that such holder would have paid if such
Warrant had been exercised immediately prior to such action.
The adjustment shall become effective immediately after the record date in
the case of a dividend or distribution and immediately after the effective date
in the case of a subdivision, combination or reclassification.
Such adjustment shall be made successively whenever any event listed above
shall occur.
The Company shall not issue shares of Class B Common Stock as a dividend or
distribution on any class of capital stock other than Class B Common Stock
unless (i) the Warrant Holders also receive such dividend or distribution on a
ratable basis or (ii) the appropriate adjustment to the Warrant Number and
Exercise Price is made under this Section 8.
(b) Notice of Adjustment
--------------------
Whenever the Warrant Number is adjusted, the Company shall provide the
notices required by Section 10 hereof.
(c) Voluntary Increase
------------------
The Company from time to time may increase the Warrant Number by any amount
for any period of time (including, without limitation, permanently) if the
period is at least 20 Business Days and if the increase is irrevocable during
the period. Whenever the Warrant Number is increased, the Company shall mail to
the Holders a notice of the increase. The Company shall mail the notice at
least 15 days before the date the increased Warrant Number takes effect. The
notice shall state the increased Warrant Number and the period it will be in
effect.
An increase of the Warrant Number under this Subsection (c) (other than a
permanent increase) does not change or adjust the Warrant Number otherwise in
effect for purposes of subsection (a) of this Section 8.
(d) Reorganizations
---------------
In case of any capital reorganization, other than in the cases referred to
in Section 8(a) hereof, or the consolidation or merger of the Company with or
into another
-5-
<PAGE>
corporation (other than a merger or consolidation in which the Company is the
continuing corporation and which does not result in any reclassification of the
outstanding shares of the Company's capital stock into shares of other stock or
other securities or property), or the sale of the property of the Company as an
entirety or substantially as an entirety (collectively, such actions being
hereinafter referred to as "Reorganizations"),there shall thereafter be
---------------
deliverable upon exercise of any Warrant (in lieu of the number of shares of
Class B Common Stock theretofore deliverable) the number of shares of stock or
other securities or property to which a holder of the number of shares of Class
B Common Stock that would otherwise have been deliverable upon the exercise of
such Warrant would have been entitled upon such Reorganization if such Warrant
had been exercised in full immediately prior to such Reorganization. In case of
any Reorganization, appropriate adjustment, as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
duly adopted resolution certified by the Company's Secretary or Assistant
Secretary, shall be made in the application of the provisions herein set forth
with respect to the rights and interests of Holders so that the provisions set
forth herein shall thereafter be applicable, as nearly as possible, in relation
to any shares or other property thereafter deliverable upon exercise of
Warrants.
The Company shall not effect any such Reorganization unless prior to or
simultaneously with the consummation thereof, (i) notice of such Reorganization
shall be given to each of the Holders of the Warrants, and (ii) the successor
corporation (if other than the Company) resulting from such Reorganization or
the corporation purchasing or leasing such assets or other appropriate
corporation or entity shall expressly assume, by a supplemental Warrant
Agreement or other acknowledgement executed and delivered to the Holder(s), the
obligation to deliver to each such Holder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such Holder may be
entitled to purchase, and all other obligations and liabilities under this
Agreement.
(e) Form of Warrants
----------------
Irrespective of any adjustments in the Exercise Price or the number or kind
of shares purchasable upon the exercise of the Warrants, Warrants theretofore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in the Warrants initially issuable pursuant to this
Agreement but shall nevertheless be exercisable for the adjusted number of
Warrant Shares at the adjusted Exercise Price.
SECTION 9. Fractional Interests. The Company shall not be required to
issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be presented for exercise in full at the same time by the same
Holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 9,
be issuable on the exercise of any Warrants (or specified portion thereof), the
Company shall, pay an amount in cash equal to the fair market value (as
determined in good faith by the Board of Directors) of the Warrant Share so
issuable, multiplied by such fraction.
-6-
<PAGE>
SECTION 10. Notices to Warrant Holders. Upon any adjustment pursuant to
Section 8 hereof, the Company shall promptly thereafter (i) cause to be filed
with the Company a certificate of an officer of the Company setting forth the
Warrant Number and Exercise Price after such adjustment and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculations are based, and (ii) cause to be given to each of the Holders at its
address appearing on the Warrant Register written notice of such adjustments.
Where appropriate, such notice may be given in advance and included as a part of
the notice required to be mailed under the other provisions of this Section 10.
In case:
(a) The Company shall authorize the issuance to all holders of shares
of Class B Common Stock of rights, options or warrants to subscribe for or
purchase shares of Class B Common Stock or of any other subscription rights or
warrants;
(b) The Company shall authorize the distribution to all holders of
shares of Class B Common Stock of assets, including cash, evidences of its
indebtedness, or other securities;
(c) of any consolidation or merger to which the Company is a party
and for which approval of any shareholders of the Company is required, or of the
conveyance or transfer of the properties and assets of the Company substantially
as an entirety, or of any reclassification or change of Class B Common Stock
issuable upon exercise of the Warrants (other than a change in par value, or
from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), or a tender offer or exchange offer for
shares of Class B Common Stock;
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) the Company proposes to take any action that would require an
adjustment to the Warrant Number pursuant to Section 9 hereof;
then the Company shall cause to be given to each of the Holders at its address
appearing on the Warrant Register, at least 20 days prior to the applicable
record date hereinafter specified, or the date of the event in the case of
events for which there is no record date, in accordance with the provisions of
Section 11 hereof, a written notice stating (i) the date as of which the holders
of record of shares of the capital stock of the Company to be entitled to
receive any such rights, options, warrants or distribution are to be determined,
or (ii) the initial expiration date set forth in any tender offer or exchange
offer for shares of the capital stock of the Company, or (iii) the date on which
any such consolidation, merger, conveyance, transfer, dissolution, liquidation
or winding up is expected to become effective or consummated, and the date as of
which it is expected that holders of record of shares of the capital stock of
the Company shall be entitled to exchange such shares for securities or other
property, if any, deliverable upon such reclassification, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up. The failure to
give the notice required by this Section 10 or any defect therein shall not
-7-
<PAGE>
affect the legality or validity of any distribution, right, option, warrant,
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up, or the vote upon any action.
Nothing contained in this Agreement or in any Warrant Certificate shall be
construed as conferring upon the Holders (prior to the exercise of such
Warrants) the right to vote or to consent or to receive notice as shareholder in
respect of the meetings of shareholders or the election of Directors of the
Company or any other matter, or any rights whatsoever as shareholders of the
Company; provided, however, that nothing in the foregoing provision is intended
to detract from any rights explicitly granted to any Holder hereunder.
SECTION 11. Notices to the Company and Warrant Holders. All notices and
other communications provided for or permitted hereunder shall be made by hand-
delivery, first-class mail, telex, telecopier, or overnight air courier
guaranteeing next day delivery:
(a) if to ________, to the address specified on the signature page
executed by ________; and
(b) if to the Company, iXL Enterprises, Inc., 1888 Emery Street, N.W.,
Atlanta, Georgia, 30318, Telecopy no. (404) 267-3801, Attention: James V.
Sandry, with a copy to Minkin & Snyder PC, One Buckhead Plaza, 3060 Peachtree
Road, N.E., Suite 1100, Atlanta, Georgia 30305, Telecopy No. (404) 261-5064,
Attention: James S. Altenbach, Esq., and with an additional copy to Kelso &
Company, 320 Park Avenue, Suite 2400, New York, New York 10022, Attention:
James J. Connors II, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed (so long as a
fax copy is sent and receipt acknowledged within two business days after
mailing); when answered back if telexed; when receipt acknowledged, if
telecopied; and the next business day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery. The parties may
change the addresses to which notices are to be given by giving five days' prior
written notice of such change in accordance herewith.
SECTION 12. Certain Supplements and Amendments. The Company may from time
to time supplement or amend this Agreement without the approval of any Holders
in order to cure any ambiguity or to correct or supplement any provision
contained herein which may be defective or inconsistent with any other provision
herein; provided that any such supplement or amendment shall not in any way
adversely affect the interests of the Holders.
SECTION 13. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company shall bind and inure to the benefit of its
respective successors and assigns hereunder.
SECTION 14. Termination. This Agreement shall terminate if all Warrants
have been exercised or shall have expired or been canceled pursuant to this
Agreement.
-8-
<PAGE>
SECTION 15. GOVERNING LAW; SUBMISSION TO JURISDICTION; Waiver of Jury
Trial. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF GEORGIA (PROVIDED THAT DETERMINATIONS RELATING TO
CORPORATE LAW SHALL BE CONSTRUED IN ACCORDANCE WITH THE DELAWARE GENERAL
CORPORATION LAW). THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF ANY GEORGIA STATE COURT SITTING IN FULTON COUNTY, GEORGIA OR ANY
FEDERAL COURT SITTING IN FULTON COUNTY, GEORGIA IN RESPECT OF ANY SUIT, ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE WARRANTS, AND
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE COMPANY AGREES THAT
IT WILL NOT COMMENCE ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY OTHER
JURISDICTION. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTWITHSTANDING THE FOREGOING,
NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY HOLDER OF A WARRANT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
EACH OF THE PARTIES HERETO HEREBY WAIVES THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE OTHER DOCUMENTS, OR ANY DEALINGS BETWEEN THEM REALTING
RELATING TO THE SUBJECT MATTER OF ____________'S INVESTMENT IN THE COMPANY
CONTEMPLATED HEREBY. THE SCOPE OF THIS JURY TRIAL WAIVER SHALL BE LIMITED TO
DISPUTES BETWEEN THE COMPANY AND _________ AND SHALL NOT EXTEND TO DISPUTES
BETWEEN THE COMPANY AND ANY OTHER PERSON.
SECTION 16. Benefits of This Agreement. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company and the
Holders any legal or equitable right, remedy or claim under this Agreement; but
this Agreement shall be for the sole and exclusive benefit of the Company and
the Holders.
SECTION 17. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
SECTION 18. Amendments and Waivers. Subject to Section 13, the Company
agrees it will not solicit, request or negotiate for or with respect to any
proposed waiver or amendment of any of the provisions of this Agreement or any
Warrant unless each Holder (irrespective of the amount of Warrants then owned by
it) shall substantially concurrently be informed thereof by the
-9-
<PAGE>
Company and shall be afforded the opportunity of considering the same and shall
be supplied by the Company with sufficient information (including any offer of
remuneration) to enable it to make an informed decision with respect thereto
which information shall be the same as that supplied to each other Holder. The
Company will not, directly or indirectly, pay or cause to be paid any
remuneration whether by way of supplement or additional interest fee or
otherwise, to any Holder as consideration for or as an inducement to the
entering into by any Holder of any waiver or amendment of any of the terms and
provisions of this Agreement or any Warrant unless such remunerations is
concurrently paid on the same terms, ratably to each Holder whether or not such
Holder signs such waiver or consent, provided that the foregoing is not intended
to preclude the adoption of any amendment or the giving of any waiver by the
Holders of a majority of the Warrants to the extent permitted by the other
provisions of this Section 19.
[Signature pages follow]
-10-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement
to be duly executed as of the day and year first above written.
iXL Enterprises, Inc.
By:
-----------------------------------------
Name:
Title:
Addresses for Notices:
- ---------------------
______________________
By:
-----------------------------------------
Name:
Title:
-11-
<PAGE>
EXHIBIT A
[Form of Warrant Certificate]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON
________________, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED. THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE
DISTRIBUTED EXCEPT IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE ACT, OR IN COMPLIANCE WITH RULE 144 OR PURSUANT TO
ANOTHER EXEMPTION THEREFROM. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO A WARRANT AGREEMENT DATED AS OF ____________, AMONG THE ISSUER OF
SUCH SECURITIES (THE "COMPANY") AND __________________. THE TRANSFER OF THIS
CERTIFICATE IS SUBJECT TO THE CONDITIONS SPECIFIED IN SUCH AGREEMENT AND THE
COMPANY RESERVES THE RIGHT TO REFUSE THE TRANSFER OF THIS CERTIFICATE UNTIL SUCH
CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. A COPY OF SUCH
AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF
UPON WRITTEN REQUEST.
THE SHARES ISSUABLE UPON EXERCISE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE PREFERENCES, POWERS, QUALIFICATIONS AND RIGHTS OF
EACH CLASS AND SERIES AS SET FORTH IN THE COMPANY'S CERTIFICATE OF
INCORPORATION. THE COMPANY WILL FURNISH A COPY OF THE CERTIFICATE OF
INCORPORATION TO THE HOLDER OF THIS CERTIFICATE UPON WRITTEN REQUEST.
_____________ Warrants
Warrant Certificate
iXL Enterprises, Inc.
This Warrant Certificate certifies that ______________, or registered
assigns, is the registered holder of the number of Warrants (the "Warrants") set
--------
forth above to purchase Class B Common Stock, par value $.01 per share (the
"Class B Common Stock"), of iXL Enterprises, Inc., a Delaware corporation (the
- ---------------------
"Company"). Each Warrant entitles the Holder upon exercise to receive from the
- --------
Company one fully paid and nonassessable share of Class B Common Stock (a
"Warrant Share"), at an exercise price (the "Exercise Price") of $___ payable in
- -------------- --------------
lawful money of the United States of America, upon surrender of this Warrant
Certificate and payment of the Exercise Price at the office of the Company
designated for such purpose, but only subject to the conditions set forth herein
and in the Warrant Agreement referred to hereinafter. The number of Warrant
Shares issuable upon exercise of the Warrants and the Exercise Price are subject
to adjustment upon the occurrence of certain events, as set forth in the Warrant
Agreement. Each Warrant is exercisable at any time during the period commencing
on the date hereof and ending at
-12-
<PAGE>
5:00 p.m., New York City time, on the later of (i) ________________ or (ii) the
date which is one year after the effective date of a Qualified Public Offering.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants, and are issued or to be issued pursuant to a
Warrant Agreement dated as of ______________ (the "Warrant Agreement"), duly
-----------------
executed and delivered by the Company, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Company and the holders (the words
"holders or holder" meaning the registered holders or registered holder) of the
- -------- ------
Warrants. A copy of the Warrant Agreement may be obtained by the holder hereof
upon written request to the Company. Capitalized terms used and not defined
herein shall have the meaning ascribed thereto in the Warrant Agreement.
The holder of Warrants evidenced by this Warrant Certificate may
exercise such Warrants under and pursuant to the terms and conditions of the
Warrant Agreement by surrendering this Warrant Certificate, with the form of
election to purchase set forth hereon (and by this reference made a part hereof)
properly completed and executed, together with payment of the Exercise Price
made, at the election of the Holder, (i) in cash, by certified or official bank
check payable to the order of the Company, (ii) by delivering for surrender and
cancellation to the Company Warrants with an aggregate Surrender Value (as
defined in Section 4 of the Warrant Agreement), as of the date of such exercise,
equal to the Exercise Price for the Warrants being exercised, or (iii) any
combination thereof. In the event that upon any exercise of Warrants evidenced
hereby the number of Warrants exercised shall be less than the total number of
Warrants evidenced hereby, there shall be issued by the Company to the holder
hereof or its registered assignee a new Warrant Certificate evidencing the
number of Warrants not exercised.
Warrant Certificates, when surrendered at the office of the Company by
the registered holder thereof in person or by legal representative or attorney
duly authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Subject to the terms and conditions of the Warrant Agreement, upon due
presentation for registration of transfer of this Warrant Certificate at the
office of the Company a new Warrant Certificate or Warrant Certificates of like
tenor and evidencing in the aggregate a like number of Warrants shall be issued
to the transferee(s) in exchange for this Warrant Certificate, subject to the
limitations provided in the Warrant Agreement, without charge except for any tax
or other governmental charge imposed in connection therewith.
The Company may deem and treat the registered holder(s) thereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
Neither the Warrants nor this Warrant Certificate entitles any holder hereof to
any rights of a stockholder of the Company.
-13-
<PAGE>
IN WITNESS WHEREOF, iXL Enterprises, Inc. has caused this Warrant
Certificate to be signed by its Chairman of the Board, President or Vice
President and by its Secretary or Assistant Secretary.
Dated: _____________________
iXL Enterprises, Inc.
By:
-----------------------------------------
Name:
Title:
By:
-----------------------------------------
Name:
Title:
-14-
<PAGE>
FORM OF ELECTION TO PURCHASE
(To Be Executed Upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive __________ shares of Class B
Common Stock and herewith tenders payment for such shares to the Company in the
form of [a certified or official bank check payable to the order of the Company
in the amount of $_____, [and] Warrants to purchase __________ Warrant Shares
with an aggregate Surrender Value (as defined in Section 4 of the Warrant
Agreement) of $__________].
The undersigned requests that a certificate for such shares be
registered in the name of _______________, whose address is
_______________________________ and that such shares be delivered to
__________________, whose address is ___________________________.
If said number of shares is less than all of the shares of Class B
Common Stock purchasable hereunder, the undersigned requests that a new Warrant
Certificate representing the remaining balance of such shares be registered in
the name of ________________________, whose address is
_______________________________, and that such Warrant Certificate be delivered
to _____________________, whose address is ________________________________.
Signature(s):
---------------------------------
NOTE: The above signature(s) must correspond
with the name written upon the face of
this Warrant Certificate in every
particular, without alteration or
enlargement or any change whatever. If
this Warrant is held of record by two or
more joint owners, all such owners must
sign.
Date: ____________
-15-
<PAGE>
FORM OF ASSIGNMENT
(To be signed only upon assignment of Warrant Certificate)
FOR VALUE RECEIVED, hereby sells, assigns and transfers unto
_________________________ whose address is _________________________ and whose
social security number or other identifying number is _________________________,
the within Warrant Certificate, together with all right, title and interest
therein and to the Warrants represented thereby, and does hereby irrevocably
constitute and appoint _____________________, attorney, to transfer said Warrant
Certificate on the books of the within-named Company, with full power of
substitution in the premises.
Signature(s):
---------------------------
NOTE: The above signature(s) must
correspond with the name written
upon the face of this Warrant
Certificate in every particular,
without alteration or enlargement
or any change whatever. If this
Warrant is held of record by two
or more joint owners, all such
owners must sign.
Date: ____________
-16-
<PAGE>
EXHIBIT 4.5
================================================================================
FORM OF CLASS B
COMMON STOCK
WARRANT AGREEMENT
WARRANT AGREEMENT
among
iXL ENTERPRISES, INC.
and
-------------------
Dated as of
-------------------
================================================================================
<PAGE>
WARRANT AGREEMENT
This WARRANT AGREEMENT is dated as of (the "Agreement")
---------------- ---------
and entered into by and among iXL Enterprises, Inc., a Delaware corporation (the
"Company"), and , a Delaware
------- --------------------------------------------
corporation. Certain capitalized terms used herein are defined in Section 18.
Section 1. Issue of Warrants.
-----------------
1.1 Marketing Campaign. Promptly after the date hereof, the Company and
------------------
____ will discuss a marketing campaign to publicize the services of the Company
and Consumer Financial Network, Inc., a subsidiary of the Company (the
"Marketing Campaign"). If, upon the culmination of such discussions, the
Company, in its sole discretion, approves the Marketing Campaign proposed by
____ for general use, the Company will issue to ____ warrants (the "Warrants")
to purchase _______ shares of the Class A Common Stock of the Company (the
"Common Stock"), par value $.0l per share (the "Warrant Shares").
1.2 Adjustment. The number of Warrant Shares issued pursuant to Section
----------
1.1 may be subject to adjustment as provided in Section 9 hereof.
Section 2. Warrant Certificates.
--------------------
2.1 Delivery of Warrant Certificates. If Warrants are to be issued
--------------------------------
pursuant to Section 1.1, the Company shall issue and deliver to ____, within ten
Business Days after the determination by the Company that Warrants are to be
issued, a certificate evidencing the Warrants.
2.2 Form of Certificates. The certificate representing the Warrants
--------------------
("Warrant Certificate") shall be substantially in the form set forth as Exhibit
A attached hereto. The Warrant Certificate shall be dated the date of issuance
of the Warrants by the Company.
Section 3. Execution of Warrant Certificates. Each Warrant Certificate
---------------------------------
shall be signed on behalf of the Company by its Chairman of the Board or its
Chief Executive Officer, President or any Vice President. Each Warrant
Certificate shall also be signed on behalf of the Company by its Secretary or an
Assistant Secretary.
<PAGE>
Section 4. Restrictions on Transfer; Legend. Subject to the conditions to
--------------------------------
and restrictions on transfer contained in the Second Amended and Restated
Stockholders Agreement of the Company, as such agreement may be amended from
time to time (the "Stockholders Agreement") which shall apply to each Holder of
----------------------
any Warrants (with respect to such Warrants) or Warrant Shares (with respect to
such Warrant Shares) as if such Holder were a "Chase Investor" thereunder and as
if such Warrants and Warrant Shares were "Stock" thereunder, the Company shall
from time to time register the transfer of any outstanding Warrant Certificate
and any certificate evidencing Warrant Shares in the applicable register to be
maintained by the Company upon surrender thereof accompanied by a written
instrument or instruments of transfer in form reason-ably satisfactory to the
Company, duly executed by the registered Holder or Holders thereof or by the
duly appointed legal representative thereof or by a duly authorized attorney.
Notwithstanding the foregoing, each Holder of Warrants and Warrant Shares agrees
that it will not transfer such securities for 180 days after any public offering
of common stock (or security convertible with common stock) by the Company
unless the managing underwriter for such offering decides such restriction is
unnecessary, and each Holder agrees to execute any agreement or document
reasonably requested by any such underwriter which relates to such restriction.
Upon any such registration of transfer, a new Warrant Certificate or Stock
Certificate, as the case may be, shall be issued to the transferee Holder(s) and
the surrendered Warrant Certificate or certificate evidencing any Warrant
Shares, as the case may be, shall be canceled and disposed of by the Company.
Any attempted transfer in violation of the Stockholders' Agreement and this
Section 4 shall be null and void.
Upon original issuance thereof, and until such time as the same shall have
been registered under the Securities Act or Sold pursuant to Rule 144
promulgated thereunder (or any similar rule or regulation) each Warrant
Certificate shall bear the legend included on the first page of Exhibit A,
unless in such opinion of counsel, such legend is no longer required by the Act.
Section 5. Warrants; Exercise of Warrants. Subject to the terms of this
------------------------------
Agreement, each Holder shall have the right, which may be exercised at any time
during the period commencing on the date hereof and ending at 5:00 p.m., New
York City time, on the date that is three years from the date hereof (the
"Expiration Date"), to receive from the Company the number of fully paid and
---------------
nonassessable Warrant Shares which the Holder may at the time be entitled to
receive on exercise of such Warrants and payment of the Exercise Price (as
defined below) for such Warrant Shares. Each Warrant not exercised prior to 5:00
p.m., New York City time, on the Expiration Date shall become void and all
rights thereunder and all rights in respect thereof under this Agreement shall
2
<PAGE>
cease as of such time. No adjustments as to dividends will be made upon exercise
of the Warrants, except as otherwise expressly provided herein.
The price at which each Warrant shall be exercisable (the "Exercise
--------
Price") shall be equal to $_____ per share of Common Stock.
- -----
A Warrant may be exercised upon surrender to the Company at its office
designated for such purpose of the Warrant Certificate or Certificates to be
exercised with the form of election to purchase attached thereto duly filled in
and signed, and upon payment to the Company of the applicable Exercise Price for
the number of Warrant Shares in respect of which such Warrants are then
exercised. Payment of the aggregate Exercise Price shall be made, at the
election of the Holder, (i) in cash, by certified or official bank check payable
to the order of the Company, (ii) by delivering for surrender and cancellation
to the Company Warrants with an aggregate Surrender Value, as of the date of
such exercise, equal to the Exercise Price for the Warrants being exercised, or
(iii) any combination thereof. For the purposes of this paragraph, the
"Surrender Value" of any Warrant is equal to the fair market value (as
---------------
determined in good faith by the board of directors of the Company), as of the
date of such surrender, of the Warrant Shares issuable upon the exercise of such
Warrant, minus the Exercise Price of such Warrant.
Subject to the provisions of this Section 5, upon such surrender of
Warrant Certificates and payment of the Exercise Price, the Company shall issue
and cause to be delivered, as promptly as practicable, to the Holder, or, upon
the written order of the Holder, to such other person or persons as such Holder
may designate, a certificate or certificates for the number of full Warrant
Shares issuable upon the exercise of such Warrants (and such other consideration
as may be deliverable upon exercise of such Warrants pursuant to the terms of
this Agreement) together with cash for fractional Warrant Shares as provided in
Section 10. The certificate or certificates for such Warrant Shares shall be
deemed to have been issued and the person so named therein shall be deemed to
have become a holder of record of such Warrant Shares as of the date of the
surrender of such Warrants and payment of the Exercise Price, irrespective of
the date of delivery of such certificate or certificates for Warrant Shares.
Each Warrant shall be exercisable, at the election of the Holder thereof,
either in full or from time to time in part and, in the event that a Warrant
Certificate is exercised in respect of fewer than all of the Warrant Shares
issuable on such exercise at any time prior to the date of expiration of the
Warrants, a new certificate evidencing the remaining Warrant or Warrants will be
issued and delivered pursuant to the provisions hereof.
3
<PAGE>
All Warrant Certificates surrendered upon exercise of Warrants shall be
canceled and disposed of by the Company. The Company shall keep copies of this
Agreement and any notices given or received hereunder available for inspection
by the Holders during normal business hours at its office.
Section 6. Payment of Taxes. The Company will pay all documentary stamp
----------------
taxes and other governmental charges (excluding all foreign, federal or state
income, franchise, property, estate, inheritance, gift or similar taxes) in
connection with the issuance or delivery of the Warrants hereunder, as well as
all such taxes attributable to the initial issuance or delivery of Warrant
Shares upon the exercise of Warrants and payment of the Exercise Price. The
Company shall not, however, be required to pay any tax that may be payable in
respect of any subsequent transfer of the Warrants or any transfer involved in
the issuance and delivery of Warrant Shares in a name other than that in which
the Warrants to which such issuance relates were registered, and, if any such
tax would otherwise be payable by the Company, no such issuance or delivery
shall be made unless and until the person requesting such issuance has paid to
the Company the amount of any such tax, or it is established to the reasonable
satisfaction of the Company that any such tax has been paid.
Section 7. Mutilated or Missing Warrant Certificates. If a mutilated
-----------------------------------------
Warrant Certificate is surrendered to the Company, or if the Holder of a Warrant
Certificate claims and submits an affidavit or other evidence satisfactory to
the Company to the effect that the Warrant Certificate has been lost, destroyed
or wrongfully taken, the Company shall issue a replacement Warrant Certificate.
If reasonably required by the Company, such Holder must provide an indemnity
bond, or other form of indemnity, sufficient in the reasonable judgment of the
Company to protect the Company from any loss which it may suffer if a Warrant
Certificate is replaced. If any Investor or any other Holder is the owner of any
such lost, stolen or destroyed Warrant Certificate, then the affidavit of an
authorized officer of such owner, setting forth the fact of loss, theft or
destruction and of its ownership of the Warrant Certificate at the time of such
loss, theft or destruction shall be accepted as satisfactory evidence thereof
and no further indemnity shall be required as a condition to the execution and
delivery of a new Warrant Certificate other than the unsecured written agreement
of such owner to indemnify the Company.
Section 8. Reservation of Warrant Shares. The Company shall at all times
-----------------------------
reserve and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued Common Stock or its authorized and issued Common
Stock held in its treasury, for the purpose of enabling it to satisfy any
obligation to issue Warrant
4
<PAGE>
Shares upon exercise of Warrants, the maximum number of shares of Common Stock
which may then be deliverable upon the exercise of all outstanding Warrants.
The Company or, if appointed, any transfer agent for any shares of the
Common Stock (the "Transfer Agent") will be irrevocably authorized and directed
--------------
at all times to reserve such number of authorized shares as shall be required
for such purpose. The Company shall keep a copy of this Agreement on file with
any such Transfer Agent. The Company will supply any such Transfer Agent with
duly executed certificates for such purposes and will provide or otherwise make
available all other consideration that may be deliverable upon exercise of the
Warrants. The Company will furnish any such Transfer Agent a copy of all notices
of adjustments and certificates related thereto, transmitted to each Holder
pursuant to Section 11 hereof.
Before taking any action which would cause an adjustment pursuant to
Section 9 hereof to reduce the Exercise Price below the then par value of the
Warrant Shares, the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares at the Exercise Price
as so adjusted.
The Company covenants that all Warrant Shares and other capital stock
issued upon exercise of Warrants will, upon payment of the Exercise Price
therefor and issue thereof, be validly authorized and issued, fully paid,
nonassessable, free of preemptive rights and free, subject to Section 6 hereof,
from all taxes, liens, charges and security interests with respect to the issue
thereof, provided, that such Warrant Shares or other capital stock shall be
--------
treated as "Stock", and the Holders of Warrant Shares shall be subject to all
restrictions applicable to "Outside" Investors" pursuant to the Stockholders'
Agreement.
Section 9. Adjustment of Exercise Price and Warrant Number. The number of
-----------------------------------------------
shares of Common Stock issuable upon the exercise of each Warrant (the "Warrant
-------
Number") is initially one. The Warrant Number is subject to adjustment from time
- ------
to time upon the occurrence of the events enumerated in, or as otherwise
provided in, this Section 9.
(a) Adjustment for Change in Common Stock
-------------------------------------
If the Company:
(1) pays a dividend or makes a distribution on its Common Stock in
shares of its Common Stock;
5
<PAGE>
(2) subdivides or reclassifies its outstanding shares of Common
Stock into a greater number of shares;
(3) combines or reclassifies its outstanding shares of Common Stock
into a smaller number of shares; or
(4) issues by reclassification of its Common Stock any shares of its
capital stock (other than reclassification arising solely as a result
of a change in the par value or no par value of the Common Stock);
then the Warrant Number and the Exercise Price in effect immediately prior to
such action shall be proportionately adjusted so that the holder of any
Warrant thereafter exercised shall receive the aggregate number and kind of
shares of capital stock of the Company which it would have received
immediately following such action if such Warrant had been exercised
immediately prior to such action for the same aggregate consideration that
such holder would have paid if such Warrant had been exercised immediately
prior to such action.
The adjustment shall become effective immediately after the record date
in the case of a dividend or distribution and immediately after the effective
date in the case of a subdivision, combination or reclassification.
Such adjustment shall be made successively whenever any event listed
above shall occur.
The Company shall not issue shares of Common Stock as a dividend or
distribution on any class of capital stock, other than the Common Stock,
unless the Warrant Holders also receive such dividend or distribution on a
ratable basis or an appropriate adjustment to the Warrant Number and Exercise
Price is made under this Section 9.
(b) Notice of Adjustment
--------------------
Whenever the Warrant Number is adjusted, the Company shall provide the
notices required by Section 11 hereof.
(c) Voluntary Increase
------------------
The Company from time to time may increase the Warrant Number by any
amount for any period of time (including, without limitation, permanently) if
the period is at least 20 business days and if the increase is irrevocable
during the period. Whenever
6
<PAGE>
the Warrant Number is increased, the Company shall mail to the Holders a notice
of the increase. The Company shall mail the notice at least 15 days before the
date the increased Warrant Number takes effect The notice shall state the
increased Warrant Number and the period it will be in effect.
An increase of the Warrant Number under this Subsection (c) (other than a
permanent increase) does not change or adjust the Warrant Number otherwise in
effect for purposes of subsection (a) of this Section 9.
(d) Reorganizations
---------------
In case of any capital reorganization, other than in the cases referred to
in Section 9(a) hereof, or the consolidation or merger of the Company with or
into another corporation (other than a merger or consolidation in which the
Company is the continuing corporation and which does not result in any
reclassification of the outstanding shares of Common Stock into shares of other
stock or other securities or property), or the sale of the property of the
Company as an entirety or substantially as an entirety (collectively, such
actions being hereinafter referred to as "Reorganizations"), there shall
---------------
thereafter be deliverable upon exercise of any Warrant (in lieu of the number of
shares of Common Stock theretofore deliverable) the number of shares of stock or
other securities or property to which a holder of the number of shares of Common
Stock that would otherwise have been deliverable upon the exercise of such
Warrant would have been entitled upon such Reorganization if such Warrant had
been exercised in full immediately prior to such Reorganization. In the event
that the Warrants are not exercised in connection with such Reorganization,
appropriate adjustment, as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a duly adopted resolution
certified by the Company's Secretary or Assistant Secretary, shall be made in
the application of the provisions herein set forth with respect to the rights
and interests of Holders so that the anti-dilution provisions set forth in this
Section 9 shall thereafter be applicable, as nearly as possible, in relation to
any shares or other property thereafter deliverable upon exercise of Warrants.
The Company shall not effect any such Reorganization unless prior to or
simultaneously with the consummation thereof, (i) notice of such Reorganization
-
shall be given to each of the Holders of the Warrants, and (ii) the successor
--
corporation (if other than the Company) resulting from such Reorganization or
the corporation purchasing or leasing such assets or other appropriate
corporation or entity shall expressly assume, by a supplemental Warrant
Agreement or other acknowledgment executed and delivered to the Holder(s), the
obligation to deliver to each such Holder such shares of stock,
7
<PAGE>
securities or assets as, in accordance with the foregoing provisions, such
Holder may be entitled to purchase, and all other obligations and liabilities
under this Agreement
(e) Form of Warrants
----------------
Irrespective of any adjustments in the Exercise Price or the number or
kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement but shall nevertheless be exercisable for the
adjusted number of Warrant Shares at the adjusted Exercise Price.
Section 10. Fractional Interests. The Company shall not be required to
--------------------
issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be presented for exercise in full at the same time by the same
Holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 10,
be issuable on the exercise of any Warrants (or specified portion thereof), the
Company shall pay an amount in cash equal to the fair market value (as
determined in good faith by the Board of Directors) of the Warrant Share so
issuable, multiplied by such fraction.
Section 11. Notices to Warrant Holders. Upon any adjustment pursuant to
--------------------------
Section 9 hereof, the Company shall promptly thereafter (i) cause to be filed
-
with the Company a certificate of an officer of the Company setting forth the
Warrant Number and Exercise Price after such adjustment and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculations are based, and (ii) cause to be given to each of the Holders at its
--
address appearing on the Warrant Register written notice of such adjustments.
Where appropriate, such notice may be given in advance and included as a part of
the notice required to be mailed under the other provisions of this Section 11.
In case:
(a) the Company shall authorize the issuance to all holders of shares of
Common Stock of rights, options or warrants to subscribe for or purchase shares
of Common Stock or of any other subscription rights or warrants;
8
<PAGE>
(b) the Company shall authorize the distribution to all holders of shares
of Common Stock of assets, including cash, evidences of its indebtedness, or
other securities;
(c) of any consolidation or merger to which the Company is a party and for
which approval of any shareholders of the Company is required, or of the
conveyance or transfer of the properties and assets of the Company substantially
as an entirety, or of any reclassification or change of Common Stock issuable
upon exercise of the Warrants (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination),. or a tender offer or exchange offer for shares of
Common Stock;
(d) of the voluntary or involuntary dissolution, liquidation or winding up
of the Company; or
(e) the Company proposes to take any action that would require an
adjustment to the Warrant Number pursuant to Section 9 hereof;
then the Company shall cause to be given to each of the Holders at its address
appearing on the Warrant Register, at least 20 days prior to the applicable
record date hereinafter specified, or the date of the event in the case of
events for which there is no record date, in accordance with the provisions of
Section 12 hereof, a written notice stating (i) the date as of which the holders
-
of record of shares of Common Stock or the preferred stock of the Company to be
entitled to receive any such rights, options, warrants or distribution are to be
determined, or (ii) the initial expiration date set forth in any tender offer or
--
exchange offer for shares of Preferred Stock or Common Stock, or (iii) the date
---
on which any such consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up is expected to become effective or consummated, and
the date as of which it is expected that holders of record of shares of
Preferred Stock or Common Stock shall be entitled to exchange such shares for
securities or other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up. The failure to give the notice required by this Section 11 or any defect
therein shall not affect the legality or validity of any distribution, right,
option, warrant, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up, or the vote upon any action.
Nothing contained in this Agreement or in any Warrant Certificate shall be
construed as conferring upon the Holders (prior to the exercise of such
Warrants) the right to vote or to consent or to receive notice as shareholder in
respect of the meetings of shareholders or the election of Directors of the
Company or any other matter, or any rights whatsoever as shareholders of the
Company; provided, however, that nothing in the
9
<PAGE>
foregoing provision is intended to detract from any rights explicitly granted to
any Holder hereunder.
Section 12. Notices to the Company and Warrant Holders. All notices and
------------------------------------------
other communications provided for or permitted hereunder shall be made by hand-
delivery, first-class mail, telex, telecopier, or overnight air courier
guaranteeing next day delivery:
(a) if to ________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
_____________________________________;
(b) if to the Company, to iXL Enterprises, Inc., 1888 Emery Street, Suite
200, Atlanta, Georgia, 30318, Fax no.(404)267-3801, Attention: M. Wayne
Boylston, with a copy to Minkin & Snyder PC, One Buckhead Plaza, 3060 Peachtree
Road, N.E., Suite 1100, Atlanta, Georgia 30305, Fax no.(404)233-5064, Attention:
James S. Altenbach, Esq. and Debevoise & Plimpton, 875 Third Avenue, New York,
New York 10022, Fax no.(212)909-6836, Attention: Margaret Andrews Davenport,
Esq., and with an additional copy to Kelso & Company, 320 Park Avenue, Suite
2400, New York, New York 10022, Fax no: (212) 223-2379 Attention: James J.
Connors II, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed (so long as a
fax copy is sent and receipt acknowledged within two business days after
mailing); when answered back if telexed; when receipt acknowledged, if
telecopied; and the next business day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery. The patties may
change the addresses to which notices are to be given by giving five days' prior
written notice of such change in accordance herewith.
Section 13. Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants to ____ on the date hereof as follows:
(a) Due Incorporation and Good Standing. The Company has been duly
-----------------------------------
incorporated and is validly existing as a corporation in good standing under the
laws of the State of Delaware with corporate power and authority to enter into
and perform its obligations under this Agreement.
10
<PAGE>
(b) Authority. The Company has all necessary corporate power and
---------
authority to execute and deliver this Agreement, and to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement has been authorized by all necessary corporate
action on the part of the Company and no other corporate proceedings or
approvals are required on the part of the Company to authorize this Agreement or
to consummate the transactions contemplated hereby. This Agreement has been duly
authorized and validly executed and delivered by the Company and, assuming the
due authorization, execution and delivery thereof by ____, will constitute a
legal, valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as such enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to or affecting creditors' rights generally and
by general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). The Company has duly authorized
and reserved a sufficient number of shares of Common Stock for issuance upon
exercise of the Warrants, and the Warrant Shares, when issued upon exercise of
the Warrants in accordance with the terms of this Agreement, will be validly
issued, fully paid and nonassessable, with no personal liability attached to the
ownership thereof.
(c) No Violation or Conflict: No Default.
------------------------------------
(i) The execution, delivery or performance of this Agreement by the
-
Company and the consummation of the transactions contemplated hereby will not:
(A) violate or conflict with any provision of the certificate of
-
incorporation or by-laws of the Company or any of its subsidiaries;
(B) violate or conflict with any statute, law, rule or regulation
-
or any judgment, decree, order, regulation or rule of any court or governmental
authority or body (collectively, "Laws") applicable to the Company or any of its
----
subsidiaries or by which any of their respective properties or assets may be
subject, except where such violation would not reasonably be expected to have,
singly or in the aggregate, a material adverse effect on the Company; or
(C) violate, be in contact with, or constitute a breach or default
-
(or any event which, with the passage of time or notice or both, would become a
default) under, or permit the termination of, or require the consent of any
person or entity under, result in the creation or imposition of any lien or
encumbrance upon any property of the Company or any of its subsidiaries under,
result in the loss (by the Company or any subsidiary) or modification in any
manner adverse to the Company and its subsidiaries of
11
<PAGE>
any right or benefit under, or give to any other person or entity any right of
termination, amendment, acceleration, repurchase or repayment, increased
payments or cancellation under, any mortgage, indenture, note, debenture,
agreement, lease, license, permit, franchise or other instrument or obligation,
whether written or oral, to which the Company or any of its subsidiaries is a
party or by which their properties may be bound or affected except as would not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the Company.
(ii) The execution and delivery of this Agreement does not, and the
--
issuance of the Warrants and the performance of its obligations under this
Agreement will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any governmental authority under any laws or
regulations, except for (i) required filings under the Securities Act or state
-
"blue sky" laws as a result of the exercise of rights under the Registration
Rights Agreement, or (ii) where the failure to obtain such consents, approvals,
--
authorizations or permits or to make such filings or notifications, would not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the Company.
(d) Private Offering. Assuming the correctness of the representations
----------------
and warranties set forth in Sections 14 hereof, the issuance of the Warrants to
-----------
____ hereunder will be exempt from the registration and prospectus delivery
requirements of the Securities Act.
(e) No Brokers. The Company has not engaged any broker, finder,
----------
commission agent or other such intermediary in connection with the issuance of
the Warrants and the transactions contemplated by this Agreement, and the
Company is under no obligation to pay any broker's or finder's fee or commission
or similar payment in connection with such transactions.
Section 14. Representations and Warranties of ____. ____ represents and
--------------------------------------
warrants to the Company that:
(a) Purchase for Own Account. ____ will purchase the Warrants solely
------------------------
for its own account and not as nominee or agent for any other person and not
with a view to, or for offer or sale in connection with, any current
distribution thereof (within the meaning of the Securities Act) that would cause
the original purchase of the Warrants and Warrant Shares to be in violation of
the securities laws of the United States of America or any state thereof,
without prejudice, however, to its right at all times to sell or otherwise
dispose of all or any part of such Warrants or the Warrant Shares pursuant to a
registration statement under the Securities Act or pursuant to an exemption from
the
12
<PAGE>
registration requirements of the Securities Act, and subject, nevertheless, to
the disposition of its property being at all times within its control.
(b) Accredited Investor. ____ is knowledgeable, sophisticated and
-------------------
experienced in business and financial matters and in investing in privately held
business enterprises; it has previously invested in securities similar to the
Warrants and the Warrant Shares and it acknowledges that the Warrants and the
Warrant Shares, when issued, will not have been registered under the Securities
Act and understands that the Securities must be held indefinitely unless they
are subsequently registered under the Securities Act or such sale is permitted
pursuant to an available exemption from such registration requirement; it is
able to bear the economic risk of its investment in the Warrants and the Warrant
Shares and is presently able to afford the complete loss of such investment; and
it is an "accredited investor" as defined in Regulation D promulgated under the
Securities Act.
(c) Authorization. ____ has taken all actions necessary to authorize it
-------------
(j) to execute, deliver and perform all of its obligations under this Agreement
and (ii) to consummate the transactions contemplated hereby. This Agreement is a
legally valid and binding obligation of ____ enforceable against it in
accordance with its terms, except for (a) the effect thereon of bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to or
affecting the rights of creditors generally and (b) limitations imposed by
federal or state law or equitable principles upon the specific enforceability of
any of the remedies, covenants or other provisions thereof and upon the
availability of injunctive relief or other equitable remedies.
Section 15. Certain Supplements and Amendments. The Company may from time
----------------------------------
to time supplement or amend this Agreement without the approval of any Holders
in order to cure any ambiguity or to correct or supplement any provision
contained herein which may be defective or inconsistent with any other provision
herein; provided that any such supplement or amendment shall not in any way
adversely affect the interests of the Holders.
Section 16. Information to Prospective Investors. Provided that a sale of
------------------------------------
the Warrants or the Warrant Shares pursuant to Rule 144A is available to the
Holders, until the closing of a Qualified Public Offering (as such term is
defined in the Stockholders' Agreement), the Company shall, upon the request of
any Holder, deliver to such Holder and any prospective purchaser designated by
such Holder promptly following the request of such Holder or such prospective
purchaser the information which such Holder or prospective purchaser may
reasonably request in order to comply with the information requirements of Rule
144A.
13
<PAGE>
Each Holder is hereby authorized to deliver a copy of any financial
statement or any other information relating to the business, operations or
financial condition of the Company or each of its Subsidiaries which may be
furnished to it hereunder or otherwise, to any other Holder, any court,
Governmental Body claiming to have jurisdiction over such Holder, to the
National Association of Insurance Commissioners or similar organizations, as may
be required or appropriate in response to any summons or subpoena in connection
with any litigation, to the extent necessary to comply with any law, order,
regulation or ruling applicable to such Holder, or to any rating agency, order
to protect its investment hereunder; provided, however; that prior to disclosing
any such information, such Holder shall provide the Company with prompt written
notice so that the Company may seek a protective order or other appropriate
remedy if the Company reasonably determines that such information must be kept
confidential.
Each Holder is hereby authorized to deliver a copy of any financial
statement or any other information relating to the business, operations or
financial condition of the Company or each of its Subsidiaries which may be
furnished to it hereunder or otherwise, to any Person which shall, or shall have
any right or obligation to, succeed to all or any part of such Holder's interest
in the Warrants, the Warrant Shares and this Agreement or to any actual
purchaser or assignee thereof; provided, however, that no disclosure may be made
unless such other Person first executes a confidentiality agreement acceptable
to the Company with respect to any such information disclosed.
Section 17. Successors. All the covenants and provisions of this Agreement
----------
by or for the benefit of the Company and ____ shall bind and inure to the
benefit of their respective successors and assigns hereunder, provided, however,
that this Agreement shall not be assignable by any Holder if such Holder has not
complied with the transfer restrictions of Section 4 hereof. Any such assignment
in violation of Section 4 shall be null and void.
Section 18. Defined Terms. As used in this Agreement, the following terms
-------------
shall have the meanings ascribed to them below:
"Holder" or "Holders" means ____ and any transferee of ____ or a sub-
------ -------
sequent Holder that is or becomes, in accordance with Section 4 thereof, a
holder of any of the Warrants or Warrant Shares, in each case, so long as such
Person holds any Warrants or Warrant Shares.
"Registration Rights Agreement" shall mean the Registration Rights
-----------------------------
Agreement dated as of April 30, 1996, as amended, by and among the Company and
each of the other Persons listed on the signature pages thereto.
14
<PAGE>
"Stockholders' Agreement" shall mean the Second Amended and Restated
-----------------------
Stockholders Agreement, dated as of December 17, 1997, among iXL and the
stockholders listed therein, as amended, modified or restated, from time to
time.
Section 19. Termination. This Agreement shall terminate if all Warrants
-----------
have been exercised or shall have expired or been canceled pursuant to this
Agreement.
SECTION 20. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK (PROVIDED THAT DETERMINATIONS RELATING TO
CORPORATE LAW SHALL BE CONSTRUED IN ACCORDANCE WITH THE DELAWARE GENERAL
CORPORATION LAW). THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT AND THE WARRANTS, AND IRREVOCABLY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,
JURISDICTION OF THE AFORESAID COURTS. THE COMPANY AGREES THAT IT WILL NOT
COMMENCE ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY OTHER JURISDICTION. THE
COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. NOTWITHSTANDING THE FOREGOING, NOTHING HEREIN SHALL AFFECT
THE RIGHT OF ANY HOLDER OF A WARRANT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE COMPANY IN ANY OTHER JURISDICTION.
EACH OF THE PARTIES HERETO HEREBY WAIVES THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE OTHER DOCUMENTS, OR ANY DEALINGS BETWEEN THEM RELATING
TO THE SUBJECT MATTER OF THE HOLDER'S INVESTMENT IN THE COMPANY CONTEMPLATED
HEREBY. THE SCOPE OF THIS JURY TRIAL WAIVER
15
<PAGE>
SHALL BE LIMITED TO DISPUTES BETWEEN THE COMPANY AND THE HOLDERS AND SHALL NOT
EXTEND TO DISPUTES BETWEEN THE COMPANY AND ANY OTHER PERSON.
Section 21. Benefits of This Agreement. Nothing in this Agreement shall be
--------------------------
construed to give to any person or corporation other than the Company and the
Holders any legal or equitable right, remedy or claim under this Agreement; but
this Agreement shall be for the sole and exclusive benefit of the Company and
the Holders.
Section 22. Counterparts. This Agreement may be executed in any number of
------------
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 23. Amendments and Waivers. Subject to Section 15, the Company
----------------------
agrees it will not solicit, request or negotiate for or with respect to any
proposed waiver or amendment of any of the provisions of this Agreement or any
Warrant unless each Holder (irrespective of the amount of Warrants then owned by
it) shall substantially concurrently be informed thereof by the Company and
shall be afforded the opportunity of considering the same and shall be supplied
by the Company with sufficient in-formation (including any offer of
remuneration) to enable it to make an informed decision with respect thereto
which information shall be tile same as that supplied to the other Holders. The
Company will not, directly or indirectly, pay or cause to be paid any
remuneration whether by way of supplement or additional interest fee or
otherwise, to any Holder as consideration for or as an inducement to the
entering into by such Holder of any waiver or amendment of any of the terms and
provisions of this Agreement or any Warrant unless such remunerations is
concurrently paid on the same terms, ratably to each Holder whether or not such
Holder signs such waiver or consent, provided that the foregoing is not intended
to preclude the adoption of any amendment or the giving of any waiver by the
Holders of a majority of the Warrants to the extent permitted by the other
provisions of this Section 23.
16
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement to
be duly executed as of the day and year first above written.
iXL ENTERPRISES, INC.
By:
--------------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
<PAGE>
EXHIBIT A
[Form of Warrant Certificate)
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON [ ],
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE DISTRIBUTED
EXCEPT IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE ACT, OR IN COMPLIANCE WITH RULE 144 OR PURSUANT TO ANOTHER
EXEMPTION THEREFROM. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO A WARRANT AGREEMENT, DATED AS OF [ ] BETWEEN IXL ENTERPRISES, INC.
(THE "COMPANY") AND ____________________________________. THE TRANSFER OF THIS
CERTIFICATE IS SUBJECT TO THE CONDITIONS SPECIFIED IN SUCH AGREEMENT AND THE
COMPANY RESERVES THE RIGHT TO REFUSE THE TRANSFER OF THIS CERTIFICATE UNTIL SUCH
CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. A COPY OF SUCH
AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF
UPON WRITTEN REQUEST.
No. _____ _______ Warrants
Warrant Certificate
IXL ENTERPRISES, INC.
This Warrant Certificate certifies that ________________________
___________, a Delaware corporation, or registered assigns, is the registered
holder of the number of Warrants (the "Warrants") set forth above to purchase
--------
Class A Common Stock, par value $.0l per share (the "Common Stock"), of iXL
------------
Enterprises, Inc., a Delaware corporation (the "Company"). Each Warrant entitles
-------
the Holder upon exercise to receive from the Company one fully paid and
nonassessable share of Common Stock (a "Warrant Share"), at an exercise price
-------------
(the "Exercise Price") of $____ payable in lawful money of the United States of
--------------
America, upon surrender of this Warrant Certificate and payment of the Exercise
Price at the office of the Company designated for such purpose, but only subject
to the conditions set forth herein and in the Warrant Agreement referred to
hereinafter. The number of Warrant Shares issuable upon exercise of the Warrants
is subject to adjustment upon the occurrence of certain events, as set forth in
the Warrant Agreement.
18
<PAGE>
Each Warrant is exercisable at any time during the period commencing on the date
hereof and ending at 5:00 p.m., New York City time, on ______, _____ [i.e. 36
months after the date of the Warrant Agreement].
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants, and are issued or to be issued pursuant to a
Warrant Agreement dated as of ________________ (the "Warrant Agreement"), duly
------- -----------
executed and delivered by the Company, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Company and the holders (the words
"holders" or "holder" meaning the registered holders or registered holder) of
the Warrants. A copy of the Warrant Agreement may be obtained by the holder
hereof upon written request to the Company. Capitalized terms used and not
defined herein shall have the meaning ascribed thereto in the Warrant Agreement.
The holder of Warrants evidenced by this Warrant Certificate may exercise
such Warrants under and pursuant to the terms and conditions of the Warrant
Agreement by surrendering this Warrant Certificate, with the form of election to
purchase set forth hereon (and by this reference made a part hereof) properly
completed and executed, together with payment of the Exercise Price made, at the
election of the Holder, (j) in cash, by certified or official bank check payable
to the order of the Company, (ii) by delivering for surrender and cancellation
to the Company Warrants with an aggregate Surrender Value (as defined in Section
5 of the Warrant Agreement), as of the date of such exercise, equal to the
Exercise Price for the Warrants being exercised or (iii) any combination
thereof. In the event that upon any exercise of Warrants evidenced hereby the
number of Warrants exercised shall be less than the total number of Warrants
evidenced hereby, there shall be issued by the Company to the holder hereof or
its registered assignee a new Warrant Certificate evidencing the number of
Warrants not exercised.
Warrant Certificates, when surrendered at the office of the Company by the
registered holder thereof in person or by legal representative or attorney duly
authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Subject to the terms and conditions of the Warrant Agreement, upon due
presentation for registration of transfer of this Warrant Certificate at the
office of the Company a new Warrant Certificate or Warrant Certificates of like
tenor and evidencing
19
<PAGE>
in the aggregate a like number of Warrants shall be issued to the transferee(s)
in exchange for this Warrant Certificate, subject to the limitations provided in
the Warrant Agreement, without charge except for any tax or other governmental
charge imposed in connection therewith.
The Company may deem and treat the registered holder(s) thereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for tile purpose of any
exercise hereof, of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
Neither the Warrants nor this Warrant Certificate entitles any holder hereof to
any rights of a stockholder of the Company.
IN WITNESS WHEREOF, iXl Enterprises, Inc. has caused this Warrant
Certificate to be signed by its [ ].
Dated: [ ],
iXL ENTERPRISES, INC.
By ___________________________
Name:
Title:
By ___________________________
Name:
Title:
20
<PAGE>
FORM OF ELECTION TO PURCHASE
(To Be Executed Upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive _______shares of Common
Stock and herewith tenders payment for such shares to the Company in the form of
a certified or official bank check payable to the order of the Company in the
amount of $ ____, and Warrants to purchase Warrant Shares with an aggregate
Surrender Value (as defined in Section 5 of the Warrant Agreement) of $_______.
The undersigned requests that a certificate for such shares be registered
in the name of______________ whose address is ____________________________ and
that such shares be delivered to _________________, whose address is
If said number of shares is less than all of the shares of Common Stock
purchasable hereunder, the undersigned requests that a new Warrant Certificate
representing the remaining balance of such shares be registered in the name of
________________________, whose address is _______________________________, and
that such Warrant Certificate be delivered to _______________, whose address is
____________________________.
[HOLDER]
___________________________
By:
Title:
Date: _________________
21
<PAGE>
FORM OF ASSIGNMENT
(To be signed only upon assignment of Warrant Certificate)
FOR VALUE RECEIVED, hereby sells, assigns and transfers unto
_______________________ whose address is _______________________ and whose
social security number or other identifying number is ___________________, the
within Warrant Certificate, together with all right, title and interest therein
and to the Warrants represented thereby, and does hereby irrevocably constitute
and appoint ___________________, attorney, to transfer said Warrant Certificate
on the books of the within-named Company, with full power of substitution in the
premises.
[HOLDER]
___________________________
By:
Title:
Date: _______________
22
<PAGE>
EXHIBIT 4.7
FORM OF
THIRD AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
--------------------------------------------------
THIRD AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT (the "Agreement"),
dated as of _________ __, 1999, among iXL Enterprises, Inc., a Delaware
corporation (the "Company") (formerly named IXL Holdings, Inc.), Kelso
-------
Investment Associates V, L.P. ("KIA V"), Kelso Equity Partners V, L.P. ("KEP V",
----- -----
and together with KIA V, "Kelso"), CB Capital Investors, L.P. ("CB") and the
-----
other signatories hereto. Capitalized terms used herein shall have the meaning
ascribed thereto in Section 6.
WHEREAS, the Company, Kelso, certain management stockholders and
certain outside investors entered into a Second Amended and Restated
Stockholders' Agreement, dated as of December 17, 1997, as amended as of March
30, 1998 and August 14, 1998 (the "Second Amended and Restated Stockholders'
Agreement");
WHEREAS, the Second Amended and Restated Stockholders' Agreement may
be amended in accordance with Section 12 thereof;
WHEREAS, the Company, Kelso, those stockholders of the Company other
than Kelso owning at least 51% of all shares of Preferred Stock owned by all
such stockholders other than Kelso, those stockholders of the Company owning at
least 51% of all shares of Class B Common Stock, U. Bertram Ellis, Jr., Kevin
Wall, William C. Whitley, David Wyler, CB Capital Investors, L.P., Flatiron
Partners, LLC, Greylock IX Limited Partnership, Mellon Ventures II, L.P. and
Thomson U.S. Inc. believe it to be in their best interests that they amend and
restate the Second Amended and Restated Stockholders' Agreement;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and obligations set forth in this Agreement, the
parties hereto agree as follows:
1. Second Amended and Restated Stockholders' Agreement. The Second
---------------------------------------------------
Amended and Restated Stockholders' Agreement is hereby amended and restated in
its entirety as provided for herein.
2. Board of Directors.
------------------
2.1 Designation of Director Nominees. (i) Kelso. For so long as
-------------------------------- -----
Kelso and its Affiliates hold 5% or more in the aggregate of the
<PAGE>
outstanding Common Stock of the Company, Kelso shall have (A) the right to
designate two individuals as Board of Directors nominees for election to the
Board of Directors of the Company, and (B) the exclusive right to designate for
election an individual to fill any vacancy created by the removal or death of or
resignation by a director originally designated for election by Kelso. Such
right shall terminate when Kelso or its Affiliates hold less than 5% of the
outstanding Common Stock of the Company.
(ii) CB. For so long as CB and its Affiliates hold 5% and more of the
--
outstanding Common Stock of the Company, CB shall have (A) the right to
designate one individual as a Board of Directors nominee for election to the
Board of Directors of the Company, and (B) the exclusive right to designate for
election an individual to fill any vacancy created by the removal or death of or
resignation by a director originally designated for election by CB. Such right
shall terminate when CB or its Affiliates hold less than 5% of the outstanding
Common Stock of the Company. All calculations pursuant to this Section 2.1
shall be made on a primary basis.
(iii) If Kelso transfers 100% of the shares of Common Stock owned by
it as of the date of the filing of the Restated Certificate of Incorporation of
the Company (immediately after the reclassification of capital stock effectuated
by the Restated Certificate of Incorporation of the Company) to one Person or a
group of Affiliates, its transferees shall be deemed to be Kelso for purposes of
this Section 2.1. If Kelso transfers 50% or more, but less than 100%, of the
shares of Common Stock owned by it as of the date of the filing of the Restated
Certificate of Incorporation of the Company (immediately after the
reclassification of capital stock effectuated by the Restated Certificate of
Incorporation of the Company) to one Person or a group of Affiliates, then such
transferees shall have the rights and obligations of Kelso under this Section
2.1 to the extent set forth in an instrument executed by Kelso and such
transferees. If CB transfers 100% of the shares of Common Stock owned by it as
of the date of the filing of the Restated Certificate of Incorporation of the
Company (immediately after the reclassification of capital stock effectuated by
the Restated Certificate of Incorporation of the Company) to one Person or a
group of Affiliates, its transferees shall be deemed to be CB for purposes of
this Section 2.1.
2.2 Method of Designation. All designations made pursuant to
---------------------
Section 2.1 shall be made in writing to the Chairman of the Board of Directors
of the Company (the "Chairman"), and any designation may be changed from time to
time by Kelso or CB, as the case may be, by providing written notice thereof to
the Chairman.
2.3 Effect of Designation. Any designation made pursuant to this
---------------------
Section 2 shall be included as Board of Directors' nominations of persons for
election to
2
<PAGE>
the Board of Directors of the Company pursuant to Section 1.10 of the Amended
and Restated Bylaws of the Company.
2.4 Vacancies. So long as this Agreement shall remain in effect,
---------
the Bylaws shall provide that Kelso or CB, as the case may be, shall have the
exclusive right, in accordance with Section 2.1, to designate for election an
individual to fill any vacancy created by the removal or death of or resignation
by a director originally designated for election by Kelso or CB, as the case may
be, pursuant to Section 2.1.
2.5 Restated Certificate of Incorporation; Bylaws. So long as
---------------------------------------------
this Agreement shall remain in effect, the Restated Certificate of Incorporation
and the Bylaws shall provide (i) that Kelso and CB shall have the right to
designate director nominees pursuant to Section 2.1 and (ii) the rights set
forth in Section 2.4 shall be an exception to the provisions set forth in the
Bylaws governing vacancies on the Board of Directors, and the Bylaws shall
provide that: (i) Kelso or CB shall have the right to call a special meeting of
stockholders for the purpose of voting on directors designated for election by
Kelso or CB, as the case may be, pursuant to Section 2.1 and (ii) the rights set
forth in Section 2.1 shall be an exception to the requirements set forth in the
Bylaws governing advance notice requirements for stockholder proposals and
director nominations.
2.6 Further Assurances of the Company. The Company will take all
---------------------------------
such actions and execute and deliver such documents as Kelso or CB may
reasonably request in order to effectuate the intent and purposes of this
Section 2.
3. Amendment and Modification. This Agreement may be amended,
--------------------------
modified or supplemented only by written agreement of the Company, Kelso and CB.
4. Termination; Nonrenewability. All rights and obligations pursuant
----------------------------
to this Agreement with respect to Kelso shall terminate as provided for in
Section 2.1(i). All rights and obligations pursuant to this Agreement with
respect to CB shall terminate as
3
<PAGE>
provided in Section 2.1(ii). All rights and obligations terminated pursuant to
this Section 4 may not be renewed or reinstated.
5. Definitions. As used in this Agreement, the following terms
-----------
shall have the meanings ascribed to them below:
(a) Affiliate. The term "Affiliate" shall mean, with respect to any
--------- ---------
Person, any other Person directly or indirectly, through one or more
intermediaries, controlling, controlled by, or under common control with such
Person.
(b) Person. The term "Person" means an individual, corporation,
------ ------
partnership, limited liability company, association, trust or other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
(c) Stock. The term "Stock" shall mean all classes of the capital
----- -----
stock of the Company, including the following classes of stock:
(i) "Class A Common Stock" shall mean the Class A voting
--------------------
common stock of the Company, par value $.01 per share, and shall
include any capital stock of the Company into which such Class A
common stock is converted, reclassified or exchanged.
(ii) "Class B Common Stock" shall mean the Class B voting
---------------------
common stock of the Company, par value $.01 per share, and shall
include any capital stock of the Company into which such Class B
common stock is converted, reclassified or exchanged.
(iii) "Common Stock" shall mean the Class A Common Stock and
------------
the Class B Common Stock and shall include any capital stock of
the Company into which the Class A Common Stock and the Class B
Common Stock are converted, reclassified or exchanged.
(iv) "Class A Preferred Stock" shall mean the Class A
-----------------------
convertible preferred stock of the Company, par value $.01 per
share, and shall include any capital stock of the Company into
which such Class A convertible preferred stock is converted,
reclassified or exchanged.
(v) "Class B Preferred Stock" shall mean the Class B
-----------------------
convertible preferred stock of the Company, par value $.01 per
share, and shall include any capital stock of the Company into
which such
4
<PAGE>
Class B convertible preferred stock is converted, reclassified or
exchanged.
(vi) "Class C Preferred Stock" shall mean the Class C
-----------------------
nonvoting convertible preferred stock of the Company, par value
$.01 per share, and shall include any capital stock of the
Company into which such Class C convertible preferred stock is
converted, reclassified or exchanged.
(vii) "Class D Preferred Stock" shall mean the Class D
-----------------------
nonvoting preferred stock of the Company, par value $.01 per
share, and shall include any capital stock of the Company into
which such Class D convertible preferred stock is converted,
reclassified or exchanged.
(viii) "Preferred Stock" shall mean the Class A Preferred
---------------
Stock, the Class B Preferred Stock, the Class C Preferred Stock
and the Class D Preferred Stock.
6.. Further Assurances. Each party hereto shall do and perform or
------------------
cause to be done and performed all such further acts and things and shall
execute and deliver all such other agreements, certificates, instruments and
documents as any other party hereto or Person subject hereto may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated hereby.
7. Governing Law. This Agreement and the rights and obligations of
-------------
the parties hereunder shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Delaware, without giving effect to the
choice of law principles thereof.
8. Invalidity of Provision. The invalidity or unenforceability of
-----------------------
any provision of this Agreement in any jurisdiction shall not affect the
validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of this Agreement, including that
provision, in any other jurisdiction.
9. Notices. All notices, requests, demands, waivers and other
-------
communi cations required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (a) delivered
-
personally, (b) mailed, certified or registered mail with postage prepaid, (c)
- -
sent by next-day or overnight mail or delivery or (d) sent by telecopier as
-
follows:
5
<PAGE>
(a) if to the Company, to it at:
-------
iXL Enterprises, Inc.
1888 Emery Street N.W.
Atlanta, Georgia 30318
Attention: Mr. U. Bertram Ellis, Jr.
Telecopier number: (404) 267-3801
with a copy to:
Minkin & Snyder
3060 Peachtree Road, Suite 1100
Atlanta, Georgia 30305
Telecopier number: (404) 233-5824
Attention: James S. Altenbach, Esq.;
(b) If to Kelso, to it at:
-----
Kelso & Company
320 Park Avenue
24th Floor
New York, New York 10022
Telecopier number: (212) 223-2379
Attention: James J. Connors, II, Esq.
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telecopier number: (212) 909-6836
Attention: Margaret A. Davenport, Esq.;
(c) If to CB, to it at:
--
CB Capital Investors, L.P.
380 Madison Avenue
12th Floor
New York, New York 10017-2591
Telecopier number: (212)
Attention: I. Robert Greene
6
<PAGE>
with a copy to:
Harvey M. Eisenberg, Esq.
O'Sullivan Graev & Karbell
30 Rockefeller Plaza
New York, New York 10112
Telecopier number: (212) 408-2420;
or to such other person or address as any party shall specify by notice in
writing to the Company. All such notices, requests, demands, waivers and other
communications shall be deemed to have been received (w) if by personal delivery
-
on the day after such delivery, (x) if by certified or registered mail, on the
-
seventh business day after the mailing thereof, (y) if by next-day or overnight
-
mail or delivery, on the day delivered or (z) if by telecopier on the next day
-
following the day on which such telecopy was sent, provided that a copy is also
sent by certified or registered mail.
10. Headings; Execution in Counterparts. The headings and captions
-----------------------------------
contained herein are for convenience and shall not control or affect the meaning
or construction of any provision hereof. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and
which together shall constitute one and the same instrument.
11. Effective Date. This Agreement shall become effective upon the
--------------
closing of the Company's initial public offering of its common stock, par value
$0.01 per share.
[SIGNATURES ON FOLLOWING PAGES]
7
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed by each of the
parties hereto as of the date first above written.
iXL ENTERPRISES, INC.
By:____________________________
Name:
Title:
KELSO INVESTMENT ASSOCIATES V, L.P
By: KELSO PARTNERS V, L.P.
By:_____________________________
Name:
Title: General Partner
KELSO EQUITY PARTNERS V, L. P.
By:_____________________________
Name:
Title: General Partner
STOCKHOLDERS, OTHER THAN KELSO, OWNING AT LEAST
51% OF THE PREFERRED STOCK OF THE COMPANY:
CB CAPITAL INVESTORS, L.P.
By: CHASE CAPITAL PARTNERS,
its General Partner
By:______________________________
Name:
Title: Partner
8
<PAGE>
FLATIRON PARTNERS, LLC
By:_____________________________
Name:
Title: Managing Partner
THE FLATIRON FUND 1998/99, LLC
By:_____________________________
Name:
Title:
FLATIRON ASSOCIATES, LLC
By: Flatiron Partners, LLC, its Manager
By:_____________________________
Name:
Title:
GENERAL ELECTRIC CAPITAL CORPORATION
By:_____________________________
Name:
Title:
9
<PAGE>
MELLON VENTURES II, L.P., a Delaware Limited
Partnership
By: MVMA II, L.P., a Delaware limited
partnership, its General Partner
By: MVMA, Inc., a Delaware corporation,
its General Partner
By:_____________________________
Name:
Title:
THOMSON U.S. INC.
By:_____________________________
Name:
Title:
GREYLOCK IX LIMITED PARTNERSHIP
By: Greylock IX GP Limited Partnership,
its General Partner
By:_____________________________
Name:
Title: General Partner
_____________________________
U. Bertram Ellis, Jr.
10
<PAGE>
SHAREHOLDERS OWNING AT LEAST 51% OF THE
CLASS B COMMON STOCK OF THE COMPANY:
_____________________________
Kevin Wall
(1,588,984 shares, 9.88%)
_____________________________
William C. Whitley
(450,400 shares, 2.80%)
_____________________________
David Wyler
(955,000 shares, 5.94%)
_____________________________
Karen Booth Adams
(493,463 shares, 3.07%)
_____________________________
Steven P. Amedio
(62,500 shares, 0.39%)
_____________________________
Ashish Bahl
(275,000 shares, 1.71%)
_____________________________
Stephan Balzer
(79,357 shares, 0.49%)
_____________________________
Steven C. Baum
(407,000 shares, 2.53%)
_____________________________
Victor Manuel Fraile Blanco
(23,444 shares, 0.15%)
11
<PAGE>
_____________________________
Robert Bowman
(130,000 shares, 0.81%)
_____________________________
Paul Bryant
(35,923 shares, 0.22%)
_____________________________
Eric Butz
(34,188 shares, 0.21%)
_____________________________
Stefan Chopin
(226,840 shares, 1.41%)
_____________________________
Steven K. Conine
(337,066 shares, 2.10%)
_____________________________
Barbara B. Cook
(75,613 shares, 0.47%)
_____________________________
Randall S. Coppersmith
(22,002 shares, 0.14%)
_____________________________
Larry Culbertson
(104,900 shares, 0.65%)
_____________________________
Guy Davidson
(896,000 shares, 5.57%)
_____________________________
Edwin J. Davis II
(4,300 shares, 0.03%)
12
<PAGE>
_____________________________
Kevin Davis
(30,200 shares, 0.19%)
_____________________________
Norwood H. Davis III
(96,480 shares, 0.60%)
_____________________________
Michael B. Dowdle
(13,300 shares, 0.08%)
_____________________________
U. Bertram Ellis, Jr.
(4,100 shares, 0.03%)
_____________________________
William Stephen Floyd
(849,000 shares, 5.28%)
_____________________________
Mary M. Fowlkes
(269,159 shares, 1.67%)
_____________________________
Eric H. Freedman
(333,000 shares, 2.07%)
_____________________________
James P. Ganley
(25,000 shares, 0.16%)
_____________________________
Robert Gear
(35,923 shares, 0.22%)
_____________________________
Juergen Goersch
(75,613 shares, 0.47%)
13
<PAGE>
_____________________________
Jeffrey R. Gordon
(237,672 shares, 1.48%)
_____________________________
William A. Grana, Jr.
(9,339 shares, 0.06%)
_____________________________
David Greeley
(11,382 shares, 0.07%)
_____________________________
Francisco Dominguez Heredia
(13,663 shares, 0.08%)
_____________________________
Michael Hettwer
(358,551 shares, 2.23%)
_____________________________
Stephen P. Jackson
(100,800 shares, 0.63%)
_____________________________
Mark Jacobstein
(135,678 shares, 0.84%)
_____________________________
Jeffrey Janer
(102,441 shares, 0.64%)
_____________________________
Teresa Joel
(195,000 shares, 1.21%)
_____________________________
William A. Lackey
(66,667 shares, 0.41%)
14
<PAGE>
_____________________________
William M. Lackey
(66,667 shares, 0.41%)
_____________________________
Thomas C. Lakeman
(24,303 shares, 0.15%)
_____________________________
Jacob McGowan
(103,279 shares, 0.64%)
_____________________________
Geoff Melick
(35,923 shares, 0.22%)
_____________________________
Colin Morris
(65,229 shares, 0.41%)
_____________________________
Scott Murphy
(135,678 shares, 0.84%)
_____________________________
Richard Nailling
(490,000 shares, 3.05%)
_____________________________
Matthias Oelmann
(83,357 shares, 0.52%)
_____________________________
Robert Ortiz
(100,000 shares, 0.62%)
_____________________________
Manfred Ottenbreit
(79,357 shares, 0.49%)
15
<PAGE>
_____________________________
Kyle Parent
(103,279 shares, 0.64%)
_____________________________
N. Blake Patton
(5,700 shares, 0.04%)
_____________________________
Stephanie A.H. Petersen
(4,669 shares, 0.03%)
_____________________________
Randall M. Pipp
(261,535 shares, 1.63%)
_____________________________
James Rocco
(1,028,300 shares, 6.39%)
_____________________________
James V. Sandry
(100 shares, 0.00%)
_____________________________
Derek Scanlon
(42,852 shares, 0.27%)
_____________________________
Niraj S. Shah
(337,066 shares, 2.10%)
_____________________________
Barry Sikes
(221,100 shares, 1.37%)
_____________________________
Marc Sirkin
(4,300 shares, 0.03%)
16
<PAGE>
_____________________________
Richard A. Starbuck
(258 shares, 0.00%)
_____________________________
Mark Swanson
(255,400 shares, 1.59%)
_____________________________
John Tierney
(100,000 shares, 0.62%)
_____________________________
John D. Troxel
(516 shares, 0.00%)
_____________________________
Jeffrey Vick
(1,900 shares, 0.01%)
_____________________________
Gregory Waldbaum
(79,602 shares, 0.49%)
_____________________________
Armistead Whitney
(6,300 shares, 0.04%)
_____________________________
Ronald Wissing
(25,834 shares, 0.16%)
_____________________________
@radical.media, Inc.
(2,000 shares, 0.01%)
_____________________________
James S. Altenbach
(100 shares, 0.00%)
17
<PAGE>
_____________________________
Dr. Lenox D. Baker, Jr.
(15,525 shares, 0.10%)
_____________________________
Jens Bley
(79,357 shares, 0.49%)
_____________________________
Robert Burk (Trustee of the Burk Family
Trust dated 8/17/82)
(5,787 shares, 0.04%)
_____________________________
Burton Technology Partners, Ltd.
(5,161 shares, 0.03%)
_____________________________
Crile Carvey, Jr.
(10,000 shares, 0.06%)
_____________________________
Continental Communications Group, Inc.
(266,000 shares, 1.65%)
_____________________________
Marguerite Davis
(1,553 shares, 0.01%)
_____________________________
Norwood H. Davis, Jr.
(67,033 shares, 0.42%)
_____________________________
Parker Davis
(12,035 shares, 0.07%)
_____________________________
Dr. Dennis S. Ferraro
(2,700 shares, 0.02%)
18
<PAGE>
_____________________________
Glenn Golenberg
(191,200 shares, 1.19%)
_____________________________
Susan E. Grana (Living Trust)
(2,700 shares, 0.02%)
_____________________________
Paul Grand
(129,863 shares, 0.81%)
_____________________________
Joshua Greer
(199,631 shares, 1.24%)
_____________________________
Guren Family Trust
(37,800 shares, 0.24%)
_____________________________
Adam M. Guren, Marc or Aliza Guren,
custodians
(14,200 shares, 0.09%)
_____________________________
Julia V. Guren, Marc or Aliza Guren,
custodians
(14,200 shares, 0.09%)
_____________________________
Phil Gustlin
(115,600 shares, 0.72%)
_____________________________
Patricia Hardesty (Trust)
(3,000 shares, 0.02%)
_____________________________
William R. Harvey, Ph.D.
(2,700 shares, 0.02%)
19
<PAGE>
_____________________________
Investar Burgeon Venture Capital, Inc.
(118,277 shares, 0.74%)
_____________________________
Ropbert Jaeschke
(53,884 shares, 0.34%)
_____________________________
Lisa Janzen
(173,400 shares, 1.08%)
_____________________________
Kraft Enterprises Ltd.
(53,884 shares, 0.34%)
_____________________________
Robert H. Kriebel (Estate of)
(14,200 shares, 0.09%)
_____________________________
John Laurence
(24,166 shares, 0.15%)
_____________________________
Lazarus Family Investments, LLC
(2,000 shares, 0.01%)
_____________________________
James F. Lipscomb, Jr.
(2,700 shares, 0.02%)
_____________________________
Dan Lynch
(39,424 shares, 0.25%)
_____________________________
M.R.W. Ventures, LLC
(22,002 shares, 0.14%)
20
<PAGE>
_____________________________
Maton Fund I, L.P.
(78,850 shares, 0.49%)
_____________________________
Mellett, Reene & Smith, LLC
(50,000 shares, 0.31%)
_____________________________
William Melton
(118,277 shares, 0.74%)
_____________________________
Morino Enterprises
(21,730 shares, 0.14%)
_____________________________
Next Century Communications Corp.
(701,375 shares, 4.36%)
_____________________________
Katherine Noto
(18,900 shares, 0.12%)
_____________________________
Daniella Ortiz (Trust)
(3,000 shares, 0.02%)
_____________________________
Justin Ortiz (Trust)
(3,000 shares, 0.02%)
_____________________________
Anthony Rocco (Trust)
(3,000 shares, 0.02%)
_____________________________
Christopher Rocco(Trust)
(3,000 shares, 0.02%)
21
<PAGE>
_____________________________
James Rocco (Trust)
(3,000 shares, 0.02%)
_____________________________
Marge Rocco (Trust)
(3,000 shares, 0.02%)
_____________________________
Mario Rocco (Trust)
(3,000 shares, 0.02%)
_____________________________
Patricia Ann Rocco (Trust)
(3,000 shares, 0.02%)
_____________________________
S&C, LLC
(2,700 shares, 0.02%)
_____________________________
F. Blair Schmidt-Fellner
(26,700 shares, 0.17%)
_____________________________
Mary Jane Shapiro
(18,900 shares, 0.12%)
_____________________________
Melissa Shenkin
(12,200 shares, 0.08%)
_____________________________
Stephen D. Silbert
(75,600 shares, 0.47%)
_____________________________
Patricia Terry
(2,322 shares, 0.01%)
22
<PAGE>
_____________________________
The International Business Group, Inc.
(70,432 shares, 0.44%)
_____________________________
Daryl Travis
(53,884 shares, 0.34%)
_____________________________
Andrea Valji, Susanna Flaster, custodian
(14,200 shares, 0.09%)
_____________________________
Matthew Valji, Susanna Flaster, custodian
(14,100 shares, 0.09%)
_____________________________
Leonard N. Waldbaum
(1,577 shares, 0.01%)
_____________________________
Garland Wong
(261,535 shares, 1.63%)
_____________________________
Charles Zug
(5,157 shares, 0.03%)
23
<PAGE>
Exhibit 10.4
FORM OF
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT, dated as of ______________, 1999, between Consumer
Financial Network, Inc., a Delaware corporation (the "Company"), and C. Cathleen
-------
Raffaeli (the "Executive"). The parties hereto agree as follows:
---------
1. Employment.
----------
(a) Agreement to Employ. Upon the terms and subject to the conditions of
-------------------
this Agreement, the Company shall hereby employ the Executive and the Executive
hereby agrees to be employed by the Company.
(b) Term of Employment. Subject to Section 6 and Section 7, the Company
------------------
shall employ the Executive pursuant to the terms hereof for the period
commencing on the date Executive begins exclusive employment with the Company
(the "Start Date"), which shall be the earliest date reasonably possible for
Executive, and ending on December 31, 2001, provided that the Executive's
--------
employment with the Company shall be deemed to be automatically renewed upon the
same terms and conditions for an additional one-year period on each of December
31, 2001 and December 31, 2002 unless either party hereto shall have given the
other party written notice that such party does not intend to renew the
Agreement as of such date at least three months in advance of the date on which
this Agreement would otherwise automatically be renewed. The period during which
the Executive is employed pursuant to this Agreement, including any renewal
thereof in accordance with this Section (1)(b), shall be referred to as the
"Employment Period."
- ------------------
2. Position and Duties.
-------------------
During the Employment Period, the Executive shall serve as President and
Chief Operating Officer of the Company and the Executive shall have the duties,
responsibilities and obligations customarily assigned to individuals serving in
the position or positions in which the Executive serves hereunder. The
Executive shall report to the Chief Executive Officer of the Company. The
Executive shall devote her full time to the services required of her hereunder,
except for vacation time and reasonable periods of absence due to sickness,
personal injury or other disability, and shall use her best efforts, judgment,
skill and energy to perform such services in a manner consonant with the duties
of her position and to improve and advance the business and interests of the
Company. The Executive shall also serve as a Director of the Company during the
Employment Period without additional compensation.
<PAGE>
3. Compensation.
------------
(a) Salary and Bonus. The Company shall pay the Executive a base salary at
----------------
an annual rate of $250,000. The Company shall pay the Executive such base
salary in equal bi-monthly installments or in such other installments as the
parties may agree. Beginning with the fiscal year ended December 31, 1999 and
continuing until the end of the Employment Period, the Company shall pay the
Executive an annual bonus (the "Bonus"). Such bonus shall be paid within 15
days after the delivery of the annual audited financial statements of the
Company and its subsidiaries by the Company's independent accountant. The
amount of any such bonus shall be based upon certain strategic and financial
goals which shall be determined by the Executive and other senior officers of
the Company and shall be determined by the Board of Directors of the Company,
with a target maximum of $50,000 per year.
(b) Stock Options. The Executive shall be granted an aggregate of 500,000
-------------
options to purchase Class B Common Stock, par value $.01 per share, of iXL
Enterprises, Inc., at an exercise price of $10 per share. Except as provided in
Section 6 and Section 7, such options shall vest over four years, with 25% of
such options vesting on the last day of the month of the first anniversary of
the Start Date, and thereafter 2.088% of such options vesting on the last day of
each of the subsequent thirty-six months. Notwithstanding such vesting
schedule, Executive shall not exercise any of such options prior to the
expiration of the Review Period (as defined in Section 6 hereof).
4. Benefits and Vacation.
---------------------
During the Employment Period, the Executive shall be eligible to
participate in the health, disability and life insurance plans sponsored or
maintained by the Company for the benefit of its senior executive corporate
officers to the extent that the Executive is eligible to participate in any such
plans under the generally applicable provisions thereof. The Company may, in
its discretion, amend or terminate any such plans in accordance with the terms
thereof. During the Employment Period, the Executive shall be entitled to three
weeks of paid vacation annually. Unused vacation days for any given calendar
year may be carried over to the subsequent year, or, at Executive's option, may
be surrendered to the Company for a cash payment equal to (a) the quotient of
the number of unused vacation days surrendered, divided by 365, times (b)
Executive's base salary for the year in which such unused vacation day was
initially accrued.
5. Residence; Corporate Apartment; Travel Expenses.
-----------------------------------------------
The Company is headquartered in Duluth, Georgia. The Executive may
continue to reside in Connecticut and utilize the facilities of iXL-New York,
Inc., an affiliate of the Company, in the course of her work. However,
Executive shall commute to the Company's headquarters as necessary for the
execution of her duties and responsibilities. The Company anticipates that the
execution of the Executive's duties and responsibilities will require the
Executive to commute to the Company's headquarters an average of four days per
week. The Company shall reimburse the Executive all reasonable travel expenses
associated with the Executive's regular commute between her residence in
Connecticut and Atlanta, Georgia, including, but not limited to, roundtrip
airfare.
- 2 -
<PAGE>
Reimbursement requests shall be submitted to the Chief Executive Officer of the
Company for approval. The Company shall maintain a two-bedroom corporate
apartment convenient to the Company's headquarters reserved for use by the
Executive.
6. First Anniversary Employment Review.
-----------------------------------
(a) Within the thirty (30) days prior to and the thirty (30) days after the
first anniversary of the Start Date (such sixty-day period is hereinafter
referred to as the "Review Period"), the Company shall have the option to
terminate Executive's employment with the Company. If the Company terminates
Executive's employment with the Company during the Review Period,
(i) at the Company's option, Executive shall be entitled to either
(A) receive severance pay equal to the base salary payable to the
Executive under Section 3(a) for the six months following such
termination (payable monthly), in which case all options, vested
or unvested, granted to Executive pursuant to Section 3(b) hereof
shall be surrendered to the Company unexercised, or (B) retain
125,000 options granted pursuant to Section 3(b) hereof which
were scheduled to vest on the last day of the month of the first
anniversary of the Start Date, in which case all other options,
vested or unvested, granted to Executive pursuant to Section 3(b)
hereof shall be surrendered to the Company unexercised; and
(ii) Section 11 hereof shall continue in full force and effect.
(b) Within the thirty (30) day period prior to the first anniversary of the
Start Date, the Executive shall have the option to terminate Executive's
employment with the Company. If the Executive so terminates her employment with
the Company,
(i) Executive shall receive no severance pay and all options, vested
or unvested, granted to Executive pursuant to Section 3(b) hereof
shall be surrendered to the Company unexercised; and
(ii) Section 11 hereof shall not apply.
7. Change of Control.
-----------------
If the Executive's employment with the Company is terminated in connection
with a sale of the Company, and if the Change of Control Vesting (as calculated
below) exceeds the number of the Executive's vested options at the time of such
termination, the vesting of the options granted to the Executive pursuant to
Section 3(b) hereof shall be immediately accelerated such that the Executive
shall have a number of vested options equal to the Change of Control Vesting as
calculated in accordance with the following formula:
Change of Control Vesting = (X - $75,000,000)(500,000)(4 / 3) / 100,000,000
- 3 -
<PAGE>
Where: X = in the case of a sale of all or substantially all of the assets
of the Company, the total sales price received by the Company upon
the sale of such assets, or, in the case of the sale of all of the
equity interests of the Company, the total sales price received by
the equity interest holders of the Company upon the sale of such
equity interests.
For example, if the Company is sold for $100,000,000:
<TABLE>
<S> <C>
Change of Control Vesting = ($100,000,000 - $75,000,000)(500,000)(4/3)/100,000,000
= (25,000,000)(666,666.67)/(100,000,000)
= 166,667
</TABLE>
Provided, however, that if the number derived from the formula above exceeds the
number of the Executive's unvested options, the vesting of all of the
Executive's options remaining unvested shall be immediately accelerated. All
options remaining unvested after such acceleration shall terminate.
8. Termination of Employment.
-------------------------
If the Executive's employment with the Company terminates earlier than upon
the expiration of the Employment Period, other than a termination pursuant to
Section 6 or Section 7 hereof, the Executive shall be entitled to receive the
following payments under the following circumstances:
(a) Death. Upon the death of the Executive, the Executive's spouse, if
-----
any, or her estate shall receive the Executive's base salary payable in the year
of her death pursuant to Section 3(a) hereof, life insurance benefits and a pro
rata portion of the Executive's Bonus that would have been payable pursuant to
Section 3(a) hereof with respect to the fiscal year in which the Executive died.
Such pro rata portion shall be determined by multiplying (i) the total Bonus
that the Executive would have received in respect of the year of her death by
(ii) the quotient of the number of days in such year prior to her death, divided
by 365. Such pro rata Bonus payment will be payable at the same time that the
full Bonus would have been payable to the Executive pursuant to Section 3(a)
hereof.
(b) Disability. Upon the Disability of the Executive, she shall receive
----------
her Earned Salary, any disability benefits payable under any disability program
in which she participates, any other benefits under any benefit plan of the
Company to which she is entitled pursuant to the terms of such plan and a
portion of the Executive's Bonus that would have been payable pursuant to
Section 3(a) hereof with respect to the fiscal year in which the Executive
became disabled. Such pro rata portion shall be determined by multiplying (i)
the total Bonus that the Executive would have received in respect of the year of
her Disability by (ii) the quotient of the number of days in such year prior to
her Disability, divided by 365. Such pro rata Bonus payment will be payable at
the same time that the full Bonus would have been payable to the Executive
pursuant to Section 3(a) hereof.
- 4 -
<PAGE>
(c) Termination for Cause or a Resignation Other than for Good Reason. If
-----------------------------------------------------------------
the Executive's employment terminates due to a Termination for Cause or a
Resignation Other than for Good Reason, the Executive shall receive her Earned
Salary and any other benefits under any benefit plan of the Company to which she
is entitled pursuant to the terms of such plan.
(d) Termination Without Cause or Resignation for Good Reason. If the
--------------------------------------------------------
Executive's employment terminates due to a Termination Without Cause or a
Resignation for Good Reason the Executive shall receive severance pay equal to
the base salary (but not the bonus) payable to the Executive under Section 3(a)
for the six months immediately following such termination or resignation.
Notwithstanding anything herein to the contrary, in no event shall the Company
be obligated to pay any amount to the Executive with respect to any period after
such six-month period.
9. Definitions.
-----------
For purposes of this Agreement, capitalized terms have the following
meanings:
"Cause" shall mean a termination by the Company due to (i) the continued
-----
failure (other than any such failure resulting from incapacity due to reasonably
documented physical or mental illness) by the Executive substantially to perform
her duties, responsibilities or obligations as an officer, director or employee
of the Company or any of its subsidiaries after having been given written notice
of such failure to perform, listing in reasonable specificity such failures, and
after having failed to improve such performance within the time period (which
shall have been a reasonable time period) specified in such notice or (ii) the
engaging by the Executive in serious misconduct which is material to the
performance by the Executive of her duties and obligations for the Company,
including, without limitation, gross negligence, dishonesty, willful
malfeasance, gross insubordination or gross misconduct or conviction of a felony
or the entering of a plea of nolo contendere to a felony.
---------------
"Disability" shall mean the Executive's inability for more than six months
----------
within any 12-month period of performing her duties, responsibilities or
obligations as an officer, director or employee of the Company on a full-time
basis because of a physical, mental or emotional incapacity resulting from
injury, sickness or disease and within 30 days after written notice of
termination has been given to the Executive, the Executive shall not have
returned to the full-time performance of her duties, responsibilities and
obligations. The date of termination in the case of a termination for
"Disability" shall be the last day of the aforementioned 30-day period.
"Earned Salary" means the base salary earned, but unpaid, for services
-------------
rendered to the Company on or prior to the date of disability, resignation or
termination of the Executive's employment, as the case may be. Earned Salary
shall be paid in a single lump sum as soon as practicable, but in no event more
than 30 days following such date.
"Resignation for Good Reason" means a resignation by the Executive as a result
---------------------------
of any of the following:
- 5 -
<PAGE>
(a) a material breach by the Company of its obligations under this Agreement
with respect to the base salary, Bonus, benefits or vacation to which the
Executive is entitled under Sections 3 and 4 hereof; or
(b) the taking of any action by the Company that would substantially diminish
the aggregate value of the benefits provided to the Executive under the
benefit plans of the Company that may be in effect at such time in which
she was participating, other than any such reduction which is (i) required
by law, (ii) implemented in connection with a general concessionary
arrangement affecting all employees or affecting the group of senior
corporate executive employees or (iii) generally applicable to all
similarly situated beneficiaries of such plans.
"Resignation Other than for Good Reason" shall be any resignation other than a
--------------------------------------
Resignation with Good Reason.
"Termination for Cause" shall be any termination of the Executive's employment
---------------------
by the Company for Cause.
"Termination Without Cause" shall be any termination of the Executive's
-------------------------
employment by the Company other than a Termination for Cause.
10. Full Discharge of Company Obligations.
-------------------------------------
The amounts payable to the Executive pursuant to Section 6, Section 7, or
Section 8 following termination of her employment shall be in full and complete
discharge of the Executive's rights under this Agreement and any other claims
she may have in respect of her employment by the Company or any of its
subsidiaries. Such amounts payable shall constitute liquidated damages with
respect to any and all such rights and claims and, upon the Executive's receipt
of such amounts, the Company shall be released and discharged from any and all
liability to the Executive in connection with this Agreement or otherwise in
connection with the Executive's employment with the Company and its
subsidiaries.
11. Noncompetition and Confidentiality.
----------------------------------
(a) Noncompetition. If the Executive's employment with the Company terminates
--------------
during the Employment Period for any reason (other than a resignation by
Executive pursuant to Section 6(c) or due to her death or Disability),
during the six-month period following such termination or resignation of
the Executive (the "Restriction Period"), the Executive shall not become
------------------
associated with any entity, whether as a principal, partner, employee,
consultant or shareholder (other than as a holder of not in excess of 1% of
the outstanding voting shares of any publicly traded company), that is
actively engaged in the business of internet-based sales of financial
services to the corporate market.
- 6 -
<PAGE>
(b) Confidentiality. Without the prior written consent of the Company, except
---------------
for disclosures of Confidential Information (as defined below) in the
ordinary course of business that, individually and in the aggregate, are
not materially injurious to the Company or any of its subsidiaries, and
except to the extent required by an order of a court having competent
jurisdiction or under subpoena from an appropriate government agency, the
Executive shall not disclose any trade secrets, customer lists, computer
programs, drawings, designs, marketing or sales plans, management
organization information (including data and other information relating to
members of the Board or management), operating policies or manuals,
business plans, financial records or other financial, commercial, business
or technical information relating to the Company or any of its subsidiaries
or information designated as confidential or proprietary that the Company
or any of its subsidiaries may receive belonging to suppliers, customers or
others who do business with the Company or any of its subsidiaries
(collectively, "Confidential Information") to any third person unless such
------------------------
Confidential Information has been previously disclosed to the public by the
Company or is in the public domain (other than by reason of the Executive's
breach of this Section 11(b)). If the Executive receives an order of a
court or a subpoena requiring the Executive to disclose any Confidential
Information, as described above, the Executive shall promptly deliver a
copy of such order or subpoena to the Company and the Company shall use its
best efforts to assist the Executive in responding thereto.
(c) Company Property. Promptly following the Executive's termination of
----------------
employment, the Executive shall return to the Company all property of the
Company, and all copies thereof in the Executive's possession or under her
control, including, without limitation, all Confidential Information, in
whatever media.
(d) Nonsolicitation of Employees. During the Employment Period and the
----------------------------
Restriction Period, the Executive shall not directly or indirectly induce
any employee of the Company or any of its subsidiaries to terminate
employment with such entity, and will not directly or indirectly, either
individually or as owner, agent, employee, consultant or otherwise, employ
or offer employment to any person who is or was employed by the Company or
a subsidiary thereof unless such person shall have ceased to be employed by
such entity for a period of at least six months.
(e) Certain Payments to the Executive during the Restriction Period. If the
---------------------------------------------------------------
Executive's employment with the Company is terminated due to a Termination
for Cause or a Resignation Other than for Good Reason, then, as
consideration for the covenants set forth in Section 11(a) and Section
11(d), the Company shall pay the Executive, for the duration of the
Restriction Period, the salary (but not the bonus) she otherwise would have
received under Section 3(a). If the Executive's employment with the
Company is terminated due to a Termination Without Cause or a Resignation
for Good Reason, then, as consideration for the covenants set forth in
Section 11(a) and Section 11(d), the Company shall pay the Executive the
compensation set forth in Section 8(d). If the Executive's employment is
terminated pursuant to Section 6(b), then the receipt by the Executive of
the compensation elected by the Company pursuant to Section 6(c) will
constitute the consideration for the covenants set forth in Section 11(a)
and Section 11(d). If the Restriction Period extends beyond the Employment
Period, the Company shall continue to pay the Executive her then current
salary until the end of the Restriction Period for that portion of the
Restricted Period which extends beyond the Employment Period. Except in
the case of a Termination Without Cause or such Resignation for Good
Reason, the Company may elect at any time during the Restriction Period
- 7 -
<PAGE>
upon thirty (30) days prior written notice to discontinue such salary
payments, in which event the Executive shall be released from any further
obligation to comply with the provisions of Sections 11(a) and 11(d)
herein. If the Company fails to timely make any payment due under this
Section 11(e) and if such failure continues for ten (10) business days
after notice by the Executive to the Company of such failure, the Executive
shall be released from any further obligation to comply with the provisions
of Sections 11(a) and 11(d) herein.
(f) Injunctive Relief with Respect to Covenants. The Executive acknowledges and
-------------------------------------------
agrees that the covenants and obligations of the Executive with respect to
noncompetition, nonsolicitation, confidentiality and Company property
relate to special, unique and extraordinary matters and that a violation of
any of the terms of such covenants and obligations will cause the Company
and its subsidiaries irreparable injury for which adequate remedies are not
available at law. Therefore, the Executive agrees that the Company and its
subsidiaries shall be entitled to an injunction, restraining order or such
other equitable relief (without the requirement to post bond) as a court of
competent jurisdiction may deem necessary or appropriate to restrain the
Executive from committing any violation of the covenants and obligations
contained in this Section 11. These injunctive remedies are cumulative and
are in addition to any other rights and remedies the Company or its
subsidiaries may have at law or in equity.
12. Miscellaneous.
-------------
(a) Binding Effect. This Agreement shall be binding on the Company and any
--------------
person or entity which succeeds to the interest of the Company (regardless
of whether such succession occurs by operation of law, by reason of the
sale of all or a portion of the Company's stock or assets or a merger,
consolidation or reorganization involving the Company). This Agreement
shall also inure to the benefit of the Executive's heirs, executors,
administrators and legal representatives.
(b) Assignment. Except as provided under Section 12(a) above, neither this
----------
Agreement nor any of the rights or obligations hereunder shall be assigned
or delegated by either party hereto without the prior written consent of
the other party.
(c) Entire Agreement. This Agreement supersedes any and all prior agreements
----------------
between the parties hereto, and constitutes the entire agreement between
the parties hereto with respect to the matters referred to herein, and no
other agreement, oral or otherwise, shall be binding between the parties
unless it is in writing and signed by the party against whom enforcement is
sought. There are no promises, representations, inducements or statements
between the parties other than those that are expressly contained herein.
The Executive acknowledges that she is entering into this Agreement of her
own free will and accord, and with no duress, that she has read this
Agreement and that she understands it and its legal consequences. No parol
or other evidence may be admitted to alter, modify or construe this
Agreement, which may be changed only by a writing signed by the parties
hereto.
(d) Severability; Reformation. In the event that one or more of the provisions
-------------------------
of this Agreement shall become invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected thereby. In the
- 8 -
<PAGE>
event any of Section 11(a), (b), (c), (d) or (e) is not enforceable in
accordance with its terms, the Executive and the Company agree that such
Section, or such portion of such Section, shall be reformed to make it
enforceable in a manner which provides the Company the maximum rights
permitted under applicable law.
(e) Waiver. Waiver by either party hereto of any breach or default by the
------
other party of any of the terms of this Agreement shall not operate as a
waiver of any other breach or default, whether similar to or different from
the breach or default waived. No waiver of any provision of this Agreement
shall be implied from any course of dealing between the parties hereto or
from any failure by either party hereto to assert their rights hereunder on
any occasion or series of occasions.
(f) Notices. Any notice required or desired to be delivered under this
-------
Agreement shall be in writing and shall be delivered personally, by courier
service, by registered mail, return receipt requested, or by telecopy and
shall be effective upon dispatch to the party to whom such notice shall be
directed, and shall be addressed as follows (or to such other address as
the party entitled to notice shall hereafter designate in accordance with
the terms hereof):
If to the Company:
Consumer Financial Network, Inc.
1888 Emery Street, NW
Atlanta, GA 30318
Fax: 404/267-3801
Attention: U. Bertram Ellis, Jr.
with a copy to:
Minkin & Snyder, P.C.
One Buckhead Plaza
3060 Peachtree Road, Suite 1100
Atlanta, Georgia 30305
Attention: James S. Altenbach, Esq.
Fax: 404/261-5064
with an additional copy to:
Kelso & Company
320 Park Avenue
24th Floor
New York, New York 10022
Attention: James J. Connors II, Esq.
Fax: 212/223-2379
- 9 -
<PAGE>
If to the Executive:
C. Cathy Raffaeli
1795 Shippan Avenue
Stamford, CT 06902
Fax: __________
with a copy to:
Sack & Sack
135 E. 57th Street
New York, NY 10022
Attn: Jonathan Sack
Fax: 212/702-9702
(g) Amendments. This Agreement may not be altered, modified or amended except
----------
by a written instrument signed by each of the parties hereto.
(h) Headings. Headings to sections in this Agreement are for the convenience
--------
of the parties only and are not intended to be part of or to affect the
meaning or interpretation hereof.
(i) Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be deemed an original but both of which together shall
constitute one and the same instrument.
(j) Withholding. Any payments provided for herein shall be reduced by any
-----------
amounts required to be withheld by the Company from time to time under
applicable Federal, state or local income or employment tax laws or similar
statutes or other provisions of law then in effect.
(k) Governing Law. This Agreement shall be governed by the laws of the State
-------------
of Georgia, without reference to principles of conflicts or choice of law
under which the law of any other jurisdiction would apply.
[Signatures on Following Page]
- 10 -
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer and the Executive has hereunto set her hand as of
the day and year first above written.
Consumer Financial Network, Inc.
----------------------------------------
By: U. Bertram Ellis, Jr.
Title: Chief Executive Officer
The Executive:
----------------------------------------
C. Cathleen Raffaeli
- 11 -
<PAGE>
EXHIBIT 10.5
I. DEFINITIONS
1.1 Definitions.
------------
(a) "Award" shall mean an Option, which may be designated as a
-----
Nonqualified Stock Option or an Incentive Stock Option granted under this
Plan.
(b) "Award Agreement" shall mean, as the case may be, the
---------------
Incentive Stock Option Award Agreement substantially in the form of Exhibit
-------
A attached hereto and made a part herewith, setting forth the terms of an
-
Award, or the Non-Qualified Stock Option Award Agreement substantially in
the form of Exhibit B attached hereto and made a part herewith setting
---------
forth the terms of an Award.
(c) "Award Date" shall mean the date upon which the Committee
----------
took the action granting an Award or such later date as is prescribed by
the Committee.
(d) "Award Period" shall mean the period beginning on an Award
------------
Date and ending on the expiration date of such Award.
(e) "Beneficiary" shall mean the person, persons, trust or trusts
-----------
entitled by will or the laws of descent and distribution to receive the
benefits specified under this Plan in the event of a Participant's death.
(f) "Board" shall mean the Board of Directors of the Corporation.
-----
(g) "Class B Common Stock" shall mean the Class B Common Stock,
--------------------
$.O1 par value, of the Corporation.
(h) "Code" shall mean the Internal Revenue Code of 1986, as
----
amended from time to time.
(i) "Commission" shall mean the Securities and Exchange
----------
Commission.
(j) "Committee" shall mean the committee appointed by the Board
---------
and consisting of three or more members or if no such committee has been
appointed, the Board.
(k) "Company" shall mean, collectively, the Corporation and its
-------
Subsidiaries.
(1) "Corporation" shall mean IXL Holdings, Inc., a Delaware
-----------
corporation, and its successors.
(m) "Eligible Employee" shall mean an officer or key employee of
-----------------
the Company.
-1-
<PAGE>
(n) "Event" shall mean approval by the stockholders of the Corporation
-----
of (i) the dissolution or liquidation of the Corporation; (ii) an agreement
to merge or consolidate, or otherwise reorganize, with or into one or more
entities which are not Subsidiaries, as a result of which less than 50% of
the outstanding voting securities of the surviving or resulting entity are,
or are to be, owned by the stockholders (or their affiliates) of the
Corporation immediately prior to such transaction; (iii) the sale of
substantially all of the Corporation's business and/or assets to a person
or entity which is not a Subsidiary or a stockholder (or an affiliate of a
stockholder) immediately prior to such sale; or (iv) a tender offer by a
person other than a stockholder (or an affiliate thereof) of the
Corporation) pursuant to which the offeror acquires more than 50% of the
Corporation's outstanding voting securities.
(o) "Fair Market Value" shall mean (i) the per share closing sales
-----------------
price of the Class B Common Stock on the date at which Fair Market Value is
to be determined (the "Determination Date") on the national securities
exchange having the greatest volume of trading in the Class B Common Stock
during the 30-day period immediately preceding that time as reported in The
---
Wall Street Journal; (ii) if the Class B Common Stock is not listed or
-------------------
admitted to trade on any national securities exchange, the per share
closing sales price for the Class B Common Stock on the Determination Date
at which Fair Market Value is to be determined, as quoted in the National
Association of Securities Dealers Automated Quotation (NASDAQ) National
Market Reporting System, or any successor system, as reported in The Wall
--------
Street Journal; (iii) if the Class B Common Stock is not listed or
--------------
admitted to trade on any national securities exchange and is not quoted on
the NASDAQ National Market Reporting System, the average of the per share
closing bid and asked sales prices for the Class B Common Stock on the
over-the-counter market on the Determination Date at which Fair Market
Value is to be determined, as quoted on NASDAQ or such other national
reporting service, as reported in The Wall Street Journal; or (iv) if the
-----------------------
Class B Common Stock is not listed or admitted to trade on a national
securities exchange, is not quoted on the NASDAQ National Market Reporting
System and if the bid and asked sales prices for the Class B Common Stock
are not furnished by the National Association of Securities Dealers, Inc.
or a similar organization, the Fair Market Value of a share of Class B
Common Stock as of the Determination Date at which Fair Market Value is to
be determined, and established by the Committee under the Plan based on
such relevant facts, which may include opinions of independent experts or
annual appraisals of the fair market value of the Company, as may be
available to the Committee.
(p) "Incentive Stock Option" shall mean an option which is designated
----------------------
as an incentive stock option within the meaning of Section 422 of the Code,
the award of which contains such provisions as are necessary to comply with
that section.
-2-
<PAGE>
(q) "Nonqualified Stock Option" shall mean an option which is
-------------------------
designated as a Nonqualified Stock Option.
(r) "Option" shall mean an option to purchase Class B Common
------
Stock under this Plan. An Option shall be designated by the Committee as a
Nonqualified Stock Option or an Incentive Stock Option.
(s) "Participant" shall mean an Eligible Employee who has been
-----------
awarded an Award.
(t) "Personal Representative" shall mean the person or persons
-----------------------
who, upon the disability or incompetence of a Participant, shall have
acquired on behalf of the Participant by legal proceeding or otherwise the
legal power to exercise the rights and receive the benefits specified in
this Plan.
(u) "Plan" shall mean the IXL Holdings, Inc., 1996 Stock Option
----
Plan, as amended from time to time in accordance herewith.
(v) "Securities Act" shall mean the Securities Act of 1933, as
--------------
amended.
(w) "Subsidiary" shall mean any corporation or other entity a
----------
majority or more of whose outstanding voting stock or voting power is
beneficially owned directly or indirectly by the Corporation.
II. THE PLAN
2.1 Purpose.
-------
The purpose of this Plan is to promote the success of the Company
by providing an additional means to attract and retain key personnel
through added long term incentives for high levels of performance and for
significant efforts to improve the financial performance of the Company by
granting Awards.
2.2 Administration.
--------------
(a) This Plan shall be administered by the Committee. Action of
the Committee with respect to the administration of this Plan shall be
taken pursuant to a majority vote or the written consent of a majority of
its members. If action by the Committee is taken by written consent, the
action shall be deemed to have been taken at the time specified in the
consent or, if none is specified, at the time of the last signature. The
Committee may delegate administrative functions to individuals who are
officers or employees of the Company.
(b) Subject to the express provisions of this Plan, the Committee
shall have the authority to construe and interpret this Plan and any
agreements defining the rights and obligations of the
-3-
<PAGE>
Company and Participants under this Plan, to further define the terms used
in this Plan, to prescribe, amend and rescind rules and regulations
relating to the administration of this Plan, to determine the duration and
purposes of leaves of absence which may be granted to Participants without
constituting a termination of their employment for purposes of this Plan
and to make all other determinations necessary or advisable for the
administration of this Plan. The determinations of the Committee on the
foregoing matters shall be conclusive.
(c) Any action taken by, or inaction of, the Corporation, any
Subsidiary, the Board or the Committee relating to this Plan shall be
within the absolute discretion of that entity or body and shall be
conclusive and binding upon all persons. No member of the Board or
Committee, or officer of the Corporation or Subsidiary, shall be liable for
any such action or inaction of the entity or body, of another person or,
except in circumstances involving bad faith, of himself or herself. Subject
only to compliance with the express provisions hereof, the Board and
Committee may act in their absolute discretion in matters related to this
Plan.
2.3 Participation.
-------------
Awards may be granted only to Eligible Employees. An Eligible
Employee who has been granted an Award may, if otherwise eligible, be
granted additional Awards if the Committee shall so determine. Members of
the Board who are not officers or employees of the Company shall not be
eligible to receive Awards.
2.4 Stock Subject to the Plan.
-------------------------
The stock to be offered under this Plan shall be shares of the
Corporation's authorized but unissued Class B Common Stock. The aggregate
amount of Class B Common Stock that may be issued or transferred pursuant
to Awards granted under this Plan shall not exceed 24,405 shares, subject
to adjustment as set forth in Section 4.2. If any Option shall lapse or
terminate (either by its terms or as a result of the repurchase by the
Company of such Option) without having been exercised in full, the
unpurchased shares subject thereto shall again be available for purposes of
this Plan.
2.5 Grant of Options.
----------------
Subject to the express provisions of the Plan, the Committee
shall determine from the class of Eligible Employees those individuals to
whom Options under the Plan shall be granted, the terms of Options (which
need not be identical) and the number of shares of Class B Common Stock
subject to each Option. Each Option shall be subject to the terms and
conditions set forth in the Plan and such other terms and conditions
established by the Committee and as set forth in the Award Agreement as are
not
-4-
<PAGE>
inconsistent with the purpose and provisions of the Plan. The grant of an
Option is made on the Award Date.
2.6 Exercise of Options.
-------------------
An Option shall be deemed to be exercised when the Secretary or
Assistant Secretary of the Corporation receives written notice of such exercise
from the Participant, together with payment of the purchase price made in
accordance with Section 3.2. Notwithstanding any other provision of this Plan,
the Committee may impose, by rule or in Award Agreements, such conditions upon
the exercise of Options (including, without limitation, vesting of exercise
rights and conditions limiting the time of exercise to specified periods) as may
be required to satisfy applicable securities laws, regulatory requirements or as
may be deemed necessary or advisable by the Committee. It shall be a condition
to the exercise of any Options that the Eligible Employee exercising such
Option execute and become subject to the Stockholder Agreement of the
Corporation dated as of April 30, 1996, as the same may be amended from time to
time.
III. OPTIONS
3.1 Grants.
------
One or more Options may be granted to any Eligible Employee. Each
Option so granted shall be designated by the Committee as either a Nonqualified
Stock Option or an Incentive Stock Option.
3.2 Option Price.
------------
The purchase price per share of the Class B Common Stock covered
by each Option shall be determined by the Committee, but in the case of
Incentive Stock Options shall not be less than 100% (110% in the case of a
Participant who owns more than 10% of the total combined voting power of all
classes of stock of the Company) of the Fair Market Value of the Class B Common
Stock on the date the Incentive Stock Option is granted. The purchase price of
any shares purchased shall be paid in full at the time of each purchase in one
or a combination of the following methods: (i) in cash, or by certified or
cashier's check payable to the order of the Corporation, (ii) if authorized by
the Committee or specified in the Option being exercised, by a promissory note
made by the Participant in favor of the Corporation, upon the terms and
conditions determined by the Committee, and secured by the Class B Common Stock
issuable upon exercise in compliance with applicable law (including, without
limitation, state corporate law and federal margin requirements), or (iii) if
authorized by the Committee, by shares of Class B Common Stock of the
Corporation already owned by the Participant, provided such shares are publicly
traded; provided, however, the Committee may in its absolute discretion limit
the Participant's ability to exercise an Option by delivering
-5-
<PAGE>
shares, and any shares delivered which were initially acquired upon
exercise of a stock option must have been owned by the Participant at least
six months as of the date of delivery. Shares of Class B Common Stock used
to satisfy the exercise price of an Option shall be valued at their Fair
Market Value on the date of exercise.
3.3 Option Period.
-------------
Each Option and all rights or obligations thereunder shall expire
on such date as shall be determined by the Committee and set forth in the
Award Agreement, but not later than 10 years after the Award Date in the
case of an Incentive Stock Option (five years in the case of a person
described in Section 3.5(c)), and shall be subject to earlier termination
as hereinafter provided or as provided in any Award Agreement.
3.4 Exercise of Options.
-------------------
Except as otherwise provided in Section 4.4, an Option may become
exercisable, in whole or in part, on the date or dates specified in the
Award Agreement and thereafter shall remain exercisable until the
expiration or earlier termination of such Option. No Option shall be
exercisable except in respect of whole shares, and fractional share
interests shall be disregarded. Subject to any requirement of law, not less
than 10 shares of Class B Common Stock may be purchased at one time unless
the number purchased is the total number at the time available for purchase
under the terms of the Option.
3.5 Limitations on Grant of Incentive Stock Options.
-----------------------------------------------
(a) The aggregate Fair Market Value (determined as of the Award
Date) of the Class B Common Stock for which Incentive Stock Options may
first become exercisable by any Participant during any calendar year under
this Plan, together with that of Class B Common Stock subject to Incentive
Stock Options first exercisable (other than as a result of acceleration
pursuant to Section 4.2 or 4.4) by such Participant under any other plan of
the Corporation or any Subsidiary, shall not exceed $100,000.
(b) There shall be imposed in the Award Agreement relating to
Incentive Stock Options such terms and conditions as are required in order
that the Option be an "incentive stock option" as that term is defined in
Section 422 of the Code.
(c) No Incentive Stock Option may be granted to any person who,
at the time the Incentive Stock Option is granted, owns shares of stock of
the Corporation or any Subsidiary possessing more than 10% of the total
combined voting power of all classes of stock of the Company, unless the
exercise price of such Option is at least 110% of the Fair Market Value of
the stock subject to the Option and such Option by its terms is not
exercisable after the expiration of five years from the date such Option is
granted.
-6-
<PAGE>
IV. OTHER PROVISIONS
4.1 Rights of Eligible Employees. Participants and Beneficiaries.
------------------------------------------------------------
(a) Status as an Eligible Employee shall not be construed as a
commitment that any Award will be made under this Plan to an Eligible
Employee or to Eligible Employees generally.
(b) Nothing contained in this Plan (or in Award Agreements or in
any other documents related to this Plan or to Options) shall confer upon
any Eligible Employee or Participant any right to continue in the employ of
the Company or constitute any contract or agreement of employment, or
interfere in any way with the right of the Company to reduce such person's
compensation or to terminate the employment of such Eligible Employee or
Participant, with or without cause, but nothing contained in this Plan or
any document related thereto shall affect any other contractual right of
any Eligible Employee or Participant.
(c) Other than by will or the laws of descent and distribution,
no interest in this Plan or in any Option shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance
or charge and any such attempted action shall be void and no such benefit
or interest shall be, in any manner, liable for, or subject to, debts,
contracts, liabilities, engagements or torts of any Eligible Employee,
Participant or Beneficiary. The Committee shall disregard any attempted
transfer, assignment or other alienation prohibited by the preceding
sentence and shall pay or deliver such cash or shares of Class B Common
Stock in accordance with the provisions of this Plan. Further, any shares
of Class B Common Stock purchased upon the exercise of any Option shall be
subject to the Stockholders Agreement of the Company dated as of April 30,
1996.
(d) No Participant, Beneficiary or other person shall have any
right, title or interest in any fund or in any specific asset (including
shares of Class B Common Stock) of the Company by reason of any Option
granted hereunder. Neither the provisions of this Plan (or of any documents
related hereto), nor the creation or adoption of this Plan, nor any action
taken pursuant to the provisions of this Plan shall create, or be construed
to create, a trust of any kind or a fiduciary relationship between the
Company and any Participant, Beneficiary or other person. To the extent
that a Participant, Beneficiary or other person acquires a right to receive
an Option hereunder, such right shall be no greater than the right of any
unsecured general creditor of the Company.
4.2 Adjustments Upon Changes in Capitalization.
------------------------------------------
(a) If the outstanding shares of Class B Common Stock are
increased, decreased or changed into, or exchanged for, a different number
or kind of shares or securities of the Corporation
-7-
<PAGE>
through a reorganization or merger in which the Corporation is the
surviving entity, or through a combination, recapitalization,
reclassification, stock split, stock dividend, stock consolidation or
otherwise, an appropriate adjustment shall be made in the number and kind
of shares that may be issued pursuant to Options. A corresponding
adjustment to the consideration payable with respect to Options granted
prior to any such change shall also be made. Any such adjustment, however,
shall be made without change in the total payment, if any, applicable to
the portion of the Option not exercised but with a corresponding adjustment
in the price for each share.
(b) Upon the dissolution or liquidation of the Corporation, or
upon a reorganization, merger or consolidation of the Corporation with one
or more corporations as a result of which the Corporation is not the
surviving corporation, the Plan shall terminate, and any outstanding
Options shall, subject to the provisions of Section 4.4, terminate and
be forfeited. Notwithstanding the foregoing, the Committee may provide in
writing in connection with, or in contemplation of, any such transaction
for any or all of the following alternatives (separately or in
combinations): (i) for the assumption by the successor corporation of the
Options theretofore granted or the substitution by such corporation for
such Options of Options covering the stock of the successor corporation, or
a parent or subsidiary thereof, with appropriate adjustments as to the
number and kind of shares and prices; (ii) for the continuance of the Plan
by such successor corporation in which event the Plan and the Options shall
continue in the manner and under the terms so provided; or (iii) for the
payment in cash or shares of Class B Common Stock in lieu of and in
complete satisfaction of such Awards.
(c) All determinations under this Section 4.2 shall be made by
the Committee with the purpose of neither enlarging nor diminishing the
rights or obligations hereunder or under any then outstanding Option. In
adjusting Options to reflect the changes described in this Section 4.2, or
in determining that no such adjustment is necessary, the Committee may rely
upon the advice of counsel and accountants of the Corporation, and the
determination of the Committee shall be conclusive. No fractional shares
of stock shall be issued under this Plan on account of any such adjustment.
4.3 Termination of Employment.
-------------------------
(a) If the Participant's employment by the Company terminates for
any reason including, death or disability, or if the Option shall terminate
after the times specified in the Award Agreement evidencing such Option
provided that the Committee shall have the discretion to terminate the
Option or any part thereof prior to the expiration date therefor in the
Award Agreement upon thirty (30) days notice to the Participant; provided,
however, that in the case of Incentive Stock Options, military leaves of
absence,
-8-
<PAGE>
sick leave and any other bona fide leaves of absence shall not be
considered a termination of employment as long as such leave does not
extend beyond 90 days or if the Participant's reemployment rights are
guaranteed by law (as with certain federal military reservist laws, certain
state maternity or paternity leave laws) or by contract.
(b) If the Participant's employment by the Company terminates as
a result of disability, the Participant or Participant's Personal
Representative may subject to Section 4.3(a) exercise any Option to the
extent it shall have become exercisable; provided, however, that in the
case of Incentive Stock Options, the Participant or Participant's Personal
Representative must exercise an Option to the extent it shall have become
exercisable within one year of the termination of employment.
(c) If the Participant's employment by the Company terminates as
a result of death while the Participant is employed by the Company (or in
the case of Incentive Stock Options was last employed by the Company within
three months before his death), the Participant's Option shall subject to
Section 4.3(a) be exercisable by the Participant's Beneficiary to the
extent such Option was exercisable immediately prior to the date of death
(or earlier termination).
(d) Notwithstanding the foregoing, in the event of termination of
employment with the Company for any reason, other than discharge for cause,
the Committee may, in its discretion and in connection with such
termination, increase the portion of the Participant's Option available to
the Participant, or Participant's Beneficiary or Personal Representative,
as the case may be, upon such terms as the Committee shall determine.
(e) If an entity ceases to be a Subsidiary, such action shall be
deemed for purposes of this Section 4.3 to be a termination of employment
of each employee of that entity.
4.4 Acceleration of Options.
-----------------------
Unless prior to an Event the Board determines that, upon its
occurrence, there shall be no acceleration of Options or determines those
Options which shall be accelerated and the extent to which they shall be
accelerated, upon the occurrence of an Event each Option shall become
immediately exercisable to the full extent theretofore not exercisable.
Acceleration of Options shall comply with applicable regulatory
requirements, including without limitation, Section 422 of the Code. For
purposes of this Section 4.4 only, the Board shall mean the Board as
constituted immediately prior to the Event.
-9-
<PAGE>
4.5 Government Regulations.
----------------------
This Plan, the granting of Options under this Plan and the
issuance or transfer of shares of Class B Common Stock (and/or the payment
of money) pursuant thereto are subject to all applicable federal and state
laws, rules and regulations and to such approvals by any regulatory or
governmental agency (including without limitation "no action" positions of
the Commission) which may, in the opinion of counsel for the Corporation,
be necessary or advisable in connection therewith. Without limiting the
generality of the foregoing, no Options may be granted under this Plan, and
no shares shall be issued by the Corporation, pursuant to any such Option,
unless and until, in each such case, all legal requirements applicable to
the issuance have, in the opinion of counsel to the Corporation, been
complied with. In connection with any stock issuance or transfer, the
person acquiring the shares shall, if requested by the Corporation, give
assurances satisfactory to counsel to the Corporation in respect of such
matters as the Corporation may deem desirable to assure compliance with all
applicable legal requirements.
4.6 Tax Withholding.
---------------
Upon the disposition by a Participant or other person of shares
of Class B Common Stock acquired pursuant to the exercise of an Incentive
Stock Option prior to satisfaction of the holding period requirements of
Section 422 of the Code, or upon the exercise of a Nonqualified Stock
Option, the Company shall have the right to require such Participant or
such other person to pay by cash, or certified or cashier's check payable
to the Company, the amount of any taxes which the Company may be required
to withhold with respect to such transactions and the issuance of any
shares of Class B Common Stock pursuant to the exercise of a Nonqualified
Stock Option will be subject to the Participant's (or other person's)
satisfaction of all such tax withholding obligations.
4.7 Amendment, Termination, and Suspension.
--------------------------------------
(a) The Board may, at any time, terminate or, from time to time,
amend, modify or suspend this Plan (or any part hereof). In addition, the
Committee may, from time to time, amend or modify any provision of this
Plan except Section 4.4 and, with the consent of the Participant, make such
modifications of the terms and conditions of such Participant's Option as
it shall deem advisable. No Options may be granted during any suspension of
this Plan or after its termination.
(b) If an amendment would (i) increase the aggregate number of
shares which may be issued under this Plan, or (ii) modify the requirements
of eligibility for participation in this Plan, the amendment shall be
approved by the Board or the Committee and by a majority of the
stockholders entitled to vote thereon.
-10-
<PAGE>
(c) In the case of Options issued before the effective date of
any amendment, suspension or termination of this Plan, such amendment,
suspension or termination of the Plan shall not, without specific action of
the Board and consent of the Participant, in any way modify, amend, alter
or impair any rights or obligations under any Option previously granted
under the Plan.
4.8 Privileges of Stock Ownership; Nondistributive Intent.
-----------------------------------------------------
A Participant shall not be entitled to the privilege of stock
ownership as to any shares of Class B Common Stock not actually issued to
him. Upon the issuance and transfer of shares to the Participant, unless a
registration statement is in effect under the Securities Act, relating to
such issued and transferred Class B Common Stock and there is available for
delivery a prospectus meeting the requirements of Section 10 of the
Securities Act, the Class B Common Stock may be issued and transferred to
the Participant only if he represents and warrants in writing to the
Corporation that the shares are being acquired for investment and not with
a view to the resale or distribution thereof and there is an available
exemption from the federal and applicable state securities laws. No shares
shall be issued and transferred unless and until there shall have been full
compliance with any the applicable regulatory requirements (including those
of exchanges upon which any Class B Common Stock of the Corporation may be
listed).
4.9 Effective Date of the Plan.
--------------------------
This Plan shall be effective upon its approval by the Board.
4.10 Term of the Plan.
----------------
Unless previously terminated by the Board, this Plan shall
terminate at the close of business on the tenth anniversary of the date on
which this Plan is approved by the Board, and no Options shall be granted
under it thereafter, but such termination shall not affect any Option
theretofore granted.
4.11 Governing Law.
-------------
This Plan and the documents evidencing Options and all other
related documents shall be governed by, and construed in accordance with,
the laws of the State of Delaware. If any provision shall be held by a
court of competent jurisdiction to be invalid and unenforceable, the
remaining provisions of this Plan shall continue to be fully effective.
-11-
<PAGE>
EXHIBIT A
INCENTIVE STOCK
OPTION AWARD AGREEMENT
THIS AWARD AGREEMENT is dated as of the ___ day of _______, 1998, by and
between iXL Enterprises, Inc., a Delaware corporation (the "Corporation") f/k/a
IXL Holdings, Inc., and _______________ (the "Participant").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, on ___________, 1998, pursuant to the Corporation's 1996 Stock Option
Plan, as amended (hereinafter, the term "Plan"; and such other capitalized terms
as used herein without definition having the meaning ascribed to them in the
Plan), the Committee of the Corporation's Board of Directors (the "Committee")
has granted to the Participant, effective as of __________, 1998 (the "Award
Date"), an incentive stock option ("Option" or "Award") to purchase all or any
part of the total number of shares of Class B Common Stock, $.01 par value of
the Corporation ("Stock") set forth on Schedule I hereto upon the terms and
conditions hereinafter set forth; and
WHEREAS, the Participant and the Corporation desire to enter into a written
agreement in accordance with the Plan;
NOW THEREFORE, in consideration of the mutual promises and covenants made
herein and the mutual benefits to be derived herefrom, the parties hereto agree
as follows;
1. GRANT OF OPTION. The Corporation has granted to the Participant, as a
---------------
matter of separate inducement and agreement in connection with their employment,
and not in lieu of any salary or other compensation for their services, the
right and option to purchase, in accordance with the Plan and subject to the
terms and conditions thereof and those hereinafter set forth, all or any part of
the total number of shares of Stock set forth on Schedule I attached hereto and
incorporated herein ("Schedule I"), at the exercise price per share set forth on
Schedule I (the "Price"), exercisable from time to time subject to the
provisions hereof prior to the close of business on __________ (the "Expiration
Date"). The Price has been determined by the Committee in accordance with
Section 3.2 of the Plan.
2. EXERCISABILITY OF OPTION. Except as otherwise provided herein, the Option
------------------------
may be exercised in accordance with the vesting schedule set forth on Schedule
II attached hereto and incorporated herein ("Schedule II"), and the Option may
only be exercised at any given time to the extent that the Option has vested in
accordance with Schedule II; provided, however, that the Option may be exercised
only prior to the Expiration Date, and may not be exercised as to less than 10
shares of Stock at any one time unless the number of shares purchased is the
total number at the time available for purchase under the Option. Furthermore,
the Option may be exercised only after the Stock into which the Option is
exercisable has been registered under the Securities Act of 1933, as amended
(the "Securities Act"). The Corporation will register such Stock under the
Securities Act no later than the sixth anniversary of the date of grant; and in
any event, notwithstanding the preceding sentence, the Option may be exercised
after such sixth anniversary. The Option may be
-12-
<PAGE>
exercised only as to whole shares; fractional share interests shall be
disregarded except that they may be accumulated. A condition to the exercise of
any Option shall be the execution by the Participant of the Corporation's Second
Amended and Restated Stockholders' Agreement dated December 17, 1997, as the
same may be amended from time to time.
3. METHOD OF EXERCISE AND PAYMENT. Each exercise of any part of the Option
------------------------------
shall be by means of written notice of exercise duly delivered to the
Corporation, specifying the number of whole shares of Stock with respect to
which the Option is being exercised, together with any written statements
required pursuant to Section 10 below and payment of the Price in full (i) in
cash or by certified or cashier's check payable to the order of the Corporation,
(ii) if authorized by the Committee, by a promissory note made by the
Participant in favor of the Corporation, upon the terms and conditions
determined by the Committee, and secured by the Stock issuable upon exercise in
compliance with applicable law (including state corporate law and federal margin
requirements), or (iii) if authorized by the Committee and there is a public
market for the Stock, by delivery of shares of Stock already owned by the
Participant for at least six months.
4. CONTINUANCE OF EMPLOYMENT. Nothing contained herein or in the Plan shall
-------------------------
confer upon the Participant any right to continue in the employ of the
Corporation, or of any subsidiary or other affiliate thereof, or constitute any
contract or agreement of employment. Nothing contained herein or in the Plan
shall interfere in any way with the right of the Corporation to (i) terminate
the employment of the Participant, or (ii) reduce the compensation received by
the Participant from the rate in existence on the Award Date; provided that
nothing herein shall modify any written employment agreement as may now exist or
hereinafter be entered into between Participant and the Corporation.
5. EFFECT OF TERMINATION OF RELATIONSHIP. If the Participant ceases to be
-------------------------------------
employed by the Corporation, or by any subsidiary or other affiliate thereof,
for any reason other than breach by the Corporation of any written employment
agreement in effect between the Participant and the Corporation, the Option
shall terminate to the extent not vested. Notwithstanding the vesting schedule
in Schedule II, if the Corporation has materially breached any written
employment agreement with the Participant, and as a result Participant's
employment is terminated, then to the extent provided in such written employment
agreement the Option shall become fully vested upon such termination of
employment. However, in no event may any Option be exercised by any person after
the Expiration Date.
6. NON-ASSIGNABILITY OF OPTION. Interests in the Option shall not be subject
---------------------------
to sale, transfer, pledge, assignment or alienation other than by will or the
laws of descent and distribution regardless of any interest therein of the
Participant's spouse or such spouse's successor in interest.
7. ADJUSTMENTS UPON SPECIFIED CHANGES. As set forth in Section 4.2 of the
----------------------------------
Plan, upon the occurrence of specified events relating to the Corporation's
stock, adjustments will be made in the number and kind of shares that may be
issuable under an Option to the extent deemed appropriate by the Committee. In
addition, upon the occurrence of specified events relating to the Corporation,
such as its dissolution or liquidation, a reorganization, merger or
consolidation in which it is not the surviving corporation, or upon sale of all
or substantially all of the Corporation's
-13-
<PAGE>
property, unless provision is otherwise made and subject to the provisions of
Section 4.4 of the Plan, the Plan and any outstanding Options will terminate.
8. NO AUTOMATIC ACCELERATION. Options shall not be accelerated unless and
-------------------------
until the Board determines that there shall be an acceleration of Options in
accordance with Section 4.4 of the Plan.
9. PARTICIPANT NOT A STOCKHOLDER. Neither the Participant nor any other
-----------------------------
person entitled to exercise the Option shall have any of the rights or
privileges of a stockholder of the Corporation as to any shares of Stock not
actually issued and delivered to them. No adjustment will be made for dividends
or other rights for which the record date is prior to the date on which such
stock certificate(s) is issued even if such record date is subsequent to the
date upon which notice of exercise was delivered and the tender of payment was
accepted.
10. APPLICATION OF SECURITIES LAWS.
------------------------------
(a) No shares of Stock may be purchased pursuant to the Option unless
and until any then applicable requirements of the Securities and Exchange
Commission and any other regulatory agency, including any state securities law
commissioner having jurisdiction over the Corporation or such issuance, and any
exchange upon which Stock is listed, shall have been fully satisfied. The
Participant represents, agrees and certifies that if the Participant exercises
the Option, in whole or in part, the Participant will acquire the Stock issuable
upon such exercise for the purpose of investment and not with a view to resale
or distribution and that, as a condition to each such exercise, the Participant
will furnish to the Corporation a written statement to such effect, satisfactory
in form and substance to the Corporation.
(b) The Participant understands that the certificate(s) representing the
Stock acquired pursuant to the Option may bear a legend referring to the fact
that the Stock has not been registered under the Securities Act, and has not
been qualified under any state securities law and is subject to certain
restrictions on transfer and other limitations under the Securities Act and
state securities laws with respect to the transfer of such Stock, and the
Corporation may impose stop transfer instructions to implement such limitations,
if applicable. Any person(s) entitled to exercise the Option under the
provisions of Section 6 above shall be bound by and obligated under the
provisions of this Section 10 to the same extent as is the Participant.
(c) The Committee may impose such conditions on an Option or on its
exercise or acceleration or on the payment of any withholding obligation
(including restricting the time of exercise to specified periods) as may be
required to satisfy applicable regulatory requirements.
11. NOTICES. Any request or notice to be given hereunder shall be deemed
-------
given, and any election or exercise to be made or accomplished shall be deemed
made or accomplished, upon actual delivery thereof to the designated recipient,
or three days after deposit thereof in the United States mail, registered,
return receipt requested and postage prepaid, addressed, if to the Participant,
at the address given beneath the Participant's signature set forth below, and if
to the Corporation, at the executive offices of the Corporation.
-14-
<PAGE>
12. EFFECT OF AWARD AGREEMENT. The Award Agreement shall be assumed by, be
-------------------------
binding upon and inure to the benefit of (i) any successor(s) of the Corporation
to the extent provided in Section 4.2(b) of the Plan, and (ii) any Beneficiary
or Personal Representative of the Participant as provided in Section 4.3 of the
Plan.
13. TAX WITHHOLDING. The provisions of Section 4.6 of the Plan are hereby
---------------
incorporated and shall govern any withholding that the Corporation employing the
Participant is required to make with respect to an exercise of the Option, as
well as the Corporation's right to condition a transfer of Class A Common Stock
or Class B Common Stock upon compliance with the applicable withholding
requirements of federal, state and local authorities.
14. TERMS OF PLAN GOVERN. The Option and this Award Agreement are subject
--------------------
to, and the Corporation and the Participant agree to be bound by, all of the
terms and conditions of the Plan. The Participant acknowledges receipt of a
copy of the Plan, which is made a part hereof by this reference. The rights of
the Participant are subject to limitations, adjustments, modifications,
suspension and termination in certain circumstances and upon the occurrence of
certain conditions as set forth in the Plan.
15. LAWS APPLICABLE TO CONSTRUCTION. The Option has been granted, executed
-------------------------------
and delivered as of the day and year first above written, and the
interpretation, performance and enforcement of the Option and this Award
Agreement shall be governed by the laws of the State of Delaware (excluding its
conflicts of law principles).
16. NOTICE OF DISPOSITION. The Participant agrees to notify the Corporation
---------------------
of any sale or other disposition of any shares of Stock received upon exercise
of the Option if such sale or disposition occurs within two years after the
Award Date or within one year after the date of exercise of the Option.
17. COUNTERPARTS. This Award Agreement may be executed and delivered in one
------------
or more counterparts, each of which shall be considered an original but which,
together, shall constitute one and the same document.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
-15-
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Award Agreement to be
executed on its behalf by a duly authorized officer and the Participant has
hereunto set his hand as of the date and year first above written.
IXL ENTERPRISES, INC.
BY:_________________________________________
JAMES V. SANDRY, EXECUTIVE VICE PRESIDENT
PARTICIPANT
___________________________________________
[name]
___________________________________________
(Address)
___________________________________________
(City, State, Zip Code)
___________________________________________
(Social Security Number)
-16-
<PAGE>
SCHEDULE I
NUMBER OF SHARES AND EXERCISE PRICE
[__________]
Number of Class B Option Shares Exercise Price Per Share
- ------------------------------- ------------------------
____ $____
-17-
<PAGE>
SCHEDULE II
VESTING OF OPTION PERIOD
[___________]
Award Date to _________ - __%
Award Date to _________ - __%
Award Date to _________ - __%
Award Date to _________ - __%
Award Date to _________ - __%
-18-
<PAGE>
EXHIBIT B
NON-QUALIFIED STOCK
OPTION AWARD AGREEMENT
THIS AWARD AGREEMENT is dated as of the ___ day of _______, 1998, by and
between iXL Enterprises, Inc., a Delaware corporation (the "Corporation") f/k/a
IXL Holdings, Inc., and _______________ (the "Participant").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, on ___________, 1998, pursuant to the Corporation's 1996 Stock Option
Plan, as amended (hereinafter, the term "Plan"; and such other capitalized terms
as used herein without definition having the meaning ascribed to them in the
Plan), the Committee of the Corporation's Board of Directors (the "Committee")
has granted to the Participant, effective as of __________, 1998 (the "Award
Date"), a non-qualified stock option ("Option" or "Award") to purchase all or
any part of the total number of shares of Class B Common Stock, $.01 par value
of the Corporation ("Stock") set forth on Schedule I hereto upon the terms and
conditions hereinafter set forth; and
WHEREAS, the Participant and the Corporation desire to enter into a written
agreement in accordance with the Plan;
NOW THEREFORE, in consideration of the mutual promises and covenants made
herein and the mutual benefits to be derived herefrom, the parties hereto agree
as follows;
1. GRANT OF OPTION. The Corporation has granted to the Participant, as a
---------------
matter of separate inducement and agreement in connection with their employment,
and not in lieu of any salary or other compensation for their services, the
right and option to purchase, in accordance with the Plan and subject to the
terms and conditions thereof and those hereinafter set forth, all or any part of
the total number of shares of Stock set forth on Schedule I attached hereto and
incorporated herein ("Schedule I"), at the exercise price per share set forth on
Schedule I (the "Price"), exercisable from time to time subject to the
provisions hereof prior to the close of business on __________ (the "Expiration
Date"). The Price has been determined by the Committee in accordance with
Section 3.2 of the Plan.
2. EXERCISABILITY OF OPTION. Except as otherwise provided herein, the Option
------------------------
may be exercised in accordance with the vesting schedule set forth on Schedule
II attached hereto and incorporated herein ("Schedule II"), and the Option may
only be exercised at any given time to the extent that the Option has vested in
accordance with Schedule II; provided, however, that the Option may be exercised
only prior to the Expiration Date, and may not be exercised as to less than 10
shares of Stock at any one time unless the number of shares purchased is the
total number at the time available for purchase under the Option. Furthermore,
the Option may be exercised only after the Stock into which the Option is
exercisable has been registered under the Securities Act of 1933, as amended
(the "Securities Act"). The Corporation will register such Stock under the
Securities Act no later than the sixth anniversary of the date of grant; and in
any event, notwithstanding the preceding sentence, the Option may be exercised
after such sixth anniversary. The Option may be
-19-
<PAGE>
exercised only as to whole shares; fractional share interests shall be
disregarded except that they may be accumulated. A condition to the exercise of
any Option shall be the execution by the Participant of the Corporation's Second
Amended and Restated Stockholders' Agreement dated December 17, 1997, as the
same may be amended from time to time.
3. METHOD OF EXERCISE AND PAYMENT. Each exercise of any part of the Option
------------------------------
shall be by means of written notice of exercise duly delivered to the
Corporation, specifying the number of whole shares of Stock with respect to
which the Option is being exercised, together with any written statements
required pursuant to Section 10 below and payment of the Price in full (i) in
cash or by certified or cashier's check payable to the order of the Corporation,
(ii) if authorized by the Committee, by a promissory note made by the
Participant in favor of the Corporation, upon the terms and conditions
determined by the Committee, and secured by the Stock issuable upon exercise in
compliance with applicable law (including state corporate law and federal margin
requirements), or (iii) if authorized by the Committee and there is a public
market for the Stock, by delivery of shares of Stock already owned by the
Participant for at least six months.
4. CONTINUANCE OF EMPLOYMENT. Nothing contained herein or in the Plan shall
-------------------------
confer upon the Participant any right to continue in the employ of the
Corporation, or of any subsidiary or other affiliate thereof, or constitute any
contract or agreement of employment. Nothing contained herein or in the Plan
shall interfere in any way with the right of the Corporation to (i) terminate
the employment of the Participant, or (ii) reduce the compensation received by
the Participant from the rate in existence on the Award Date; provided that
nothing herein shall modify any written employment agreement as may now exist or
hereinafter be entered into between Participant and the Corporation.
5. EFFECT OF TERMINATION OF RELATIONSHIP. If the Participant ceases to be
-------------------------------------
employed by the Corporation, or by any subsidiary or other affiliate thereof,
for any reason other than breach by the Corporation of any written employment
agreement in effect between the Participant and the Corporation, the Option
shall terminate to the extent not vested. Notwithstanding the vesting schedule
in Schedule II, if the Corporation has materially breached any written
employment agreement with the Participant, and as a result Participant's
employment is terminated, then to the extent provided in such written employment
agreement the Option shall become fully vested upon such termination of
employment. However, in no event may any Option be exercised by any person after
the Expiration Date.
6. NON-ASSIGNABILITY OF OPTION. Interests in the Option shall not be subject
---------------------------
to sale, transfer, pledge, assignment or alienation other than by will or the
laws of descent and distribution regardless of any interest therein of the
Participant's spouse or such spouse's successor in interest.
7. ADJUSTMENTS UPON SPECIFIED CHANGES. As set forth in Section 4.2 of the
----------------------------------
Plan, upon the occurrence of specified events relating to the Corporation's
stock, adjustments will be made in the number and kind of shares that may be
issuable under an Option to the extent deemed appropriate by the Committee. In
addition, upon the occurrence of specified events relating to the Corporation,
such as its dissolution or liquidation, a reorganization, merger or
consolidation in which it is not the surviving corporation, or upon sale of all
or substantially all of the Corporation's
-20-
<PAGE>
property, unless provision is otherwise made and subject to the provisions of
Section 4.4 of the Plan, the Plan and any outstanding Options will terminate.
8. NO AUTOMATIC ACCELERATION. Options shall not be accelerated unless and
-------------------------
until the Board determines that there shall be an acceleration of Options in
accordance with Section 4.4 of the Plan.
9. PARTICIPANT NOT A STOCKHOLDER. Neither the Participant nor any other
-----------------------------
person entitled to exercise the Option shall have any of the rights or
privileges of a stockholder of the Corporation as to any shares of Stock not
actually issued and delivered to them. No adjustment will be made for dividends
or other rights for which the record date is prior to the date on which such
stock certificate(s) is issued even if such record date is subsequent to the
date upon which notice of exercise was delivered and the tender of payment was
accepted.
10. APPLICATION OF SECURITIES LAWS.
------------------------------
(a) No shares of Stock may be purchased pursuant to the Option unless
and until any then applicable requirements of the Securities and Exchange
Commission and any other regulatory agency, including any state securities law
commissioner having jurisdiction over the Corporation or such issuance, and any
exchange upon which Stock is listed, shall have been fully satisfied. The
Participant represents, agrees and certifies that if the Participant exercises
the Option, in whole or in part, the Participant will acquire the Stock issuable
upon such exercise for the purpose of investment and not with a view to resale
or distribution and that, as a condition to each such exercise, the Participant
will furnish to the Corporation a written statement to such effect, satisfactory
in form and substance to the Corporation.
(b) The Participant understands that the certificate(s) representing the
Stock acquired pursuant to the Option may bear a legend referring to the fact
that the Stock has not been registered under the Securities Act, and has not
been qualified under any state securities law and is subject to certain
restrictions on transfer and other limitations under the Securities Act and
state securities laws with respect to the transfer of such Stock, and the
Corporation may impose stop transfer instructions to implement such limitations,
if applicable. Any person(s) entitled to exercise the Option under the
provisions of Section 6 above shall be bound by and obligated under the
provisions of this Section 10 to the same extent as is the Participant.
(c) The Committee may impose such conditions on an Option or on its
exercise or acceleration or on the payment of any withholding obligation
(including restricting the time of exercise to specified periods) as may be
required to satisfy applicable regulatory requirements.
11. NOTICES. Any request or notice to be given hereunder shall be deemed
-------
given, and any election or exercise to be made or accomplished shall be deemed
made or accomplished, upon actual delivery thereof to the designated recipient,
or three days after deposit thereof in the United States mail, registered,
return receipt requested and postage prepaid, addressed, if to the Participant,
at the address given beneath the Participant's signature set forth below, and if
to the Corporation, at the executive offices of the Corporation.
-21-
<PAGE>
12. EFFECT OF AWARD AGREEMENT. The Award Agreement shall be assumed by, be
-------------------------
binding upon and inure to the benefit of (i) any successor(s) of the Corporation
to the extent provided in Section 4.2(b) of the Plan, and (ii) any Beneficiary
or Personal Representative of the Participant as provided in Section 4.3 of the
Plan.
13. TAX WITHHOLDING. The provisions of Section 4.6 of the Plan are hereby
---------------
incorporated and shall govern any withholding that the Corporation employing the
Participant is required to make with respect to an exercise of the Option, as
well as the Corporation's right to condition a transfer of Class A Common Stock
or Class B Common Stock upon compliance with the applicable withholding
requirements of federal, state and local authorities.
14. TERMS OF PLAN GOVERN. The Option and this Award Agreement are subject
--------------------
to, and the Corporation and the Participant agree to be bound by, all of the
terms and conditions of the Plan. The Participant acknowledges receipt of a
copy of the Plan, which is made a part hereof by this reference. The rights of
the Participant are subject to limitations, adjustments, modifications,
suspension and termination in certain circumstances and upon the occurrence of
certain conditions as set forth in the Plan.
15. LAWS APPLICABLE TO CONSTRUCTION. The Option has been granted, executed
-------------------------------
and delivered as of the day and year first above written, and the
interpretation, performance and enforcement of the Option and this Award
Agreement shall be governed by the laws of the State of Delaware (excluding its
conflicts of law principles).
16. NOTICE OF DISPOSITION. The Participant agrees to notify the Corporation
---------------------
of any sale or other disposition of any shares of Stock received upon exercise
of the Option if such sale or disposition occurs within two years after the
Award Date or within one year after the date of exercise of the Option.
17. COUNTERPARTS. This Award Agreement may be executed and delivered in one
------------
or more counterparts, each of which shall be considered an original but which,
together, shall constitute one and the same document.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
-22-
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Award Agreement to be
executed on its behalf by a duly authorized officer and the Participant has
hereunto set his hand as of the date and year first above written.
IXL ENTERPRISES, INC.
BY:________________________________________
JAMES V. SANDRY, EXECUTIVE VICE PRESIDENT
PARTICIPANT
___________________________________________
[name]
___________________________________________
(Address)
___________________________________________
(City, State, Zip Code)
___________________________________________
(Social Security Number)
-23-
<PAGE>
SCHEDULE I
NUMBER OF SHARES AND EXERCISE PRICE
[__________]
Number of Class B Option Shares Exercise Price Per Share
- ------------------------------- ------------------------
____ $___
-24-
<PAGE>
SCHEDULE II
VESTING OF OPTION PERIOD
[___________]
Award Date to _________ - __%
Award Date to _________ - __%
Award Date to _________ - __%
Award Date to _________ - __%
Award Date to _________ - __%
-25-
<PAGE>
FIRST AMENDMENT TO
1996 STOCK OPTION PLAN
This First Amendment to the 1996 Stock Option Plan, dated as of March 31,
1997 ("First Amendment"), is an amendment of the 1996 Stock Option Plan (the
"Plan") of IXL Holdings, Inc., a Delaware corporation (the "Company").
Capitalized terms used herein without definition shall have the meaning set
forth in the Plan.
R E C I T A L S
- - - - - - - -
A. The Company desires to amend the Plan in certain particulars.
B. The First Amendment has been approved by the Board of Directors and
the Stockholders of the Company in accordance with the terms of the Plan.
NOW, THEREFORE, the Plan is hereby amended as follows:
1. AMENDMENT TO SECTION 2.4. Section 2.4 of the Plan shall be amended by
deleting Section 2.4 in its entirety and substituting the following in lieu
thereof:
"2.4 Stock Subject to the Plan.
-------------------------
The stock to be offered under this Plan shall be shares of the
Company's authorized but unissued Class B Common Stock. The aggregate
amount of Class B Common Stock that may be issued or transferred
pursuant to Awards granted under this Plan shall not exceed 100,000
shares, subject to adjustment as set forth in Section 4.2. If any
Option shall lapse or terminate (either by its terms or as a result of
the repurchase by the Company of such Option) without having been
exercised in full, the unpurchased shares subject thereto shall again
be available for purposes of this Plan."
2. NO FURTHER CHANGES. Except as amended hereby, the Plan shall remain in
full force and effect.
-26-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this First Amendment as
of the date first above written.
IXL HOLDINGS, INC.
/s/ James V. Sandry
---------------------------------
JAMES V. SANDRY, EXECUTIVE VICE
PRESIDENT
ATTEST:
/s/ James S. Altenbach
- ---------------------------------
JAMES S. ALTENBACH, SECRETARY
-27-
<PAGE>
SECOND AMENDMENT TO
1996 STOCK OPTION PLAN
The Second Amendment to the 1996 Stock Option Plan, dated as of October 17,
1997 ("Second Amendment"), is an amendment of the 1996 Stock Option Plan (the
"Plan") of IXL Holdings, Inc., a Delaware corporation (the "Company").
Capitalized terms used herein without definition shall have the meaning set
forth in the Plan.
R E C I T A L S
- - - - - - - -
A. The Company desires to amend the Plan in certain particulars.
B. The Second Amendment has been approved by the Board of Directors and
the Stockholders of the Company in accordance with the terms of the Plan.
NOW, THEREFORE, the Plan is hereby amended as follows:
1. AMENDMENT TO SECTION 1.1(M). Section 1.1(m) of Article I of the Plan
shall be amended by deleting Section 1.1(m) in its entirety, and replacing such
Section 1.1(m) with the following:
"(m) "Eligible Employee" shall mean an officer or key employee of
-----------------
the Company or such other Person as may be designated by the
Stock Option Plan Committee."
2. AMENDMENT TO SECTION 2.4. Section 2.4 of the Plan shall be amended by
deleting Section 2.4 in its entirety and substituting the following in lieu
thereof:
"2.4 Stock Subject to the Plan.
-------------------------
The stock to be offered under this Plan shall be shares of the
Company's authorized but unissued Class B Common Stock. The aggregate
amount of Class B Common Stock that may be issued or transferred
pursuant to Awards granted under this Plan shall not exceed 150,000
shares, subject to adjustment as set forth in Section 4.2. If any
Option shall lapse or terminate (either by its terms or as a result of
the repurchase by the Company of such Option) without having been
exercised in full, the unpurchased shares subject thereto shall again
be available for purposes of this Plan."
-28-
<PAGE>
3. NO FURTHER CHANGES. Except as amended hereby, the Plan shall remain in
full force and effect.
IN WITNESS WHEREOF, the undersigned have executed this Second Amendment as
of the date first above written.
IXL HOLDINGS, INC.
/s/ James V. Sandry
--------------------------------
JAMES V. SANDRY, EXECUTIVE VICE
PRESIDENT
ATTEST:
/s/ James S. Altenbach
- -------------------------------
JAMES S. ALTENBACH, SECRETARY
-29-
<PAGE>
THIRD AMENDMENT TO
THE 1996 STOCK OPTION PLAN
OF IXL HOLDINGS, INC.
This Third Amendment to the 1996 Stock Option Plan, dated as of December
___, 1997 ("Third Amendment"), is an amendment of the 1996 Stock Option Plan
(the "Plan") of IXL Holdings, Inc., a Delaware corporation (the "Company").
Capitalized terms used herein without definition shall have the meaning set
forth in the Plan.
R E C I T A L S
- - - - - - - -
A. The Company desires to amend the Plan in certain particulars.
B. The Third Amendment has been approved by the Board of Directors of the
Company in accordance with the terms of the Plan.
NOW, THEREFORE, the Plan is hereby amended as follows:
1. AMENDMENT TO SECTION 4.4: Section 4.4 of the Plan shall be deleted in
its entirety, and the following shall be inserted in lieu thereof:
"4.4 Acceleration of Options.
-----------------------
The Options shall not be accelerated unless and until the
Board determines that there shall be an acceleration of Options.
Acceleration of Options shall comply with applicable regulatory
requirements, including without limitation, Section 422 of the Code."
2. NO FURTHER CHANGES. Except as amended hereby, the Plan shall remain in
full force and effect.
[SIGNATURES ON FOLLOWING PAGE]
-30-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Third Amendment as
of the date first above written.
iXL HOLDINGS, INC.
/s/ James V. Sandry
--------------------------------
JAMES V. SANDRY, EXECUTIVE VICE
PRESIDENT
ATTEST:
/s/ James S. Altenbach
- -----------------------------
JAMES S. ALTENBACH, SECRETARY
-31-
<PAGE>
FOURTH AMENDMENT TO 1996 STOCK OPTION PLAN
This Fourth Amendment to the 1996 Stock Option Plan, dated as of November
24 , 1998 ("Fourth Amendment"), is an amendment of the 1996 Stock Option Plan
(the "Plan") of iXL Enterprises, Inc., a Delaware corporation (the "Company")
f/k/a IXL Holdings, Inc. Capitalized terms used herein without definition shall
have the meaning set forth in the Plan.
R E C I T A L S
- - - - - - - -
A. The Company desires to amend the Plan in certain particulars.
B. The Fourth Amendment has been approved by the Board of Directors and
the Stockholders of the Company in accordance with the terms of the Plan.
NOW, THEREFORE, the Plan is hereby amended as follows:
1. CERTAIN REFERENCES. All references in the Plan to the Corporation or
to IXL Holdings, Inc. shall be understood to refer to iXL Enterprises, Inc.
2. AMENDMENT TO SECTION 1.1. Section 1.1 of the Plan shall be amended by
renumbering former Sections 1.1(t), (u), (v) and (w) as Sections 1.1(u), (v),
(w) and (x), respectively, and by adding a new Section 1.1(t) as follows:
"(t) "Person" shall mean any individual, corporation,
------
partnership, limited liability company, joint venture, association,
trust or other business entity."
3. AMENDMENT TO SECTION 2.3. Section 2.3 of the Plan shall be amended by
deleting Section 2.3 in its entirety and substituting the following in lieu
thereof:
"2.3 Participation.
-------------
Awards may be granted only to Eligible Employees. An Eligible
Employee who has been granted an award may, if otherwise eligible, be
granted additional Awards if the Committee shall so determine."
4. AMENDMENT TO SECTION 2.4. Section 2.4 of the Plan shall be amended by
deleting Section 2.4 in its entirety and substituting the following in lieu
thereof:
"2.4 Stock Subject to the Plan.
-------------------------
The stock to be offered under this Plan shall be shares of the
Company's authorized but unissued Class B Common Stock. The aggregate
amount of Class B Common Stock that may be issued or transferred
pursuant to Awards granted under this Plan shall not exceed 25,000,000
shares, subject to adjustment as set forth in Section 4.2. If any
-32-
<PAGE>
Option shall lapse or terminate (either by its terms or as a result of
the repurchase by the Company of such Option) without having been
exercised in full, the unpurchased shares subject thereto shall again
be available for purposes of this Plan."
5. AMENDMENT TO SECTION 4.3(a). Section 4.3(a) of the Plan shall be
amended by deleting Section 4.3(a) in its entirety and substituting the
following in lieu thereof:
"4.3 Termination of Employment.
-------------------------
(a) If the Participant's employment by the Company terminates
for any reason including death or disability, then the Committee shall
have the discretion to terminate the Option or any part thereof prior
to the expiration date therefor in the Award Agreement upon thirty
(30) days notice to the Participant; provided, however, that in the
case of Incentive Stock Options, military leave of absence, sick leave
and any other bona fide leave of absence shall not be considered a
termination of employment as long as such leave does not extend beyond
ninety (90) days or if the Participant's reemployment rights are
guaranteed by law (as with certain federal military reservist laws, or
certain state maternity or paternity leave laws) or by contract."
6. NO FURTHER CHANGES. Except as amended hereby, the Plan shall remain in
full force and effect.
[SIGNATURES ON FOLLOWING PAGE]
-33-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Fourth Amendment as
of the date first above written.
iXL ENTERPRISES, INC.
/s/ James V. Sandry
------------------------------------------
James V. Sandry, Executive Vice President
ATTEST:
/s/ James S. Altenbach
- -----------------------------
James S. Altenbach, Secretary
-34-
<PAGE>
FIFTH AMENDMENT TO
1996 STOCK OPTION PLAN
This Fifth Amendment to the 1996 Stock Option Plan, dated as of December
10, 1998 ("Fifth Amendment"), is an amendment of the 1996 Stock Option Plan (the
"Plan") of IXL Enterprises, Inc., a Delaware corporation (the "Company") f/k/a
IXL Holdings, Inc. Capitalized terms used herein without definition shall have
the meaning set forth in the Plan.
R E C I T A L S
- - - - - - - -
A. The Company desires to amend the Plan in certain particulars.
B. The Fifth Amendment has been approved by the Board of Directors and
the Stockholders of the Company in accordance with the terms of the Plan.
NOW, THEREFORE, the Plan is hereby amended as follows:
1. AMENDMENT TO SECTION 1.1(M). Section 1.1(m) of Article I of the Plan
shall be amended by deleting Section 1.1(m) in its entirety, and replacing such
Section 1.1(m) with the following:
"(m) "Eligible Employee" shall mean
any employee of the Company as may be
designated by the Stock Option Plan
Committee."
2. NO FURTHER CHANGES. Except as amended hereby, the Plan shall remain in
full force and effect.
IN WITNESS WHEREOF, the undersigned have executed this Fifth Amendment as
of the date first above written.
IXL ENTERPRISES, INC.
/s/ James V. Sandry
--------------------------------
JAMES V. SANDRY, Executive Vice
President
ATTEST:
/s/ James S. Altenbach
- -----------------------------
JAMES S. ALTENBACH, Secretary
-35-
<PAGE>
EXHIBIT 10.6
I. DEFINITIONS
1.1 Definitions.
-----------
(a) "Award" shall mean an Option, which may be designated as a
-----
Nonqualified Stock Option or an Incentive Stock Option granted under this Plan.
(b) "Award Agreement" shall mean, as the case may be, the Incentive Stock
---------------
Option Award Agreement substantially in the form of Exhibit A attached hereto
---------
and made a part herewith, setting forth the terms of an Award, or the Non-
Qualified Stock Option Award Agreement substantially in the form of Exhibit B
---------
attached hereto and made a part herewith setting forth the terms of an Award.
(c) "Award Date" shall mean the date upon which the Committee took the
----------
action granting an Award or such later date as is prescribed by the Committee.
(d) "Award Period" shall mean the period beginning on an Award Date and
------------
ending on the expiration date of such Award.
(e) "Beneficiary" shall mean the person, persons, trust or trusts entitled
-----------
by will or the laws of descent and distribution to receive the benefits
specified under this Plan in the event of a Participant's death.
(f) "Board" shall mean the Board of Directors of the Corporation.
-----
(g) "Class B Common Stock" shall mean the Class B Common Stock, $.01 par
--------------------
value, of the Corporation.
(h) "Code" shall mean the Internal Revenue Code of 1986, as amended from
----
time to time.
(i) "Commission" shall mean the Securities and Exchange Commission.
----------
(j) "Committee" shall mean the committee appointed by the Board and
---------
consisting of three or more members or if no such committee has been appointed,
the Board.
(k) "Company" shall mean, collectively, the Corporation and its
-------
Subsidiaries.
(l) "Corporation" shall mean iXL Enterprises, Inc., a Delaware
-----------
corporation, and its successors.
<PAGE>
(m) "Eligible Person" shall mean any Person designated by the Committee
---------------
who is not an employee of the Company.
(n) "Event" shall mean approval by the stockholders of the Corporation of
-----
(i) the dissolution or liquidation of the Corporation; (ii) an agreement to
merge or consolidate, or otherwise reorganize, with or into one or more entities
which are not Subsidiaries, as a result of which less than 50% of the
outstanding voting securities of the surviving or resulting entity are, or are
to be, owned by the stockholders (or their affiliates) of the Corporation
immediately prior to such transaction; (iii) the sale of substantially all of
the Corporation's business and/or assets to a person or entity which is not a
Subsidiary or a stockholder (or an affiliate of a stockholder) immediately prior
to such sale; or (iv) a tender offer by a person other than a stockholder (or an
affiliate thereof) of the Corporation) pursuant to which the offeror acquires
more than 50% of the Corporation's outstanding voting securities.
(o) "Fair Market Value shall mean (i) the per share closing sales price of
-----------------
the Class B Common Stock on the date at which Fair Market Value is to be
determined (the "Determination Date") on the national securities exchange having
the greatest volume of trading in the Class B Common Stock during the 30-day
period immediately preceding that time as reported in The Wall Street Journal;
(ii) if the Class B Common Stock is not listed or admitted to trade on any
national securities exchange, the per share closing sales price for the Class B
Common Stock on the Determination Date at which Fair Market Value is to be
determined, as quoted in the National Association of Securities Dealers
Automated Quotation (NASDAQ) National Market Reporting System, or any successor
system, as reported in The Wall Street Journal; (iii) if the Class B Common
Stock is not listed or admitted to trade on any national securities exchange and
is not quoted on the NASDAQ National Market Reporting System, the average of the
per share closing bid and asked sales prices for the Class B Common Stock on the
over-the-counter market on the Determination Date at which Fair Market Value is
to be determined, as quoted on NASDAQ or such other national reporting service,
as reported in The Wall Street Journal; or (iv) if the Class B Common Stock is
not listed or admitted to trade on a national securities exchange, is not quoted
on the NASDAQ National Market Reporting System and if the bid and asked sales
prices for the Class B Common Stock are not furnished by the National
Association of Securities Dealers, Inc. or a similar organization, the Fair
Market Value of a share of Class B Common Stock as of the Determination Date at
which Fair Market Value is to be determined, and established by the Committee
under the Plan based on such relevant facts, which may include opinions of
independent experts or annual appraisals of the fair market value of the
Company, as may be available to the Committee.
(p) "Incentive Stock Option" shall mean an option which is designated as
----------------------
an incentive stock option within the meaning of Section 422 of the Code, the
award of which contains such provisions as are necessary to comply with that
section.
(q) "Nonqualified Stock Option" shall mean an option which is designated
-------------------------
as a Nonqualified Stock Option.
2
<PAGE>
(r) "Option" shall mean an option to purchase Class B Common Stock under
------
this Plan. An Option shall be designated by the Committee as a Nonqualified
Stock Option or an Incentive Stock Option.
(s) "Participant" shall mean an Eligible Person who has been awarded an
-----------
Award.
(t) "Person" shall mean any individual, corporation, partnership, limited
------
liability company, joint venture, association, trust or other business entity.
(u) "Personal Representative" shall mean the person or persons who, upon
-----------------------
the disability or incompetence of a Participant, shall have acquired on behalf
of the Participant by legal proceeding or otherwise the legal power to exercise
the rights and receive the benefits specified in this Plan.
(v) "Plan" shall mean the iXL Enterprises, Inc., 1998 Non-Employee Stock
----
Option Plan, as amended from time to time in accordance herewith.
(w) "Securities Act" shall mean the Securities Act of 1933, as amended.
--------------
(x) "Subsidiary" shall mean any corporation or other entity a majority or
----------
more of whose outstanding voting stock or voting power is beneficially owned
directly or indirectly by the Corporation.
II. THE PLAN
2.1 Purpose.
-------
The purpose of this Plan is to promote the success of the Company by
providing an additional means to attract and retain key personnel through added
long term incentives for high levels of performance and for significant efforts
to improve the financial performance of the Company by granting Awards.
2.2 Administration.
--------------
(a) This Plan shall be administered by the Committee. Action of the
Committee with respect to the administration of this Plan shall be taken
pursuant to a majority vote or the written consent of a majority of its members.
If action by the Committee is taken by written consent, the action shall be
deemed to have been taken at the time specified in the consent or, if none is
specified, at the time of the last signature. The Committee may delegate
administrative functions to individuals who are officers or employees of the
Company.
(b) Subject to the express provisions of this Plan, the Committee
shall have the authority to construe and interpret this Plan and any agreements
defining the rights and obligations
3
<PAGE>
of the Company and Participants under this Plan, to further define the terms
used in this Plan, to prescribe, amend and rescind rules and regulations
relating to the administration of this Plan, to determine the duration and
purposes of leaves of absence which may be granted to Participants without
constituting a termination of their engagement for purposes of this Plan and to
make all other determinations necessary or advisable for the administration of
this Plan. The determinations of the Committee on the foregoing matters shall be
conclusive.
(c) Any action taken by, or inaction of, the Corporation, any
Subsidiary, the Board or the Committee relating to this Plan shall be within the
absolute discretion of that entity or body and shall be conclusive and binding
upon all persons. No member of the Board or Committee, or officer of the
Corporation or Subsidiary, shall be liable for any such action or inaction of
the entity or body, of another person or, except in circumstances involving bad
faith, of himself or herself. Subject only to compliance with the express
provisions hereof, the Board and Committee may act in their absolute discretion
in matters related to this Plan.
2.3 Participation.
-------------
Awards may be granted only to Eligible Persons. An Eligible Person who
has been granted an Award may, if otherwise eligible, be granted additional
Awards if the Committee shall so determine. Officers and Members of the Board
who are not employees of the Company shall be eligible to receive Awards.
2.4 Stock Subject to the Plan.
-------------------------
The stock to be offered under this Plan shall be shares of the
Company's authorized but unissued Class B Common Stock. The aggregate amount of
Class B Common Stock that may be issued or transferred pursuant to Awards
granted under this Plan shall not exceed One Million (1,000,000) shares, subject
to adjustment as set forth in Section 4.2. If any Option shall lapse or
terminate (either by its terms or as a result of the repurchase by the Company
of such Option) without having been exercised in full, the unpurchased shares
subject thereto shall again be available for purposes of this Plan.
2.5 Grant of Options.
----------------
Subject to the express provisions of the Plan, the Committee shall
determine from the class of Eligible Persons those individuals to whom Options
under the Plan shall be granted, the terms of Options (which need not be
identical) and the number of shares of Class B Common Stock subject to each
Option. Each Option shall be subject to the terms and conditions set forth in
the Plan and such other terms and conditions established by the Committee and as
set forth in the Award Agreement as are not inconsistent with the purpose and
provisions of the Plan. The grant of an Option is made on the Award Date.
4
<PAGE>
2.6 Exercise of Options.
-------------------
An Option shall be deemed to be exercised when the Secretary or
Assistant Secretary of the Corporation receives written notice of such exercise
from the Participant, together with payment of the purchase price made in
accordance with Section 3.2. Notwithstanding any other provision of this Plan,
the Committee may impose, by rule or in Award Agreements, such conditions upon
the exercise of Options (including, without limitation, vesting of exercise
rights and conditions limiting the time of exercise to specified periods) as may
be required to satisfy applicable securities laws, regulatory requirements or as
may be deemed necessary or advisable by the Committee. It shall be a condition
to the exercise of any Options that the Eligible Person exercising such Option
execute and become subject to the Stockholder Agreement of the Corporation dated
as of April 30, 1996, as the same may be amended from time to time.
III. OPTIONS
3.1 Grants.
------
One or more Options may be granted to any Eligible Person. Each Option
so granted shall be designated by the Committee as either a Nonqualified Stock
Option or an Incentive Stock Option.
3.2 Option Price.
------------
The purchase price per share of the Class B Common Stock covered by
each Option shall be determined by the Committee, but in the case of Incentive
Stock Options shall not be less than 100% (110% in the case of a Participant who
owns more than 10% of the total combined voting power of all classes of stock of
the Company) of the Fair Market Value of the Class B Common Stock on the date
the Incentive Stock Option is granted. The purchase price of any shares
purchased shall be paid in full at the time of each purchase in one or a
combination of the following methods: (i) in cash, or by certified or cashier's
check payable to the order of the Corporation, (ii) if authorized by the
Committee or specified in the Option being exercised, by a promissory note made
by the Participant in favor of the Corporation, upon the terms and conditions
determined by the Committee, and secured by the Class B Common Stock issuable
upon exercise in compliance with applicable law (including, without limitation,
state corporate law and federal margin requirements), or (iii) if authorized by
the Committee, by shares of Class B Common Stock of the Corporation already
owned by the Participant, provided such shares are publicly traded; provided,
however, the Committee may in its absolute discretion limit the Participant's
ability to exercise an Option by delivering shares, and any shares delivered
which were initially acquired upon exercise of a stock option must have been
owned by the Participant at least six months as of the date of delivery. Shares
of Class B Common Stock used to satisfy the exercise price of an Option shall be
valued at their Fair Market Value on the date of exercise.
5
<PAGE>
3.3 Option Period.
-------------
Each Option and all rights or obligations thereunder shall expire on
such date as shall be determined by the Committee and set forth in the Award
Agreement, but not later than 10 years after the Award Date in the case of an
Incentive Stock Option (five years in the case of a person described in Section
3.5(c)), and shall be subject to earlier termination as hereinafter provided or
as provided in any Award Agreement.
3.4 Exercise of Options.
-------------------
Except as otherwise provided in Section 4.4, an Option may become
exercisable, in whole or in part, on the date or dates specified in the Award
Agreement and thereafter shall remain exercisable until the expiration or
earlier termination of such Option. No Option shall be exercisable except in
respect of whole shares, and fractional share interests shall be disregarded.
Subject to any requirement of law, not less than 10 shares of Class B Common
Stock may be purchased at one time unless the number purchased is the total
number at the time available for purchase under the terms of the Option.
3.5 Limitations on Grant of Incentive Stock Options.
-----------------------------------------------
(a) The aggregate Fair Market Value (determined as of the Award Date)
of the Class B Common Stock for which Incentive Stock Options may first become
exercisable by any Participant during any calendar year under this Plan,
together with that of Class B Common Stock subject to Incentive Stock Options
first exercisable (other than as a result of acceleration pursuant to Section
4.2 or 4.4) by such Participant under any other plan of the Corporation or any
Subsidiary, shall not exceed $100,000.
(b) There shall be imposed in the Award Agreement relating to
Incentive Stock Options such terms and conditions as are required in order that
the Option be an "incentive stock option" as that term is defined in Section 422
of the Code.
(c) No Incentive Stock Option may be granted to any person who, at
the time the Incentive Stock Option is granted, owns shares of stock of the
Corporation or any Subsidiary possessing more than 10% of the total combined
voting power of all classes of stock of the Company, unless the exercise price
of such Option is at least 110% of the Fair Market Value of the stock subject to
the Option and such Option by its terms is not exercisable after the expiration
of five years from the date such Option is granted.
6
<PAGE>
IV. OTHER PROVISIONS
4.1 Rights of Eligible Persons, Participants and Beneficiaries.
----------------------------------------------------------
(a) Status as an Eligible Person shall not be construed as a
commitment that any Award will be made under this Plan to an Eligible Person or
to Eligible Persons generally.
(b) Nothing contained in this Plan (or in Award Agreements or in any
other documents related to this Plan or to Options) shall confer upon any
Eligible Person or Participant any right to continue any business relationship
with the Company or constitute any contract or agreement of engagement (as an
employee, consultant or otherwise), or interfere in any way with the right of
the Company to reduce such person's compensation or to terminate the engagement
of such Eligible Person or Participant, with or without cause, but nothing
contained in this Plan or any document related thereto shall affect any other
contractual right of any Eligible Person or Participant.
(c) Other than by will or the laws of descent and distribution, no
interest in this Plan or in any Option shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge and any such attempted action shall be void and no such benefit or
interest shall be, in any manner, liable for, or subject to, debts, contracts,
liabilities, engagements or torts of any Eligible Person, Participant or
Beneficiary. The Committee shall disregard any attempted transfer, assignment or
other alienation prohibited by the preceding sentence and shall pay or deliver
such cash or shares of Class B Common Stock in accordance with the provisions of
this Plan. Further, any shares of Class B Common Stock purchased upon the
exercise of any Option shall be subject to the Second Amended and Restated
Stockholders' Agreement of the Company dated December 17, 1997, as the same may
be amended from time to time.
(d) No Participant, Beneficiary or other person shall have any right,
title or interest in any fund or in any specific asset (including shares of
Class B Common Stock) of the Company by reason of any Option granted hereunder.
Neither the provisions of this Plan (or of any documents related hereto), nor
the creation or adoption of this Plan, nor any action taken pursuant to the
provisions of this Plan shall create, or be construed to create, a trust of any
kind or a fiduciary relationship between the Company and any Participant,
Beneficiary or other person. To the extent that a Participant, Beneficiary or
other person acquires a right to receive an Option hereunder, such right shall
be no greater than the right of any unsecured general creditor of the Company.
7
<PAGE>
4.2 Adjustments Upon Changes in Capitalization.
------------------------------------------
(a) If the outstanding shares of Class B Common Stock are increased,
decreased or changed into, or exchanged for, a different number or kind of
shares or securities of the Corporation through a reorganization or merger in
which the Corporation is the surviving entity, or through a combination,
recapitalization, reclassification, stock split, stock dividend, stock
consolidation or otherwise, an appropriate adjustment shall be made in the
number and kind of shares that may be issued pursuant to Options. A
corresponding adjustment to the consideration payable with respect to Options
granted prior to any such change shall also be made. Any such adjustment,
however, shall be made without change in the total payment, if any, applicable
to the portion of the Option not exercised but with a corresponding adjustment
in the price for each share.
(b) Upon the dissolution or liquidation of the Corporation, or upon a
reorganization, merger or consolidation of the Corporation with one or more
corporations as a result of which the Corporation is not the surviving
corporation, the Plan shall terminate, and any outstanding Options shall,
subject to the provisions of Section 4.4, terminate and be forfeited.
Notwithstanding the foregoing, the Committee may provide in writing in
connection with, or in contemplation of, any such transaction for any or all of
the following alternatives (separately or in combinations): (i) for the
assumption by the successor corporation of the Options theretofore granted or
the substitution by such corporation for such Options of Options covering the
stock of the successor corporation, or a parent or subsidiary thereof, with
appropriate adjustments as to the number and kind of shares and prices; (ii) for
the continuance of the Plan by such successor corporation in which event the
Plan and the Options shall continue in the manner and under the terms so
provided; or (iii) for the payment in cash or shares of Class B Common Stock in
lieu of and in complete satisfaction of such Awards.
(c) All determinations under this Section 4.2 shall be made by the
Committee with the purpose of neither enlarging nor diminishing the rights or
obligations hereunder or under any then outstanding Option. In adjusting Options
to reflect the changes described in this Section 4.2, or in determining that no
such adjustment is necessary, the Committee may rely upon the advice of counsel
and accountants of the Corporation, and the determination of the Committee shall
be conclusive. No fractional shares of stock shall be issued under this Plan on
account of any such adjustment.
8
<PAGE>
4.3 Termination of Engagement.
-------------------------
(a) If a Participant is engaged by the Company as an independent
contractor and such Participant ceases to have a business relationship with the
Company, either as an independent contractor or employee of the Company, for any
reason including, death or disability, then the Committee shall have the
discretion to terminate the Option or any part thereof prior to the expiration
date therefor in the Award Agreement upon thirty (30) days notice to the
Participant; provided, however, that in the case of Incentive Stock Options,
military leaves of absence, sick leave and any other bona fide leaves of absence
shall not be considered a termination of such relationship as long as such leave
does not extend beyond 90 days or if the Participant's reemployment rights are
guaranteed by law (as with certain federal military reservist laws, certain
state maternity or paternity leave laws) or by contract.
(b) If a Participant is engaged by the Company as an independent
contractor and such Participant ceases to have a business relationship with the
Company, either as an independent contractor or employee of the Company, as a
result of disability, the Participant or Participant's Personal Representative
may subject to Section 4.3(a) exercise any Option to the extent it shall have
become exercisable; provided, however, that in the case of Incentive Stock
Options, the Participant or Participant's Personal Representative must exercise
an Option to the extent it shall have become exercisable within one year of the
termination of such relationship.
(c) If a Participant is engaged by the Company as an independent
contractor and such Participant ceases to have a business relationship with the
Company, either as an independent contractor or employee of the Company, as a
result of death while the Participant is so engaged or employed by the Company
(or in the case of Incentive Stock Options was last engaged or employed by the
Company within three months before his death), the Participant's Option shall
subject to Section 4.3(a) be exercisable by the Participant's Beneficiary to the
extent such Option was exercisable immediately prior to the date of death (or
earlier termination).
(d) Notwithstanding the foregoing, in the event that the business
relationship between the Participant and the Company is terminated for any
reason, other than a termination for cause, the Committee may, in its discretion
and in connection with such termination, increase the portion of the
Participant's Option available to the Participant, or Participant's Beneficiary
or Personal Representative, as the case may be, upon such terms as the Committee
shall determine.
(e) If an entity ceases to be a Subsidiary, such action shall be
deemed for purposes of this Section 4.3 to be a termination of the business
relationship between the Company and each Eligible Person and Participant
engaged (as an independent contractor or employee) by that entity.
9
<PAGE>
4.4 Acceleration of Options.
-----------------------
The Options shall not be accelerated unless and until the Board
determines that there shall be an acceleration of Options. Acceleration of
Options shall comply with applicable regulatory requirements, including without
limitation, Section 422 of the Code.
4.5 Government Regulations.
----------------------
This Plan, the granting of Options under this Plan and the issuance or
transfer of shares of Class B Common Stock (and/or the payment of money)
pursuant thereto are subject to all applicable federal and state laws, rules and
regulations and to such approvals by any regulatory or governmental agency
(including without limitation "no action" positions of the Commission) which
may, in the opinion of counsel for the Corporation, be necessary or advisable in
connection therewith. Without limiting the generality of the foregoing, no
Options may be granted under this Plan, and no shares shall be issued by the
Corporation, pursuant to any such Option, unless and until, in each such case,
all legal requirements applicable to the issuance have, in the opinion of
counsel to the Corporation, been complied with. In connection with any stock
issuance or transfer, the person acquiring the shares shall, if requested by the
Corporation, give assurances satisfactory to counsel to the Corporation in
respect of such matters as the Corporation may deem desirable to assure
compliance with all applicable legal requirements.
4.6 Tax Withholding.
---------------
Upon the disposition by a Participant or other person of shares of
Class B Common Stock acquired pursuant to the exercise of an Incentive Stock
Option prior to satisfaction of the holding period requirements of Section 422
of the Code, or upon the exercise of a Nonqualified Stock Option, the Company
shall have the right to require such Participant or such other person to pay by
cash, or certified or cashier's check payable to the Company, the amount of any
taxes which the Company may be required to withhold with respect to such
transactions and the issuance of any shares of Class B Common Stock pursuant to
the exercise of a Nonqualified Stock Option will be subject to the Participant's
(or other person's) satisfaction of all such tax withholding obligations.
4.7 Amendment, Termination, and Suspension.
--------------------------------------
(a) The Board may, at any time, terminate or, from time to time,
amend, modify or suspend this Plan (or any part hereof). In addition, the
Committee may, from time to time, amend or modify any provision of this Plan
except Section 4.4 and, with the consent of the Participant, make such
modifications of the terms and conditions of such Participant's Option as it
shall deem advisable. No Options may be granted during any suspension of this
Plan or after its termination.
(b) If an amendment would (i) increase the aggregate number of shares
which may be issued under this Plan, or (ii) modify the requirements of
eligibility for participation in this Plan, the amendment shall be approved by
the Board or the Committee and by a majority of the
10
<PAGE>
stockholders entitled to vote thereon.
(c) In the case of Options issued before the effective date of any
amendment, suspension or termination of this Plan, such amendment, suspension or
termination of the Plan shall not, without specific action of the Board and
consent of the Participant, in any way modify, amend, alter or impair any rights
or obligations under any Option previously granted under the Plan.
4.8 Privileges of Stock Ownership; Nondistributive Intent.
-----------------------------------------------------
A Participant shall not be entitled to the privilege of stock
ownership as to any shares of Class B Common Stock not actually issued to him.
Upon the issuance and transfer of shares to the Participant, unless a
registration statement is in effect under the Securities Act, relating to such
issued and transferred Class B Common Stock and there is available for delivery
a prospectus meeting the requirements of Section 10 of the Securities Act, the
Class B Common Stock may be issued and transferred to the Participant only if he
represents and warrants in writing to the Corporation that the shares are being
acquired for investment and not with a view to the resale or distribution
thereof and there is an available exemption from the federal and applicable
state securities laws. No shares shall be issued and transferred unless and
until there shall have been full compliance with any the applicable regulatory
requirements (including those of exchanges upon which any Class B Common Stock
of the Corporation may be listed).
4.9 Effective Date of the Plan.
--------------------------
This Plan shall be effective upon its approval by the Board.
4.10 Term of the Plan.
----------------
Unless previously terminated by the Board, this Plan shall terminate
at the close of business on the tenth anniversary of the date on which this Plan
is approved by the Board, and no Options shall be granted under it thereafter,
but such termination shall not affect any Option theretofore granted.
4.11 Governing Law.
-------------
This Plan and the documents evidencing Options and all other related
documents shall be governed by, and construed in accordance with, the laws of
the State of Delaware. If any provision shall be held by a court of competent
jurisdiction to be invalid and unenforceable, the remaining provisions of this
Plan shall continue to be fully effective.
11
<PAGE>
EXHIBIT A
INCENTIVE STOCK
OPTION AWARD AGREEMENT
THIS AWARD AGREEMENT is dated as of the ___ day of _______, 1998, by and
between iXL Enterprises, Inc., a Delaware corporation (the "Corporation") f/k/a
IXL Holdings, Inc., and _______________ (the "Participant").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, on ___________, 1998, pursuant to the Corporation's 1998 Non-Employee
Stock Option Plan (hereinafter, the term "Plan"; and such other capitalized
terms as used herein without definition having the meaning ascribed to them in
the Plan), the Committee of the Corporation's Board of Directors (the
"Committee") has granted to the Participant, effective as of __________, 1998
(the "Award Date"), an incentive stock option ("Option" or "Award") to purchase
all or any part of the total number of shares of Class B Common Stock, $.01 par
value of the Corporation ("Stock") set forth on Schedule I hereto upon the terms
and conditions hereinafter set forth; and
WHEREAS, the Participant and the Corporation desire to enter into a written
agreement in accordance with the Plan;
NOW THEREFORE, in consideration of the mutual promises and covenants made
herein and the mutual benefits to be derived herefrom, the parties hereto agree
as follows:
1. GRANT OF OPTION. The Corporation has granted to the Participant, as a
---------------
matter of separate inducement and agreement in connection with the business
relationship between the Corporation and the Participant, and not in lieu of any
compensation for their services, the right and option to purchase, in accordance
with the Plan and subject to the terms and conditions thereof and those
hereinafter set forth, all or any part of the total number of shares of Stock
set forth on Schedule I attached hereto and incorporated herein ("Schedule I"),
at the exercise price per share set forth on Schedule I (the "Price"),
exercisable from time to time subject to the provisions hereof prior to the
close of business on __________ (the "Expiration Date"). The Price has been
determined by the Committee in accordance with Section 3.2 of the Plan.
2. EXERCISABILITY OF OPTION. Except as otherwise provided herein, the Option
------------------------
may be exercised in accordance with the vesting schedule set forth on Schedule
II attached hereto and incorporated herein ("Schedule II"), and the Option may
only be exercised at any given time to the extent that the Option has vested in
accordance with Schedule II; provided, however, that the Option may be exercised
only prior to the Expiration Date, and may not be exercised as to less than 10
shares of Stock at any one time unless the number of shares purchased is the
total number at the time available for purchase under the Option. Furthermore,
the Option may be exercised only after the Stock into which the Option is
exercisable has been registered under the Securities Act of 1933, as amended
(the "Securities Act"). The Corporation will register such Stock under the
Securities Act no later than the sixth anniversary of the date of grant; and in
any event, notwithstanding the
<PAGE>
preceding sentence, the Option may be exercised after such sixth anniversary.
The Option may be exercised only as to whole shares; fractional share interests
shall be disregarded except that they may be accumulated. A condition to the
exercise of any Option shall be the execution by the Participant of the
Corporation's Second Amended and Restated Stockholders' Agreement dated December
17, 1997, as the same may be amended from time to time.
3. METHOD OF EXERCISE AND PAYMENT. Each exercise of any part of the Option
------------------------------
shall be by means of written notice of exercise duly delivered to the
Corporation, specifying the number of whole shares of Stock with respect to
which the Option is being exercised, together with any written statements
required pursuant to Section 10 below and payment of the Price in full (i) in
cash or by certified or cashier's check payable to the order of the Corporation,
(ii) if authorized by the Committee, by a promissory note made by the
Participant in favor of the Corporation, upon the terms and conditions
determined by the Committee, and secured by the Stock issuable upon exercise in
compliance with applicable law (including state corporate law and federal margin
requirements), or (iii) if authorized by the Committee and there is a public
market for the Stock, by delivery of shares of Stock already owned by the
Participant for at least six months.
4. CONTINUANCE OF RELATIONSHIP. Nothing contained herein or in the Plan
--------------------------
shall confer upon the Participant any right to continue in any business
relationship with the Corporation, or any subsidiary or other affiliate thereof,
or constitute any contract or agreement of engagement or employment. Nothing
contained herein or in the Plan shall interfere in any way with the right of the
Corporation to (i) terminate its relationship, if any, with the Participant, or
(ii) reduce any compensation received by the Participant from the rate in
existence on the Award Date; provided that nothing herein shall modify any
written agreement as may now exist or hereinafter be entered into between
Participant and the Corporation.
5. EFFECT OF TERMINATION OF RELATIONSHIP. If the Participant is engaged on
-------------------------------------
the date hereof as an independent contractor by the Corporation, or by any
subsidiary or other affiliate thereof, and later ceases to have a business
relationship with the Corporation, or any subsidiary or other affiliate thereof,
either as an independent contractor or employee of any such entity, for any
reason other than breach by the Corporation of any written agreement in effect
between the Participant and the Corporation, the Option shall terminate to the
extent not vested. Notwithstanding the vesting schedule in Schedule II, if the
Corporation has materially breached any written agreement with the Participant,
and as a result Participant's relationship with the Corporation or any
subsidiary or other affiliate thereof is terminated, then to the extent provided
in such written agreement the Option shall become fully vested upon such
termination of relationship. However, in no event may any Option be exercised
by any person after the Expiration Date.
6. NON-ASSIGNABILITY OF OPTION. Interests in the Option shall not be subject
---------------------------
to sale, transfer, pledge, assignment or alienation other than by will or the
laws of descent and distribution regardless of any interest therein of the
Participant's spouse or such spouse's successor in interest.
7. ADJUSTMENTS UPON SPECIFIED CHANGES. As set forth in Section 4.2 of the
----------------------------------
Plan, upon the occurrence of specified events relating to the Corporation's
stock, adjustments will be made in the number and kind of shares that may be
issuable under an Option to the extent deemed appropriate by the Committee. In
addition, upon the occurrence of specified events relating to the
2
<PAGE>
Corporation, such as its dissolution or liquidation, a reorganization, merger or
consolidation in which it is not the surviving corporation, or upon sale of all
or substantially all of the Corporation's property, unless provision is
otherwise made and subject to the provisions of Section 4.4 of the Plan, the
Plan and any outstanding Options will terminate.
8. NO AUTOMATIC ACCELERATION. Options shall not be accelerated unless and
-------------------------
until the Board determines that there shall be an acceleration of Options in
accordance with Section 4.4 of the Plan.
9. PARTICIPANT NOT A STOCKHOLDER. Neither the Participant nor any other
-----------------------------
person entitled to exercise the Option shall have any of the rights or
privileges of a stockholder of the Corporation as to any shares of Stock not
actually issued and delivered to them. No adjustment will be made for dividends
or other rights for which the record date is prior to the date on which such
stock certificate(s) is issued even if such record date is subsequent to the
date upon which notice of exercise was delivered and the tender of payment was
accepted.
10. APPLICATION OF SECURITIES LAWS.
------------------------------
(a) No shares of Stock may be purchased pursuant to the Option unless and
until any then applicable requirements of the Securities and Exchange Commission
and any other regulatory agency, including any state securities law commissioner
having jurisdiction over the Corporation or such issuance, and any exchange upon
which Stock is listed, shall have been fully satisfied. The Participant
represents, agrees and certifies that if the Participant exercises the Option,
in whole or in part, the Participant will acquire the Stock issuable upon such
exercise for the purpose of investment and not with a view to resale or
distribution and that, as a condition to each such exercise, the Participant
will furnish to the Corporation a written statement to such effect, satisfactory
in form and substance to the Corporation.
(b) The Participant understands that the certificate(s) representing the
Stock acquired pursuant to the Option may bear a legend referring to the fact
that the Stock has not been registered under the Securities Act, and has not
been qualified under any state securities law and is subject to certain
restrictions on transfer and other limitations under the Securities Act and
state securities laws with respect to the transfer of such Stock, and the
Corporation may impose stop transfer instructions to implement such limitations,
if applicable. Any person(s) entitled to exercise the Option under the
provisions of Section 6 above shall be bound by and obligated under the
provisions of this Section 10 to the same extent as is the Participant.
(c) The Committee may impose such conditions on an Option or on its
exercise or acceleration or on the payment of any withholding obligation
(including restricting the time of exercise to specified periods) as may be
required to satisfy applicable regulatory requirements.
11. NOTICES. Any request or notice to be given hereunder shall be deemed
-------
given, and any election or exercise to be made or accomplished shall be deemed
made or accomplished, upon actual delivery thereof to the designated recipient,
or three days after deposit thereof in the United States mail, registered,
return receipt requested and postage prepaid, addressed, if to the Participant,
3
<PAGE>
at the address given beneath the Participant's signature set forth below, and if
to the Corporation, at the executive offices of the Corporation.
12. EFFECT OF AWARD AGREEMENT. The Award Agreement shall be assumed by, be
-------------------------
binding upon and inure to the benefit of (i) any successor(s) of the Corporation
to the extent provided in Section 4.2(b) of the Plan, and (ii) any Beneficiary
or Personal Representative of the Participant as provided in Section 4.3 of the
Plan.
13. TAX WITHHOLDING. The provisions of Section 4.6 of the Plan are hereby
---------------
incorporated and shall govern any withholding that the Corporation employing the
Participant is required to make with respect to an exercise of the Option, as
well as the Corporation's right to condition a transfer of Class A Common Stock
or Class B Common Stock upon compliance with the applicable withholding
requirements of federal, state and local authorities.
14. TERMS OF PLAN GOVERN. The Option and this Award Agreement are subject
--------------------
to, and the Corporation and the Participant agree to be bound by, all of the
terms and conditions of the Plan. The Participant acknowledges receipt of a
copy of the Plan, which is made a part hereof by this reference. The rights of
the Participant are subject to limitations, adjustments, modifications,
suspension and termination in certain circumstances and upon the occurrence of
certain conditions as set forth in the Plan.
15. LAWS APPLICABLE TO CONSTRUCTION. The Option has been granted, executed
-------------------------------
and delivered as of the day and year first above written, and the
interpretation, performance and enforcement of the Option and this Award
Agreement shall be governed by the laws of the State of Delaware (excluding its
conflicts of law principles).
16. NOTICE OF DISPOSITION. The Participant agrees to notify the Corporation
---------------------
of any sale or other disposition of any shares of Stock received upon exercise
of the Option if such sale or disposition occurs within two years after the
Award Date or within one year after the date of exercise of the Option.
17. COUNTERPARTS. This Award Agreement may be executed and delivered in one
------------
or more counterparts, each of which shall be considered an original but which,
together, shall constitute one and the same document.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
4
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Award Agreement to be
executed on its behalf by a duly authorized officer and the Participant has
hereunto set his hand as of the date and year first above written.
IXL ENTERPRISES, INC.
BY: _________________________________________
JAMES V. SANDRY, EXECUTIVE VICE PRESIDENT
PARTICIPANT
___________________________________________
[name]
___________________________________________
(Address)
___________________________________________
(City, State, Zip Code)
___________________________________________
(Social Security Number)
5
<PAGE>
SCHEDULE I
NUMBER OF SHARES AND EXERCISE PRICE
[__________]
Number of Class B Option Shares Exercise Price Per Share
------------------------------- ------------------------
____ $____
6
<PAGE>
SCHEDULE II
VESTING OF OPTION PERIOD
[___________]
Award Date to _________ - __%
Award Date to _________ - __%
Award Date to _________ - __%
Award Date to _________ - __%
Award Date to _________ - __%
7
<PAGE>
EXHIBIT B
NON-QUALIFIED STOCK
OPTION AWARD AGREEMENT
THIS AWARD AGREEMENT is dated as of the ___ day of _______, 1998, by and
between iXL Enterprises, Inc., a Delaware corporation (the "Corporation") f/k/a
IXL Holdings, Inc., and _______________ (the "Participant").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, on ___________, 1998, pursuant to the Corporation's 1998 Non-Employee
Stock Option Plan (hereinafter, the term "Plan"; and such other capitalized
terms as used herein without definition having the meaning ascribed to them in
the Plan), the Committee of the Corporation's Board of Directors (the
"Committee") has granted to the Participant, effective as of __________, 1998
(the "Award Date"), a non-qualified stock option ("Option" or "Award") to
purchase all or any part of the total number of shares of Class B Common Stock,
$.01 par value of the Corporation ("Stock") set forth on Schedule I hereto upon
the terms and conditions hereinafter set forth; and
WHEREAS, the Participant and the Corporation desire to enter into a written
agreement in accordance with the Plan;
NOW THEREFORE, in consideration of the mutual promises and covenants made
herein and the mutual benefits to be derived herefrom, the parties hereto agree
as follows:
1. GRANT OF OPTION. The Corporation has granted to the Participant, as a
---------------
matter of separate inducement and agreement in connection with the business
relationship between the Corporation and Participant, and not in lieu of any
compensation for their services, the right and option to purchase, in accordance
with the Plan and subject to the terms and conditions thereof and those
hereinafter set forth, all or any part of the total number of shares of Stock
set forth on Schedule I attached hereto and incorporated herein ("Schedule I"),
at the exercise price per share set forth on Schedule I (the "Price"),
exercisable from time to time subject to the provisions hereof prior to the
close of business on __________ (the "Expiration Date"). The Price has been
determined by the Committee in accordance with Section 3.2 of the Plan.
2. EXERCISABILITY OF OPTION. Except as otherwise provided herein, the Option
------------------------
may be exercised in accordance with the vesting schedule set forth on Schedule
II attached hereto and incorporated herein ("Schedule II"), and the Option may
only be exercised at any given time to the extent that the Option has vested in
accordance with Schedule II; provided, however, that the Option may be exercised
only prior to the Expiration Date, and may not be exercised as to less than 10
shares of Stock at any one time unless the number of shares purchased is the
total number at the time available for purchase under the Option. Furthermore,
the Option may be exercised only after the Stock into which the Option is
exercisable has been registered under the Securities Act of 1933, as amended
(the "Securities Act"). The Corporation will register such Stock under the
Securities Act no later than the sixth anniversary of the date of grant; and in
any event, notwithstanding the
<PAGE>
preceding sentence, the Option may be exercised after such sixth anniversary.
The Option may be exercised only as to whole shares; fractional share interests
shall be disregarded except that they may be accumulated. A condition to the
exercise of any Option shall be the execution by the Participant of the
Corporation's Second Amended and Restated Stockholders' Agreement dated December
17, 1997, as the same may be amended from time to time.
3. METHOD OF EXERCISE AND PAYMENT. Each exercise of any part of the Option
------------------------------
shall be by means of written notice of exercise duly delivered to the
Corporation, specifying the number of whole shares of Stock with respect to
which the Option is being exercised, together with any written statements
required pursuant to Section 10 below and payment of the Price in full (i) in
cash or by certified or cashier's check payable to the order of the Corporation,
(ii) if authorized by the Committee, by a promissory note made by the
Participant in favor of the Corporation, upon the terms and conditions
determined by the Committee, and secured by the Stock issuable upon exercise in
compliance with applicable law (including state corporate law and federal margin
requirements), or (iii) if authorized by the Committee and there is a public
market for the Stock, by delivery of shares of Stock already owned by the
Participant for at least six months.
4. CONTINUANCE OF RELATIONSHIP. Nothing contained herein or in the Plan
---------------------------
shall confer upon the Participant any right to continue in any business
relationship with the Corporation, or any subsidiary or other affiliate thereof,
or constitute any contract or agreement of engagement or employment. Nothing
contained herein or in the Plan shall interfere in any way with the right of the
Corporation to (i) terminate its relationship, if any, with the Participant, or
(ii) reduce any compensation received by the Participant from the rate in
existence on the Award Date; provided that nothing herein shall modify any
written agreement as may now exist or hereinafter be entered into between
Participant and the Corporation.
5. EFFECT OF TERMINATION OF RELATIONSHIP. If the Participant is engaged on
-------------------------------------
the date hereof as an independent contractor by the Corporation, or by any
subsidiary or other affiliate thereof, and later ceases to have a business
relationship with the Corporation, or any subsidiary or other affiliate thereof,
as either an independent contractor or an employee of any such entity, for any
reason other than breach by the Corporation of any written agreement in effect
between the Participant and the Corporation, the Option shall terminate to the
extent not vested. Notwithstanding the vesting schedule in Schedule II, if the
Corporation has materially breached any written agreement with the Participant,
and as a result Participant's relationship with the Corporation or any
subsidiary or other affiliate thereof is terminated, then to the extent provided
in such written agreement the Option shall become fully vested upon such
termination of relationship. However, in no event may any Option be exercised
by any person after the Expiration Date.
6. NON-ASSIGNABILITY OF OPTION. Interests in the Option shall not be subject
---------------------------
to sale, transfer, pledge, assignment or alienation other than by will or the
laws of descent and distribution regardless of any interest therein of the
Participant's spouse or such spouse's successor in interest.
7. ADJUSTMENTS UPON SPECIFIED CHANGES. As set forth in Section 4.2 of the
----------------------------------
Plan, upon the occurrence of specified events relating to the Corporation's
stock, adjustments will be made in the number and kind of shares that may be
issuable under an Option to the extent deemed appropriate by the Committee. In
addition, upon the occurrence of specified events relating to the
2
<PAGE>
Corporation, such as its dissolution or liquidation, a reorganization, merger or
consolidation in which it is not the surviving corporation, or upon sale of all
or substantially all of the Corporation's property, unless provision is
otherwise made and subject to the provisions of Section 4.4 of the Plan, the
Plan and any outstanding Options will terminate.
8. NO AUTOMATIC ACCELERATION. Options shall not be accelerated unless and
-------------------------
until the Board determines that there shall be an acceleration of Options in
accordance with Section 4.4 of the Plan.
9. PARTICIPANT NOT A STOCKHOLDER. Neither the Participant nor any other
-----------------------------
person entitled to exercise the Option shall have any of the rights or
privileges of a stockholder of the Corporation as to any shares of Stock not
actually issued and delivered to them. No adjustment will be made for dividends
or other rights for which the record date is prior to the date on which such
stock certificate(s) is issued even if such record date is subsequent to the
date upon which notice of exercise was delivered and the tender of payment was
accepted.
10. APPLICATION OF SECURITIES LAWS.
------------------------------
(a) No shares of Stock may be purchased pursuant to the Option unless and
until any then applicable requirements of the Securities and Exchange Commission
and any other regulatory agency, including any state securities law commissioner
having jurisdiction over the Corporation or such issuance, and any exchange upon
which Stock is listed, shall have been fully satisfied. The Participant
represents, agrees and certifies that if the Participant exercises the Option,
in whole or in part, the Participant will acquire the Stock issuable upon such
exercise for the purpose of investment and not with a view to resale or
distribution and that, as a condition to each such exercise, the Participant
will furnish to the Corporation a written statement to such effect, satisfactory
in form and substance to the Corporation.
(b) The Participant understands that the certificate(s) representing the
Stock acquired pursuant to the Option may bear a legend referring to the fact
that the Stock has not been registered under the Securities Act, and has not
been qualified under any state securities law and is subject to certain
restrictions on transfer and other limitations under the Securities Act and
state securities laws with respect to the transfer of such Stock, and the
Corporation may impose stop transfer instructions to implement such limitations,
if applicable. Any person(s) entitled to exercise the Option under the
provisions of Section 6 above shall be bound by and obligated under the
provisions of this Section 10 to the same extent as is the Participant.
(c) The Committee may impose such conditions on an Option or on its
exercise or acceleration or on the payment of any withholding obligation
(including restricting the time of exercise to specified periods) as may be
required to satisfy applicable regulatory requirements.
11. NOTICES. Any request or notice to be given hereunder shall be deemed
-------
given, and any election or exercise to be made or accomplished shall be deemed
made or accomplished, upon actual delivery thereof to the designated recipient,
or three days after deposit thereof in the United States mail, registered,
return receipt requested and postage prepaid, addressed, if to the Participant,
3
<PAGE>
at the address given beneath the Participant's signature set forth below, and if
to the Corporation, at the executive offices of the Corporation.
12. EFFECT OF AWARD AGREEMENT. The Award Agreement shall be assumed by, be
-------------------------
binding upon and inure to the benefit of (i) any successor(s) of the Corporation
to the extent provided in Section 4.2(b) of the Plan, and (ii) any Beneficiary
or Personal Representative of the Participant as provided in Section 4.3 of the
Plan.
13. TAX WITHHOLDING. The provisions of Section 4.6 of the Plan are hereby
---------------
incorporated and shall govern any withholding that the Corporation employing the
Participant is required to make with respect to an exercise of the Option, as
well as the Corporation's right to condition a transfer of Class A Common Stock
or Class B Common Stock upon compliance with the applicable withholding
requirements of federal, state and local authorities.
14. TERMS OF PLAN GOVERN. The Option and this Award Agreement are subject
--------------------
to, and the Corporation and the Participant agree to be bound by, all of the
terms and conditions of the Plan. The Participant acknowledges receipt of a
copy of the Plan, which is made a part hereof by this reference. The rights of
the Participant are subject to limitations, adjustments, modifications,
suspension and termination in certain circumstances and upon the occurrence of
certain conditions as set forth in the Plan.
15. LAWS APPLICABLE TO CONSTRUCTION. The Option has been granted, executed
-------------------------------
and delivered as of the day and year first above written, and the
interpretation, performance and enforcement of the Option and this Award
Agreement shall be governed by the laws of the State of Delaware (excluding its
conflicts of law principles).
16. NOTICE OF DISPOSITION. The Participant agrees to notify the Corporation
---------------------
of any sale or other disposition of any shares of Stock received upon exercise
of the Option if such sale or disposition occurs within two years after the
Award Date or within one year after the date of exercise of the Option.
17. COUNTERPARTS. This Award Agreement may be executed and delivered in one
------------
or more counterparts, each of which shall be considered an original but which,
together, shall constitute one and the same document.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
4
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Award Agreement to be
executed on its behalf by a duly authorized officer and the Participant has
hereunto set his hand as of the date and year first above written.
IXL ENTERPRISES, INC.
BY: ______________________________________
JAMES V. SANDRY, EXECUTIVE VICE PRESIDENT
PARTICIPANT
___________________________________________
[name]
___________________________________________
(Address)
___________________________________________
(City, State, Zip Code)
___________________________________________
(Social Security Number)
5
<PAGE>
SCHEDULE I
NUMBER OF SHARES AND EXERCISE PRICE
[__________]
Number of Class B Option Shares Exercise Price Per Share
- ------------------------------- ------------------------
____ $____
6
<PAGE>
SCHEDULE II
VESTING OF OPTION PERIOD
[___________]
Award Date to _________ - __%
Award Date to _________ - __%
Award Date to _________ - __%
Award Date to _________ - __%
Award Date to _________ - __%
7
<PAGE>
Exhibit 10.7
iXL ENTERPRISES, INC.
1999 Employee Stock Option Plan
1. Purposes.
The purpose of the iXL Enterprises, Inc. 1999 Employee Stock Option Plan
(the "Plan") is to foster and promote the long-term financial success of the
Company and materially increase shareholder value by (a) motivating superior
-
performance by means of performance-related incentives, (b) encouraging and
-
providing for the acquisition of an ownership interest in the Company by
Employees and (c) enabling the Company to attract and retain the services of an
-
outstanding management team upon whose judgment, interest and special effort the
successful conduct of its operations is largely dependent.
2. Definitions.
(a) Certain Definitions. Capitalized terms used herein without
-------------------
definition shall have the respective meanings set forth below:
"Act" means the Securities Exchange Act of 1934, as amended.
---
"Board" means the Board of Directors of the Company.
-----
"Cause" means (i) the willful failure by the Participant (other than due to
----- -
physical or mental illness) to perform substantially his duties as an
employee of the Company or any Subsidiary after reasonable notice to the
Participant of such failure, (ii) the Participant's engaging in serious
--
misconduct that is injurious to the Company or any Subsidiary, (iii) the
---
Participant's having been convicted of, or entered a plea of nolo contendere
---- ----------
to, a crime that constitutes a felony or (iv) the breach by the Participant
of any written covenant or agreement with the Company or any Subsidiary not
to disclose any information pertaining to the Company or any Subsidiary or
not to compete or interfere with the Company or any Subsidiary.
"Change in Control" means the occurrence of any of the following events:
-----------------
(1) the members of the Board at the beginning of any consecutive
twenty-four calendar month period (the "Incumbent Directors") cease for
-------------------
any reason to constitute at least a majority of the members of the Board,
provided
<PAGE>
that any director whose election, or nomination for election by
the Company's stockholders, was approved by a vote of at least a majority
of the members of the Board then still in office who were members of the
Board at the beginning of such twenty-four calendar month period other
than as a result of a proxy contest, or any agreement arising out of an
actual or threatened proxy contest, shall be treated as an Incumbent
Director; or
(2) any "person," including a "group" (as such terms are used in
Sections 13(d) and 14(d)(2) of the Act, but excluding Kelso, the Company,
any Subsidiary or any employee benefit plan of the Company or any
Subsidiary is or becomes the "beneficial owner" (as defined in Rule
13(d)(3) under the Act), directly or indirectly, of securities of the
Company representing 20% or more of the combined voting power of the
Company's then outstanding securities; or
(3) the stockholders of the Company shall approve a definitive
agreement (A) for the merger or other business combination of the Company
-
with or into another corporation, a majority of the directors of which
were not directors of the Company immediately prior to the merger and in
which the stockholders of the Company immediately prior to the effective
date of such merger own a percentage of the voting power in such
corporation that is less than one-half of the percentage of the voting
power they owned in the Company immediately prior to such transaction or
(B) for the sale or other disposition of all or substantially all of the
-
assets of the Company to any other entity; provided, in each case, that
--------
such transaction shall have been consummated; or
(4) the purchase of Stock pursuant to any tender or exchange offer
made by any "person," including a "group" (as such terms are used in
Sections 13(d) and 14(d)(2) of the Act), other than Kelso, the Company,
any Subsidiary, or an employee benefit plan of the Company or any
Subsidiary, for 20% or more of the Stock of the Company.
Notwithstanding the foregoing, a "Change in Control" shall not be deemed to
occur in the event the Company files for bankruptcy, liquidation or
reorganization under the United States Bankruptcy Code.
"Change in Control Price" means the highest price per share of Stock
-----------------------
offered in conjunction with any transaction resulting in a Change in Control
(as determined in good faith by the Committee if any part of the offered
price is payable other than in cash) or, in the case of a Change in Control
occurring solely by reason of a change in the composition of the Board, the
highest Fair
2
<PAGE>
Market Value of the Stock on any of the 30 trading days
immediately preceding the date on which a Change in Control occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Committee" means the Compensation Committee of the Board or such other
---------
committee as the Board may from time to time designate to administer the Plan
(or in the absence of any such designation, the Board), provided that
--------------
following the IPO, any such committee shall consist of two or more members,
each of whom shall be a "Non-Employee Director" within the meaning of Rule
16b-3, as promulgated under the Act.
"Company" means iXL Enterprises, Inc., a Delaware corporation, and any
-------
successor thereto.
"Disability" means, unless otherwise determined by the Committee with
----------
respect to a particular Option, disability of the Participant within the
meaning of any long-term disability plan maintained by the Company.
"Employee" means any employee of the Company or any Subsidiary.
--------
"Fair Market Value" means, on any date, (i) prior to an IPO, as determined
-----------------
and established by the Committee based on such relevant facts, which may
include opinions of "independent experts," or annual appraisals of the fair
market value of the Company as may be available to the Committee, and (ii)
following an IPO, the closing price of the Stock on a national securities
exchange (or on such other recognized quotation system on which the trading
prices of the Stock are quoted at the relevant time) on such date, provided
--------
that in the event that there are no Stock transactions reported on such
----
exchange (or such other system) on such date, Fair Market Value shall mean
the closing price on the immediately preceding date on which Stock
transactions were so reported.
"IPO" means the initial public offering of the Company's Stock.
---
"Kelso" means Kelso Investment Associates V, L.P., together with Kelso
-----
Equity Partners V, L.P.
"Option" means the right to purchase Stock at a stated price for a
------
specified period of time. For purposes of the Plan, an Option may be either
(i) an "Incentive Stock Option" (ISO) within the meaning of Section 422 of
-
the
3
<PAGE>
Code or (ii) a "Nonstatutory Stock Option" (NSO). Unless the Committee
--
shall otherwise specify at the time of grant, any Option granted hereunder
shall be a Nonstatutory Stock Option.
"Participant" means any Employee designated by the Committee to receive an
-----------
Option under the Plan.
"Retirement" means termination of a Participant's employment on or after
----------
the normal retirement date or, with the Committee's approval, on or after any
early retirement date established under any retirement plan maintained by the
Company, or any Subsidiary in which the Participant participates.
"Stock" means the Class B common stock of the Company, par value $0.01 per
-----
share.
"Subsidiary" means any corporation in which the Company owns, directly or
----------
indirectly, stock representing 50% or more of the voting power of all classes
of stock entitled to vote and any other business organization, regardless of
form, in which the Company possesses directly or indirectly 50% or more of
the total combined equity interests in such organization.
(b) Gender and Number. Except when otherwise indicated by the context,
-----------------
words in the masculine gender used in the Plan shall include the feminine
gender, the singular shall include the plural, and the plural shall include
the singular.
3. Powers of The Committee
The Committee shall be responsible for the administration of the Plan,
including, without limitation, determining which Employees receive Options, what
kind of Options are granted under the Plan and for what number of shares, and
the other terms and conditions of each such Option. The Committee may establish
different terms and conditions for different types of Options, for different
Participants receiving the same type of Option and for the same Participant for
each Option such Participant may receive, whether or not granted at different
times. The Committee shall have the responsibility of construing and
interpreting the Plan and of establishing and amending such rules and
regulations as it may deem necessary or desirable for the proper administration
of the Plan. Any decision or action taken or to be taken by the Committee,
arising out of or in connection with the construction, administration,
interpretation and effect of the Plan and of its rules and regulations, shall,
to the maximum extent permitted by applicable law, be within its absolute
discretion (except as otherwise specifically provided herein) and shall
4
<PAGE>
be conclusive and binding upon the Company, all Participants and any person
claiming under or through any Participant.
4. Stock Subject to Plan
(a) Number. Subject to the provisions of Section 4(b) and (c), the
------
number of shares of Stock subject to Options under the Plan may not exceed
5,000,000 shares of Stock, plus any shares which, after the effective date of
the Plan, become available for Options under this Plan in accordance with
Section 4(b) below. Without limiting the generality of the foregoing, whenever
shares are received by the Company in connection with the exercise of any Option
granted under the Plan, only the net number of shares actually issued shall be
counted against the foregoing limit. The shares to be delivered under the Plan
may consist, in whole or in part, of treasury Stock or authorized but unissued
Stock not reserved for any other purpose.
(b) Canceled, Terminated, or Forfeited Options. Any shares of Stock
------------------------------------------
subject to any Option granted hereunder which for any reason is canceled,
terminated or otherwise settled without the issuance of any Stock shall be
available for further Options under the Plan.
(c) Adjustment in Capitalization. In the event of any Stock dividend or
----------------------------
Stock split, recapitalization (including, without limitation, the payment of an
extraordinary cash dividend), merger, consolidation, combination, spin-off,
distribution of assets to stockholders, exchange of shares, or other similar
corporate change or other similar event that affects the Stock such that an
adjustment is required to preserve, or to prevent enlargement of, the benefits
or potential benefits made available under this Plan, then the Committee shall,
in such manner as the Committee shall deem equitable, adjust any or all of (i)
-
the number and kind of shares which thereafter may be optioned and sold under
the Plan (including, without termination, adjusting the limits on the number and
types of Options that may be made under the Plan), (ii) the number and kinds of
--
shares subject to outstanding Options and (iii) the exercise price with respect
---
to any of the foregoing. Additionally, the Committee may make provisions for a
cash payment to a Participant or a person who has an outstanding Option.
However, the number of shares subject to any Option shall always be a whole
number.
5. Stock Options
(a) Grant of Options. Options may be granted to Participants at such
----------------
time or times as shall be determined by the Committee. Options granted under
the Plan may be of two types: (i) Incentive Stock Options and (ii) Nonstatutory
- --
Stock Options, provided that no Incentive Stock Option shall be granted to any
--------
Employee who is not eligible to receive
5
<PAGE>
such an Option under Section 422 of the Code and the regulations thereunder. The
Committee shall have complete discretion in determining the number of Options,
if any, to be granted to a Participant. Without limiting the foregoing, the
Committee may grant Options containing provisions for the issuance to the
Participant, upon exercise of such Option and payment of the exercise price
therefor with previously owned shares of Stock, of an additional Option for the
number of shares so delivered. Each Option shall be evidenced by an Option
agreement that shall specify the type of Option granted, the exercise price, the
duration of the Option, the number of shares of Stock to which the Option per
tains, and such other terms and conditions not inconsistent with the Plan as the
Committee shall determine.
(b) Option Price. Unless otherwise determined by the Committee at the
------------
time of grant, Options granted pursuant to the Plan shall have an exercise price
which is not less than the Fair Market Value of a share of Stock on the date the
Option is granted.
(c) Exercise of Options. Options awarded under the Plan shall be
-------------------
exercisable at such times and shall be subject to such restrictions and
conditions including the performance of a minimum period of service or the
satisfaction of performance goals, as the Committee may impose, either at or
after the time of grant of such Options; provided that no Option shall be
-------------
exercisable for more than 10 years after the date on which it is granted.
(d) Payment. The Committee shall establish procedures governing the
-------
exercise of Options. No shares shall be delivered pursuant to any exercise of
an Option unless arrangements satisfactory to the Committee have been made to
assure full payment of the option price therefor. Without limiting the
generality of the foregoing, the Committee may provide, on such terms and
conditions as the Committee determines appropriate, that payment of the option
price may be made (i) in cash or its equivalent, (ii) by exchanging shares of
- --
Stock owned by the optionee (which are not the subject of any pledge or other
security interest), (iii) through an arrangement with a broker approved by the
---
Company whereby payment of the exercise price is accomplished with the proceeds
of the sale of Stock or (iv) by any combination of the foregoing, provided that
-- -------------
the combined value of all cash and cash equivalents paid and the Fair Market
Value of any such Stock so tendered to the Company, valued as of the date of
such tender, is at least equal to such option price.
(e) Termination of Employment Due to Death, Disability or Retirement.
----------------------------------------------------------------
Unless otherwise determined by the Committee at the time of grant, in the event
a Participant's employment terminates by reason of death, Disability or
Retirement, any Options granted to such Participant which are exercisable at the
date of his or her death, Disability or Retirement may be exercised at any time
prior to the earlier of the expiration of the term of the Options or within one
(1) year (or such other period as the Committee
6
<PAGE>
shall determine at the time of grant) following the Participant's termination of
employment. Unless otherwise determined by the Committee at the time of grant,
and Options which have not become exercisable in accordance with the terms
thereof shall be cancelled upon the Participant's termination of employment.
(f) Termination of Employment for Any Other Reason. Unless otherwise
----------------------------------------------
determined by the Committee at or after the time of grant, in the event the
employment of the Participant shall terminate for any reason other than those
described in Section 5(f), any Options granted to such Participant which are
exercisable at the date of the Participant's termination of employment shall be
exercisable at any time prior to the earlier of the expiration of the term of
the Options or the sixtieth day following the Participant's termination of
employment; provided that, if a Participant's employment is terminated for
-------------
Cause, all Options granted to such Participant which are then outstanding shall
be immediately forfeited (whether or not then exercisable).
(g) Incentive Stock Options. Notwithstanding anything in the Plan to
-----------------------
the contrary, no term of this Plan relating to Incentive Stock Options shall be
interpreted, amended or altered, nor shall any discretion or authority granted
under the Plan be so exercised, so as to disqualify the Plan under Section 422
of the Code.
(h) Buyout. The Committee may at any time offer to buy out an Option
------
previously granted for a payment in cash, based on such terms and conditions as
the Committee shall establish and communicate to the optionee at the time that
such offer is made.
6. Change in Control
(a) Accelerated Vesting and Payment. Subject to the provisions of
-------------------------------
Section 6(b) below, in the event of a Change in Control, each Option shall be,
at the discretion of the Committee, either canceled in exchange for a payment in
cash of an amount equal to the excess, if any, of the Change in Control Price
over the exercise price for such Option, or fully exercisable regardless of the
exercise schedule otherwise applicable to such Option.
(b) Alternative Options. Notwithstanding Section 6(a), no cancellation,
-------------------
acceleration of exercisability, vesting, cash settlement or other payment shall
occur with respect to any Option if the Committee reasonably determines in good
faith prior to the occurrence of a Change in Control that such Option shall be
honored or assumed, or new rights substituted therefor (such honored, assumed or
substituted option hereinafter called an "Alternative Option"), by a
Participant's employer (or the parent or a Subsidiary of such
7
<PAGE>
employer) immediately following the Change in Control, provided that any such
Alternative Option must:
(i) provide such Participant (or each Participant in a class of
Participants) with rights and entitlements substantially equivalent to or
better than the rights, terms and conditions applicable under such Option,
including, but not limited to, an identical or better exercise or vesting
schedule and identical or better timing and methods of payment;
(ii) have substantially equivalent economic value to such Option
(determined at the time of the Change in Control);
(iii) have terms and conditions which provide that in the event that the
Participant's employment is involuntarily terminated or constructively
terminated, any conditions on a Participant's rights under, or any
restrictions on transfer or exercisability applicable to, each such
Alternative Option shall be waived or shall lapse, as the case may be.
For this purpose, a constructive termination shall mean a termination by a
Participant following a material reduction in the Participant's base salary or a
Participant's incentive compensation opportunity or a material reduction in the
Participant's responsibilities, in any such case without the Participant's
written consent.
7. Amendment, Modification, And Termination of Plan
The Board at any time may terminate or suspend the Plan, and from time to
time may amend or modify the Plan, except that no amendment, modification, or
-----------
termination of the Plan shall in any manner adversely affect any Option
theretofore granted under the Plan, without the consent of the Participant to
whom such Option was granted. Notwithstanding the foregoing, the Board may not
increase the total number of shares of Stock subject to the Plan without
shareholder approval (except pursuant to Section 4(c)).
8. Miscellaneous Provisions
(a) Nontransferability of Options. Unless the Committee shall permit (on
-----------------------------
such terms and conditions as it shall establish) an Option to be transferred to
a member of the Participant's immediate family or to a trust or similar vehicle
for the benefit of such immediate family members (collectively, the "Permitted
Transferees"), no Option shall be assignable or transferable except by will or
the laws of descent and distribution, and except to the extent required by law,
no right or interest of any Participant shall be subject to any lien, obligation
or liability of the Participant. All rights with respect to Options granted to
8
<PAGE>
a Participant under the Plan shall be exercisable during his lifetime only by
such Participant or, if applicable, the Permitted Transferees. The rights of a
Permitted Transferee shall be limited to the rights conveyed to such Transferee,
who shall be subject to and bound by the terms of the agreement or agreements
between the Participant and the Company.
(b) Beneficiary Designation. Each Participant under the Plan may from
-----------------------
time to time name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
or by whom any right under the Plan is to be exercised in case of his death.
Each designation will revoke all prior designations by the same Participant,
shall be in a form prescribed by the Committee, and will be effective only when
filed by the Participant in writing with the Committee during his lifetime. In
the absence of any such designation, benefits remaining unpaid at the Par
ticipant's death shall be paid to or exercised by the Participant's surviving
spouse, if any, or otherwise to or by his or her estate.
(c) No Guarantee of Employment or Participation. Nothing in the Plan
-------------------------------------------
shall interfere with or limit in any way the right of the Company, or any
Subsidiary to terminate any Participant's employment at any time, nor to confer
upon any Participant any right to continue in the employ of the Company, or any
Subsidiary. No Employee shall have a right to be selected as a Participant, or,
having been so selected, to receive any future Options.
(d) Tax Withholding. The Company shall have the right to deduct from all
---------------
amounts paid to a Participant in cash (whether under this Plan or otherwise) any
taxes required by law to be withheld in respect of Options under this Plan. No
shares shall be issued pursuant to any Option unless and until arrangements
satisfactory to the Committee shall have been made to satisfy any withholding
tax obligations applicable with respect to such Option. Without limiting the
generality of the foregoing, the Company shall have the right to retain, or the
Committee may, subject to such terms and conditions as it may establish from
time to time, permit Participants to elect to tender, Stock (including Stock
issuable in respect of an Option) to satisfy, in whole or in part, the amount
required to be withheld.
(e) Compliance with Legal and Exchange Requirements. The Plan, the
-----------------------------------------------
granting and exercising of Options thereunder, and the other obligations of the
Company under the Plan, shall be subject to all applicable Federal and State
laws, rules, and regulations, and to such approvals by any regulatory or
governmental agency as may be required. The Company, in its discretion, may
postpone the granting and exercising of Options, the issuance or delivery of
Stock under any Option or any other action permitted under the Plan to permit
the Company, with reasonable diligence, to complete such stock exchange listing
or registration or qualification of such Stock or other required action
9
<PAGE>
under any Federal or State law, rule, or regulation and may require any
Participant to make such representations and furnish such information as it may
consider appropriate in connection with the issuance or delivery of Stock in
compliance with applicable laws, rules, and regulations. The Company shall not
be obligated by virtue of any provision of the Plan to recognize the exercise of
any Option or to otherwise sell or issue Stock in violation of any such laws,
rules, or regulations; and any postponement of the exercise of any Option under
this provision shall not extend the term of such Options, and neither the
Company nor its directors or officers shall have any obligation or liability to
the Participant with respect to any Option (or Stock issuable thereunder) that
shall lapse because of such postponement.
(f) Indemnification. Each person who is or shall have been a member of
---------------
the Committee or of the Board shall be indemnified and held harmless by the
Company against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him in connection with or resulting from
any claim, action, suit, or proceeding to which he may be made a party or in
which he may be involved by reason of any action taken or failure to act under
the Plan and against and from any and all amounts paid by him in settlement
thereof, with the Company's approval, or paid by him in satisfaction of any
judgment in any such action, suit, or proceeding against him, provided he shall
give the Company an opportunity, at its own expense, to handle and defend the
same before he undertakes to handle and defend it on his own behalf. The
foregoing right of indemnification shall not be exclusive and shall be
independent of any other rights of indemnification to which such persons may be
entitled under the Company's Articles of Incorporation or By-laws, by contract,
as a matter of law, or otherwise.
(g) Effective Date. Subject to the approval of the shareholders of the
--------------
Company, the Plan shall be effective on February 3, 1999. No Options may be
granted under the Plan after February 3, 2009.
(h) No Limitation on Compensation. Nothing in the Plan shall be
-----------------------------
construed to limit the right of the Company to establish other plans or to pay
compensation to its employees, in cash or property, in a manner which is not
expressly authorized under the Plan.
(i) Deferrals. The Committee may postpone the exercising of Options,
---------
the issuance or delivery of Stock under any Option or any action permitted under
the Plan to prevent the Company or any Subsidiary from being denied a Federal
income tax deduction with respect to any Option other than an Incentive Stock
Option.
10
<PAGE>
(j) Governing Law. The Plan shall be construed in accordance with and
-------------
governed by the laws of the State of New York, without reference to principles
of conflict of laws which would require application of the law of another
jurisdiction, except to the extent that the corporate law of the State of
Delaware specifically and mandatorily applies.
(k) No Impact On Benefits. Except as may otherwise be specifically
---------------------
stated under any employee benefit plan, policy or program, no amount payable in
respect of any Option shall be treated as compensation for purposes of
calculating an Employee's right under any such plan, policy or program.
(l) No Constraint on Corporate Action. Nothing in this Plan shall be
---------------------------------
construed (i) to limit, impair or otherwise affect the Company's right or power
-
to make adjustments, reclassifications, reorganizations or changes of its
capital or business structure, or to merge or consolidate, or dissolve,
liquidate, sell, or transfer all or any part of its business or assets or (ii)
--
except as provided in Section 7, to limit the right or power of the Company, or
any Subsidiary to take any action which such entity deems to be necessary or
appropriate.
11
<PAGE>
Exhibit 10.8
IXL HOLDINGS, INC.
1465 Northside Drive
Atlanta, Georgia 30318
as of April 30, 1996
Kelso & Company, L.P.
320 Park Avenue
New York, New York 10022
Attention: Mr. Frank T. Nickell
Ladies and Gentlemen:
IXL Holdings, Inc. (the "Company"), hereby agrees to retain you, Kelso &
Company, L.P. ("Kelso"), to provide consulting and advisory services to the
Company commencing on the date hereof for a term ending on the date on which
Kelso and its affiliates cease to own any equity securities of the Company.
Such services may include (i) assisting in the raising of additional debt and
equity capital from time to time for the Company, if deemed advisable by the
Board of Directors of the Company, (ii) assisting the Company in its long-term
strategic planning generally, and (iii) providing such other consulting and
advisory services as the Company may reasonably request.
In consideration of providing the foregoing services, the Company will
pay to Kelso an annual advisory fee of $15,000, payable in advance on January 1
of each year. The first payment will be due on the first day of the first full
calendar quarter following the closing under the Exchange Agreement, dated as of
April 30, 1996, among the Company, William Stephen Floyd, Richard Nailling,
Theresa B. Joel and Richard D. Bowman and will be a pro rated amount equal to
the product of (a) $15,000 and (b) the quotient of the number of days remaining
in 1996 from such closing over 365. If Kelso or any of its affiliates or
designees invests additional equity in the Company or any of its affiliates on
one or more occasions after the date hereof, then, in each such case, the
Company and Kelso will negotiate in good faith to effect a mutually acceptable
increase to such
<PAGE>
advisory fee. The Company will also reimburse Kelso promptly for Kelso's
reasonable out-of-pocket costs and expenses incurred in connection with the
performance of Kelso's duties hereunder.
The Company will indemnify Kelso and its affiliates, and their
respective officers, directors, partners, employees, agents and control persons
(as such term is used in the Securities Act of 1933, as amended, and the rules
and regulations thereunder) to the full extent lawful against any and all
claims, losses and expenses as incurred (including all reasonable fees and
disbursements of any such indemnitee's counsel and other out-of-pocket expenses
incurred in connection with the investigation of and preparation for any such
pending or threatened claims and any litigation or other proceedings arising
therefrom) arising out of any services rendered by Kelso hereunder, provided,
--------
however, there shall be excluded from such indemnification any such claim,
- -------
loss or expense that is based upon any action or failure to act by Kelso that is
found in a final judicial determination to constitute gross negligence or
intentional misconduct on Kelso's part. The Company will advance costs and
expenses, including attorney's fees, incurred by any such indemnitee in
defending any such claim in advance of the final disposition of such claim upon
receipt of an undertaking by or on behalf of such indemnitee to repay amounts so
advanced if it shall ultimately be determined that such indemnitee is not
entitled to be indemnified by the Company pursuant to this Agreement.
The Company's obligations set forth in this Agreement shall survive the
termination of Kelso's services pursuant to paragraph one.
This agreement shall be governed by the laws of the State of New York.
-2-
<PAGE>
If you are in agreement with the foregoing, kindly so indicate by signing a
counterpart of this letter, whereupon it will become a binding agreement between
us.
Very truly yours,
IXL HOLDINGS, INC.
By: /s/ U. Bertram Ellis, Jr.
-------------------------
Name:
Title:
Agreed and accepted as of
April 30, 1996.
KELSO & COMPANY, L.P.
By: Kelso & Companies, Inc.,
its general partner
By: /s/ Frank T. Nickell
--------------------
Name:
Title:
<PAGE>
FORM OF
AMENDMENT TO ADVISORY AGREEMENT
-------------------------------
AMENDMENT TO ADVISORY AGREEMENT (the "Agreement"), dated as of
_________ __, 1999, between iXL Enterprises, Inc., a Delaware corporation
(formerly named IXL Holdings, Inc.) (the "Company") and Kelso & Company, L.P.
("Kelso"). -------
-----
WHEREAS, the Company and Kelso are parties to a Letter Agreement,
dated as of April 30, 1996 (the "1996 Advisory Agreement");
WHEREAS, Kelso has provided consulting and advisory services to the
Company pursuant to the 1996 Advisory Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
1. Amendment of the Advisory Agreement Effective upon the closing of
-----------------------------------
the Company's initial public offering of its common stock, par value $0.01 per
share, Kelso's obligation to continue to provide ongoing consulting and advisory
services pursuant to the first paragraph of the 1996 Advisory Agreement and the
Company's obligation to pay to Kelso an annual advisory fee pursuant to the
second paragraph of the 1996 Advisory Agreement will terminate.
2. Survival and Amendment of Expense Reimbursement The Company's
-----------------------------------------------
obligation to reimburse Kelso promptly for Kelso's out-of-pocket costs and
expenses pursuant to the last sentence of the second paragraph of the 1996
Advisory Agreement is hereby amended and restated as follows:
"The Company shall reimburse Kelso promptly for Kelso's reasonable
out-of-pocket costs and expenses incurred in connection with the
monitoring by Kelso of its investment in the Company from and after
the date hereof."
3. Survival of Indemnification. The Company's obligation to
---------------------------
indemnify Kelso and its affiliates and to reimburse certain expenses pursuant to
the fourth paragraph of the 1996 Advisory Agreement shall remain in full force
and effect.
4. Counterparts. This Agreement may be executed in counterparts,
-------------
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed by each of the
parties hereto as of the date first above written.
iXL ENTERPRISES, INC.
By:
-----------------------------
Name:
Title:
KELSO & COMPANY, L.P.
By: Kelso & Companies, Inc.,
its general partner
By:
-----------------------------
Name:
Title:
2
<PAGE>
Exhibit 10.9
iXL Enterprises, Inc.
1888 Emery Street N.W.
Atlanta, Georgia 30318
as of February 5, 1999
Kelso & Company, L.P.
320 Park Avenue
New York, New York 10022
Attention: Mr. Frank T. Nickell
Ladies and Gentlemen:
iXL Enterprises, Inc. (the "Company"), hereby agrees to retain you,
Kelso & Company, L.P. ("Kelso"), to provide consulting and advisory services to
the Company in connection with the Company's initial public offering ("IPO") of
its common stock, par value $0.01 per share (the "Common Stock"), pursuant to a
registration statement on Form S-1 (the "Registration Statement") to be filed
with the U.S. Securities and Exchange Commission (the "Commission").
In consideration of providing such services, the Company will pay a
consulting fee to Kelso equal to $750,000. Such fee shall be paid in shares of
the Common Stock (the "Fee Shares"), valued at the gross IPO offering price to
the public, and shall be paid upon the closing of the IPO.
Kelso represents and warrants to the Company, as of the date hereof,
that: (i) Kelso is acquiring the Fee Shares solely for its own account or for
-
the account of one or more of its subsidiaries or affiliates and not as nominee
or agent for any other person and not with a view to, or for offer or sale in
connection with, any current distribution thereof (within the meaning of the
Securities Act of 1993, as amended (the "Securities Act")) that would cause the
original acquisition of the Fee Shares to be in violation of the securities laws
of the United States of America or any state thereof, without prejudice,
<PAGE>
however, to its right at all times to sell or otherwise dispose of all or any
part of such Fee Shares pursuant to a registration statement under the
Securities Act or pursuant to an exemption from the registration requirements of
the Securities Act, and subject, nevertheless, to the disposition of its
property being at all times within its control and (ii) Kelso is knowledgeable,
--
sophisticated and experienced in business and financial matters and in investing
in business enterprises; it has previously invested in securities similar to the
Fee Shares and it acknowledges that the Fee Shares have not been registered
under the Securities Act and understands that the Fee Shares must be held
indefinitely unless they are subsequently registered under the Securities Act or
such sale is permitted pursuant to an available exemption from such registration
requirement; it is able to bear the economic risk of its investment in the Fee
Shares and is presently able to afford the complete loss of such investment; and
it is an "accredited investor" as defined in Regulation D promulgated under the
Securities Act.
The Company will indemnify Kelso and its affiliates, and their
respective officers, directors, partners, employees, agents and control persons
(as such term is used in the Securities Act and the rules and regulations
thereunder) to the full extent lawful against any and all claims, losses and
expenses as incurred (including all reasonable fees and disbursements of any
such indemnitee's counsel and other out-of-pocket expenses incurred in
connection with the investigation of and preparation for any such pending or
threatened claims and any litigation or other proceedings arising therefrom)
arising out of any services rendered by Kelso hereunder, provided, however,
-------- -------
there shall be excluded from such indemnification any such claim, loss or
expense that is based upon any action or failure to act by Kelso that is found
in a final judicial determination to constitute gross negligence or intentional
misconduct on Kelso's part. The Company will advance costs and expenses,
including attorney's fees, incurred by any such indemnitee in defending any such
claim in advance of the final disposition of such claim upon receipt of an
undertaking by or on behalf of such indemnitee to repay amounts so advanced if
it shall ultimately be determined that such indemnitee is not entitled to be
indemnified by the Company pursuant to this Agreement.
If the indemnification provided for in the prior paragraph is for any
reason unavailable or insufficient to hold Kelso and its affiliates, and their
respective officers, directors, partners, employees, agents and control persons
harmless in respect of any and all claims, losses and expenses referred to
therein, then the Company shall contribute to the aggregate amount of such
claims, losses and expenses incurred by Kelso, as incurred, (i) in such
-
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and Kelso on the other hand from the IPO and the
performance by Kelso of its services under this Agreement or (ii) if the
--
allocation referred to in clause (i) is not permitted by applicable law, in such
proportion as is appropriate reflect not only the relative benefits referred to
in clause (i) above, but also the relative fault of the
2
<PAGE>
Company on the one hand and of Kelso on the other hand in connection with the
basis for the action which resulted in such claims, losses or expenses, as well
as any other equitable considerations.
The Company's obligations set forth in this Agreement shall survive
the payment made to Kelso pursuant to paragraph two.
This agreement shall be governed by the laws of the State of New York.
3
<PAGE>
If you are in agreement with the foregoing, kindly so indicate by
signing a counterpart of this letter, whereupon it will become a binding
agreement between us.
Very truly yours,
iXL ENTERPRISES, INC.
By: /s/ M. Wayne Boylston
_______________________________________________
Name: M. Wayne Boylston
Title: Executive Vice President
Agreed and accepted as of
February 5, 1999.
KELSO & COMPANY, L.P.
By: Kelso & Companies, Inc.,
its general partner
By: /s/ James J. Connors II
________________________________________________________
Name: James J. Connors II
Title: Vice President and General Counsel
4
<PAGE>
EXHIBIT 10.10
PROMISSORY NOTE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
$250,000.00 12--31--1996 01--31--1997 NEW
- ---------------------------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular
loan or item.
- ---------------------------------------------------------------------------------------------------------------------------------
BORROWER: IXL -- Memphis, Inc. (TIN: ) LENDER: First Tennessee Bank National Association
3160 Directors Row Commercial Banking Department
Memphis, TN 38116 165 Madison Avenue
Memphis, TN 38103
==================================================================================================================================
PRINCIPAL AMOUNT: $250,000.00 INTEREST RATE: 8.250% DATE OF NOTE: DECEMBER 31, 1996
</TABLE>
PROMISE TO PAY. IXL -- MEMPHIS, INC. ("BORROWER") PROMISES TO PAY TO FIRST
TENNESSEE BANK NATIONAL ASSOCIATION ("LENDER"), OR ORDER, IN LAWFUL MONEY OF
THE UNITED STATES OF AMERICA, THE PRINCIPAL AMOUNT OF TWO HUNDRED FIFTY
THOUSAND & 00/100 DOLLARS ($250,000.00), TOGETHER WITH INTEREST AT THE RATE OF
8.250% PER ANNUM ON THE UNPAID PRINCIPAL BALANCE FROM DECEMBER 31, 1996, UNTIL
PAID IN FULL.
PAYMENT. BORROWER WILL PAY THIS LOAN IN ONE PRINCIPAL PAYMENT OF $250,000.00
PLUS INTEREST ON JANUARY 31, 1997. THIS PAYMENT DUE JANUARY 31, 1997, WILL BE
FOR ALL PRINCIPAL AND ACCRUED INTEREST NOT YET PAID. Borrower will pay Lender
at Lender's address shown above or at such other place as Lender may designate
in writing. Unless otherwise agreed or required by applicable law, payments
will be applied first to accrued unpaid interest, then to principal, and any
remaining amount to any unpaid collection costs and late charges.
PREPAYMENT PENALTY. Borrower agrees that all loan fees and other prepaid
finance charges are earned fully as of the date of the loan and will not be
subject to refund upon early payment (whether voluntary or as a result of
default), except as otherwise required by law. UPON PREPAYMENT OF THIS NOTE,
LENDER IS ENTITLED TO THE FOLLOWING PREPAYMENT PENALTY: SHOULD BORROWER REPAY
ANY PRINCIPAL AMOUNT AHEAD OF SCHEDULE, BORROWER SHALL PAY TO LENDER A
PREPAYMENT PENALTY EQUAL TO 2% OF THE PRINCIPAL AMOUNT PREPAID. SAID PREPAYMENT
FEE SHALL BE PAID THE SAME DAY OF THE PREPAYMENT OF PRINCIPAL. Except for the
foregoing, Borrower may pay all or a portion of the amount owed earlier than it
is due. Early payments will not, unless agreed to by Lender in writing, relieve
Borrower of Borrower's obligation to continue to make payments under the
payment schedule. Rather, they will reduce the principal balance due.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due and such failure continues for ten
(10) days after written notice of such failure has been mailed from Lender to
Borrower. (b) Borrower breaks any promise Borrower has made to Lender, or
Borrower fails to comply with or to perform when due any other term,
obligation, covenant, or condition contained in this Note or any agreement
related to this Note, or in any other agreement or loan Borrower has with
Lender and such failure continues for ten (10) days after written notice of
such failure has been delivered by Lender to Borrower. (c) Borrower defaults
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's property or Borrower's ability to
repay this Note or perform Borrower's obligations under this Note or any of the
Related Documents. (d) Any representation or statement made or furnished to
Lender by Borrower or on Borrower's behalf is false or misleading in any
material respect either now or at the time made or furnished. (e) Borrower
becomes insolvent, a receiver is appointed for any part of Borrower's property,
Borrower makes an assignment for the benefit of creditors, or any proceeding is
commenced either by Borrower or against Borrower under any bankruptcy or
insolvency laws. (f) Any creditor tries to take any of Borrower's property on
or in which Lender has a lien or security interest. This includes a garnishment
of any of Borrower's accounts with Lender. (g) Any guarantor dies or any of the
other events described in this default section occurs with respect to any
guarantor of this Note. (h) A material adverse change occurs in Borrower's
financial condition, or Lender believes the prospect of payment or performance
of the Indebtedness is impaired. (i) Lender in good faith deems itself
insecure.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon default, including failure
to pay upon final maturity, Lender, at its option, may also, if permitted under
applicable law, increase the interest rate on this Note to 24.000% per annum,
but in no event at an effective total interest rate on this Note greater than
the rate permitted by applicable law. Lender may hire or pay someone else to
help collect this Note if Borrower does not pay. Borrower also will pay Lender
that amount. This includes, subject to any limits under applicable law,
Lender's attorneys' fees and Lender's legal expenses whether or not there is a
lawsuit, including attorneys' fees and legal expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post--judgment collection services.
If not prohibited by applicable law, Borrower also will pay any court costs, in
addition to all other sums provided by law. THIS NOTE HAS BEEN DELIVERED TO
LENDER AND ACCEPTED BY LENDER IN THE STATE OF TENNESSEE. IF THERE IS A LAWSUIT,
BORROWER AGREES UPON LENDER'S REQUEST TO SUBMIT TO THE JURISDICTION OF THE
COURTS OF SHELBY COUNTY, THE STATE OF TENNESSEE. LENDER AND BORROWER HEREBY
WAIVE THE RIGHT TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
BROUGHT BY EITHER LENDER OR BORROWER AGAINST THE OTHER. THIS NOTE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TENNESSEE.
Any payment not made when due hereunder (whether by acceleration or otherwise)
shall bear interest after maturity at the maximum effective contract rate of
interest which the Lender may lawfully charge.
In the event of any renewal or extension of the loan indebtedness evidenced
hereby, unless the parties otherwise agree to a lower rate, the Lender shall
have the right to charge interest at the highest of the following rates: (i)
the maximum rate permissible at the time the contract to make the loan was
executed; or (ii) the maximum rate permissible at the time the loan was made;
or (iii) the maximum rate permissible at the time of such renewal or extension;
or (iv) the maximum rate permitted by applicable federal law; it being intended
that those statutes and laws, state or federal, from time to time in effect,
which permit the charging of the higher rate of interest shall govern the
maximum rate which may be charged hereunder. In the event that for any reason
the foregoing provisions hereof shall not contain a valid, enforceable
designation of a rate of interest prior to maturity or method of determining
the same, then the indebtedness hereby evidenced shall bear interest prior to
maturity at the maximum effective rate which may be lawfully charged by the
Lender under applicable law.
Regardless of any provision herein, or in any other document executed in
connection herewith, the holder hereof shall never be entitled to receive,
collect, or apply, as interest hereon, any amount in excess of the maximum
contract rate which may be lawfully charged by the holder hereof under
applicable law; and in the event the holder hereof ever receives, collects, or
applies as interest, any such excess, such amount which would be excessive
interest shall be deemed a partial prepayment of principal and treated
hereunder as such; and, if the principal hereof is paid in full, any remaining
excess shall forthwith be paid to the undersigned. In determining whether or
not the interest paid or payable, under any specific contingency, exceeds the
maximum lawful contract rate, the undersigned and the holder hereof shall, to
the maximum extent permitted by applicable law, (a) characterize any non--
principal payment as a reasonable loan charge, rather than as interest; (b)
exclude voluntary prepayments and the effects thereof; and (c) amortize,
prorate, allocate, and spread, in equal parts, the total amount of interest
throughout the entire contemplated term hereof, so that the interest accrued or
to accrue throughout the entire term contemplated hereby shall at no time
exceed the maximum lawful contract rate.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts Borrower may open in the future, excluding
however all IRA and Keogh accounts, and all trust accounts for which the grant
of a security interest would be prohibited by law. Borrower authorizes Lender,
to the extent permitted by applicable law, to charge or setoff all sums owing
on this Note against any and all such accounts, and, at Lender's option, to
administratively freeze all such accounts to allow Lender to protect Lender's
charge and setoff rights provided on this paragraph.
FINANCIAL STATEMENTS. The guarantor agrees to furnish a current financial
statement upon the request of lender (quarterly and annual) and further agrees
to execute and deliver all other instruments and take such other actions as
Lender may from time to time reasonably request in order to carry out the
provisions and intent hereof.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person who
signs, guarantees or endorses this Note, to the extent allowed by law, waive
presentment, demand for payment, protest and notice of dishonor. Upon any
change in the terms of this Note, and unless otherwise expressly stated in
writing, no party who signs this Note, whether as maker, guarantor,
accommodation maker or endorser, shall be released from liability. All such
parties agree that Lender may renew or extend (repeatedly and for any length of
time) this loan, or release any party or guarantor or collateral; or impair,
fail to realize upon or perfect Lender's security interest in the collateral;
and take any other action deemed necessary by Lender without the consent of or
notice to anyone. All such parties also agree that Lender may modify this loan
without the consent of or notice to anyone other than the party with whom the
modification is made.
12-31-1996
================================================================================
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE. BORROWER AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF
A COMPLETED COPY OF THE NOTE.
BORROWER
IXL - Memphis, Inc.
By: /s/ James V. Sandry
------------------------------------
James V. Sandry, Treasurer
================================================================================
<PAGE>
COMMERCIAL GUARANTY
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
NEW
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
References tn the shaded area are for Lender's use only and do not limit the applicability of this document to any particular
loan or item.
- ---------------------------------------------------------------------------------------------------------------------------------
BORROWER: IXL-- MEMPHIS, INC. (TIN: ) LENDER: FIRST TENNESSEE BANK NATIONAL ASSOCIATION
3160 DIRECTORS ROW COMMERCIAL BANKING DEPARTMENT
MEMPHIS, TN 38116 165 MADISON AVENUE
MEMPHIS, TN 38103
GUARANTOR: IXL HOLDINGS, INC.
1465 NORTHSIDE DRIVE
ATLANTA, GA 30318
=================================================================================================================================
</TABLE>
AMOUNT OF GUARANTY. THE PRINCIPAL AMOUNT OF THIS GUARANTY IS TWO HUNDRED FIFTY
THOUSAND & 00/100 DOLLARS ($250,000.00).
CONTINUING GUARANTY. FOR GOOD AND VALUABLE CONSIDERATION, IXL HOLDINGS, INC.
("GUARANTOR") ABSOLUTELY AND UNCONDITIONALLY GUARANTEES AND PROMISES TO PAY TO
FIRST TENNESSEE BANK NATIONAL ASSOCIATION ("LENDER") OR ITS ORDER, IN LEGAL
TENDER OF THE UNITED STATES OF AMERICA, THE INDEBTEDNESS (AS THAT TERM IS
DEFINED BELOW) OF IXL OF MEMPHIS, INC. ("BORROWER") TO LENDER ON THE TERMS AND
CONDITIONS SET FORTH IN THIS GUARANTY. THE OBLIGATIONS OF GUARANTOR UNDER THIS
GUARANTY ARE CONTINUING.
DEFINITIONS. The following words shall have the following meanings when used in
this Guaranty:
BORROWER. The word "Borrower" means IXL Memphis, Inc.
GUARANTOR. The word "Guarantor" means IXL Holdings, Inc.
GUARANTY. The word "Guaranty" means this Guaranty made by Guarantor for the
benefit of Lender dated December31, 1996.
INDEBTEDNESS. The word "Indebtedness" is used in its most comprehensive
sense and means and includes any and all of Borrower's liabilities,
obligations, debts, and indebtedness to Lender, now existing or hereinafter
incurred or created, including, without limitation, all loans, advances,
interest, costs, debts, overdraft indebtedness, credit card indebtedness,
lease obligations, other obligations, and liabilities of Borrower, or any
of them, and any present or future judgments against Borrower, or any of
them; and whether any such Indebtedness is voluntarily or involuntarily
incurred, due or not due, absolute or contingent, liquidated or
unliquidated, determined or undetermined; whether Borrower may be liable
individually or jointly with others, or primarily or secondarily, or as
guarantor or surety; whether recovery on the Indebtedness may be or may
become barred or unenforceable against Borrower for any reason whatsoever;
and whether the Indebtedness arises from transactions which may be voidable
on account of infancy, insanity, ultra vires, or otherwise.
LENDER. The word "Lender" means First Tennessee Bank National Association,
its successors and assigns.
RELATED DOCUMENTS. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds
of trust, and all other instruments, agreements and documents, whether now
or hereafter existing, executed in connection with the Indebtedness.
MAXIMUM LIABILITY. THE MAXIMUM LIABILITY OF GUARANTOR UNDER THIS GUARANTY SHALL
NOT EXCEED AT ANY ONE TIME THE SUM OF THE PRINCIPAL AMOUNT OF $250,000.00, PLUS
ALL INTEREST THEREON, PLUS ALL OF LENDER'S REASONABLE COSTS, EXPENSES, AND
ATTORNEYS' FEES INCURRED IN CONNECTION WITH OR RELATING TO (A) THE COLLECTION
OF THE INDEBTEDNESS, (B) THE COLLECTION AND SALE OF ANY COLLATERAL FOR THE
INDEBTEDNESS OR THIS GUARANTY, OR (C) THE ENFORCEMENT OF THIS GUARANTY.
ATTORNEYS' FEES INCLUDE, WITHOUT LIMITATION, ATTORNEYS' FEES WHETHER OR NOT
THERE IS A LAWSUIT, AND IF THERE IS A LAWSUIT, ANY FEES AND COSTS FOR TRIAL AND
APPEALS.
The above limitation on liability is not a restriction on the amount of the
Indebtedness of Borrower to Lender either in the aggregate or at any one time.
If Lender presently holds one or more guaranties, or hereafter receives
additional guaranties from Guarantor, the rights of Lender under all guaranties
shall be cumulative. This Guaranty shall not (unless specifically provided
below to the contrary) affect or invalidate any such other guaranties. The
liability of Guarantor will be the aggregate liability of Guarantor under the
terms of this Guaranty and any such other unterminated guaranties.
NATURE OF GUARANTY. Guarantor's liability under this Guaranty shall be open and
continuous for so long as this Guaranty remains in force. Guarantor intends to
guarantee at all times the performance and prompt payment when due, whether at
maturity or earlier by reason of acceleration or otherwise, of all Indebtedness
within the limits set forth in the preceding section of this Guaranty.
Accordingly, no payments made upon the Indebtedness will discharge or diminish
the continuing liability of Guarantor in connection with any remaining portions
of the Indebtedness or any of the Indebtedness which subsequently arises or is
thereafter incurred or contracted.
DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor
or to Borrower, and will continue in full force until all Indebtedness incurred
or contracted before receipt by Lender of any notice of revocation shall have
been fully and finally paid and satisfied and all other obligations of
Guarantor under this Guaranty shall have been performed in full. If Guarantor
elects to revoke this Guaranty, Guarantor may only do so in writing.
Guarantor's written notice of revocation must be mailed to Lender, by certified
mail, at the address of Lender listed above or such other place as Lender may
designate in writing. Written revocation of this Guaranty will apply only to
advances or new Indebtedness created after actual receipt by Lender of
Guarantor's written revocation. For this purpose and without limitation, the
term "new Indebtedness" does not include Indebtedness which at the time of
notice of revocation is contingent, unliquidated, undetermined or not due and
which later becomes absolute, liquidated, determined or due. This Guaranty will
continue to bind Guarantor for all Indebtedness incurred by Borrower or
committed by Lender prior to receipt of Guarantor's written notice of
revocation, including any extensions, renewals, substitutions or modifications
of the Indebtedness. All renewals, extensions, substitutions, and modifications
of the Indebtedness granted after Guarantor's revocation, are contemplated
under this Guaranty and, specifically will not be considered to be new
Indebtedness. This Guaranty shall bind the estate of Guarantor as to
Indebtedness created both before and after the death or incapacity of
Guarantor, regardless of Lender's actual notice of Guarantor's death. Subject
to the foregoing, Guarantor's executor or administrator or other legal
representative may terminate this Guaranty in the same manner in which
Guarantor might have terminated it and with the same effect. Release of any
other guarantor or termination of any other guaranty of the Indebtedness shall
not affect the liability of Guarantor under this Guaranty. A revocation
received by Lender from any one or more Guarantors shall not affect the
liability of any remaining Guarantors under this Guaranty. IT IS ANTICIPATED
THAT FLUCTUATIONS MAY OCCUR IN THE AGGREGATE AMOUNT OF INDEBTEDNESS COVERED BY
THIS GUARANTY, AND IT IS SPECIFICALLY ACKNOWLEDGED AND AGREED BY GUARANTOR THAT
REDUCTIONS IN THE AMOUNT OF INDEBTEDNESS, EVEN TO ZERO DOLLARS ($0.00), PRIOR
TO WRITTEN REVOCATION OF THIS GUARANTY BY GUARANTOR SHALL NOT CONSTITUTE A
TERMINATION OF THIS GUARANTY. THIS GUARANTY IS BINDING UPON GUARANTOR AND
GUARANTOR'S HEIRS, SUCCESSORS AND ASSIGNS SO LONG AS ANY OF THE GUARANTEED
INDEBTEDNESS REMAINS UNPAID AND EVEN THOUGH THE INDEBTEDNESS GUARANTEED MAY
FROM TIME TO TIME BE ZERO DOLLARS ($0.00).
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before
or after any revocation hereof, without notice or demand and without lessening
Guarantor's liability under this Guaranty, from time to time: (a) prior to
revocation as set forth above, to make one or more additional secured or
unsecured loans to Borrower, to lease equipment or other goods to Borrower, or
otherwise to extend additional credit to Borrower; (b) to alter, compromise,
renew, extend, accelerate, or otherwise change one or more times the time for
payment or other terms of the Indebtedness or any part of the Indebtedness,
including increases and decreases of the rate of interest on the Indebtedness;
extensions may be repeated and may be for longer than the original loan term;
(c) to take and hold security for the payment of this Guaranty or the
Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to
perfect, and release any such security, with or without the substitution of new
collateral; (d) to release, substitute, agree not to sue, or deal with any one
or more of Borrower's sureties, endorsers, or other guarantors on any terms or
in any manner Lender may choose; (e) to determine how, when and what
application of payments and credits shall be made on the Indebtedness; (f) to
apply such security and direct the order or manner of sale thereof, including
without limitation, any nonjudicial sale permitted by the terms of the
controlling security agreement or deed of trust, as Lender in its discretion
may determine; (g) to sell, transfer, assign, or grant participations in all or
any part of the Indebtedness; and (h) to assign or transfer this Guaranty in
whole or in part.
GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants
to Lender that (a) no representations or agreements of any kind have been made
to Guarantor which would limit or qualify in any way the terms of this
Guaranty; (b) this Guaranty is executed at Borrower's request and not at the
request of Lender; (c) Guarantor has full power, right and authority to enter
into this Guaranty; (d) the provisions of this Guaranty do not conflict with or
result in a default under any agreement or other instrument binding upon
Guarantor and do not result in a violation of any law, regulation, court decree
or order applicable to Guarantor; (e) Guarantor has not and will not, without
the prior written consent of Lender, sell, lease, assign, encumber,
hypothecate, transfer, or otherwise dispose of all or substantially all of
Guarantor's assets, or any interest therein; (f) upon Lender's request,
Guarantor will provide to Lender financial and credit information in form
acceptable to Lender, and all such financial information which currently has
been, and all future financial information which will be provided to Lender is
and will be true and correct in all material respects and fairly present the
financial condition of Guarantor as of the dates the financial information is
provided; (g) no material adverse change has occurred in Guarantor's financial
condition since the date of the most recent financial statements provided to
Lender and no event has occurred which may materially adversely affect
Guarantor's financial condition; (h) no material litigation, claim,
investigation, administrative proceeding or similar action (including those for
unpaid taxes) against Guarantor is pending or threatened; (i) Lender has made
no representation to Guarantor as to the creditworthiness of Borrower; and (j)
Guarantor has established adequate means of obtaining from Borrower on a
continuing basis information regarding Borrower's financial condition.
Guarantor agrees to keep adequately informed from such means of any facts,
events, or circumstances which might in any way
<PAGE>
12-31-1996 COMMERCIAL GUARANTY PAGE 2
(CONTINUED)
================================================================================
affect Guarantor's risks under this Guaranty, and Guarantor further agrees
that, absent a request for information, Lender shall have no obligation to
disclose to Guarantor any information or documents acquired by Lender in the
course of its relationship with Borrower.
GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender (a) to continue lending money or to extend other
credit to Borrower; (b) to make any presentment, protest, demand, or notice of
any kind, including notice of any nonpayment of the Indebtedness or of any
nonpayment related to any collateral, or notice of any action or nonaction on
the part of Borrower, Lender, any surety, endorser, or other guarantor in
connection with the Indebtedness or in connection with the creation of new or
additional loans or obligations; (c) to resort for payment or to proceed
directly or at once against any person, including Borrower or any other
guarantor; (d) to proceed directly against or exhaust any collateral held by
Lender from Borrower, any other guarantor, or any other person; (e) to give
notice of the terms, time, and place of any public or private sale of personal
property security held by Lender from Borrower or to comply with any other
applicable provisions of the Uniform Commercial Code; (f) to pursue any other
remedy within Lender's power; or (g) to commit any act or omission of any kind,
or at any time, with respect to any matter whatsoever.
If now or hereafter (a) Borrower shall be or become insolvent, and (b) the
Indebtedness shall not at all times until paid be fully secured by collateral
pledged by Borrower, Guarantor hereby forever waives and relinquishes in favor
of Lender and Borrower, and their respective successors, any claim or right to
payment Guarantor may now have or hereafter have or acquire against Borrower,
by subrogation or otherwise, so that at no time shall Guarantor be or become a
"creditor" of Borrower within the meaning of 11 U.S.C. section 547(b), or any
successor provision of the Federal bankruptcy laws.
Guarantor also waives any and all rights or defenses arising by reason of (a)
any "one action" or "anti--deficiency" law or any other law which may prevent
Lender from bringing any action, including a claim for deficiency, against
Guarantor, before or after Lender's commencement or completion of any
foreclosure action, either judicially or by exercise of a power of sale; (b)
any election of remedies by Lender which destroys or otherwise adversely
affects Guarantor's subrogation rights or Guarantor's rights to proceed against
Borrower for reimbursement, including without limitation, any loss of rights
Guarantor may suffer by reason of any law limiting, qualifying, or discharging
the Indebtedness; (c) any disability or other defense of Borrower, of any other
guarantor, or of any other person, or by reason of the cessation of Borrower's
liability from any cause whatsoever, other than payment in full in legal
tender, of the Indebtedness; (d) any right to claim discharge of the
Indebtedness on the basis of unjustified impairment of any collateral for the
Indebtedness; (e) any statute of limitations, if at any time any action or suit
brought by Lender against Guarantor is commenced there is outstanding
Indebtedness of Borrower to Lender which is not barred by any applicable
statute of limitations; or (f) any defenses given to guarantors at law or in
equity other than actual payment and performance of the Indebtedness. If
payment is made by Borrower, whether voluntarily or otherwise, or by any third
party, on the Indebtedness and thereafter Lender is forced to remit the amount
of that payment to Borrower's trustee in bankruptcy or to any similar person
under any federal or state bankruptcy law or law for the relief of debtors, the
Indebtedness shall be considered unpaid for the purpose of enforcement of this
Guaranty.
Guarantor further waives and agrees not to assert or claim at any time any
deductions to the amount guaranteed under this Guaranty for any claim of
setoff, counterclaim, counter demand, recoupment or similar right, whether such
claim, demand or right may be asserted by the Borrower, the Guarantor, or both.
GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and
agrees that each of the waivers set forth above is made with Guarantor's full
knowledge of its significance and consequences and that, under the
circumstances, the waivers are reasonable and not contrary to public policy or
law. If any such waiver is determined to be contrary to any applicable law or
public policy, such waiver shall be effective only to the extent permitted by
law or public policy.
LENDER'S RIGHT OF SETOFF. In addition to all liens upon and rights of setoff
against the moneys, securities or other property of Guarantor given to Lender
by law, Lender shall have, with respect to Guarantor's obligations to Lender
under this Guaranty and to the extent permitted by law, a contractual
possessory security interest in and a right of setoff against, and Guarantor
hereby assigns, conveys, delivers, pledges, and transfers to Lender all of
Guarantor's right, title and interest in and to, all deposits, moneys,
securities and other property of Guarantor now or hereafter in the possession
of or on deposit with Lender, whether held in a general or special account or
deposit or whether held for safekeeping or otherwise, excluding however all
IRA, Keogh, and trust accounts. Every such security interest and right of
setoff may be exercised without demand upon or notice to Guarantor. No security
interest or right of setoff shall be deemed to have been waived by any act or
conduct on the part of Lender or by any neglect to exercise such right of
setoff or to enforce such security interest or by any delay in so doing. Every
right of setoff and security interest shall continue in full force and effect
until such right of setoff or security interest is specifically waived or
released by an instrument in writing executed by Lender.
SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether, now existing or hereafter created,
shall be prior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may now or hereafter have against
Borrower. In the event of insolvency and consequent liquidation of the assets
of Borrower, through bankruptcy, by an assignment for the benefit of creditors,
by voluntary liquidation, or otherwise, the assets of Borrower applicable to
the payment of the claims of both Lender and Guarantor shall be paid to Lender
and shall be first applied by Lender to the Indebtedness of Borrower to Lender.
Guarantor does hereby assign to Lender all claims which it may have or acquire
against Borrower or against any assignee or trustee in bankruptcy of Borrower;
provided however, that such assignment shall be effective only for the purpose
of assuring to Lender full payment in legal tender of the Indebtedness. If
Lender so requests, any notes or credit agreements now or hereafter evidencing
any debts or obligations of Borrower to Guarantor shall be marked with a legend
that the same are subject to this Guaranty and shall be delivered to Lender.
Guarantor agrees, and Lender hereby is authorized, in the name of Guarantor,
from time to time to execute and file financing statements and continuation
statements and to execute such other documents and to take such other actions
as Lender deems necessary or appropriate to perfect, preserve and enforce its
rights under this Guaranty.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:
AMENDMENTS. This Guaranty, together with any Related Documents, constitutes
the entire understanding and agreement of the parties as to the matters set
forth in this Guaranty. No alteration of or amendment to this Guaranty shall
be effective unless given in writing and signed by the party or parties sought
to be charged or bound by the alteration or amendment.
APPLICABLE LAW. This Guaranty has been delivered to Lender and accepted by
Lender in the State of Tennessee. If there is a lawsuit, Guarantor agrees upon
Lender's request to submit to the jurisdiction of the courts of Shelby County,
State of Tennessee. Lender and Guarantor hereby waive the right to any jury
trial in any action, proceeding, or counterclaim brought by either Lender or
Guarantor against the other. This Guaranty shall be governed by and construed
in accordance with the laws of the State of Tennessee.
ATTORNEYS' FEES; EXPENSES. Guarantor agrees to pay upon demand all of Lender's
costs and expenses, including attorneys' fees and Lender's legal expenses,
incurred in connection with the enforcement of this Guaranty. Lender may pay
someone else to help enforce this Guaranty, and Guarantor shall pay the costs
and expenses of such enforcement. Costs and expenses include Lender's
attorneys' fees and legal expenses whether or not there is a lawsuit,
including attorneys' fees and legal expenses for bankruptcy proceedings (and
including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post--judgment collection services. Guarantor
also shall pay all court costs and such additional fees as may be directed by
the court.
NOTICES. All notices required to be given by either party to the other under
this Guaranty shall be in writing, may be sent by telefacsimilie, and, except
for revocation notices by Guarantor, shall be effective when actually
delivered or when deposited with a nationally recognized overnight courier, or
when deposited in the United States mail, first class postage prepaid,
addressed to the party to whom the notice is to be given at the address shown
above or to such other addresses as either party may designate to the other in
writing. All revocation notices by Guarantor shall be in writing and shall be
effective only upon delivery to Lender as provided above in the section titled
"DURATION OF GUARANTY." If there is more than one Guarantor, notice to any
Guarantor will constitute notice to all Guarantors. For notice purposes,
Guarantor agrees to keep Lender informed at all times of Guarantor's current
address.
INTERPRETATION. In all cases where there is more than one Borrower or
Guarantor, then all words used in this Guaranty in the singular shall be
deemed to have been used in the plural where the context and construction so
require; and where there is more than one Borrower named in this Guaranty or
when this Guaranty is executed by more than one Guarantor, the words
"Borrower" and "Guarantor" respectively shall mean all and any one or more of
them. The words "Guarantor," "Borrower," and "Lender" include the heirs,
successors, assigns, and transferees of each of them. Caption headings in this
Guaranty are for convenience purposes only and are not to be used to interpret
or define the provisions of this Guaranty. If a court of competent
jurisdiction finds any provision of this Guaranty to be invalid or
unenforceable as to any person or circumstance, such finding shall not render
that provision invalid or unenforceable as to any other persons or
circumstances, and all provisions of this Guaranty in all other respects shall
remain valid and enforceable. If any one or more of Borrower or Guarantor are
corporations or partnerships, it is not necessary for Lender to inquire into
the powers of Borrower or Guarantor or of the officers, directors, partners,
or agents acting or purporting to act on their behalf, and any Indebtedness
made or created in reliance upon the professed exercise of such powers shall
be guaranteed under this Guaranty.
WAIVER. Lender shall not be deemed to have waived any rights under this
Guaranty unless such waiver is given in writing and signed by Lender. No delay
or omission on the part of Lender in exercising any right shall operate as a
waiver of such right or any other right. A waiver by Lender of a provision of
this Guaranty shall not prejudice or constitute a waiver of Lender's right
otherwise to demand strict compliance with that provision or any other
provision of this Guaranty. No prior waiver by Lender, nor any course of
dealing between Lender and Guarantor, shall constitute a waiver of any of
Lender's rights or of any of Guarantor's obligations as to any future
transactions. Whenever the consent of Lender is required under this Guaranty,
the granting of such consent by Lender in any instance shall not constitute
continuing consent to subsequent instances
<PAGE>
12--31--1996 COMMERCIAL GUARANTY PAGE 3
(CONTINUED)
================================================================================
where such consent is required and in all cases such consent may be granted
or withheld in the sole discretion of Lender.
EXCLUSION FROM INDEBTEDNESS. Excluded from Indebtedness shall be any
indebtedness governed by the Federal Truth in Lending Act.
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE
MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY." NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS
GUARANTY IS DATED DECEMBER 31, 1996.
IN WITNESS WHEREOF, THIS GUARANTY HAS BEEN SIGNED AND SEALED BY THE
UNDERSIGNED, WHO ACKNOWLEDGES A COMPLETED COPY HEREOF.
GUARANTOR:
IXL Holdings, Inc.
By: /s/ James V. Sandry
-----------------------------(SEAL)
James V. Sandry, Treasurer
Signed, Sealed and Delivered in the presence of:
X /s/ Karen Cutler
----------------------------------------
Unofficial Witness
/s/ Janet Wilson Williams
----------------------------------------
Notary Public, Fulton County (SEAL APPEARS HERE)
-------------------------------
(NOTARY SEAL)
My Commission expires:______________________
================================================================================
<PAGE>
RECORDATION REQUESTED BY:
First Tennessee Bank National Association
Commercial Banking Department
165 Madison Avenue
Memphis, TN 38103
WHEN RECORDED MAIL TO:
First Tennessee Bank National Association
Commercial Banking Department
165 Madison Avenue
Memphis, TN 38103
SEND TAX NOTICES TO:
IXL--Memphis, Inc.
1465 Northside Drive
Atlanta, GA 30318
OWNER:
IXL--Memphis, Inc.
1465 Northside Drive
Atlanta, GA 30318
SPACE ABOVE THIS LINE IS FOR RECORDER'S
USE ONLY
- --------------------------------------------------------------------------------
This Deed of Trust prepared by: X _______________________________
Carolyn W. Witcover
- --------------------------------------------------------------------------------
DEED OF TRUST
MAXIMUM PRINCIPAL INDEBTEDNESS FOR TENNESSEE RECORDING TAX PURPOSES IS
$250,000.00
THIS DEED OF TRUST IS DATED DECEMBER 31, 1996, AMONG IXL-Memphis, Inc. WHOSE
ADDRESS IS 1465 NORTHSIDE DRIVE, ATLANTA, GA 30318 (REFERRED TO BELOW AS
"GRANTOR"); FIRST TENNESSEE BANK NATIONAL ASSOCIATION, WHOSE ADDRESS IS
COMMERCIAL BANKING DEPARTMENT, 165 MADISON AVENUE, MEMPHIS, TN 38103 (REFERRED
TO BELOW SOMETIMES AS "LENDER" AND SOMETIMES AS "BENEFICIARY"); AND THOMAS F.
BAKER, IV, WHOSE ADDRESS IS 165 MADISON AVENUE, MEMPHIS, SHELBY COUNTY,
TENNESSEE (REFERRED TO BELOW AS "TRUSTEE").
CONVEYANCE AND GRANT. For and in consideration of Five Dollars ($5.00) cash in
hand paid, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor has bargained and sold,
and does hereby bargain, sell, convey and confirm unto the Trustee in trust,
with Power of Sale, for the benefit of Lender as Beneficiary, all of Grantor's
right, title, and interest in and to the following described real property,
together with all existing or subsequently erected or affixed buildings,
improvements and fixtures; all easements, rights of way, and appurtenances; all
water, water rights and ditch rights (including stock in utilities with ditch or
irrigation rights); and all other rights, royalties, and profits relating to the
real property, including without limitation all minerals, oil, gas, geothermal
and similar matters, LOCATED IN SHELBY COUNTY, STATE OF TENNESSEE (THE "REAL
PROPERTY"):
SEE EXHIBIT "A" ATTACHED HERETO AND MADE A PART HEREOF AS IF SET OUT
VERBATIM HEREIN.
THE REAL PROPERTY OR ITS ADDRESS IS COMMONLY KNOWN AS 3160 DIRECTORS ROW.,
MEMPHIS, TN 38116.
Grantor presently assigns to Lender (also known as Beneficiary in this Deed of
Trust) all of Grantor's right, title, and interest in and to all present and
future leases of the Property and all Rents from the Property. In addition,
Grantor grants Lender a Uniform Commercial Code security interest in the Rents
and the Personal Property defined below.
DEFINITIONS. The following words shall have the following meanings when used in
this Deed of Trust. Terms not otherwise defined in this Deed of Trust shall have
the meanings attributed to such terms in the Uniform Commercial Code. All
references to dollar amounts shall mean amounts in lawful money of the United
States of America.
BENEFICIARY. The word "Beneficiary" means First Tennessee Bank National
Association, its successors and assigns. First Tennessee Bank National
Association also is referred to as `Lender" in this Deed of Trust.
BORROWER. The word "Borrower" means each and every person or entity signing
the Note, including without limitation IXL of Memphis, Inc.
DEED OF TRUST. The words "Deed of Trust" mean this Deed of Trust among
Grantor, Lender, and Trustee, and includes without limitation all assignment
and security interest provisions relating to the Personal Property and Rents.
GRANTOR. The word "Grantor" means any and all persons and entities executing
this Deed of Trust, including without limitation IXL Holdings, Inc.. Any
Grantor who signs this Deed of Trust, but does not sign the Note, is signing
this Deed of Trust only to grant and convey that Grantor's interest in the
Real Property and to grant a security interest in Grantor's interest in the
Rents and Personal Property to Lender and is not personally liable under the
Note except as otherwise provided by contract or law.
GUARANTOR. The word "Guarantor" means and includes without limitation any and
all guarantors, sureties, and accommodation parties in connection with the
Indebtedness.
IMPROVEMENTS. The word "Improvements" means and includes without limitation
all existing and future improvements, buildings, structures, mobile homes
affixed on the Real Property, facilities, additions, replacements and other
construction on the Real Property.
INDEBTEDNESS. The word "Indebtedness" means all principal and interest payable
under the Note and any amounts expended or advanced by Lender to discharge
obligations of Grantor or expenses incurred by Trustee or Lender to enforce
obligations of Grantor under this Deed of Trust, together with interest on
such amounts as provided in this Deed of Trust. In addition to the Note, the
word "Indebtedness" includes all obligations, debts and liabilities, plus
interest thereon, of Borrower to Lender, or any one or more of them, as well
as all claims by Lender against Borrower, or any one or more of them, whether
now existing or hereafter arising, whether related or unrelated to the purpose
of the Note, whether voluntary or otherwise, whether due or not due, absolute
or contingent, liquidated or unliquidated and whether Borrower may be liable
individually or jointly with others, whether obligated as guarantor or
otherwise, and whether recovery upon such Indebtedness may be or hereafter may
become barred by any statute of limitations, and whether such Indebtedness may
be or hereafter may become otherwise unenforceable.
LENDER. The word "Lender" means First Tennessee Bank National Association, its
successor and assigns.
<PAGE>
12--31--1996 DEED OF TRUST PAGE 2
(CONTINUED)
================================================================================
NOTE. THE WORD "NOTE" MEANS THE NOTE DATED DECEMBER 31, 1996, IN THE
PRINCIPAL AMOUNT OF $250,000.00 from Borrower to Lender, together with all
renewals, extensions, modifications, refinancings, and substitutions for
the Note. The maturity date of this Deed of Trust is January 31, 1997.
PERSONAL PROPERTY. The words "Personal Property" mean all equipment,
fixtures, and other articles of personal property now or hereafter owned by
Grantor, and now or hereafter attached or affixed to the Real Property;
together with all accessions, parts, and additions to, all replacements of,
and all substitutions for, any of such property; and together with all
proceeds (including without limitation all insurance proceeds and refunds
of premiums) from any sale or other disposition of the Property.
PROPERTY. The word "Property" means collectively the Real Property and the
Personal Property.
REAL PROPERTY. The words "Real Property" mean the property, interests and
rights described above in the "Conveyance and Grant" section.
RELATED DOCUMENTS. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds
of trust, and all other instruments, agreements and documents, whether now
or hereafter existing, executed in connection with the Indebtedness.
RENTS. The word "Rents" means all present and future rents, revenues,
income, issues, royalties, profits, and other benefits derived from the
Property.
TRUSTEE. The word "Trustee" means Thomas F. Baker, IV and any substitute or
successor trustees.
THIS DEED OF TRUST, INCLUDING THE ASSIGNMENT OF RENTS AND THE SECURITY INTEREST
IN THE RENTS AND PERSONAL PROPERTY, IS GIVEN TO SECURE (1) PAYMENT OF THE
INDEBTEDNESS AND (2) PERFORMANCE OF ANY AND ALL OBLIGATIONS OF BORROWER UNDER
THE NOTE, THE RELATED DOCUMENTS, AND THIS DEED OF TRUST. THIS DEED OF TRUST IS
GIVEN AND ACCEPTED ON THE FOLLOWING TERMS:
GRANTOR'S REPRESENTATIONS AND WARRANTIES. Grantor warrants that: (a) this Deed
of Trust is executed at Borrower's request and not at the request of Lender;
(b) Grantor has the full power, right, and authority to enter into this Deed of
Trust and to hypothecate the Property; (c) the provisions of this Deed of Trust
do not conflict with, or result in a default under any agreement or other
instrument binding upon Grantor and do not result in a violation of any law,
regulation, court decree or order applicable to Grantor; (d) Grantor has
established adequate means of obtaining from Borrower on a continuing basis
information about Borrower's financial condition; and (e) Lender has made no
representation to Grantor about Borrower (including without limitation the
creditworthiness of Borrower).
GRANTOR'S WAIVERS. Grantor waives all rights or defenses arising by reason of
any "one action" or "anti--deficiency" law, or any other law which may prevent
Lender from bringing any action against Grantor, including a claim for
deficiency to the extent Lender is otherwise entitled to a claim for
deficiency, before or after Lender's commencement or completion of any
foreclosure action, either judicially or by exercise of a power of sale.
PAYMENT AND PERFORMANCE. Except as otherwise provided in this Deed of Trust,
Borrower shall pay to Lender all Indebtedness secured by this Deed of Trust as
it becomes due, and Borrower and Grantor shall strictly perform all their
respective obligations under the Note, this Deed of Trust, and the Related
Documents.
POSSESSION AND MAINTENANCE OF THE PROPERTY. Grantor and Borrower agree that
Grantor's possession and use of the Property shall be governed by the following
provisions:
POSSESSION AND USE. Until the occurrence of an Event of Default, or until
Lender exercises its right to collect Rents as provided for in the
Assignment of Rents form executed by Grantor in connection with the
Property, Grantor may (a) remain in possession and control of the Property,
(b) use, operate or manage the Property, and (c) collect any Rents from the
Property.
DUTY TO MAINTAIN. Grantor shall maintain the Property in tenantable
condition and promptly perform all repairs, replacements, and maintenance
necessary to preserve its value.
HAZARDOUS SUBSTANCES. The terms "hazardous waste," "hazardous substance,"
"disposal," "release," and "threatened release," as used in this Deed of
Trust, shall have the same meanings as set forth in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986, Pub. L. No. 99--499 ("SARA"),
the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et
seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901,
et seq., the Tennessee Hazardous Substances Act, T.C.A., 68--27--101, et
seq., or other applicable state or Federal laws, rules, or regulations
adopted pursuant to any of the foregoing. The terms "hazardous waste" and
"hazardous substance" shall also include, without limitation, petroleum and
petroleum by--products or any fraction thereof and asbestos. Grantor
represents and warrants to Lender that: (a) During the period of Grantor's
ownership of the Property, there has been no use, generation, manufacture,
storage, treatment, disposal, release or threatened release of any
hazardous waste or substance by any person on, under, about or from the
Property; (b) Grantor has no knowledge of, or reason to believe that there
has been, except as previously disclosed to and acknowledged by Lender in
writing, (i) any use, generation, manufacture, storage, treatment,
disposal, release, or threatened release of any hazardous waste or
substance on, under, about or from the Property by any prior owners or
occupants of the Property or (ii) any actual or threatened litigation or
claims of any kind by any person relating to such matters; and (c) Except
as previously disclosed to and acknowledged by Lender in writing, (i)
neither Grantor nor any tenant, contractor, agent or other authorized user
of the Property shall use, generate, manufacture, store, treat, dispose of,
or release any hazardous waste or substance on, under, about or from the
Property and (ii) any such activity shall be conducted in compliance with
all applicable federal, state, and local laws, regulations and ordinances,
including without limitation those laws, regulations, and ordinances
described above. Grantor authorizes Lender and its agents to enter upon the
Property to make such inspections and tests, at Grantor's expense, as
Lender may deem appropriate to determine compliance of the Property with
this section of the Deed of Trust. Any inspections or tests made by Lender
shall be for Lender's purposes only and shall not be construed to create
any responsibility or liability on the part of Lender to Grantor or to any
other person. The representations and warranties contained herein are based
on Grantor's due diligence in investigating the Property for hazardous
waste and hazardous substances. Grantor hereby (a) releases and waives any
future claims against Lender for indemnity or contribution in the event
Grantor becomes liable for cleanup or other costs under any such laws, and
(b) agrees to indemnify and hold harmless Lender against any and all
claims, losses, liabilities, damages, penalties, and expenses which Lender
may directly or indirectly sustain or suffer resulting from a breach of
this section of the Deed of Trust or as a consequence of any use,
generation, manufacture, storage, disposal, release or threatened release
occurring prior to Grantor's ownership or interest in the Property, whether
or not the same was or should have been known to Grantor. The provisions of
this section of the Deed of Trust, including the obligation to indemnify,
shall survive the payment of the Indebtedness and the satisfaction and
reconveyance of the lien of this Deed of Trust and shall not be affected by
Lender's acquisition of any interest in the Property, whether by
foreclosure or otherwise.
NUISANCE, WASTE. Grantor shall not cause, conduct or permit any nuisance
nor commit, permit, or suffer any stripping of or waste on or to the
Property or any portion of the Property. Without limiting the generality of
the foregoing, Grantor will not remove, or grant to any other party the
right to remove, any timber, minerals (including oil and gas), soil, gravel
or rock products without the prior written consent of Lender.
REMOVAL OF IMPROVEMENTS. Grantor shall not demolish or remove any
Improvements from the Real Property without the prior written consent of
Lender. As a condition to the removal of any Improvements, Lender may
require Grantor to make arrangements satisfactory to Lender to replace such
Improvements with Improvements of at least equal value.
LENDER'S RIGHT TO ENTER. Lender and its agents and representatives may
enter upon the Real Property at all reasonable times with prior notice to
attend to Lender's interests and to inspect the Property for purposes of
Grantor's compliance with the terms and conditions of this Deed of Trust.
COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Grantor shall promptly comply
with all laws, ordinances, and regulations, now or hereafter in effect, of
all governmental authorities applicable to the use or occupancy of the
Property, including without limitation, the
<PAGE>
12-31-1996 DEED OF TRUST PAGE 3
(CONTINUED)
================================================================================
Americans With Disabilities Act. Grantor may contest in good faith any such
law, ordinance, or regulation and withhold compliance during any proceeding,
including appropriate appeals, so long as Grantor has notified Lender in
writing prior to doing so and so long as, in Lender's sole opinion, Lender's
interests in the Property are not jeopardized. Lender may require Grantor to
post adequate security or a surety bond, reasonably satisfactory to Lender, to
protect Lender's interest.
DUTY TO PROTECT. Grantor agrees not to abandon the Property. Grantor shall do
all other acts, in addition to those acts set forth above in this section,
which from the character and use of the Property are reasonably necessary to
protect and preserve the Property.
DUE ON SALE -- CONSENT BY LENDER. Lender may, at its option, declare immediately
due and payable all sums secured by this Deed of Trust upon the sale or
transfer, without the Lender's prior written consent, of all or any part of the
Real Property, or any interest in the Real Property. A "sale or transfer" means
the conveyance of Real Property or any right, title or interest therein; whether
legal, beneficial or equitable; whether voluntary or involuntary; whether by
outright sale, deed, installment sale contract, land contract, contract for
deed, leasehold interest with a term greater than three (3) years, lease--option
contract, or by sale, assignment, or transfer of any beneficial interest in or
to any land trust holding title to the Real Property, or by any other method of
conveyance of Real Property interest. If any Grantor is a corporation,
partnership or limited liability company, transfer also includes any change in
ownership of more than twenty--five percent (25%) of the voting stock,
partnership interests or limited liability company interests, as the case may
be, of Grantor. However, this option shall not be exercised by Lender if such
exercise is prohibited by federal law or by Tennessee law.
TAXES AND LIENS. The following provisions relating to the taxes and liens on the
Property are a part of this Deed of Trust.
PAYMENT. Grantor shall pay when due (and in all events prior to delinquency)
all taxes, special taxes, assessments, charges (including water and sewer),
fines and impositions levied against or on account of the Property, and shall
pay when due all claims for work done on or for services rendered or material
furnished to the Property. Grantor shall maintain the Property free of all
liens having priority over or equal to the interest of Lender under this Deed
of Trust, except for the lien of taxes and assessments not due and except as
otherwise provided in this Deed of Trust.
RIGHT TO CONTEST. Grantor may withhold payment of any tax, assessment, or
claim in connection with a good faith dispute over the obligation to pay, so
long as Lender's interest in the Property is not jeopardized. If a lien arises
or is filed as a result of nonpayment, Grantor shall within fifteen (15) days
after the lien arises or, if a lien is filed, within fifteen (15) days after
Grantor has notice of the filing, secure the discharge of the lien, or if
requested by Lender, deposit with Lender cash or a sufficient corporate surety
bond or other security satisfactory to Lender in an amount sufficient to
discharge the lien plus any costs and attorneys' fees or other charges that
could accrue as a result of a foreclosure or sale under the lien. In any
contest, Grantor shall defend itself and Lender and shall satisfy any adverse
judgment before enforcement against the Property. Grantor shall name Lender as
an additional obligee under any surety bond furnished in the contest
proceedings.
EVIDENCE OF PAYMENT. Grantor shall upon demand furnish to Lender satisfactory
evidence of payment of the taxes or assessments and shall authorize the
appropriate governmental official to deliver to Lender at any time a written
statement of the taxes and assessments against the Property.
NOTICE OF CONSTRUCTION. Grantor shall notify Lender at least fifteen (15) days
before any work is commenced, any services are furnished, or any materials are
supplied to the Property, if any mechanic's lien, materialmen's lien, or other
lien could be asserted on account of the work, services, or materials and the
cost exceeds $10,000.00. Grantor will upon request of Lender furnish to Lender
advance assurances satisfactory to Lender that Grantor can and will pay the
cost of such improvements.
PROPERTY DAMAGE INSURANCE. The following provisions relating to insuring the
Property are a part of this Deed of Trust.
MAINTENANCE OF INSURANCE. Grantor shall procure and maintain policies of fire
insurance with standard extended coverage endorsements on a replacement basis
for the full insurable value covering all Improvements on the Real Property in
an amount sufficient to avoid application of any coinsurance clause, and with
a standard mortgagee clause in favor of Lender. Grantor shall also procure and
maintain comprehensive general liability insurance in such coverage amounts as
Lender may request with trustee and Lender being named as additional insureds
in such liability insurance policies. Additionally, Grantor shall maintain
such other insurance, including but not limited to hazard, business
interruption, and boiler insurance, as Lender may reasonably require. Policies
shall be written in form, amounts, coverages and basis reasonably acceptable
to Lender and issued by a company or companies reasonably acceptable to
Lender. Grantor, upon request of Lender, will deliver to Lender from time to
time the policies or certificates of insurance in form satisfactory to Lender,
including stipulations that coverages will not be cancelled or diminished
without at least thirty (30) days' prior written notice to Lender. Each
insurance policy also shall include an endorsement providing that coverage in
favor of Lender will not be impaired in any way by any act, omission or
default of Grantor or any other person. Should the Real Property at any time
become located in an area designated by the Director of the Federal Emergency
Management Agency as a special flood hazard area, Grantor agrees to obtain and
maintain Federal Flood Insurance for the full unpaid principal balance of the
loan, up to the maximum policy limits set under the National Flood Insurance
Program, or as otherwise required by Lender, and to maintain such insurance
for the term of the loan.
APPLICATION OF PROCEEDS. Grantor shall promptly notify Lender of any loss or
damage to the Property if the estimated cost of repair or replacement exceeds
$1,000.00. Lender may make proof of loss if Grantor fails to do so within
fifteen (15) days of the casualty. Grantor agrees to place funds in escrow and
to use the funds to restore the building to its prior condition within 180
days or Lender may apply the funds to any indebtedness, at its option. If
Grantor is in default, Lender may apply funds immediately.
UNEXPIRED INSURANCE AT SALE. Any unexpired insurance shall inure to the
benefit of, and pass to, the purchaser of the Property covered by this Deed of
Trust at any trustee's sale or other sale held under the provisions of this
Deed of Trust, or at any foreclosure sale of such Property.
GRANTOR'S REPORT ON INSURANCE. Upon request of Lender, however not more than
once a year, Grantor shall furnish to Lender a report on each existing policy
of insurance showing: (a) the name of the insurer; (b) the risks insured; (c)
the amount of the policy; (d) the property insured, the then current
replacement value of such property, and the manner of determining that value;
and (e) the expiration date of the policy. Grantor shall, upon request of
Lender, have an independent appraiser satisfactory to Lender determine the
cash value replacement cost of the Property.
EXPENDITURES BY LENDER. If Grantor fails to comply with any provision of this
Deed of Trust, or if any action or proceeding is commenced that would materially
affect Lender's interests in the Property, Lender on Grantor's behalf may, but
shall not be required to, take any action that Lender deems appropriate. Any
amount that Lender expends in so doing will bear interest at the rate provided
for in the Note from the date incurred or paid by Lender to the date of
repayment by Grantor. All such expenses, at Lender's option, will (a) be payable
on demand, (b) be added to the balance of the Note and be apportioned among and
be payable with any installment payments to become due during either (i) the
term of any applicable insurance policy or (ii) the remaining term of the Note,
or (c) be treated as a balloon payment which will be due and payable at the
Note's maturity. This Deed of Trust also will secure payment of these amounts.
The rights provided for in this paragraph shall be in addition to any other
rights or any remedies to which Lender may be entitled on account of the
default. Any such action by Lender shall not be construed as curing the default
so as to bar Lender from any remedy that it otherwise would have had.
WARRANTY; DEFENSE OF TITLE. The following provisions relating to ownership of
the Property are a part of this Deed of Trust.
TITLE. Grantor warrants that: (a) Grantor holds good and marketable title of
record to the Property in fee simple, free and clear of all
<PAGE>
12-31-1996 DEED OF TRUST PAGE 4
(CONTINUED)
================================================================================
liens and encumbrances other than those set forth in the Real Property
description or in any title insurance policy, title report, or final title
opinion issued in favor of, and accepted by, Lender in connection with this
Deed of Trust, and (b) Grantor has the full right, power, and authority to
execute and deliver this Deed of Trust to Lender.
DEFENSE OF TITLE. Subject to the exception in the paragraph above, Grantor
warrants and will forever defend the title to the Property against the lawful
claims of all persons. In the event any action or proceeding is commenced
that questions Grantor's title or the interest of Trustee or Lender under
this Deed of Trust, Grantor shall defend the action at Grantor's expense.
Grantor may be the nominal party in such proceeding, but Lender shall be
entitled to participate in the proceeding and to be represented in the
proceeding by counsel of Lender's own choice, and Grantor will deliver, or
cause to be delivered, to Lender such instruments as Lender may request from
time to time to permit such participation.
COMPLIANCE WITH LAWS. Grantor warrants that the Property and Grantor's use of
the Property complies with all existing applicable laws, ordinances, and
regulations of governmental authorities.
CONDEMNATiON. The following provisions relating to condemnation proceedings are
a part of this Deed of Trust.
APPLICATION OF NET PROCEEDS. If all or any part of the Property is condemned
by eminent domain proceedings or by any proceeding or purchase in lieu of
condemnation, Lender may at its election require that all or any portion of
the net proceeds of the award be applied to the Indebtedness or the repair or
restoration of the Property. The net proceeds of the award shall mean the
award after payment of all reasonable costs, expenses, and attorneys' fees
incurred by Trustee or Lender in connection with the condemnation.
PROCEEDINGS. If any proceeding in condemnation is filed, Grantor shall
promptly notify Lender in writing, and Grantor shall promptly take such steps
as may be necessary to defend the action and obtain the award. Grantor may be
the nominal party in such proceeding, but Lender shall be entitled to
participate in the proceeding and to be represented in the proceeding by
counsel of its own choice, and Grantor will deliver or cause to be delivered
to Lender such instruments as may be requested by it from time to time to
permit such participation.
IMPOSITION OF TAXES, FEES AND CHARGES BY GOVERNMENTAL AUTHORITIES. The following
provisions relating to governmental taxes, fees and charges are a part of this
Deed of Trust:
CURRENT TAXES, FEES AND CHARGES. Upon request by Lender, Grantor shall
execute such documents in addition to this Deed of Trust and take whatever
other action is requested by Lender to perfect and continue Lender's lien on
the Real Property. Grantor shall reimburse Lender for all taxes, as described
below, together with all expenses incurred in recording, perfecting or
continuing this Deed of Trust, including without limitation all taxes, fees,
documentary stamps, and other charges for recording or registering this Deed
of Trust.
TAXES. The following shall constitute taxes to which this section applies:
(a) a specific tax upon this type of Deed of Trust or upon all or any part of
the Indebtedness secured by this Deed of Trust; (b) a specific tax on
Borrower which Borrower is authorized or required to deduct from payments on
the Indebtedness secured by this type of Deed of Trust; (c) a tax on this
type of Deed of Trust chargeable against the Lender or the holder of the
Note; and (d) a specific tax on all or any portion of the Indebtedness or on
payments of principal and interest made by Borrower.
SUBSEQUENT TAXES. If any tax to which this section applies is enacted
subsequent to the date of this Deed of Trust, this event shall have the same
effect as an Event of Default (as defined below), and Lender may exercise any
or all of its available remedies for an Event of Default as provided below
unless Grantor either (a) pays the tax before it becomes delinquent, or (b)
contests the tax as provided above in the Taxes and Liens section and
deposits with Lender cash or a sufficient corporate surety bond or other
security satisfactory to Lender.
SECURITY AGREEMENT; FINANCING STATEMENTS. The following provisions relating to
this Deed of Trust as a security agreement are a part of this Deed of Trust.
SECURITY AGREEMENT. This instrument shall constitute a security agreement to
the extent any of the Property constitutes fixtures or other personal
property, and Lender shall have all of the rights of a secured party under
the Uniform Commercial Code as amended from time to time.
SECURITY INTEREST. Upon request by Lender, Grantor shall execute financing
statements and take whatever other action is requested by Lender to perfect
and continue Lender's security interest in the Rents and Personal Property.
In addition to recording this Deed of Trust in the real property records,
Lender may, at any time and without further authorization from Grantor, file
executed counterparts, copies or reproductions of this Deed of Trust as a
financing statement. Grantor shall reimburse Lender for all expenses incurred
in perfecting or continuing this security interest. Upon default, Grantor
shall assemble the Personal Property in a manner and at a place reasonably
convenient to Grantor and Lender and make it available to Lender within three
(3) days after receipt of written demand from Lender.
ADDRESSES. The mailing addresses of Grantor (debtor) and Lender (secured
party), from which information concerning the security interest granted by
this Deed of Trust may be obtained (each as required by the Uniform
Commercial Code), are as stated on the first page of this Deed of Trust.
FURTHER ASSURANCES; ATTORNEY-IN-FACT. The following provisions relating to
further assurances and attorney-in-fact are a part of this Deed of Trust.
FURTHER ASSURANCES. At any time, and from time to time, upon request of
Lender, Grantor will make, execute and deliver, or will cause to be made,
executed or delivered, to Lender or to Lender's designee, and when requested
by Lender, cause to be filed, recorded, refiled, or rerecorded, as the case
may be, at such times and in such offices and places as Lender may deem
appropriate, any and all such mortgages, deeds of trust, security deeds,
security agreements, financing statements, continuation statements,
instruments of further assurance, certificates, and other documents as may,
in the sole opinion of Lender, be necessary or desirable in order to
effectuate, complete, perfect, continue, or preserve (a) the obligations of
Grantor and Borrower under the Note, this Deed of Trust, and the Related
Documents, and (b) the liens and security interests created by this Deed of
Trust as first and prior liens on the Property, whether now owned or
hereafter acquired by Grantor. Unless prohibited by law or agreed to the
contrary by Lender in writing, Grantor shall reimburse Lender for all costs
and expenses incurred in connection with the matters referred to in this
paragraph.
ATTORNEY-IN-FACT. If Grantor fails to do any of the things referred to in
the preceding paragraph, Lender may do so for and in the name of Grantor and
at Grantor's expense. For such purposes, Grantor hereby irrevocably appoints
Lender as Grantor's attorney-in-fact for the purpose of making, executing,
delivering, filing, recording, and doing all other things as may be necessary
or desirable, in Lender's sole opinion, to accomplish the matters referred to
in the preceding paragraph.
FULL PERFORMANCE. If the Grantor shall well and truly pay and perform the
obligations at the time and times, and in the manner mentioned in this Deed of
Trust, and shall well and truly abide by and comply with each and every term,
covenant and condition set forth in this Deed of Trust, then this conveyance
shall be and become null and void and the Trustee shall convey the Property to
the Grantor by release deed at the expense of the Grantor.
DEFAULT. Each of the following, at the option of lender, shall constitute an
event of default ("Event of Default") under this Deed of Trust:
DEFAULT ON INDEBTEDNESS. Failure of Borrower to make any payment when due on
the Indebtedness, and such failure continues for (ten) days after written
notice of such failure has been mailed from Lender to Grantor.
DEFAULT ON OTHER PAYMENTS. Failure of Grantor within the time required by
this Deed of Trust to make any payment for taxes or insurance, or any other
payment necessary to prevent filing of or to effect discharge of any lien.
DEFAULT IN FAVOR OF THIRD PARTIES. Should Borrower or any Grantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's property or Borrower's or any
Grantor's ability to repay the Loans or perform their respective obligations
under this Deed of Trust or any of the Related Documents.
<PAGE>
12-31-1996 DEED OF TRUST Page 5
(CONTINUED)
================================================================================
COMPLIANCE DEFAULT. Failure of Grantor or Borrower to comply with any other
term, obligation, covenant or condition contained in this Deed of Trust,
the Note or in any Related Documents. 2
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Grantor or Borrower under this Deed
of Trust, the Note or the Related Documents is false or misleading in any
material respect, either now or at the time made or furnished.
DEFECTIVE COLLATERALIZATION. This Deed of Trust or any of the Related
Documents ceases to be in full force and effect (including failure of any
collateral documents to create a valid and perfected security interest or
lien) at any time and for any reason.
INSOLVENCY. The dissolution or termination of Grantor or Borrower's
existence as a going business, the insolvency of Grantor or Borrower, the
appointment of a receiver for any part of Grantor or Borrower's property,
any assignment for the benefit of creditors, any type of creditor workout,
or the commencement of any proceeding under any bankruptcy or insolvency
laws by or against Grantor or Borrower.
FORECLOSURE, FORFEITURE, ETC. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Grantor or by any governmental agency
against any of the Property. However, this subsection shall not apply in
the event of a good faith dispute by Grantor as to the validity or
reasonableness of the claim which is the basis of the foreclosure or
forfeiture proceeding, provided that Grantor gives Lender written notice of
such claim and furnishes reserves or a surety bond for the claim
satisfactory to Lender.
BREACH OF OTHER AGREEMENT. Any breach by Grantor or Borrower under the
terms of any other agreement between Grantor or Borrower and Lender that is
not remedied within any grace period provided therein, including without
limitation any agreement concerning any indebtedness or other obligation
of Grantor or Borrower to Lender, whether existing now or later.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with respect
to any Guarantor of any of the indebtedness or any Guarantor dies or
becomes incompetent, or revokes or disputes the validity of, or liability
under, any Guaranty of the indebtedness.
ADVERSE CHANGE. A material adverse change occurs in Borrower's financial
condition.
RIGHTS AND REMEDIES ON DEFAULT. Upon the occurrence of any Event of Default and
at any time thereafter, Trustee or Lender, at its option, may exercise any one
or more of the following rights and remedies, in addition to any other rights or
remedies provided by law:
ACCELERATE INDEBTEDNESS. Lender shall have the right at its option without
notice to Grantor or Borrower, the same being expressly waived, to declare
the entire indebtedness immediately due and payable, including (if
permitted by applicable law) any prepayment penalty for which Borrower may
be obligated.
FORECLOSURE. With respect to all or any part of the Real Property, (a) the
Trustee, at the Lender's request, shall have the right to enter and take
possession of the Real Property and to sell all or part of the Real
Property, at public auction, to the highest bidder for cash, free from
equity of redemption, and any statutory or common law right of redemption,
homestead, dower, marital share and all other exemptions, after giving
notice of the time, place and terms of such sale and of the Real Property
to be sold as required by law, or (b) the Trustee or the Lender shall have
the right to foreclose by judicial proceeding, in accordance with and to
the full extent provided by applicable law.
UCC REMEDIES. With respect to all or any part of the Personal Property,
Lender shall have all the rights and remedies of a secured party under the
Uniform Commercial Code.
COLLECT RENTS. Lender shall have the right, without notice to Grantor or
Borrower, to take possession of and manage the Property and collect the
Rents, including amounts past due and unpaid, and apply the net proceeds,
over and above Lender's costs, against the Indebtedness. In furtherance of
this right, Lender may require any tenant or other user of the Property to
make payments of rent or use fees directly to Lender. If the Rents are
collected by Lender, then Grantor irrevocably designates Lender as
Grantor's attorney-in-fact to endorse instruments received in payment
thereof in the name of Grantor and to negotiate the same and collect the
proceeds. Payments by tenants or other users to Lender in response to
Lender's demand shall satisfy the obligations for which the payments are
made, whether or not any proper grounds for the demand existed. Lender may
exercise its rights under this subparagraph either in person, by agent, or
through a receiver.
APPOINT RECEIVER. Lender shall have the right to make application to a
court of competent jurisdiction to have a receiver appointed to take
possession of all or any part of the Property, with the power to protect
and preserve the Property, to operate the Property prior to foreclosure or
sale, and to collect the Rents from the Property and apply the proceeds,
over and above the cost of the receivership, against the indebtedness.
TENANCY AT WILL. If Grantor remains in possession of the Property after the
Property is sold as provided above or Lender otherwise becomes entitled to
possession of the Property upon default of Grantor, Grantor shall become a
tenant at will of Lender or the purchaser of the Property and shall, at
Lender's option, either (a) pay a reasonable rental for the use of the
Property, or (b) vacate the Property immediately upon the demand of Lender.
OTHER REMEDIES. Trustee or Lender shall have any other right or remedy
provided in this Deed of Trust or the Note or by law.
NOTICE OF SALE. Lender shall give Grantor reasonable notice of the time and
place of any public sale of the Personal Property or of the time after
which any private sale or other intended disposition of the Personal
Property is to be made. Reasonable notice shall mean notice given at least
ten (10) days before the time of the sale or disposition. Any sale of
Personal Property may be made in conjunction with any sale of the Real
Property.
SALE OF THE PROPERTY. To the extent permitted by applicable law, Grantor
and Borrower hereby waive and any all rights to have the Property
marshalled, the equity of redemption, any statutory or common law right of
redemption, homestead, dower, marital share and all other exemptions and
other rights which might defeat, reduce or affect the right of the Lender
to sell the Real Property or the Personal Property for the collection of
the indebtedness. Lender shall give notice to Grantor prior to acceleration
following Grantor's breach of any covenant or agreement in this Deed of
Trust. The notice shall specify: (a) the default; (b) the action required
to cure the default; (c) a date, not less than thirty (30) days from the
date the notice is given to Borrower, by which the default must be cured;
and (d) that failure to cure the default on or before the date specified in
the notice may result in acceleration of the sums secured by this Security
Instrument and sale of the Property. If the default is not cured on or
before the date specified in the notice, Lender at its option may require
immediate payment in full of all sums secured by this Security Instrument
without further demand and may invoke the power of sale and any other
remedies permitted by applicable law. Lender shall be entitled to collect
all expenses incurred in pursuing the remedies provided in this paragraph,
including but not limited to, reasonable attorney's fees and costs of title
evidence.
If Lender invokes the power of sale, Trustee shall give notice of sale
by public advertisement in the county in which the Property is located for
the time and in the manner provided by applicable law, and Lender or
Trustee shall mail a copy of the notice of sale to Borrower. Trustee,
without demand on Borrower, shall sell the Property at public auction to
the highest bidder at the time and under the terms designated in the notice
of sale, Lender or its designee may purchase the Property at any sale.
Trustee shall deliver to the purchaser Trustee's deed conveying that
Real Property without any covenant or warranty, express or implied. The
recitals in the Trustee's deed shall be prima facie evidence of the truth
of the statements made therein. Trustee shall apply the proceeds of the
sale in the following order: (a) to all expenses of the sale, including,
but not limited to, reasonable Trustee's and attorneys' fees; (b) to all
sums secured by this Security Instrument; and (c) any excess to the person
or persons legally entitled to it. If the Property is sold pursuant to this
paragraph, Borrower, or any person holding possession of the Real
Property through Borrower, shall immediately surrender possession of the
Real Property to the purchaser at the sale. If possession is not
surrendered, Borrower or such person shall be a tenant at will of the
purchaser and hereby agrees to pay the purchaser the reasonable rental
value of the Real Property after sale.
WAIVER; ELECTION OF REMEDIES. A waiver by any party of a breach of a
provision of this Deed of Trust shall not constitute a waiver of
2) and such failure continues for ten (10) days after written notice of
such failure has been delivered by Lender to Grantor.
<PAGE>
12-31-1996 DEED OF TRUST Page 6
(Continued)
================================================================================
or prejudice the party's rights otherwise to demand strict compliance with
that provision or any other provision. Election by Lender to pursue any remedy
provided in this Deed of Trust, the Note, in any Related Document, or provided
by law shall not exclude pursuit of any other remedy, and an election to make
expenditures or to take action to perform an obligation of Grantor or Borrower
under this Deed of Trust after failure of Grantor or Borrower to perform shall
not affect Lender's right to declare a default and to exercise any of its
remedies.
ATTORNEYS' FEES; EXPENSES. If Lender institutes any suit or action to enforce
any of the terms of this Deed of Trust, Lender shall be entitled to recover
such sum as the court may adjudge reasonable as attorneys' fees at trial and
on any appeal. Whether or not any court action is involved, all reasonable
expenses incurred by Lender which in Lender's opinion are necessary at any
time for the protection of its interest or the enforcement of its rights shall
become a part of the Indebtedness payable on demand and shall bear interest at
the Note rate from the date of expenditure until repaid. Expenses covered by
this paragraph include, without limitation, however subject to any limits
under applicable law, Lender's attorneys' fees whether or not there is a
lawsuit, including attorneys' fees for bankruptcy proceedings (including
efforts to modify or vacate any automatic stay or injunction), appeals and any
anticipated post-judgment collection services, the cost of searching records,
obtaining title reports (including foreclosure reports), surveyors reports,
appraisal fees, title insurance, and fees for the Trustee, to the extent
permitted by applicable law. Grantor also will pay any court costs, in
addition to all other sums provided by law.
RIGHTS OF TRUSTEE. Trustee shall have all of the rights and duties of Lender
as set forth in this section.
POWERS AND OBLIGATIONS OF TRUSTEE. The following provisions relating to the
powers and obligations of Trustee are part of this Deed of Trust.
POWERS OF TRUSTEE. In addition to all powers of Trustee arising as a matter of
law, Trustee shall have the power to take the following actions with respect
to the Property upon the written request of Lender and Grantor: (a) join in
preparing and filing a map or plat of the Real Property, including the
dedication of streets or other rights to the public; (b) join in granting any
easement or creating any restriction on the Real Property; and (c) join in any
subordination or other agreement affecting this Deed of Trust or the interest
of Lender under this Deed of Trust.
INDEMNIFICATION OF TRUSTEE. Grantor agrees to indemnify Trustee for all
reasonable costs, charges, and attorneys' fees incurred by Trustee if Trustee
is made a party to or intervenes in any action or proceeding affecting the
Property, the title to the Property, or the interest of the Trustee or the
Lender under this Deed of Trust.
OBLIGATIONS TO NOTIFY. Trustee shall not be obligated to notify any other
party of a pending sale under any other trust deed or lien, or of any action
or proceeding in which Grantor, Lender, or Trustee shall be a party, unless
the action or proceeding is brought by Trustee.
TRUSTEE. Trustee shall meet all qualifications required for Trustee under
applicable law. In addition to the rights and remedies set forth above, with
respect to all or any part of the Property, the Trustee shall have the right
to foreclose by notice and sale, and Lender shall have the right to foreclose
by judicial foreclosure, in either case in accordance with and to the full
extent provided by applicable law. Trustee shall have the authority, in
Trustee's discretion, to employ all proper agents and attorneys in the
execution of Trustee's duties under this Deed of Trust and in conducting any
sale made pursuant to the terms of this Deed of Trust and to pay for the
services rendered by such agents and attorneys out of the proceeds of the sale
of the Property. If no sale is made, or if the proceeds of the sale are
insufficient to pay such agents and attorneys, then Grantor agrees to pay the
cost of such services. The parties in interest hereby waive the necessity of
Trustee making oath, filing inventory, or giving bond as security for the
execution of this trust, as may be required by the laws of Tennessee.
SUCCESSOR TRUSTEE. Lender, at Lender's option, may from time to time appoint a
successor Trustee to any Trustee appointed hereunder by an instrument executed
and acknowledged by Lender and recorded in the office of the recorder of
Shelby County, Tennessee. The instrument shall contain, in addition to all
other matters required by state law, the names of the original Lender,
Trustee, and Grantor, the book and page where this Deed of Trust is recorded,
and the name and address of the successor trustee, and the instrument shall be
executed and acknowledged by Lender or its successors in interest. The
successor trustee, without conveyance of the Property, shall succeed to all
the title, power, and duties conferred upon the Trustee in this Deed of Trust
and by applicable law. This procedure for substitution of trustee shall govern
to the exclusion of all other provisions for substitution.
NOTICES TO GRANTOR AND OTHER PARTIES. Any notice under this Deed of Trust shall
be in writing, may be be sent by telefacsimilie, and shall be effective when
actually delivered, or when deposited with a nationally recognized overnight
courier, or, if mailed, shall be deemed effective when deposited in the United
States mail first class, certified or registered mail, postage prepaid, directed
to the addresses shown near the beginning of this Deed of Trust. Any party may
change its address for notices under this Deed of Trust by giving formal written
notice to the other parties, specifying that the purpose of the notice is to
change the party's address. All copies of notices of foreclosure from the holder
of any lien which has priority over this Deed of Trust shall be sent to Lender's
address, as shown near the beginning of this Deed of Trust. For notice purposes,
Grantor agrees to keep Lender and Trustee informed at all times of Grantor's
current address.
EXCLUSION FROM INDEBTEDNESS. Excluded from Indebtedness shall be any
indebtedness governed by the Federal Truth in Lending Act.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Deed of Trust:
AMENDMENTS. This Deed of Trust, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to the
matters set forth in this Deed of Trust. No alteration of or amendment to this
Deed of Trust shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or amendment.
ANNUAL REPORTS. If the Property is used for purposes other than Grantor's
residence, Grantor shall furnish to Lender, upon request, a certified
statement of net operating income received from the Property during Grantor's
previous fiscal year in such form and detail as Lender shall require. "Net
operating income" shall mean all cash receipts from the Property less all cash
expenditures made in connection with the operation of the Property.
APPLICABLE LAW. THIS DEED OF TRUST HAS BEEN DELIVERED TO LENDER AND ACCEPTED
BY LENDER IN THE STATE OF TENNESSEE. THIS DEED OF TRUST SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TENNESSEE.
CAPTION HEADINGS. Caption headings in this Deed of Trust are for convenience
purposes only and are not to be used to interpret or define the provisions of
this Deed of Trust.
MERGER. There shall be no merger of the interest or estate created by this
Deed of Trust with any other interest or estate in the Property at any time
held by or for the benefit of Lender in any capacity, without the written
consent of Lender.
MULTIPLE PARTIES; CORPORATE AUTHORITY. All obligations of Grantor and Borrower
under this Deed of Trust shall be joint and several, and all references to
Borrower shall mean each and every Borrower, and all references to Grantor
shall mean each and every Grantor. This means that each of the Borrowers
signing below is responsible for all obligations in this Deed of Trust.
SEVERABILITY. If a court of competent jurisdiction finds any provision of this
Deed of Trust to be invalid or unenforceable as to any person or circumstance,
such finding shall not render that provision invalid or unenforceable as to
any other persons or circumstances. If feasible, any such offending provision
shall be deemed to be modified to be within the limits of enforceability or
validity; however, if the offending provision cannot be so modified, it shall
be stricken and all other provisions of this Deed of Trust in all other
respects shall remain valid and enforceable.
SUCCESSORS AND ASSIGNS. In the event of the death, refusal, or of inability
for any cause, on the part of the Trustee named herein, or of any successor
trustee, to act at any time when action under the foregoing powers and trust
may be required, or for any other reason satisfactory to Lender, Lender is
authorized, either in its own name or through an attorney or attorneys in fact
appointed for that purpose, by written instrument duly registered, to name and
appoint a successor or successors to execute this trust, such
<PAGE>
12-31-1996 DEED OF TRUST Page 7
(Continued)
================================================================================
appointment to be evidenced by writing, duly acknowledged; and when such
writing shall have been registered, the substituted trustee named therein
shall thereupon be vested with all the right and title, and clothed with all
the power of the Trustee named herein and such like power of substitution
shall continue so long as any part of the debt secured hereby remains unpaid.
TIME IS OF THE ESSENCE. Time is of the essence in the performance of this Deed
of Trust.
WAIVERS AND CONSENTS. Lender shall not be deemed to have waived any rights
under this Deed of Trust (or under the Related Documents) unless such waiver
is in writing and signed by Lender. No delay or omission on the part of Lender
in exercising any right shall operate as a waiver of such right or any other
right. A waiver by any party of a provision of this Deed of Trust shall not
constitute a waiver of or prejudice the party's right otherwise to demand
strict compliance with that provision or any other provision. No prior waiver
by Lender, nor any course of dealing between Lender and Grantor or Borrower,
shall constitute a waiver of any of Lender's rights or any of Grantor or
Borrower's obligations as to any future transactions. Whenever consent by
Lender is required in this Deed of Trust, the granting of such consent by
Lender in any instance shall not constitute continuing consent to subsequent
instances where such consent is required.
MISCELLANEOUS WAIVERS. Grantor waives all right of homestead, equity of
redemption, statutory right of redemption, and relinquishes all other rights
and exemptions of every kind, including, but not limited to, a statutory right
to an elective share in the Property.
EACH GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS DEED OF TRUST,
AND EACH GRANTOR AGREES TO ITS TERMS.
GRANTOR:
IXL-Memphis, Inc.
BY: /s/ James V. Sandry
-----------------------------------
James V. Sandry, Treasurer
________________________________________________________________________________
CORPORATE ACKNOWLEDGMENT
STATE OF GEORGIA )
--------------------------
)SS
COUNTY OF FULTON )
-------------------------
[NOTARY PUBLIC SEAL APPEARS HERE]
Before me Janet Wilson Williams, a Notary Public in and for the State and
---------------------
County aforesaid personally appeared JAMES V. SANDRY, with whom I am personally
acquainted (or proved to me on the basis of satisfactory evidence and who, upon
oath, acknowledged himself or herself to be the TREASURER of IXL HOLDINGS, INC.
the within-named bargainor, a corporation and that he or she as such TREASURER,
being duly authorized so to do, executed the foregoing instrument for the
purposes therein contained by signing the name of the corporation by himself or
herself as such TREASURER.
WITNESS MY HAND AND SEAL AT OFFICE, ON THE 27/th/ day of December, 1996
[SEAL]
/s/ Janet Wilson Williams
-----------------------------
Notary Public
My Commission Expires: _____________________
================================================================================
<PAGE>
RECORDATION REQUESTED BY:
FIRST TENNESSEE BANK NATIONAL ASSOCIATION
COMMERCIAL BANKING DEPARTMENT
165 MADISON AVENUE
MEMPHIS, TN 38103
WHEN RECORDED MAIL TO:
FIRST TENNESSEE BANK NATIONAL ASSOCIATION
COMMERCIAL BANKING DEPARTMENT
166 MADISON AVENUE
MEMPHIS, TN 38103
SEND TAX NOTICES TO:
IXL-Memphis, Inc.
1465 NORTHSIDE DRIVE
ATLANTA, GA 30318
OWNER:
IXL-Memphis, Inc.
1465 NORTHSIDE DRIVE
ATLANTA, GA 30318
SPACE ABOVE THIS LINE IS FOR RECORDER'S
USE ONLY
- --------------------------------------------------------------------------------
THIS ASSIGNMENT OF RENTS PREPARED BY: X ________________________________
CAROLYN W. WITCOVER
- --------------------------------------------------------------------------------
ASSIGNMENT OF RENTS
THIS ASSIGNMENT OF RENTS IS DATED DECEMBER 31, 1996, BETWEEN IXL-MEMPHIS, INC.,
WHOSE ADDRESS IS 1465 NORTHSIDE DRIVE, ATLANTA, GA 30318 (REFERRED TO BELOW AS
"GRANTOR"); AND FIRST TENNESSEE BANK NATIONAL ASSOCIATION, WHOSE ADDRESS IS
COMMERCIAL BANKING DEPARTMENT, 165 MADISON AVENUE, MEMPHIS, TN 38103 (REFERRED
TO BELOW AS "LENDER").
ASSIGNMENT. FOR VALUABLE CONSIDERATION, GRANTOR ASSIGNS, GRANTS A CONTINUING
SECURITY INTEREST IN, AND CONVEYS TO LENDER ALL OF GRANTOR'S RIGHT, TITLE, AND
INTEREST IN AND TO THE RENTS FROM THE FOLLOWING DESCRIBED PROPERTY LOCATED IN
SHELBY COUNTY, STATE OF TENNESSEE:
SEE EXHIBIT "A" ATTACHED HERETO AND MADE A PART HEREOF AS IF SET OUT
VERBATIM HEREIN.
THE REAL PROPERTY OR ITS ADDRESS IS COMMONLY KNOWN AS 3160 DIRECTORS ROW.,
MEMPHIS, TN 38116. THIS IS A PRESENT, UNCONDITIONAL AND ABSOLUTE ASSIGNMENT OF
THE RENTS FROM THE PROPERTY.
DEFINITIONS. The following words shall have the following meanings when used in
this Assignment. Terms not otherwise defined in this Assignment shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar amounts shall mean amounts in lawful money of the United States of
America.
ASSIGNMENT. The word "Assignment" means this Assignment of Rents between
Grantor and Lender, and includes without limitation all assignments and
security interest provisions relating to the Rents.
BORROWER. The word "Borrower" means IXL Memphis, Inc..
EVENT OF DEFAULT. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the section titled
"Events of Default."
GRANTOR. The word "Grantor" means any and all persons and entities executing
this Assignment, including without limitation all Grantors named above. Any
Grantor who signs this Assignment, but does not sign the Note, is signing this
Assignment only to grant and convey that Grantor's interest in the Real
Property and to grant a security interest in Grantor's interest in the Rents
and Personal Property to Lender and is not personally liable under the Note
except as otherwise provided by contract or law.
INDEBTEDNESS. The word "Indebtedness" means all principal and interest payable
under the Note and any amounts expended or advanced by Lender to discharge
obligations of Grantor or expenses incurred by Lender to enforce obligations
of Grantor under this Assignment, together with interest on such amounts as
provided in this Assignment. In addition to the Note, the word "Indebtedness"
<PAGE>
12-31-1996 ASSIGNMENT OF RENTS Page 2
(CONTINUED)
================================================================================
includes all obligations, debts and liabilities, plus interest thereon, of
Borrower to Lender, or any one or more of them, as well as all claims by
Lender against Borrower, or any one or more of them, whether now existing or
hereafter arising, whether related or unrelated to the purpose of the Note,
whether voluntary or otherwise, whether due or not due, absolute or
contingent, liquidated or unliquidated and whether Borrower may be liable
individually or jointly with others, whether obligated as guarantor or
otherwise, and whether recovery upon such Indebtedness may be or hereafter may
become barred by any statute of limitations, and whether such Indebtedness may
be or hereafter may become otherwise unenforceable.
LENDER. The word "Lender" means First Tennessee Bank National Association, its
successors and assigns.
NOTE. The word "Note" means the promissory note or credit agreement dated
December 31, 1996, IN THE ORIGINAL PRINCIPAL AMOUNT OF $250,000.00 from
Borrower to Lender, together with all renewals of, extensions of,
modifications of, refinancings of, consolidations of, and substitutions for
the promissory note or agreement.
PROPERTY. The word "Property" means the real property, and all improvements
thereon, described above in the "Assignment" section.
REAL PROPERTY. The words "Real Property" mean the property, interests and
rights described above in the "Property Definition" section.
RELATED DOCUMENTS. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds of
trust, and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the Indebtedness.
RENTS. The word "Rents" means all rents, revenues, income, issues, profits and
proceeds from the Property, whether due now or later, including without
limitation all Rents from all leases described on any exhibit attached to this
Assignment.
THIS ASSIGNMENT IS GIVEN TO SECURE (1) PAYMENT OF THE INDEBTEDNESS AND (2)
PERFORMANCE OF ANY AND ALL OBLIGATIONS OF GRANTOR AND BORROWER UNDER THE NOTE,
THIS ASSIGNMENT, AND THE RELATED DOCUMENTS. THIS ASSIGNMENT IS GIVEN AND
ACCEPTED ON THE FOLLOWING TERMS:
GRANTOR'S WAIVERS. Grantor waives all rights or defenses arising by reason of
any "one action" or "anti--deficiency" law, or any other law which may prevent
Lender from bringing any action against Grantor, including a claim for
deficiency to the extent Lender is otherwise entitled to a claim for deficiency,
before or after Lender's commencement or completion of any foreclosure action,
either judicially or by exercise of a power of sale.
GRANTOR'S REPRESENTATIONS AND WARRANTIES. Grantor warrants that: (a) this
Assignment is executed at Borrower's request and not at the request of Lender;
(b) Grantor has the full power, right, and authority to enter into this
Assignment and to hypothecate the Property; (c) the provisions of this
Assignment do not conflict with, or result in a default under any agreement or
other instrument binding upon Grantor and do not result in a violation of any
law, regulation, court decree or order applicable to Grantor; (d) Grantor has
established adequate means of obtaining from Borrower on a continuing basis
information about Borrower's financial condition; and (e) Lender has made no
representation to Grantor about Borrower (including without limitation the
creditworthiness of Borrower).
BORROWER'S WAIVERS AND RESPONSIBILITIES. Lender need not tell Borrower about any
action or inaction Lender takes in connection with this Assignment. Borrower
assumes the responsibility for being and keeping informed about the Property.
Borrower waives any defenses that may arise because of any action or inaction of
Lender, including without limitation any failure of Lender to realize upon the
Property, or any delay by Lender in realizing upon the Property. Borrower agrees
to remain liable under the Note with Lender no matter what action Lender takes
or fails to take under this Assignment.
PAYMENT AND PERFORMANCE. Except as otherwise provided in this Assignment or any
Related Document, Grantor shall pay to Lender all amounts secured by this
Assignment as they become due, and shall strictly perform all of Grantor's
obligations under this Assignment. Unless and until Lender exercises its right
to collect the Rents as provided below and so long as there is no default under
this Assignment, Grantor may remain in possession and control of and operate and
manage the Property and collect the Rents, provided that the granting of the
right to collect the Rents shall not constitute Lender's consent to the use of
cash collateral in a bankruptcy proceeding.
GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE RENTS. With respect
to the Rents, Grantor represents and warrants to Lender that:
OWNERSHIP. Grantor is entitled to receive the Rents free and clear of all
rights, loans, liens, encumbrances, and claims except as disclosed to and
accepted by Lender in writing.
RIGHT TO ASSIGN. Grantor has the full right, power, and authority to enter
into this Assignment and to assign and convey the Rents to Lender.
NO PRIOR ASSIGNMENT. Grantor has not previously assigned or conveyed the Rents
to any other person by any instrument now in force.
NO FURTHER TRANSFER. Grantor will not sell, assign, encumber, or otherwise
dispose of any of Grantor's rights in the Rents except as provided in this
Agreement.
LENDER'S RIGHT TO COLLECT RENTS. Lender shall have the right at any time, and
even though no default shall have occurred under this Assignment, to collect and
receive the Rents. For this purpose, Lender is hereby given and granted the
following rights, powers and authority:
NOTICE TO TENANTS. Lender may send notices to any and all tenants of the
Property advising them of this Assignment and directing all Rents to be paid
directly to lender or lender's agent, after notice of default has been mailed
to Grantor.
ENTER THE PROPERTY. Lender may enter upon and take possession of the Property;
demand, collect and receive from the tenants or from any other persons liable
therefor, all of the Rents; institute and carry on all legal proceedings
necessary for the protection of the
<PAGE>
12-31-1996 ASSIGNMENT OF RENTS Page 3
(Continued)
================================================================================
Property, including such proceedings as may be necessary to recover
possession of the Property; collect the Rents and remove any tenant or
tenants or other persons from the Property.
MAINTAIN THE PROPERTY. Lender may enter upon the Property to maintain the
Property and keep the same in repair; to pay the costs thereof and of all
services of all employees, including their equipment, and of all continuing
costs and expenses of maintaining the Property in proper repair and
condition, and also to pay all taxes, assessments and water utilities, and
the premiums on fire and other insurance effected by Lender on the Property.
COMPLIANCE WITH LAWS. Lender may do any and all things to execute and comply
with the laws of the State of Tennessee and also all other laws, rules,
orders, ordinances and requirements of all other governmental agencies
affecting the Property.
LEASE THE PROPERTY. Lender may rent or lease the whole or any part of the
property for such term or terms and on such conditions as Lender may deem
appropriate.
EMPLOY AGENTS. Lender may engage such agent or agents as Lender may deem
appropriate, either in lender's name or in Grantor's name, to rent and manage
the Property, including the collection and application of Rents.
OTHER ACTS. Lender may do all such other things and acts with respect to the
Property as Lender may deem appropriate and may act exclusively and solely in
the place and stead of Grantor and to have all of the powers of Grantor for
the purposes stated above.
NO REQUIREMENT TO ACT. Lender shall not be required to do any of the
foregoing acts or things, and the fact that Lender shall have performed one
or more of the foregoing acts or things shall not require Lender to do any
other specific act or thing.
APPLICATION OF RENTS. All costs and expenses incurred by Lender in connection
with the Property shall be for Grantor and Borrower's account and Lender may
pay such costs and expenses from the Rents. Lender, in its sole discretion,
shall determine the application of any and all Rents received by it; however,
any such Rents received by Lender which are not applied to such costs and
expenses shall be applied to the Indebtedness. All expenditures made by Lender
under this Assignment and not reimbursed from the Rents shall become a part of
the Indebtedness secured by this Assignment, and shall be payable on demand,
with interest at the Note rate from date of expenditure until paid.
FULL PERFORMANCE. If Grantor pays all of the Indebtedness when due and
otherwise performs all the obligations imposed upon Grantor under this
Assignment, the Note, and the Related Documents, Lender shall execute and
deliver to Grantor a suitable satisfaction of this Assignment and suitable
statements of termination of any financing statement on file evidencing
Lender's security interest in the Rents and the Property. Any termination fee
required by law shall be paid by Grantor, if permitted by applicable law.
EXPENDITURES BY LENDER. If Grantor fails to comply with any provision of this
Assignment, or if any action or proceeding is commenced that would materially
affect Lender's interests in the Property, Lender on Grantor's behalf may, but
shall not be required to, take any action that Lender deems appropriate. Any
amount that Lender expends in so doing will bear interest at the rate provided
for in the Note from the date incurred or paid by Lender to the date of
repayment by Grantor. All such expenses, at Lenders option, will (a) be payable
on demand, (b) be added to the balance of the Note and be apportioned among and
be payable with any installment payments to become due during either (i) the
term of any applicable insurance policy or (ii) the remaining term of the Note,
or (c) be treated as a balloon payment which will be due and payable at the
Note's maturity. This Assignment also will secure payment of these amounts. The
rights provided for in this paragraph shall be in addition to any other rights
or any remedies to which Lender may be entitled on account of the default. Any
such action by Lender shall not be construed as curing the default so as to bar
Lender from any remedy that it otherwise would have had.
DEFAULT. Each of the following, at the option of Lender, shall constitute an
event of default ("Event of Default") under this Assignment:
DEFAULT ON INDEBTEDNESS. Failure of Borrower to make any payment when due on
the Indebtedness, and such failure continues for ten (10) days after written
notice of such failure has been mailed from Lender to Borrower.
COMPLIANCE DEFAULT. Failure of Grantor or Borrower to comply with any other
term, obligation, covenant or condition contained in this Assignment, the
Note or in any of the Related Documents.
DEFAULT IN FAVOR OF THIRD PARTIES. Should Borrower or any Grantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's property or Borrower's or any
Grantor's ability to repay the Loans or perform their respective obligations
under this Assignment or any of the Related Documents.
FALSE STATEMENTS. Any warranty, representation or statement made or furnished
to Lender by or on behalf of Grantor or Borrower under this Assignment, the
Note or the Related Documents is false or misleading in any material respect,
either now or at the time made or furnished.
DEFECTIVE COLLATERALIZATION. This Assignment or any of the Related Documents
ceases to be in full force and effect (including failure of any collateral
documents to create a valid and perfected security interest or lien) at any
time and for any reason.
OTHER DEFAULTS. Failure of Grantor or Borrower to comply with any term,
obligation, covenant, or condition contained in any other agreement between
Grantor or Borrower and Lender, and such failure continues for ten (10) days
after written notice of such failure has been delivered by Lender to
Borrower.
INSOLVENCY. The dissolution or termination of Grantor or Borrower's existence
as a going business, the insolvency of Grantor or Borrower, the appointment
of a receiver for any part of Grantor or Borrower's property, any assignment
for the benefit of creditors, any type of creditor workout, or the
commencement of any proceeding under any bankruptcy or insolvency laws by or
against Grantor or Borrower.
FORECLOSURE, FORFEITURE, ETC. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Grantor or by any governmental agency
against any of the Property. However, this subsection shall not apply in the
event of a good faith dispute by Grantor as to the validity or reasonableness
of the claim which is
<PAGE>
12-31-1996 ASSIGNMENT OF RENTS Page 4
(Continued)
================================================================================
the basis of the foreclosure or forefeiture proceeding, provided that Grantor
gives Lender written notice of such claim and furnishes reserves or a surety
bond for the claim satisfactory to Lender.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with respect to
any Guarantor of any of the Indebtedness or any Guarantor dies or becomes
incompetent, or revokes or disputes the validity of, or liability under, any
Guaranty of the Indebtedness.
ADVERSE CHANGE. A material adverse change occurs in Borrower's financial
condition.
INSECURITY
RIGHTS AND REMEDIES ON DEFAULT. Upon the occurrence of any Event of Default and
at any time thereafter, Lender may exercise any one or more of the following
rights and remedies, in addition to any other rights or remedies provided by
law:
ACCELERATE INDEBTEDNESS. Lender shall have the right at its option without
notice to Borrower, the same being expressly waived, to declare the entire
Indebtedness immediately due and payable, including (if permitted by
applicable law) any prepayment penalty which Borrower would be required to
pay.
COLLECT RENTS. Lender shall have the right, without notice to Grantor or
Borrower, to take possession of the Property and collect the Rents, including
amounts past due and unpaid, and apply the net proceeds, over and above
Lender's costs, against the Indebtedness. In furtherance of this right, Lender
shall have all the rights provided for in the Lender's Right to Collect
Section, above. if the Rents are collected by Lender, then Grantor irrevocably
designates Lender as Grantor's attorney-in-fact to endorse instruments
received in payment thereof in the name of Grantor and to negotiate the same
and collect the proceeds. Payments by tenants or other users to Lender in
response to Lender's demand shall satisfy the obligations for which the
payments are made, whether or not any proper grounds for the demand existed.
Lender may exercise its rights under this subparagraph either in person, by
agent, or through a receiver.
APPOINT RECEIVER. Lender shall have the right to have a receiver appointed to
take possession of all or any part of the Property, with the power to protect
and preserve the Property, to operate the Property preceding foreclosure or
sale, and to collect the Rents from the Property and apply the proceeds, over
and above the cost of the receivership, against the Indebtedness. The receiver
may serve without bond if permitted by law. Lender's right to the appointment
of a receiver shall exist whether or not the apparent value of the Property
exceeds the Indebtedness by a substantial amount. Employment by Lender shall
not disqualify a person from serving as a receiver.
OTHER REMEDIES. Lender shall have all other rights and remedies provided in
this Assignment or the Note or by law.
WAIVER; ELECTION OF REMEDIES. A waiver by any party of a breach of a provision
of this Assignment shall not constitute a waiver of or prejudice the party's
rights otherwise to demand strict compliance with that provision or any other
provision. Election by Lender to pursue any remedy shall not exclude pursuit
of any other remedy, and an election to make expenditures or take action to
perform an obligation of Grantor or Borrower under this Assignment after
failure of Grantor or Borrower to perform shall not affect Lender's right to
declare a default and exercise its remedies under this Assignment.
ATTORNEYS' FEES; EXPENSES. If Lender institutes any suit or action to enforce
any of the terms of this Assignment, Lender shall be entitled to recover such
sum as the court may adjudge reasonable as attorneys' fees at trial and on any
appeal. Whether or not any court action is involved, all reasonable expenses
incurred by Lender that in Lender's opinion are necessary at any time for the
protection of its interest or the enforcement of its rights shall become a
part of the Indebtedness payable on demand and shall bear interest from the
date of expenditure until repaid at the rate provided for in the Note.
Expenses covered by this paragraph include, without limitation, however
subject to any limits under applicable law, Lender's attorneys' fees and
Lender's legal expenses whether or not there is a lawsuit, including
attorneys' fees for bankruptcy proceedings (including efforts to modify or
vacate any automatic stay or injunction), appeals and any anticipated post-
judgment collection services, the cost of searching records, obtaining title
reports (including foreclosure reports), surveyors' reports, and appraisal
fees, and title insurance, to the extent permitted by applicable law. Borrower
also will pay any court costs, in addition to all other sums provided by law.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Assignment:
AMENDMENTS. This Assignment, together with any Related Documents, constitutes
the entire understanding and agreement of the parties as to the matters set
forth in this Assignment. No alteration of or amendment to this Assignment
shall be effective unless given in writing and signed by the party or parties
sought to be charged or bound by the alteration or amendment.
APPLICABLE LAW. THIS ASSIGNMENT HAS BEEN DELIVERED TO LENDER AND ACCEPTED BY
LENDER IN THE STATE OF TENNESSEE. THIS ASSIGNMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TENNESSEE.
MULTIPLE PARTIES; CORPORATE AUTHORITY. All obligations of Grantor and Borrower
under this Assignment shall be joint and several, and all references to
Grantor shall mean each and every Grantor, and all references to Borrower
shall mean each and every Borrower. This means that each of the persons
signing below is responsible for all obligations in this Assignment.
NO MODIFICATION. Grantor shall not enter into any agreement with the holder of
any mortgage, deed of trust, or other security agreement which has priority
over this Assignment by which that agreement is modified, amended, extended,
or renewed without the prior written consent of Lender. Grantor shall neither
request nor accept any future advances under any such security agreement
without the prior written consent of Lender.
SEVERABILITY. If a court of competent jurisdiction finds any provision of this
Assignment to be invalid or unenforceable as to any person or circumstance,
such finding shall not render that provision invalid or unenforceable as to
any other persons or circumstances. If feasible, any such offending provision
shall be deemed to be modified to be within the limits of enforceability or
validity; however, if the offending provision cannot be so modified, it shall
be stricken and all other provisions of this Assignment in all
<PAGE>
12-31-1996 ASSIGNMENT OF RENTS Page 5
(Continued)
================================================================================
other respects shall remain valid and enforceable.
SUCCESSORS AND ASSIGNS. In the event of the death, refusal, or of inability
for any cause, on the part of the Trustee named herein, or of any successor
trustee, to act at any time when action under the foregoing powers and
trust may be required, or for any other reason satisfactory to Lender,
Lender is authorized, either in its own name or through an attorney or
attorneys in fact appointed for that purpose, by written instrument duly
registered, to name and appoint a successor or successors to execute this
trust, such appointment to be evidenced by writing, duly acknowledged; and
when such writing shall have been registered, the substituted trustee named
therein shall thereupon be vested with all the right and title, and clothed
with all the power of the Trustee named herein and such like power of
substitution shall continue so long as any part of the debt secured hereby
remains unpaid.
TIME IS OF THE ESSENCE. Time is of the essence in the performance of this
Assignment.
MISCELLANEOUS WAIVERS. Grantor waives all right of homestead, equity of
redemption, statutory right of redemption, and relinquishes all other
rights and exemptions of every kind, including, but not limited to, a
statutory right to an elective share in the Property.
WAIVERS AND CONSENTS. Lender shall not be deemed to have waived any rights
under this Assignment (or under the Related Documents) unless such waiver
is in writing and signed by Lender. No delay or omission on the part of
Lender in exercising any right shall operate as a waiver of such right or
any other right. A waiver by any party of a provision of this Assignment
shall not constitute a waiver of or prejudice the party's right otherwise
to demand strict compliance with that provision or any other provision. No
prior waiver by Lender, nor any course of dealing between Lender and
Grantor or Borrower, shall constitute a waiver of any of Lender's rights or
any of Grantor or Borrower's obligations as to any future transactions.
Whenever consent by Lender is required in this Assignment, the granting of
such consent by Lender in any instance shall not constitute continuing
consent to subsequent instances where such consent is required.
EXCLUSION FROM INDEBTEDNESS. Excluded from Indebtedness shall be any
indebtedness governed by the Federal Truth in Lending Act.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS ASSIGNMENT OF RENTS,
AND GRANTOR AGREES TO ITS TERMS.
GRANTOR:
IXL-Memphis, Inc.
By: /s/ James V. Sandry
----------------------------
James V. Sandry, Treasurer
________________________________________________________________________________
CORPORATE ACKNOWLEDGEMENT
STATE OF GEORGIA )
----------------------
) SS:
COUNTY OF FULTON )
---------------------
Before me, Janet Wilson Williams, a Notary Public in and for the State and
County aforesaid personally appeared JAMES V. SANDRY, with whom I am personally
acquainted (or proved to me on the basis of satisfactory evidence, who, upon,
oath, acknowledged himself or herself to be the TREASURER of IXL HOLDINGS, INC.
the within-named bargainor, a corporation and that he or she as such Treasurer,
being duly authorized so to do, executed the foregoing instrument for the
purposes therein contained by signing the name of the corporation by himself or
herself as such TREASURER.
WITNESS my hand and seal at office, on the 27th day of December, 1996.
[SEAL]
/s/ Janet Wilson Williams
-------------------------------
Notary Public
My Commission Expires_____________________
===============================================================================
<PAGE>
EXHIBIT 10.41
- --------------------------------------------------------------------------------
SECURITIES PURCHASE AGREEMENT
among
IXL HOLDINGS, INC.
and
THE INVESTORS NAMED HEREIN
15,384 Shares of Class B Convertible Preferred Stock,
and
Warrants to Purchase 1,775 Shares of Class B Convertible Preferred Stock
Dated as of December 23, 1997
- --------------------------------------------------------------------------------
<PAGE>
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the "Agreement") is dated as of
---------
December 23, 1997, and entered into by and among IXL Holdings, Inc., a Delaware
corporation (the "Company"), and the investors listed on the signature pages
-------
hereto (each an "Investor" and collectively, the "Investors").
-------- ---------
In consideration of the mutual covenants and agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the Company agrees, and each of the Investors agrees, severally but not
jointly, as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions
As used in this Agreement, the following terms shall have
the following meanings:
"Affiliate," as applied to any specified Person, shall mean
---------
any other Person that, directly or indirectly, controls, is controlled by or is
under common control with such specified Person. For purposes of the foregoing,
"control," when used with respect to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of Voting Securities,
by contract or otherwise, and the terms "controlled" and "controlling" shall
have meanings correlative to the foregoing. In the case of a Person who is an
individual, the term "Affiliate" shall include, with respect to such specified
Person (i) members of such specified Person's immediate family (as defined in
Instruction 2 of Item 404(a) of Regulation S-K under the Securities Act) and
(ii) trusts, the trustee or the beneficiaries of which are such specified Person
or members of such Person's immediate family as determined in accordance with
the foregoing clause (i). Notwithstanding the foregoing, the Investors and their
respective Affiliates shall not be deemed Affiliates of the Company for purposes
of this Agreement.
"Audit" shall mean any audit, assessment of Taxes, other
-----
examination by any Tax Authority, proceeding or appeal of such proceeding
relating to Taxes.
1
<PAGE>
"Board of Directors" means, as to any Person, the board of directors
------------------
of such Person or any duly authorized committee thereof.
"Business Day" shall mean each day other than Saturdays, Sundays and
------------
days when commercial banks are required or authorized by law or executive order
to be closed for business in New York, New York.
"Capital Stock" means any and all shares, interests, participations
-------------
or other equivalents (however designated) of corporate stock, including, without
limitation, all common stock and preferred stock.
"Certificate of Incorporation" has the meaning ascribed thereto in
----------------------------
Section 2.1.
"Charter Documents" means the Articles of Organization, Articles of
-----------------
Incorporation or Certificate of Incorporation, Bylaws and any other
organizational document, as amended or restated (or both) to date, of the
Company, or any of its Subsidiaries, as applicable.
"Chase Investors" shall mean Chase Venture Capital Associates, L.P.,
---------------
Flatiron Partners, LLC, and Greylock IX Limited Partnership.
"Class A Common Stock" has the meaning ascribed thereto in
--------------------
Section 4.2.
- -----------
"Class A Preferred Stock" has the meaning ascribed thereto in
-----------------------
Section 4.2.
- -----------
"Class B Common Stock" has the meaning ascribed thereto in
--------------------
Section 4.2.
- -----------
"Class B Preferred Stock" has the meaning ascribed thereto in
-----------------------
Section 2.1.
- -----------
"Class C Preferred Stock" has the meaning ascribed thereto in
-----------------------
Section 4.2.
- -----------
"Closing" has the meaning ascribed thereto in Section 2.2(b).
------- --------------
"Closing Date" has the meaning ascribed thereto in Section 2.2(b).
------------ --------------
"Code" means the Internal Revenue Code of 1986, as amended from time
----
to time, and any successor statute or law thereto.
2
<PAGE>
"Consolidated" or "consolidated," when used with reference to any
------------ ------------
accounting term, means the amount described by such accounting term, determined
on a consolidated basis in accordance with GAAP, after elimination of
intercompany items.
"Contracts" has the meaning ascribed thereto in Section 4.9(a)(3).
--------- -----------------
"Documents" means this Agreement, the Warrant Agreement, the
---------
Securities, the Registration Rights Agreements and the Stockholder Agreement,
collectively, or each of such documents singularly, and any documents or
instruments contemplated by or executed in connection with any of them or any of
the transactions contemplated hereby or thereby.
"Employee Benefit Plan" has the meaning ascribed thereto in
---------------------
Section 4.19.
- ------------
"Environmental Claim" means any claim, action, cause of action,
-------------------
investigation of which the Company or any of its Subsidiaries, including any of
their management employees, are aware, or written notice by any Person alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries or penalties) arising out
of, based on or resulting from (a) the presence, or release into the
environment, of any Material of Environmental Concern at any location owned,
leased, used or operated by the Company or any of its Subsidiaries, or (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law.
"Environmental Laws" means all Federal, state, local and foreign laws
------------------
and regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata and natural resources), including,
without limitation, laws and regulations relating to emissions, discharges,
releases or threatened releases of Materials of Environmental Concern, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environmental Concern.
"Equity Interest" means (i) with respect to a corporation, any and all
---------------
issued and outstanding Capital Stock and warrants, options or other rights to
acquire Capital Stock and (ii) with respect to a partnership, limited liability
company or similar Person, any and all units, interests, or other equivalents
of, or other ownership interests in any such Person and warrants, options or
other rights to acquire any such units or interests.
"ERISA" means The Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and any successor statute or law thereto.
3
<PAGE>
"ERISA Affiliate" has the meaning ascribed thereto in Section 4.19.
--------------- ------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
and the rules and regulations of the SEC thereunder, and any successor statute
or law thereto.
"GAAP" means those generally accepted accounting principles and
----
practices which are recognized as such from time to time by the American
Institute of Certified Public Accountants acting through its Accounting
Principles Board or by the Financial Accounting Standards Board or through other
appropriate boards or committees thereof and which are consistently applied for
all periods after the date hereof.
"Governmental Body" shall mean any Federal, state, local or foreign
-----------------
governmental authority or regulatory body, any subdivision, agency, commission
or authority thereof or any quasi-governmental or private body exercising any
governmental regulatory authority thereunder and any Person directly or
indirectly owned by and subject to the control of any of the foregoing, or any
court, arbitrator or other judicial or quasi-judicial tribunal.
"Holder" or "Holders" means each Investor and any Affiliate or Related
------ -------
Person of any Investor that is or becomes a holder of any of the Securities, in
each case, so long as such Person holds any Securities.
"Inspectors" has the meaning ascribed thereto in Section 6.2.
---------- -----------
"Investors" means the investors signatory to this Agreement.
---------
"Kelso" means collectively Kelso Investment Associates V, L.P., a
-----
Delaware limited partnership, and Kelso Equity Partners V, L.P., a Delaware
limited partnership.
"Laws" has the meaning ascribed thereto in Section 4.9.
---- -----------
"Lien" means any mortgage, pledge, lien, encumbrance, charge or
----
adverse claim affecting title or resulting in a charge against real or personal
property, or security interest of any kind (including, without limitation, any
conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell and any filing of any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Material Adverse Effect" means (a) a material adverse effect upon the
-----------------------
business, operations, prospects, properties, assets or condition (financial or
otherwise) of the
4
<PAGE>
Company and its Subsidiaries, taken as a whole, or (b) a material adverse effect
on the ability of the Company to perform its obligations under this Agreement or
any of the other Documents.
"Materials of Environmental Concern" means chemicals, pollutants,
----------------------------------
contaminants, industrial, toxic or hazardous wastes, substances or constituents,
petroleum and petroleum products (or any by-product or constituent thereof),
asbestos or asbestos-containing materials, or PCBs.
"Notices" has the meaning ascribed thereto in Section 7.1.
-------
"Permitted Lien" shall mean the following Liens: (a) Liens existing on
--------------
the Closing Date as listed on Schedule 1.1; (b) Liens for taxes, assessments or
------------
other governmental charges or levies not yet due; (c) statutory Liens of
landlords, carriers, warehousemen, mechanics, materialmen and other Liens
imposed by law created in the ordinary course of business of the Company
consistent with past practices for amounts not yet due; (d) Liens (other than
any Lien imposed by ERISA) incurred or deposits made in the ordinary course of
business of the Company consistent with past practices in connection with
worker's compensation, unemployment insurance or other types of social security;
and (e) with respect to interests in real property, minor defects of title,
easements, rights-of-way, restrictions and other similar charges or encumbrances
not materially detracting from the value or materially interfering with the use
of such real property.
"Person" means an individual, partnership, corporation, trust or
------
unincorporated organization or a government or agency or political subdivision
thereof.
"Preferred Shares" has the meaning ascribed thereto in Section 2.1.
---------------- -----------
"Proceedings" has the meaning ascribed thereto in Section 4.15.
----------- ------------
"Property" or "property" means any assets or property of any kind or
-------- --------
nature whatsoever, real, personal or mixed (including fixtures), whether
tangible or intangible, provided that the terms "Property" or "property," when
used with respect to any Person, shall not include securities issued by such
Person.
"OPO" shall mean a firm commitment public offering of the Company's
---
Class B Common Stock by a major bracket underwriter resulting in net proceeds to
the Company of $30,000,000 or more and at a price per share of Class B Common
Stock (as constituted as of December 17, 1997) of $700 or higher.
5
<PAGE>
"Registration Rights Agreement" has the meaning ascribed thereto in
-----------------------------
Section 2.1.
"Related Person" means, with respect to any Investor, (i) any officer,
--------------
director or partner of, or Person controlling, such Investor or (ii) any other
Person that is (x) an Affiliate of an Investor, (y) an Affiliate of the general
partner(s), investment manager(s) or investment advisor(s) of an Investor or (z)
an investment fund, investment account or investment entity whose investment
manager, investment advisor or general partner thereof is an Investor or an
Affiliate of an Investor.
"Rule 144A" means Rule 144A as promulgated by the SEC under the
---------
Securities Act, as amended from time to time, and any successor rule or
regulation thereto.
"SEC" means the Securities and Exchange Commission and any successor
---
thereto.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations of the SEC thereunder, and any successor statute or law
thereto.
"Security" or "Securities" has the meaning ascribed thereto in
-------- ----------
Section 2.1.
- -----------
"Stockholders Agreement" has the meaning ascribed thereto in
----------------------
Section 2.1.
- -----------
"Subsidiary" of any person means (a) a corporation in which such
----------
Person, a subsidiary of such Person, or such Person and one or more subsidiaries
of such Person, directly or indirectly, at the date of determination, has either
(i) a majority ownership interest or (ii) the power, under ordinary
circumstances, to elect, or to direct the election of, a majority of the board
of directors of such corporation, or (b) a partnership in which such Person, a
subsidiary of such Person, or such Person and one or more subsidiaries of such
Person (i) is, at the date of determination, a general partner of such
partnership, or (ii) has a majority ownership interest in such partnership or
the right to elect, or to direct the election of, a majority of the governing
body of such partnership, or (c) any other Person (other than a corporation or a
partnership) in which such Person, a subsidiary of such Person, or such Person
and one or more subsidiaries of such Person has either (i) at least a majority
ownership interest or (ii) the power to elect, or to direct the election of, a
majority of the directors or other governing body of such Person.
"Taxes" shall mean all Federal, state, local and foreign taxes, and
-----
other assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax, or penalties applicable
thereto.
6
<PAGE>
"Tax Authority" means the Internal Revenue Service and any other
-------------
domestic or foreign governmental authority responsible for the administration of
any Taxes.
"Tax Returns" shall mean all Federal, state, local and foreign tax
-----------
returns, declarations, statements, reports, schedules, forms and information
returns and any amended Tax Return relating to Taxes.
"Transactions" has the meaning ascribed thereto in Section 4.4.
------------
"Voting Securities" means any class of Equity Interests of a Person
-----------------
pursuant to which the holders thereof have, at the time of determination, the
general power under ordinary circumstances to vote for the election of
directors, managers, trustees or general partners of such Person (irrespective
of whether or not at the time any other class or classes will have or might have
the general power under ordinary circumstances to vote for the election of
directors, managers, trustees or general partners by reason of the happening of
any contingency).
"Warrant Agreement" means the Warrant Agreement, to be dated as of the
-----------------
Closing Date, by and among the Company and the Investors, in the form attached
hereto as Exhibit B.
"Warrants" has the meaning ascribed thereto in Section 2.1.
-------- -----------
"Warrant Shares" has the meaning ascribed thereto in Section 2.1.
-------------- -----------
Section 1.2 Rules of Construction
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) "or" is not exclusive;
(c) words in the singular include the plural, and words in the plural
include the singular;
(d) provisions apply to successive events and transactions; and
7
<PAGE>
(e) "herein," "hereof," "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any
particular section or other subdivision.
ARTICLE II
PURCHASE AND SALE OF SECURITIES
Section 2.1 Issue and Sale of Securities
The Company has authorized the issuance and sale to the Investors, in
the respective amounts set forth below such Investor's name on the signature
page hereto, of (i) an aggregate of 15,384 shares of Class B Convertible
Preferred Stock, par value $.01 (the "Class B Preferred Stock"), having the
-----------------------
rights set forth in the Amended and Restated Certificate of Designation of the
Company and the Amended and Restated Certificate of Incorporation of the Company
in the form attached as Exhibit A (collectively, the "Certificate of
--------------
Incorporation"), to be issued to the Investors, and (ii) warrants (the
- -------------
"Warrants") to purchase, an aggregate of 1,775 shares of Class B Preferred
--------
Stock, subject to adjustment as set forth in the Warrant Agreement. The shares
of Class B Preferred Stock issued on the Closing Date pursuant to this Agreement
(the "Preferred Shares") and the Warrants are referred to herein as a "Security"
---------------- --------
and collectively as the "Securities" and the shares of Class B Preferred Stock
----------
issuable upon exercise of the Warrants are referred to herein as the "Warrant
-------
Shares." Each Holder of Securities will have certain registration rights with
- ------
respect to the Class B Common Stock, $.0l par value of the Company, underlying
the Preferred Shares and the Warrant Shares as set forth in the Registration
Rights Agreement dated as of April 30, 1996, as amended, by and among the
Company, Kelso, the Chase Investors and each of the other Persons listed on the
signature pages thereto, a copy of which is attached hereto as Exhibit C (the
"Registration Rights Agreement"). Each Investor shall also become a party to the
-----------------------------
Second Amended and Restated Stockholder Agreement, to be dated as of the Closing
Date, by and among the Company, Kelso, the Chase Investors and the other Persons
who are parties thereto, a copy of which is attached hereto as Exhibit D (the
"Stockholders Agreement").
----------------------
Each Warrant shall be substantially in the form attached as Exhibit A
to the Warrant Agreement. Each Warrant shall be dated the date of its issuance.
The Warrants will be exercisable, in the manner provided in the Warrant
Agreement and the Warrants, for a number of Warrant Shares as provided in the
Warrant Agreement and the Warrants. The terms and provisions contained in the
Warrant Agreement and in the Warrants shall constitute, and are hereby expressly
made, a part of this Agreement and, to the extent applicable, the Company and
the Holders, by their execution and delivery of this Agreement, expressly agree
to such terms and provisions and to be bound thereby.
8
<PAGE>
Section 2.2 Purchase and Sale of Securities
(a) Purchase and Sale. Subject to the terms and conditions set forth
herein and in reliance on the respective representations and warranties of the
Company, on the one hand, and the Investors, on the other hand, contained
herein, the Company agrees to sell to each Investor, and each of the Investors
agrees, severally but not jointly, to purchase from the Company, the Securities
indicated on Schedule 1 attached hereto for an aggregate purchase price of
$4,999,800 for all of the Securities.
(b) Closing. The purchase and sale of the Securities shall take place
at a closing (the "Closing") at the offices of Debevoise & Plimpton, 375 Third
-------
Avenue, New York, New York, 10022, at 10:00 a.m., New York time, on the date
hereof, or at such other place and/or on such other Business Day as may be
agreed upon by the Investors and the Company (the "Closing Date"). At the
------------
Closing, the Company will deliver to each of the Investors the Securities to be
purchased by such Investor (registered in such Investor's name or the name of
such nominee or nominees as such Investor may request), dated the Closing Date,
against payment of the purchase price therefor by intra-bank or Federal funds
bank wire transfer of same day funds to such bank account within the United
States as the Company shall designate at least two Business Days prior to the
Closing.
(c) Fees and Expenses. Provided that the Closing occurs, the Company
agrees to pay or reimburse all expenses relating to this Agreement, including
but not limited to:
(1) each Investor's expenses incurred in connection with the
transactions contemplated by this Agreement, the Warrant
Agreement, the Stockholder Agreement, the Registration Rights
Agreements and the other Documents including, without limitation,
costs incurred in connection with such Investor's review of the
Company's business and operations, including the reasonable fees
and other charges and expenses of the Investor's counsel incurred
in connection herewith or with the other Documents and reasonable
fees and other charges and expenses of Investor's consultants,
provided such fees and expenses of Investor's consultants have
been approved by the Company in advance;
(2) any reasonable fees and other charges and expenses
(including the reasonable fees and other charges and expenses of
counsel) incurred in connection with any registration or
qualification of the Securities
9
<PAGE>
required in connection with the offer and sale of the
Securities pursuant to this Agreement under the securities
or "blue sky" laws of any jurisdiction requiring such
registration or qualification or in connection with
obtaining any exemptions from such requirements; and
(3) each Investors or Holder's expenses (including
the reasonable fees and other charges and expenses of their
counsel) relating to any amendment to, or modification of,
or any waiver or consent or preservation of rights under,
this Agreement, the Securities or any of the other
Documents.
Reimbursement of the expenses to which such Investor is entitled
pursuant to this Section 2.2(c), including, without limitation, the
--------------
reasonable fees and other charges and expenses of such Investor's counsel,
shall be made concurrently with the Closing by intra-bank or Federal funds
bank wire transfer of same day funds, or at such other time and in such
other manner as the Company and the Investors may agree.
(d) Other Investors. Each Investor's obligations hereunder are subject
to the execution and delivery of this Agreement by the other Investors
listed on the signature pages hereof. The obligations of each Investor
shall be several and not joint, and no Investor shall be liable or
responsible for the acts of any other Investor under this Agreement.
Section 2.3 Issue Taxes
The Company agrees to pay all Taxes (other than Taxes in the nature of
income, franchise or gift taxes) and governmental fees arising in connection
with the issuance, sale, delivery or transfer by the Company to each Holder of
the Preferred Shares, the Warrants and the Warrant Shares, as the case may be,
and the execution and delivery of the other Documents and any modification of
any of such Securities and Documents and will hold such Holder harmless without
limitation as to time against any and all liabilities with respect to all such
Taxes and fees.
10
<PAGE>
ARTICLE III
CLOSING CONDITIONS
Section 3.1 Conditions to Obligations of the Investors
The obligations of each Investor to purchase and pay for the
Securities to be delivered to such Investor at the Closing shall be subject to
the satisfaction or waiver of each of the following conditions on or before the
Closing Date:
(a) Delivery of Documents. The Company shall have delivered to each
Investor, in form and substance satisfactory to such Investor, the following:
(i) The Preferred Shares and Warrants being purchased by such
Investor, duly executed by the Company, in the aggregate number set forth
below such Investor's name on the signature pages hereto.
(ii) An opinion, dated the Closing Date and addressed to each
Investor, from Minkin & Snyder, PC, counsel for the Company, as to the
matters set forth in Exhibit E.
(iii) Resolutions of the Board of Directors of the Company, certified
by the Secretary of the Company to be duly adopted and in full force and
effect on such date, authorizing the execution, delivery and performance of
this Agreement, the Warrant Agreement and the other Documents to which the
Company is a party and the consummation of the transactions contemplated
hereby and thereby, including the issuance of the Preferred Shares and
Warrants pursuant to this Agreement.
(iv) Copies of the certificate of incorporation of the Company
together with good standing certificates from the state of its
incorporation, from the state in which its principal place of business is
located, and from all states in which the laws thereof require the Company
to be qualified and/or licensed to do business, except where the failure to
be so qualified would not result in a Material Adverse Effect, each to be
dated a recent date prior to the Closing Date and certified by the
applicable Secretary of State or other authorized governmental entity.
(v) Certificate of the Secretary of the Company dated the Closing
Date certifying (A) a copy of the bylaws of the Company, (B) resolutions of
the Board of Directors of the Company, authorizing the execution, delivery
and performance of this Agreement, the Warrant Agreement and the other
Documents to which the Company is a
11
<PAGE>
party and the consummation of the transactions contemplated hereby and
thereby, including the issuance of the Preferred Shares and Warrants
pursuant to this Agreement, (C) written consent resolutions of the
stockholders of the Company authorizing the execution and filing of the
Certificate of Incorporation, (D) the notice delivered to nonconsenting
stockholders of the Company regarding such written consent resolutions of
the stockholders of the Company, and (E) as to the incumbency and
genuineness of the signatures of the officers of the Company.
(vi) Such additional information and materials as any Investor may
reasonably request.
(b) Compliance with Agreements. The Company shall have performed
and complied with all agreements, covenants and conditions contained herein, in
each of the other Documents and in any other document contemplated hereby or
thereby which are required to be performed or complied with by the Company on or
before the Closing Date.
(c) Completion of Other Transactions. Simultaneously with or prior
to the sale to each Investor of the Securities to be purchased by such Investor:
(i) The Company shall have executed and delivered the Warrant
Agreement.
(ii) The Company, Kelso and each Investor shall have executed and
delivered an Agreement to be Bound to the Registration Rights Agreements.
(iii) The Company, Kelso and each Investor shall have executed and
delivered an Agreement to be Bound to the Stockholder Agreement.
(iv) All of the other Investors listed in the signature pages hereof
shall have consummated their purchase of Securities pursuant to this
Agreement.
(v) The Company and the Investors shall have executed and delivered
the Warrant Award Agreement in substantially the form of Exhibit F hereto.
(d) Representations and Warranties. All of the representations and
warranties of the Company contained herein shall be true and correct in all
material respects on and as of the Closing Date, both before and after giving
effect to the transactions contemplated hereby and by the other Documents.
12
<PAGE>
(e) Proceedings Satisfactory. All proceedings taken in connection
with the sale of the Securities, the transactions contemplated hereby, and all
documents and papers relating thereto, shall be reasonably satisfactory to such
Investor. Such Investor and its counsel shall have received copies of such
documents and papers as they may reasonably request in connection therewith, or
as a basis for the opinions to be delivered pursuant to Section 3.1(a)(ii), all
------------------
in form and substance satisfactory to such Investor.
(f) Consents and Permits. The Company shall have received all
consents, permits, approvals and authorizations and sent or made all notices,
filings, registrations and qualifications as may be required pursuant to any
law, statute, regulation or rule (Federal, state, local or foreign) or pursuant
to any other agreement, order or decree to which any of them is a party or to
which any of them is subject, in connection with the transactions to be
consummated on or prior to the Closing Date as contemplated by this Agreement or
any of the other Documents, except for any such consents, approvals or
authorizations the failure of which to obtain would not reasonably be expected
to have a Material Adverse Effect.
(g) No Material Adverse Change. There shall not have been any
material adverse change in the properties, business, operations, assets,
prospects, condition (financial or otherwise) of the Company and its
Subsidiaries.
(h) No Material Judgment or Order. There shall not be on the
Closing Date any judgment or order of a court of competent jurisdiction or any
ruling of any agency of the Federal, state or local government that, in the
reasonable judgment of any Investor or its counsel, would prohibit the sale or
issuance of the Securities hereunder or subject the Company to any material
penalty if the Securities were to be issued and sold hereunder.
Section 3.2 Conditions to Obligations of the Company
The obligations of the Company to sell and issue the Securities to be
delivered to each Investor at the Closing shall be subject to the satisfaction
or waiver of each of the following conditions on or before the Closing Date:
(a) Completion of Other Transactions. Simultaneously with or prior
to the sale to each Investor of the Securities to be purchased by such Investor:
(1) all of the other Investors listed in the signature pages hereof
shall have consummated their purchase of Securities pursuant to this Agreement;
and
13
<PAGE>
(2) each of the Investors shall have executed and delivered the
Agreement to be Bound to the Stockholder Agreement.
(b) Representations and Warranties. All of the representations
and warranties of the Investors contained herein or in any of the other
Documents shall be true and correct on and as of the Closing Date, both before
and after giving effect to the transactions contemplated hereby and by the other
Documents.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investors on the date
hereof and as of the Closing as follows:
Section 4.1 Due Incorporation and Good Standing
The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware with
corporate power and authority to own, lease and operate its properties, to
conduct its business as currently conducted and as proposed to be conducted and
to enter into and perform its obligations under this Agreement and the other
Documents to which it is a party. The Company is duly qualified as a foreign
corporation to transact business and is in good standing in each jurisdiction in
which such qualification is required.
Section 4.2 Capitalization
(a) The authorized capital stock of the Company consists of (a)
50,000,000 shares of Class A Common Stock, par value S.01 per share (the "Class
-----
A Common Stock"), (b) 100,000,000 shares of Class B Common Stock, par value $.0l
- --------------
per share (the "Class B Common Stock"), (c) 500,000 shares of blank check
--------------------
preferred stock, 250,000 shares of which have been designated as Class A
Convertible Preferred Stock, par value $.0l per share (the "Class A Preferred
Stock"), 100,000 shares of which have been designated as Class B Preferred
Stock, and 15,000 shares of which have been designated as Class C Convertible
Preferred Stock, par value $.0l per share (the "Class C Preferred Stock"). As of
the Closing Date, after giving effect to the transactions contemplated by this
Agreement and the other Documents, (i) there will be issued and outstanding (A)
no shares of Class A Common Stock, (B) 82,298 shares of Class B Common Stock,
all of which will be validly issued and fully paid and nonassessable, (C)
169,260 shares of Class A Preferred Stock, all of which will be validly issued
and fully paid and nonassessable, (D) 83,075 shares of Class B Preferred Stock,
all of which will be validly issued and fully paid and
14
<PAGE>
nonassessable, and (E) 9,232 shares of Class C Preferred Stock, all of which
will be validly issued and fully paid and nonassessable; (ii) there will be
reserved for issuance (A) 365,000 shares of Class A Common Stock to be issued
upon conversion of the Class A Preferred Stock, the Class B Preferred Stock and
the Class C Preferred Stock, (B) 58,201 shares of Class B Common Stock to be
issued upon the exercise of outstanding options and warrants (other than the
Warrants); (C) 94,108 shares of Class B Common Stock to be issued upon the
exercise of unissued options pursuant to the Company's 1996 Stock Option Plan,
as amended, (D) 10,650 shares of Class B Preferred Stock to be issued upon
exercise of the Warrants and (E) 365,000 shares of Class B Common Stock to be
issued upon conversion of the Class A Common Stock. Except as set forth above
and on Schedule 4.2 hereto, at the Closing Date, after giving effect to the
transactions contemplated by this Agreement and the other Documents, no Equity
Interests of the Company will be issued or outstanding and there are not, and at
the Closing Date there will not be, any options, agreements, instruments or
securities relating to the issued or unissued Equity Interests of the Company or
any Subsidiary of the Company, or obligating the Company or any Subsidiary of
the Company to issue, transfer, grant or sell any Equity Interests in the
Company or any Subsidiary.
(b) The Company has complied with all federal and state securities
laws in connection with the issuance of all outstanding Equity Interests, except
where such failure would not have a Material Adverse Effect.
(c) Except as listed on Schedule 4.2, and except as contemplated by
the Documents, there are no preemptive rights, voting agreements, transfer
restrictions (except those imposed by applicable federal and state securities
laws), or registration rights (except as set forth in the Registration Rights
Agreement) affecting the Equity Interests in the Company.
Section 4.3 Subsidiaries
Schedule 4.3 hereto sets forth a list of all Subsidiaries of the Company
and the respective state or jurisdiction of incorporation or organization. All
of the issued or outstanding Equity Interests of such Subsidiaries have been
duly and validly issued and are fully paid and nonassessable and are owned,
directly or indirectly, by the Company. Each Subsidiary of the Company is duly
incorporated and is in good standing in its respective state or jurisdiction of
incorporation and has the corporate authority to own, lease or operate its
properties and to conduct its business as currently conducted and as proposed to
be conducted. Each Subsidiary of the Company is duly qualified to transact
business and is in good standing as a foreign corporation in each state or
jurisdiction in which such qualification is required, except where the failure
to be so qualified would not reasonably be expected to have a Material Adverse
Effect.
15
<PAGE>
Section 4.4 Authority
The Company has all necessary corporate power and authority to execute
and deliver this Agreement and each of the other Documents to which it is a
party, and to perform its obligations hereunder and thereunder, and to
consummate the transactions contemplated hereby and thereby (the
"Transactions"). The execution and delivery of this Agreement and the other
------------
Documents to which it is a party has been authorized by all necessary corporate
action on the part of the Company and no other corporate proceedings or
approvals are required on the part of the Company to authorize this Agreement or
the other Documents to which it is a party or to consummate the Transactions.
This Agreement has been duly and validly executed and delivered by the Company
and, assuming the due authorization, execution and delivery thereof by the
Investors, constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
Section 4.5 Authorization, Etc. of Preferred Shares
The issuance and sale of the Preferred Shares has been duly authorized
and the Preferred Shares when issued to the Investors for the consideration set
forth herein will be fully paid and non-assessable, with no personal liability
attached to the ownership thereof.
Section 4.6 Authorization, Etc. of Warrant Agreement and Warrant
Shares
The Warrant Agreement has been duly authorized and, at the Closing,
will be validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery thereof by the Investors, will constitute
a legal, valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as such enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to or affecting creditors' rights generally and
by general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). The Company has duly authorized
and reserved a sufficient number of shares of Class B Preferred Stock for
issuance upon exercise of the Warrants and the Warrant Shares, when issued upon
exercise of the Warrants in accordance with the terms of the Warrant Agreement
and the Warrants, will be validly issued and fully paid and nonassessable, with
no personal liability attached to the ownership thereof.
16
<PAGE>
Section 4.7 Authorization, Etc. of Registration Rights Agreement
The Registration Rights Agreement has been duly authorized, validly
executed and delivered by the Company and constitutes the legal, valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except (a) as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally and by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and (b) rights to indemnification thereunder
may be limited by Federal or state securities laws or the policies underlying
such laws.
Section 4.8 Authorization, Etc. of Stockholder Agreement
The Stockholder Agreement has been duly authorized and, validly
executed and delivered by the Company, Kelso and the required stockholders of
the Company and constitutes a legal, valid and binding agreement of the Company,
enforceable against the Company, in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
Section 4.9 No Violation or Conflict; No Default
(a) Neither the nature of the business of the Company or any of its
Subsidiaries, the execution, delivery or performance of this Agreement, the
Securities, the Registration Rights Agreement, the Warrant Agreement, the
Stockholder Agreement or any of the other Documents by the Company, nor the
compliance with its obligations hereunder or thereunder, nor the consummation of
the transactions contemplated hereby and thereby, nor the issuance, sale or
delivery of the Securities will:
(1) violate or conflict with any provision of the Charter Documents
of the Company or any of its Subsidiaries;
(2) violate or conflict with any statute, law, rule or regulation
or any judgment, decree, order, regulation or rule of any court or
governmental authority or body (collectively, "Laws") applicable to the
----
Company or any of its Subsidiaries or by which any of their respective
properties or assets may be subject, except where such violation would not
reasonably be expected to have, singly or in the aggregate, a Material
Adverse Effect; or
17
<PAGE>
(3) violate, be in conflict with, or constitute a breach or default
(or any event which, with the passage of time or notice or both, would
become a default) under, or permit the termination of, or require the
consent of any Person under, result in the creation or imposition of any
Lien upon any property of the Company or its Subsidiaries under, result in
the loss (by the Company or any Subsidiary) or modification in any manner
adverse to the Company and its Subsidiaries of any right or benefit under,
or give to any other Person any right of termination, amendment,
acceleration, repurchase or repayment, increased payments or cancellation
under, any mortgage, indenture, note, debenture, agreement, lease, license,
permit, franchise or other instrument or obligation, whether written or
oral (collectively, "Contracts") to which the Company or any of its
---------
Subsidiaries is a party or by which their properties may be bound or
affected except as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(b) The Company is not in default (without giving effect to any
grace or cure period or notice requirement) under any Contract, any of the
Charter Documents, or any applicable judgments or orders, except where such
default would not, individually or in the aggregate reasonably be expected to
have a Material Adverse Effect.
(c) The execution and delivery of this Agreement and the other
Documents to which the Company is a party do not, and the performance of its
obligations under this Agreement and the other Documents and the consummation of
the Transactions will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Body under any
Laws, except for (i) required filings under the Securities Act or state "blue
sky" laws as a result of the exercise of rights under the Registration Rights
Agreement, and (ii) where the failure to obtain such consents, approvals,
authorizations or permits or to make such filings or notifications, would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect or prevent or delay in any material respect consummation of the
Transactions, or otherwise prevent the Company from performing their obligations
under this Agreement or the other Documents.
Section 4.10 Use of Proceeds
The proceeds from the sale of the Securities will be used for general
corporate purposes.
18
<PAGE>
Section 4.11 No Material Adverse Change; Financial Statements
(a) Except as set forth on Schedule 4.11 hereto, subsequent to
October 31, 1997, there has not been (i) any material adverse change in the
properties, business, prospects, operations, assets or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole, (ii) any asset
or property of the Company made subject to a Lien of any kind, other than a
Permitted Lien, (iii) any waiver of any valuable right of the Company or any
Subsidiary, or the cancellation of any material debt or material claim held by
the Company or any Subsidiary, (iv) any payment of dividends on, or other
distributions with respect to, or any direct or indirect redemption or
acquisition of, any shares of the capital stock of the Company, or any agreement
or commitment therefor, (v) any mortgage, pledge, sale, assignment or transfer
of any material tangible or intangible assets of the Company, except in the
ordinary course of business, (vi) any loan by the Company or any Subsidiary to
any officer, director, employee, consultant or stockholder or any agreement or
commitment therefor, other than travel expense advances made by the Corporation
to its officers, directors, employees, consultants or stockholders in the
ordinary course of business, (vii) any material damage, destruction or loss
(whether or not covered by insurance) affecting the assets of the Company or any
Subsidiary or (viii) any increase, direct or indirect, in the compensation paid
or payable to any officer, director, employee, or consultant of the Company or
any Subsidiary other than in the ordinary course of business.
(b) The Company has heretofore furnished the Investors with a true
and complete copy of (i) the audited financial statements of iXL Interactive
Excellence, Inc. (n/k/a iXL, Inc.) for the years ended December 31, 1993, 1994
and 1995, and for the four-month period ending April 30, 1996; (ii) audited
combined financial statements for Creative Video, Inc. (n/k/a iXL, Inc.),
Creative Video Library, Inc. and Entrepreneur Television, Inc. for the years
ending December 31, 1993, 1994 and 1995, and for the four-month period ending
April 30, 1996; (iii) the audited consolidated financial statements for the
Company and its Subsidiaries for the eight months ended December 31, 1996; and
(iv) the unaudited consolidated financial statements for the Company and its
Subsidiaries, dated October 31, 1997. Such financial statements present fairly
in all material respects the consolidated financial position, results of
operations, shareholders' equity and cash flows of the Company 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 each 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). Except as set forth on Schedule 4.11, since
October 31, 1997, neither the Company nor any of its Subsidiaries has incurred
any liabilities or obligations (whether absolute, accrued, fixed, contingent,
liquidated, unliquidated or otherwise and whether due or to become due) of any
nature, except for liabilities, obligations or contingencies (a) which are
reflected in the unaudited balance sheet of the Company at October 31, 1997, (b)
which were incurred in the ordinary course of business after October 31,
19
<PAGE>
1997 and consistent with past practices, (c) which would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect, or (d)
which arise as a result of this Agreement or the other Documents. Since December
31, 1996, there has been no change in any significant accounting (including tax
accounting) policies, practices or procedures of the Company or its
Subsidiaries. All financial statements concerning the Company and its
Subsidiaries that will hereafter be furnished by the Company and its
Subsidiaries to the Investors or any Holder pursuant to this Agreement will be
prepared in accordance with GAAP consistently applied (except as disclosed
therein) and will present fairly in all material respects the financial
condition of the entities covered thereby as at the dates thereof and the
results of their operations for the periods then ended.
(c) Except as set forth on Schedule 4.11, the Company has good
and marketable title to all properties, interests in properties and assets,
real, personal and mixed, tangible or intangible, used in the conduct of its
business, free and clear of all Liens other than Permitted Liens.
Section 4.12 Full Disclosure
Neither this Agreement, the financial statements referred to in
Section 4.11 nor any Document contains any untrue statement of a material fact
- ------------
or omits or will omit to state a material fact necessary to make the statements
contained herein or therein not misleading in light of the circumstances under
which they were made.
Section 4.13 Private Offering
Assuming the correctness of the representations and warranties set
forth in Sections 5.1 and 5.2 hereof, the offer and sale of the Securities to
--------------------
the Investors hereunder is exempt from the registration and prospectus delivery
requirements of the Securities Act. In the case of each offer or sale of the
Securities, no form of general solicitation or general advertising was used by
the Company and its representatives, including, but not limited to,
advertisements, articles, notices or other communications published in any
newspaper, magazine or similar medium or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
Section 4.14 No Brokers
The Company has not engaged any broker, finder, commission agent or
other such intermediary in connection with the sale of the Securities and the
transactions contemplated by this Agreement and the other Documents, and the
Company is under no obligation to pay any broker's or finder's fee or commission
or similar payment in connection with such transactions.
20
<PAGE>
Section 4.15 Litigation
(a) Except as set forth on Schedule 4.15, there is no action
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced, or to the knowledge of the Company, threatened
("Proceedings") against or affecting the Company or any of its Subsidiaries or
-----------
any of their respective properties or assets, except for such Proceedings that
would not reasonably be expected to have, singly or in the aggregate, a Material
Adverse Effect, and there is no Proceeding seeking to restrain, enjoin, prevent
the consummation of or otherwise challenge this Agreement or any of the other
Documents or the transactions contemplated hereby or thereby.
(b) Neither the Company nor any of its Subsidiaries is subject to (i)
any judgment, order or decree of any Governmental Body, or (ii) any rule or
regulation of any Governmental Body that has had a Material Adverse Effect or
that would reasonably be expected to have, singly or in the aggregate, a
Material Adverse Effect.
Section 4.16 Labor Relations
Neither the Company nor any of its Subsidiaries, nor any Person for whom
the Company or any of its Subsidiaries is or may be responsible by law or
contract, is engaged in any unfair labor practice that would reasonably be
expected to have, singly or in the aggregate, a Material Adverse Effect. There
is (a) no unfair labor practice charge or complaint pending or, to the knowledge
of the Company, threatened against the Company or any of its Subsidiaries, or
any Person for whom the Company or any of its Subsidiaries is or may be
responsible by law or contract, before the National Labor Relations Board or any
corresponding state, local or foreign agency, and no grievance or arbitration
proceeding arising out of or under any collective bargaining agreement is so
pending or threatened, (b) no strike, labor dispute, slowdown or stoppage
pending or threatened against the Company or any of its Subsidiaries, or any
Person for whom either the Company or any of its Subsidiaries is or may be
responsible by law or contract, and (c) no union representation claim or
question existing with respect to the employees of the Company or any of its
Subsidiaries, or any Person for whom either the Company or any of its
Subsidiaries is or may be responsible by law or contract, and no union
organizing activities taking place. Neither the Company nor any of its
Subsidiaries, nor any Person for whom the Company or any of its Subsidiaries is
or may be responsible by law or contract, is a party to any collective
bargaining agreement.
Except as disclosed on Schedule 4.16 or such as would not reasonably
be expected to result in a Material Adverse Effect, neither the Company nor any
of its Subsidiaries has violated any applicable Federal, state, provincial or
foreign law relating to employment or employment
21
<PAGE>
practices or the terms and conditions of employment, including, without
limitation, discrimination in the hiring, promotion or pay of employees, wages,
hours of work, plant closings and layoffs, collective bargaining, immigration
and occupational safety and health. To the knowledge of the Company or any of
its Subsidiaries, no charges with respect to or relating to the Company or any
of its Subsidiaries are pending before the Equal Employment Opportunity
Commission or any other corresponding state agency, and the Company and each of
its Subsidiaries have at all times been in material compliance with all Federal
and state laws and regulations prohibiting discrimination in the workplace
including, without limitation, laws and regulations that prohibit discrimination
and/or harassment on account of race, national origin, religion, gender,
disability, age, immigration status, workers compensation status or otherwise.
Section 4.17 Taxes
Except as otherwise disclosed in Schedule 4.17:
(a) The Company and its Subsidiaries have timely filed or will timely
file or cause to be timely filed, all Tax Returns (or extensions) required by
applicable law to be filed by any of it prior to or as of the Closing Date. All
such Tax Returns and amendments thereto are or will be true, complete and
correct in all material respects.
(b) The Company and its Subsidiaries have paid or where payment is not
yet due, have established, or will establish or cause to be established on or
before the Closing Date, an adequate accrual for the payment of all Taxes due
with respect to any period ending prior to or as of the Closing Date.
(c) No Audit by a Tax Authority is pending or threatened with respect
to any Tax Returns filed by, or Taxes due from, the Company or its Subsidiaries.
No issue has been raised by any Tax Authority in any Audit of the Company or its
Subsidiaries that if raised with respect to any other period not so audited
would reasonably be expected to result in a material proposed deficiency for any
period not so audited. No deficiency or adjustment for any Taxes has been
threatened, proposed, asserted or assessed against the Company or its
Subsidiaries. There are no liens for Taxes upon the assets of the Company or its
Subsidiaries, except liens for current Taxes not yet due.
(d) Neither Company nor its Subsidiaries have given or been requested
to give any waiver of statutes of limitations relating to the payment of Taxes
or has executed powers of attorney with respect to Tax matters, which will be
outstanding as of the Closing Date.
22
<PAGE>
(e) Neither the Company nor its Subsidiaries are a party to, or are
bound by any tax sharing, cost sharing, or similar agreement or policy relating
to Taxes.
(f) Neither the Company nor its Subsidiaries have entered into
agreements that would result in the disallowance of any tax deductions pursuant
to Section 280G of the Code. No "consent" within the meaning of Section 341(f)
------------ --------------
of the Code has been filed with respect to the Company or its Subsidiaries.
Section 4.18 Environmental Matters
(a) Each of the Company and its Subsidiaries is in compliance with all
Environmental Laws, except where such non-compliance would not reasonably be
expected to have a Material Adverse Effect, and neither the Company nor any of
its Subsidiaries has received any written communication that alleges that the
Company or its Subsidiaries is not in compliance with any Environmental Laws,
and there are no circumstances that may prevent or interfere with such
compliance in the future.
(b) There is no Environmental Claim pending or to the knowledge of the
Company threatened against the Company or any of its Subsidiaries with respect
to the operations or business of the Company or its Subsidiaries, or against any
person or entity whose liability for any Environmental Claim the Company or its
Subsidiaries has retained or assumed either contractually or by operation of
law.
(c) To the Company's knowledge, there are no past or present actions,
activities, circumstances, conditions, events or incidents, including, without
limitation, the release, emission, discharge, presence or disposal of any
Material of Environmental Concern, that could form the basis of any
Environmental Claim against the Company or its Subsidiaries, or against any
person or entity whose liability for any Environmental Claim the Company or its
Subsidiaries has retained or assumed either contractually or by operation of
law, which would reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect
(d) Without in any way limiting the generality of the foregoing,
Schedule 4.18(d) sets forth (i) all permits, licenses and other governmental
authorizations held by the Company and its Subsidiaries, or required for any of
their operations or business, under any Environmental Law, including the current
status of each such permit, license and authorization, (ii) all on-site and to
the knowledge of the Company off-site locations where the Company or any of its
Subsidiaries has stored, disposed or arranged for the disposal of Materials of
Environmental Concern, (iii) to the knowledge of the Company, all underground
storage tanks, and the capacity and contents of such tanks, located on property
owned, leased or controlled by the Company or its
23
<PAGE>
Subsidiaries, (iv) to the knowledge of the Company, the location and condition
of any asbestos or lead (including furnishings or lead-based paints) contained
in or forming part of any building, building component, structure or office
space owned, leased or controlled by the Company or its Subsidiaries, and (v) to
the knowledge of the Company, all PCBs or PCB-containing items that are used or
stored at any property owned, leased or controlled by the Company or its
Subsidiaries.
Section 4.19 ERISA
Except as set forth on Schedule 4.19, neither the Company nor its
Subsidiaries, or any other trade or business, whether or not incorporated that
together with the Company or its Subsidiaries would be deemed a "single
employer" (within the meaning of Section 4001 of ERISA (an "ERISA Affiliate") is
---------------
a "party in interest" (as defined in Section 3(14) of ERISA) or a "disqualified
person" (within the meaning of Section 4975 of the Code), with respect to any
profit-sharing, pension or retirement plan, program, arrangement or agreement,
or any other "employee benefit plan" (within the meaning of Section 3(3) of
ERISA) or any "plan" (within the meaning of Section 4975 of the Code)
(collectively, each such plan, program, arrangement or agreement an "Employee
--------
Benefit Plan").
- ------------
With respect to each Employee Benefit Plan: (i) each Employee Benefit
Plan has been administered in compliance in all material respects, with its
terms including, but not limited to, any provisions relating to contributions
thereunder, and is in compliance in all material respects with the applicable
provisions of ERISA, the Code and all other Federal, state and other applicable
laws, rules and regulations, as they relate to such Employee Benefit Plans; (ii)
no "employee pension benefit plan" (as defined in Section 3(2) of ERISA) has
been the subject of a "reportable event" (as defined in Section 4043 of ERISA)
and there have been no "prohibited transactions" (as described in Section 4975
of the Code or Title I of ERISA) effected by the Company or its Subsidiaries
with respect to any Employee Benefit Plan and, to the knowledge of the Company
and its Subsidiaries, there have been no "prohibited transactions" (as described
in Section 4975 of the Code or Title I of ERISA) effected by any Person other
than the Company or its Subsidiaries with respect to any Employee Benefit Plan;
(iii) there are no proceedings, suits or material claims (other than routine
claims for benefits) pending or to the knowledge of the Company or its
Subsidiaries threatened with respect to any Employee Benefit Plan, the assets of
any trust thereunder or the Employee Benefit Plan sponsor with respect to the
design or operation of any Employee Benefit Plan, (iv) no condition exists or
event or transaction has occurred in connection with any Employee Benefit Plan
that has resulted or is reasonably likely to result in the Company or its
Subsidiaries or any such ERISA Affiliate incurring any liability, fine or
penalty except as would not reasonably be expected to have, singly or in the
aggregate, a Material Adverse Effect; (v) no Employee Benefit Plan is or ever
has been subject to Title IV of ERISA and neither the Company nor its
Subsidiaries has any liability under Title IV of ERISA, whether actual or
contingent, and (vi) no amounts payable pursuant to any
24
<PAGE>
Employee Benefit Plan will, in connection with the transactions contemplated
under this Agreement, the other Documents, fail for any reason to be deductible
for Federal income tax purposes.
Section 4.20 Intellectual Property
Each of the Company and its Subsidiaries owns or possesses adequate
licenses or other rights to use all material intellectual property, including
but not limited to trademarks, service marks, trade names, copyrights, computer
software, and know-how, necessary to conduct its business as currently conducted
and as proposed to be conducted, and neither the Company nor any of its
Subsidiaries has received any written notice of infringement of or conflict with
asserted rights of others with respect to the use of intellectual property,
including but not limited to trademarks, service marks, trade names, copyrights,
computer software or know-how which would reasonably be expected to result in
any Material Adverse Effect. To the knowledge of the Company, all intellectual
property material to its business as currently conducted and as proposed to be
conducted is valid and enforceable and the Company has performed all acts and
has paid all required fees and taxes to maintain all registrations and
applications of such intellectual property in full force and effect. Neither the
Company nor any of its Subsidiaries, in the conduct of their business as now
conducted or as proposed to be conducted, infringes or conflicts with any right
of any third party, known to the Company, where such infringement or conflict
would reasonably be expected to result in any Material Adverse Effect. Neither
the Company nor any of its Subsidiaries is, nor will it be as a result of the
execution and delivery of this Agreement and the other Documents or the
performance of any obligations hereunder and thereunder, in breach of any
license or other agreement relating to any intellectual property, except as
would not reasonably be expected to have a Material Adverse Effect. To the
knowledge of the Company, no third party is infringing or has infringed any
intellectual property of the Company or its Subsidiaries. Schedule 4.20 hereto
lists all material intellectual property owned or licensed by the Company or its
Subsidiaries. For the purposes of Schedule 4.20, "material intellectual
property" shall not include any retail shrink-wrap software licensed by the
Company.
Section 4.21 Compliance with Laws
Each of the Company and its Subsidiaries has obtained and has
maintained in good standing any licenses, permits, consents and authorizations
required to be obtained by it under all Laws relating to its business, the
absence of which would reasonably be expected to have, singly or in the
aggregate, a Material Adverse Effect, and any such licenses, permits, consents
and authorizations remain in full force and effect, except as to any of the
foregoing the absence of which would not reasonably be expected to have, singly
or in the aggregate, a Material Adverse Effect. Each of the Company and its
Subsidiaries is in compliance, in all material respects, with all Laws and there
is no pending or, to the Company's knowledge, threatened, Proceedings against
either the
25
<PAGE>
Company or its Subsidiaries under any Laws, other than any such Proceedings
which, if adversely determined, would not reasonably be expected to have, singly
or in the aggregate, a Material Adverse Effect.
Section 4.22 Agreements
Except as set forth on Schedule 4.22 hereto, the Corporation is not a
party to any written or oral (a) Contract with any labor union; (b) Contract for
the future purchase of fixed assets or for the future purchase of materials,
supplies or equipment in excess of normal operating requirements; (c) Contract
for the employment of any officer, individual employee or other person on a
full-time basis or any contract with any Person on a consulting basis; (d)
agreement or indenture relating to the borrowing of money or to the mortgaging,
pledging or otherwise placing a Lien on any assets of the Company; (e) guaranty
of any obligation for borrowed money; (f) material lease or agreement under
which the Company is lessee of or holds or operates any property, real or
personal, owned by any other party; (g) material lease or agreement under which
the Company is lessor of or permits any third party to hold or operate any
property, real or personal, owned or controlled by the Company; (h) agreement or
other commitment for capital expenditures in excess of $100,000; (i) Contract,
agreement or commitment under which the Company is obligated to pay any broker's
fees, finder's fees or any such similar fees, to any third party in connection
with the transactions contemplated herein; or (j) any other Contract, agreement,
arrangement or understanding which is material to the business of the Company.
All such Contracts constitute the valid and binding obligations of the Company
and, to the best knowledge of the Company, the other parties thereto,
enforceable in accordance with their terms, except as enforcement may be limited
by general principles of equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally. For the purposes of this
Section 4.22, "material" shall mean any Contract involving more than
$100,000.00.
Section 4.23 Year 2000
The Company represents and warrants that its computer system and
software are able to accurately process date data, including but not limited to,
calculating comparing and sequencing from, into and between the twentieth
century (through the year 1999), the year 2000 and the twenty-first century,
including leap year calculations.
26
<PAGE>
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF EACH INVESTOR
Each Investor (as to itself only) represents and warrants to the
Company that:
Section 5.1 Purchase for Own Account
Such Investor is purchasing the Securities to be purchased by it
solely for its own account and not as nominee or agent for any other person and
not with a view to, or for offer or sale in connection with, any current
distribution thereof (within the meaning of the Securities Act) that would cause
the original purchase of the Securities to be in violation of the securities
laws of the United States of America or any state thereof, without prejudice,
however, to its right at all times to sell or otherwise dispose of all or any
part of such Securities pursuant to a registration statement under the
Securities Act or pursuant to an exemption from the registration requirements of
the Securities Act, and subject, nevertheless, to the disposition of its
property being at all times within its control.
Section 5.2 Accredited Investor
Such Investor is knowledgeable, sophisticated and experienced in
business and financial matters and in investing in privately held business
enterprises; it has previously invested in securities similar to the Securities
and it acknowledges that the Securities have not been registered under the
Securities Act and understands that the Securities must be held indefinitely
unless they are subsequently registered under the Securities Act or such sale is
permitted pursuant to an available exemption from such registration requirement;
it is able to bear the economic risk of its investment in the Securities and is
presently able to afford the complete loss of such investment; and it is an
"accredited investor" as defined in Regulation D promulgated under the
Securities Act.
Section 5.3 Authorization
Each Investor has taken all actions necessary to authorize it (i) to
execute, deliver and perform all of its obligations under this Agreement, (ii)
to perform all of its obligations under the Documents and (iii) to consummate
the transactions contemplated hereby and thereby. This Agreement is a legally
valid and binding obligation of each Investor enforceable against it in
accordance with its terms, except for (a) the effect thereon of bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to or
affecting the rights of creditors generally and (b) limitations imposed by
Federal or state law or equitable principles upon the specific enforceability
27
<PAGE>
of any of the remedies, covenants or other provisions thereof and upon the
availability of injunctive relief or other equitable remedies.
Section 5.4 ERISA
Each such Investor represents that either:
(a) it is not acquiring the Securities for or on behalf of any
Employee Benefit Plan;
(b) the assets used to acquire the Securities are assets of an
insurance company general account and the purchase of the Securities would be
exempt under the provisions of Prohibited Transaction Class Exemption 95-60;
(c) the assets used to acquire the Securities are assets of a "venture
capital operating company" or "real estate operating company" (as defined in 29
C.F.R' 25 10.3-101); or
(d) if it is otherwise acquiring the Securities on behalf of an
employee pension benefit plan, an employee welfare benefit plan or a "Plan,"
either directly or through an investment fund (such as a bank collective
investment fund or insurance company pooled separate account), then, assuming
that the plans identified to such Investor by the Company in writing are the
only employee benefit plans (as defined in Section 3 of ERISA) or Plans with
respect to which the Company is a "party in interest" or "disqualified person"
(as such terms are defined in section 3 of ERISA and section 4975 of the Code,
respectively), either
(i) no part of the funds to be used to purchase the Securities
constitutes assets allocable to any trust that contains assets of any of such
employee benefit plans, or
(ii) exemption from the prohibited transaction rules applies such
that the use of such funds does not constitute a non-exempt prohibited
transaction in violation of section 406 of ERISA or section 4975 of the Code,
which could be subject to a civil penalty assessed pursuant to section 502 of
ERISA or a tax imposed under section 4975 of the Code.
28
<PAGE>
ARTICLE VI
COVENANTS
The Company covenants to the Holders of outstanding Securities as
follows:
Section 6.1 Compliance with Laws; Maintenance of Licenses
The Company shall, and shall cause each of its Subsidiaries to, comply
with all statutes, ordinances, governmental rules and regulations, judgments,
orders and decrees (including all Environmental Laws) to which any of them is
subject, and maintain, obtain and keep in effect all licenses, permits,
franchises and other governmental authorizations necessary to the ownership or
operation of its properties or the conduct of its businesses, except to the
extent that the failure to so comply or maintain, obtain and keep in effect
would not reasonably be expected to have, singly or in the aggregate, a Material
Adverse Effect.
Section 6.2 Inspection of Properties and Records
Until the closing of a QPO, the Company agrees to allow, and to cause
each of its Subsidiaries to allow, each Investor or subsequent Holder who
continues to hold Preferred Shares with an original cost of at least $1,000,000
(or, such Persons as any of them may designate) (individually and collectively,
"Inspectors"), subject to appropriate agreements as to confidentiality, (i) to
----------
visit and inspect any of the properties of the Company or any of its
Subsidiaries, (ii) to examine all their books of account, records, reports and
other papers and to make copies and extracts therefrom, (iii) to discuss its
affairs, finances and accounts with its officers and employees, and (iv) to
discuss the financial condition of the Company and its Subsidiaries with their
independent accountants upon reasonable notice to the Company of its intention
to do so and so long as the Company shall be given the reasonable opportunity to
participate in such discussions (and by this provision the Company authorizes
such accountants to have such discussions with the Inspectors). All such visits,
examinations and discussions set forth in the preceding sentence shall be at
such reasonable times and as often as may be reasonably requested.
Section 6.3 Information to Prospective Investors
Until the closing of a QPO, the Company shall, upon the request of any
Investor or subsequent Holder, deliver to such Investor or such Holder and any
prospective purchaser designated by such Investor or such Holder promptly
following the request of such Investor or such Holder or such prospective
purchaser such information which such Investor or such Holder or such
prospective purchaser may reasonably request in order to comply with the
information requirements of Rule 144A.
29
<PAGE>
Section 6.4 Financial Statements
Until the closing of a QPO, the Company will deliver to each Investor or
subsequent Holder who continues to hold Preferred Shares with an original cost
of at least $1,000,000:
(a) Beginning with January 1998, not more than 30 days after the end of
each month, a consolidated balance sheet of the Company as at the end of such
month and the related consolidated statements of income of the Company for such
month and (in the case of all months other than the first month of such fiscal
year) for the period from the beginning of the current fiscal year to the end of
such month, and setting forth, in each case in comparative form, figures for the
corresponding month and each previous month and period in the Company's budget
for the current fiscal year, certified by the chief financial officer of the
Company as fairly presenting in all material respects the financial condition of
the Company as at the dates indicated and the results of their operations for
the periods indicated, prepared in accordance with generally accepted accounting
principles consistently applied except for the absence of footnotes and subject
to changes resulting from periodic adjustments;
(b) Not more than 90 days after the end of each fiscal year of the
Company, a consolidated balance sheet of the Company as of such year and the
related consolidated statements of income and cash flows of the Company for such
year, corresponding figures from the preceding fiscal year, and in the case of
such consolidated financial statements, accompanied by a report thereon of Price
Waterhouse or such other independent public accountants of recognized national
standing selected by the Company, which report shall state that such
consolidated financial statements were prepared in accordance with generally
accepted accounting principles consistently applied and present fairly in all
material respects the consolidated financial condition of the Company as of the
dates indicated; and
(c) Not later than January 15, 1998, monthly and annual management
projections and budgets for fiscal year 1998, and not later than 30 days prior
to the start of each fiscal year beginning with the fiscal year beginning
January 1, 1999, monthly and annual management projections and budgets for such
fiscal year.
Section 6.5 Employee Agreements
The Company will use its commercially reasonable best efforts to cause its
key employees to enter into confidentiality/non-competition/no-hire agreements
within six months of the Closing Date, in a form reasonably acceptable to the
Company and the Investors.
30
<PAGE>
Section 6.6 Key Man Insurance
The Company will use its commercially reasonable best efforts to purchase
within six months of the Closing Date a life insurance policy on the life of U.
Bertram Ellis, Jr. in the principal amount of $5 million the proceeds of which
shall be paid to the Company.
Section 6.7 Indemnification for Finder's Fees
The Company hereby agrees to indemnify each Investor, each Affiliate of an
Investor, and each director, officer, partner, employee, counsel, agent or
representative against and hold them harmless from all losses, claims, damages
or other liabilities arising from any finder's or other brokers or investment
banker fees payable by the Company with respect to the transactions contemplated
hereunder.
Section 6.8 Securities Act Registration Statements
Except for securities of the Company registered on Form S-4 or Form S-8
promulgated under the Securities Act or any successor forms thereto, the Company
shall not file any registration statement under the Securities Act covering any
securities unless it shall first have given the Investors written notice
thereof. In connection with any registration statement referred to in this
Section 7.4, the Company will indemnify, to the extent permitted by law, each
Investor, its partners, officers and directors and each person, if any, who
controls such Investor within the meaning of Section 15 of the Securities Act,
against all losses, claims, damages, liabilities and expenses caused by any
untrue statement or alleged untrue statement of a material fact contained in any
registration statement or prospectus or any preliminary prospectus or any
amendment thereof or supplement thereto or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or expenses are caused by any untrue
statement or alleged untrue statement or omission or alleged omission contained
in written information furnished to the Company by such Investor for use in such
registration statement. If, in connection with any such registration statement,
an Investor shall furnish written information to the Company for use in the
registration statement, such Investor will indemnify, to the extent permitted by
law, the Company, its directors, each of its officers who sign such registration
statement and each person, if any, who controls the Company within the meaning
of the Securities Act against all losses, claims, damages, liabilities and
expenses caused by any untrue statement or alleged untrue statement of a
material fact or any omission or alleged omission of a material fact required to
be stated in the registration statement or prospectus or any preliminary
prospectus or any amendment thereof or supplement thereto or necessary to make
the statements therein not misleading, but only to the extent that such
31
<PAGE>
untrue statement or alleged untrue statement or such omission or alleged
omission is contained in information so furnished in writing by such Investor
for use therein.
Section 6.9 Publicity; Press Releases.
The Company shall not issue any press release or make any public disclosure
regarding the Investors' investment in the Company contemplated hereby unless
such press release or public disclosure is approved by the Investors in advance.
Section 6.10 Observation Rights.
So long as the Investors continue to hold at least 50% of the Class B
Preferred Stock purchased in connection herewith, the Investors shall have the
right to have a representative attend any meetings of the Board of Directors
(including any adjournments thereof) either in person or by such other method as
shall be allowed under the Bylaws for Directors, and shall further have the
right to receive any notices and materials provided to the entire Board of
Directors in their capacity as such. Such representative shall have the right to
speak at such meetings and to make such suggestions and requests during such
meetings as such representative deems appropriate, and the Board of Directors
shall consider such suggestions and requests in good faith.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Notices
All notices, demands, requests, consents or approvals (collectively,
"Notices") required or permitted to be given hereunder or which are given with
-------
respect to this Agreement shall be in writing and shall be personally delivered
or mailed, registered or certified, return receipt requested, postage prepaid
(or by a substantially similar method), or delivered by a reputable overnight
courier service with charges prepaid, or transmitted by hand delivery, telegram,
telex or facsimile, addressed as set forth below, or such other address (and
with such other copy) as such party shall have specified most recently by
written notice. Notice shall be deemed given or delivered on the date of service
or transmission if personally served or transmitted by telegram, telex or
facsimile. Notice otherwise sent as provided herein shall be deemed given or
delivered on the third Business Day following the date mailed or on the next
Business Day following delivery of such notice to a reputable overnight courier
service.
32
<PAGE>
To the Company:
IXL Holdings, Inc.
Two Park Place
1888 Emery Street, 2nd Floor
Atlanta, Georgia, 30318
Attention: U. Bertram Ellis, Jr.
Telecopy No.: (404) 267-3801
with a copy (which shall not constitute Notice) to:
Minkin & Snyder, PC
One Buckhead Plaza
3060 Peachtree Street, N.E., Suite 1100
Atlanta, Georgia 30305
Attn: James S. Altenbach, Esq.
Telecopy No.: (404) 261-5064
with an additional copy (which shall not constitute Notice) to:
Kelso & Company, Inc.
320 Park Avenue
24th Floor
New York, New York 10022
Attn: James J. Connors II, Esq.
Telecopy No.: (212) 223-2379
To the Investors:
To the address specified on the signature page executed by each such
Investor.
with a copy (which shall not constitute Notice) to:
Paul, Hastings, Janofsky & Walker LLP
399 Park Avenue
New York, New York 10022
Attn: William Schwitter, Esq.
Telecopy No.: (212) 319-4090
33
<PAGE>
Section 7.2 Successors and Assigns
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto, and their respective successors and permitted assigns; provided
that (i) neither this Agreement nor any rights or obligations hereunder may be
transferred or assigned by the Company (except by operation of law in any
merger) and (ii) neither this Agreement nor any rights or obligations hereunder
may be transferred or assigned by any Investor except to any Person to whom such
Investor has transferred Securities.
Section 7.3 No Waivers; Amendments.
(a) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
(b) This Agreement may not be amended or modified, nor may any
provision hereof be waived, other than by a written instrument signed by (x) the
Company and (y) each Investor to which any such amendment pertains.
Section 7.4 Counterparts
This Agreement may be signed in counterparts, each of which shall
constitute an original and which together shall constitute one and the same
agreement.
Section 7.5 Section Headings
The section headings contained in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this Agreement.
Section 7.6 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN
THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
34
<PAGE>
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK IN RESPECT OF ANY ACTION ARISING OUT OF OR RELATING TO THIS
AGREEMENT, AND) IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE COMPANY
AGREES THAT IT WILL NOT COMMENCE ANY SUCH ACTION IN ANY OTHER JURISDICTION. EACH
OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH ACTION BROUGHT IN ANY SUCH
COURT AND ANY CLAIM THAT ANY SUCH ACTION BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. NOTWITHSTANDING THE FOREGOING, NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE INVESTORS TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE COMPANY IN ANY OTHER JURISDICTION.
EACH OF THE PARTIES HERETO HEREBY WAIVES THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE OTHER DOCUMENTS, OR ANY DEALINGS BETWEEN THEM REALTING
RELATING TO THE SUBJECT MATTER OF THE INVESTORS' INVESTMENT IN THE COMPANY
CONTEMPLATED HEREBY. THE SCOPE OF THIS JURY TRIAL WAIVER SHALL BE LIMITED TO
DISPUTES BETWEEN THE COMPANY AND THE INVESTORS AND SHALL NOT EXTEND TO DISPUTES
BETWEEN THE COMPANY AND ANY OTHER PERSON.
Section 7.7 Entire Agreement
This Agreement, together with the other Documents, constitutes the entire
agreement and understanding among the parties hereto with respect to the subject
matter hereof and thereof and supersedes any and all prior agreements and
understandings, written or oral, relating to the subject matter hereof.
Section 7.8 Severability
Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of
35
<PAGE>
this Agreement or affecting the validity or enforceability of any of the terms
or provisions of this Agreement in any other jurisdictions, it being intended
that all rights and obligations of the parties hereunder shall be enforceable to
the fullest extent permitted by law.
Section 7.9 Further Assurances
The Company shall, and shall cause each of its Subsidiaries to, at its cost
and expense, upon request of any Investor or Holder, duly execute and deliver,
or cause to be duly executed and delivered, to such Investor or Holder such
further instruments and do or cause to be done such further acts as may be
necessary or proper in the reasonable opinion of such Investor or Holder to
carry out more effectually the provisions and purposes of this Agreement and the
other Documents.
Section 7.10 Survival of Representations, Warranties and Agreements; No
Recourse.
The representations, warranties and agreements in this Agreement shall
survive the Closing until June 30, 1998, except that the agreements contained in
Article VI and VII shall survive the Closing indefinitely (except to the extent
a shorter period of time is explicitly specified therein). In no event shall the
Investors have any recourse against the present or former directors, officers or
stockholders of the Company or any of its Affiliates with respect to any
representation, warranty or agreement made by the Company in this Agreement.
Section 7.11 Disclosure of Financial Information
Each Holder is hereby authorized to deliver a copy of any financial
statement or any other information relating to the business, operations or
financial condition of the Company or each of its Subsidiaries which may be
furnished to it hereunder or otherwise, to any other Holder, any court,
Governmental Body claiming to have jurisdiction over such Holder, to the
National Association of Insurance Commissioners or similar organizations, as may
be required or appropriate in response to any summons or subpoena in connection
with any litigation, to the extent necessary to comply with any law, order,
regulation or ruling applicable to such Holder, or to any rating agency, in
order to protect its investment hereunder, provided, however, that prior to
disclosing any such information, such Holder shall provide the Company with
prompt written notice so that the Company may seek a protective order or other
appropriate remedy if the Company reasonably determines that such information
must be kept confidential.
Each Holder is hereby authorized to deliver a copy of any financial
statement or any other information relating to the business, operations or
financial condition of the Company or each of its Subsidiaries which may be
furnished to it hereunder or otherwise, to any Person which shall,
36
<PAGE>
or shall have any right or obligation to, succeed to all or any part of such
Holder's interest in any of the Securities and this Agreement or to any actual
or prospective purchaser or assignee thereof; provided, however, that no
disclosure may be made unless such other Person first executes a confidentiality
agreement acceptable to the Company with respect to any such information
disclosed. Prior to the filing of any registration statement for the public sale
of Capital Stock of the Company, the Company shall cooperate with each Holder in
providing due diligence disclosures to any such prospective purchaser.
[Signature pages follow]
37
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties set forth below as of the date first written above.
IXL HOLDINGS, INC.
By: /s/ James V. Sandry
----------------------------------
Title: Executive Vice President
Address:
- -------
GENERAL ELECTRIC CAPITAL CORPORATION
120 Long Ridge Road By: /s/ Tony J. Pantuso
Stamford, CT 06927 ----------------------------------
Title: Dept. Operations Manager
38
<PAGE>
EXHIBITS
--------
Exhibit A Amended and Restated Certificate of Incorporation
Exhibit B Form of Warrant Agreement
Exhibit C Registration Rights Agreement
Exhibit D Stockholders' Agreement
Exhibit E Form of Opinion of Minkin & Snyder, PC
Exhibit F Form of Warrant Award Agreement
SCHEDULES
---------
Schedule 1.1 Permitted Liens
Schedule 4.2 Capitalization
Schedule 4.3 Subsidiaries
Schedule 4.11 Material Adverse Changes; Title to Property
Schedule 4.15 Litigation
Schedule 4.16 Violations re Labor Relations
Schedule 4.17 Taxes
Schedule 4.18(d) Governmental Authorizations Required under Environmental Law
Schedule 4.19 ERISA
Schedule 4.20 Intellectual Property
Schedule 4.22 Agreements
39
<PAGE>
SCHEDULE 1
- --------------------------------------------------------------------------------
Name of Investor Securities Purchased
- ---------------- --------------------
- --------------------------------------------------------------------------------
General Electric Capital Corporation 15,384 shares of Class B Preferred Stock
1,775 Warrants
<PAGE>
EXHIBIT 10.44
WARRANT AWARD AGREEMENT
This Warrant Award Agreement dated as of March 12, 1998 by and between IXL
Holdings, Inc. (the "Company") and Chase Venture Capital Associates, L.P.
("Chase").
WHEREAS, pursuant to that certain Securities Purchase Agreement dated as of
December 17, 1997 between the Company and Chase Venture Capital Associates,
L.P., Flatiron Partners, LLC, and Greylock IX Limited Partnership (the
"Securities Purchase Agreement"), the Company has issued and sold to such
investors the Securities described therein;
WHEREAS, in connection with the Securities Purchase Agreement, the Company
and Chase Venture Capital Associates, L.P., Flatiron Partners, LLC, and Greylock
IX Limited Partnership have entered into that certain Warrant Agreement dated as
of December 17, 1997 (the "Primary Warrant Agreement"), pursuant to which the
Company issued and sold to such investors warrants (the "Primary Warrants") to
purchase 8,875 shares of the Class B Convertible Preferred Stock, par value
$.01, of the Company (the "Class B Preferred Stock");
WHEREAS, the Company wishes to award Chase additional warrants to purchase
3,500 shares of Class B Preferred Stock at an exercise price of $500 per share
in the event certain conditions precedent are satisfied;
In consideration of the parties entering into the Securities Purchase
Agreement and the Warrant Agreement, and for other good and valuable
consideration, the parties agree as follows:
1. In the event that:
(a) Chase Manhattan Bank ("Chase Bank") or any of its
subsidiaries or affiliates or any of Chase Bank's portfolio companies
delivers to the Company or its subsidiaries, upon terms and conditions
acceptable to the Company, business which generates $10,000,000
recognizable in accordance with generally accepted accounting
principles as revenue by the Company in calendar year 1998,
AND
(b) (i) Chase Bank makes Consumer Financial Network, Inc.'s
("CFN") services available to the lesser of 50% or 100,000 of Chase
Bank's domestic United States employees by September 30, 1998, and
(ii) Chase Bank actively communicates to such employees, using
traditional methods of communication utilized by Chase Bank to
communicate with its employees at all levels of operational management
that CFN's services are available to such employees,
the Company shall execute a Warrant Agreement substantially in the form of
Exhibit A hereto (the "Secondary Warrant Agreement") pursuant to which, subject
to the terms and conditions thereof, the Company will issue to Chase warrants to
purchase 3,500 shares of Class B Preferred Stock at an exercise price of $500
per share.
-1-
<PAGE>
2. GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK (PROVIDED THAT DETERMINATIONS RELATING TO CORPORATE LAW SHALL BE
CONSTRUED IN ACCORDANCE WITH THE DELAWARE GENERAL CORPORATION LAW). THE COMPANY
HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND
THE WARRANTS, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE
COMPANY AGREES THAT IT WILL NOT COMMENCE ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY OTHER JURISDICTION. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTWITHSTANDING THE FOREGOING,
NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY HOLDER OF A WARRANT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
3. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
4. AMENDMENTS. This Agreement shall not be amended without the prior
written consent of all parties hereto.
[Signatures on Following Page]
-2-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
set forth below as of the date first written above.
IXL HOLDINGS, INC.
By: /s/ James V. Sandry
-------------------------------
Title: Executive Vice President & CFO
CHASE VENTURE CAPITAL ASSOCIATES, L.P.
By: CHASE CAPITAL PARTNERS,
its General Partner
By: /s/ Stephen Murray
--------------------------
A Partner
-3-
<PAGE>
EXHIBIT A
---------
- --------------------------------------------------------------------------------
WARRANT AGREEMENT
among
IXL HOLDINGS, INC.
and the other
PARTIES NAMED HEREIN
Dated as of
__________, _____
- -------------------------------------------------------------------------------
<PAGE>
WARRANT AGREEMENT
-----------------
This WARRANT AGREEMENT is dated as of __________, _____ (the "Agreement") and
---------
entered into by and among IXL Holdings, Inc., a Delaware corporation (the
"Company"), and the purchasers party hereto (each, an "Investor" and
-------
collectively, the "Investors"). All capitalized terms used but not defined
---------
herein shall have the meanings ascribed to them in the Purchase Agreement (as
hereinafter defined).
WHEREAS, pursuant to a Securities Purchase Agreement, dated as of December 17,
1997 (the "Purchase Agreement") by and among the Company and the Investors, the
------------------
Company is issuing to the Investors certain Warrants, as hereinafter described
(the "Warrants"), to purchase an aggregate of 3,500 shares (subject to
--------
adjustment as provided herein) of Class B Convertible Preferred Stock, par value
$.01 per share (the "Class B Preferred Stock"), of the Company (the shares of
-----------------------
Class B Preferred Stock issuable upon exercise of the Warrants being referred to
herein as the "Warrant Shares");
--------------
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
SECTION 1. Warrant Certificates. The Company will issue and deliver a
certificate or certificates evidencing the Warrants (the "Warrant Certificates")
--------------------
pursuant to the terms of the Purchase Agreement. Such certificate or
certificates shall be substantially in the form set forth as Exhibit A attached
hereto. Warrant Certificates shall be dated the date of issuance by the
Company.
SECTION 2. Execution of Warrant Certificates. Warrant Certificates shall be
signed on behalf of the Company by its Chairman of the Board or its Chief
Executive Officer, President or any Vice President. Each Warrant Certificate
shall also be signed on behalf of the Company by its Secretary or an Assistant
Secretary.
SECTION 3. Restrictions on Transfer; Registration of Transfers and Exchanges.
Prior to any proposed transfer of the Warrants or the Warrant Shares, unless
such transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), the transferring
--------------
Holder will deliver to the Company an opinion of counsel, reasonably
satisfactory in form and substance to the Company, to the effect that the
Warrants or Warrant Shares, as applicable, may be sold or otherwise transferred
without registration under the Securities Act; provided, however, that, with
respect to transfers by the Investors or their Affiliates and Related Persons,
no such opinion shall be required in connection with any transfer to the Company
or to a Permitted Transferee. Upon original issuance thereof, and until such
time as the same shall have been registered under the Securities Act or sold
pursuant to Rule 144 promulgated thereunder (or any similar rule or regulation)
each Warrant Certificate shall bear the legend included on the first page of
Exhibit A, unless in such opinion of counsel, such legend is no longer required
by the Act.
-1-
<PAGE>
Subject to the conditions to transfer contained in the Second Amended and
Restated Stockholders Agreement of the Company, as such agreement may be amended
from time to time (the "Stockholders Agreement") which shall apply to the
Holders of the Warrants as if such Holders were "Chase Investors," as defined in
the Stockholders Agreement, the Company shall from time to time register the
transfer of any outstanding Warrant Certificates in the Warrant Register to be
maintained by the Company upon surrender thereof accompanied by a written
instrument or instruments of transfer in form reasonably satisfactory to the
Company, duly executed by the registered Holder or Holders thereof or by the
duly appointed legal representative thereof or by a duly authorized attorney.
Upon any such registration of transfer, a new Warrant Certificate shall be
issued to the transferee Holder(s) and the surrendered Warrant Certificate shall
be canceled and disposed of by the Company. Any attempted transfer in violation
of the Stockholders Agreement shall be null and void.
SECTION 4. Warrants; Exercise of Warrants. Subject to the terms of this
Agreement, each Holder shall have the right, which may be exercised at any time
during the period commencing on the date hereof and ending at 5:00 p.m., New
York City time, on December 17, 2007 (the "Expiration Date"), to receive from
---------------
the Company the number of fully paid and nonassessable Warrant Shares (and such
other consideration) which the Holder may at the time be entitled to receive on
exercise of such Warrants and payment of the Exercise Price for such Warrant
Shares. Each Warrant not exercised prior to 5:00 p.m., New York time, on the
Expiration Date shall become void and all rights thereunder and all rights in
respect thereof under this Agreement shall cease as of such time. No
adjustments as to dividends will be made upon exercise of the Warrants, except
as otherwise expressly provided herein.
The price at which each Warrant shall be exercisable (the "Exercise Price")
--------------
shall be equal to $500.00 per share of Class B Preferred Stock.
A Warrant may be exercised upon surrender to the Company at its office
designated for such purpose of the Warrant Certificate or Certificates to be
exercised with the form of election to purchase attached thereto duly filled in
and signed, and upon payment to the Company of the Exercise Price for the number
of Warrant Shares in respect of which such Warrants are then exercised. Payment
of the aggregate Exercise Price shall be made, at the election of the Holder,
(i) in cash, by certified or official bank check payable to the order of the
Company, (ii) by delivering for surrender and cancellation to the Company
Warrants with an aggregate Surrender Value, as of the date of such exercise,
equal to the Exercise Price for the Warrants being exercised, or (iii) any
combination thereof. For the purposes of this paragraph, the "Surrender Value"
of any Warrant is equal to the Fair Market Value (as defined in the
Stockholders' Agreement), as of the date of such surrender, of the Warrant
Shares issuable upon the exercise of such Warrant, minus the Exercise Price of
such Warrant.
Subject to the provisions of Section 5 hereof, upon such surrender of Warrant
Certificates and payment of the Exercise Price, the Company shall issue and
cause to be delivered, as promptly as practicable, to or upon the written order
of the Holder and in such name or names as such Holder may designate a
certificate or certificates for the number of full Warrant Shares issuable upon
the exercise of such Warrants (and such other consideration as may be
deliverable upon exercise of such Warrants) together with cash for fractional
Warrant Shares as provided in
-2-
<PAGE>
Section 10. The certificate or certificates for such Warrant Shares shall be
deemed to have been issued and the person so named therein shall be deemed to
have become a holder of record of such Warrant Shares as of the date of the
surrender of such Warrants and payment of the Exercise Price, irrespective of
the date of delivery of such certificate or certificates for Warrant Shares.
Each Warrant shall be exercisable, at the election of the Holder thereof,
either in full or from time to time in part and, in the event that a Warrant
Certificate is exercised in respect of fewer than all of the Warrant Shares
issuable on such exercise at any time prior to the date of expiration of the
Warrants, a new certificate evidencing the remaining Warrant or Warrants will be
issued and delivered pursuant to the provisions of this Section and of Section 2
hereof.
All Warrant Certificates surrendered upon exercise of Warrants shall be
canceled and disposed of by the Company. The Company shall keep copies of this
Agreement and any notices given or received hereunder available for inspection
by the Holders during normal business hours at its office.
SECTION 5. Payment of Taxes. The Company will pay all documentary stamp
taxes and other governmental charges (excluding all foreign, federal or state
income, franchise, property, estate, inheritance, gift or similar taxes) in
connection with the issuance or delivery of the Warrants hereunder, as well as
all such taxes attributable to the initial issuance or delivery of Warrant
Shares upon the exercise of Warrants and payment of the Exercise Price. The
Company shall not, however, be required to pay any tax that may be payable in
respect of any subsequent transfer of the Warrants or any transfer involved in
the issuance and delivery of Warrant Shares in a name other than that in which
the Warrants to which such issuance relates were registered, and, if any such
tax would otherwise be payable by the Company, no such issuance or delivery
shall be made unless and until the person requesting such issuance has paid to
the Company the amount of any such tax, or it is established to the reasonable
satisfaction of the Company that any such tax has been paid.
SECTION 6. Dividends. At any time and from time to time that the Fair Market
Value (as defined in the Stockholders' Agreement) of a Warrant Share exceeds the
Exercise Price per share, the Company shall not make any distributions on the
Common Stock or the Preferred Stock (as such terms are defined in the
Stockholders' Agreement) unless there is contemporaneously declared and paid a
dividend on each Warrant equal to the distribution paid per share of Class B
Preferred Stock.
SECTION 7. Mutilated or Missing Warrant Certificates. If a mutilated Warrant
Certificate is surrendered to the Company, or if the Holder of a Warrant
Certificate claims and submits an affidavit or other evidence satisfactory to
the Company to the effect that the Warrant Certificate has been lost, destroyed
or wrongfully taken, the Company shall issue a replacement Warrant Certificate.
If reasonably required by the Company, such Holder must provide an indemnity
bond, or other form of indemnity, sufficient in the reasonable judgment of the
Company to protect the Company from any loss which it may suffer if a Warrant
Certificate is replaced. If any Investor or any other institutional Holder (or
nominee thereof) is the owner of any such lost, stolen or destroyed Warrant
Certificate, then the affidavit of an authorized officer
-3-
<PAGE>
of such owner, setting forth the fact of loss, theft or destruction and of its
ownership of the Warrant Certificate at the time of such loss, theft or
destruction shall be accepted as satisfactory evidence thereof and no further
indemnity shall be required as a condition to the execution and delivery of a
new Warrant Certificate other than the unsecured written agreement of such owner
to indemnify the Company.
SECTION 8. Reservation of Warrant Shares. The Company shall at all times
reserve and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued Class B Preferred Stock or its authorized and issued
Class B Preferred Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of Warrants, the
maximum number of shares of Class B Preferred Stock which may then be
deliverable upon the exercise of all outstanding Warrants.
The Company or, if appointed, any transfer agent for the Preferred Stock and
each transfer agent for any shares of the Company's capital stock issuable upon
the exercise of any of the Warrants (collectively, the "Transfer Agent") will be
--------------
irrevocably authorized and directed at all times to reserve such number of
authorized shares as shall be required for such purpose. The Company shall keep
a copy of this Agreement on file with any such Transfer Agent. The Company will
supply any such Transfer Agent with duly executed certificates for such purposes
and will provide or otherwise make available all other consideration that may be
deliverable upon exercise of the Warrants. The Company will furnish any such
Transfer Agent a copy of all notices of adjustments and certificates related
thereto, transmitted to each Holder pursuant to Section 11 hereof.
Before taking any action which would cause an adjustment pursuant to Section 9
hereof to reduce the Exercise Price below the then par value of the Warrant
Shares, the Company shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable Warrant Shares at the Exercise Price as so
adjusted.
The Company covenants that all Warrant Shares and other capital stock issued
upon exercise of Warrants will, upon payment of the Exercise Price therefor and
issue thereof, be validly authorized and issued, fully paid, nonassessable, free
of preemptive rights and free, subject to Section 5 hereof, from all taxes,
liens, charges and security interests with respect to the issue thereof, but
such Warrant Shares shall be subject to the applicable terms and conditions of
the Stockholders Agreement.
SECTION 9. Adjustment of Exercise Price and Warrant Number. The number of
shares of Class B Preferred Stock issuable upon the exercise of each Warrant
(the "Warrant Number") is initially one. The Warrant Number is subject to
--------------
adjustment from time to time upon the occurrence of the events enumerated in, or
as otherwise provided in, this Section 9.
(a) Adjustment for Change in Capital Stock
If the Company:
-4-
<PAGE>
(1) pays a dividend or makes a distribution on its Class B
Preferred Stock in shares of its Class B Preferred Stock;
(2) subdivides or reclassifies its outstanding shares of Class B
Preferred Stock into a greater number of shares;
(3) combines or reclassifies its outstanding shares of Class B
Preferred Stock into a smaller number of shares; or
(4) issues by reclassification of its Class B Preferred Stock any
shares of its capital stock (other than reclassification arising
solely as a result of a change in the par value or no par value of the
Class B Preferred Stock);
then the Warrant Number and the Exercise Price in effect immediately prior to
such action shall be proportionately adjusted so that the holder of any Warrant
thereafter exercised shall receive the aggregate number and kind of shares of
capital stock of the Company which it would have received immediately following
such action if such Warrant had been exercised immediately prior to such action
for the same aggregate consideration that such holder would have paid if such
Warrant had been exercised immediately prior to such action.
The adjustment shall become effective immediately after the
record date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
Such adjustment shall be made successively whenever any event
listed above shall occur.
The Company shall not issue shares of Class B Preferred Stock as
a dividend or distribution on any class of capital stock other than Class B
Preferred Stock unless the Warrant Holders also receive such dividend or
distribution on a ratable basis or the appropriate adjustment to the Warrant
Number and Exercise Price is made under this Section 9.
(b) Notice of Adjustment
--------------------
Whenever the Warrant Number is adjusted, the Company shall
provide the notices required by Section 11 hereof.
(c) Voluntary Increase
------------------
The Company from time to time may increase the Warrant Number by
any amount for any period of time (including, without limitation, permanently)
if the period is at least 20 Business Days and if the increase is irrevocable
during the period. Whenever the Warrant Number is increased, the Company shall
mail to the Holders a notice of the increase. The Company shall mail the notice
at least 15 days before the date the increased Warrant Number takes effect. The
notice shall state the increased Warrant Number and the period it will be in
effect.
-5-
<PAGE>
An increase of the Warrant Number under this Subsection (c)
(other than a permanent increase) does not change or adjust the Warrant Number
otherwise in effect for purposes of subsection (a) of this Section 9.
(d) Reorganizations
---------------
In case of any capital reorganization, other than in the cases
referred to in Section 9(a) hereof, or the consolidation or merger of the
Company with or into another corporation (other than a merger or consolidation
in which the Company is the continuing corporation and which does not result in
any reclassification of the outstanding shares of Preferred Stock or Common
Stock into shares of other stock or other securities or property), or the sale
of the property of the Company as an entirety or substantially as an entirety
(collectively, such actions being hereinafter referred to as "Reorganizations"),
---------------
there shall thereafter be deliverable upon exercise of any Warrant (in lieu of
the number of shares of Class B Preferred Stock theretofore deliverable) the
number of shares of stock or other securities or property to which a holder of
the number of shares of Class B Preferred Stock that would otherwise have been
deliverable upon the exercise of such Warrant would have been entitled upon such
Reorganization if such Warrant had been exercised in full immediately prior to
such Reorganization. In case of any Reorganization, appropriate adjustment, as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a duly adopted resolution certified by the
Company's Secretary or Assistant Secretary, shall be made in the application of
the provisions herein set forth with respect to the rights and interests of
Holders so that the provisions set forth herein shall thereafter be applicable,
as nearly as possible, in relation to any shares or other property thereafter
deliverable upon exercise of Warrants.
The Company shall not effect any such Reorganization unless prior
to or simultaneously with the consummation thereof, (i) notice of such
Reorganization shall be given to each of the Holders of the Warrants, and (ii)
the successor corporation (if other than the Company) resulting from such
Reorganization or the corporation purchasing or leasing such assets or other
appropriate corporation or entity shall expressly assume, by a supplemental
Warrant Agreement or other acknowledgement executed and delivered to the
Holder(s), the obligation to deliver to each such Holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
Holder may be entitled to purchase, and all other obligations and liabilities
under this Agreement.
(e) Form of Warrants
----------------
Irrespective of any adjustments in the Exercise Price or the
number or kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement but shall nevertheless be exercisable for the
adjusted number of Warrant Shares at the adjusted Exercise Price.
-6-
<PAGE>
SECTION 10. Fractional Interests. The Company shall not be required to
issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be presented for exercise in full at the same time by the same
Holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 10,
be issuable on the exercise of any Warrants (or specified portion thereof), the
Company shall, pay an amount in cash equal to the fair market value (as
determined in good faith by the Board of Directors) of the Warrant Share so
issuable, multiplied by such fraction.
SECTION 11. Notices to Warrant Holders. Upon any adjustment pursuant to
Section 9 hereof, the Company shall promptly thereafter (i) cause to be filed
with the Company a certificate of an officer of the Company setting forth the
Warrant Number and Exercise Price after such adjustment and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculations are based, and (ii) cause to be given to each of the Holders at its
address appearing on the Warrant Register written notice of such adjustments.
Where appropriate, such notice may be given in advance and included as a part of
the notice required to be mailed under the other provisions of this Section 11.
In case:
(a) The Company shall authorize the issuance to all holders of shares
of Class B Preferred Stock of rights, options or warrants to subscribe for or
purchase shares of Class B Preferred Stock or of any other subscription rights
or warrants;
(b) The Company shall authorize the distribution to all holders of
shares of Class B Preferred Stock of assets, including cash, evidences of its
indebtedness, or other securities;
(c) of any consolidation or merger to which the Company is a party
and for which approval of any shareholders of the Company is required, or of the
conveyance or transfer of the properties and assets of the Company substantially
as an entirety, or of any reclassification or change of Class B Preferred Stock
issuable upon exercise of the Warrants (other than a change in par value, or
from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), or a tender offer or exchange offer for
shares of Class B Preferred Stock;
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) the Company proposes to take any action that would require an
adjustment to the Warrant Number pursuant to Section 9 hereof;
then the Company shall cause to be given to each of the Holders at its address
appearing on the Warrant Register, at least 20 days prior to the applicable
record date hereinafter specified, or the date of the event in the case of
events for which there is no record date, in accordance with the provisions of
Section 12 hereof, a written notice stating (i) the date as of which the holders
of
-7-
<PAGE>
record of shares of Preferred Stock or Common Stock to be entitled to receive
any such rights, options, warrants or distribution are to be determined, or (ii)
the initial expiration date set forth in any tender offer or exchange offer for
shares of Preferred Stock or Common Stock, or (iii) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up is expected to become effective or consummated, and the date as of which it
is expected that holders of record of shares of Preferred Stock or Common Stock
shall be entitled to exchange such shares for securities or other property, if
any, deliverable upon such reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up. The failure to give the notice
required by this Section 11 or any defect therein shall not affect the legality
or validity of any distribution, right, option, warrant, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up, or the vote upon
any action.
Nothing contained in this Agreement or in any Warrant Certificate
shall be construed as conferring upon the Holders (prior to the exercise of such
Warrants) the right to vote or to consent or to receive notice as shareholder in
respect of the meetings of shareholders or the election of Directors of the
Company or any other matter, or any rights whatsoever as shareholders of the
Company; provided, however, that nothing in the foregoing provision is intended
to detract from any rights explicitly granted to any Holder hereunder.
SECTION 12. Notices to the Company and Warrant Holders. All notices and
other communications provided for or permitted hereunder shall be made by hand-
delivery, first-class mail, telex, telecopier, or overnight air courier
guaranteeing next day delivery:
(a) if to Investors, to the address specified on the signature page
executed by each such Investor, with a copy to Paul, Hastings, Janofsky & Walker
LLP, 399 Park Avenue, New York, New York 10022, telecopy No.: (212) 319-4090,
Attention: William Schwitter, Esq.; and
(b) if to the Company, IXL Holdings, Inc., 1888 Emery Street, Suite
200, Atlanta, Georgia, 30318, Telecopy no. (404) 267-3801, Attention: James V.
Sandry, with a copy to Minkin & Snyder PC, One Buckhead Plaza, 3060 Peachtree
Road, N.E., Suite 1100, Atlanta, Georgia 30305, Telecopy No. (404) 233-5064,
Attention: James S. Altenbach, Esq., and with an additional copy to Kelso &
Company, 320 Park Avenue, Suite 2400, New York, New York 10022, Attention: James
J. Connors II, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed (so long as a
fax copy is sent and receipt acknowledged within two business days after
mailing); when answered back if telexed; when receipt acknowledged, if
telecopied; and the next business day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery. The parties may
change the addresses to which notices are to be given by giving five days' prior
written notice of such change in accordance herewith.
SECTION 13. Certain Supplements and Amendments. The Company may from time
to time supplement or amend this Agreement without the approval of any Holders
in order to cure
-8-
<PAGE>
any ambiguity or to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provision herein; provided that
any such supplement or amendment shall not in any way adversely affect the
interests of the Holders.
SECTION 14. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company shall bind and inure to the benefit of its
respective successors and assigns hereunder.
SECTION 15. Termination. This Agreement shall terminate if all Warrants
have been exercised or shall have expired or been canceled pursuant to this
Agreement.
SECTION 16. GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK (PROVIDED THAT DETERMINATIONS RELATING TO CORPORATE LAW SHALL
BE CONSTRUED IN ACCORDANCE WITH THE DELAWARE GENERAL CORPORATION LAW). THE
COMPANY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY NEW YORK
STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY
FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN
RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND THE WARRANTS, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF
ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID
COURTS. THE COMPANY AGREES THAT IT WILL NOT COMMENCE ANY SUCH SUIT, ACTION OR
PROCEEDING IN ANY OTHER JURISDICTION. THE COMPANY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT,
ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTWITHSTANDING
THE FOREGOING, NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY HOLDER OF A WARRANT
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
SECTION 17. Benefits of This Agreement. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company and the
Holders any legal or equitable right, remedy or claim under this Agreement; but
this Agreement shall be for the sole and exclusive benefit of the Company and
the Holders.
SECTION 18. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
-9-
<PAGE>
SECTION 19. Amendments and Waivers. Subject to Section 13, the Company
agrees it will not solicit, request or negotiate for or with respect to any
proposed waiver or amendment of any of the provisions of this Agreement or any
Warrant unless each Holder (irrespective of the amount of Warrants then owned by
it) shall substantially concurrently be informed thereof by the Company and
shall be afforded the opportunity of considering the same and shall be supplied
by the Company with sufficient information (including any offer of remuneration)
to enable it to make an informed decision with respect thereto which information
shall be the same as that supplied to each other Holder. The Company will not,
directly or indirectly, pay or cause to be paid any remuneration whether by way
of supplement or additional interest fee or otherwise, to any Holder as
consideration for or as an inducement to the entering into by any Holder of any
waiver or amendment of any of the terms and provisions of this Agreement or any
Warrant unless such remunerations is concurrently paid on the same terms,
ratably to each Holder whether or not such Holder signs such waiver or consent,
provided that the foregoing is not intended to preclude the adoption of any
amendment or the giving of any waiver by the Holders of a majority of the
Warrants to the extent permitted by the other provisions of this Section 19.
[Signature pages follow]
-10-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement
to be duly executed as of the day and year first above written.
IXL HOLDINGS, INC.
By: ______________________________
Title: ______________________________
CHASE VENTURE CAPITAL ASSOCIATES, L.P.
By: CHASE CAPITAL PARTNERS,
its General Partner
By: ___________________________
A Partner
-11-
<PAGE>
EXHIBIT A
[Form of Warrant Certificate]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON
__________, _____, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR
OTHERWISE DISTRIBUTED EXCEPT IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE ACT, OR IN COMPLIANCE WITH RULE 144 OR
PURSUANT TO ANOTHER EXEMPTION THEREFROM. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO A WARRANT AGREEMENT DATED AS OF __________, AMONG THE
ISSUER OF SUCH SECURITIES (THE "COMPANY"), THE INVESTORS REFERRED TO THEREIN AND
THE OTHER PARTIES THERETO. THE TRANSFER OF THIS CERTIFICATE IS SUBJECT TO THE
CONDITIONS SPECIFIED IN SUCH AGREEMENTS AND THE COMPANY RESERVES THE RIGHT TO
REFUSE THE TRANSFER OF THIS CERTIFICATE UNTIL SUCH CONDITIONS HAVE BEEN
FULFILLED WITH RESPECT TO SUCH TRANSFER. A COPY OF SUCH AGREEMENTS WILL BE
FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN
REQUEST.
THE SHARES ISSUABLE UPON EXERCISE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE PREFERENCES, POWERS, QUALIFICATIONS AND RIGHTS OF
EACH CLASS AND SERIES AS SET FORTH IN THE COMPANY'S CERTIFICATE OF
INCORPORATION. THE COMPANY WILL FURNISH A COPY OF THE CERTIFICATE OF
INCORPORATION TO THE HOLDER OF THIS CERTIFICATE UPON WRITTEN REQUEST.
No._____ _____ Warrants
Warrant Certificate
IXL HOLDINGS, INC.
This Warrant Certificate certifies that ___________________, or registered
assigns, is the registered holder of the number of Warrants (the "Warrants") set
---------
forth above to purchase Class B Preferred Stock, par value $.01 per share (the
"Class B Preferred Stock"), of IXL Holdings, Inc., a Delaware corporation (the
-----------------------
"Company"). Each Warrant entitles the Holder upon exercise to receive from the
-------
Company one fully paid and nonassessable share of Class B Preferred Stock (a
"Warrant Share"), at an exercise price (the "Exercise Price") of $500.00 payable
------------- --------------
in lawful money of the United States of America, upon surrender of this Warrant
Certificate and payment of the Exercise Price at the office of the Company
designated for such purpose, but only subject to the conditions set forth herein
and in the Warrant Agreement referred to hereinafter. The number of Warrant
Shares issuable upon exercise of the Warrants is subject to adjustment upon the
occurrence of certain events, as set forth in the Warrant Agreement. Each
Warrant is exercisable at any time
-12-
<PAGE>
during the period commencing and ending at 5:00 p.m., New York City time, on
December 17, 2007.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants, and are issued or to be issued pursuant to a
Warrant Agreement dated as of __________, _____ (the "Warrant Agreement"), duly
-----------------
executed and delivered by the Company, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Company and the holders (the words
"holders or holder" meaning the registered holders or registered holder) of the
------- ------
Warrants. A copy of the Warrant Agreement may be obtained by the holder hereof
upon written request to the Company. Capitalized terms used and not defined
herein shall have the meaning ascribed thereto in the Warrant Agreement.
The holder of Warrants evidenced by this Warrant Certificate may exercise
such Warrants under and pursuant to the terms and conditions of the Warrant
Agreement by surrendering this Warrant Certificate, with the form of election to
purchase set forth hereon (and by this reference made a part hereof) properly
completed and executed, together with payment of the Exercise Price made, at the
election of the Holder, (i) in cash, by certified or official bank check payable
to the order of the Company, (ii) by delivering for surrender and cancellation
to the Company Warrants with an aggregate Surrender Value (as defined in Section
4 of the Warrant Agreement), as of the date of such exercise, equal to the
Exercise Price for the Warrants being exercised, or (iii) any combination
thereof. In the event that upon any exercise of Warrants evidenced hereby the
number of Warrants exercised shall be less than the total number of Warrants
evidenced hereby, there shall be issued by the Company to the holder hereof or
its registered assignee a new Warrant Certificate evidencing the number of
Warrants not exercised.
Warrant Certificates, when surrendered at the office of the Company by the
registered holder thereof in person or by legal representative or attorney duly
authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Subject to the terms and conditions of the Warrant Agreement, upon due
presentation for registration of transfer of this Warrant Certificate at the
office of the Company a new Warrant Certificate or Warrant Certificates of like
tenor and evidencing in the aggregate a like number of Warrants shall be issued
to the transferee(s) in exchange for this Warrant Certificate, subject to the
limitations provided in the Warrant Agreement, without charge except for any tax
or other governmental charge imposed in connection therewith.
The Company may deem and treat the registered holder(s) thereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
Neither the Warrants nor this Warrant Certificate entitles any holder hereof to
any rights of a stockholder of the Company.
-13-
<PAGE>
IN WITNESS WHEREOF, IXL Holdings, Inc. has caused this Warrant Certificate
to be signed by its Chairman of the Board, President or Vice President and by
its Secretary or Assistant Secretary.
Dated: [ ], _____
IXL HOLDINGS, INC.
By__________________________________
Name:
Title:
By__________________________________
Name:
Title:
-14-
<PAGE>
FORM OF ELECTION TO PURCHASE
(To Be Executed Upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive __________ shares of Class B
Preferred Stock and herewith tenders payment for such shares to the Company in
the form of [a certified or official bank check payable to the order of the
Company in the amount of $_____, [and] Warrants to purchase __________ Warrant
Shares with an aggregate Surrender Value (as defined in Section 4 of the Warrant
Agreement) of $__________].
The undersigned requests that a certificate for such shares be registered
in the name of _______________, whose address is _______________________________
and that such shares be delivered to __________________, whose address is
___________________________.
If said number of shares is less than all of the shares of Class B
Preferred Stock purchasable hereunder, the undersigned requests that a new
Warrant Certificate representing the remaining balance of such shares be
registered in the name of ________________________, whose address is
_______________________________, and that such Warrant Certificate be delivered
to _____________________, whose address is ________________________________.
Signature(s):________________________________
NOTE: The above signature(s) must
correspond with the name written upon the
face of this Warrant Certificate in every
particular, without alteration or
enlargement or any change whatever. If this
Warrant is held of record by two or more
joint owners, all such owners must sign.
Date: _____________
-15-
<PAGE>
FORM OF ASSIGNMENT
(To be signed only upon assignment of Warrant Certificate)
FOR VALUE RECEIVED, hereby sells, assigns and transfers unto ______________
whose address is _________________________ and whose social security number or
other identifying number is _________________________, the within Warrant
Certificate, together with all right, title and interest therein and to the
Warrants represented thereby, and does hereby irrevocably constitute and appoint
_____________________, attorney, to transfer said Warrant Certificate on the
books of the within-named Company, with full power of substitution in the
premises.
Signature(s): ___________________________________________
NOTE: The above signature(s) must correspond
with the name written upon the face of this
Warrant Certificate in every particular,
without alteration or enlargement or any
change whatever. If this Warrant is held of
record by two or more joint owners, all such
owners must sign.
Date: ____________
-16-
<PAGE>
PURCHASE AGREEMENT
PURCHASE AGREEMENT (the "Agreement") dated as of July 15, 1998, among
CHASE CAPITAL PARTNERS, a New York general partnership ("CCP"), CHASE VENTURE
CAPITAL ASSOCIATES, L.P., a California limited partnership ("CVCA" or the
"Seller") and CB CAPITAL INVESTORS, L.P., a Delaware limited partnership ("CB
Capital" or the "Buyer").
WHEREAS, CVCA owns the following securities (collectively, the
"Securities") of iXL Holdings, Inc., a Delaware corporation (the "Company"):
. 46,153 shares of Class B Preferred Stock (certificate B-1);
. 6,390 Warrants to purchase Class B Preferred Stock;
. 9,232 shares of Class C Preferred Stock (certificate C-1); and
. Right to acquire additional Warrants to purchase Class B Preferred
Stock of the Company pursuant to Warrant Award Agreement dated as
of March 12, 1998.
WHEREAS, the parties hereto deem it desirable and in their respective
best interests to enter into this Agreement to transfer the Securities from CVCA
to CB Capital.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Purchase and Sale.
-----------------
(a) CVCA hereby sells the Securities to CB Capital, and CB Capital
hereby purchases the Securities from CVCA, for a purchase price of
$17,917,812.44, which purchase price equals the fair market value of the
Securities, as determined by the parties hereto.
(b) CCP hereby consents to the sale of the Securities to CB Capital.
(c) This Agreement shall constitute a stock power authorizing the
Company to record on its books and records the transfer of the Securities from
CVCA to CB Capital.
(d) All transfers of Securities contemplated herein shall be deemed to
occur on the date hereof. All necessary bookkeeping entries shall be made
accordingly.
2. Buyers Representations.
----------------------
The Buyer represents and warrants that it is purchasing the Securities
for its own account, for investment purposes and not with a view to the
distribution thereof. The Buyer agrees that it will not, directly or indirectly,
offer, transfer, sell, assign, pledge, hypothecate or otherwise dispose of any
of the Securities (or solicit any offers to buy, purchase, or otherwise acquire
or take a pledge of any of its Securities, except in compliance with the
Securities Exchange Act of 1933, as amended (the "Securities Act") and the
Securities Exchange Act of
<PAGE>
1934, as amended (the "Exchange Act"), and the rules and regulations under the
Securities Act and the Exchange Act. The Buyer represents and warrants that it
has acquired such information about the Company, and has had an opportunity to
ask such questions of the Company's officers, as it has deemed necessary in
order to make an informal investment decision concerning the Securities. The
Buyer further represents and warrants that it is an "accredited investor" (as
such term is defined by Rule 501 of the Securities Act) and it has such
knowledge and sophistication necessary to use such knowledge to make an informed
investment decision and that it has the ability to bear the economic risks of
any such investment.
3. The Sellers Representations.
---------------------------
The Seller represents and warrants as follows:
(a) It owns (and upon completion of the transactions contemplated
herein, the Purchaser will acquire), beneficially and of record, the Securities
free and clear of all encumbrances (other than transfer restrictions pursuant to
the Securities Act and encumbrances pursuant to the Second Amended and Restarted
Stockholders Agreement dated as of December 17, l977, as amended, among the
Company and the stockholders party thereto (the "Stockholders Agreement");
(b) The transfer of Securities to the Buyer is (i) exempt from the
registration requirements of the Securities Act and (ii) permitted by the
Stockholders Agreement, and
(c) No consents are necessary for CVCA to sell the Securities.
4. Miscellaneous.
-------------
(a) This Agreement may be executed in two or more counterparts, any
one of which need not contain the signatures of more than one party, but all
such counterparts taken together when delivered shall constitute one and the
same agreement.
(b) This Agreement contains the complete agreement among the parties
and supersedes any prior understandings, agreements or representations by or
between the parties, written or oral which may have related to the subject
matter hereof in any way.
(c) This Agreement shall be governed by and construed in accordance
with the domestic laws of the State of New York, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York.
(d) This Agreement may only be amended in a writing executed by all
parties hereto.
* * *
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their authorized
representatives to execute this Agreement on the date first written above.
CHASE CAPITAL PARTNERS
By: /s/ George Kelts
-------------------------
Name: George Kelts
Title: Managing Director/
Chief Administrative Officer
CHASE VENTURE CAPITAL
ASSOCIATES ,L.P.
By: CHASE CAPITAL PARTNERS,
its General Partner
By: /s/ George Kelts
-------------------------
Name: George Kelts
Title: Managing Director/
Chief Administrative Officer
CB CAPITAL INVESTORS, L.P.
By: CB CAPITAL INVESTORS, INC.
its General Partner
By: /s/ George Kelts
-------------------------
Name: George Kelts
Title: Vice President
3
<PAGE>
The Company, in reliance upon the representations set forth in
Sections II and III above, hereby waives compliance with the requirements set
forth in the Stockholders Agreement.
iXL HOLDINGS, INC.
By: /s/ James V. Sandry
-----------------------------
Name: James V. Sandry
Title:
4
<PAGE>
EXHIBIT 10.48
================================================================================
STOCK PURCHASE AGREEMENT
among
CONSUMER FINANCIAL NETWORK, INC.
and
THE INVESTORS NAMED HEREIN
Series A Convertible Preferred Stock
Dated as of November 3, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS ........................................................................1
Section 1.1 Definitions .........................................................1
Section 1.2 Rules of Construction ...............................................7
ARTICLE II
SALE AND PURCHASE OF PREFERRED STOCK ...............................................7
Section 2.1 Sale and Purchase of Preferred Stock ................................7
Section 2.2 Closing of Transactions .............................................8
Section 2.3 Issue Taxes ........................................................10
ARTICLE III
CLOSING CONDITIONS ................................................................10
Section 3.1 Conditions to Obligations of the Initial Investors .................10
Section 3.2 Conditions to Obligations of the Company at the First Closing ......12
Section 3.3 Conditions to Obligations of the Subsequent Investors ..............13
Section 3.4 Conditions to Obligations of the Company ...........................15
ARTICLE 1V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY .....................................17
Section 4.1 Due Incorporation and Good Standing ................................17
Section 4.2 Capitalization .....................................................17
Section 4.3 Subsidiaries .......................................................18
Section 4.4 Authority ..........................................................18
Section 4.5 Authorization, Etc. of Preferred Stock .............................18
Section 4.6 No Violation or Conflict; No Default ...............................19
Section 4.7 No Material Adverse Change; Financial Statements ...................20
Section 4.8 Full Disclosure ....................................................21
Section 4.9 Private Offering ...................................................21
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 4.10 No Brokers .....................................................21
Section 4.11 Litigation .....................................................21
Section 4.12 Labor Relations ................................................22
Section 4.13 Taxes ..........................................................22
Section 4.14 Environmental Matters ..........................................23
Section 4.15 ERISA ..........................................................24
Section 4.16 Intellectual Property ..........................................25
Section 4.17 Compliance with Laws ...........................................26
Section 4.18 Agreements .....................................................26
Section 4.19 Year 2000 ......................................................27
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF EACH INVESTOR ..................................27
Section 5.1 Organization and Standing .......................................27
Section 5.2 Purchase for Own Account ........................................27
Section 5.3 Accredited Investor .............................................27
Section 5.4 Authorization ...................................................28
Section 5.5 ERISA ...........................................................28
ARTICLE VI
COVENANTS .........................................................................29
Section 6.1 Capital Contribution of iXL; Use of Proceeds. ...................29
Section 6.2 Compliance with Laws; Maintenance of Licenses ...................29
Section 6.3 Information to Prospective Investors ............................29
Section 6.4 Inspection of Properties and Records ............................30
Section 6.5 Financial Statements ............................................30
Section 6.6 Indemnification for Finder's Fees . .............................31
Section 6.7 Securities Act Registration Statements ..........................31
Section 6.8 Publicity; Press Releases .......................................32
Section 6.9 Observation Rights ..............................................32
Section 6.10 Lock-up. .......................................................32
Section 6.11 Covenants by Investors .........................................32
ARTICLE VII
MISCELLANEOUS .....................................................................33
Section 7.1 Notices .........................................................33
Section 7.2 Successors and Assigns ..........................................34
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Section 7.3 No Waivers; Amendments ......................................................34
Section 7.4 Counterparts ................................................................35
Section 7.5 Section Headings ............................................................35
Section 7.6 GOVERNING LAW; SUBMISSION TO JURISDICTION; ..................................35
Section 7.7 Entire Agreement ............................................................36
Section 7.8 Severability ................................................................36
Section 7.9 Further Assurances ..........................................................36
Section 7.10 Survival of Representations, Warranties and Agreements; No Recourse ........36
Section 7.11 Disclosure of Financial Information ........................................37
</TABLE>
iii
<PAGE>
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is dated as of November 3,
---------
1998, and entered into by and among Consumer Financial Network, Inc., a Delaware
corporation (the "Company"), and the investors listed on Schedules 1 and 2
-------
hereto (each an "Investor" and collectively, the "Investors").
-------- ---------
In consideration of the mutual covenants and agreements set forth herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound hereby, the
Company agrees, and each of the Investors agrees, severally but not jointly, as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the following terms
-----------
shall have the following meanings:
"Affiliate," as applied to any specified Person, shall mean any other
---------
Person that, directly or indirectly, controls, is controlled by or is under
common control with such specified Person. For purposes of the foregoing,
"control," when used with respect to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of Voting Securities,
by contract or otherwise, and the terms "controlled" and "controlling" shall
have meanings correlative to the foregoing. In the case of a Person who is an
individual, the term "Affiliate" shall include, with respect to such specified
Person (i) members of such specified Person's immediate family (as defined in
Instruction 2 of Item 404(a) of Regulation S-K under the Securities Act) and
(ii) trusts, the trustee or the beneficiaries of which are such specified Person
or members of such Person's immediate family as determined in accordance with
the foregoing clause (i). Notwithstanding the foregoing, the Investors and their
respective Affiliates shall not be deemed Affiliates of the Company for purposes
of this Agreement.
"Audit" shall mean any audit, assessment of Taxes, other examination by any
-----
Tax Authority, proceeding or appeal of such proceeding relating to Taxes.
"Board of Directors" means, as to any Person, the board of directors of
------------------
such Person or any duly authorized committee thereof.
<PAGE>
"Business Day" shall mean each day other than Saturdays, Sundays and days
------------
when commercial banks are required or authorized by law or executive order to be
closed for business in New York, New York.
"Capital Stock" means any and all shares, interests, participations or
-------------
other equivalents (however designated) of corporate stock, including, without
limitation, all common stock and preferred stock.
"Certificate of Designations" means the Certificate of Designations,
---------------------------
Powers, Preferences and Relative, Participating, Optional and Other Special
Rights of the Series A Convertible Preferred Stock of the Company, as set forth
as Exhibit A hereto.
"Certificate of Incorporation" means the Amended and Restated Certificate
----------------------------
of Incorporation of the Company, together with the Certificate of Designations.
"CFN Technology Services Agreement" means the CFN Technology Services
---------------------------------
Agreement, dated the date hereof, between iXL and the Company, in the form
attached hereto as Exhibit B.
"Charter Documents" means the Articles of Organization, Articles of In-
-----------------
corporation or Certificate of Incorporation, Bylaws and any other
organizational document, as amended or restated (or both).
"Code" means the Internal Revenue Code of 1986, as amended from time to
----
time, and any successor statute or law thereto.
"Common Stock" means all classesof the common stock of the Company, par
------------
value $.01 per share.
"Consolidated" or "consolidated," when used with reference to any
------------ ------------
accounting term, means the amount described by such accounting term, determined
on a consolidated basis in accordance with GAAP, after elimination of
intercompany items.
"Contracts" has the meaning ascribed thereto in Section 4.6(a)(3).
---------
"Documents" means this Agreement, the Certificate of Incorporation, the
---------
Registration Rights Agreements and the Stockholders' Agreement, collectively, or
each of such documents singularly, and any documents or instruments contemplated
by or executed in connection with any of them or any of the transactions
contemplated hereby or thereby.
2
<PAGE>
"Employee Benefit Plan" has the meaning ascribed thereto in Section 4.15.
---------------------
"Environmental Claim" means any claim, action, cause of action,
-------------------
investigation of which the Company or any of its Subsidiaries, including any of
their management employees, are aware, or written notice by any Person alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries or penalties) arising out
of, based on or resulting from (a) the presence, or release into the
environment, of any Material of Environmental Concern at any location owned,
leased, used or operated by the Company or any of its Subsidiaries, or (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law.
"Environmental Laws" means all Federal, state, local and foreign laws and
------------------
regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata and natural resources), including,
without limitation, laws and regulations relating to emissions, discharges,
releases or threatened releases of Materials of Environmental Concern, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Materials of
Environmental Concern.
"Equity Interest" means (i) with respect to a corporation, any and all
---------------
issued and outstanding Capital Stock and warrants, options or other rights to
acquire Capital Stock and (ii) with respect to a partnership, limited liability
company or similar Person, any and all units, interests, or other equivalents
of, or other ownership interests in any such Person and warrants, options or
other rights to acquire any such units or interests.
"ERISA" means The Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and any successor statute or law thereto.
"ERISA Affiliate" has the meaning ascribed thereto in Section 4.15.
---------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
------------
the rules and regulations of the SEC thereunder, and any successor statute or
law thereto.
"First Closing" has the meaning ascribed thereto in Section 2.2(a).
-------------
"GAAP" means those generally accepted accounting principles and practices
----
which are recognized as such from time to time by the American Institute of
Certified Public Accountants acting through its Accounting Principles Board or
by the Financial
3
<PAGE>
Accounting Standards Board or through other appropriate boards or committees
thereof and which are consistently applied for all periods after the date
hereof.
"GECC" shall mean General Electric Capital Corporation, a Delaware
----
corporation.
"Governmental Body" shall mean any Federal, state, local or foreign
-----------------
governmental authority or regulatory body, any subdivision, agency, commission
or authority thereof or any quasi-governmental or private body exercising any
governmental regulatory authority thereunder and any Person directly or
indirectly owned by and subject to the control of any of the foregoing, or any
court, arbitrator or other judicial or quasi-judicial tribunal.
"Holder" or "Holders" means each Investor and any Affiliate of any Investor
------ -------
that is or becomes a holder of any of the Preferred Stock, in each case, so long
as such Person holds any Preferred Stock.
"Initial Investors" means the Investors listed on Schedule 1 hereto.
-----------------
"Investors" has the meaning ascribed thereto in the recitals to this
---------
Agreement.
"iXL" means iXL Enterprises, Inc., a Delaware corporation.
---
"Laws" has the meaning ascribed thereto in Section 4.6.
----
"Lien" means any mortgage, pledge, lien, encumbrance, charge or adverse
----
claim affecting title or resulting in a charge against real or personal
property, or security interest of any kind (including, without limitation, any
conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell and any filing of any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Material Adverse Effect" means (a) a material adverse effect upon the
-----------------------
business, operations, prospects, properties, assets or condition (financial or
otherwise) of the Company and its Subsidiaries, taken as a whole or (b) a
material adverse effect on the ability of the Company to perform its obligations
under this Agreement or any of the other Documents.
4
<PAGE>
"Materials of Environmental Concern" means chemicals, pollutants,
----------------------------------
contaminants, industrial, toxic or hazardous wastes, substances or constituents,
petroleum and petroleum products (or any by-product or constituent thereof);
asbestos or asbestos-containing materials, or PCBs.
"Notices" has the meaning ascribed thereto in Section 7.1.
-------
"Permitted Lien" shall mean the following Liens: (a) Liens existing on the
--------------
Closing Date as listed on Schedule 1.1; (b) Liens for taxes, assessments or
------------
other governmental charges or levies not yet due; (c) statutory Liens of
landlords, carriers, warehousemen, mechanics, materialmen and other Liens
imposed by law created in the ordinary course of business of the Company
consistent with past practices for amounts not yet due; (d) Liens (other than
any Lien imposed by ERISA) incurred or deposits made in the ordinary course of
business of the Company consistent with past practices in connection with
worker's compensation, unemployment insurance or other types of social security;
and (e) with respect to interests in real property, minor defects of title,
easements, rights-of-way, restrictions and other similar charges or
encumbrances not materially detracting from the value or materially interfering
with the use of such real property.
"Person" means an individual, partnership, corporation, trust or
------
unincorporated organization or a government or agency or political subdivision
thereof.
"Preferred Stock" means the Series A Convertible Preferred Stock of the
---------------
Company, having the rights set forth in the Certificate of Incorporation.
"Proceedings" has the meaning ascribed thereto in Section 4.11.
-----------
"Property" or "property" means any assets or property of any kind or nature
-------- --------
whatsoever, real, personal or mixed (including fixtures), whether tangible or
intangible, provided that the terms "Property" or "property," when used with
respect to any Person, shall not include securities issued by such Person.
"OPO" shall mean a public offering of the Common Stock (i) involving (a) at
---
least 15% of the total outstanding Common Stock on a fully diluted basis and (b)
a minimum anticipated offering price of at least $2.00 per share or (ii) which
has been approved by at least one of the members of the Board of Directors that
was designated for nomination and election by GECC (or, if no member of the
Board of Directors was designated for nomination and election by GECC, by at
least one of the members of the
5
<PAGE>
Board of Directors that was designated for nomination and election by the
holders of Preferred Stock) pursuant to Section 10.1 of the Stockholders'
Agreement.
"Registration Rights Agreement" means the Registration Rights Agreement,
-----------------------------
dated as of the date hereof, among the Company, iXL, the Initial Investors and
certain other investors, as amended from time to time.
"Rule 144A" means Rule 144A as promulgated by the SEC under the Securities
---------
Act, as amended from time to time, and any successor rule or regulation thereto.
"SEC" means the Securities and Exchange Commission and any successor
---
thereto.
"Second Closing" shall have the meaning ascribed thereto in Section 2.2(a).
--------------
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations of the SEC thereunder, and any successor statute or law
thereto.
"Stockholders' Agreement" means the Stockholders' Agreement, dated as of
-----------------------
the date hereof, among the Company and the stockholders named therein, as
amended from time to time.
"Subsequent Investor" shall have the meaning ascribed thereto in Section
-------------------
2.2(a).
"Subsidiary" of any person means (a) a corporation in which such Person, a
----------
subsidiary of such Person, or such Person and one or more subsidiaries of such
Person, directly or indirectly, at the date of determination, has either (i) a
majority ownership interest or (ii) the power, under ordinary circumstances, to
elect, or to direct the election of, a majority of the board of directors of
such corporation, or (b) a partnership in which such Person, a subsidiary of
such Person, or such Person and one or more subsidiaries of such Person (i) is,
at the date of determination, a general partner of such partnership, or (ii) has
a majority ownership interest in such partnership or the right to elect, or to
direct the election of, a majority of the governing body of such partnership, or
(c) any other Person (other than a corporation or a partnership) in which such
Person, a subsidiary of such Person, or such Person and one or more subsidiaries
of such Person has either (i) at least a majority ownership interest or (ii) the
power to elect, or to direct the election of, a majority of the directors or
other governing body of such Person.
6
<PAGE>
"Taxes" shall mean all Federal, state, local and foreign taxes, and
-----
other assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax, or penalties applicable
thereto.
"Tax Authority" means the Internal Revenue Service and any other
-------------
domestic or foreign governmental authority responsible for the administration of
any Taxes.
"Tax Returns" shall mean all Federal, state, local and foreign tax
-----------
returns, declarations, statements, reports, schedules, forms and information
returns and any amended Tax Return relating to Taxes.
"Transactions" has the meaning ascribed thereto in Section 4.4.
------------
"Voting Securities" means any class of Equity Interests of a Person
-----------------
pursuant to which the holders thereof have, at the time of determination, the
general power under ordinary circumstances to vote for the election of
directors, managers, trustees or general partners of such Person (irrespective
of whether or not at the time any other class or classes will have or might have
the general power under ordinary circumstances to vote for the election of
directors, managers, trustees or general partners by reason of the happening of
any contingency).
Section 1.2 Rules of Construction. Unless the context otherwise
---------------------
requires:
(a) a term has the meaning assigned to it;
(b) "or" is not exclusive;
(c) words in the singular include the plural, and words in the plural
include the singular;
(d) provisions apply to successive events and transactions; and
(e) "herein," "hereof," "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any particular section or other
subdivision.
7
<PAGE>
ARTICLE II
SALE AND PURCHASE OF PREFERRED STOCK
Section 2.1 Sale and Purchase of Preferred Stock. (i) On the First
------------------------------------
Closing Date, the Company shall issue and sell to each Initial Investor, and
each Initial Investor shall purchase, in the respective amounts set forth
opposite each such Initial Investor's name on Schedule 1 hereto, an aggregate of
13,333,334 shares of Preferred Stock, in each case for a purchase price per
share of $0.75.
(ii) On the Second Closing Date, the Company shall issue and sell to
each Subsequent Investor, and each Subsequent Investor shall purchase, in the
respective amounts set forth opposite each such Subsequent Investor's name on
Schedule 2 hereto, an aggregate of not more than 11,566,666 shares of Preferred
Stock, in each case for a purchase price per share of $0.75.
Section 2.2 Closing of Transactions.
-----------------------
(a) Closings. (i) First Closing. The first closing (the "First
-------- ------------- -----
Closing") hereunder with respect to the issuance and sale of the Preferred
- -------
Stock being purchased by the Initial Investors shall take place at the offices
of Debevoise & Plimpton, 875 Third Avenue, New York, New York, 10022, at 10:00
a.m., New York time, on the date hereof, or at such other place and/or on such
other Business Day as may be agreed upon by the Initial Investors and the
Company (the "First Closing Date"). At the First Closing, the Company will
------------------
deliver to each of the Initial Investors the certificates of Preferred Stock to
be purchased by such Investor (registered in such Investor's name or the name of
such nominee or nominees as such Investor may request), dated the First Closing
Date, against payment of the purchase price therefor by intra-bank or Federal
funds bank wire transfer of same day funds to such bank account within the
United States as the Company shall have designated at least one Business Day
prior to such Closing.
(ii) Second Closing. The second closing (the "Second Closing")
-------------- --------------
hereunder with respect to the issuance and sale of the Preferred Stock being
purchased by the Investors listed on Schedule 2 hereto (the "Subsequent
----------
Investors") shall take place at the offices of Debevoise & Plimpton, 875 Third
- ---------
Avenue, New York, New York, 10022, at 10:00 a.m., New York time or at such other
place and time and on the Business Day as may be agreed upon by the Subsequent
Investors and the Company (the "Second Closing Date"). At the Second Closing,
-------------------
the Company will deliver to each of the Subsequent Investors the certificates of
Preferred Stock to be purchased by such Investor (registered in such Investor's
name or the name of such nominee or nominees as such Investor may
8
<PAGE>
request), dated the Second Closing Date, against payment of the purchase price
therefor by intra-bank or Federal funds bank wire transfer of same day funds to
such bank account within the United States as the Company shall have designated
at least one Business Day prior to such Closing.
(b) Fees and Expenses. (i) Fees Related to the First Closing. Provided
----------------- ---------------------------------
that the First Closing occurs, the Company agrees to pay or reimburse all
reasonable expenses of the Initial Investors relating to this Agreement,
including, but not limited to:
(1) each Initial Investor's expenses incurred in connection with the
transactions contemplated by this Agreement, and the other Documents, including,
without limitation, costs incurred in connection with such Initial Investor's
review of the Company's business and operations, including the reasonable fees
and other charges and expenses of the Investor's counsel incurred in connection
herewith or with the other Documents and reasonable fees and other charges and
expenses of such Initial Investor's consultants;
(2) any reasonable fees and other charges and expenses (including the
reasonable fees and other charges and expenses of counsel) incurred in
connection with any registration or qualification of the Preferred Stock
required in connection with the offer and sale of the Preferred Stock to such
Initial Investor pursuant to this Agreement under the securities or "blue sky"
laws of any jurisdiction requiring such registration or qualification or in
connection with obtaining any exemptions from such requirements; and
(3) each Initial Investor's expenses (including the reasonable fees
and other expenses of counsel) relating to any amendment to, or modification of,
or any waiver or consent under, this Agreement, the Preferred Stock or any of
the other Documents.
(ii) Fees Related to the Second Closing. Provided that the Second
----------------------------------
Closing occurs, the Company agrees to pay or reimburse all reasonable expenses
of the Subsequent Investors relating to this Agreement, including, but not
limited to:
(1) each Subsequent Investor's expenses incurred in connection with
the transactions contemplated by this Agreement and the other Documents
including, without limitation, costs incurred in connection with such Subsequent
Investor's review of the Company's business and operations, including the
reasonable fees and other charges and expenses of the Investor's counsel
incurred in connection herewith or with the other Documents and reasonable fees
and other charges and expenses of such Subsequent Investor's consultants;
9
<PAGE>
(2) any reasonable fees and other charges and expenses (including the
reasonable fees and other charges and expenses of counsel) incurred in
connection with any registration or qualification of the Preferred Stock
required in connection with the offer and sale of the Preferred Stock to such
Subsequent Investor pursuant to this Agreement under the securities or "blue
sky" laws of any jurisdiction requiring such registration or qualification or in
connection with obtaining any exemptions from such requirements; and
(3) each Subsequent Investor's expenses (including the reasonable fees
and other expenses of counsel) relating to any amendment to, or modification of,
or any waiver or consent under, this Agreement, the Preferred Stock or any of
the other Documents.
Reimbursement of the expenses to which such Investor is entitled
pursuant to this Section 2.2(b), including, without limitation, the reasonable
fees and other charges and expenses of such Investor's counsel, shall be made
concurrently with the First Closing or the Second Closing, as the case may be,
by intra-bank or Federal funds bank wire transfer of same day funds, or at such
other time and in such other manner as the Company and the Initial Investors or
the Subsequent Investors, as the case may be, may agree.
(c) Other Investors. The obligations of each Investor shall be several
---------------
and not joint, and no Investor shall be liable or responsible for the acts of
any other Investor under this Agreement.
Section 2.3 Issue Taxes. The Company agrees to pay all Taxes (other
-----------
than Taxes in the nature of income, franchise or gift taxes) and governmental
fees arising in connection with the issuance, sale, delivery or transfer of
Preferred Stock by the Company to each Investor and, as the case may be, the
execution and delivery of the other Documents and any modification of the
Preferred Stock or the Documents, and will hold each Investor harmless without
limitation as to time against any and all liabilities with respect to all such
Taxes and fees.
ARTICLE III
CLOSING CONDITIONS
Section 3.1 Conditions to Obligations of the Initial Investors. The
--------------------------------------------------
obligations of each Initial Investor to purchase and pay for the Preferred Stock
to be delivered to
10
<PAGE>
such Initial Investor at the First Closing shall be subject to the satisfaction
or waiver of each of the following conditions on or before the First Closing
Date:
(a) Delivery of Documents. The Company shall have delivered to each
---------------------
Investor, in form and substance satisfactory to such Investor, the following:
(i) Certificates representing the Preferred Stock to be purchased by
such Initial Investor, duly executed by the Company, in the aggregate number set
forth opposite such Investor's name on Schedule 1 hereto.
(ii) An opinion, dated the First Closing Date and addressed to each
Initial Investor, from Minkin & Snyder, PC, counsel for the Company, as to the
matters set forth in Exhibit C.
(iii) Copies of the Certificate of Incorporation of the Company,
together with good standing certificates from the State of Delaware and from all
states in which the laws thereof require the Company to be qualified and/or
licensed to do business, except where the failure to be so qualified would not
result in a Material Adverse Effect, each to be dated a recent date prior to the
First Closing Date and certified by the Secretary of State.
(iv) A certificate of the Secretary of the Company dated the First
Closing Date certifying (A) a copy of the bylaws of the Company, (B) resolutions
of the Board of Directors of the Company, authorizing the execution, delivery
and performance of this Agreement, the Stockholders' Agreement, the Registration
Rights Agreement; the Warrant Agreement and the other Documents and the
consummation of the transactions contemplated hereby and thereby, including the
issuance of the Preferred Stock to the Initial Investors pursuant to this
Agreement, (C) written consent resolutions of iXL, as sole stockholder of the
Company, authorizing the execution and filing of the Certificate of
Incorporation and (D) as to the incumbency and genuineness of the signatures of
the officers of the Company.
(v) A certificate of an officer of the Company, dated the First
Closing Date, certifying as to the conditions specified in Sections 3.1(b) and
3.1(d).
(vi) Such additional information and materials as any Initial Investor
may reasonably and timely request.
(b) Compliance with Agreements. The Company shall have performed and
--------------------------
complied with all agreements, covenants and conditions contained herein, in each
of the
11
<PAGE>
other Documents and in any other document contemplated hereby or thereby which
are required by the terms hereof or thereof to be performed or complied with by
the Company on or before the First Closing Date.
(c) Completion of Other Transactions. Simultaneously with or prior
--------------------------------
to the sale to each Initial Investor of the Preferred Stock to be purchased by
such Initial Investor:
(i) The Company shall have executed and delivered the Registration
Rights Agreement.
(ii) The Company shall have executed and delivered the Stockholders'
Agreement.
(iv) The Company and iXL shall have entered into the CFN Technology
Services Agreement.
(d) Representations and Warranties. All of the representations and
------------------------------
warranties of the Company contained herein or in any of the other Documents
shall be true and correct in all material respects on and as of the First
Closing Date, except those representations and warranties of the Company that
speak as of a certain date, which representations and warranties shall have been
true and correct in all material respects as of such date both before and after
giving effect to the transactions contemplated hereby and by the other
Documents.
(e) Proceedings Satisfactory. All proceedings taken in connection
------------------------
with the sale of the Preferred Stock, the transactions contemplated hereby, and
all documents and papers relating thereto, shall be reasonably satisfactory to
such Initial Investor. Such Investor and its counsel shall have received copies
of such documents and papers as they may reasonably request in connection
therewith, or as a basis for the opinions to be delivered pursuant to Section
3.1 (a)(ii), all in form and substance satisfactory to such Initial Investor.
(f) Consents and Permits. The Company shall have received all
--------------------
consents, permits, approvals and authorizations and sent or made all notices,
filings, registrations and qualifications as may be required pursuant to any
law, statute, regulation or rule (Federal, state, local or foreign) or pursuant
to any other agreement, order or decree to which it is a party or to which it is
subject, in connection with the transactions to be consummated on or prior to
the First Closing Date as contemplated by this Agreement or any of the other
Documents, except for any such consents, approvals or authorizations
12
<PAGE>
the failure of which to obtain would not reasonably be expected to have a
Material Adverse Effect.
(g) No Material Adverse Change. There shall not have been any material
--------------------------
adverse change in the properties, business, operations, prospects, assets,
condition (financial or otherwise) of the Company and its Subsidiaries, taken as
a whole.
(h) No Material Judgment or Order. There shall not be on the First
-----------------------------
Closing Date any judgment or order of a court of competent jurisdiction or any
ruling of any agency of the Federal, state or local government that, in the
reasonable judgment of such Initial Investor or its counsel, would prohibit the
sale or issuance of the Preferred Stock hereunder or would subject the Company
to any material penalty if the Preferred Stock were to be issued and sold
hereunder.
Section 3.2 Conditions to Obligations of the Company at the First
-----------------------------------------------------
Closing. The obligations of the Company to sell and issue the Preferred Stock to
- -------
be delivered to each Initial Investor at the First Closing shall be subject to
the satisfaction or waiver of each of the following conditions on or before the
First Closing Date:
(a) Delivery of Documents. Each Initial Investor shall have delivered
---------------------
to the Company satisfactory evidence of such Initial Investor's authorization to
consummate the Transactions.
(b) Completion of Other Transactions. Simultaneously with or prior to
--------------------------------
the sale to each Initial Investor of the Preferred Stock to be purchased by such
Investor:
(1) such Initial Investor shall have executed and delivered the
Stockholders' Agreement and the Registration Rights Agreement.
(2) all covenants, agreements and conditions contained in this
Agreement and the other Documents to which such Initial Investor is a party to
be performed or complied with by such Initial Investor on or prior to the First
Closing shall have been performed or complied with in all material respects by
such Initial Investor, and at such time such Initial Investor shall not be in
default in the performance of or compliance with any of the provisions of this
Agreement and the other Documents to which it is a party.
(c) Representations and Warranties. All of the representations and
------------------------------
warranties of each Initial Investor contained herein or in any of the other
Documents shall be true and correct on and as of the First Closing Date, except
for those representations and
13
<PAGE>
warranties of such Initial Investor that speak as of a certain date, which
representations and warranties shall have been true and correct in all material
respects as of such date, both before and after giving effect to the
transactions contemplated hereby and by the other Documents.
(d) No Material Judgment or Order. There shall not be on the First
-----------------------------
Closing Date any judgment or order of a court of competent jurisdiction or any
ruling of any agency of the Federal, state or local government that prohibits
the sale or issuance of the Preferred Stock to such Initial Investor hereunder
or would subject the Company to any material penalty if the Preferred Stock were
to be issued and sold to such Initial Investor hereunder.
Section 3.3 Conditions to Obligations of the Subsequent Investors. The
-----------------------------------------------------
obligations of each Subsequent Investor to purchase and pay for the Preferred
Stock to be delivered to such Subsequent Investor at the Second Closing shall be
subject to the satisfaction or waiver of each of the following conditions on or
before the Second Closing Date:
(a) Delivery of Documents. The Company shall have delivered to each
---------------------
Subsequent Investor, in form and substance satisfactory to such Investor, the
following:
(i) Certificates representing the Preferred Stock to be purchased by
such Subsequent Investor, duly executed by the Company, in the aggregate number
set forth below such Investor's name on Schedule 2 hereto.
(ii) An opinion, dated the Second Closing Date and addressed to each
Subsequent Investor, from Minkin & Snyder, PC counsel for the Company, as to the
matters set forth in Exhibit C.
(iii) Copies of the Certificate of Incorporation of the Company
together with good standing certificates from the State of Delaware and from all
states in which the laws thereof require the Company to be qualified and/or
licensed to do business, except where the failure to be so qualified would not
result in a Material Adverse Effect, each to be dated a recent date prior to the
Second Closing Date and certified by the Secretary of State.
(iv) A certificate of the Secretary of the Company, dated the Second
Closing Date, certifying (A) a copy of the bylaws of the Company, (B)
resolutions of the Board of Directors of the Company, authorizing the execution,
delivery and performance of this Agreement, the Stockholders' Agreement, the
Registration Rights
14
<PAGE>
Agreement, and the other Documents and the consummation of the transactions
contemplated hereby and thereby, including the issuance of the Preferred Stock
to the Subsequent Investors pursuant to this Agreement, (C) written consent
resolutions of iXL, as the majority stockholder of the Company, authorizing the
execution and filing of the Certificate of Incorporation and (D) as to the
incumbency and genuineness of the signatures of the officers of the Company.
(v) A certificate of an Officer of the Company, dated the Second
Closing Date, certifying as to the conditions specified in Sections 3.3(b) and
3.3(c).
(vi) Such additional information and materials as any Subsequent
Investor may reasonably and timely request.
(b) Compliance with Agreements. The Company shall have performed and
--------------------------
complied with all agreements, covenants and conditions contained herein or in
any of the other Documents which are required by the terms hereof or thereof to
be performed or complied with by the Company on or before the Second Closing
Date.
(c) Representations and Warranties. All of the representations and
------------------------------
warranties of the Company contained herein shall be true and correct in all
material respects on and as of the Second Closing Date both before and after
giving effect to the transactions contemplated hereby and by the other
Documents, except those representations and warranties of the Company that speak
as of a certain date, which representations and warranties shall have been true
and correct in all material respects as of such date.
(d) Proceedings Satisfactory. All proceedings taken in connection
------------------------
with the sale of the Preferred Stock, the transactions contemplated hereby, and
all documents and papers relating thereto, shall be reasonably satisfactory to
such Subsequent Investor. Such Investor and its counsel shall have received
copies of such documents and papers as they may reasonably request in connection
therewith, or as a basis for the opinions to be delivered pursuant to Section
3.3(a)(ii), all in form and substance satisfactory to such Subsequent Investor.
(e) Consents and Permits. The Company shall have received all
--------------------
consents, permits, approvals and authorizations and sent or made all notices,
filings, registrations and qualifications as may be required pursuant to any
law, statute, regulation or rule (Federal, state, local or foreign) or pursuant
to any other agreement, order or decree to which it is a party or to which it is
subject, in connection with the transactions to be consummated on or prior to
the Second Closing Date as contemplated by this Agreement or any of the other
Documents, except for any such consents, approvals or authorizations
15
<PAGE>
the failure of which to obtain would not reasonably be expected to have a
Material Adverse Effect.
(f) No Material Adverse Change. There shall not have been any material
--------------------------
adverse change in the properties, business, operations, prospects assets,
condition (financial or otherwise) of the Company and its Subsidiaries, taken as
a whole.
(g) No Material Judgment or Order. There shall not be on the Second
-----------------------------
Closing Date any judgment or order of a court of competent jurisdiction or any
ruling of any agency of the Federal, state or local government that prohibits
the sale or issuance of the Preferred Stock hereunder or would subject the
Company to any material penalty if the Preferred Stock were to be issued and
sold hereunder.
Section 3.4 Conditions to Obligations of the Company at the Second
------------------------------------------------------
Closing. The obligations of the Company to sell and issue the Preferred Stock to
- -------
be delivered to each Subsequent Investor at the Second Closing shall be subject
to the satisfaction or waiver of each of the following conditions on or before
the Second Closing Date:
(a) Delivery of Documents. Each Subsequent Investor shall have
---------------------
delivered to the Company satisfactory evidence of such Subsequent Investor's
authorization to consummate the Transactions.
(b) Completion of Other Transactions. Simultaneously with or prior to
--------------------------------
the sale to each Subsequent Investor of the Preferred Stock to be purchased by
such Investor:
(1) such Subsequent Investors shall have executed and delivered the
Stockholders' Agreement and the Registration Rights Agreement.
(2) all covenants, agreements and conditions contained in this
Agreement and the other Documents to which such Subsequent Investor is a party
to be performed or complied with by each Subsequent Investor on or prior to the
Second Closing shall have been performed or complied with in all material
respects by such Subsequent Investor, and at such time such Subsequent Investor
shall not be in default in the performance of or compliance with any of the
provisions of this Agreement and the other Documents to which it is a party.
(c) Representations and Warranties. All of the representations and
------------------------------
warranties of each Subsequent Investor contained herein or in any of the other
Documents shall be true and correct on and as of the Second Closing Date both
before and after giving effect to the transactions contemplated hereby and by
the other Documents, except for those
16
<PAGE>
representations and warranties of such Subsequent Investor that speak of a
certain date, which representations and warranties shall have been true and
correct in all material respects as of such date.
(d) No Material Judgment or Order. There shall not be on the Second
-----------------------------
Closing Date any judgment or order of a court of competent jurisdiction or any
ruling of any agency of the Federal, state or local government that prohibits
the sale or issuance of the Preferred Stock to such Subsequent Investor
hereunder or would subject the Company to any material penalty if the Preferred
Stock were to be issued and sold to such Subsequent Investor hereunder.
(e) Compliance Certificate. Such Subsequent Investor shall have
----------------------
delivered to the Company a certificate, dated the Second Closing Date certifying
to the fulfillment of the conditions specified in this Sections 3.4(b)(2) and
3.4(c).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investors on the date
hereof and as of the respective Closings as follows:
Section 4.1 Due Incorporation and Good Standing. The Company has been
-----------------------------------
duly incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware with corporate power and authority to
own, lease and operate its properties, to conduct its business as currently
conducted and as proposed to be conducted and to enter into and perform its
obligations under this Agreement and the other Documents to which it is a party.
The Company is duly qualified as a foreign corporation to transact business and
is in good standing in each jurisdiction in which such qualification is required
except where the failure to be so qualified would not reasonably be expected to
have a Material Adverse Effect.
Section 4.2 Capitalization. (a) The authorized capital stock of the
--------------
Company consists of (1) 250,000,000 shares of Common Stock, par value $.0l per
share (the "Common Stock"), and (2) 30,000,000 shares of blank check preferred
stock, 24,900,000 shares of which have been designated as the Preferred Stock.
After giving effect to the transactions contemplated by the First Closing, (i)
there will be issued and outstanding (A) 100,000,000 shares of Common Stock and
(B) 13,333,334 shares of Preferred Stock, all of which will be validly issued
and fully paid and nonassessable and (ii) there will be
17
<PAGE>
reserved for issuance 24,900,000 shares of Common Stock to be issued upon
conversion of the Preferred Stock. Except as set forth above and on Schedule 4.2
hereto, after giving effect to the First Closing and Second Closing,
respectively, no Equity Interests of the Company or any Subsidiary of the
Company will be issued or outstanding and there are not, and at each Closing
Date there will not be, any options, agreements, instruments or securities
relating to the issued or unissued Equity Interests of the Company or any
Subsidiary of the Company, or obligating the Company or any Subsidiary of the
Company to issue, transfer, grant or sell any Equity Interests in the Company or
any Subsidiary of the Company.
(b) The Company has complied with all federal and state securities
laws in connection with the issuance of all outstanding Equity Interests, except
where such failure would not have a Material Adverse Effect.
(c) Except as listed on Schedule 4.2, and except as contemplated by
the Documents, there are no preemptive rights, voting agreements, transfer
restrictions (except those imposed by applicable federal and state securities
laws), or registration rights (except as set forth in the Registration Rights
Agreement) affecting the Equity Interests in the Company.
Section 4.3 Subsidiaries. Schedule 4.3 hereto sets forth a list of all
------------
Subsidiaries of the Company and the respective state or jurisdiction of
incorporation or organization. All of the issued or outstanding Equity Interests
of such Subsidiaries have been duly and validly issued and are fully paid and
nonassessable and are owned, directly or indirectly, by the Company. Each
Subsidiary of the Company is duly incorporated and is in good standing in its
respective state or jurisdiction of incorporation and has the corporate
authority to own, lease or operate its properties and to conduct its business as
currently conducted and as proposed to be conducted. Each Subsidiary of the
Company is duly qualified to transact business and is in good standing as a
foreign corporation in each state or jurisdiction in which such qualification is
required, except where the failure to be so qualified would not reasonably be
expected to have a Material Adverse Effect.
Section 4.4 Authority. The Company has all necessary corporate power
---------
and authority to execute and deliver this Agreement and each of the other
Documents, and to perform its obligations hereunder and thereunder, and to
consummate the transactions contemplated hereby and thereby (the
"Transactions"). The execution and delivery of this Agreement and the other
------------
Documents have been authorized by all necessary corporate action on the part of
the Company and no other corporate proceedings or approvals are required on the
part of the Company to authorize this Agreement or the other Documents or to
consummate the Transactions. Each of this Agreement, the Registration Rights
18
<PAGE>
Agreement and the Stockholders' Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery thereof by the Initial Investors or the Subsequent Investors, as the
case may be, constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
Section 4.5 Authorization, Etc. of Preferred Stock. The issuance and
--------------------------------------
sale of the Preferred Stock has been duly authorized and the Preferred Stock
when issued to the Investors for the consideration set forth herein will be
fully paid and non-assessable, with no personal liability attached to the
ownership thereof.
Section 4.6 No Violation or Conflict: No Default. (a) None of the
------------------------------------
nature of the business of the Company or any of its Subsidiaries, the execution,
delivery or performance by the Company of this Agreement or the other Documents,
the compliance by the Company with its obligations hereunder or thereunder, the
consummation of the Transactions, and the issuance, sale or delivery of the
Preferred Stock will:
(1) violate or conflict with any provision of the Charter Documents of
the Company or any of its Subsidiaries;
(2) violate or conflict with any statute, law, rule or regulation or
any judgment, decree, order, regulation or rule of any court or
governmental authority or body (collectively, "Laws") applicable to the
----
Company or any of its Subsidiaries or by which any of their respective
properties or assets may be subject, except where such violation would not,
reasonably be expected to have, a Material Adverse Effect; or
(3) violate, be in conflict with, or constitute a breach or default
(or any event which, with the passage of time or notice or both, would
become a default) under, or permit the termination of, or require the
consent of any Person under, result in the creation or imposition of any
Lien upon any property of the Company or any of its Subsidiaries under,
result in the loss (by the Company or any of its Subsidiaries) or
modification in any manner adverse to the Company and its Subsidiaries of
any right or benefit under, or give to any other Person any right of
termination, amendment, acceleration, repurchase or repayment, increased
payments or cancellation under, any mortgage, indenture, note, debenture,
agreement, lease, license, permit, franchise or other instrument or
obligation, whether written or oral (collectively,
19
<PAGE>
"Contracts") to which the Company or any of its Subsidiaries is a party or
---------
by which their properties are bound or affected except as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(b) The Company is not in default (without giving effect to any grace
or cure period or notice requirement) under any Contract, its Certificate of
Incorporation or bylaws or any applicable judgments or orders, except where such
default would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(c) The execution and delivery of this Agreement and the other
Documents do not, and the performance of its obligations under this Agreement
and the other Documents and the consummation of the Transactions will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Body under any Laws, except for (i) required
filings under the Securities Act or state "blue sky" laws, (ii) those filings or
notifications listed on Schedule 4.7 hereto and (iii) where the failure to
obtain such consents, approvals, authorizations or permits or to make such
filings or notifications, would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
Section 4.7 No Material Adverse Change: Financial Statements.
------------------------------------------------
(a) Except as set forth on Schedule 4.7 hereto, subsequent to June 30,
1998, there has not been (i) any material adverse change in the properties,
business, prospects, operations, assets or condition (financial or otherwise) of
the Company and its Subsidiaries taken as a whole, (ii) any asset or property of
the Company made subject to a Lien of any kind, other than Permitted Liens,
(iii) any waiver of any valuable right of the Company or any Subsidiary, or the
cancellation of any material debt or material claim held by the Company or any
Subsidiary, (iv) any payment of dividends on, or other distributions with
respect to, or any direct or indirect redemption or acquisition of, any shares
of the capital stock of the Company, or any agreement or commitment therefor,
(v) any mortgage, pledge, sale, assignment or transfer of any material tangible
or intangible assets of the Company, except in the ordinary course of business,
(vi) any loan by the Company or any Subsidiary to any officer, director,
employee, consultant or stockholder or any agreement or commitment therefor,
other than travel expense advances made by the Corporation to its officers,
directors, employees, consultants or stockholders in the ordinary course of
business, (vii) any material damage, destruction or loss (whether or not covered
by insurance) affecting the assets of the Company or any Subsidiary or (viii)
any increase, direct or indirect, in the compensation paid or payable
20
<PAGE>
to any officer, director, employee, or consultant of the Company or any
Subsidiary other than in the ordinary course of business.
(b) The Company has heretofore furnished the Investors with a true
and complete copy of (i) the audited financial statements of the Company for the
years ended December 31, 1996 and 1997 and unaudited financial statements for
the six-month period ending June 30, 1998. Such financial statements present
fairly in all material respects the financial position, results of operations,
shareholders' equity and cash flows of the Company 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 each 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). Except as set forth on Schedule 4.8, since June 30, 1998,
the Company has not incurred any liabilities or obligations (whether absolute,
accrued, fixed, contingent, or otherwise and whether due or to become due) of
any nature, except for liabilities, obligations or contingencies (a) which are
reflected in the unaudited balance sheet of the Company at June 30, 1998 (b)
which were incurred in the ordinary course of business after June 30, 1998 (c)
which would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect, or (d) which arise as a result of this Agreement
or the other Documents. Since December 31, 1997, there has been no change in any
significant accounting (including tax accounting) policies, practices or
procedures of the Company.
(c) Except as set forth on Schedule 4.7, the Company has good and
marketable title to all properties, interests in properties and assets, real,
personal and mixed, tangible or intangible, used in the conduct of its business,
free and clear of all Liens other than Permitted Liens.
Section 4.8 Full Disclosure. Neither this Agreement, the financial
---------------
statements referred to in Section 4.8 nor any other Document contains any untrue
-----------
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made.
Section 4.9 Private Offering. Assuming the correctness of the
----------------
representations and warranties set forth in Sections 5.1, 5.2 and 5.3 hereof,
the offer and sale of the Preferred Stock to the Investors hereunder is exempt
from the registration and prospectus delivery requirements of the Securities
Act. In the case of each offer or sale of the Preferred Stock, no form of
general solicitation or general advertising was used by the Company and its
representatives, including, but not limited to, advertisements, articles,
21
<PAGE>
notices or other communications published in any newspaper, magazine or similar
medium or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising.
Section 4.10 No Brokers. The Company has not engaged any broker,
----------
finder, commission agent or other such intermediary in connection with the sale
of the Preferred Stock and the Transactions contemplated by this Agreement and
the other Documents, and the Company is under no obligation to pay any broker's
or finder's fee or commission or similar payment in connection with such
transactions.
Section 4.11 Litigation. (a) Except as set forth on Schedule 4.11,
----------
there is no action (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced, or to the knowledge of the
Company, threatened ("Proceedings") against or affecting the Company or any of
-----------
its Subsidiaries or any of their respective properties or assets, except for
such Proceedings that would not reasonably be expected to have, singly or in the
aggregate, a Material Adverse Effect, and there is no Proceeding seeking to
restrain, enjoin, prevent the consummation of or otherwise challenge this
Agreement or any of the other Documents or the Transactions.
(b) Neither the Company nor any of its Subsidiaries is subject to (i)
any judgment, order or decree of any Governmental Body, or (ii) any rule or
regulation of any Governmental Body that has had a Material Adverse Effect or
that would reasonably be expected to have, singly or in the aggregate, a
Material Adverse Effect.
Section 4.12 Labor Relations. (a) Neither the Company nor any of its
---------------
Subsidiaries, nor any Person for whom the Company or any of its Subsidiaries is
or may be responsible by law or contract, is engaged in any unfair labor
practice that would reasonably be expected to have, singly or in the aggregate,
a Material Adverse Effect. There is (i) no unfair labor practice charge or
complaint pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries, or any Person for whom the Company or any of
its Subsidiaries is or may be responsible by law or contract, before the
National Labor Relations Board or any corresponding state, local or foreign
agency, and no grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is so pending or threatened, (ii) no strike,
labor dispute, slowdown or stoppage pending or threatened against the Company or
any of its Subsidiaries, or any Person for whom either the Company or any of its
Subsidiaries is or may be responsible by law or contract, and (iii) no union
representation claim or question existing with respect to the employees of the
Company or any of its Subsidiaries, or any Person for whom either the Company or
any of its Subsidiaries is or may be responsible by law or contract, and no
union organizing activities taking place. Neither the Company
22
<PAGE>
nor any of its Subsidiaries, nor any Person for whom the Company or any of its
Subsidiaries is or may be responsible by law or contract, is a party to any
collective bargaining agreement.
(b) Except as disclosed on Schedule 4.12 or such as would not
reasonably be expected to result in a Material Adverse Effect, neither the
Company nor any of its Subsidiaries has violated any applicable Federal, state,
provincial or foreign law relating to employment or employment practices or the
terms and conditions of employment, including, without limitation,
discrimination in the hiring, promotion or pay of employees, wages, hours of
work, plant closings and layoffs, collective bargaining, immigration and
occupational safety and health. To the knowledge of the Company or any of its
Subsidiaries, no charges with respect to or relating to the Company or any of
its Subsidiaries are pending before the Equal Employment Opportunity Commission
or any other corresponding state agency, and the Company and each of its
Subsidiaries have at all times been in material compliance with all Federal and
state laws and regulations prohibiting discrimination in the workplace
including, without limitation, laws and regulations that prohibit discrimination
and/or harassment on account of race, national origin, religion, gender,
disability, age, immigration status, workers compensation status or otherwise.
Section 4.13 Taxes. Except as otherwise disclosed in Schedule 4.13:
-----
(a) The Company and its Subsidiaries have timely tiled or will timely
file or cause to be timely filed, all Tax Returns (or extensions) required by
applicable law to be filed by any of the Company or its Subsidiaries. All such
Tax Returns and amendments thereto are or will be true, complete and correct in
all material respects.
(b) The Company and its Subsidiaries have paid, or where payment is
not yet due, have established, or will establish or cause to be established on
or before the First Closing Date, an adequate accrual for the payment of all
Taxes due with respect to any period ending prior to or as of the First Closing
Date.
(c) No Audit by a Tax Authority is pending or threatened with respect
to any Tax Returns filed by, or Taxes due from, the Company or its Subsidiaries.
No issue has been raised by any Tax Authority in any Audit of the Company or its
Subsidiaries that if raised with respect to any other period not so audited
would reasonably be expected to result in a material proposed deficiency for any
period not so audited. No deficiency or adjustment for any Taxes has been
threatened, proposed, asserted or assessed against the Company or its
Subsidiaries. There are no liens for Taxes upon the assets of the Company or its
Subsidiaries, except liens for current Taxes not yet due.
23
<PAGE>
(d) Neither the Company nor its Subsidiaries has given or been
requested to give any waiver of statutes of limitations relating to the payment
of Taxes or has executed powers of attorney with respect to Tax matters, which
will be outstanding as of the First Closing Date.
(e) Neither the Company nor its Subsidiaries is a party to, or is
bound by any tax sharing, cost sharing, or similar agreement or policy relating
to Taxes.
(f) Neither the Company nor its Subsidiaries has entered into
agreements that would result in the disallowance of any tax deductions pursuant
to Section 280G of the Code. No "consent" within the meaning of Section 341(f)
of the Code has been filed with respect to the Company or its Subsidiaries.
Section 4.14 Environmental Matters.
---------------------
(a) Each of the Company and its Subsidiaries is in compliance with
all Environmental Laws, except where such non-compliance would not reasonably be
expected to have a Material Adverse Effect, and neither the Company nor any of
its Subsidiaries has received any written communication that alleges that the
Company or its Subsidiaries is not in compliance with any Environmental Laws,
and there are no circumstances that may prevent or interfere with such
compliance in the future.
(b) There is no Environmental Claim pending or, to the knowledge of
the Company, threatened against the Company or any of its Subsidiaries with
respect to the operations or business of the Company or its Subsidiaries, or
against any person or entity whose liability for any Environmental Claim the
Company or its Subsidiaries has retained or assumed either contractually or by
operation of law.
(c) To the Company's knowledge, there are no past or present actions,
activities, circumstances, conditions, events or incidents, including, without
limitation, the release, emission, discharge, presence or disposal of any
Material of Environmental Concern, that could form the basis of any
Environmental Claim against the Company or its Subsidiaries, or against any
person or entity whose liability for any Environmental Claim the Company or its
Subsidiaries has retained or assumed either contractually or by operation of
law, which would reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect.
(d) Without in any way limiting the generality of the foregoing,
Schedule 4.14 sets forth (i) all permits, licenses and other governmental
authorizations held by the Company and its Subsidiaries, or required for any of
their operations or business, under
24
<PAGE>
any Environmental Law, including the current status of each such permit, license
and authorization, (ii) all on-site and to the knowledge of the Company off-site
locations where the Company or any of its Subsidiaries has stored, disposed or
arranged for the disposal of Materials of Environmental Concern, (iii) to the
knowledge of the Company, all underground storage tanks, and the capacity and
contents of such tanks, located on property owned, leased or controlled by the
Company or its Subsidiaries, (iv) to the knowledge of the Company, the location
and condition of any asbestos or lead (including furnishings or lead-based
paints) contained in or forming part of any building, building component,
structure or office space owned, leased or controlled by the Company or its
Subsidiaries, and (v) to the knowledge of the Company, all PCBs or
PCB-containing items that are used or stored at any property owned, leased or
controlled by the Company or its Subsidiaries.
Section 4.15 ERISA. Except as set forth on Schedule 4.15, none of the
-----
Company nor any of its Subsidiaries, or any other trade or business, whether or
not incorporated, that together with the Company or its Subsidiaries would be
deemed a "single employer" (within the meaning of Section 4001 of ERISA (an
"ERISA Affiliate") is a "party in interest" (as defined in Section 3(14) of
ERISA) or a "disqualified person" (within the meaning of Section 4975 of the
Code), with respect to any profit-sharing, pension or retirement plan, program,
arrangement or agreement, or any other "employee benefit plan" (within the
meaning of Section 3(3) of ERISA) or any "plan" (within the meaning of Section
4975 of the Code) (collectively, each such plan, program, arrangement or
agreement an "Employee Benefit Plan").
---------------------
With respect to each Employee Benefit Plan: (i) each Employee Benefit
Plan has been administered in compliance in all material respects, with its
terms including, but not limited to, any provisions relating to contributions
thereunder, and is in compliance in all material respects with the applicable
provisions of ERISA, the Code and all other Federal, state and other applicable
laws, rules and regulations, as they relate to such Employee Benefit Plans; (ii)
no "employee pension benefit plan" (as defined in Section 3(2) of ERISA) has
been the subject of a "reportable event" (as defined in Section 4043 of ERISA)
and there have been no "prohibited transactions" (as described in Section 4975
of the Code or Title I of ERISA) effected by the Company or any of its
Subsidiaries with respect to any Employee Benefit Plan and, to the knowledge of
the Company or any of its Subsidiaries, there have been no "prohibited
transactions" (as described in Section 4975 of the Code or Title I of ERISA)
effected by any Person other than the Company or any of its Subsidiaries with
respect to any Employee Benefit Plan; (iii) there are no proceedings, suits or
material claims (other than routine claims for benefits) pending or to the
knowledge of the Company threatened with respect to any Employee Benefit Plan,
the assets of any trust thereunder or the Employee Benefit Plan sponsor with
respect to
25
<PAGE>
the design or operation of any Employee Benefit Plan; (iv) no condition exists
or event or transaction has occurred in connection with any Employee Benefit
Plan that has resulted or is reasonably likely to result in the Company or any
of its Subsidiaries or any such ERISA Affiliate incurring any liability, fine or
penalty except as would not reasonably be expected to have, singly or in the
aggregate, a Material Adverse Effect; (v) no Employee Benefit Plan is or ever
has been subject to Title IV of ERISA and neither the Company nor any of its
Subsidiaries has any liability under Title IV of ERISA, whether actual or
contingent; and (vi) no amounts payable pursuant to any Employee Benefit Plan
will, in connection with the transactions contemplated under this Agreement, the
other Documents, fail for any reason to be deductible for Federal income tax
purposes.
Section 4.16 Intellectual Property. Each of the Company and its
---------------------
Subsidiaries owns or possesses adequate licenses or other rights to use all
material intellectual property, including but not limited to trademarks, service
marks, trade names, copyrights, computer software, and know-how, necessary to
conduct its business as currently conducted and as proposed to be conducted, and
neither the Company nor any of its Subsidiaries has received any written notice
of infringement of or conflict with asserted rights of others with respect to
the use of such intellectual property that would reasonably be expected to have
a Material Adverse Effect. To the knowledge of the Company, all intellectual
property used in its business as currently conducted and as proposed to be
conducted is valid and enforceable and the Company has performed all acts and
has paid all required fees and taxes to maintain all registrations and
applications of such intellectual property in full force and effect, except for
any failure to do so which would not reasonably be expected to have a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries, in the conduct
of their respective businesses as now conducted or as proposed to be conducted,
infringes or conflicts with any right of any third party known to the Company,
where such infringement or conflict would reasonably be expected to have a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries is, nor
will it be as a result of the execution and delivery of this Agreement and the
other Documents or the performance of any obligations hereunder and thereunder,
in breach of any license or other agreement relating to any intellectual
property, except as would not reasonably be expected to have a Material Adverse
Effect. To the knowledge of the Company, no third party is infringing or has
infringed any intellectual property of the Company or its Subsidiaries except
for any infringement that would not reasonably be expected to have a Material
Adverse Effect. Schedule 4.16 hereto lists all registered intellectual property
owned or licensed by the Company or its Subsidiaries.
Section 4.17 Compliance with Laws. Each of the Company and its Subsidiaries
--------------------
has obtained and has maintained in good standing any licenses, permits, consents
and
26
<PAGE>
authorizations required to be obtained by it under all Laws relating to its
business, other than those licenses, permits, consents and authorizations the
absence of which would not reasonably be expected to have, singly or in the
aggregate, a Material Adverse Effect, and any such licenses, permits, consents
and authorizations remain in full force and effect, except as to any of the
foregoing, the absence of which would not reasonably be expected to have, singly
or in the aggregate, a Material Adverse Effect. Each of the Company and its
Subsidiaries is in compliance, in all material respects, with all Laws and there
is no pending or, to the Company's knowledge, threatened, Proceedings against
either the Company or its Subsidiaries under any Laws, other than any such
Proceedings which would not reasonably be expected to have, singly or in the
aggregate, a Material Adverse Effect.
Section 4.18 Agreements. Except as set forth on Schedule 4.18 hereto,
----------
neither the Company nor any of its Subsidiaries is a party to any written or
oral (a) Contract with any labor union; (b) Contract for the future purchase of
fixed assets or for the future purchase of materials, supplies or equipment in
excess of normal operating requirements; (c) Contract for the employment of any
officer, individual employee or other person on a full-time basis or any
contract with any Person on a consulting basis; (d) agreement or indenture
relating to the borrowing of money or to the mortgaging, pledging or otherwise
placing a Lien on any assets of the Company or any of its Subsidiaries; (e)
guaranty of any obligation for borrowed money; (f) material lease or agreement
under which the Company or any of its Subsidiaries is lessee of or holds or
operates any property, real or personal, owned by any other party; (g) material
lease or agreement under which the Company or any of its Subsidiaries is lessor
of or permits any third party to hold or operate any property, real or personal,
owned or controlled by the Company or any of its Subsidiaries; (h) agreement or
other commitment for capital expenditures in excess of $100,000; (i) Contract,
agreement or commitment under which the Company or any of its Subsidiaries is
obligated to pay any broker's fees, finder's fees or any such similar fees, to
any third party in connection with the transactions contemplated herein; or (j)
any other Contract, agreement, arrangement or understanding which is material to
the business of the Company and its Subsidiaries, taken as a whole. All such
Contracts constitute the valid and binding obligations of the Company or its
Subsidiaries, as the case may be, and, to the best knowledge of the Company, the
other parties thereto, enforceable in accordance with their terms, except as
enforcement may be limited by general principles of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
For the purposes of this Section 4.18, "material" shall mean any Contract
calling for payments from one party to the other of more than $100,000.00.
27
<PAGE>
Section 4.19 Year 2000. The Company represents and warrants that its
---------
computer system and software are able to accurately process date data, including
but not limited to, calculating comparing and sequencing from, into and between
the twentieth century (through the year 1999), the year 2000 and the
twenty-first century, including leap year calculations.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF EACH INVESTOR
Each Investor (as to itself only) represents and warrants to the
Company that:
Section 5.1 Organization and Standing. Such Investor is a corporation
-------------------------
or other legally recognizable entity duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization.
Section 5.2 Purchase for Own Account. Such Investor is purchasing the
------------------------
Preferred Stock to be purchased by it solely for its own account and not as
nominee or agent for any other person and not with a view to, or for offer or
sale in connection with, any current distribution thereof (within the meaning of
the Securities Act) that would cause the original purchase of the Preferred
Stock to be in violation of the securities laws of the United States of America
or any state thereof, without prejudice, however, to its right at all times to
sell or otherwise dispose of all or any part of such Preferred Stock pursuant to
a registration statement under the Securities Act or pursuant to an exemption
from the registration requirements of the Securities Act, and subject,
nevertheless, to the disposition of its property being at all times within its
control.
Section 5.3 Accredited Investor. Such Investor is knowledgeable,
-------------------
sophisticated and experienced in business and financial matters and in investing
in privately held business enterprises; it has previously invested in securities
similar to the Preferred Stock and it acknowledges that the Preferred Stock has
not been registered under the Securities Act and understands that the Preferred
Stock must be held indefinitely unless they are subsequently registered under
the Securities Act or such sale is permitted pursuant to an available exemption
from such registration requirement; it is able to bear the economic risk of its
investment in the Preferred Stock and is presently able to afford the complete
loss of such investment; and it is an "accredited investor" as defined in
Regulation D promulgated under the Securities Act.
28
<PAGE>
Section 5.4 Authorization. Such Investor has taken all actions necessary to
-------------
authorize it (i) to execute, deliver and perform all of its obligations under
this Agreement, (ii) to perform all of its obligations under the Documents and
(iii) to consummate the transactions contemplated hereby and thereby. This
Agreement is a legally valid and binding obligation of such Investor enforceable
against it in accordance with its terms, except for (a) the effect thereon of
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting the rights of creditors generally and (b) limitations
imposed by Federal or state law or equitable principles upon the specific
enforceability of any of the remedies, covenants or other provisions thereof and
upon the availability of injunctive relief or other equitable remedies.
Section 5.5 ERISA. Such Investor represents that either:
-----
(a) it is not acquiring the Preferred Stock for or on behalf of any
Employee Benefit Plan;
(b) the assets used to acquire the Preferred Stock are assets of an
insurance company general account and the purchase of the Preferred Stock would
be exempt under the provisions of Prohibited Transaction Class Exemption 95-60;
(c) the assets used to acquire the Preferred Stock are assets of a "venture
capital operating company" or "real estate operating company" (as defined in 29
C.F.R' 25 10.3-101); or
(d) if it is otherwise acquiring the Preferred Stock on behalf of an
employee pension benefit plan, an employee welfare benefit plan or a "Plan,"
either directly or through an investment fund (such as a bank collective
investment fund or insurance company pooled separate account), then, assuming
that the plans identified to such Investor by the Company in writing are the
only employee benefit plans (as defined in Section 3 of ERISA) or Plans with
respect to which the Company is a "party in interest" or "disqualified person"
(as such terms are defined in section 3 of ERISA and section 4975 of the Code,
respectively), either
(i) no part of the funds to be used to purchase the Preferred Stock
constitutes assets allocable to any trust that contains assets of any of such
employee benefit plans, or
(ii) exemption from the prohibited transaction rules applies such that the
use of such funds does not constitute a non-exempt prohibited transaction in
violation of section 406 of ERISA or section 4975 of the Code, which could be
subject to a civil
29
<PAGE>
penalty assessed pursuant to section 502 of ERISA or a tax imposed under
section 4975 of the Code.
ARTICLE VI
COVENANTS
Section 6.1 Capital Contribution of iXL: Use of Proceeds.
--------------------------------------------
(a) Immediately preceding the First Closing, iXL shall make a capital
contribution to the Company equal to the Company's outstanding indebtedness to
iXL as of the date of the First Closing, and the Company shall use the proceeds
from such capital contribution to repay such amount of such indebtedness.
(b) The proceeds from the sale of the Preferred Stock will be used
first to satisfy the fees and expenses of the Company and the Investors related
to the Transactions and the remainder shall be used as working capital of the
Company.
Section 6.2 Compliance with Laws: Maintenance of Licenses. The
---------------------------------------------
Company shall, and shall cause each of its Subsidiaries to, comply with all
statutes, ordinances, governmental rules and regulations, judgments, orders and
decrees (including all Environmental Laws) to which any of them is subject, and
maintain, obtain and keep in effect all licenses, permits, franchises and other
governmental authorizations necessary to the ownership or operation of its
properties or the conduct of its businesses, except to the extent that the
failure to so comply or maintain, obtain and keep in effect would not reasonably
be expected to have, singly or in the aggregate, a Material Adverse Effect.
Section 6.3 Information to Prospective Investors. Provided that a
------------------------------------
sale pursuant to Rule 144A is available to the Holders, until the closing of a
QPO, the Company shall, upon the request of any Investor or subsequent Holder,
deliver to such Investor or such Holder and any prospective purchaser designated
by such Investor or such Holder promptly following the request of such Investor,
such Holder or such prospective purchaser the information which such Investor,
Holder or prospective purchaser may reasonably request in order to comply with
the information requirements of Rule 144A.
Section 6.4 Inspection of Properties and Records. Until the closing
------------------------------------
of a QPO, the Company agrees to allow, and to cause each of its Subsidiaries to
allow, each Investor or subsequent Holder who continues to hold Preferred Stock
with an original cost of at least $1,000,000 (or, such Persons as any of them
may designate) (individually
30
<PAGE>
and collectively, "Inspectors"), subject to appropriate agreements as to
----------
confidentiality, (i) to visit and inspect any of the properties of the Company
-
or any of its Subsidiaries, (ii) to examine all their books of account, records,
--
reports and other papers and to make copies and extracts therefrom, (iii) to
---
discuss its affairs, finances and accounts with its officers and employees, and
(iv) to discuss the financial condition of the Company and its Subsidiaries with
their independent accountants upon reasonable notice to the Company of its
intention to do so and so long as the Company shall be given the reasonable
opportunity to participate in such discussions (and by this provision the
Company authorizes such accountants to have such discussions with the
Inspectors). All such visits, examinations and discussions set forth in the
preceding sentence shall be at such reasonable times and as often as may be
reasonably requested.
Section 6.5 Financial Statements. Until the closing of a QPO, the
--------------------
Company will deliver to each Investor or subsequent Holder who continues to hold
Preferred Stock with an original cost of at least $2,000,000:
(a) Not more than 30 days after the end of each month, beginning with
November 1998, a consolidated balance sheet of the Company as at the end of such
month and the related consolidated statements of income of the Company for such
month and (in the case of all months other than the first month of such fiscal
year) for the period from the beginning of the current fiscal year to the end of
such month, and setting forth, in each case in comparative form, figures for the
corresponding month and each previous month and period in the Company's budget
for the current fiscal year, certified by the chief financial officer of the
Company as fairly presenting in all material respects the financial condition of
the Company as at the dates indicated and the results of their operations for
the periods indicated, prepared in accordance with GAAP consistently applied
except for the absence of footnotes and subject to changes resulting from
periodic adjustments;
(b) Not more than 90 days after the end of each fiscal year of the
Company, a consolidated balance sheet of the Company as of such year and the
related consolidated statements of income and cash flows of the Company for such
year, corresponding figures from the preceding fiscal year, and in the case of
such consolidated financial statements, accompanied by a report thereon of Price
Waterhouse or such other independent public accountants of recognized national
standing selected by the Company, which report shall state that such
consolidated financial statements were prepared in accordance with GAAP
consistently applied and present fairly in all material respects the
consolidated financial condition of the Company as of the dates indicated; and
31
<PAGE>
(c) Not later than 30 days prior to the start of each fiscal year
beginning with the fiscal year beginning January 1, 1999, monthly and annual
management projections and budgets for such fiscal year.
Section 6.6 Indemnification for Finder's Fees. The Company hereby
---------------------------------
agrees to indemnify each Investor, each Affiliate of an Investor, and each
director, officer, partner, employee, counsel, agent or representative against
and hold them harmless from all losses, claims, damages or other liabilities
arising from any finder's or other brokers or investment banker fees payable by
the Company with respect to the transactions contemplated hereunder.
Section 6.7 Securities Act Registration Statements. Except for
--------------------------------------
securities of the Company registered on Form S-4 or Form S-8 promulgated under
the Securities Act or any successor forms thereto, the Company shall not file
any registration statement under the Securities Act covering any securities
unless it shall first have given the Investors written notice thereof. In
connection with any registration statement referred to in this Section 6.6, the
Company will indemnify, to the extent permitted by law, each Investor, its
partners, officers and directors and each person, if any, who controls such
Investor within the meaning of Section 15 of the Securities Act, against all
losses, claims, damages, liabilities and expenses caused by any untrue statement
or alleged untrue statement of a material fact contained in any registration
statement or prospectus or any preliminary prospectus or any amendment thereof
or supplement thereto or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses are caused by any untrue statement or alleged
untrue statement or omission or alleged omission contained in written
information furnished to the Company by such Investor for use in such
registration statement. If, in connection with any such registration statement,
an Investor shall furnish written information to the Company for use in the
registration statement, such Investor will indemnify, to the extent permitted by
law, the Company, its directors, each of its officers who sign such registration
statement and each person, if any, who controls the Company within the meaning
of the Securities Act against all losses, claims, damages, liabilities and
expenses caused by any untrue statement or alleged untrue statement of a
material fact or any omission or alleged omission of a material fact required to
be stated in the registration statement or prospectus or any preliminary
prospectus or any amendment thereof or supplement thereto or necessary to make
the statements therein not misleading, but only to the extent that such untrue
statement or alleged untrue statement or such omission or alleged omission is
contained in information so furnished in writing by such Investor for use
therein, provided, however, that in no case shall any Investor be liable or
responsible for any amount in excess of the net amount of proceeds (after taking
into
32
<PAGE>
account underwriters' discounts and commissions) actually received by such
Investor from the sale of securities pursuant to such registration statement,
prospectus or preliminary prospectus.
Section 6.8 Publicity: Press Releases. The Company shall not issue
-------------------------
any press release or make any public disclosure (other than any public
disclosure required by law) identifying any Investor's relationship with the
Company or iXL, including with respect to an Investor's investment in the
Company contemplated hereby unless such press release or public disclosure is
approved by such Investor in advance, provided, however, that this Section 6.8
shall not prevent iXL from disclosing any such information required to be
disclosed by the federal securities laws in a registration statement filed by
iXL pursuant to the Securities Act or in any of its filings pursuant to the
Exchange Act.
Section 6.9 Observation Rights. In the event that either GECC or the
------------------
Holders representing a majority of the outstanding Preferred Stock do not
designate for nomination and election members to the Board of Directors in
accordance with Section 10.1 of the Stockholders' Agreement or in the event that
either GECC's or such Holders' designee is not elected to the Board of
Directors, then GECC (for so long as GECC and its Affiliates still own at least
30% of the aggregate number of shares of Preferred Stock purchased by GECC
hereunder) or such Holders, as the case may be, shall have the right to have a
non-voting representative attend any meetings of the Board of Directors
(including any adjournments thereof) either in person or by such other method as
shall be allowed under the Bylaws for Directors, and shall further have the
right to receive any notices and materials provided to the entire Board of
Directors in their capacity as such. Any such representative shall have the
right to speak at such meetings and to make such suggestions and requests during
such meetings as such representative deems appropriate, and the Board of
Directors shall consider such suggestions and requests in good faith.
Section 6.10 Lock-up. Each Investor agrees that it shall not Transfer
-------
(as such term is defined in the Stockholders' Agreement) any shares of Preferred
Stock or Common Stock issuable upon conversion of Preferred Stock for 180 days
after any public offering of shares of common stock of iXL unless the managing
underwriter for such offering decides such restriction is unnecessary, and each
Investor agrees to execute any agreement or document reasonably requested by any
such underwriter which relates to such restriction.
Section 6.11 Covenants by Investors. From and after the date hereof,
----------------------
each Holder shall use its reasonable efforts to provide the Company with a
"slot" on the payroll deduction system used by the Holder and its affiliated
companies for direct payment by the Holder's employees for products purchased
through the Company.
33
<PAGE>
ARTICLE VII
MISCELLANEOUS
Section 7.1 Notices. All notices, demands, requests, consents or
-------
approvals (collectively, "Notices") required or permitted to be given hereunder
-------
or which are given with respect to this Agreement shall be in writing and shall
be personally delivered or mailed, registered or certified, return receipt
requested, postage prepaid (or by a substantially similar method), or delivered
by a reputable overnight courier service with charges prepaid, or transmitted by
hand delivery, telegram, telex or facsimile, addressed as set forth below, or
such other address (and with such other copy) as such party shall have specified
most recently by written notice. Notice shall be deemed given or delivered on
the date of service or transmission if personally served or transmitted by
telegram, telex or facsimile. Notice otherwise sent as provided herein shall be
deemed given or delivered on the third Business Day following the date mailed or
on the next Business Day following delivery of such notice to a reputable
overnight courier service.
To the Company:
Consumer Financial Network, Inc.
Two Park Place
1888 Emery Street, 2nd Floor
Atlanta, Georgia, 30318
Attention: M. Wayne Boylston
Telecopy No.: (404) 267-3801
with a copy (which shall not constitute Notice) to:
Minkin & Snyder, PC
One Buckhead Plaza
3060 Peachtree Street, N.E., Suite 1100
Atlanta, Georgia 30305
Attention: James S. Altenbach, Esq.
Telecopy No.: (404) 261-5064
and
34
<PAGE>
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Margaret A. Davenport
Telecopy No.: (212) 909-6836
with an additional copy (which shall not constitute Notice) to:
Kelso & Company
320 Park Avenue
24th Floor
New York, New York 10022
Attention: James J. Connors II, Esq.
Telecopy No.: (212) 223-2379
To the Investors:
To the address specified on the signature page executed by each such
Investor.
with a copy (which shall not constitute Notice) to:
Paul, Hastings, Janofsky & Walker LLP
399 Park Avenue
31st Floor
New York, NY 10022
Attention: William F. Schwitter, Esq.
Telecopy No.: (212) 319-4090
Section 7.2 Successors and Assigns. This Agreement shall be binding
----------------------
upon and shall inure to the benefit of the parties hereto, and their respective
successors and permitted assigns; provided that (i) neither this Agreement nor
any rights or obligations hereunder may be transferred or assigned by the
Company (except by operation of law in any merger) and (ii) neither this
Agreement nor any rights or obligations hereunder may be transferred or assigned
by any Investor except to any Person to whom such Investor has transferred
Preferred Shares pursuant to the Stockholders' Agreement.
Section 7.3 No Waivers: Amendments. (a) No failure or delay by any
----------------------
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein
35
<PAGE>
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
(b) This Agreement may not be amended or modified, nor may any provision
hereof be waived, other than by a written instrument signed by (X) the Company
and (y) each Investor to which any such amendment pertains.
Section 7.4 Counterparts. This Agreement may be signed in counterparts,
------------
each of which shall constitute an original and which together shall constitute
one and the same agreement.
Section 7.5 Section Headings. The section headings contained in this
----------------
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
Section 7.6 GOVERNING LAW: SUBMISSION TO JURISDICTION: WAIVER OF JURY
---------------------------------------------------------
TRIAL. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
- -----
LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED
WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OR RULES OF CONFLICT
OF LAWS TO THE EXTENT SUCH PRINCIPLES OR RULES WOULD REQUIRE OR PERMIT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK IN RESPECT OF ANY ACTION ARISING OUT OF OR RELATING TO THIS
AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE COMPANY
AGREES THAT IT WILL NOT COMMENCE ANY SUCH ACTION IN ANY OTHER JURISDICTION. EACH
OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH ACTION BROUGHT IN ANY SUCH
COURT AND ANY CLAIM THAT ANY SUCH ACTION BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. NOTWITHSTANDING THE FOREGOING, NOTHING HEREIN
SHALL AFFECT
36
<PAGE>
THE RIGHT OF THE INVESTORS TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW
OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY
OTHER JURISDICTION.
EACH OF THE PARTIES HERETO HEREBY WAIVES THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE OTHER DOCUMENTS, OR ANY DEALINGS BETWEEN THEM RELATING
TO THE SUBJECT MATTER OF THE INVESTORS' INVESTMENT IN THE COMPANY CONTEMPLATED
HEREBY. THE SCOPE OF THIS JURY TRIAL WAIVER SHALL BE LIMITED TO DISPUTES BETWEEN
THE COMPANY AND THE INVESTORS AND SHALL NOT EXTEND TO DISPUTES BETWEEN THE
COMPANY AND ANY OTHER PERSON.
Section 7.7 Entire Agreement. This Agreement, together with the other
----------------
Documents, constitutes the entire agreement and understanding among the parties
hereto with respect to the subject matter hereof and thereof and supersedes any
and all prior agreements, documents, projections, representations, warranties
and understandings, written or oral, relating to the subject matter hereof. The
Investors acknowledge and agree that the only representations and warranties
made by the Company with respect to the Company, the Documents and the
Transactions are those set forth therein.
Section 7.8 Severability. Any term or provision of this Agreement which is
------------
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdictions, it being intended that
all rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.
Section 7.9 Further Assurances. The Company shall, and shall cause each of
------------------
its Subsidiaries to, at its cost and expense, upon request of any Investor or
Holder, duly execute and deliver, or cause to be duly executed and delivered, to
such Investor or Holder such further instruments and do or cause to be done such
further acts as may be necessary or proper in the reasonable opinion of such
Investor or Holder to carry out more effectually the provisions and purposes of
this Agreement and the other Documents.
37
<PAGE>
Section 7.10 Survival of Representations. Warranties and Agreements:
-------------------------------------------------------
No Recourse. With respect to the Initial Investors, the representations,
- -----------
warranties and agreements of the Initial Investors and the Company in this
Agreement shall survive the First Closing until the date that is six months from
the date hereof. With respect to the Subsequent Investors, the representations,
warranties and agreements of the Subsequent Investors and the Company in this
Agreement shall survive the Second Closing until the six-month anniversary of
the Second Closing. Notwithstanding the foregoing, the covenants contained in
Article VI and the agreements contained in this Article VII shall survive both
the First Closing and the Second Closing indefinitely. In no event shall any
Investor have any recourse against the present or former directors, officers or
stockholders of the Company or any of its Affiliates with respect to any
representation, warranty or agreement made by the Company in this Agreement.
Section 7.11 Disclosure of Financial Information. Each Holder is
-----------------------------------
hereby authorized to deliver a copy of any financial statement or any other
information relating to the business, operations or financial condition of the
Company or each of its Subsidiaries which may be furnished to it hereunder or
otherwise, to any other Holder, any court, Governmental Body claiming to have
jurisdiction over such Holder, to the National Association of Insurance
Commissioners or similar organizations, as may be required or appropriate in
response to any summons or subpoena in connection with any litigation, to the
extent necessary to comply with any law, order, regulation or ruling applicable
to such Holder, or to any rating agency, in order to protect its investment
hereunder; provided, however, that prior to disclosing any such information,
such Holder shall provide the Company with prompt written notice so that the
Company may seek a protective order or other appropriate remedy if the Company
reasonably determines that such information must be kept confidential.
Each Holder is hereby authorized to deliver a copy of any financial
statement or any other information relating to the business, operations or
financial condition of the Company or each of its Subsidiaries which may be
furnished to it hereunder or otherwise, to any Person which shall, or shall have
any right or obligation to, succeed to all or any part of such Holder's interest
in any of the Preferred Stock (or any Common Stock into which such Preferred
Stock is convertible) and this Agreement or to any actual purchaser or assignee
thereof; provided, however, that no disclosure may be made unless such other
Person first executes a confidentiality agreement acceptable to the Company with
respect to any such information disclosed.
[THE REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
38
<PAGE>
IN WITNESS WHEREOF, this Stock Purchase Agreement has been signed by each of the
parties hereto as of the date first written above.
CONSUMER FINANCIAL NETWORK, INC.
Address: By: /s/ James V. Sandry
- -------- ----------------------------
Title: EVP
--------------------------
GENERAL ELECTRIC CAPITAL CORPORATION
120 Long Ridge Road By: /s/ Tony J. Pantuso
Stamford, CT 06927 ----------------------------
Title: Dept Ops Manager
--------------------------
-39-
<PAGE>
SCHEDULE 1
Name of Investor Preferred Stock Purchased Aggregate Purchase
---------------- ------------------------- ------------------
Price
1 General Electric Capital 13,333,334 shares of Series A $10,000,000
Corporation Convertible Preferred Stock
40
<PAGE>
SCHEDULE 2
Name of Investor Preferred Stock Purchased Aggregate
- ---------------- ------------------------- ---------
Purchase Price
--------------
41
<PAGE>
EXHIBITS
--------
Exhibit A - Certificate of Designations
Exhibit B - CFN Technology Services Agreement
Exhibit C - Form of Opinion of Minkin & Snyder, PC
SCHEDULES
---------
Schedule 1.1 - Permitted Liens
Schedule 4.2 - Capitalization
Schedule 4.3 - Subsidiaries
Schedule 4.7 - Material Adverse Changes
Schedule 4.8 - Financial Statements
Schedule 4.11 - Litigation
Schedule 4.12 - Violations re Labor Relations
Schedule 4.13 - Taxes
Schedule 4.14 - Governmental Authorizations Required under Environmental Law
Schedule 4.15 - ERISA
Schedule 4.16 - Intellectual Property
Schedule 4.18 - Agreements
42
<PAGE>
EXHIBIT 10.52
PARK PLACE ATLANTA
LEASE AGREEMENT
---------------
THIS LEASE, made and entered into as of this 8 day of January, 1997,
by and between PARK PLACE EMERY, L.L.C., a Georgia limited liability company
(hereinafter referred to as the "Landlord") and iXL, Inc., a Delaware
corporation (hereinafter referred to as the as the "Tenant");
W I T N E S S E T H:
--------------------
1. PREMISES. The Landlord, for and in consideration of the rents,
--------
covenants, agreements, and stipulations hereinafter mentioned, reserved and
contained, to be paid, kept and performed by the Tenant, by these presents does
lease and rent unto the said Tenant, and said Tenant hereby agrees to lease and
take upon the terms and conditions which hereinafter appear, the following
described property (hereinafter referred to as the "Prime Premises") containing
initially approximately 1,230 rentable square feet in Suite 115 on the First
Floor, 14,170 rentable square feet in Suite 200 on the Second Floor, 7,321
rentable square feet in Suite 350 on the Third Floor, and 14,170 rentable square
feet in Suite 400 on the Fourth Floor, for a total of 36,891 rentable square
feet in BUILDING TWO (hereinafter referred to as the "Building") located in PARK
PLACE ATLANTA (hereinafter referred to as the "Office Complex") and the Building
being more fully described as 1888 Emery Street. Atlanta, Fulton County, Georgia
30318. The attached floor plan (Exhibit "A-1") represents an approximation of
-------------
the Prime Premises to be leased pursuant to this Lease. A legal description of
the land on which the Building is situated is attached hereto as Exhibit "B"
----------
(hereinafter referred to as the "Land").
2. TERM. The term of this Lease shall be for a period of ONE HUNDRED
----
TWENTY (120) MONTHS commencing on the 1ST day of APRIL, 1997 (hereinafter
referred to as the "Commencement Date"), and ending on the 31ST day of MARCH,
2007, at midnight (hereinafter referred to as the "Expiration Date") (such term
being hereinafter referred to as the "Term"), unless sooner terminated as may be
hereinafter provided. If the Commencement Date of the Lease should change for
any reason, or if the tenant improvements are not substantially complete on or
before the Commencement Date for any reason, Landlord shall not be liable or
responsible for any claims, damages, losses, penalties or liabilities in
connection therewith or by reason thereof, and this Lease shall not be void or
voidable. After the occurrence of the Commencement Date. Tenant and Landlord
shall execute a certificate in the form attached hereto as Exhibit "C"
-----------
confirming the Commencement Date. (SEE SPECIAL STIPULATIONS)
3. COMPLETION OF IMPROVEMENTS, ADDITIONAL PREMISES, OPTIONS TO RENEW.
-----------------------------------------------------------------
(SEE SPECIAL STIPULATIONS)
4. BASE MONTHLY RENTAL. Tenant agrees to pay Landlord, by payments to
-------------------
Park Place Emery, L.L.C., and delivered to Landlord c/o Winter Properties,
Inc., 1900 Emery Street, Suite 300, Atlanta, Georgia 30318, promptly on the
first day of each month in advance, from and after the Rental Commencement
Dates forth in Special Stipulation 7, during the Term of this Lease, without
deduction or set off, in legal tender, an initial monthly rental of THIRTY-NINE
THOUSAND NINE HUNDRED SIXTY-FIVE AND 25/100 ($39,965.25) DOLLARS (hereinafter
referred to as "Base Monthly Rental"). If the Term commences on a day other than
the first day of a month, or terminates on a day other than the last day of a
month, the Base Monthly Rental for the first or last partial month shall be
prorated based upon the actual number of days in such a month.
5. BASE MONTHLY RENTAL ADJUSTMENT. (a) At the end of each and every
------------------------------
Lease Year, as hereinbelow defined, during the Term, the Base Monthly Rental, as
increased by previous rental adjustments hereunder, shall be increased for the
next succeeding Lease Year by an amount equal to the product of (i) the Base
Monthly Rental, as increased by previous rental adjustments hereunder, less the
actual monthly Operating Expenses attributable to the Prime Premises for the
first twelve (12) full calendar months after the first Rental Commencement Date
set forth in Special Stipulation 7, as outlined in Paragraph 6 below, multiplied
by (ii) one hundred percent (100%) of the difference expressed as a percentage
between the Consumer Price Index, as hereinbelow defined, published for the
month of November for the immediately preceding calendar year and the Consumer
Price Index published for the month of November for the year immediately
preceding the immediately preceding calendar year. Each adjustment shall remain
in effect until the next such annual adjustment is made. In no event shall the
Base Monthly Rental, as increased by previous rental adjustments, be decreased
pursuant to any adjustment hereunder; if a decrease would result, then no
adjustment will be made until the end of the next Lease Year. Landlord and
Tenant agree that the Base Monthly Rental shall not be increased in any year by
more than five percent (5%) from the prior year's Base Monthly Rental.
(b) "Consumer Price Index", as used herein, shall be the "Revised
Consumer Price Index for All Urban Consumers, U.S. City Average, All Items
(1967=100) Unadjusted" issued by the Bureau of Labor Statistics of the U.S.
Department of Labor. If the manner in which such Index is determined by the
Bureau of Labor Statistics shall be substantially revised, an adjustment shall
be made by Landlord in such revised index which would produce results
equivalent, as nearly as possible, to those which would have been obtained if
the Index had not been so revised. If the 1967 average shall no longer be used
as an index of 100, such change shall constitute a substantial revision. If the
Consumer Price Index published by the Bureau of Labor Statistics of the U.S.
Department of Labor is discontinued, then the Consumer Price Index published by
the U.S. Department of
<PAGE>
Commerce shall be used (with proper adjustment); and if the U.S. Department of
Commerce Index is discontinued, then Landlord and Tenant shall, in good faith,
agree on a suitable substitute. If no such agreement can be reached, then four
percent (4%) shall be deemed to be the difference in the Consumer Price Index
for the rental adjustment each year for purposes of this paragraph until such
time as a new index can be agreed upon. If there is a change in the frequency of
publication of such Index so that there is no such publication in the month or
months specified in subparagraph (a), then the adjustments called for in such
subparagraph shall be based on the publication of such Index most closely
preceding the month or months specified in such subparagraph.
(c) "Lease Year", as used herein, means a period of twelve (12)
consecutive calendar months, or a portion thereof falling within the Term, with
the first Lease Year commencing with the first day of the first calendar month
beginning on or after the last to occur of the Rental Commencement. Dates set
forth in Special Stipulation 7 and each subsequent Lease Year commencing on each
anniversary thereof. The period, if any, from the commencement date of the Term
to the beginning of the first Lease Year shall be treated as if it were part of
the first Lease Year under this Lease for all purposes.
(d) Within ninety (90) days after the end of each Lease Year,
Landlord shall deliver to Tenant a statement setting forth (i) a computation of
the amount of the Base Monthly Rental, as adjusted, that is due each month of
the Lease Year in which such statement is issued; and (ii) the amount of a lump
sum payment required to cover the amount of increase for the lapsed months of
the then current Lease Year. Within thirty (30) days after Landlord renders such
statement, Tenant shall pay to Landlord, as additional rental, such lump sum
payment and thereafter pay the Base Monthly Rental, as adjusted pursuant to such
statement.
(e) The provisions of this paragraph shall survive the expiration
or earlier termination of this Lease. Within ninety (90) days following such
expiration or earlier termination, Landlord shall issue a final statement,
setting forth all amounts due Landlord pursuant to this paragraph. Tenant shall
pay such final statement to Landlord within thirty (30) days following the date
Landlord issues such final statement.
6. ADDITIONAL RENT. (a) The following terms, as defined below, are
---------------
used in this paragraph:
"Escalation Year" shall mean the calendar year, commencing with
the calendar year following the year in which the commencement date of the Term
occurs, falling in whole or in part, within the Term.
"Estimated Operating Expense Increase" shall mean the payments to
be made by Tenant to Landlord toward the Operating Expense Increase in the
amounts, at the times, and in the manner provided for by subparagraph (c) below.
"Estimated Operating Statement" shall mean a statement rendered to
Tenant setting forth: (i) Landlord's reasonable estimate of the projected
Operating Expenses attributable to the Prime Premises for the then current
Escalation Year; (ii) a computation of the Estimated Operating Expense Increase
attributable to the Prime Premises due for the then current Escalation Year;
(iii) a computation of the monthly Estimated Operating Expense Increase
installments to be paid by Tenant pursuant to the Estimated Operating Statement,
being one-twelfth (1/12) of the amount determined pursuant to clause (ii) above;
and (iv) a computation of the amount due Landlord, or credit due Tenant, in
respect of the lapsed months of the then current Escalation Year.
"Operating Expense Increase" shall mean time amount to be paid as
Additional Rent in accordance with subparagraph (b).
"Operating Expenses" are defined in Exhibit "D" attached hereto
-----------
and incorporated herein by this reference.
"Operating Statement" shall mean a statement setting forth (i) the
actual Operating Expenses attributable to the Prime Premises for an Escalation
Year; (ii) a computation of the total actual Operating Expense Increase
attributable to the Prime Premises for such Escalation Year; (iii) an accounting
for Estimated Operating Expense Increase payments, if any, made with respect to
such Escalation Year; and (iv) the amount of Operating Expense Increase then
payable to Landlord, or the credit in respect thereof to which Tenant is
entitled, for such Escalation Year, taking into account any increase in the
Estimated Operating Expense Increase payments due Landlord pursuant the
Estimated Operating Statement rendered with respect to the next Escalation Year,
if any.
(b) Tenant shall pay to Landlord as additional rent (the
"Additional Rent") for each Escalation Year during the Term Tenant's Percentage
Share (defined below) of the total dollar increase in the Operating Expenses
attributable to the Prime Premises for such Escalation Year if and to the extent
they exceed the actual Operating Expenses for the first twelve (12) full
calendar months after the last to occur of the Rental Commencement Dates set
forth in Special Stipulation 7 as increased to reflect ninety-five percent (95%)
occupancy in the Office Complex, and the same being assessed for purposes of
taxes and insurance as if it were fully complete and occupied. Within one
hundred twenty (120) days after the expiration of each Escalation Year, Landlord
shall furnish Tenant with an Operating Statement. All amounts shown as due from
Tenant on the Operating Statement for such Escalation Year shall be due from
Tenant thirty (30) days after the rendering of such Operating Statement. The
term, "Tenant's Percentage Share", means 35.51%. Landlord and Tenant acknowledge
that Tenant's Percentage Share has been obtained by dividing the rentable square
feet of the Prime Premises by the rentable square feet of the Office Complex,
and multiplying such quotient by 100. In the event Tenant's Percentage Share
-2-
<PAGE>
is changed during a calendar year by reason of a change in the rentable square
feet of the Prime Premises or the rentable square feet of the Office Complex,
Tenant's Percentage Share shall thereafter mean the result obtained by using the
revised net rentable square feet in the foregoing formula. For the purpose of
this Lease, Tenant's Percentage Share shall be determined on the basis of the
number of days during such calendar year at each percentage share. Landlord
agrees to operate and manage the Office Complex in an efficient and effective
manner consistent with other comparable properties and customary property
management practices.
(c) Commencing with the first Escalation Year during the Term,
Landlord may render an Estimated Operating Statement for any Escalation Year. If
and when so rendered from time to time, Tenant shall pay to Landlord in advance
on the first day of each calendar month the monthly Estimated Operating Expense
Increase installments provided for in such Estimated Operating Statement, such
payments to continue until another Estimated Operating Statement is rendered.
Upon the rendering of the Operating Statement for any Escalation Year for which
Estimated Operating Expense Increase installments were paid by Tenant, Tenant
shall, within thirty (30) days thereafter, pay to Landlord the sum of (i) the
excess, if any, of the Operating Expense Increase due for such Escalation Year
over the monthly Estimated Operating Expense Increase installments paid by
Tenant in respect of such Escalation Year; and (ii) the excess, if any, of the
Estimated Operating Expense Increase installments due for the current Escalation
Year, as shown on the Estimated Operating Statement, over the Estimated
Operating Expense Increase installments then being paid by Tenant multiplied by
the number of months which shall have elapsed, in whole or in part, since the
commencement of the current Escalation Year. If Tenant's Estimated Operating
Expense Increase installments for the prior or current Escalation Year shall
exceed the Operating Expense Increase due for the prior Escalation Year or the
Estimated Operating Expense Increase due for the current Escalation Year,
respectively, such excess shall first be credited against any amounts shown due
on the Operating Statement (including the Estimated Operating Statement) and
the balance, if any, shall be credited against the next succeeding installment
or installments of Base Monthly Rent, Operating Expense Increase or Estimated
Operating Expense Increase becoming due hereunder; provided, however, that if
the Term of this Lease shall terminate or expire prior to full application of
such credit, any balance due Tenant shall be refunded to Tenant by Landlord on
the date of such termination or expiration.
(d) For any Escalation Year not wholly falling within the Term,
the Operating Expense Increase shall be determined by annualizing Operating
Expenses actually accrued during the portion of the Escalation Year falling
within the Term and then prorating the Operating Expense Increase thereby
determined, based on the number of days of such Escalation Year falling within
the Term. The provisions of this paragraph shall survive the expiration or
earlier termination of this Lease.
7. USE OF PREMISES. The Prime Premises shall be used for general
---------------
office purposes and no other purposes and in accordance with the Rules and
Regulations attached hereto and incorporated herein by this reference. The
Tenant shall not use, permit or allow the Prime Premises to be used other than
as strictly provided in this Lease and shall not use, permit or allow the Prime
Premises or any part thereof to be used for any immoral, improper, offensive, or
unlawful purpose or otherwise in violation of any federal, state or local
statute, law, ordinance, rule or regulation, including, without limitation, in
violation of any zoning ordinances; nor shall the Tenant permit any nuisance
within the Prime Premises or permit the Prime Premises to be used in any manner
which will be a source of material annoyance or in any way interfere with the
peaceful possession, enjoyment and proper use of other areas of the Building,
nor shall the Prime Premises be used in any manner so as to vitiate the
insurance or increase the rate of insurance on the Prime Premises or the
Building, nor shall the Prime Premises be used for any purpose which would tend
to lower the quality or character of the Building, create unreasonable elevator
loads or otherwise unreasonably interfere with Building operations. Not by way
of limitation of the foregoing but in addition thereto, neither the Prime
Premises nor any portion thereof shall be used or occupied for any or all of the
following: governmental or quasi-governmental offices, spas, massage parlors,
escort services offices, retail sales purposes, auto leasing or auto sales
offices, equipment or appliance repair shops, daycare centers, nurseries,
churches, or places of religious or quasi-religious worship, religious
facilities or offices of religious organizations, or retail or wholesale sale
purposes, medical research laboratories or offices for medical or quasi-medical
professionals providing medical treatments.
8. NO NUISANCE. Tenant shall conduct its business and control its
-----------
agents, contractors, customers, employees, invitees, licensees and visitors in
such a manner so as not to create any unreasonable nuisance or interference
with, annoy or disturb any other tenant or Landlord in its operation of the
Office Complex.
9. ASSIGNMENT AND SUBLETTING. Tenant may sublease any or all of the
-------------------------
Prime Premises to a subsidiary or affiliated corporation without Landlord's
prior written consent. Tenant may sublease portions of the Prime Premises to
others provided such subtenant's operation is a part of the general operation
of Tenant and under the supervision and control of Tenant, and provided such
operation is within time purposes for which said Prime Premises shall be used.
Except as provided in the preceding sentences, Tenant shall not voluntarily or
involuntarily, whether by operation of law or otherwise, assign, transfer,
hypothecate or otherwise encumber this Lease or any interest therein and shall
not sublet or permit the use by others of the Prime Premises or any portion
thereof without obtaining in each instance Landlord's prior written consent,
which shall not be unreasonably withheld, provided excess rent goes to Landlord
as provided below. Landlord's consent to one assignment, sublease, transfer or
hypothecation shall not be deemed as a consent to any other or further
assignment, sublease, transfer or hypothecation. Any such assignment, sublease,
transfer or hypothecation without Landlord's prior written consent shall be void
and shall, at Landlord's option, constitute a material breach of this Lease. No
acceptance by Landlord of any rent or any other sum of money from any assignee,
sublessee or other category of
-3-
<PAGE>
transferee shall release Tenant from any of its obligations hereunder or be
deemed to constitute Landlord's consent to any assignment, sublease, transfer or
hypothecation, and in any event, Tenant shall remain primarily liable on this
Lease for the entire Term hereof and shall in no way be released from the full
and complete performance of all the terms, conditions, covenants and agreements
contained herein.
In the event Tenant should desire to assign this Lease or sublet the
Prime Premises or any part thereof, Tenant shall give Landlord prior written
notice, which notice shall specify (a) the date on which Tenant desires to make
such assignment or sublease; (b)the name and business of the proposed assignee
or sublessee; (c) the amount and location of the space affected; (d) the
proposed effective date and duration of the subletting or assignment; and (e)
the proposed rental to be paid to Tenant by such subtenant or assignee. Landlord
shall then have a period of fifteen (15) days following receipt of such notice
within which to notify Tenant in writing that Landlord elects either (1) to
terminate this Lease as to the space so affected as of the date so specified by
Tenant, in which event Tenant will on that date be relieved of all further
obligations to pay rent hereunder as to such space; or (2) to permit Tenant to
assign or sublet such space, in which event if the proposed rental between
Tenant and subtenant is greater than the Base Monthly Rental as adjusted under
this Lease, then fifty (50%) percent of such excess rental shall be deemed
additional rent owed by Tenant to Landlord under this Lease, and the amount of
such excess shall be paid by Tenant to Landlord in the same manner that Tenant
pays the Base Monthly Rental hereunder and in addition thereto; or (3) to
withhold consent to Tenant's assigning or subleasing such space, which consent
shall not be unreasonably withheld, and to continue this Lease in full force and
effect as to the entire Prime Premises. In the event Landlord elects to
terminate under Paragraph (1) above, Tenant may immediately thereafter withdraw
its notice of desire to assign or sublet, whereupon this Lease shall continue in
full force and effect. Requests for sublease or assignment shall be accompanied
by a minimum service fee of Three Hundred and No/100 ($300.00) Dollars and
Tenant agrees to reimburse Landlord for all legal fees and other expenses
incurred by Landlord in connection with the request. Total service fees,
including legal fees, shall not exceed $1,000.00.
10. HOLDING OVER. Should Tenant or any of its successors in interest
------------
continue to hold the Prime Premises after termination of this Lease, whether
such termination occurs by lapse of time or otherwise, with Landlord's
acquiescence, and without any distinct agreement between the parties, such
holding over shall constitute and be construed as a tenancy at sufferance at a
monthly rental equal to one and one-fourth (1 1/4) times time monthly rental
(including Base Monthly Rental and any adjusted and Additional Rent) provided
herein at the time of such termination, if Landlord elects to accept such rent.
During such time as Tenant shall continue to hold the Prime Premises after the
termination hereof, Tenant shall be regarded as a tenant at sufferance and not a
tenant at will; subject, however, to all the terms, provisions, covenants and
agreements on the part of Tenant hereunder. No payments of money by Tenant to
Landlord after the termination of this Lease shall reinstate, continue, renew
or extend the Term and no extension of this Lease after the termination hereof
shall be valid unless and until the same shall be reduced to writing and signed
by both Landlord and Tenant. Tenant shall be liable to Landlord for all damage
which Landlord shall suffer by reason of Tenant's holding over and Tenant shall
indemnify, defend and hold Landlord harmless against all claims made by any
other tenant or prospective tenant against Landlord resulting from delay by
Landlord in delivering possession of the Prime Premises to such other tenant or
prospective tenant. If Landlord accepts rent pursuant to this paragraph,
Landlord shall always have the right to terminate Tenant's possession under this
paragraph upon thirty (30) days prior written notice to Tenant.
11. ALTERATIONS AND IMPROVEMENTS. (a) No structural alteration in, or
----------------------------
addition to the Prime Premises will be made without first obtaining Landlord's
prior written consent, which Landlord may grant or withhold for any reason or
for no reason;
(b) If Tenant's actions, omissions or occupancy of the Prime
Premises shall cause the rate of fire or other insurance either on the Office
Complex or the Prime Premises to be increased, Tenant shall pay, as additional
rent, the amount of any such increase promptly upon demand by Landlord; and
(c) All erections, additions, fixtures and improvements, whether
temporary or permanent in character (except only the movable office furniture of
Tenant) made in or upon the Prime Premises shall be and remain Landlord's
property and shall remain upon the Prime Premises at the termination of this
Lease by lapse of time or otherwise, with no compensation to Tenant. Landlord
may, at its election, repair any damage to the Prime Premises caused by or in
connection with the removal of any articles of personal property, business or
trade fixtures, alterations, improvements and installations, and all costs for
such repairs shall be at Tenant's expense.
12. REPAIRS TO THE PREMISES. Except as expressly stated herein,
-----------------------
Landlord shall not be required to make any repairs or improvements to the Prime
Premises, except structural repairs necessary for safety and tenantability.
Tenant shall, at its own cost and expense, keep in good repair all portions of
the Prime Premises, including but not limited to windows, interior glass,
doors, interior walls and finish work, floors and floor coverings, and
supplemental or special heating and air conditioning systems, and shall take
good care of the Prime Premises and its fixtures and permit no waste, except
normal wear and tear with due consideration for the purpose for which the Prime
Premises are leased. Tenant shall maintain and replace, at its cost and expense,
all light bulbs and fixtures in the Prime Premises that are not the building's
standard 2-foot by 4-foot fluorescent light fixtures and bulbs therefor, which
Landlord shall replace. Tenant shall indemnify Landlord against any loss,
damage, or expense arising by reason of any failure of Tenant so to keep the
Prime Premises in good repair and tenantable condition or due to any act or
neglect of Tenant, its agents, employees, contractors, invitees, licensees,
tenants, or assignees. If Tenant fails to perform, or cause to be performed,
such maintenance and repairs, then at the option of Landlord, in its sole
discretion, any such maintenance or repair may be performed or caused to be
performed by
-4-
<PAGE>
Landlord and the cost and expense thereof charged to Tenant, and Tenant shall
pay the amount thereof to Landlord on demand as additional rental. Tenant shall
promptly report to Landlord promptly in writing any damage to, or defective
condition in or about the Building or Prime Premises known to Tenant.
13. LANDLORD'S RIGHT TO ENTER PREMISES. Tenant shall not change the
----------------------------------
locks on any entrance to the Prime Premises. Upon Tenant's written request to
Landlord, Landlord will make a reasonable change of locks on behalf of Tenant at
Tenant's sole cost and expense. Landlord and its agents, employees, and
contractors shall have the right to enter the Prime Premises, at such times as
Landlord deems reasonably necessary, to make necessary repairs, additions,
alterations, and improvements to the Prime Premises or the Building, including,
without limitation, the erection, use, and maintenance of pipes and conduits and
to show the Prime Premises to prospective tenants and purchasers. Landlord shall
also be allowed to take into and through the Prime Premises any and all needed
materials that may be required to make such repairs, additions, alterations, and
improvements, all without being liable to Tenant in any manner whatsoever.
During such time as work is being carried on in or about the Prime Premises,
provided such work is carried out in a manner so as not to interfere
unreasonably with the conduct of Tenant's business therein, the rent provided
herein shall in no way abate, and Tenant waives any claim and cause of action
against Landlord for damages by reason of loss or interruption to Tenant's
business and profits therefrom because of the prosecution of any such work or
any part thereof. In the event of emergency, or if otherwise necessary to
prevent injury to persons or damage to property, such entry to the Prime
Premises may be made by force without any liability whatsoever on the part of
Landlord for damage resulting from such forcible entry. Except in the event of
emergency, Landlord agrees to give reasonable notice to Tenant prior to entering
Prime Premises.
14. DEFAULT AND REMEDIES. The following events shall be deemed to be
--------------------
events of default by Tenant under this Lease: (i) Tenant shall fail to pay any
installment of Base Monthly Rental, Additional Rent or any other charge or
assessment against Tenant pursuant to the terms hereof within five (5) days
after notice of failure; (ii) Tenant shall fail to comply with any term,
provision, covenant or warranty made under this Lease by Tenant, other than the
payment of the Base Monthly Rental or Additional Rent or any other charge or
assessment payable by Tenant, and shall not cure such failure within thirty (30)
days after notice thereof to Tenant, as extended as reasonably necessary to
effect cure, provided Tenant commences cure and diligently pursues same to
completion; (iii) Tenant or any guarantor of this Lease shall make a general
assignment for the benefit of creditors, or shall admit in writing its inability
to pay its debts as they become due, or shall file a petition in bankruptcy or
shall be adjudicated as bankrupt or insolvent, or shall file a petition in any
proceeding seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future statute,
law or regulation, or shall file an answer admitting or fail timely to contest
the material allegations of a petition filed against it in any such proceeding;
(iv) a proceeding is commenced against Tenant or any guarantor of this Lease
seeking any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, and such proceeding shall not have been dismissed within forty-five
(45) days after the commencement thereof; (v) a receiver or trustee shall be
appointed for the Prime Premises or for all or substantially all of the assets
of Tenant or of any guarantor of this Lease; (vi) Tenant shall abandon or vacate
all or any portion of the Prime Premises, or fail to take possession thereof as
provided in this Lease; (vii) Tenant shall do or permit to be done anything
which creates a lien upon the Prime Premises or the Office Complex and such lien
is not removed or discharged within fifteen (15) days after the filing thereof;
(viii) Tenant shall fail to return a properly executed instrument to Landlord in
accordance with the provisions of Paragraph 29 hereof within the time period
provided for such return following Landlord's request for same as provided in
Paragraph 29; or (ix) Tenant shall fail to return a properly executed estoppel
certificate to Landlord in accordance with the provisions of Paragraph 30 hereof
within the time period provided for such return following Landlord's request for
same as provided in Paragraph 30.
Upon the occurrence of any of the aforesaid events of default, without
notice or demand of Tenant in any instance, Landlord shall have the option to
pursue any one or more of the following remedies:
(a) Terminate this Lease by giving Tenant notice of termination,
in which event this Lease shall expire and terminate on the date specified in
such notice of termination, with the same force and effect as though the date so
specified were the date herein originally fixed as the termination date of the
Term of this Lease, and all rights of Tenant under this Lease and in and to the
Prime Premises shall expire and terminate, and Tenant shall remain liable for
all obligations under this Lease arising up to the date of such termination, and
Tenant shall surrender the Prime Premises to Landlord on the date specified in
such notice and if Tenant fails to do so. Landlord may without prejudice to any
other remedy which it may have for possession or arrearage in rent, enter upon
and take possession of the Prime Premises and expel or remove Tenant and any
other person who may be occupying the Prime Premises or any portion thereof.
(b) Without terminating this Lease, terminate Tenant's right of
possession and enter into and upon and take possession of the Prime Premises or
any part thereof, and at Landlord's option, expel and remove persons and
property therefrom by entry (including the use of force if necessary),
dispossessing suit or otherwise, without thereby releasing Tenant from any
liability hereunder, without terminating this Lease, and without being liable to
prosecution or any claim for damages therefor. Such property, if any, may be
removed and stored in a warehouse or elsewhere at the cost of; and for the
account of Tenant, all without being deemed guilty of trespass or becoming
liable for any loss or damage which may be occasioned thereby, and Landlord
may, but shall be under no obligation to do so relet the Prime Premises or any
portion thereof in Landlord's or Tenant's name, but for the account of Tenant,
with or without advertisement, and by private negotiations, and receive the rent
therefore, and
-5-
<PAGE>
for any term and upon such terms and conditions as Landlord may deem necessary
or desirable. Landlord shall in no way be responsible or liable for any rental
concessions or any failure to lease the Prime Premises or any part thereof, or
for any failure to collect any rent due upon such reletting. Upon each such
reletting, all rentals received by Landlord from such reletting shall be applied
as follows: first, to the payment of any indebtedness (other than any amounts
due hereunder) from Tenant to Landlord; second, to the payment of any costs and
expenses of such reletting, including, without limitation, brokerage fees and
attorneys' fees and costs of alterations and repairs (Tenant agreeing that
Landlord shall have the right to make such alterations and repairs as, in
Landlord's judgement, may be necessary to relet the Prime Premises); third, to
the payment of rental and other charges then due and unpaid hereunder; and the
residue, if any, shall be held by Landlord to the extent of and for application
in payment of future amounts due hereunder as the same may become due and
payable hereunder. In reletting the Prime Premises as aforesaid, Landlord may
grant rent concessions and Tenant shall not be credited therefor. If such
rentals received from such reletting shall at any time or from time to time be
less than sufficient to pay to Landlord the entire sums then due from Tenant
hereunder, Tenant shall pay any such deficiency to Landlord. Such deficiency
shall, at Landlord's option, be calculated and paid monthly. No such reletting
shall be construed as an election by Landlord to terminate this Lease unless a
written notice of such election has been given to Tenant by Landlord.
Notwithstanding any such reletting without termination, Landlord may at any time
thereafter elect to terminate this Lease for any such previous event of default
provided same has not been cured. Notwithstanding anything contained herein to
the contrary, no termination of Tenant's right of possession of the Prime
Premises by dispossessory action or otherwise shall release Tenant from the
performance of Tenant's obligations under this Lease, including, without
limitation, the timely payment of all rent reserved hereunder for the balance of
the Term of this Lease following such termination of Tenant's right of
possession, and Tenant agrees to so perform said obligations.
(c) Without liability to Tenant or any other party and without
constituting a constructive or actual eviction, suspend, or discontinue
furnishing or rendering to Tenant any property, material, labor, utilities or
other service, wherever Landlord is obligated to furnish or render the same, so
long as Tenant is in default under this Lease.
(d) Allow the Prime Premises to remain unoccupied and collect
Base Monthly Rental and other charges due hereunder from Tenant as they come
due.
(e) Landlord may perform, as agent for and at the expense of
Tenant, any obligation of Tenant under this Lease which Tenant has failed to
perform and of which Landlord shall have given Tenant notice and opportunity to
cure as provided herein, the cost of which performance by Landlord together with
interest thereon at the default rate from the date of such expenditure, shall be
deemed additional rental and shall be payable by Tenant to Landlord upon demand,
and Tenant agrees that Landlord shall not be liable for any damages resulting to
Tenant from such action, whether caused by negligence of Landlord or otherwise.
(f) Landlord may exercise any other legal or equitable right or
remedy which it may have, including, but not limited to Landlord's right
judicially to obtain possession pursuant to Georgia statutory law.
Notwithstanding the provisions of clause (c) above and regardless of
whether a "default" shall have occurred, Landlord may exercise the remedy
described in clause (c) without any notice to Tenant if Landlord, in its good
faith judgment, believes it would be materially injured by failure to take rapid
action or if the unperformed obligation of Tenant constitutes an emergency. Any
costs and expenses incurred by Landlord (including, without limitation,
reasonable attorneys' fees actually incurred at standard rates without reference
to O.C.G.A. (S) 13-1-11)) in enforcing any of its rights or remedies under
this Lease shall be deemed additional rent and shall be repaid to Landlord by
Tenant on demand.
Pursuit of any of the foregoing remedies shall not preclude pursuit of
any other remedy herein provided or any other remedy provided by law or at
equity, nor shall pursuit of any remedy herein provided constitute an election
of remedies thereby excluding the later election of an alternate remedy, or a
forfeiture or waiver of any Base Rental, Additional Rent or other charges and
assessments payable by Tenant and due to Landlord hereunder or of any damage
accruing to Landlord by reason or violation of any of the terms, covenants,
warranties and provisions herein contained. No course of dealing between
Landlord and Tenant or any failure or delay on the part of Landlord in
exercising any rights of Landlord under this paragraph, or under any other
provisions of this Lease, shall operate as a waiver of any rights of Landlord
hereunder or under any other provisions of this Lease, nor shall any waiver of
an event of default on one occasion operate as a waiver of any subsequent event
of default or of any other event of default. No express waiver shall affect any
condition, covenant, rule, or regulation other than the one specified in such
waiver and that one only for the time and in the manner specifically stated.
Neither the commencement of any action or proceeding, nor the
settlement thereof, nor entry of judgment thereon shall bar Landlord from
bringing subsequent actions or proceedings from time to time, nor shall the
failure to include in any action or proceeding any sum or sums then due be a bar
to the maintenance of any subsequent actions or proceedings for the recovery of
such sum or sums so omitted. Landlord's pursuit of any remedy or remedies,
including, without limitation, any one or more of the remedies stated above,
shall not (i) constitute an election of remedies or preclude pursuit of any
other remedy or remedies provided in this Lease or separately or concurrently or
in any combination, or (ii) serve as the basis for any claim of constructive
eviction, or allow Tenant to withhold any payments under this Lease.
-6-
<PAGE>
The failure of Landlord to insist upon strict performance of any of
the terms, conditions and covenants herein shall not be deemed to be a waiver of
any subsequent breach or default in the terms, conditions, and covenants herein
contained except as may be expressly waived in writing.
Landlord shall in no event be in default in the performance of any of
its obligations in this Lease unless and until Landlord shall have failed to
perform such obligation within thirty (30) days or such additional time as is
reasonably required to correct any such default, after notice by Tenant to
Landlord properly specifying wherein Landlord has failed to perform any such
obligation.
If Tenant shall at any time be in default hereunder, and if Landlord
shall deem it necessary to engage attorneys to enforce Landlord's rights
hereunder, the determination of such necessity to be in the sole discretion of
Landlord or if Landlord is made a party to litigation involving or pertaining to
Tenant due to no fault of Landlord, then Tenant will reimburse Landlord for the
reasonable expenses incurred thereby, including but not limited to court costs
and reasonable attorneys' fees and other legal expenses actually incurred at
standard rates without reference to O.C.G.A. (S)13-1-11.
Notwithstanding any other provisions of this Lease (including but not
limited to, provisions relating to periods within which defaults may be cured)
which are or may be construed to be to the contrary, if Tenant shall default in
the payment of any monetary obligations contained in this Lease more than three
(3) times in any Lease year, then any further default shall be deemed to be
deliberate and thereupon Landlord may immediately exercise its rights and
remedies without further notice to or demand upon Tenant. Furthermore, Tenant
hereby covenants that, prior to the exercise of any remedies, it will give the
holder of any Mortgage (as defined below) notice and thirty (30) days to cure
said default unless said default cannot be cured within thirty (30) days, in
which case such holder shall have the right, but not the obligation, to commence
and to diligently prosecute the cure of Landlord's default.
15. LANDLORD'S SERVICES. Landlord shall render services and supplies
-------------------
incidental to this Lease in accordance with and as described in this paragraph,
as follows:
(a) General cleaning and janitorial service required as a result
of normal, prudent use of the Prime Premises and only on Mondays through
Fridays, inclusive, with New Year's Day, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, Christmas Day, and any other recognized bank holiday
(herein collectively referred to as the "Holidays") excepted.
(b) Electric current for building standard tenant lighting and
small business machinery only from electric circuits designated by Landlord for
Tenant's use. Tenant will not use any electrical equipment which in Landlord's
opinion will overload the wiring installations or interfere with the reasonable
use thereof by other users in the Building. Tenant will not, without Landlord's
prior written consent in each instance, connect any items such as non-building
standard tenant lighting, vending equipment, printing or duplicating machines,
computers (other than desk top word processors and personal computers),
auxiliary air-conditioners, and other computer-related equipment to the
electrical system of the Prime Premises, or make any alteration or addition to
the system, except as disclosed in Tenant's Work. If any additional circuitry or
wiring is required by Tenant, and Landlord approves the installation of the same
in writing, such work shall be performed at Tenant's expense under Landlord's
control and supervision and Tenant shall pay Landlord the actual cost of such
additional work as billed. In the event the Tenant utilizes electric current or
other utilities in excess of the amount which would be typically utilized by
normal business office use of the Prime Premises, then Landlord shall have the
right to charge Tenant as additional rent a reasonable sum as reimbursement for
the direct cost of such additional use or services. In the event of a
disagreement as to the reasonableness of the amount of such additional rent, the
opinion of a qualified, local, and independent professional engineer selected by
Landlord in good faith shall be binding upon Landlord and Tenant. Payments for
such additional electrical power shall be deemed additional rent due from
Tenant.
(c) Seasonable air-conditioning and heating during normal
business hours (8:00 A.M. to 6:00 P.M.) Monday through Friday and (8:00 A.M.
until 1:00 P.M.) Saturday, said heating or air-conditioning not being furnished
Sunday or Holidays. Should Tenant desire either heating or air-conditioning at
other times on a regular basis, Landlord agrees to provide same upon written
request by Tenant, but at Tenant's expense at such hourly rates as may be
determined by Landlord, which charge Tenant shall pay promptly upon being billed
therefor. If Tenant desires a supplemental air-conditioning system and Landlord
has approved same, then Landlord may, at its option, either cause to be designed
or permit Tenant to design a supplemental air-conditioning system subject to
Landlord's approval, and Landlord shall install such system substantially in
accordance with such design. If Tenant has requested such supplemental system,
Tenant shall be responsible for determining that the design of such system is
adequate for its needs. Tenant agrees to pay Landlord for such equipment,
design, installation, metering and consumption of electricity for supplemental
air-conditioning and to maintain such equipment at Tenant's expense. Payments
for such additional servicing shall be deemed additional rent due from Tenant.
(d) Elevator services and other utilities as appropriate for
office buildings of this type.
Landlord may elect, at its option, to utilize security
practices, controls or devices in or about the Office Complex, but retains the
right, without notice to Tenant, to terminate, suspend or modify such practices,
devices and controls, without liability or responsibility to Tenant.
Notwithstanding anything contained in this Lease or otherwise, Tenant
acknowledges that Landlord has no liability, obligation or responsibility to
Tenant, its guests,
-7-
<PAGE>
invitees, contractors or employees with respect to either (i) such security
practices, contracts or devices; or (ii) failure to install such security
practices, controls or devices. Tenant acknowledges that Tenant, its employees,
agents, contractors and invitees enter the Office Complex at their own risk as
to their person or property.
Landlord shall not be liable for any damages directly or indirectly
resulting from the installation, use or interruption of use of any equipment in
connection with the furnishing of services referred to in this paragraph, and
particularly any interruption in services by any cause beyond the immediate
control of Landlord, provided Landlord shall use reasonable diligence in the
restoration of such services.
In the event that any interruption shall continue beyond five (5)
days, Landlord and Tenant agree that all rent shall abate until service is fully
restored.
16. WINDOW DRESSINGS. All exterior windows of the Prime Premises
----------------
shall be equipped only with building-standard blinds provided by the Landlord.
Tenant may install other window treatments so long as same have solid white
linings and so long as the building-standard blinds remain affixed between the
window glass and the other window treatments.
17. TELEPHONE SERVICE. Tenant acknowledges and agrees that securing
-----------------
and arranging for telephone service to the Prime Premises is the sole
responsibility of Tenant and that Landlord has no responsibility or obligation
to provide or arrange such telephone service, nor to permit installation of any
facilities or equipment in the Building outside the Prime Premises in connection
with providing telephone service to the Prime Premises.
18. DESTRUCTION OF PRIME PREMISES. Should the Prime Premises be so
-----------------------------
damaged by fire or other cause that rebuilding or repairs cannot, in the
estimation of Landlord, be completed within one hundred eighty (180) days from
the date of the fire, or other cause of damage, then either Landlord or Tenant
may terminate this Lease by written notice to the other given within thirty (30)
days of the date of such damage or destruction, in which event rent shall be
abated from the date of such damage or destruction. However, if the damage or
destruction is such that rebuilding or repairs can be completed within one
hundred eighty (180) days, Landlord covenants and agrees, subject to the
provisions of this paragraph, to make such repairs with reasonable promptness
and dispatch, and to allow Tenant an abatement in the Base Monthly Rental for
such time as the Prime Premises are untenantable or proportionately for such
portion of the Prime Premises as shall be untenantable, and Tenant covenants and
agrees that the terms of this Lease shall not be otherwise affected. In no event
shall Landlord be required to repair or replace any trade fixtures, furniture,
equipment or other property belonging to Tenant nor shall Landlord be required
to rebuild, repair or replace any part of the partitions, fixtures, additions,
or other improvements which may have been placed in or about the Prime Premises
by Tenant; nor shall Landlord have any obligation to incur any cost to repair,
reconstruct or restore the Prime Premises in excess of insurance proceeds from
the casualty necessitating such work that are made available to Landlord, under
its sole control, for such work. Notwithstanding anything to the contrary
contained in this paragraph, Landlord shall not have any obligation whatsoever
to repair, reconstruct or restore the Prime Premises when the damage resulting
from any casualty contained under this paragraph occurs during the last twelve
(12) months of the Term of this Lease.
19. CONDEMNATION. If the whole of the Prime Premises, or such portion
------------
thereof, as will make Prime Premises unusable for the purposes herein leased, be
condemned by any legally constituted authority for any public use or purpose,
then, in either of said events, the Term hereby granted shall cease from the
date when possession thereof is taken by public authorities, and rental shall be
accounted for as between Landlord and Tenant as of said date. Such termination,
however, shall be without prejudice to the rights of either Landlord or Tenant
to recover compensation and damage caused by condemnation from the condemnor;
provided, however, Tenant shall not be entitled to claim compensation for items
which would reduce Landlord's award.
20. INSURANCE. Tenant shall carry fire and extended coverage
---------
insurance insuring Tenant's interest in its improvements and betterment to the
Prime Premises and any and all furniture, equipment, supplies, and other
property owned, leased, held, or possessed by it and contained therein, against
loss or damage by fire, flood, windstorms, hail, earthquakes, explosion, riot,
damage from aircraft and vehicles, smoke damage, vandalism and malicious
mischief and such other risks as are from time to time covered under "extended
coverage" endorsements and special extended coverage endorsements commonly known
as "all risks" endorsements, such insurance coverage to be in an amount equal to
the full replacement value of such improvements and property.
Tenant also agrees to carry a policy or policies of workers'
compensation and commercial general liability insurance, including personal
injury and property damage, with contractual liability endorsement, in an amount
of not less than One Million and No/100 Dollars ($l,000,000.00) for the property
damage and Two Million and No/100 Dollars ($2,000,000.00) per occurrence for
personal injuries or deaths of persons occurring in or about the Prime Premises.
Said policies shall: (i) name Landlord, its agents and mortgagees as additional
insureds and insure Landlord's contingent liability under this Lease (except for
the workers' compensation policy, which shall instead include waiver of
subrogation endorsement in favor of Landlord); (ii) be issued by an insurance
company which is acceptable to Landlord and licensed to do business in the State
of Georgia and maintains an A.M. Best credit rating of "B+" or better; and (iii)
provide that said insurance shall not be cancelled unless thirty (30) days'
prior written notice shall have been given to Landlord. Said policy or policies,
or certificate thereof, shall be delivered to Landlord by Tenant upon
commencement of the Term of the Lease and upon each renewal and/or modification
of said insurance. If during the Term or any extension thereof additional
coverage and/or higher limits of insurance than those mentioned above shall be
deemed necessary by Landlord, Tenant shall procure such
-8-
<PAGE>
additional coverage provided such additional coverage is appropriate, customary
and generally required for like premises utilized for similar purpose. If Tenant
shall fail at any time to procure and/or maintain the insurance required herein,
Landlord may, at its option, procure such insurance on Tenant's behalf and the
cost thereof shall be payable upon demand, as additional rent. Payment by
Landlord of any insurance premium or the carrying by Landlord of any such
insurance policy shall not be deemed to waive or release the default of Tenant
with respect thereto.
21. WAIVER OF SUBROGATION. Landlord and Tenant each hereby releases
---------------------
the other from any and all liability or responsibility to the other or anyone
claiming through or under them by way of subrogation or otherwise for any loss
or damage to property caused by fire or any other perils that is insured against
or that are required to be insured against under the terms of the Lease, even if
such loss or damage shall have been caused by the fault or negligence of the
other party, or anyone for whom such party may be responsible, including,
without limitation, any other tenants or occupants of the remainder of the
Building in which the Prime Premises are located; provided, however, that this
release shall be applicable and in force and effect only to the extent that such
release shall be lawful at that time and in any event only with respect to loss
or damage occurring during such time as the releaser's policies shall contain a
clause or endorsement to the effect that any such release shall not adversely
affect or impair said policies or prejudice the right of the releaser to recover
thereunder and then only to the extent of the insurance proceeds payable under
such policies. Landlord and Tenant each agrees that it will request its
insurance carriers to include in its policies such a clause of endorsement. If
extra cost shall be charged therefor, each party shall advise the other thereof
and of the amount of the extra cost, and the other party, at its election, may
pay the same, but shall not be obligated to do so. If such other party fails to
pay such extra costs, the release provisions of this paragraph shall be
inoperative against such other party to the extent necessary to avoid
invalidation of such releaser's insurance.
22. NO ESTATE IN LAND. This contract shall create the relationship of
-----------------
Landlord and Tenant between the parties hereto; no estate shall pass out of
Landlord. Tenant has only a usufruct, not subject to levy and sale, and not
assignable by Tenant except by Landlord's consent
23. INDEMNITY. Excepting for the willful misconduct or gross
---------
negligence of Landlord, its agents and employees, Tenant indemnities and shall
hold Landlord, its agents and employees, harmless from and defend Landlord, its
agents, officers, directors, partners, attorneys and employees, against any and
all claims or liability for injury or death to any person or damage to any
property whatsoever:
(a) either (i) occurring in, on, or about the Prime Premises; or
(ii) occurring in, on, or about any facilities (including, without limitation,
elevators, stairways, passageways or hallways) the use of which Tenant may have
in conjunction with other occupants of the Office Complex, when such injury,
death or damage shall be caused in part or in whole by the act, neglect or fault
of, or omission of any duty with respect to the same by Tenant, its agents,
employees, contractors, invitees, licensees, tenants, or assignees; or
(b) arising from any work or thing whatsoever done by or
benefitting the Tenant in or about the Prime Premises or from transactions of
the Tenant concerning the Prime Premises; or
(c) arising from any breach or default on the part of the Tenant
in the performance of any covenant or agreement on the part of the Tenant to be
performed pursuant to the terms of this Lease; or
(d) otherwise arising from any act or neglect of the Tenant, or
any of its agents, employees, contractors, invitees, licensees, tenants or
assignees; and from and against all costs, expenses, counsel fees, and court
costs incurred or assessed in connection with any or all of the foregoing.
Furthermore, in case any action or proceeding be brought against Landlord by
reason of any claims or liability, Tenant agrees to cause such action or
proceeding to be defended at Tenant's sole expense by counsel reasonably
satisfactory to Landlord. The provisions of this Lease with respect to any
claims or liability occurring or caused prior to any expiration or termination
of this Lease shall survive such expiration or termination.
Except as may be the result of Landlord's gross negligence or wilful
misconduct, as a material part of the consideration to Landlord for this Lease,
Tenant hereby assumes all risk of damage to property or injury to persons in,
upon or about the Prime Premises from any cause, and Tenant hereby waives all
claims with respect thereto against Landlord. Tenant shall give immediate notice
to Landlord in case of casualty or accidents in the Prime Premises. The
provisions of this paragraph shall survive the expiration or sooner termination
of this Lease.
24. LIABILITY OF LANDLORD. Except as provided herein to the contrary,
---------------------
and except as may be the result of Landlord's gross negligence or wilful
misconduct, Landlord shall not be liable to Tenant or to any persons, firm,
corporation, or other business association claiming by, through, or under Tenant
for failure to furnish or for delay in furnishing any service provided for in
this Lease, and no such failure or delay by Landlord shall be an actual or
constructive eviction of Tenant nor shall any such failure or delay operate to
relieve Tenant from the prompt and punctual performance of each and all the
covenants to be performed herein by Tenant; nor for any latent defects in the
Premises or Building; nor for defects in the cooling, heating, electric, water,
elevator, or other apparatus or systems or for water discharged from sprinkler
systems, if any, or from water pipes and plumbing facilities in the Building;
nor for the theft, mysterious disappearance, or loss of any property of Tenant
whether from the Premises or any part of the Building; and nor from
interference, disturbance, or acts to or omitted against
-9-
<PAGE>
Tenant by third parties, including, without limitation other occupants of the
Building and any such occurrences shall not constitute an actual or constructive
eviction of Tenant.
25. LIMITATION OF LIABILITY. Landlord's obligations and liability
-----------------------
with respect to this Lease shall be limited solely to Landlord's interest in the
Office Complex, as such interest is constituted from time to time, and neither
Landlord nor any officer, director, shareholder, or partner of Landlord, or of
any partner of Landlord, shall have any personal liability whatsoever with
respect to this Lease. In no event shall Landlord be liable to Tenant nor shall
any interest of Landlord in the Office Complex be subject to execution by
Tenant, for any indirect, special or consequential damages.
26. NO WAIVER OF RIGHTS. No failure or delay of Landlord to exercise
-------------------
any right or power given it herein or to insist upon strict compliance by Tenant
of any obligation imposed on it herein and no custom or practice of either party
hereto at variance with any term hereof shall constitute a waiver or a
modification of the terms hereof by Landlord or any right it has herein to
demand strict compliance with the terms hereof by Tenant. No person has or shall
have any authority to waive any provision of this Lease unless such waiver is
expressly made in writing and signed by Landlord.
27. ENTIRE AGREEMENT AND EXHIBITS. This Lease constitutes and
-----------------------------
contains the sole and entire agreement of Landlord and Tenant and no prior or
contemporaneous oral or written representation or agreement between the parties
and affecting the Prime Premises shall have legal effect. The content of each
and every exhibit which is referenced in this Lease as being attached hereto is
incorporated into this Lease as fully as if set forth in the body of this Lease.
Landlord hereby disclaims any warranties and representations as to the Office
Complex or Prime Premises, whether express or implied.
28. NOTICES. All notices required or desired to be given with respect
-------
to this Lease shall, in order to be effective, be in writing and shall be
effectively given or delivered if hand delivered to the addresses for Landlord
and Tenant specified hereinbelow, or if deposited, postage prepaid, to the
United States mail, certified, return receipt requested, properly addressed to
the addresses specified hereinbelow, or if delivered by Federal Express or other
overnight commercial courier to the addresses for Landlord and Tenant
hereinbelow. Any notice mailed or sent by overnight commercial courier shall be
deemed to have been given upon receipt or refusal thereof. Notice affected by
hand delivery shall be deemed to have been given at the time of actual delivery.
In the event of a change of address by either party, such party shall give
written notice thereof to the other party in accordance with the foregoing.
Additionally, Tenant agrees to send copies of all notices required or permitted
to be given to Landlord to each lessor under any ground or land lease covering
all or any part of the Land and each holder of a mortgage or deed to secure debt
encumbering the Office Complex and/or the Land that notifies Tenant in writing
of its interest in the address to which notices are to be sent.
If to Tenant: iXL, INC.
1888 Emery Street, Suite 200
Atlanta, Georgia 30318
Attention: Barry T. Sikes
If to Landlord: PARK PLACE EMERY, L.L.C.
1900 Emery Street, Suite 300
Atlanta, Georgia 30318
Attention: Mr. Derek Aynsley
The foregoing addresses may be changed by thirty (30) days written
notice from time to time.
Tenant hereby appoints as his agent to receive the service of all
dispossessory or distraint proceedings and notices thereunder, and all notices
required under this Lease, the person in charge of or occupying the Prime
Premises at the time and if no person is in charge of or occupying same, then
such service or notice may be made by attaching the same on the main entrance to
the Prime Premises. To the extent permitted by law. Tenant hereby submits to the
jurisdiction of any state or federal court located in Fulton County, Georgia, as
well as to the jurisdiction of all courts from which an appeal may be taken from
the aforesaid courts for the purpose of any suit, action or other proceeding
arising out of Tenant's obligations under or with respect to this Lease and
Tenant hereby expressly waives any and all objections that Tenant may have as to
jurisdiction and/or venue in any of such courts.
29. SUCCESSORS AND ASSIGNS. The covenants, conditions and agreements
----------------------
herein contained shall inure to the benefit of and be binding upon Landlord, its
successors and assigns, and shall be binding upon Tenant, its heirs, executors,
administrators, successors and assigns, and shall inure to the benefit of Tenant
and only such assigns of Tenant to whom the assignment by Tenant has been
consented to by Landlord. Nothing contained in this Lease shall in any manner
restrict Landlord's right to assign or encumber this Lease in its sole
discretion. Should Landlord assign this Lease as provided for above, Tenant
shall be bound to said conditions of this Lease for the balance of the Term
hereof remaining after such succession, and Tenant shall attorn to such
succeeding party as its landlord under this Lease promptly under any such
successions. Tenant agrees that should any party so succeeding to the interest
of Landlord require a separate agreement of attornment regarding the matters
covered by this Lease, then Tenant shall enter into any such "attornment
agreement", provided the same does not modify any of the provisions of this
Lease and has no adverse effect upon Tenant's continued occupancy of the Prime
Premises.
-10-
<PAGE>
30. SUBORDINATION. Tenant agrees that this Lease shall automatically
-------------
be and remain subject and subordinate to all present and future mortgages, deeds
to secure debt or other security instruments (the "Security Deeds") affecting
the Prime Premises. Tenant shall promptly execute and deliver to Landlord such
certificate or certificates in writing as Landlord may request, confirming the
subordinate nature of the Lease to such Security Deeds, and in default of Tenant
so doing, Landlord shall be and is hereby authorized and empowered to execute
such certificate in the name of and as the act and deed of Tenant, this
authority being hereby declared to be coupled with an interest and to be
irrevocable.
31. ESTOPPEL CERTIFICATE. Tenant shall, within ten (10) days after
--------------------
request from Landlord, at any time and from time to time execute, acknowledge
and deliver to Landlord a written statement certifying as follows: (a) that this
Lease is unmodified and in full force and effect (or if there has been
modification thereof, that the same is in full force and effect as modified and
stating the nature thereof); (b)that to the best of its knowledge there are no
uncured defaults on the part of Landlord (or if any such default exists, the
specific nature and extent thereof); and (c) the date to which any rents and
other charges have been paid in advance, if any; and (d) such other matters as
Landlord may reasonably request. Tenant irrevocably appoints Landlord as its
attorney-in-fact, coupled with an interest, to execute and deliver, for and in
the name of Tenant, any document or instrument provided for in this paragraph.
32. TIME IS OF THE ESSENCE. Time is of the essence with the respect
----------------------
to the performance of each of the covenants and agreements of this Lease;
provided, however, that failure of Landlord to provide Tenant with any
notification regarding adjustments in Base Monthly Rental, or any other charges
provided for hereunder, within the time periods prescribed in this Lease shall
not relieve Tenant of its obligation to make such payments, which payments shall
be made by Tenant at such time as notice is subsequently given. Unless
specifically provided otherwise, all references to terms of days or months shall
be construed as references to calendar days or calendar months, respectively.
33. CAPTIONS GOVERNING LAW. The captions of this Lease are for
----------------------
convenience of reference only and in no way define, limit or describe the scope
or intent of this Lease. The laws of the State of Georgia shall govern the
validity, performance and enforcement of this Lease.
34. DEFINITIONS. "Landlord" as used in this Lease shall include his
-----------
heirs, representatives, assigns and successors in title to Prime Premises.
"Tenant" shall include its heirs and representatives, and if this Lease shall
be validly assigned or sublet, shall include also Tenant's assignees or
sublessees, as to premises covered by such assignment or sublease. "Broker" and
"Co-Broker" shall include its successors, assigns, heirs, and representatives.
"Landlord", "Tenant", "Broker" and "Co-Broker", shall include male and female,
singular and plural, corporation, partnership or individual, as may fit the
particular parties.
35. SEVERABILITY. If any clause or provision of this Lease is or
------------
becomes illegal, invalid, or unenforceable because of present or future laws or
any rule or regulation of any governmental body or entity, effective during its
term, the intention of the parties hereto is that the remaining parts of this
Lease shall not be affected thereby, unless such invalidity is, in the sole
determination of Landlord, essential to the rights of both parties in which
event Landlord has the right to terminate this Lease on written notice to
Tenant.
36. LAWS AND REGULATIONS: BUILDING RULES AND REGULATIONS. Tenant
----------------------------------------------------
shall comply with, and Tenant shall cause its agents, contractors, customers,
employees, invitees, licensees, servants and visitors to comply with (i) all
applicable laws, ordinances, orders, directions, requirements, rules and
regulations (state, federal, municipal and other agencies or bodies having any
jurisdiction thereof) now in force or which may hereafter be in force, which
shall impose any duty upon Landlord or Tenant relating to the use, condition or
occupancy of the Prime Premises or the conduct of Tenant's business therein,
including, without limitation, the Americans With Disabilities Act or 1990 (as
now or hereafter amended); and (ii) the Rules and Regulations set forth in
Exhibit "E", as such Rules and Regulations are modified and supplemented by
- -----------
Landlord from time to time, and such other rules and regulations as are
reasonably adopted by Landlord from time to time, for the safety, care or
cleanliness of the Prime Premises and the Building, or for preservation of good
order therein, all of which will be sent by Landlord to Tenant in writing and
shall be thereafter carried out and observed by Tenant, its agents, contractors,
customers, employees, invitees, licensees, servants and visitors. Tenant hereby
expressly waives the benefit of all existing and future rent control laws and
similar governmental rules and regulations, whether in time of war or not, to
the full extent permitted by law.
37. SPECIAL STIPULATIONS. The Special Stipulations, if any, attached
--------------------
hereto and initialed by Landlord and Tenant are hereby incorporated herein and
made a part hereof. In the event the Special Stipulations conflict with any of
the foregoing provisions of this Lease, the Special Stipulations shall control.
38. BROKER COMMISSION. Tenant acknowledges and agrees that The
-----------------
Griffin Company ("Broker") has represented the Tenant in this transaction and
shall receive a real estate commission payable by Tenant as outlined in a
separate Commission Agreement. Tenant represents and warrants to Landlord that,
other than Broker, no broker, agent, commissioned salesperson or other person
has represented Tenant in the negotiations for and procurement of this Lease,
and that no commissions, fees or compensation of any kind are due in connection
herewith to any broker, agent, commissioned salesperson or other person, other
than Broker. Landlord agrees to pay all commissions, fees, or compensation of
any kind to any real estate broker(s) representing Landlord in this Lease.
-11-
<PAGE>
Tenant further acknowledges that some principals of Landlord are
licensed real estate brokers and may be receiving a real estate commission in
connection with this transaction.
39. REMOVAL OF PERSONAL PROPERTY. Tenant may (if not in default
----------------------------
hereunder) prior to the expiration of this Lease, or any extension thereof,
remove all unattached and movable personal property and equipment which Tenant
has placed in the Prime Premises, provided Tenant repairs all damages to Prime
Premises caused by such removal. All personal property of Tenant remaining on
the Prime Premises after the end or the Term shall be deemed conclusively
abandoned, notwithstanding that title to or a security interest in such personal
property may be held by an individual or entity other than Tenant, and Landlord
may dispose of such personal property in any manner it deems proper, in its sole
discretion. Tenant hereby waives and releases any claim against Landlord arising
out of the removal or disposition of such personal property. Tenant shall
reimburse Landlord for the cost of removing such personal property.
40. SIGNAGE. Tenant shall not place any signs, decals, or other
-------
materials upon the windows or suite doors of the Prime Premises nor on the
exterior walls of Prime Premises. Landlord agrees to provide Tenant one building
standard suite door tenant identification sign and one building standard
directory listing. Any additional signage desired by Tenant shall be approved,
in writing, by Landlord and the management company of the Office Complex, which
shall be granted in their sole discretion, unless otherwise specified in the
Special Stipulations.
41. EFFECT OF TERMINATION OF LEASE. No termination of this Lease
------------------------------
prior to the normal ending thereof, by lapse of time or otherwise, shall affect
Landlord's right to collect rent for the period prior to termination thereof.
42. RIGHTS CUMULATIVE. All rights, powers and privileges conferred
-----------------
hereunder upon parties hereto shall be cumulative but not restrictive to those
given by law.
43. FORCE MAJEURE. In the event of strike, lockout, labor trouble,
-------------
civil commotion, act of God, or any other cause (hereinafter collectively
referred to as "Force Majeure") outside and beyond Landlord's control, resulting
in the impairment of Landlord's ability to perform any obligation or provide any
service hereunder, this Lease shall not terminate except at Landlord's election,
and Tenant's obligation to pay Base Monthly Rental, additional rental and all
other charges and sums due payable by Tenant shall not be altered or excused and
Landlord shall not be considered to be in default under this Lease or liable in
damages to Tenant in any manner.
44. TENANT CORPORATION. Each of the persons executing this Lease on
------------------
behalf of Tenant does hereby covenant, warrant and represent that Tenant is a
duly organized and validly existing corporation, that Tenant has and is
qualified to do business in Georgia, that the corporation has full right and
authority to enter into this Lease, and that each and all persons signing on
behalf of the corporation were authorized to so do. Upon Landlord's request,
Tenant shall provide Landlord with evidence reasonably satisfactory to Landlord
confirming the foregoing covenants and warranties.
45. SUBMISSION OF LEASE. The submission of this Lease for examination
-------------------
does not constitute an offer to lease nor a reservation of space even if said
lease is executed by Landlord, and this Lease shall be effective only upon
execution hereof by Landlord and Tenant and delivery of a counterpart hereof to
Landlord and Landlord's acceptance and final approval thereof.
46. NO RECORDATION OF LEASE. This Lease is not in recordable form,
-----------------------
and Tenant agrees not to record or permit the recording of this Lease.
47. HAZARDOUS SUBSTANCES. Tenant hereby covenants and agrees that
--------------------
Tenant shall not cause or permit any "Hazardous Substances" (as hereinafter
defined) to be generated, placed, held, stored, used, located or disposed of at
the Office Complex or any part thereof, except for Hazardous Substances as are
commonly and legally used or stored as a consequence of using the Demised Prime
Premises for general office and administrative purposes, but only so long as the
quantities thereof do not pose a threat to public health or to the environment
or would necessitate a "response action", as that term is defined in CERCLA (as
hereinafter defined), and so long as Tenant strictly complies or causes
compliance with all applicable governmental rules and regulations concerning the
use or production of such Hazardous Substances. For purposes of this paragraph,
"Hazardous Substances" shall mean and include those elements or compounds which
are contained in the list of Hazardous Substances adopted by the United States
Environmental Protection Agency (EPA) or the list of toxic pollutants designated
by Congress or the EPA which are defined as hazardous, toxic, pollutant,
infectious or radioactive by any other federal, state or local statute, law,
ordinance, code, rule, regulation, order or decree regulating, relating to or
imposing liability (including, without limitation, strict liability) or
standards of conduct concerning, any hazardous, toxic or dangerous waste,
substance or material, as now or at any time hereinafter in effect (collectively
"Environmental Laws") Tenant hereby agrees to indemnify Landlord and hold
Landlord harmless from and against any and all losses, liabilities, including
strict liability, damages, injuries, expenses, including reasonable attorneys'
fees, costs of settlement or judgment and claims of any and every kind
whatsoever paid, incurred or suffered by, or asserted against, Landlord by any
person, entity or governmental agency for, with respect to, or as a direct or
indirect result oh, the presence in, or the escape, leakage, spillage,
discharge, emission or release from, the Demised Prime Premises of any Hazardous
Substances (including, without limitation, any losses, liabilities, including
strict liability, damages, injuries, expenses, including reasonable attorneys'
fees, costs of any settlement or judgment or
-12-
<PAGE>
claims asserted or arising under the Comprehensive Environmental Response,
Compensation and Liability Act ["CERCLA"], any so-called federal, state or local
"Superfund" or "Superlien" laws or any other Environmental Law); provided,
however, that the foregoing indemnity is limited to matters arising solely from
Tenant's violation of the covenant contained in this Article. The obligations of
Tenant under this Article shall survive any expiration or termination of this
Lease.
48. EXECUTION. This Lease may be executed in any number of
---------
counterparts, each of which shall be deemed an original and any of which shall
be deemed to be complete in itself and may be introduced into evidence or used
for any purpose without the production of the other counterparts. No
modification or amendment of this Lease shall be binding upon the parties hereto
unless such modification or amendment is in writing and signed by Landlord and
Tenant.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals
hereunder and have caused this Lease to be executed in their names and their
corporate seals to be affixed by their officers duly authorized thereunto, upon
the day and year set forth above.
TENANT:
Signed, sealed and delivered iXL, INC., A DELAWARE CORPORATION
in the presence of:
/s/ James V. Sandry By: /s/ Barry T. Sikes
- --------------------------------- --------------------------------
Notary Public or Witness
James V. Sandry Name: BARRY T. SIKES
- --------------------------------- ------------------------------
Name (Please Print) (Please Print)
Title: VP OF OPERATIONS
-----------------------------
(CORPORATE SEAL)
LANDLORD:
Signed, sealed and delivered PARK PLACE EMERY, L.L.C.,
in the presence of:
/s/ Janine A. Shelly By: /s/ Robert L. Silverman
- --------------------------------- --------------------------------
Notary Public or Witness
Janine A. Shelly Name: Robert L. Silverman
- --------------------------------- ------------------------------
Name (Please Print) (Please Print)
Notary Public, Cobb County, Georgia
My Commission Expires Oct. 20, 2000 Title: Chairman, The Winter Construction
----------------------------------
Co.
----
Managing Member
Park Place Emery L.L.C.
-13-
<PAGE>
PARK PLACE ATLANTA
SPECIAL STIPULATIONS
--------------------
1. Landlord and Tenant agree that Tenant shall accept the Prime Premises in an
"as is" condition per Exhibit "A-1" attached hereto. Landlord agrees to
------------
provide an amount equal to $12.00 per rentable square foot for tenant
improvements desired by Tenant ("Tenant Improvement Allowance"). Any costs
in excess of this amount shall be at Tenant's expense. Landlord agrees to
"demo" Suite 115, Suite 200, and Suite 400 at Landlord's expense, which
---
shall not be included in the Tenant Improvement Allowance, and the Prime
Premises shall be delivered to Tenant broom clean and ready for
construction of Tenant's work.
Tenant shall have the right to select the contractor of its choice
("Tenant's Contractor") to construct the "Tenant Improvements" (hereinafter
defined); however, Tenant's Contractor shall require the final approval of
Landlord, which approval shall not be unreasonably withheld. Landlord and
Tenant agree that all building materials used by Tenant's contractor will
be first quality.
Landlord and Tenant agree that Exhibit "F" attached hereto represents the
----------
Construction Rules and Regulations for outside contractors by which
Tenant's Contractor agrees to abide. Tenant shall be responsible for any
failure by Tenant's Contractor to comply with such rules and regulations
and such failure to comply in any respect within ten (10) days of notice by
Landlord to Tenant to cure by either Tenant or Tenant's Contractor shall
constitute a default under this Lease. Further, Tenant and Tenant's
Contractor shall jointly and severally be responsible to Landlord for and
shall indemnify and hold Landlord from any and all costs, expenses,
damages, liabilities, suits, claims or court costs, incurred or suffered by
Landlord solely as a result of the acts of omissions of Tenant, Tenant's
Contractor or their respective employees, agent subcontractors and
suppliers in connection with the Tenant Improvements.
It is understood that Tenant desires to make changes to the existing
partition layout within the Prime Premises, Landlord agrees that Tenant
shall submit line drawings, to be approved by Landlord prior to
construction, of proposed changes to the Prime Premises (on copies of plans
previously submitted to Tenant as representative of the existing layout),
which plans shall serve to notify Landlord of the proposed changes. Upon
completion of the construction of the Prime Premises, Tenant shall deliver
to Landlord "as built" drawings of the remodeling, showing wall locations,
electrical and telephone outlet, and lighting switch locations, drawn to
1/8" scale, which will be attached to the Lease as Exhibit "A-3". All
------------
approvals and consents shall not be unreasonably withheld, delayed or
conditioned by Landlord.
Tenant agrees that Landlord shall have the right to inspect the tenant
improvements upon completion, and any corrections to the work, if any
required by Landlord to cause the work to comply with the plans approved
for the work shall be at Tenant's expense.
Landlord agrees to disburse the Tenant Improvement Allowance to Tenant in
monthly payments based on the percent of work complete. Tenant agrees to
provide monthly affidavits and lien waivers to Landlord. Tenant does hereby
release and relieve Landlord from any claims for damages and the like which
may result from Landlord's paying an inaccurate invoice, fee statement or
the like, and does hereby indemnify and agree to hold Landlord harmless and
to defend Landlord from and against any and all claims, damages, liability
or costs (including, without limitation, attorneys' fees and court costs)
which may arise or result from Landlord's payment of Tenant Improvement
Costs. Notwithstanding the foregoing, the within release and
indemnification of Landlord by Tenant shall not release any other third
parties, nor shall it waive any and all rights which Tenant may have
against Landlord or other third parties in connection with the payment or
nonpayment of Tenant Improvement Costs. Prior to final payment, Tenant
shall provide Landlord with copies of all invoices, final affidavits, and
removal of all liens.
Landlord shall give access and entry to the Prime Premises to Tenant and
its contract parties performing time improvement work and reasonable
opportunity and time to enable Tenant and such contract parties to perform
and complete such work. All of such work and Tenant's use (and the use by
its contract parties) of the Prime Premises for such purposes shall be
entirely in accordance with the Lease.
Tenant shall, at its own expense, obtain all necessary licenses and
permits and Certificates of Occupancy pertaining to the Tenant Improvements
and comply with all statutes, ordinances, rules, regulations, and orders
of any governmental or quasi-governmental authority having jurisdiction
over the Tenant Improvements or the performance thereof and respond to, and
shall defend, indemnify and save harmless Landlord and/or Landlord's agents
from and against any loss, liability or expense arising from, any such
violations and any citations, assessments, fines or penalties resulting
therefrom. Tenant agrees that time work shall be performed in strict
accordance with all applicable current fire, health safety and building
codes of the city, county, and state in which these premises are situated
and all Federal Occupational Safety and Health Act (OSHA) guidelines.
Tenant, at its expense, shall be responsible for removing or repairing all
conditions not in accordance with state and local codes. To the extent
Landlord has work to be completed prior to Tenant's being able to obtain a
Certificate of Occupancy, Landlord agrees to complete its
<PAGE>
iXL, INC.
SPECIAL STIPULATIONS - CONTINUED
- --------------------------------
work promptly and in a good and workmanlike manner. Any delays resulting
from Landlord's responsibility shall delay rental commencement. Upon
completion of the Tenant Improvements, Tenant shall submit to Landlord
copies of the Certificate of Occupancy and building permit. Landlord
agrees, at its own expense, to promptly comply with all existing
requirements of any legally constituted public authority imposed by reason
of Tenant's use or occupancy of the Prime Premises and Building, including,
but not limited to, the Americans with Disabilities Act ("ADA"). To the
extent that any part of the Prime Premises or Building does not, prior to
commencement of this Lease, meet the minimum standards imposed by ADA,
Landlord shall cause the Building to be upgraded to meet said minimum
standards. Landlord agrees to promptly comply with all requirements of any
legally constituted public authority which hereinafter become effective,
but the expense shall be an operating cost of the Building.
2. Landlord agrees to use its reasonable efforts to deliver to Tenant
additional premises ("Additional Premises"). Landlord agrees to use
reasonable efforts to deliver to Tenant Suite 110, Suite 1ll, and Suite 300
(collectively, the "Additional Premises") as each respectively become
available or are vacated pursuant to Landlord's efforts. Tenant
acknowledges that with respect to certain of the Additional Premises there
exist certain leases with other parties, some of which leases contain
renewal options and first rights of refusal over the Additional Premises
which may prevent Landlord from being able to deliver to Tenant all or part
of such Additional Premises. The attached Floor Plan A-2 represents an
approximation of the Additional Premises to be leased pursuant to this
stipulation.
To the extent Landlord is able to lease to Tenant all or portions of the
Additional Premises, Tenant agrees to lease such Additional Premises in an
"as is" condition upon receipt of thirty (30) days written notice from the
Landlord. Upon each and every lease of Additional Premises, a Lease
Amendment shall be prepared and executed to reflect the following changes
to the Lease:
a) The incremental square footage to be added to the Prime Premises and
any previous Additional Premises to disclose the current aggregate
square footage;
b) Effective ninety (90) days after the delivery of each Additional
Premises, the Base Monthly Rental shall be increased by a sum which
is the product of the number of square feet of the Additional
Premises times the then current prevailing Base Monthly Rental for
the Lease computed on a per square foot basis;
c) There will be proportionate and commensurate adjustments to the
Additional Rent and Tenant Percentage Share;
d) Upon the full execution by Tenant of each Lease Amendment, Landlord
shall provide to Tenant an Additional Tenant Improvement Allowance
of $12.00 per square foot of each Additional Premises, such
provision and disbursement to be effected in a manner consistent
with applicable provisions of these Special Stipulations;
3. Landlord and Tenant agree that Landlord is entitled to a Return of twelve
percent (12%) (Return is defined as Net Operating Income before debt
service) on its Total Investment (debt plus equity and accrued Return) in
the Office Complex. Attached as Exhibit "G" is the current Pro-Forma for
----------
the acquisition, improvement and leasing of the Office Complex. Upon
completion of the Improvements and leasing as contemplated in the Pro-
Forma, and the attainment of ninety percent (90%) occupancy or December 31,
1998, whichever shall first occur, the current estimates in the Pro-Forma
shall be replaced by the actual expenditures, income and expenses incurred.
Landlord warrants and represents that one of its investors/affiliated
companies will initially be leasing approximately 23,000 square feet of
premises on Floors 2 and 3 of Building One of the Office Complex at the
exact same Base Rent. Additional Rent and Tenant Improvement Allowance,
and substantially the same Lease Agreement as Tenant. If, upon the
replacement of the estimated Pro-Forma by the actual Pro-Forma, Landlord is
receiving a Return of less than twelve percent (12%), then to the extent
necessary, the Base Rent payable by both Tenant and Landlord's
investor/affiliate company will be increased proportionately and
commensurately, retroactive to the Commencement Date in both Leases,
sufficient to generate a return of twelve percent (12%) per annum on
Landlord's Total Investment. Landlord and Tenant agree that in no event
shall the initial Base Monthly Rental rate exceed $14.00 per rentable
square foot.
4. Provided Tenant still occupies the Prime Premises and any Additional
Premises and has not otherwise been in default beyond notice and cure
periods provided herein, Tenant shall be entitled to two (2) options to
renew this Lease for the Prime Premises as expanded by any Additional
Premises for additional terms of five (5) years each. Not less than one
hundred twenty (120) days, nor more then one hundred eighty (180) days
prior to the expiration of this Lease or any renewed Lease, Tenant shall
notify Landlord in writing of its exercise of its renewal option which
shall be on the same terms and conditions of this Lease except for Base
Rent, which shall be adjusted to the then prevailing market rent for
similar facilities within reasonable proximity. Landlord shall deliver to
Tenant Landlord's estimate of the prevailing Base Market Rental Rate within
thirty (30) days of Tenant's notice, and Tenant, upon receiving Landlord's
estimate of the prevailing Base Market Rental Rate, shall have seven (7)
days to submit a counter estimate. Following such time, Tenant and Landlord
shall have thirty (30) days to agree upon the prevailing Base Market
Rental Rate. If an agreement has not been reached at the end of thirty (30)
days, Tenant may notify Landlord of its intent to arbitrate such rate, with
notice to be accompanied by the identity of an appraiser in the
Metropolitan Atlanta area appointed by the Tenant.
<PAGE>
IXL, INC.
SPECIAL STIPULATIONS - CONTINUED
- --------------------------------
Thereafter, Landlord shall have fifteen (15) days in which to appoint its
appraiser in the Metropolitan Atlanta area, and if the two appraisers can
not agree on the Base Market Rental Rate within fifteen (15) days after the
appointment of Landlord's appraiser, the two appraisers theretofore
appointed shall appoint a third appraiser in the Metropolitan Atlanta area,
experienced in the commercial real estate market in Fulton County, Georgia.
If the two appraisers can not agree on the appointment of a third appraiser
within fifteen (15) days, then either party shall have the right to apply
to the presiding judge of the Superior Court of Fulton County, Georgia for
such selection of the third appraiser. After the appointment of such third
appraiser, the third appraiser thus elected shall have thirty (30) days in
which to decide on the Base Market Rental Rate as defined above, which
determination shall be final and binding upon the parties thereto. After
the Base Market Rental Rate has been established, the third appraiser shall
immediately notify the parties in writing. Each appraiser appointed
hereunder shall be a member of the MAI with at least ten (10) years of
full-time appraisal experience in commercial real estate in the Atlanta
area, and shall also be a Georgia certified appraiser, and no such
appraiser shall have any other existing contractual relationship with
either party hereto. Landlord and Tenant shall pay the fees of their
respectively appointed appraisers and the fee of the third appraiser shall
be shared equally by Landlord and Tenant. It is also agreed that any
arbitrated rate shall be within the parameters of the rates last quoted to
each party by tine other party.
5. Tenant shall have the right to erect, access and maintain, at its sole cost
and expense, and exclusively utilize a deck on the roof of Building Two.
Tenant shall submit its plans and specifications for Landlord's review and
consent which may not be unreasonably withheld provided Landlord deems the
same safe. Notwithstanding any consent issued by Landlord for a roof deck,
the protections of Paragraphs 23 and 24 are specifically incorporated
herein by reference and to matters pertaining to the roof and deck, are
expanded to an absolute unqualified hold harmless by Tenant in favor of
Landlord.
6. Tenant shall have the right, to erect signage on not more than two
elevations on Building Two identifying iXL and Virtual Resources as
occupants of Building Two. The installation maintenance and illumination of
such signage shall be ant the sole expense of Tenant. Upon the termination
of the Lease or if Tenant shall cease to be the largest occupant of
Building Two, Tenant's Building signage rights shall terminate and Tenant
will immediately remove all of its signs arid repair and restore Building
to its original condition.
7. With regard to the Prime Premises, the following Rental Commencement Dates
shall apply:
a) Fourth Floor and Suite 115, April 1, 1997, subject to Landlord
delivering tile same to Tenant on or before January 1, 1997.
b) Second Floor, the earliest of ninety (90) days after delivery by
Landlord, or May 1, 1997, subject to Landlord delivering the same
to Tenant on or before February 1, 1997.
c) Suite 350, subject to Landlord delivering the same and ninety (90)
days from completion of the Tenant Improvements on the Second Floor,
on October 1, 1997.
8. Landlord agrees that Tenant shall have the right to construct a driveway,
at Tenant's expense, to gain access to the south entrance to the Building
and that the two (2) adjacent parking spaces on the southeast corner of the
Building shall be designated "iXL Loading Zone", as outlined in yellow on
the site plan attached as Exhibit "M". Tenant will be allowed to use the
----------
spaces to load and unload Tenant's vehicles.
9. If Tenant has leased all available space in Building Two and the net worth
of Tenant equals at least the value of the Office Complex, Landlord agrees
to grant Tenant the right of first refusal to lease all space that Winter
Properties occupies in Park Place Atlanta, Building One, 1900 Emery Street,
Atlanta, Georgia 30318 (hereinafter referred to as the 'Winters
Construction Company Space and as outlined on Exhibit "N" attached hereto).
----------
Upon Landlord presenting a copy of a bona fide lease proposal for the
Winters Construction Company Space acceptable to Landlord and the third
party involved, Tenant shall have five (5) business days within which to
notify Landlord. In writing, of its decision to lease or not to lease the
Winters Construction Company Space under the same terms and conditions as
the bona fide lease proposal. If Tenant exercises said right of first
refusal, then Tenant agrees to execute an Amendment to this Lease for such
Winters Construction Company Space upon the same terms and conditions
identical to those contained in the bona fide lease proposal. If the Tenant
does not exercise this right of first refusal, this right of first refusal
shall be null and void and Landlord shall be entitled to thereafter lease
said Winters Construction Company Space without restriction.
<PAGE>
iXL, INC.
SPECIAL STIPULATIONS - CONTINUED
- --------------------------------
10. If Tenant has leased all available space in Building Two and the net worth
of Tenant equals at least the value of the Office Complex, Landlord agrees
to grant Tenant the right of first refusal to lease all other space in
Building One (hereinafter referred to as the "Non-Winters Construction
Company Space") and as outlined on Exhibit "O" attached hereto). In the
----------
event there is already a right of first refusal on any Non-Winters
Construction Company Space in Building One, Landlord agrees to grant Tenant
a right of second refusal on such space. Upon any Non-Winters Construction
Company Space becoming available for Tenant and Landlord presenting a copy
of a bona fide lease proposal for the Non-Winters Construction Company
Space acceptable to Landlord and all other parties involved. Tenant shall
have ten (10) business days within which to notify Landlord, in writing, of
its decision to lease or not to lease the Non-Winters Construction Company
Space under the same terms and conditions as the bona fide lease proposal.
If Tenant exercises said right of first or second refusal, then Tenant
agrees to execute an amendment to this Lease for such Non-Winters
Construction Company Space upon the same terms and conditions identical to
those contained in the bona fide lease proposal.
11. Landlord agrees to provide card key access to Building and Premises with
one (1) card per employee of Tenant. Tenant shall have the right to
install, at Tenant's expense, card key access for the elevators and
stairwell doors to any floor occupied 100% by Tenant and to all doors with
access to the roof. Tenant shall provide Landlord six (6) sets of such
keys.
12. Landlord agrees to designate six (6) "iXL Visitor" spaces conveniently
located adjacent to the Building, as outlined on the site plan attached
hereto as Exhibit "P".
----------
13. Landlord hereby acknowledges and agrees that "Tenant shall have the right
for no additional consideration to install and operate satellite dishes,
antennas, or any other electronic/transmitting/ receiving devices for
service to the Premises at a location on the roof and in a first-class
manner reasonably acceptable to Landlord during the term of this Lease and
any extension thereof.
Tenant hereby agrees to install the satellite dish on the dish space in a
good and workmanlike manner, maintain and repair such satellite dish and
dish space in proper condition and to secure all permits required for the
installation and operation thereof, at no cost to Landlord, and hereby
indemnifies Landlord from and against any claims against Landlord for
personal injury, property damage or other damage, including reasonable
attorney's fees actually incurred, arising from the installation, use,
operation, maintenance, repair and removal of the dish space, the satellite
dish, such other equipment, or any cables or related equipment thereof. The
provisions of this paragraph shall survive the expiration date or sooner
termination of this Lease. The insurance required to be carried by Tenant
under the Lease shall also apply to the satellite dish or other equipment
and dish space (collectively, the "Satellite Dish").
Landlord understands and agrees that the Satellite Dish and related
equipment is considered the personal property of Tenant, and that Tenant
has the right to remove the same at any time during the Lease Term, or
during any renewals or extensions thereafter. Tenant shall remove the
Satellite Dish and restore the dish space to substantially the same
condition as existed prior to the installation of the Satellite Dish,
reasonable wear and tear excepted.
All direct expenses incurred by Tenant in connection with the installation,
operation or removal of the Satellite Dish shall be paid promptly by
Tenant, and Tenant shall not permit any mechanic's or other lien to be
filed against Landlord in connection with the installation, operation or
removal of the Satellite Dish. Tenant shall provide Landlord with an
executed contractor's lien waiver within thirty (30) days of completion of
the work, Tenant shall be responsible for any and all utilities to be used
in connection with the operation of the Satellite Dish should Landlord
determine an additional charge is necessary for its operation. Tenant shall
properly and promptly repair any damage or potentially damaging condition
existing or caused by the existence or operation and use of the Satellite
Dish or connecting cables of any part thereof within ten (10) days after
receipt of Landlord's written notice; provided, however, if such repair
cannot reasonably be cured within the said ten (10) day period, and Tenant
shall, in good faith, commence to repair and diligently proceed to effect
such repair, then the ten (10) day period shall be extended for such
reasonable period as Tenant shall require to effect such repair. Should
Tenant fail to satisfy the terms of this provision within said ten (10)
days period, Landlord may repair the damaged condition at Tenant's cost.
Tenant represents and warrants to Landlord that the specifications,
location and contemplated use of the Satellite Dish comply with all laws,
ordinances, codes and regulations promulgated by any governmental authority
having jurisdiction over the Premises or the installation and operation of
the Satellite Dish. The construction and installation shall be accomplished
in a good and workmanlike manner and with no disruption to the other
occupants of the Building. Tenant shall provide Landlord, prior to
installation of the Satellite Dish, detailed drawings and specifications on
the mounting method to be used in affixing the proposed dish to the roof.
Tenant shall require all contractors and subcontractors to provide Landlord
with certificates of insurance with Landlord being named as Additional Loss
Payee prior to installation. Tenant's installation of any devices on the
roof shall not void any roof warranties.
<PAGE>
iXL, INC.
SPECIAL STIPULATIONS - CONTINUED
- --------------------------------
14. Except for the wilful misconduct or gross negligence of Tenant, its agents
and employees, Landlord indemnifies Tenant and shall hold Tenant, its
agents and employees, harmless from and defend Tenant, its agents,
officers, directors, partners, attorneys, employees, licensees and invitees
against any and all claims or liability for injury or death to any person
or damage to any property whatsoever arising out of Landlord's conduct and
operation of the Office Complex of which the Prime Premises are a part.
Landlord shall indemnify Tenant against any loss, damage, or expense
arising by reason of any failure of Landlord to repair or maintain the
Prime Premises or Office Complex due to any act of wilful neglect or gross
misconduct, or neglect of Landlord, its agents, employees, contractors,
invitees, licensees, tenants, or assignees.
15. In the event Suite 200 is not delivered to Tenant for any reason (including
the exercise by other parties of rights of first refusal) by February 1,
1997, Tenant may elect, at is sole option, to terminate this Lease in its
entirety, or to terminate this Lease as to that portion not delivered,
which election shall be evidenced by notice to Landlord. In the event
Tenant elects to terminate this Lease or to terminate the same with respect
to a portion thereof, this Lease and Tenant's obligations with respect to
the portion(s) so terminated shall become null and void.
16. Landlord acknowledges and agrees that Tenant shall have the right to
install a separate electrical meter for the HVAC system serving that part
of the Prime Premises located on the fourth (4th) floor so that Tenant
shall have access and use of the HVAC system 24 hours per day, seven days
per week. Upon the installation of the meter by Tenant, (a) Tenant shall
pay for the HVAC charges (at rates charged by the utility providers) for
the fourth (4th) floor portion of the Prime Premises (b) Landlord shall
deduct the square footage of the fourth (4th) floor portion of the Prime
Premises from the calculations used to determine Tenant's operating expense
charges hereunder, such that Tenant shall not be billed for HVAC usage not
actually consumed or used by Tenant.
17. Landlord acknowledges and agrees that as a material inducement to Tenant,
Landlord has agreed to renovate the Building and the Office Complex as
described on Exhibit "O" attached hereto, such that the quality and
----------
appearance of the Office Complex would be deemed Class "B" or better office
space in the metropolitan Atlanta area. Landlord shall complete such
renovations by January 1, 1998.
18. Landlord and Tenant agree that Suite 350 shall include Suites 312 and 325,
as outlined in red on the floor plan attached hereto as Exhibit "A-1", and
------------
that other tenants will occupy Suites 312 and 325, as outlined in yellow on
the floor plan attached hereto as Exhibit "A-1", until no later than
------------
December 31, 1997. Upon Suites 312 and 325 becoming available and delivered
to Tenant and Suite 200 being available for Tenant's occupancy, Tenant
shall have ninety (90) days until the Rental Commencement Date occurs.
Landlord and Tenant further agree that Tenant shall pay $10.00 per rentable
square foot for Suite 350 until Suites 312 and 325 are delivered to Tenant
and Suite 200 is available for Tenant's occupancy, whereupon the rental
rate for Suite 350 shall become the higher of $13.00 per square foot or the
prevailing rental rate pursuant to Paragraph 5(a) or Special Stipulation 3.
Should Tenant decide not to build out Suite 350 upon Landlord delivering
Suite 350 to Tenant, Tenant shall pay $10.00 per rentable square foot for
Suite 350 for the ninety (90) day period following delivery to Tenant.
<PAGE>
iXL LEASE EXHIBITS
------------------
Paragraph/Special Stips #
EXHIBIT
-------
P1 A-I Floor Plan(s)
SS1 A-3 Tenant Build Out As Builts
SS2 A-2 Additional Premises
P1 B Legal Description (attached hereto)
P2 C Tenant Acceptance Agreement
P36 D Projected Operating Expenses
P6 E Building Rules & Regulations
SS1 F Construction Rules & Regulations
SS3 G Pro-Forma Return
SS5 H (Intentionally Deleted)
SS6 K (Intentionally Deleted)
SS8 M Loading Zone
SS9 N Right of First Refusal Over Winter Space
SS10 0 Right of First Refusal Over Non-Winter Space
SS12 P iXL Visitor Parking
SS16 Q Building Renovations
<PAGE>
EXHIBIT B
---------
ALL THAT TRACT OR PARCEL OF LAND situated, lying and being in Land Lot 153, 17th
District, Fulton County, Georgia, and being more particularly described as
follows:
To find the TRUE POINT OF BEGINNING, commence at the intersection of the
northerly right-of-way line of Beck Street (a 40-foot right-of-way) and the
easterly right-of-way line of Emery Street (a 40-foot right-of-way); running
thence North 13 degrees 24' 42" West 324.08 feet to an iron pin set on the
westerly right-of-way line of Emery Street and the TRUE POINT OF BEGINNING; FROM
SAID TRUE POINT OF BEGINNING AS THUS ESTABLISHED, running thence along said
westerly right-of-way line of Emery Street South 05 degrees 12' 53" East 164.89
feet to an iron pin set; thence South 04 degrees 58' 14" East 39.95 feet to an
iron pin set; thence South 04 degrees 58' 14" East 188.77 feet to an iron pin
set; thence South 06 degrees 57' 57" East 100.00 feet to an iron pin set thence
South 83 degrees 53' 37" West 200.00 feet to an iron pin set; thence South 06
degrees 43' 21" East 24.31 feet to an iron pin set; thence North 64 degrees 27'
21" West 63.50 feet to a point; thence North 61 degrees 19' 44" West 24.90 feet
to a point; thence North 54 degrees 45' 13" West 169.41 feet to a point; thence
North 52 degrees 18' 19" West 239.53 feet to an iron pin set; thence North 14
degrees 56' 29" West 33.48 feet to an iron pin set; thence North 05 degrees 20'
36" West 164.89 feet to an iron pin found; thence North 84 degrees 25' 14" East
582.86 feet to the TRUE POINT OF BEGINNING.
Said property being more particularly shown as containing 5.483 acres on that
certain plat of survey prepared for Park Place Atlanta, a California general
partnership, and Confederation Life Insurance Company by Vance W. Ruhling,
G.R.L.S. No. 2134, dated September 15, 1986, revised October 17, 1986.
<PAGE>
LEASE AMENDMENT
---------------
THIS LEASE AMENDMENT (the "Amendment") is made and entered into this 6th
day May, 1997, by and between PARK PLACE EMERY, L.L.C., (hereinafter referred
---
to as "Landlord"), and iXL, Inc. (hereinafter referred to as "Tenant").
WITNESSETH:
-----------
WHEREAS, Landlord and Tenant have entered into that certain Office Lease,
dated as of January 8, 1997, with respect to certain premises, containing
approximately 36,891 square feet of rentable area (hereinafter referred to as
the "Prime Premises") located on the first, second, third and fourth floors of
Two Park Place, 1888 Emery St., N.W., Suite 400, Atlanta, Georgia, (the "Office
Complex") and a preliminary Occupancy Agreement, dated as of October 28, 1996,
covering approximately 21,361 square feet of space on the third and fourth
floors of the Building (said Office Lease is hereinafter referred to as the
"Lease");
WHEREAS, Landlord and Tenant desire to amend the Lease as set forth herein;
NOW, THEREFORE, for and in consideration of the sum of TEN AND NO/100
DOLLARS ($10.00), in hand paid by Tenant to Landlord, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Landlord and Tenant agree as follows:
1. Definitions. Except as otherwise expressly provided herein, all terms
-----------
used herein with an initial Capital letter or letters shall have the
meaning ascribed thereto in the Lease.
2. Change in Square Footage for Temporary Premises relating to the
---------------------------------------------------------------
Occupancy Agreement. The term "Temporary Premises" means the space on the
-------------------
third (3rd) floor of the office building located at 1888 Emery Street,
Atlanta, Georgia (the "Building"). Landlord and Tenant agree that the total
area occupied as Temporary Premises and Additional Temporary Space by
Tenant under the Occupancy Agreement was increased to approximately 5,070
square feet of space effective January 23, 1997. Exhibit A to the
Agreement, attached hereto, is hereby amended as shown to reflect the
Temporary Premises and the Additional Temporary Space as noted.
3. Increase of Occupancy Fee. The occupancy fee payable to Landlord for
-------------------------
the Temporary Premises and the Additional Temporary space shall be
$4,208.10 (5070 sq. ft. X $.83) per month until such time as the Additional
Temporary Space or the Prime Premises, as the case may be, are to be
expanded to include further additional space occupied by Tenant.
<PAGE>
4. Confirmation and Ratification. Except as amended herein, the Lease
-----------------------------
remains in full force and effect; and the parties hereby ratify and confirm the
Lease as amended herein.
This Amendment to Office Lease shall be binding upon and inure to the
benefit of the parties hereto, their respective heirs, administrators, personal
representatives, guarantors, executors, successors and permitted assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Lease Amendment to
be executed by duly authorized representatives or officers, as the case may be,
as of the day and year first above written.
LANDLORD:
--------
PARK PLACE EMERY, L.L.C.
By: /s/ D. Ansley
------------------------------
Its: ____________________________
TENANT:
------
iXL, INC.
By: /s/ Barry T. Sikes
------------------------------
Its.: VP OPERATIONS
----------------------------
<PAGE>
EXHIBIT "A"
-----------
[BUILDING TWO THIRD FLOOR PLAN APPEARS HERE]
<PAGE>
LEASE ADDENDUM TWO
PARK PLACE EMERY L. L. C. ("Landlord") and iXL, INC. ("Tenant") have entered
into a lease agreement, dated January 8, 1997, and a lease addendum dated May 6,
1997 (hereinafter collectively referred to as the "Lease"). Tenant wishes to
lease from Landlord, for a term to run concurrently with the Lease and, except
as set forth below, under the same terms and conditions set forth in the Lease,
additional space at 1888 Emery Street, NW, Atlanta, Georgia. Said additional
space is located in the same building as the premises which are the subject of
the Lease ("Premises") and shall hereafter be included in the Premises. Tenant
also wishes to vacate a certain portion of the Premises. For and in
consideration of the rent to be paid and the space to be leased thereunder,
Landlord and Tenant hereby agree as follows:
1. Tenant is currently leasing space on the third (3rd) floor, known as
Suite 350, of the office building located at 1888 Emery Street, Atlanta, Georgia
(the "Building") containing approximately 5070 rentable square feet as set forth
on Exhibit "A", attached hereto, incorporated in, and by reference made a part
hereof.
2. The reconfiguration and Tenant's space on the third (3rd) floor, known
as Suite 350, set forth on Exhibit "B" attached hereto, incorporated in, and by
reference made a part hereof, will change the rentable square footage to 6338
("Reconfigured Space")
3. The lease term for the Reconfigured Space shall commence the day after
the demising wall which will create the Reconfigured Space is completed. The
rent payable to the Landlord for the Reconfigured Space shall be $5,260.54 (6338
rentable square feet X $.83) per month which shall be prorated if the demising
wall is completed on any day other than the first of the month. Upon the
completion of any conversion of the Reconfigured Space to Prime Premises, as
defined in the Lease, Landlord shall pay to Tenant a tenant improvement
contribution in the amount set forth in the lease based on rentable square
footage of the Prime Premises located on the third (3RD) Floor, plus 490
rentable square feet.
<PAGE>
4. Tenant shall also lease from Landlord, commencing September 1, 1997,
space located on the first (1ST) floor, known as Suite 108, at 1888 Emery
Street, Atlanta, Georgia (the "Building") and shown on Exhibit "C", attached
hereto, incorporated in, and by reference made a part hereof, contains
approximately 571 rentable square feet. Tenant shall pay to Landlord rent in the
amount of $473.93 (571 rentable square feet X $.83) per month, commencing on
September 1, 1997.
5. Tenant shall also lease from Landlord, commencing July 1, 1997, space
located on the first (1ST) floor known as Suite 111, 1888 Emery Street, Atlanta,
Georgia (the "Building") and shown on Exhibit "D", attached herto, incorporated
in, and by reference made a part hereof. Suite 111 contains approximately 3483
rentable square feet. Tenant shall pay to Landlord rent in the amount of
$3,773.25 per month, Commencing October 1, 1997. Pursuant to the terms of the
Lease, Landlord shall pay to Tenant $41,796.00 as a contribution toward Lessee's
improvements upon receipt of a copy of the Certificate of Occupancy for Suite
111.
6. Upon acceptance of Lease Addendum Two the Tenant will occupy the
following space which totals 35,908 rentable square feet of Prime Premises and
4,658 rentable square feet of Additional Premises.
Prime Premises
Suite 115 1,230 rentable square feet
Suite 350 6,338 rentable square feet
Suite 200 14,170 rentable square feet
Suite 400 14,170 rentable square feet
TOTAL 35,908 rentable square feet
Additional Premises Suite 108 571 rentable square feet
Suite 111 3,483 rentable square feet
Suite 112 604 rentable square feet
TOTAL 4,658 rentable square feet
<PAGE>
7. Except as modified herein, all other terms and provisions of the Lease
shall remain in full force and effect and are hereby made applicable to this
Addendum, and this Addendum is hereby incorporated in and made a part of said
Lease. Furthermore, Tenant and Landlord agree that as of the date of this
Addendum, no default exists under said Lease.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals as of
this 6th day of October, 1997.
LANDLORD
PARK PLACE EMERY, L. L. C.
By: /s/ Robert L. Silverman
---------------------------
Its: MANAGER FOR PARK PLACE EMERY, L.L.C.
------------------------------------
TENANT
iXL, Inc.
By: /s/ Barry T. Sikes
--------------------------
Its: COO
----------------------
[CORPORATE SEAL]
<PAGE>
[FLOOR PLAN APPEARS HERE]
EXHIBIT "A"
<PAGE>
[FLOOR PLAN APPEARS HERE]
EXHIBIT "B"
<PAGE>
[FLOOR PLAN APPEARS HERE]
EXHIBIT "C"
<PAGE>
[FLOOR PLAN APPEARS HERE]
EXHIBIT "D"
<PAGE>
LEASE ADDENDUM THREE
--------------------
This Lease Addendum Three (hereinafter referred to as this "Amendment") is
made and entered into as of July 1, 1998, by and between PARK PLACE EMERY,
L.L.C., a Georgia limited liability company (hereinafter referred to as
"Landlord"); and iXL, INC., a Delaware corporation (hereinafter referred to as
"Tenant"). All defined terms used herein shall have the meanings ascribed to
them in the Lease, unless otherwise defined herein.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Tenant and Landlord have heretofore entered into that certain
Lease Agreement dated as of January 8, 1997, as amended by that certain Lease
Amendment dated May 6, 1997, as further amended by that certain Lease Addendum
Two dated as of October 6, 1997 (collectively, the "Lease") for the lease of a
total of 5,036 rentable square feet in Building One of the Office Complex and
for the lease of a total of 41,005 rentable square feet in Building Two of the
Office Complex; and
WHEREAS, the parties desire to further amend the Lease so as to clarify and
restate the current area of the Premises and the Base Monthly Rental payable
with respect thereto, to expand further the area of the Premises leased to
Tenant pursuant to the Lease, to modify the Expiration Date of the Lease, and to
make such other modifications as are provided herein;
NOW, THEREFORE, for and in consideration of the mutual covenants and
conditions contained herein, the sum of Ten Dollars ($10.00) and other good and
valuable consideration, the receipt, adequacy and sufficiency of which is hereby
acknowledged, the parties do hereby agree as follows:
1.
As of the date hereof, Tenant is currently leasing from Landlord, and
Landlord is renting to Tenant, the Premises in each Building as more
particularly described in Exhibit "A" attached hereto and by this reference made
-----------
a part hereof.
2.
(a) Notwithstanding anything in Section 1 of the Lease to the contrary,
and except for the repair by Landlord of any damage beyond normal wear and tear,
Landlord shall deliver to Tenant in its then "AS IS" condition, on the
"Expansion Date" (which Expansion Date is
<PAGE>
anticipated to be no later than December 31, 1998) the "Expansion Space". The
"Expansion Space" shall consist of: (i) approximately 2,108 square feet known as
Suite 103 on the first (1st) floor of Building One; (ii) approximately 14,170
square feet known as Suite 200 and consisting of the entire second (2nd) floor
of Building One; and (iii) approximately 14,170 square feet known as Suite 300
and consisting of the entire third (3rd) floor of Building One, all as more
particularly described on Exhibit "B" attached hereto and by this reference made
----------
a part hereof. On and after the Expansion Date, the "Premises" as referred to in
the Lease from time to time shall be deemed to include the Expansion Space, and
shall consist of a total of 35,484 rentable square feet in Building One and a
total of 41,005 rentable square feet in Building Two.
(b) Following the Expansion Date, Landlord and Tenant shall execute a
Tenant Acceptance Agreement in the form attached hereto as Exhibit "C" and by
----------
this reference made a part hereof setting forth the Expansion Date with respect
to the Expansion Space.
3.
Notwithstanding anything in Section 2 of the Lease to the contrary, on and
after the Expansion Date, the Expiration Date of the Lease with respect to the
Premises, including the Expansion Space, shall be December 31, 2008.
4.
Notwithstanding anything in Section 4 of the Lease to the contrary, on and
after the Expansion Date, Tenant shall pay to Landlord promptly on the first day
of each month, in the manner more particularly described in Section 4 of the
Lease: (i) Base Monthly Rental of $50,844.34 for the Premises as more
particularly described in Exhibit "A"; and (ii) Base Monthly Rental for the
-----------
Expansion Space (which Expansion Space consists of a total of 30,448 square
feet) of $41,866.00, for a total of $92,710.34 of Base Monthly Rental, which
shall be adjusted at the times and in the manner more particularly set forth in
Section 5 of the Lease.
5.
On and after the Expansion Date, "Tenant's Percentage Share" as defined in
Section 6(b) of the Lease, for all purposes as set forth in the Lease, shall be
71.76%, based on 53,455 square feet contained in Building One and 53,135 square
feet contained in Building Two.
6.
Notwithstanding anything in Section 38 of the Lease to the contrary, Tenant
acknowledges and agrees that John S. Dryman d/b/a/a The Dryman Team ("Dryman"),
has represented Tenant in this transaction and shall receive a real estate
commission payable by
2
<PAGE>
Tenant as outlined in a separate agreement. Landlord and Tenant represent and
warrant to each other that, other than Dryman, no broker, agent, commissioned
salesperson or other person has represented Tenant or Landlord in the
negotiations for and procurement of this Amendment, and that no commissions,
fees, or compensation of any kind are due in connection herewith, either
pursuant to the Lease or to any other separate agreement, to any broker, agent,
commissioned salesperson or other person, other than Dryman. Landlord and Tenant
hereby indemnify and hold each other harmless from and against any such claims
made against each other by any such third parties.
7.
Paragraph 4 of the Special Stipulations attached to the Lease granting
renewal options to Tenant shall apply in all respects to the entire Premises,
which renewal periods set forth therein shall be measured from the new
Expiration Date of the Lease as set forth herein.
8.
Notwithstanding anything to the contrary in Paragraphs 9 or 10 of the
Special Stipulations attached to the Lease, and as long as Tenant is not in
default hereunder or under the Lease, if any space in Building One of the Office
Complex becomes available for occupancy in 1998 or 1999 (any space which is
subject to a pre-existing possessory right by any party shall not be considered
"available for occupancy" pursuant to this Section unless and until all possible
notice periods and/or other conditions precedent which were granted to any such
party shall have passed without such party having fully complied therewith),
then in accordance with Section 28 of the Lease, Landlord shall so advise Tenant
from time to time, and Tenant shall have ten (10) days following each such
notice from Landlord to advise Landlord in writing of Tenant's intention to
lease such additional space (the "98-99 Space"). Tenant shall then execute an
amendment to the Lease within ten (10) days following Landlord's delivery to
Tenant of each such amendment, which shall include, but not be limited to, the
following terms: (i) the Base Rental for any 98-99 Space shall be $15.50 per
square foot, with annual adjustments as set forth in Section 5 of the Lease;
(ii) the term of the lease of any 98-99 Space shall be co-terminous with that of
the Lease; (iii) Tenant's Percentage Share shall increase proportionately; and
(iv) Landlord will provide Tenant with a Tenant Improvement Allowance for any
98-99 Space in accordance with Special Stipulation 1 of the Lease.
9.
As an express condition precedent to the effectiveness of this Amendment,
within three (3) business days following the execution of this Amendment by both
parties, Tenant shall remit to The Winter Construction Company, the former
tenant in the Expansion Space, a check in the amount of $121,792.00. In
addition, no later than the Expansion Date and as an express
3
<PAGE>
condition precedent to Tenant's right to occupy the Expansion Space, Tenant
shall remit to Landlord a second check in the amount of $121,792.00. Tenant's
failure to comply in a timely manner with the obligations set forth in this
Item shall constitute a material breach of the Lease and shall entitle Landlord
to avail itself of all remedies available to it as set forth in the Lease, as
well as all remedies available at law or in equity.
10.
Landlord shall diligently pursue certain renovations in Building One and
Building Two, in a manner as solely determined by Landlord, which renovations
may include the first floor lobbies, common elevator lobbies, elevator cabs,
hallways and bathrooms where applicable, and additional surface parking and/or
restriping of existing parking. Landlord shall use commercially reasonable
efforts diligenty to pursue such renovations, with the good faith intention to
achieve substantial completion of such renovations on or about the Expansion
Date.
11.
Section 28 of the Lease shall be and is hereby, modified to reflect that
Landlord's address for notice purposes is as follows:
If to Landlord: Park Place Emery, L.L.C.
- --------------
1900 Emery Street, N.W.
Suite 300
Atlanta, Georgia 30318-2569
Attn: President
with a copy to: Arnall Golden & Gregory, LLP
- --------------
2800 One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3450
Attn: J. Grant Wilmer, Jr., Esq.
12.
This Amendment may be executed in any number of counterparts, each of
which, when executed and delivered, shall be an original, but all of which
shall together constitute one and the same instrument, and the several signature
pages may be collected and annexed to one or more counterparts to form a
complete counterpart.
4
<PAGE>
13.
Except as specifically set forth herein, all of the terms, covenants, and
conditions of the Lease shall remain in full force and effect. This Amendment
and the Lease represent the complete agreement of the parties hereto and
supersede any and all other written or oral previous or contemporaneous
agreements.
IN WITNESS WHEREOF, this Amendment has been executed on behalf of the
parties hereto by their respective duly authorized officers as of the day and
year herein first above written.
LANDLORD:
--------
PARK PLACE EMERY, L.L.C.,
a Georgia limited liability company
BY: Winter Properties, Inc.,
its Managing Member
By: /s/ Robert L. Silverman
--------------------------
Robert L. Silverman
President
TENANT:
------
iXL, INC.,
a Delaware Operations
By: /s/ Barry T. Sikes
---------------------------
Print Name: Barry T. Sikes
------------------
Title: [Vice] President
E V P Worldwide Operations
Attest: /s/ James V. Sandry
-----------------------
Print Name: James V. Sandry
-------------------
Title: Assistant Secretary
(CORPORATE SEAL)
5
<PAGE>
EXHIBIT "A"
----------
SUMMARY OF EXISTING PREMISES
6
<PAGE>
EXHIBIT "A-1"
------------
Site drawing of Existing Premises in Buildings One and Two currently leased by
Tenant
7
<PAGE>
EXHIBIT "B"
-----------
Site drawing showing Expansion Space
8
<PAGE>
EXHIBIT "C"
----------
TENANT ACCEPTANCE AGREEMENT
9
<PAGE>
LEASE GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT ("Guaranty"), made this ____ day of_________,
1998, by iXL ENTERPRISES, INC., a Delaware corporation (hereinafter "Guarantor")
whose address is 1888 Emery Street, Atlanta, Georgia 30318;
W I T N E S S E T H:
WHEREAS, concurrently with this Guaranty, PARK PLACE EMERY, L.L.C.
("Landlord") has entered into that certain Lease Agreement dated January 8,
1997, as amended by that certain Lease Amendment dated as of May 6, 1997, as
further amended by that certain Lease Addendum Two dated as of October 6, 1997,
as further amended by that certain Lease Addendum Three dated as of July 1, 1998
(collectively, the "Lease"), with iXL, INC., a Delaware corporation ("Tenant"),
pursuant to which Tenant has leased from Landlord those certain premises at
Building One and Building Two, Park Place Atlanta, 1888 Emery Street, Atlanta,
Georgia 30318, as more particularly described in the Lease; and
WHEREAS, the Lease is incorporated by reference into this Guaranty; and
WHEREAS, Landlord is willing to enter into Lease Addendum Three only on the
condition that Guarantor enter into this Guaranty Agreement; and
WHEREAS, Guarantor has substantial monetary interest, directly or
indirectly, in the Lease transaction and is willing to enter into this Guaranty.
NOW, THEREFORE, for and in consideration of the Lease and as an inducement
to Landlord to enter into the Lease, Guarantor, for itself and its successors
and assigns, guarantees to Landlord, its successors and assigns, the full and
punctual payment of all rent (as described in the Lease), and any and all other
sums payable by Tenant under the Lease, when and as the same shall be due and
payable under the terms of the Lease, after any notice and cure period set forth
in the Lease, and the due and punctual performance by Tenant of each and every
term, covenant, and condition contained in the Lease to be observed or performed
by the Tenant. If Tenant defaults in the payment or performance of the Lease,
upon written Landlord's request, Guarantor immediately agrees to pay or perform
on Tenant's behalf. Guarantor agrees to pay all expenses and costs (including,
but not limited to, legal costs and attorneys' fees) paid or incurred by
Landlord to enforce Tenant's obligations under the Lease or Guarantor's
obligations under this Guaranty. The provisions of this Guaranty shall extend
and apply to all renewals, amendments, extensions, consolidations and
modifications of the Lease, including the leasing of any additional space. All
references to the Lease in this Guaranty shall include any renewals, extensions,
amendments, consolidations and modifications of or to the Lease.
Landlord agrees that it shall send a copy of all notices delivered to
Tenant concerning the Lease to Guarantor at the address set forth in the first
paragraph above, or, thirty (30) days following the receipt in writing thereof,
at such other address as Guarantor shall provide to Landlord.
<PAGE>
Guarantor consents and agrees that Landlord may, at any time and without
notice to or further consent from Guarantor, and without releasing, discharging,
modifying or otherwise affecting the obligations and liabilities of Guarantor in
any manner, either with or without consideration: (a) modify or otherwise change
the terms of the Lease, (b) extend or renew the Lease for any period, or (c)
grant releases, compromises, waivers of compliance and other indulgences with
respect to the Lease and this Guaranty to any persons or entities now or
hereafter liable under the Lease or the Guaranty, (d) release any Guarantor or
any other obligor under the Lease or this Guaranty, or (e) otherwise deal with
Tenant, or any other person or entity, in all respects, or take or fail to take
any action of any type.
This shall be an agreement of suretyship as well as guaranty and
Guarantor's liabilities and obligations under this Guaranty shall be direct and
immediate, not conditional or contingent upon the pursuit of any rights or
remedies against Tenant or any other person or against securities or liens
available to Landlord. Guarantor waives any right to require that an action be
brought against Tenant or any other person or entity or to require that resort
be had to any security. In the event of any default under the Lease, Landlord
may enforce its rights and remedies provided under the Lease or this Guaranty,
or under any other instruments relating to the Lease, in any order or not at
all. All rights and remedies available to Landlord shall be nonexclusive and
cumulative of all other rights and remedies provided under the Lease, or
hereafter, or by law, in equity, or contract. All rights and remedies afforded
to Landlord under this Guaranty shall be exercisable notwithstanding termination
of the Lease or termination of Tenant's right to possession under the Lease
because of Tenant's default.
To the extent permitted by law, Guarantor waives on account of its
liability under this Guaranty: (a) any of its available rights, privileges and
defenses under law for the relief of debtors, sureties or guarantors, (b) the
benefits of all provisions of law to stay or delay execution or sale of
property, and (c) other satisfaction of any judgment against Guarantor (or any
one or more of them if more than one).
This Guaranty is governed by the laws of Georgia.
This Guaranty shall not be impaired by any change arising by reason of
Tenant's bankruptcy or dissolution.
No obligation of the Guarantor can be released or waived by Landlord or any
partner, agent or employee of Landlord, except by a writing signed and attested
by the duly authorized representative or representatives of Landlord. This
Guaranty is irrevocable until all amounts guaranteed have been completely paid
and all obligations and undertakings of Guarantor have been completely
performed.
Any notice or demand which by any provision of this Guaranty is required or
allowed to any party shall have been sufficiently given when made in writing and
either delivered personally or sent by certified or registered United States
mail, Federal Express, express United States mail, or air courier, all postage
or fees prepaid, addressed to the parties at the addresses set forth on the
Summary Sheet of the Lease or to another address furnished in writing. Unless
otherwise provided, Guarantor's address, for purposes of notice, shall be the
same as that for Tenant.
This Guaranty is binding upon the Guarantor and its successors, legal
representatives and assigns, and inures to the benefit of Landlord, its
successors, legal representatives and assigns.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of the
day and year first above written.
GUARANTOR:
iXL ENTERPRISES, INC.
/s/ Adrienne Lane By: /s/ James V. Sandry
- ------------------ ----------------------
Witness
Its: E V P
------------------
/s/ Linda McClure
- --------------------------
Notary Public
(CORPORATE SEAL)
My Commission Expires:
Notary Public, Cobb County, Georgia
My Commission Expires July 29, 1999
[NOTARY SEAL]
<PAGE>
EXHIBIT 10.53
================================================================================
REGISTRATION RIGHTS AGREEMENT
among
IXL HOLDINGS, INC.
and
KELSO INVESTMENT ASSOCIATES V, L.P.,
KELSO EQUITY PARTNERS V, L.P.,
and
CERTAIN OThER STOCKHOLDERS OF
IXL HOLDINGS, INC.
Dated as of April 30, 1996
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. Registrations Upon Request....................................... 1
1.1. Requests.................................................. 1
1.2. Registration Statement Form............................... 2
1.3. Expenses.................................................. 2
1.4. Priority in Demand Registrations.......................... 2
1.5. No Company Initiated Registration......................... 3
2. Incidental Registrations......................................... 3
3. Registration Procedures.......................................... 5
4. Underwritten Offerings........................................... 10
4.1. Underwriting Agreement.................................... 10
4.2. Selection of Underwriters................................. 10
5. Holdback Agreements.............................................. 11
6. Preparation; Reasonable Investigation............................ 11
7. No Grant of Future Registration Rights........................... 12
8. Kelso Designees and Permitted Transferees........................ 12
9. Indemnification.................................................. 12
9.1. Indemnification by the Company............................ 12
9.2. Indemnification by the Sellers............................ 13
9.3. Notices of Claims, etc.................................... 14
9.4. Other Indemnification..................................... 15
9.5. Indemnification Payments.................................. 15
9.6. Other Remedies............................................ 15
10. Definitions...................................................... 16
11. Miscellaneous.................................................... 18
11.1. Rule 144 etc.............................................. 18
11.2. Successors, Assigns and Transferees....................... 19
11.3. Other Stockholders........................................ 19
11.4. Stock Splits, etc......................................... 19
11.5. Amendment and Modification................................ 20
11.6. Governing Law............................................. 20
11.7. Invalidity of Provision................................... 20
11.8. Notices................................................... 20
11.9. Headings; Execution in Counterparts....................... 21
11.10. Injunctive Relief......................................... 21
11.11. Entire Agreement.......................................... 21
11.12. Term...................................................... 21
</TABLE>
i
<PAGE>
REGISTRATION RIGHTS AGREEMENT
-----------------------------
REGISTRATION RIGHTS AGREEMENT, dated as of April 30, 1996, among IXL
Holdings, Inc., a Delaware corporation (the "Company"), Kelso Investment
Associates V, L.P., a Delaware limited partnership ("KIA V"), Kelso Equity
Partners V, L.P., a Delaware limited partnership ("KEP V", together with KIA V,
"Kelso"), and certain other stockholders of the Company listed on Exhibit A
attached hereto (collectively, the "Other Stockholders"). Capitalized terms used
herein without definition are defined in Section 10.
1. Registrations Upon Request.
--------------------------
1.1. Requests. At any time after the first anniversary hereof, the
--------
Majority Stockholder shall have the right at any time and from time to time to
request that the Company effect the registration under the Securities Act of any
of the Registrable Securities of the Majority Stockholder, each such request to
specify the intended method or methods of disposition thereof. Upon any request
by the Majority Stockholder pursuant to this Section 1.1, the Company will
promptly, but in any event within 15 days, give written notice of such request
to all holders of Registrable Securities and thereupon the Company will use its
best efforts to effect the registration under the Securities Act of:
(i) the Registrable Securities which the Company has been so
requested to register by the Majority Stockholder, and
(ii) all other Registrable Securities which the Company has been
requested to register by the other holders of Registrable Securities by
written request given to the Company within 20 days after the giving of
such written notice by the Company,
all to the extent required to permit the disposition (in accordance with the
Majority Stockholder's intended method or methods of disposition) of the
Registrable Securities so to be registered. Notwithstanding the foregoing, but
subject to the rights of holders of Registrable Securities under Section 2, (a)
-
if the Board determines in its good faith judgment, after consultation with a
firm of nationally recognized underwriters, that there will be an adverse effect
on a then contemplated initial public offering of the
<PAGE>
Company's equity securities, the Company may defer the filing (but not the
preparation) of the registration statement which is required to effect any
registration pursuant to this Section 1.1, during the period starting with the
30th day immediately preceding the date of anticipated filing by the Company of,
and ending on a date 60 days following the effective date of, the registration
statement relating to such initial public offering, provided that at all times
--------
the Company is in good faith using all reasonable efforts to cause such
registration statement to become effective.
1.2. Registration Statement Form. Each registration requested
---------------------------
pursuant to Section 1.1 shall be effected by the filing of a registration
statement on a form agreed to by the Majority Stockholder.
1.3. Expenses. The Company will pay all Registration Expenses in
--------
connection with any registrations requested under Section 1.1; provided that any
--------
seller thereunder shall pay all Registration Expenses to the extent required to
be paid by such seller under applicable law.
1.4. Priority in Demand Registrations. If a registration pursuant to
--------------------------------
this Section 1 involves an underwritten offering, and the managing underwriter
(or, in the case of an offering which is not underwritten, an investment banker)
shall advise the Company in writing (with a copy to each Person requesting
registration of Registrable Securities) that, in its opinion, the number of
securities requested and otherwise proposed to be included in such registration
exceeds the number which can be sold in such offering, the Company will include
in such registration to the extent of the number which the Company is so advised
can be sold in such offering, first, the Registrable Securities of the Majority
-----
Stockholder requested to be included in such registration, together with the
Registrable Securities (other than any Registrable Securities issued pursuant to
a stock option plan or similar arrangement (the "Option Shares")) requested to
be sold by the Other Stockholders, pro rata, among all such holders, on the
--- ----
basis of the number of Registrable Securities (other than any Option Shares)
requested to be included in such registration by such holders, second, any
------
Option Shares, pro rata, among such holders, on the basis of the number of such
--- ----
Option Shares requested to be included in such registration by such holders and
third, the securities, if any, being sold by the Company. Notwithstanding the
- -----
foregoing, no employee
2
<PAGE>
stockholder will be entitled to participate in any such registration requested
by the Majority Stockholder if the managing underwriter (or, in the case of an
offering that is not underwritten, an investment banker) shall determine in good
faith that the participation of such employee stockholder would adversely affect
the marketability of the securities being sold by the Majority Stockholder in
such registration.
1.5. No Company Initiated Registration. After receipt of notice of a
---------------------------------
requested registration pursuant to Section 1.1, the Company shall not initiate a
registration of any of its securities for its own account until 90 days after
such registration has been effected or such registration has been terminated.
2. Incidental Registrations. If the Company at any time proposes to
------------------------
register any of its equity securities under the Securities Act (other than
pursuant to Section 1 or a registration on Form S-4 or S-8 or any successor
form), and the registration form to be used may be used for the registration of
Registrable Securities, it will give prompt written notice to all holders of
Registrable Securities of its intention to do so. Upon the written request of
any such holder made within 30 days after the receipt of any such notice (which
request shall specify the number of Registrable Securities intended to be
disposed of by such holder and the intended method or methods of disposition
thereof), the Company will use its best efforts to effect the registration under
the Securities Act of all such Registrable Securities in accordance with such
intended method or methods of disposition, provided that:
--------
(a) if such registration shall be in connection with an initial
public offering by the Company, the Company shall not include any
Registrable Securities in such proposed registration if the Board shall
have determined, after consultation with the managing underwriter for such
offering, that it is not in the best interests of the Company to include
any Registrable Securities in such registration;
(b) if, at any time after giving written notice of its intention to
register any equity securities and prior to the effective date of the
registration statement filed in connection with such registration, the
Company shall determine for any reason not to register such equity
securities, the Company may, at its elec-
3
<PAGE>
tion, give written notice of such determination to each holder of
Registrable Securities and, thereupon, shall not be obligated to register
any Registrable Securities in connection with such registration (but shall
nevertheless pay the Registration Expenses in connection therewith),
without prejudice, however, to the rights of the Majority Stockholder to
request that a registration be effected under Section 1; and
(c) if a registration pursuant to this Section 2 involves an
underwritten offering, and the managing underwriter (or, in the case of an
offering that is not underwritten, an investment banker) shall advise the
Company in writing (with a copy to each holder of Registrable Securities
requesting registration thereof) that, in its opinion, the number of
securities requested and otherwise proposed to be included in such
registration exceeds the number which can be sold in such offering, the
Company will include in such registration to the extent of the number which
the Company is so advised can be sold in such offering, first, the
-----
securities if any, being sold by the Company, and second, the Registrable
------
Securities of Kelso requested to be included in such registration, together
with the Registrable Securities (other than Option Shares) of the Other
Stockholders requested to be included in such registration, pro rata, among
--- ----
all such holders, on the basis of the number of Registrable Securities
(other than Option Shares) requested to be included by such holders and
third, Option Shares, pro rata, among such holders, on the basis of the
----- --- ----
number of such Option Shares requested to be included in such registration
by such holders. Notwithstanding the foregoing, no employee stockholder
will be entitled to participate in any such registration if the managing
underwriter (or, in the case of an offering that is not underwritten, an
investment banker) shall determine in good faith that the participation of
such employee stockholder would adversely affect the marketability of the
securities being sold by the Company in such registration.
The Company will pay all Registration Expenses in connection with each
registration of Registrable Securities requested pursuant to this Section 2,
provided that each seller of Registrable Securities shall pay all Registration
- --------
Expenses to the extent required to be paid by such seller under applicable law.
No registration effected under this
4
<PAGE>
Section 2 shall relieve the Company from its obligation to effect registrations
under Section 1.
3. Registration Procedures. If and whenever the Company is required
-----------------------
to use its best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in Sections 1 and 2, the Company will
promptly:
(a) prepare, and within 60 days thereafter file with the Commission, a
registration statement with respect to such Registrable Securities, make
all required filings with the NASD and use best efforts to cause such
registration statement to become effective;
(b) prepare and promptly file with the Commission such amendments and
post-effective amendments and supplements to such registration statement
and the prospectus used in connection therewith as may be necessary to keep
such registration statement effective for so long as is required to comply
with the provisions of the Securities Act and to complete the disposition
of all securities covered by such registration statement in accordance with
the intended method or methods of disposition thereof, but in no event for
a period of more than six months after such registration statement becomes
effective;
(c) furnish to counsel selected by the Majority Stockholder and each
seller of Registrable Securities copies of all documents proposed to be
filed with the Commission in connection with such registration, which
documents will be subject to the review of such counsel and each seller and
the Company shall not file any amendment and post-effective amendments or
supplement to such registration statement or the prospectus used in
connection therewith which any such seller shall have reasonably objected
in writing on the grounds that such amendment or supplement does not comply
(explaining why) in all material respects with the requirements of the
Securities Act or of the rules or regulations thereunder;
(d) furnish to each seller of Registrable Securities, without charge,
such number of conformed copies of such registration statement and of each
such amendment and supplement thereto (in each case including all exhibits
and documents filed therewith) and such number
5
<PAGE>
of copies of the prospectus included in such registration statement
(including each preliminary prospectus and any summary prospectus) and any
other prospectus filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, and such other
documents, as such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such seller in
accordance with the intended method or methods of disposition thereof;
(e) use its best efforts to register or qualify such Registrable
Securities covered by such registration statement under the securities or
blue sky laws of such jurisdictions as each seller shall reasonably
request, and do any and all other acts and things which may be necessary or
advisable to enable such seller to consummate the disposition of such
Registrable Securities in such jurisdictions in accordance with the
intended method or methods of disposition thereof, provided that the
--------
Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it is not
so qualified, subject itself to taxation in any jurisdiction wherein it is
not so subject, or take any action which would subject it to general
service of process in any jurisdiction wherein it is not so subject;
(f) use its best efforts to cause all Registrable Securities covered
by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary by virtue of
the business and operations of the Company to enable the seller or sellers
thereof to consummate the disposition of such Registrable Securities in
accordance with the intended method or methods of disposition thereof;
(g) furnish to each seller of Registrable Securities a signed
counterpart, addressed to the sellers, of
(i) an opinion of counsel for the Company experienced in
securities law matters, dated the effective date of the registration
statement (and, if such registration includes an underwritten
6
<PAGE>
public offering, the date of the closing under the underwriting
agreement), and
(ii) a "comfort" letter (unless the registration is pursuant to
Section 2 and such a letter is not otherwise being furnished to the
Company), dated the effective date of such registration statement (and
if such registration includes an underwritten public offering, dated
the date of the closing under the underwriting agreement), signed by
the independent public accountants who have issued an audit report on
the Company's financial statements included in the registration
statement,
covering such matters as are customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to the underwriters in
underwritten public offerings of securities and such other matters as the
Majority Stockholder may reasonably request;
(h) notify each seller of any Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any
event or existence of any fact as a result of which the prospectus included
in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, and, as promptly as
is practicable, prepare and furnish to such seller a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light
of the circumstances then existing;
(i) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement of the
Company (in form complying with the provisions of Rule 158 under the
Securities Act) covering the period of at
7
<PAGE>
least 12 months, but not more than 18 months, beginning with the first
month after the effective date of the registration statement;
(j) notify each seller of any Registrable Securities covered by such
registration statement (i) when the prospectus or any prospectus supplement
-
or post-effective amendment has been filed, and, with respect to such
registration statement or any post-effective amendment, when the same has
become effective, (ii) of any request by the Commission for amendments or
--
supplements to such registration statement or to amend or to supplement
such prospectus or for additional information, (iii) of the issuance by the
---
Commission of any stop order suspending the effectiveness of such
registration statement or the initiation of any proceedings for that
purpose and (iv) of the suspension of the qualification of such securities
--
for offering or sale in any jurisdiction, or of the institution of any
proceedings for any of such purposes;
(k) use every reasonable effort to obtain the lifting of any stop
order that might be issued suspending the effectiveness of such
registration statement at the earliest possible moment;
(l) use its best efforts (i) (A) to list such Registrable Securities
- -
on any securities exchange on which the equity securities of the Company
are then listed or, if no such equity securities are then listed, on an
exchange selected by the Company, if such listing is then permitted under
the rules of such exchange, or (B) if such listing is not practicable, to
-
secure designation of such securities as a NASDAQ "national market system
security" within the meaning of Rule 11Aa2-1 under the Exchange Act or,
failing that, to secure NASDAQ authorization for such Registrable
Securities, and, without limiting the foregoing, to arrange for at least
two market makers to register as such with respect to such Registrable
Securities with the NASD, and (ii) to provide a transfer agent and
--
registrar for such Registrable Securities not later than the effective date
of such registration statement;
(m) enter into such agreements and take such other actions as the
sellers of Registrable Securities or the underwriters reasonably request in
order to
8
<PAGE>
expedite or facilitate the disposition of such Registrable Securities,
including, without limitation, preparing for, and participating in, such
number of "road shows" and all such other customary selling efforts as the
underwriters reasonably request in order to expedite or facilitate such
disposition; and
(n) use its reasonable best efforts to take all other steps necessary
to effect the registration of such Registrable Securities contemplated
hereby.
The Company may require each seller of any Registrable Securities as
to which any registration is being effected to furnish to the Company such
information regarding such seller, its ownership of Registrable Securities and
the disposition of such Registrable Securities as the Company may from time to
time reasonably request in writing and as shall be required by law in connection
therewith. Each such holder agrees to furnish promptly to the Company all
information required to be disclosed in order to make the information previously
furnished to the Company by such holder not materially misleading.
The Company agrees not to file or make any amendment to any
registration statement with respect to any Registrable Securities, or any
amendment of or supplement to the prospectus used in connection therewith, which
refers to any seller of any Registrable Securities covered thereby by name, or
otherwise identifies such seller as the holder of any Registrable Securities,
without the consent of such seller, such consent not to be unreasonably
withheld, unless such disclosure is required by law.
By acquisition of Registrable Securities, each holder of such
Registrable Securities shall be deemed to have agreed that upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 3 (h), such holder will promptly discontinue such holder's disposition
of Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3 (h). If so directed
by the Company, each holder of Registrable Securities will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies,
in such holder's possession of the prospectus covering such Registrable
Securities at the time of receipt of such notice. In the event that the Company
shall give any
9
<PAGE>
such notice, the period mentioned in Section 3 (b) shall be extended by the
number of days during the period from and including the date of the giving of
such notice to and including the date when each seller of any Registrable
Securities covered by such registration statement shall have received the copies
of the supplemented or amended prospectus contemplated by Section 3 (h).
4. Underwritten Offerings.
----------------------
4.1. Underwriting Agreement. If requested by the underwriters for any
----------------------
underwritten offering by holders of Registrable Securities pursuant to a
registration requested under Section 1 or Section 2, the Company shall enter
into an underwriting agreement with the underwriters for such offering, such
agreement to be reasonably satisfactory in substance and form to the Majority
Stockholder and to the underwriters and to contain such representations and
warranties by the Company and such other terms and provisions as are customarily
contained in agreements of this type, including, without limitation, indemnities
to the effect and to the extent provided in Section 9. The holders of
Registrable Securities to be distributed by such underwriters shall be parties
to such underwriting agreement and may, at their option, require that any or all
of the representations and warranties by, and the agreements on the part of, the
Company to and for the benefit of such underwriters be made to and for the
benefit of such holders of Registrable Securities and that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement shall also be conditions precedent to the obligations of
such holders of Registrable Securities. No underwriting agreement (or other
agreement in connection with such offering) shall require any holder of
Registrable Securities to make any representations or warranties to or
agreements with the Company or the underwriters other than representations,
warranties or agreements regarding such holder, the ownership of such holder's
Registrable Securities and such holder's intended method or methods of
disposition and any other representation required by law or to furnish any
indemnity to any Person which is broader than the indemnity furnished by such
holder in Section 9.2.
4.2. Selection of Underwriters. If the Company at any time proposes
-------------------------
to register any of its securities under the Securities Act for sale for its own
account pursuant to an underwritten offering, the Company will have the right to
select the managing underwriter (which shall be of nation-
10
<PAGE>
ally recognized standing) to administer the offering, but only with the approval
of the Majority Stockholder, such approval not to be unreasonably withheld,
provided that whenever a registration requested pursuant to Section 1 is for an
- --------
underwritten offering, the Majority Stockholder will have the right to select
the managing underwriter (which shall be of nationally recognized standing) to
administer the offering, but only with the approval of the Company, such
approval not to be unreasonably withheld.
5. Holdback Agreements. (a) If and whenever the Company proposes to
-------------------
register any of its equity securities under the Securities Act for its own
account (other than on Form S-4 or S-8 or any successor form) or is required to
use its best efforts to effect the registration of any Registrable Securities
under the Securities Act pursuant to Section 1 or 2, each holder of Registrable
Securities agrees by acquisition of such Registrable Securities not to effect
any public sale or distribution, including any sale pursuant to Rule 144 under
the Securities Act, of any Registrable Securities within seven days prior to and
90 days (unless advised in writing by the managing underwriter that a longer
period, not to exceed 180 days, is required) after the effective date of the
registration statement relating to such registration, except as part of such
registration.
(b) The Company agrees not to effect any public sale or distribution
of its equity securities or securities convertible into or exchangeable or
exercisable for any of such securities within seven days prior to and 90 days
(unless advised in writing by the managing underwriter that a longer period, not
to exceed 180 days, is required) after the effective date of such registration
statement (except as part of such registration or pursuant to a registration on
Form S-4 or S-8 or any successor form). In addition, the Company shall cause
each holder of its equity securities or any securities convertible into or
exchangeable or exercisable for any of such securities, whether outstanding on
the date of this Agreement or issued at any time after the date of this
Agreement (other than any such securities acquired in a public offering), to
agree not to effect any such public sale or distribution of such securities
during such period, except as part of any such registration if permitted, and to
cause each such holder to enter into a similar agreement to such effect with the
Company.
6. Preparation; Reasonable Investigation. In connection with the
-------------------------------------
preparation and filing of each regis-
11
<PAGE>
tration statement registering Registrable Securities under the Securities Act,
the Company will give the holders of such Registrable Securities so to be
registered and their underwriters, if any, and their respective counsel and
accountants the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give each
of them such access to the financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries and such
opportunities to discuss the business of the Company with its officers and the
independent public accountants who have issued audit reports on its financial
statements as shall be reasonably requested by such holders in connection with
such registration statement.
7. No Grant of Future Registration Rights. The Company shall not
--------------------------------------
grant any other demand or incidental registration rights to any other Person
without the prior written consent of the Majority Stockholder.
8. Kelso Designees and Permitted Transferees. The Majority
-----------------------------------------
Stockholder shall have the right to have included in any registration pursuant
to Section 1 or Section 2 any shares of Class B Common Stock owned by any of the
Kelso Designees as though such shares were Registrable Securities owned by the
Majority Stockholder.
9. Indemnification.
---------------
9.1. Indemnification by the Company. In the event of any registration
------------------------------
of any Registrable Securities pursuant to this Agreement, the Company will
indemnify and hold harmless (a) the seller of such Registrable Securities, (b)
- -
the directors, officers, partners, employees, agents and Affiliates of such
seller, (c) each Person who participates as an underwriter in the offering or
-
sale of such securities and (d) each person, if any, who controls (within the
-
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
any such seller, partner or underwriter against any and all losses, claims,
damages or liabilities (or actions or proceedings in respect thereof), joint or
several, directly or indirectly based upon or arising out of (i) any untrue
-
statement or alleged untrue statement of a fact contained in any registration
statement under which such Registrable Securities were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein or used in
12
<PAGE>
connection with the offering of securities covered thereby, or any amendment or
supplement thereto, or (ii) any omission or alleged omission to state a fact
--
required to be stated therein or necessary to make the statements therein not
misleading; and the Company will reimburse each such indemnified party for any
legal or any other expenses reasonably incurred by them in connection with
investigating, preparing, pursuing or defending any such loss, claim, damage,
liability, action or proceeding, except insofar as any such loss, claim, damage,
liability, action, proceeding or expense arises out of or is based upon an
untrue statement or omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by such seller expressly for use in the preparation thereof. Such
indemnity shall remain in full force and effect, regardless of any investigation
made by such indemnified party and shall survive the transfer of such
Registrable Securities by such seller. The indemnity agreement contained in this
Section 9.1 shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability, action or proceeding if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld).
9.2. Indemnification by the Sellers. The Company may require, as a
------------------------------
condition to including any Registrable Securities in any registration statement
filed pursuant to Section 1 or 2 that the Company shall have received an
undertaking satisfactory to it from each of the prospective sellers of such
Registrable Securities to indemnify and hold harmless, severally, not jointly,
in the same manner and to the same extent as set forth in Section 9.1, the
Company, its directors and officers and each person, if any, who controls
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) the Company with respect to any statement or alleged statement in
or omission or alleged omission from such registration statement, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, if such statement or alleged
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such seller
expressly for use in the preparation of such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement. Such
indemnity shall remain in full force and effect,
13
<PAGE>
regardless of any investigation made by or on behalf of the Company or any such
director, officer or controlling Person and shall survive the transfer of such
Registrable Securities by such seller. The indemnity agreement contained in this
Section 9.2 shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability, action or proceeding if such settlement is effected
without the consent of such seller (which consent shall not be unreasonably
withheld). The Company and the holders of Registrable Securities hereby
acknowledge and agree that for all purposes of this Agreement the only
information furnished or to be furnished to the Company for use in any such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement are statements specifically relating to (a)
-
transactions between such holder and its Affiliates, on the one hand, and the
Company, on the other hand, (b) the beneficial ownership of shares of Class B
-
Common Stock by such holder and its Affiliates and (c) the name and address of
-
such holder. The indemnity provided by each seller of Registrable Securities
under this Section 9.2 shall be limited in amount to the net amount of proceeds
actually received by such seller from the sale of Registrable Securities
pursuant to such registration statement.
9.3. Notices of Claims, etc. Promptly after receipt by an indemnified
----------------------
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Section 9, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action or proceeding, provided that the failure of any indemnified party to
--------
give notice as provided herein shall not relieve the indemnifying party of its
obligations under the preceding paragraphs of this Section 9, except to the
extent that the indemnifying party is materially prejudiced by such failure to
give notice. In case any such action is brought against an indemnified party,
the indemnifying party will be entitled to participate therein and to assume the
defense thereof, jointly with any other indemnifying party similarly notified,
to the extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party for any legal or
other expenses subsequently incurred by the latter in connection with the
defense thereof except
14
<PAGE>
for the reasonable fees and expenses of any counsel retained by such indemnified
party to monitor such action or proceeding. Notwithstanding the foregoing, if
such indemnified party and the indemnifying party reasonably determine, based
upon advice of their respective independent counsel, that a conflict of interest
may exist between the indemnified party and the indemnifying party with respect
to such action and that it is advisable for such indemnified party to be
represented by separate counsel, such indemnified party may retain other
counsel, reasonably satisfactory to the indemnifying party, to represent such
indemnified party, and the indemnifying party shall pay all reasonable fees and
expenses of such counsel. No indemnifying party, in the defense of any such
claim or litigation, shall, except with the consent of such indemnified party,
which consent shall not be unreasonably withheld, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect of such claim or litigation.
9.4. Other Indemnification. Indemnification similar to that specified
---------------------
in the preceding paragraphs of this Section 9 (with appropriate modifications)
shall be given by the Company and each seller of Registrable Securities with
respect to any required registration (other than under the Securities Act) or
other qualification of such Registrable Securities under any federal or state
law or regulation of any governmental authority.
9.5. Indemnification Payments. Any indemnification required to be
------------------------
made by an indemnifying party pursuant to this Section 9 shall be made by
periodic payments to the indemnified party during the course of the action or
proceeding, as and when bills are received by such indemnifying party with
respect to an indemnifiable loss, claim, damage, liability or expense incurred
by such indemnified party.
9.6. Other Remedies. If for any reason the foregoing indemnity is
--------------
unavailable, or is insufficient to hold harmless an indemnified party, other
than by reason of the exceptions provided therein, then the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of such losses, claims, damages, liabilities, actions, proceedings or
expenses in such proportion as is appropriate to reflect the relative benefits
to and faults of the indemnifying party on the one
15
<PAGE>
hand and the indemnified party on the other in connection with the offering of
Registrable Securities (taking into account the portion of the proceeds of the
offering realized by each such party) and the statements or omissions or alleged
statements or omissions which resulted in such loss, claim, damage, liability,
action, proceeding or expense, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statements or omissions.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. No party shall be
liable for contribution under this Section 9.6 except to the extent and under
such circumstances as such party would have been liable to indemnify under this
Section 9 if such indemnification were enforceable under applicable law.
10. Definitions. For purposes of this Agreement, the following terms
-----------
shall have the following respective meanings:
"Affiliate": A Person that directly, or indirectly through one or more
----------
intermediaries, controls, or is controlled by, or is under common control with,
the Person specified.
"Board": The Board of Directors of the Company.
-----
"Class B Common Stock": The Company's Class B Common Stock, par value
---------------------
$.01 per share.
"Commission": The Securities and Exchange Commission.
-----------
"Exchange Act": The Securities Exchange Act of 1934, as amended, or
-------------
any successor federal statute, and the rules and regulations thereunder which
shall be in effect at the time.
"IPO": as defined in the Stockholders Agreement.
---
16
<PAGE>
"Kelso Designees": Any of the following individuals or entities: Louis
----------------
and Patricia Kelso Trust, William A. Marquard, John F. McGillicuddy and each of
the other members of the board of directors of Kelso & Companies, Inc., and any
of their permitted assigns under the Stockholders Agreement.
"Majority Stockholder": Any holder or holders of at least 50% of the
---------------------
Registrable Securities then outstanding, including for purposes of such
calculation any shares of preferred stock or common stock convertible into or
exchangeable into Registrable Securities.
"NASD": National Association of Securities Dealers, Inc.
----
"NASDAQ": The Nasdaq National Market.
------
"Permitted Transferees": As defined in the Stockholders Agreement.
----------------------
"Person": An individual, corporation, partnership, joint venture,
------
association, trust or other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof.
"Preferred Stock": The Company's Class A Convertible Preferred Stock,
----------------
par value $.01 per share.
"Registrable Securities": The shares of Class B Common Stock (or any
-----------------------
successor class of common stock) beneficially owned (within the meaning of
Section 13d-3 of the Exchange Act) by Kelso, the Other Stockholders or any other
Person made a party hereto pursuant to Section 11.2 or 11.3. As to any
particular Registrable Securities, such securities shall cease to be Registrable
Securities when (i) a registration statement with respect to the sale of such
-
securities shall have become effective under the Securities Act and such
securities shall have been disposed of in accordance with such registration
statement, (ii) they shall have been sold to the public pursuant to Rule 144
--
under the Securities Act, (iii) they shall have been otherwise transferred and
---
subsequent disposition of them shall not require registration or qualification
of them under the Securities Act of or any similar state law then in force or
(iv) they shall have ceased to be outstanding.
--
17
<PAGE>
"Registration Expenses": All expenses incident to the Company's
----------------------
performance of or compliance with Section 1 and Section 2, including, without
limitation, (i) registration, filing and NASD fees, (ii) fees and expenses of
- --
complying with securities or blue sky laws, (iii) fees and expenses associated
---
with listing securities on an exchange or NASDAQ, (iv) word processing,
--
duplicating and printing expenses, (v) messenger and delivery expenses, (vi)
- --
fees and disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audits or "cold comfort"
letters, (vii) reasonable fees and disbursements of any one counsel retained by
---
the sellers of Registrable Securities, which counsel shall be designated by the
Majority Stockholder, and (viii) any fees and disbursements of underwriters
----
customarily paid by issuers or sellers of securities, but excluding underwriting
discounts and commissions and transfer taxes, if any.
"Securities Act": The Securities Act of 1933, as amended, or any
---------------
successor federal statute, and the rules and regulations thereunder which shall
be in effect at the time.
"Stockholders Agreement": The Stockholders Agreement, dated as of the
-----------------------
date hereof, as the same shall be amended from time to time, among the Company,
KIA V, KEP V and certain other stockholders of the Company.
11. Miscellaneous.
-------------
11.1. Rule 144 etc. If the Company shall have filed a registration
------------
statement pursuant to the requirements of Section 12 of the Exchange Act or a
registration statement pursuant to the requirements of the Securities Act
relating to any class of equity securities, the Company will file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the Commission thereunder, and will take such
further action as any holder of Registrable Securities may reasonably request,
all to the extent required from time to time to enable such holder to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities Act,
-
as such rule may be amended from time to time, or (b) any successor rule or
-
regulation hereafter the commission. Upon the request of any holder of
Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such requirements.
18
<PAGE>
11.2. Successors, Assigns and Transferees. This Agreement shall be
-----------------------------------
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. In addition, and provided that an
express assignment shall have been made, and a copy of which shall have been
delivered to the Company, the provisions of this Agreement which are for the
benefit of a holder of Registrable Securities shall be for the benefit of and
enforceable by any subsequent holder of any Registrable Securities, provided
--------
that each Other Stockholder may only assign such Other Stockholder's rights
hereunder to one or more of such Other Stockholder's Permitted Transferees.
Notwithstanding anything herein to the contrary, the Other Stockholders shall
exercise all rights hereunder on behalf of any such Permitted Transferees and
the Company and Kelso shall be entitled to deal exclusively with the Other
Stockholders and rely on the consent, waiver or any other action by the Other
Stockholders as the consent, waiver or other action, as the case may be, of any
such Permitted Transferee.
11.3. Other Stockholders. In the event that any Person shall become a
------------------
party to the Stockholders Agreement after the date hereof pursuant to Sections
13.5 or 13.6 thereof, then upon the execution and delivery of a signature page
hereto, such Person shall be deemed to be an Other Stockholder for all purposes
of this Agreement and the Company shall amend Exhibit A to reflect such
additional Other Stockholder.
11.4. Stock Splits, etc. Each holder of Registrable Securities agrees
-----------------
that it will vote to effect a stock split or combination with respect to any
Registrable Securities in connection with any registration of such Registrable
Securities hereunder, or otherwise, if the managing underwriter shall advise the
Company in writing (or, in connection with an offering that is not underwritten,
if an investment banker shall advise the Company in writing) that in its opinion
such a stock split or combination would facilitate or increase the likelihood of
success of the offering.
11.5. Amendment and Modification. This Agreement may be amended,
--------------------------
modified or supplemented by the Company with the written consent of the Majority
Stockholder and a majority (by number of shares) of any other holder of
Registrable Securities whose interests would be adversely affected by such
amendment. Notwithstanding the foregoing,
19
<PAGE>
Exhibit A may be amended unilaterally by the Company as provided in Section
11.3.
11.6. Governing Law. This Agreement and the rights and obligations of
-------------
the parties hereunder and the persons subject hereto shall be governed by, and
construed and interpreted in accordance with, the law of the State of Delaware,
without giving effect to the choice of law principles thereof.
11.7. Invalidity of Provision. The invalidity or unenforceability of
-----------------------
any provision of this Agreement in any jurisdiction shall not affect the
validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of this Agreement, including that
provision, in any other jurisdiction.
11.8. Notices. All notices, requests, demands, letters, waivers and
-------
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a) delivered
-
personally, (b) mailed, certified or registered mail with postage prepaid, (c)
- -
sent by next-day or overnight mail or delivery or (d) sent by fax as follows:
-
(i) If to the Company, to it at:
IXL Holdings, Inc.
1465 Northside Drive
Atlanta, Georgia 30318
Attention: U. Bertram Ellis, Jr.
(ii) If to Kelso, to it at:
KIA Investment Associates V, L.P.
Kelso Equity Partners V, L.P.
c/o Kelso & Company
320 Park Avenue, 24th Floor
New York, New York 10022
Attention: James J. Connors, II, Esq.
(iii) If to any other holder of Registrable Securities, to the address of
such holder as set forth in the books and records of the Company
20
<PAGE>
or to such other person or address as any party shall specify by notice in
writing to the Company. All such notices, requests, demands, letters, waivers
and other communications shall be deemed to have been received (w) if by
-
personal delivery on the day after such delivery, (x) if by certified or
-
registered mail, on the fifth business day after the mailing thereof, (y) if by
-
next-day or overnight mail or delivery, on the day delivered or (z) if by fax,
-
on the next day following the day on which such fax was sent, provided that a
copy is also sent by certified or registered mail.
11.9. Headings; Execution in Counterparts. The headings and captions
-----------------------------------
contained herein are for convenience and shall not control or affect the meaning
or construction of any provision hereof. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and
which together shall constitute one and the same instrument.
11.10. Injunctive Relief. Each of the parties recognizes and agrees
-----------------
that money damages may be insufficient and, therefore, in the event of a breach
of any provision of this Agreement the aggrieved party may elect to institute
and prosecute proceedings in any court of competent jurisdiction to enforce
specific performance or to enjoin the continuing breach of this Agreement. Such
remedies shall, however, be cumulative and not exclusive, and shall be in
addition to any other remedy which such party may have.
11.11. Entire Agreement. This Agreement, together with the
----------------
Stockholders Agreement, is intended by the parties hereto as a final expression
of their agreement and intended to be a complete and exclusive statement of
their agreement and understanding in respect of the subject matter contained
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
11.12. Term. This Agreement shall be effective as of the date hereof
----
and shall continue in effect thereafter until the earlier of (a) its termination
-
by the consent of the parties hereto or their respective successors in interest
and (b) the date on which no Registrable Securities remain outstanding.
-
21
<PAGE>
Exhibit A
---------
Other Stockholders
- ------------------
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed by each of the
parties hereto, effective as of the date first written above.
IXL HOLDINGS, INC.
By: /s/ U. Bertram Ellis Jr.
-------------------------------
Name:
Title:
KELSO INVESTMENT ASSOCIATES V, L.P.
By: Kelso Partners V, L.P.
General Partner
By: /s/ Frank T. Nickell
------------------------------
General Partner
KELSO EQUITY PARTNERS V. L.P.
By: /s/ Frank T. Nickell
------------------------------
General Partner
/s/ James S. Altenbach
----------------------------------
James S. Altenbach
/s/ Robert D. Bowman
----------------------------------
Robert D. Bowman
/s/ Larry Culbertson
----------------------------------
Larry Culbertson
/s/ Guy Davidson
----------------------------------
Guy Davidson
/s/ U. Bertram Ellis, Jr.
----------------------------------
U. Bertram Ellis, Jr.
<PAGE>
/s/ William Stephen Floyd
----------------------------------
William Steve Floyd
/s/ Theresa B. Joel
----------------------------------
Theresa B. Joel
/s/ Richard Nailling
----------------------------------
Richard Nailling
/s/ James R. Rocco
----------------------------------
James R. Rocco
/s/ James V. Sandry
----------------------------------
James V. Sandry
/s/ Barry Sikes
----------------------------------
Barry Sikes
/s/ Jeffrey Vick
----------------------------------
Jeffrey Vick
/s/ Armistead Whitney
----------------------------------
Armistead Whitney
<PAGE>
EXHIBIT 10.54
INDEMNITY AGREEMENT
-------------------
THIS AGREEMENT is made as of ___________ 1999, by and between iXL
Enterprises, Inc., a Delaware corporation ("Company"), and each person described
on a signature page hereto as "Indemnitee".
RECITALS
WHEREAS, highly competent persons have become more reluctant to serve
publicly-held corporations as directors or in other capacities unless they are
provided with adequate protection through insurance or adequate indemnification
against inordinate risks of claims and actions against them arising out of their
service to and activities on behalf of the Company; and
WHEREAS, the Board of Directors of the Company (the "Board") has determined
that, in order to attract and retain qualified individuals, the Company will
attempt to maintain on an ongoing basis, at its sole expense, liability
insurance to protect persons serving the Company and its subsidiaries from
certain liabilities. Although the furnishing of such insurance has been a
customary and widespread practice among United States-based corporations and
other business enterprises, the Company believes that, given current market
conditions and trends, such insurance may be available to it in the future only
at higher premiums and with more exclusions. At the same time, directors,
officers, and other persons in service to corporations or business enterprises
are being increasingly subjected to expensive and time-consuming litigation
relating to, among other things, matters that traditionally would have been
brought only against the Company or business enterprise itself. The By-laws of
the Company require indemnification of the officers and directors of the
Company. Indemnitee may also be entitled to indemnification pursuant to the
Delaware General Corporation Law ("DGCL"). The By-laws and the DGCL expressly
provide that the indemnification provisions set forth therein are not exclusive,
and thereby contemplate that contracts may be entered into between the Company
and members of the board of directors and officers with respect to
indemnification of directors and officers.
WHEREAS, the uncertainties relating to such insurance and to
indemnification have increased the difficulty of attracting and retaining such
persons; and
WHEREAS, the Board has determined that the increased difficulty in
attracting and retaining such persons is detrimental to the best interests of
the Company's stockholders and that the Company should act to assure such
persons that there will be increased certainty of such protection in the future;
and
WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify, and to advance expenses on behalf
of, such persons to the fullest extent permitted by applicable law so that they
will serve or continue to serve the Company free from undue concern that they
will not be so indemnified; and
<PAGE>
WHEREAS, this Agreement is a supplement to and in furtherance of the Bylaws
of the Company and any resolutions adopted pursuant thereto, and shall not be
deemed a substitute therefor, nor to diminish or abrogate any rights of
Indemnitee thereunder; and
WHEREAS, Indemnitee does not regard the protection available under the
Company's Bylaws and insurance adequate in the present circumstances, and may
not be willing to serve as an officer or director without adequate protection,
and the Company desires Indemnitee to serve in such capacity. Indemnitee is
willing to serve, continue to serve and to take on additional service for or on
behalf of the Company on the condition that he be so indemnified;
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
1. Services to the Company. Indemnitee will serve or continue to serve,
at the will of the Company, as an officer or director of the Company for so long
as Indemnitee is duly elected or appointed or until Indemnitee tenders his or
her resignation in writing.
2. Definitions. As used in this Agreement:
(a) A "Change in Control" shall be deemed to occur upon the earliest
to occur after the date of this Agreement of any of the following events:
(i) Acquisition of Stock by Third Party. Any Person (as defined
below) is or becomes the Beneficial Owner (as defined below), directly or
indirectly, of securities of the Company representing fifteen percent (15%) or
more of the combined voting power of the Company's then outstanding securities;
(ii) Change in Board of Directors. During any period of two (2)
consecutive years (not including any period prior to the execution of this
Agreement), individuals who at the beginning of such period constitute the
Board, and any new director (other than a director designated by a person who
has entered into an agreement with the Company to effect a transaction described
in Sections 2(a)(i), 2(a)(iii) or 2(a)(iv)) whose election by the Board or
nomination for election by the Company's shareholders was approved by a vote of
at least two-thirds of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute at least
a majority of the members of the Board;
(iii) Corporate Transactions. The effective date of a merger or
consolidation of the Company with any other entity, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior to such merger of consolidation continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 51% of the combined voting power
of the voting securities of the surviving entity outstanding immediately after
such merger or consolidation and with the power to elect at least a majority of
the board of directors or other governing body of such surviving entity;
<PAGE>
(iv) Liquidation. The approval by the shareholders of the Company
of a complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets;
and
(v) Other Events. There occurs any other event of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or a response to any similar item on any similar schedule or
form) promulgated under the Exchange Act (as defined below), whether or not the
Company is then subject to such reporting requirement.
(vi) Certain Definitions. For purposes of this Section 2(a),
the following terms shall have the following meanings:
(A) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(B) "Person" shall have the meaning as set forth in Sections
13(d) and 14(d) of the Exchange Act; provided, however, that
Person shall exclude (i) the Company, (ii) any trustee or other
fiduciary holding securities under an employee benefit plan of
the Company, and (iii) any corporation owned, directly or
indirectly, by the shareholders of the Company in substantially
the same proportions as their ownership of stock of the Company.
(C) "Beneficial Owner" shall have the meaning given to such
term in Rule 13d-3 under the Exchange Act; provided, however,
that Beneficial Owner shall exclude any Person otherwise becoming
a Beneficial Owner by reason of the shareholders of the Company
approving a merger of the Company with another entity.
(b) "Corporate Status" describes the status of a person who is or was
a director, officer, employee or agent of the Company or of any other
corporation, partnership or joint venture, trust, employee benefit plan or other
enterprise which such person is or was serving at the request of the Company.
(c) "Disinterested Director" means a director of the Company who is
not and was not a party to the Proceeding in respect of which indemnification is
sought by Indemnitee.
(d) "Enterprise" shall mean the Company and any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise of
which Indemnitee is or was serving at the request of the Company as a director,
officer, employee, agent or fiduciary.
<PAGE>
(e) "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, and all other disbursements or expenses of the
types customarily incurred in connection with prosecuting, defending, preparing
to prosecute or defend, investigating, being or preparing to be a witness in, or
otherwise participating in, a Proceeding. Expenses, however, shall not include
amounts paid in settlement by Indemnitee or the amount of judgments or fines
against Indemnitee.
(f) As to the Indemnitee, "good faith" shall mean Indemnitee having
acted in good faith and in a manner Indemnitee reasonably believed to be in or
not opposed to the best interests of the Company, and, with respect to any
criminal Proceeding, having had no reasonable cause to believe Indemnitee's
conduct was unlawful.
(g) Reference to "other enterprise" shall include employee benefit
plans; references to "fines" shall include any excise tax assessed with respect
to any employee benefit plan; references to "serving at the request of the
Company" shall include any service as a director, officer, employee or agent of
the Company which imposes duties on, or involves services by, such director,
officer, employee or agent with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the best interests of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in
manner "not opposed to the best interests of the Company" as referred to in this
Agreement.
(h) The term "Proceeding" shall include any threatened, pending or
completed action, suit, arbitration, alternate dispute resolution mechanism,
investigation, inquiry, administrative hearing or any other actual, threatened
or completed proceeding, whether brought in the right of the Company or
otherwise and whether of a civil, criminal, administrative or investigative
nature, in which Indemnitee was, is or will be involved as a party or otherwise
by reason of the fact that Indemnitee is or was a director or officer of the
Company, by reason of any action taken by him or of any action on his part while
acting as director or officer of the Company, or by reason of the fact that he
is or was serving at the request of the Company as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, in each case whether or not serving in such capacity at the time any
liability or expense is incurred for which indemnification, reimbursement, or
advancement of expenses can be provided under this Agreement.
(i) "Independent Counsel" means a law firm, or a member of a law
firm, that is experienced in matters of corporation law and neither presently
is, nor in the past five years has been, retained to represent: (i) the Company
or Indemnitee in any matter material to either such party (other than with
respect to matters concerning the Indemnitee under this Agreement, or of other
indemnitees under similar indemnification agreements), or (ii) any other party
to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Counsel" shall not include
any person who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either the Company
or Indemnitee in an action to determine Indemnitee's rights under this
Agreement. The Company agrees to pay the reasonable fees and expenses of the
Independent Counsel referred to above and to fully indemnify such counsel
against any and all Expenses, claims,
<PAGE>
liabilities and damages arising out of or relating to this Agreement or its
engagement pursuant hereto.
3. Indemnity in Third-Party Proceedings. The Company shall indemnify
Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is,
or is threatened to be made, a party to or a participant in any Proceeding,
other than a Proceeding by or in the right of the Company to procure a judgment
in its favor. Pursuant to this Section 3, Indemnitee shall be indemnified
against all Expenses, judgments, fines and amounts paid in settlement actually
and reasonably incurred by Indemnitee or on his behalf in connection with such
Proceeding or any claim, issue or matter therein, if Indemnitee acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Company and, in the case of a criminal proceeding had no
reasonable cause to believe that his conduct was unlawful.
4. Indemnity in Proceedings by or in the Right of the Company. The
Company shall indemnify Indemnitee in accordance with the provisions of this
Section 4 if Indemnitee is, or is threatened to be made, a party to or a
participant in any Proceeding by or in the right of the Company to procure a
judgment in its favor. Pursuant to this Section 4, Indemnitee shall be
indemnified against all Expenses actually and reasonably incurred by him or on
his behalf in connection with such Proceeding or any claim, issue or matter
therein, if Indemnitee acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company. No
indemnification for Expenses shall be made under this Section 4 in respect of
any claim, issue or matter as to which Indemnitee shall have been finally
adjudged by a court to be liable to the Company, unless and only to the extent
that any court in which the Proceeding was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, Indemnitee is fairly and reasonably entitled to
indemnification.
5. Indemnification for Expenses of a Party Who is Wholly or Partly
Successful. Notwithstanding any other provisions of this Agreement, to the
extent that Indemnitee is a party to (or a participant in) and is successful, on
the merits or otherwise, in any Proceeding or in defense of any claim, issue or
matter therein, in whole or in part, the Company shall indemnify Indemnitee
against all Expenses actually and reasonably incurred by him in connection
therewith. If Indemnitee is not wholly successful in such Proceeding but is
successful, on the merits or otherwise, as to one or more but less than all
claims, issues or matters in such Proceeding, the Company shall indemnify
Indemnitee against all Expenses actually and reasonably incurred by him or on
his behalf in connection with each successfully resolved claim, issue or matter.
If the Indemnitee is not wholly successful in such Proceeding, the Company also
shall indemnify Indemnitee against all Expenses reasonably incurred in
connection with a claim, issue or matter related to any claim, issue, or matter
on which the Indemnitee was successful. For purposes of this Section and without
limitation, the termination of any claim, issue or matter in such a Proceeding
by dismissal, with or without prejudice, shall be deemed to be a successful
result as to such claim, issue or matter.
6. Indemnification For Expenses of a Witness. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee is, by reason of his
Corporate Status, a
<PAGE>
witness in any Proceeding to which Indemnitee is not a party, he shall be
indemnified against all Expenses actually and reasonably incurred by him or on
his behalf in connection therewith.
7. Additional Indemnification.
(a) Notwithstanding any limitation in Sections 3, 4, or 5, the
Company shall indemnify Indemnitee to the fullest extent permitted by law if
Indemnitee is a party to or threatened to be made a party to any Proceeding
(including a Proceeding by or in the right of the Company to procure a judgment
in its favor) against all Expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred by Indemnitee in connection with the
Proceeding. No indemnity shall be made under this Section 7(a) on account of
Indemnitee's conduct which constitutes a breach of Indemnitee's duty of loyalty
to the Company or its shareholders or is an act or omission not in good faith or
which involves intentional misconduct or a knowing violation of the law.
(b) Notwithstanding any limitation in Sections 3, 4, 5 or 7(a), the
Company shall indemnify Indemnitee to the fullest extent permitted by law if
Indemnitee is a party to or threatened to be made a party to any Proceeding
(including a Proceeding by or in the right of the Company to procure a judgement
in its favor) against all Expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred by Indemnitee in connection with the
Proceeding.
(c) For purposes of Sections 7(a) and 7(b), the meaning of the
phrase "to the fullest extent permitted by law" shall include, but not be
limited to:
i. to the fullest extent permitted by the provision of the Act
that authorizes or contemplates additional indemnification by agreement, or the
corresponding provision of any amendment to or replacement of the Act, and
ii. to the fullest extent authorized or permitted by any
amendments to or replacements of the Act adopted after the date of this
Agreement that increase the extent to which a corporation may indemnify its
officers and directors.
8. Exclusions. Notwithstanding any provision in this Agreement, the
Company shall not be obligated under this Agreement to make any indemnity in
connection with any claim made against Indemnitee:
(a) for which payment has actually been made to or on behalf of
Indemnitee under any insurance policy or other indemnity provision, except with
respect to any excess beyond the amount paid under any insurance policy or other
indemnity provision; or
(b) for an accounting of profits made from the purchase and sale (or
sale and purchase) by Indemnitee of securities of the Company within the meaning
of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar
provisions of state statutory law or common law.
9. Advances of Expenses. Notwithstanding any provision of this Agreement
to the
<PAGE>
contrary, the Company shall advance the expenses incurred by Indemnitee in
connection with any Proceeding within 30 days after the receipt by the Company
of a statement or statements requesting such advances from time to time, whether
prior to or after final disposition of any Proceeding. Advances shall be
unsecured and interest free. Advances shall be made without regard to
Indemnitee's ability to repay the expenses and without regard to Indemnitee's
ultimate entitlement to indemnification under the other provisions of this
Agreement. Advances shall include any and all reasonable Expenses incurred
pursuing an action to enforce this right of advancement, including Expenses
incurred preparing and forwarding statements to the Company to support the
advances claimed. The Indemnitee shall qualify for advances solely upon the
execution and delivery to the Company of an undertaking providing that the
Indemnitee undertakes to repay the advance to the extent that it is ultimately
determined that Indemnitee is not entitled to be indemnified by the Company.
10. Procedure for Notification and Defense of Claim.
(a) To obtain indemnification under this Agreement, Indemnitee shall
submit to the Company a written request, including therein or therewith such
documentation and information as is reasonably available to Indemnitee and is
reasonably necessary to determine whether and to what extent Indemnitee is
entitled to indemnification, not later than thirty (30) days after receipt by
Indemnitee of notice of the commencement of any Proceeding. The omission to
notify the Company will not relieve the Company from any liability which it may
have to Indemnitee otherwise than under this Agreement. The Secretary of the
Company shall, promptly upon receipt of such a request for indemnification,
advise the Board in writing that Indemnitee has requested indemnification.
(b) The Company will be entitled to participate in the Proceeding at
its own expense.
11. Procedure Upon Application for Indemnification.
(a) Upon written request by Indemnitee for indemnification pursuant
to the first sentence of Section 10(a), a determination, if required by
applicable law, with respect to Indemnitee's entitlement thereto shall be made
in the specific case: (i) if a Change in Control shall have occurred, by
Independent Counsel in a written opinion to the Board of Directors, a copy of
which shall be delivered to Indemnitee; or (ii) if a Change in Control shall not
have occurred, (A) by a majority vote of the Disinterested Directors, even
though less than a quorum of the Board, or (B) if there are no such
Disinterested Directors or, if such Disinterested Directors so direct, by
Independent Counsel in a written opinion to the Board, a copy of which shall be
delivered to Indemnitee or (C) if so directed by the Board, by the stockholders
of the Company; and, if it is so determined that Indemnitee is entitled to
indemnification, payment to Indemnitee shall be made within ten (10) days after
such determination. Indemnitee shall cooperate with the person, persons or
entity making such determination with respect to Indemnitee's entitlement to
indemnification, including providing to such person, persons or entity upon
reasonable advance request any documentation or information which is not
privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
costs or expenses (including attorneys' fees and disbursements) incurred by
Indemnitee in so cooperating with the person,
<PAGE>
persons or entity making such determination shall be borne by the Company
(irrespective of the determination as to Indemnitee's entitlement to
indemnification) and the Company hereby indemnifies and agrees to hold
Indemnitee harmless therefrom.
(b) In the event the determination of entitlement to indemnification
is to be made by Independent Counsel pursuant to Section 11(a) hereof, the
Independent Counsel shall be selected as provided in this Section 11(b). If a
Change in Control shall not have occurred, the Independent Counsel shall be
selected by the Board of Directors, and the Company shall give written notice to
Indemnitee advising him of the identity of the Independent Counsel so selected.
If a Change in Control shall have occurred, the Independent Counsel shall be
selected by Indemnitee (unless Indemnitee shall request that such selection be
made by the Board of Directors, in which event the preceding sentence shall
apply), and Indemnitee shall give written notice to the Company advising it of
the identity of the Independent Counsel so selected. In either event, Indemnitee
or the Company, as the case may be, may, within 10 days after such written
notice of selection shall have been given, deliver to the Company or to
Indemnitee, as the case may be, a written objection to such selection; provided,
--------
however, that such objection may be asserted only on the ground that the
- -------
Independent Counsel so selected does not meet the requirements of "Independent
Counsel" as defined in Section 2 of this Agreement, and the objection shall set
forth with particularity the factual basis of such assertion. Absent a proper
and timely objection, the person so selected shall act as Independent Counsel.
If such written objection is so made and substantiated, the Independent Counsel
so selected may not serve as Independent Counsel unless and until such objection
is withdrawn or a court has determined that such objection is without merit. If,
within 20 days after submission by Indemnitee of a written request for
indemnification pursuant to Section 10(a) hereof, no Independent Counsel shall
have been selected and not objected to, either the Company or Indemnitee may
petition a court of competent jurisdiction for resolution of any objection which
shall have been made by the Company or Indemnitee to the other's selection of
Independent Counsel and/or for the appointment as Independent Counsel of a
person selected by the Court or by such other person as the Court shall
designate, and the person with respect to whom all objections are so resolved or
the person so appointed shall act as Independent Counsel under Section 11(a)
hereof. Upon the due commencement of any judicial proceeding or arbitration
pursuant to Section 13(a) of this Agreement, Independent Counsel shall be
discharged and relieved of any further responsibility in such capacity (subject
to the applicable standards of professional conduct then prevailing).
12. Presumptions and Effect of Certain Proceedings.
(a) In making a determination with respect to entitlement to indemnification
<PAGE>
hereunder, the person or persons or entity making such determination shall
presume that Indemnitee is entitled to indemnification under this Agreement if
Indemnitee has submitted a request for indemnification in accordance with
Section 10(a) of this Agreement, and the Company shall have the burden of proof
to overcome that presumption in connection with the making by any person,
persons or entity of any determination contrary to that presumption. Neither the
failure of the Company (including by its directors or independent legal counsel)
to have made a determination prior to the commencement of any action pursuant to
this Agreement that indemnification is proper in the circumstances because
Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Company (including by its directors or independent legal
counsel) that Indemnitee has not met such applicable standard of conduct, shall
be a defense to the action or create a presumption that Indemnitee has not met
the applicable standard of conduct.
(b) If the person, persons or entity empowered or selected under
Section 11 of this Agreement to determine whether Indemnitee is entitled to
indemnification shall not have made a determination within sixty (60) days after
receipt by the Company of the request therefor, the requisite determination of
entitlement to indemnification shall be deemed to have been made and Indemnitee
shall be entitled to such indemnification, absent (i) a misstatement by
Indemnitee of a material fact, or an omission of a material fact necessary to
make Indemnitee's statement not materially misleading, in connection with the
request for indemnification, or (ii) a prohibition of such indemnification under
applicable law; provided, however, that such 60-day period may be extended for a
reasonable time, not to exceed an additional thirty (30) days, if the person,
persons or entity making the determination with respect to entitlement to
indemnification in good faith requires such additional time for the obtaining or
evaluating of documentation and/or information relating thereto; and provided,
further, that the foregoing provisions of this Section 12(b) shall not apply (i)
if the determination of entitlement to indemnification is to be made by the
stockholders pursuant to Section 11(a) of this Agreement and if (A) within
fifteen (15) days after receipt by the Company of the request for such
determination the Board of Directors has resolved to submit such determination
to the stockholders for their consideration at an annual meeting thereof to be
held within seventy five (75) days after such receipt and such determination is
made thereat, or (B) a special meeting of stockholders is called within fifteen
(15) days after such receipt for the purpose of making such determination, such
meeting is held for such purpose within sixty (60) days after having been so
called and such determination is made thereat, or (ii) if the determination of
entitlement to indemnification is to be made by Independent Counsel pursuant to
Section 11(a) of this Agreement.
(c) The termination of any Proceeding or of any claim, issue or
matter therein, by judgment, order, settlement or conviction, or upon a plea of
nolo contendere or its equivalent, shall not (except as otherwise expressly
- ---- ----------
provided in this Agreement) of itself adversely affect the right of Indemnitee
to indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal Proceeding,
that Indemnitee had reasonable cause to believe that his conduct was unlawful.
(d) Reliance as Safe Harbor. For purposes of any determination of
-----------------------
good faith, Indemnitee shall be deemed to have acted in good faith if
Indemnitee's action is based on the records or books of account of the
Enterprise, including financial statements, or on information
<PAGE>
supplied to Indemnitee by the officers of the Enterprise in the course of their
duties, or on the advice of legal counsel for the Enterprise or on information
or records given or reports made to the Enterprise by an independent certified
public accountant or by an appraiser or other expert selected with the
reasonable care by the Enterprise. The provisions of this Section 12(d) shall
not be deemed to be exclusive or to limit in any way the other circumstances in
which the Indemnitee may be deemed to have met the applicable standard of
conduct set forth in this Agreement.
(e) Actions of Others. The knowledge and/or actions, or failure to
-----------------
act, of any director, officer, agent or employee of the Enterprise shall not be
imputed to Indemnitee for purposes of determining the right to indemnification
under this Agreement.
13. Remedies of Indemnitee.
(a) In the event that (i) a determination is made pursuant to
Section 11 of this Agreement that Indemnitee is not entitled to
indemnification under this Agreement, (ii) advancement of Expenses is not
timely made pursuant to Section 9 of this Agreement, (iii) no determination
of entitlement to indemnification shall have been made pursuant to Section
11(a) of this Agreement within 90 days after receipt by the Company of the
request for indemnification, (iv) payment of indemnification is not made
pursuant to Section 5, 6, 7 or the last sentence of Section 11(a) of this
Agreement within ten (10) days after receipt by the Company of a written
request therefor, or (v) payment of indemnification pursuant to Section 3
or 4 of this Agreement is not made within ten (10) days after a
determination has been made that Indemnitee is entitled to indemnification,
Indemnitee shall be entitled to an adjudication by a court of his
entitlement to such indemnification or advancement of Expenses.
Alternatively, Indemnitee, at his option, may seek an award in arbitration
to be conducted by a single arbitrator pursuant to the Commercial
Arbitration Rules of the American Arbitration Association. The Company
shall not oppose Indemnitee's right to seek any such adjudication or award
in arbitration.
(b) In the event that a determination shall have been made pursuant
to Section 11(a) of this Agreement that Indemnitee is not entitled to
indemnification, any judicial proceeding or arbitration commenced pursuant to
this Section 13 shall be conducted in all respects as a de novo trial, or
-- ----
arbitration, on the merits and Indemnitee shall not be prejudiced by reason of
that adverse determination. In any judicial proceeding or arbitration commenced
pursuant to this Section 13 the Company shall have the burden of proving
Indemnitee is not entitled to indemnification or advancement of Expenses, as the
case may be.
(c) If a determination shall have been made pursuant to Section
11(a) of this Agreement that Indemnitee is entitled to indemnification, the
Company shall be bound by such determination in any judicial proceeding or
arbitration commenced pursuant to this Section 13, absent (i) a misstatement by
Indemnitee of a material fact, or an omission of a material fact necessary to
make Indemnitee's statement not materially misleading, in connection with the
request for indemnification, or (ii) a prohibition of such indemnification under
applicable law.
(d) In the event that Indemnitee, pursuant to this Section 13, seeks
a judicial
<PAGE>
adjudication of or an award in arbitration to enforce his rights under, or to
recover damages for breach of, this Agreement, Indemnitee shall be entitled to
recover from the Company, and shall be indemnified by the Company against, any
and all Expenses actually and reasonably incurred by him in such judicial
adjudication or arbitration. If it shall be determined in said judicial
adjudication or arbitration that Indemnitee is entitled to receive part but not
all of the indemnification or advancement of Expenses sought, the Indemnitee
shall be entitled to recover from the Company, and shall be indemnified by the
Company against, any and all Expenses reasonably incurred by Indemnitee in
connection with such judicial adjudication or arbitration.
(e) The Company shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 13 that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court or before any such arbitrator
that the Company is bound by all the provisions of this Agreement. The Company
shall indemnify Indemnitee against any and all Expenses and, if requested by
Indemnitee, shall (within ten (10) days after receipt by the Company of a
written request therefore) advance such expenses to Indemnitee, which are
incurred by Indemnitee in connection with any action brought by Indemnitee for
indemnification or advance of Expenses from the Company under this Agreement or
under any directors' and officers' liability insurance policies maintained by
the Company, regardless of whether Indemnitee ultimately is determined to be
entitled to such indemnification, advancement of Expenses or insurance recovery,
as the case may be.
14. Non-exclusivity; Survival of Rights; Insurance; Subrogation.
(a) The rights of indemnification and to receive advancement of
Expenses as provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may at any time be entitled under applicable
law, the Company's Articles of Incorporation, the Company's Bylaws, any
agreement, a vote of stockholders or a resolution of directors, or otherwise. No
amendment, alteration or repeal of this Agreement or of any provision hereof
shall limit or restrict any right of Indemnitee under this Agreement in respect
of any action taken or omitted by such Indemnitee in his Corporate Status prior
to such amendment, alteration or repeal. To the extent that a change in Delaware
law, whether by statute or judicial decision, permits greater indemnification or
advancement of Expenses than would be afforded currently under the Company's
Bylaws and this Agreement, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits so afforded by
such change. No right or remedy herein conferred is intended to be exclusive of
any other right or remedy, and every other right and remedy shall be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or employment
of any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other right or remedy.
(b) To the extent that the Company maintains an insurance policy or
policies providing liability insurance for directors, officers, employees, or
agents of the Company or of any other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise which such person serves at the
request of the Company, Indemnitee shall be covered by such policy or policies
in accordance with its or their terms to the maximum extent of the coverage
available for any such director, officer, employee or agent under such policy or
policies. If, at the
<PAGE>
time of the receipt of a notice of a claim pursuant to Section 2(b) of Section 2
hereof, the Company has director and officer liability insurance in effect, the
Company shall give prompt notice of the commencement of such proceeding to the
insurers in accordance with the procedures set forth in the respective policies.
The Company shall thereafter take all necessary or desirable action to cause
such insurers to pay, on behalf of the Indemnitee, all amounts payable as a
result of such proceeding in accordance with the terms of such policies.
(c) In the event of any payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers required and take all
action necessary to secure such rights, including execution of such documents as
are necessary to enable the Company to bring suit to enforce such rights.
(d) The Company shall not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable (or for which advancement is provided
hereunder) hereunder if and to the extent that Indemnitee has otherwise actually
received such payment under any insurance policy, contract, agreement or
otherwise.
(e) The Company's obligation to indemnify or advance Expenses
hereunder to Indemnitee who is or was serving at the request of the Company as a
director, officer, employee or agent of any other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise shall be reduced
by any amount Indemnitee has actually received as indemnification or advancement
of expenses from such other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise.
15. Duration of Agreement. This Agreement shall continue until and
terminate upon the later of: (a) 10 years after the date that Indemnitee shall
have ceased to serve as a director or officer of the Company or as a director,
officer, employee or agent of any other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise which Indemnitee served at the
request of the Company; or (b) 1 year after the final termination of any
Proceeding then pending in respect of which Indemnitee is granted rights of
indemnification or advancement of Expenses hereunder and of any proceeding
commenced by Indemnitee pursuant to Section 13 of this Agreement relating
thereto. This Agreement shall be binding upon the Company and its successors and
assigns and shall inure to the benefit of Indemnitee and his heirs, executors
and administrators.
16. Severability. If any provision or provisions of this Agreement shall
be held to be invalid, illegal or unenforceable for any reason whatsoever: (a)
the validity, legality and enforceability of the remaining provisions of this
Agreement (including without limitation, each portion of any Section of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall not
in any way be affected or impaired thereby and shall remain enforceable to the
fullest extent permitted by law; (b) such provision or provisions shall be
deemed reformed to the extent necessary to conform to applicable law and to give
the maximum effect to the intent of the parties hereto; and (c) to the fullest
extent possible, the provisions of this Agreement (including, without
limitation, each portion of any Section of this Agreement containing any such
provision held to be invalid, illegal
<PAGE>
or unenforceable, that is not itself invalid, illegal or unenforceable) shall be
construed so as to give effect to the intent manifested thereby.
17. Enforcement.
(a) The Company expressly confirms and agrees that it has entered
into this Agreement and assumed the obligations imposed on it hereby in order to
induce Indemnitee to serve as a director or officer of the Company, and the
Company acknowledges that Indemnitee is relying upon this Agreement in serving
as a director or officer of the Company.
(b) This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings, oral, written and implied, between the
parties hereto with respect to the subject matter hereof.
18. Modification and Waiver. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by the parties
thereto. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provisions of this Agreement nor shall
any waiver constitute a continuing waiver.
19. Notice by Indemnitee. Indemnitee agrees promptly to notify the
Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement of Expenses
covered hereunder. The failure of Indemnitee to so notify the Company shall not
relieve the Company of any obligation which it may have to the Indemnitee under
this Agreement or otherwise.
20. Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given (a) if delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, or (b) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:
(a) If to Indemnitee, at the address indicated on the signature page
of this Agreement, or such other address as Indemnitee shall provide to the
Company.
(b) If to the Company to:
iXL Enterprises, Inc.
1888 Emery Street, N. W.
Atlanta, Georgia 30318
Attention: Chief Executive Officer
with a required copy to:
Minkin & Snyder, A Professional Corporation
3060 Peachtree Road, Suite 1100
Atlanta, Georgia 30305
Attention: James W. Altenbach
<PAGE>
or to any other address as may have been furnished to Indemnitee by the Company.
21. Contribution. To the fullest extent permissible under applicable
law, if the indemnification provided for in this Agreement is unavailable to
Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying
Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for
judgments, fines, penalties, excise taxes, amounts paid or to be paid in
settlement and/or for Expenses, in connection with any claim relating to an
indemnifiable event under this Agreement, in such proportion as is deemed fair
and reasonable in light of all of the circumstances of such Proceeding in order
to reflect (i) the relative benefits received by the Company and Indemnitee as a
result of the event(s) and/or transaction(s) giving cause to such Proceeding;
and/or (ii) the relative fault of the Company (and its directors, officers,
employees and agents) and Indemnitee in connection with such event(s) and/or
transaction(s).
22. Applicable Law. This Agreement and the legal relations among the
parties shall be governed by, and construed and enforced in accordance with, the
laws of the State of Delaware, without regard to its conflict of laws rules.
Except with respect to any arbitration commenced by Indemnitee pursuant to
Section 10(a) of this Agreement, the Company and Indemnitee hereby irrevocably
and unconditionally (i) agree that any action or proceeding arising out of or in
connection with this Agreement shall be brought only in the Chancery Court of
the State of Delaware (the "Delaware Court"), and not in any other state or
federal court in the United States of America or any court in any other country,
(ii) consent to submit to the exclusive jurisdiction of the Delaware Court for
purposes of any action or proceeding arising out of or in connection with this
Agreement, (iii) appoint, to the extent such party is not a resident of the
State of Delaware, irrevocably RL&F Service Corp., One Rodney Square, 10th
Floor, 10th and King Streets, Wilmington, Delaware 19801 as its agent in the
State of Delaware as such party's agent for acceptance of legal process in
connection with any such action or proceeding against such party with the same
legal force and validity as if served upon such party personally within the
State of Delaware, (iv) waive any objection to the laying of venue of any such
action or proceeding in the Delaware Court, and (v) waive, and agree not to
plead or to make, any claim that any such action or proceeding brought in the
Delaware Court has been brought in an improper or inconvenient forum.
23. Identical Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this Agreement.
24. Miscellaneous. Use of the masculine pronoun shall be deemed to
include usage of the feminine pronoun where appropriate. The headings of the
paragraphs of this Agreement are inserted for convenience only and shall not be
deemed to constitute part of this Agreement or to affect the construction
thereof.
[Signatures Begin on Following Page]
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as
of the day and year first above written.
iXL ENTERPRISES, INC.
By:_______________________________
Name: U. Bertram Ellis, Jr.
Title: Chief Executive Officer
.
INDEMNITEES
__________________________________
Name: Kevin M. Wall
Address: __________________________
__________________________
__________________________
__________________________________
Name: William C. Nussey
Address: ___________________________
___________________________
___________________________
__________________________________
Name: C. Cathleen Raffaeli
Address: ___________________________
___________________________
___________________________
[Signatures Continue on Next Page]
<PAGE>
_________________________________
Name: Barry T. Sikes
Address: ___________________________
___________________________
___________________________
__________________________________
Name: M. Wayne Boylston
Address: ___________________________
___________________________
___________________________
__________________________________
Name: David Clauson
Address: ___________________________
___________________________
___________________________
__________________________________
Name: Thomas R. Wall, IV
Address: ___________________________
___________________________
___________________________
__________________________________
Name: Frank K. Bynum, Jr.
Address: ___________________________
___________________________
___________________________
__________________________________
Name: I. Robert Greene
Address: ___________________________
___________________________
___________________________
[Signatures Continue on Next Page]
<PAGE>
__________________________________
Name: Jerome D. Colonna
Address: ___________________________
___________________________
___________________________
__________________________________
Name: Thomas G. Rosencrants
Address: ___________________________
___________________________
___________________________
__________________________________
Name: Jeffrey T. Arnold
Address: ___________________________
___________________________
___________________________
<PAGE>
Exhibit 10.55
================================================================================
FORM OF
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
among
CONSUMER FINANCIAL NETWORK, INC.,
iXL ENTERPRISES, INC.,
GENERAL ELECTRIC CAPITAL CORPORATION
and
CERTAIN OTHER INVESTORS NAMED HEREIN FROM TIME TO TIME
Dated as of ________ __, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
1. Registrations Upon Request 1
1.1. Requests by the Majority Stockholder.............................. 1
1.2. Request by the Outside Investors.................................. 2
1.3. Registration Statement Form....................................... 3
1.4. Expenses.......................................................... 3
1.5. Priority in Demand Registrations.................................. 3
1.6. No Company Initiated Registration................................. 4
2. Incidental Registrations.................................................. 4
3. Registration Procedures................................................... 6
4. Underwritten Offerings....................................................10
4.1. Underwriting Agreement............................................10
4.2. Selection of Underwriters.........................................11
5. Holdback Agreements.......................................................11
6. Preparation; Reasonable Investigation.....................................12
7. No Grant of Future Registration Rights....................................12
8. Indemnification...........................................................12
8.1. Indemnification by the Company....................................12
8.2. Indemnification by the Sellers....................................13
8.3. Notices of Claims, etc............................................14
8.4. Other Indemnification.............................................15
8.5. Indemnification Payments..........................................15
8.6. Other Remedies....................................................15
9. Definitions...............................................................15
10. Miscellaneous............................................................17
10.1. Rule 144 etc.....................................................18
10.2. Successors, Assigns and Transferees..............................18
10.3. Other Stockholders...............................................18
10.4. Stock Splits, etc................................................18
i
<PAGE>
10.5. Amendment and Modification.......................................19
10.6. Governing Law....................................................19
10.7. Invalidity of Provision..........................................19
10.8. Notices..........................................................19
10.9. Headings; Execution in Counterparts..............................20
10.10. Injunctive Relief................................................20
10.11. Entire Agreement.................................................20
10.12. Term.............................................................20
ii
<PAGE>
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
--------------------------------------------------
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT, dated as of ______
__, 1999, among Consumer Financial Network, Inc., a Delaware corporation (the
"Company"), iXL Enterprises, Inc., a Delaware corporation ("iXL"), General
Electric Capital Corporation, GE Capital Equity Investments, Inc. and
General Electric Pension Trust (together with any other non-employee Persons who
become stockholders of the Company and party to the Stockholders' Agreement, the
"Outside Investors"), and those individual employees of the Company who have
become stockholders of the Company and whose names are set forth on Exhibit A
hereto (the "Management Stockholders"). Capitalized terms used herein without
definition are defined in Section 9.
1. Registrations Upon Request.
--------------------------
1.1. Requests by the Majority Stockholder. At any time, the Majority
------------------------------------
Stockholder shall have the right to make up to four separate requests that the
Company effect the registration under the Securities Act of all or a portion of
the Registrable Securities owned by the Majority Stockholder, each such request
to specify the intended method or methods of disposition thereof. A request
made by the Majority Stockholder shall not be counted for purposes of the
request limitations set forth above (a) if the Majority Stockholder determines
-
in its good faith judgment to withdraw the proposed registration of any
Registrable Securities requested to be registered pursuant to this Section 1.1
due to marketing or regulatory reasons, (b) the registration statement relating
-
to any such request is not declared effective within 90 days of the date such
registration statement is first filed with the Commission, (c) if, within 180
-
days after the registration relating to any such request has become effective,
such registration is interfered with by any stop order, injunction or other
order or requirement of the Commission or other governmental agency or court for
any reason and the Company fails to have such stop order, injunction or other
order or requirement removed, withdrawn or resolved to the Majority
Stockholder's reasonable satisfaction within 30 days, (d) if more than 10% of
-
the Registrable Securities requested by the Majority Stockholder to be included
in the registration are not so included pursuant to Section 1.5, or (e) the
-
conditions to closing specified in the purchase agreement or underwriting
agreement entered into in connection with the registration relating to any such
request are not satisfied (other than as a result of a default or breach
thereunder by the Majority Stockholder). Upon any such request, the Company
will promptly, but in any event within 15 days, give written notice of such
request to all holders of Registrable Securities and thereupon the Company will,
subject to Section 1.5, use its best efforts to effect the prompt registration
under the Securities Act of:
<PAGE>
(i) the Registrable Securities which the Company has been so requested to
register by the Majority Stockholder, and
(ii) all other Registrable Securities which the Company has been
requested to register by the holders thereof by written request given to
the Company within 20 days after the giving of such written notice by the
Company
all to the extent required to permit the disposition of the Registrable
Securities so to be registered in accordance with the intended method or methods
of disposition of each seller of such Registrable Securities.
1.2. Request by the Outside Investors. At any time following the
--------------------------------
earlier of (a) the third anniversary of the date hereof and (b) the closing of
- -
any registered underwritten public offering of the Company's Common Stock,
including, without limitation, a Qualified Public Offering (a majority in
interest based on the number of shares of Preferred Stock and Common Stock into
which any such shares are converted) of the purchasers under the Stock Purchase
Agreement and their transferees who become parties hereto (the "Requesting
Outside Investors") shall have the right in the aggregate to make four requests
that the Company effect the registration under the Securities Act of any or all
of the then outstanding Registrable Securities owned by the Outside Investors,
such request to specify the intended method or methods of disposition thereof.
Upon any such request, the Company will use its best efforts to effect the
prompt registration under the Securities Act of the Registrable Securities which
the Company has been so requested to register by the Requesting Outside
Investors. A request made by the Requesting Outside Investors shall not be
counted for purposes of the request limitation set forth above (a) if the
Requesting Outside Investors determine in their good faith
-
judgment to withdraw the proposed registration of any Registrable Securities
requested to be registered pursuant to this Section 1.2 due to marketing or
regulatory reasons, (b) the registration statement relating to any such request
-
is not declared effective within 90 days of the date such registration statement
is first filed with the Commission, (c) if, within 180 days after the
-
registration relating to any such request has become effective, such
registration is interfered with by any stop order, injunction or other order or
requirement of the Commission or other governmental agency or court for any
reason and the Company fails to have such stop order, injunction or other order
or requirement removed, withdrawn or resolved to the Requesting Outside
Investors' reasonable satisfaction within 30 days, (d) the conditions to closing
-
specified in the purchase agreement or underwriting agreement entered into in
connection with the registration relating to any such request are not satisfied
(other than as a result of a default or breach thereunder by any Outside
Investor) or (e) if more than 10% of the Registrable Securities requested by the
-
Requesting Outside Investors to be included in the registration are not so
included
2
<PAGE>
pursuant to Section 1.5. Upon any such request, the Company will promptly, but
in any event within 15 days, give written notice of such request to all holders
of Registrable Securities and thereupon the Company will, subject to Section
1.5, use its best efforts to effect the prompt registration under the Securities
Act of:
(i) the Registrable Securities which the Company has been so requested to
register by the Requesting Outside Investors, and
(ii) all other Registrable Securities which the Company has been
requested to register by the holders thereof by written request given to
the Company within 20 days after the giving of such written notice by the
Company,
all to the extent required to permit the disposition of the Registrable
Securities so to be registered in accordance with the intended method or methods
of disposition of each seller of such Registrable Securities.
Notwithstanding the foregoing, but subject to the rights of holders of
Registrable Securities under Section 2, if the Company shall at any time furnish
to each seller of Registrable Securities a certificate signed by the President
of the Company stating that the Company has pending or in process a material
transaction (including a financing transaction), the disclosure of which would,
in the good faith judgment of the Board, materially and adversely affect the
Company, the Company may defer the filing (but not the preparation) of a
registration statement to be filed pursuant to Sections 1.1 and 1.2 for up to 60
days (but the Company shall use its best efforts to complete the transaction and
file the registration statement as soon as possible).
1.3. Registration Statement Form. Each registration requested
---------------------------
pursuant to Section 1.1 shall be effected by the filing of a registration
statement on a form agreed to by the Majority Stockholder; each registration
requested pursuant to Section 1.2 shall be effected by the filing of a
registration statement on a form agreed to by the Requesting Outside Investors.
1.4. Expenses. The Company will pay all Registration Expenses in
--------
connection with any registrations requested under Section 1.1 and 1.2 provided
--------
that any seller thereunder shall pay all Registration Expenses to the extent
required to be paid by such seller under applicable law and provided further
-------- -------
that underwriting commissions related to a registration requested under Sections
1.1 and 1.2 shall be paid pro rata by the Persons selling Registrable Securities
--- ----
in such registration, based on the number of shares of Registrable Securities
being sold.
3
<PAGE>
1.5. Priority in Demand Registrations. If a registration pursuant to
--------------------------------
Section 1.1 or Section 1.2 involves an underwritten offering, and the managing
underwriter (or, in the case of an offering which is not underwritten, an
investment banker) shall advise the Company or the initiating Stockholder in
writing (with a copy to the Company and each Person requesting registration of
Registrable Securities) that, in its opinion, the number of securities requested
and otherwise proposed to be included in such registration exceeds the number
which can be sold in such offering, the Company will include in such
registration to the extent of the number which the Company is so advised can be
sold in such offering in the case of a registration pursuant to Section 1,
first, the Registrable Securities of the Majority Stockholder and the Outside
- -----
Investors requested to be included in such registration, pro rata, among all
--- ----
such holders, on the basis of the number of Registrable Securities owned by such
holders, second, the Registrable Securities, if any, of the Management
------
Stockholders, pro rata, among such holders, on the basis of the number of
--- ----
Registrable Securities requested to be included in such registration by such
holders and third, the securities, if any, being sold by the Company.
-----
Notwithstanding the foregoing, no employee stockholder will be entitled to
participate in any such registration requested pursuant to Sections 1.1 or 1.2
if the managing underwriter (or, in the case of an offering that is not
underwritten, an investment banker) shall determine in good faith that the
participation of such employee stockholder would adversely affect the
marketability of the securities being sold in such registration.
1.6. No Company Initiated Registration. After receipt of notice of a
---------------------------------
requested registration pursuant to Section 1.1 or 1.2, the Company shall not
initiate, without the consent of the Majority Stockholder, in the case of a
request pursuant to Section 1.1 or the Requesting Outside Investors, in the case
of a request pursuant to Section 1.2, a registration of any of its securities
for its own account until 90 days after such registration has been effected or
such registration has been terminated.
2. Incidental Registrations. If the Company at any time proposes to
------------------------
register any of its equity securities under the Securities Act (other than
pursuant to Section 1 hereof or a registration on Form S-4 or S-8 or any
successor form), and the registration form to be used may be used for the
registration of Registrable Securities, it will give prompt written notice to
all holders of Registrable Securities of its intention to do so. Upon the
written request of any such holder made within 30 days after the receipt of any
such notice (which request shall specify the number of Registrable Securities
intended to be disposed of by such holder and the intended method or methods of
disposition thereof), the Company will use its best efforts to effect the
registration under the Securities Act of all such Registrable Securities in
accordance with such intended method or methods of disposition, provided that:
--------
4
<PAGE>
(a) if such registration shall be in connection with an initial
public offering by the Company, the Company shall not include any
Registrable Securities in such proposed registration if the Board shall
have determined, after consultation with the managing underwriter for such
offering, that it is not in the best interests of the Company to include
any Registrable Securities in such registration;
(b) if, at any time after giving written notice of its intention to
register any equity securities and prior to the effective date of the
registration statement filed in connection with such registration, the
Company shall determine for any reason not to register such equity
securities, the Company may, at its election, give written notice of such
determination to each holder of Registrable Securities and, there upon,
shall not be obligated to register any Registrable Securities in connection
with such registration (but shall nevertheless pay the Registration
Expenses in connection therewith), without prejudice, however, to the
rights of the Majority Stockholder and the Requesting Outside Investors to
request that a registration be effected under Section 1.1 or 1.2,
respectively; and
(c) if a registration pursuant to this Section 2 involves an
underwritten offering, and the managing underwriter (or, in the case of an
offering that is not underwritten, an investment banker) shall advise the
Company in writing (with a copy to each holder of Registrable Securities
requesting registration thereof) that, in its opinion, the number of
securities requested and otherwise proposed to be included in such
registration exceeds the number which can be sold in such offering, the
Company will include in such registration to the extent of the number which
the Company is so advised can be sold in such offering, first, the
-----
securities if any, being sold by the Company, and second, the Registrable
------
Securities of the Majority Stockholder requested to be included in such
registration, together with the Registrable Securities of the Outside
Investors requested to be included in such registration, pro rata, among
--- ----
all such holders, on the basis of the number of Registrable Securities
owned by such holders and third, the Registrable Securities, if any, of the
-----
Management Stockholders, pro rata, among such holders, on the basis of the
--- ----
number of such Registrable Securities requested to be included in such
registration by such holders. Notwithstanding the foregoing, no employee
stockholder will be entitled to participate in any such registration if the
managing underwriter (or, in the case of an offering that is not
underwritten, an investment banker) shall determine in good faith that the
participation of such employee stockholder would adversely affect the
marketability of the securities being sold by the Company in such
registration.
5
<PAGE>
The Company will pay all Registration Expenses in connection with each
registration of Registrable Securities requested pursuant to this Section 2,
provided that any seller thereunder shall pay all Registration Expenses to the
- --------
extent required to be paid by such seller under applicable law and provided
--------
further that underwriting commissions shall be paid pro rata by the sellers in
- ------- --- ----
such registration, based on the number of shares of Registrable Securities being
sold. No registration effected under this Section 2 shall relieve the Company
from its obligation to effect registrations under Section 1.
3. Registration Procedures. If and whenever the Company is required
-----------------------
to use its best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in Sections 1 and 2, the Company will
promptly:
(a) prepare, and within 60 days thereafter file with the Commission,
a registration statement with respect to such Registrable Securities, make
all required filings with the NASD and use best efforts to cause such
registration statement to become effective as soon as practicable;
(b) prepare and promptly file with the Commission such amendments and
post-effective amendments and supplements to such registration statement
and the prospectus used in connection therewith as may be necessary to keep
such registration statement effective for so long as is required to comply
with the provisions of the Securities Act and to complete the disposition
of all securities covered by such registration statement in accordance with
the intended method or methods of disposition thereof, but in no event for
a period of more than six months after such registration statement becomes
effective;
(c) furnish copies of all documents proposed to be filed with the
Commission in connection with such registration to (i) in the case of a
registration pursuant to Section 1.1 (a "Majority Stockholder
--------------------
Registration"), counsel selected by the Majority Stockholder; (ii) in the
------------ --
case of a registration pursuant to Section 1.2 (an "Outside Investors
-----------------
Registration"), one counsel selected by the Requesting Outside Investors
------------
and approved by the Company (such approval not to be unreasonably withheld,
it being agreed that each of Weil, Gotshal & Manges LLP and Paul, Hastings,
Janofsky & Walker, LLP will be deemed approved by the Company) and (iii) in
---
the case of a registration pursuant to Section 2, one counsel selected by
the holders of at least 51% of the Registrable Securities proposed to be
sold in connection with such registration (such holders, the "Majority
--------
Holders"), which documents will be subject to the review of such counsel
-------
and the Company shall not file any amendment and post-effective amendments
or supplement to such registration statement or the prospectus used in
connection therewith which relevant
6
<PAGE>
counsel and the Majority Stockholder, in the case of a Majority Stockholder
Registration, the Requesting Outside Investors, in the case of an Outside
Investors Registration or the Majority Holders in the case of all other
registrations pursuant to this Agreement, shall have reasonably objected in
writing on the grounds that such amendment or supplement does not comply
(explaining why) in all material respects with the requirements of the
Securities Act or of the rules or regulations thereunder;
(d) furnish to each seller of Registrable Securities, without charge,
such number of conformed copies of such registration statement and of each
such amendment and supplement thereto (in each case including all exhibits
and documents filed therewith) and such number of copies of the prospectus
included in such registration statement (including each preliminary
prospectus and any summary prospectus) and any other prospectus filed under
Rule 424 under the Securities Act, in conformity with the requirements of
the Securities Act, and such other documents, as such seller may reasonably
request in order to facilitate the disposition of the Registrable
Securities owned by such seller in accordance with the intended method or
methods of disposition thereof;
(e) use its best efforts to register or qualify such Registrable
Securities covered by such registration statement under the securities or
blue sky laws of such jurisdictions as each seller shall reasonably
request, and do any and all other acts and things which may be necessary or
advisable to enable such seller to con summate the disposition of such
Registrable Securities in such jurisdictions in accordance with the
intended method or methods of disposition thereof, provided that the
--------
Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it is not
so qualified, subject itself to taxation in any jurisdiction wherein it is
not so subject, or take any action which would subject it to general
service of process in any jurisdiction wherein it is not so subject;
(f) use its best efforts to cause all Registrable Securities covered
by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary by virtue of
the business and operations of the Company to enable the seller or sellers
thereof to consummate the disposition of such Registrable Securities in
accordance with the intended method or methods of disposition thereof;
(g) furnish to each seller of Registrable Securities a signed
counterpart, addressed to the sellers, of
7
<PAGE>
(i) an opinion of counsel for the Company experienced in
securities law matters, dated the effective date of the registration
statement (and, if such registration includes an underwritten public
offering, the date of the closing under the underwriting agreement),
and
(ii) a "comfort" letter (unless the registration is pursuant to
Section 2 and such a letter is not otherwise being furnished to the
Company), dated the effective date of such registration statement (and
if such registration includes an underwritten public offering, dated
the date of the closing under the underwriting agreement), signed by
the independent public accountants who have issued an audit report on
the Company's financial statements included in the registration
statement,
covering such matters as are customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to the underwriters in
underwritten public offerings of securities and such other matters as the
Majority Stockholder, in the case of a Majority Stockholder Registration,
the Requesting Outside Investors, in the case of an Outside Investors
Registration and the Majority Holders, in the case of all other
registrations pursuant to this Agreement, may reasonably request;
(h) notify each seller of any Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any
event or existence of any fact as a result of which the prospectus included
in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, and, as promptly as
is practicable, prepare and furnish to such seller a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light
of the circumstances then existing;
(i) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement of the
Company (in form complying with the provisions of Rule 158 under the
Securities Act) covering the period of at least 12 months, but not more
than 18 months, beginning with the first month after the effective date of
the registration statement;
8
<PAGE>
(j) notify each seller of any Registrable Securities covered by such
registration statement (i) when the prospectus or any prospectus supplement
-
or post-effective amendment has been filed, and, with respect to such
registration statement or any post-effective amendment, when the same has
become effective, (ii) of any request by the Commission for amendments or
--
supplements to such registration statement or to amend or to supplement
such prospectus or for additional information after the effectiveness of
such registration statement, (iii) of the issuance by the Commission of any
---
stop order suspending the effectiveness of such registration statement or
the initiation of any proceedings for that purpose and (iv) of the
--
suspension of the qualification of such securities for offering or sale in
any jurisdiction, or of the institution of any proceedings for any of such
purposes;
(k) use every reasonable effort to obtain the lifting of any stop
order that might be issued suspending the effectiveness of such
registration statement at the earliest possible moment;
(l) use its best efforts (i) (A) to list such Registrable Securities
- -
on any securities exchange on which the equity securities of the Company
are then listed or, if no such equity securities are then listed, on an
exchange selected by the Company, if such listing is then permitted under
the rules of such exchange, or (B) if such listing is not practicable, to
-
secure designation of such securities as a NASDAQ "national market system
security" within the meaning of Rule 11Aa2-1 under the Exchange Act or,
failing that, to secure NASDAQ authorization for such Registrable
Securities, and, without limiting the foregoing, to arrange for at least
two market makers to register as such with respect to such Registrable
Securities with the NASD, and (ii) to provide a transfer agent and
--
registrar for such Registrable Securities not later than the effective date
of such registration statement;
(m) enter into such agreements and take such other actions as the
sellers of Registrable Securities or the underwriters reasonably request in
order to expedite or facilitate the disposition of such Registrable
Securities, including, without limitation, preparing for, and participating
in, such number of "road shows" and all such other customary selling
efforts as the underwriters reasonably request in order to expedite or
facilitate such disposition; and
(n) use its reasonable best efforts to take all other steps necessary
to effect the registration of such Registrable Securities contemplated
hereby.
9
<PAGE>
As a condition to its registration of Registrable Securities of any
prospective seller, the Company may require each seller of any Registrable
Securities as to which any registration is being effected to furnish to the
Company such information regarding such seller, its ownership of Registrable
Securities and the disposition of such Registrable Securities as the Company
may from time to time reasonably request in writing and as shall be required
by law in connection therewith. Each such holder agrees to furnish promptly to
the Company all information required to be disclosed in order to make the
information previously furnished to the Company by such holder not materially
misleading.
The Company agrees not to file or make any amendment to any
registration statement with respect to any Registrable Securities, or any
amendment of or supplement to the prospectus used in connection therewith, which
refers to any seller of any Registrable Securities covered thereby by name, or
otherwise identifies such seller as the holder of any Registrable Securities,
without the consent of such seller, such consent not to be unreasonably
withheld, unless such disclosure is required by law.
By acquisition of Registrable Securities, each holder of such
Registrable Securities shall be deemed to have agreed that upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 3(h), such holder will promptly discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(h). If so directed
by the Company, each holder of Registrable Securities will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies,
in such holder's possession of the prospectus covering such Registrable
Securities at the time of receipt of such notice. In the event that the Company
shall give any such notice, the period mentioned in Section 3(b) shall be
extended by the number of days during the period from and including the date of
the giving of such notice to and including the date when each seller of any
Registrable Securities covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
Section 3(h).
4. Underwritten Offerings.
----------------------
4.1. Underwriting Agreement. If requested by the underwriters for any
----------------------
underwritten offering by holders of Registrable Securities pursuant to (i) a
Majority Stockholder Registration, (ii) an Outside Investors Registration or
(iii) any other registration pursuant to Section 2, the Company shall enter into
---
an underwriting agreement with the underwriters for such offering, such
agreement to be reasonably
10
<PAGE>
satisfactory in substance and form to, in the case of a Majority Stockholder
Registration, the Majority Stockholder, in the case of an Outside Investors
Registration, the Requesting Outside Investors, and in the case of all other
registrations, the Majority Holders, and also in each such case satisfactory to
the underwriters, containing such representations and warranties by the Company
and such other terms and provisions as are customarily contained in agreements
of this type, including, without limitation, indemnities to the effect and to
the extent provided in Section 8. The holders of Registrable Securities to be
distributed by such underwriters shall be parties to such underwriting
agreement and may, at their option, require that any or all of the
representations and warranties by, and the agreements on the part of, the
Company to and for the benefit of such underwriters be made to and for the
benefit of such holders of Registrable Securities and that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement shall also be conditions precedent to the obligations of
such holders of Registrable Securities. No underwriting agreement (or other
agreement in connection with such offering) shall require any holder of
Registrable Securities to make any representations or warranties to or
agreements with the Company or the underwriters other than representations,
warranties or agreements regarding such holder, the ownership of such holder's
Registrable Securities and such holder's intended method or methods of
disposition and any other representation required by law or to furnish any
indemnity to any Person which is broader than the indemnity furnished by such
holder in Section 8.2.
4.2. Selection of Underwriters. If the Company at any time proposes
-------------------------
to register any of its securities under the Securities Act for sale for its own
account pursuant to an underwritten offering, the Company will have the right to
select the managing under writer (which shall be of nationally recognized
standing) to administer the offering, but only with the approval of the Majority
Stockholder, such approval not to be unreasonably withheld, provided that
--------
whenever a registration requested pursuant to Section 1.1 or 1.2 is for an
underwritten offering, the Majority Stockholder, or the Requesting Outside
Investors, as the case may be, will have the right to select the managing
underwriter (which shall be of nationally recognized standing) to administer the
offering, but only with the approval of the Company, such approval not to be
unreasonably withheld.
5. Holdback Agreements. (a) If and whenever the Company proposes to
-------------------
register any of its equity securities under the Securities Act for its own
account (other than on Form S-4 or S-8 or any successor form) or is required to
use its best efforts to effect the registration of any Registrable Securities
under the Securities Act pursuant to Section 1 or 2, each holder of Registrable
Securities agrees by acquisition of such Registrable Securities not to effect
any public sale or distribution, including any sale pursuant to Rule 144 under
the Securities Act, of any Registrable Securities within seven days prior to and
90 days (unless advised in writing by the managing underwriter that a longer
period, not to
11
<PAGE>
exceed 180 days, is required) after the effective date of the registration
statement relating to such registration, except as part of such registration.
(b) The Company agrees not to effect any public sale or distribution
of its equity securities or securities convertible into or exchangeable or
exercisable for any of such securities within seven days prior to and 90 days
(unless advised in writing by the managing underwriter that a longer period, not
to exceed 180 days, is required) after the effective date of such registration
statement (except as part of such registration or pursuant to a registration on
Form S-4 or S-8 or any successor form). In addition, if requested by the
managing underwriter, the Company shall use its commercially reasonable best
efforts to cause each holder of its equity securities or any securities
convertible into or exchangeable or exercisable for any of such securities,
whether outstanding on the date of this Agreement or issued at any time after
the date of this Agreement (other than any such securities acquired in a public
offering), to agree not to effect any such public sale or distribution of such
securities during such period, except as part of any such registration if
permitted, and to cause each such holder to enter into a similar agreement to
such effect with the Company.
6. Preparation; Reasonable Investigation. In connection with the
-------------------------------------
preparation and filing of each registration statement registering Registrable
Securities under the Securities Act, the Company will give the holders of such
Registrable Securities so to be registered and their underwriters, if any, and
their respective counsel and accountants the opportunity to participate in the
preparation of such registration statement, each prospectus included therein or
filed with the Commission, and each amendment thereof or supplement thereto, and
will give each of them such access to the financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries and such
opportunities to discuss the business of the Company with its officers and the
independent public accountants who have issued audit reports on its financial
statements as shall be reasonably requested by such holders in connection with
such registration statement.
7. No Grant of Future Registration Rights. The Company shall not
--------------------------------------
grant any other demand or incidental registration rights to any other Person
without the prior written consent of the Majority Stockholder; provided, that
--------
the Company shall not grant demand or incidental registration rights which are
inconsistent with the rights granted under this Agreement (it being understood
that the neither the granting of demand registration rights (with respect to
which the holders of Registrable Securities may participate pro rata under the
second paragraph of Section 1.2 hereof) nor pro rata incidental registration
rights, each on terms comparable to the terms hereof is considered inconsistent
with the terms hereof).
8. Indemnification.
---------------
12
<PAGE>
8.1 Indemnification by the Company. In the event of any registration
------------------------------
of any Registrable Securities pursuant to this Agreement, the Company will
indemnify and hold harmless (a) the seller of such Registrable Securities, (b)
- -
the directors, officers, partners, employees, agents and Affiliates of such
seller, (c) each Person who participates as an underwriter in the offering or
-
sale of such securities and (d) each person, if any, who controls (within the
-
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
any such seller, partner or underwriter against any and all losses, claims,
damages or liabilities (or actions or proceedings in respect thereof), joint or
several, directly or indirectly based upon or arising out of (i) any untrue
-
statement or alleged untrue statement of a fact contained in any registration
statement under which such Registrable Securities were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein or used in connection with the offering of
securities covered thereby, or any amendment or supplement thereto, or (ii)
--
any omission or alleged omission to state a fact required to be stated therein
or necessary to make the statements therein not misleading; and the Company will
reimburse each such indemnified party for any legal or any other expenses
reasonably incurred by them in connection with investigating, preparing,
pursuing or defending any such loss, claim, damage, liability, action or
proceeding, except insofar as any such loss, claim, damage, liability, action,
proceeding or expense arises out of or is based upon an untrue statement or
omission made in such registration statement, any such preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by such
seller expressly for use in the preparation thereof. Such indemnity shall remain
in full force and effect, regardless of any investigation made by such
indemnified party and shall survive the transfer of such Registrable Securities
by such seller. The indemnity agreement contained in this Section 8.1 shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability,
action or proceeding if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld).
8.2 Indemnification by the Sellers. The Company may require, as a
------------------------------
condition to including any Registrable Securities of a prospective seller in any
registration statement filed pursuant to Section 1 or 2 that the Company shall
have received an under taking satisfactory to it from each such prospective
sellers of such Registrable Securities to indemnify and hold harmless,
severally, not jointly, in the same manner and to the same extent as set forth
in Section 8.1, the Company, its directors and officers and each person, if any,
who controls (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) the Company with respect to any statement or alleged
statement in or omission or alleged omission from such registration statement,
any preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, if such statement or alleged
statement or omission or alleged omission
13
<PAGE>
was made in reliance upon and in conformity with written information furnished
to the Company by such seller expressly for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement. Such indemnity shall remain in full force
and effect, regardless of any investigation made by or on behalf of the Company
or any such director, officer or controlling Person and shall survive the
transfer of such Registrable Securities by such seller. The indemnity agreement
contained in this Section 8.2 shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability, action or proceeding if such settlement
is effected without the consent of such seller (which consent shall not be
unreasonably withheld). The Company and the holders of Registrable Securities
hereby acknowledge and agree that for all purposes of this Agreement the only
information furnished or to be furnished to the Company for use in any such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement are statements specifically relating to (a)
-
transactions between such holder and its Affiliates, on the one hand, and the
Company, on the other hand, (b) the beneficial ownership of shares of Common
-
Stock by such holder and its Affiliates and (c) the name and address of such
-
holder. The indemnity provided by each seller of Registrable Securities under
this Section 8.2 shall be limited in amount to the net amount of proceeds
actually received by such seller from the sale of Registrable Securities
pursuant to such registration statement.
8.3 Notices of Claims, etc. Promptly after receipt by an indemnified
----------------------
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Section 8, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action or proceeding, provided that the failure of any indemnified party to
--------
give notice as provided herein shall not relieve the indemnifying party of its
obligations under the preceding paragraphs of this Section 8, except to the
extent that the indemnifying party is materially prejudiced by such failure to
give notice. In case any such action is brought against an indemnified party,
the indemnifying party will be entitled to participate therein and to assume the
defense thereof, jointly with any other indemnifying party similarly notified,
to the extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party for any legal or
other expenses subsequently incurred by the latter in connection with the
defense thereof except for the reasonable fees and expenses of any counsel
retained by such indemnified party to monitor such action or proceeding.
Notwithstanding the foregoing, if such indemnified party and the indemnifying
party reasonably determine, based upon advice of their respective independent
counsel, that a conflict of interest may exist between the indemnified party and
the indemnifying party with respect to such action and that it is advisable for
such
14
<PAGE>
indemnified party to be represented by separate counsel, such indemnified party
may retain other counsel, reasonably satisfactory to the indemnifying party, to
represent such indemnified party, and the indemnifying party shall pay all
reasonable fees and expenses of such counsel. No indemnifying party, in the
defense of any such claim or litigation, shall, except with the consent of such
indemnified party, which consent shall not be unreasonably withheld, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation.
8.4 Other Indemnification. Indemnification similar to that specified
---------------------
in the preceding paragraphs of this Section 8 (with appropriate modifications)
shall be given by the Company and each seller of Registrable Securities with
respect to any required registration (other than under the Securities Act) or
other qualification of such Registrable Securities under any federal or state
law or regulation of any governmental authority.
8.5 Indemnification Payments. Any indemnification required to be
------------------------
made by an indemnifying party pursuant to this Section 8 shall be made by
periodic payments to the indemnified party during the course of the action or
proceeding, as and when bills are received by such indemnifying party with
respect to an indemnifiable loss, claim, damage, liability or expense incurred
by such indemnified party.
8.6 Other Remedies. If for any reason the foregoing indemnity is
--------------
unavailable, or is insufficient to hold harmless an indemnified party, other
than by reason of the exceptions provided therein, then the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of such losses, claims, damages, liabilities, actions, proceedings or
expenses in such proportion as is appropriate to reflect the relative benefits
to and faults of the indemnifying party on the one hand and the indemnified
party on the other in connection with the offering of Registrable Securities
(taking into account the portion of the proceeds of the offering realized by
each such party) and the statements or omissions or alleged statements or
omissions which resulted in such loss, claim, damage, liability, action,
proceeding or expense, as well as any other relevant equitable considerations.
The relative fault of the indemnifying party and of the indemnified party shall
be determined by reference to, among other things, whether the untrue statement
of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statements or omissions. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. No party shall be
15
<PAGE>
liable for contribution under this Section 8.6 except to the extent and under
such circumstances as such party would have been liable to indemnify under this
Section 8 if such indemnification were enforceable under applicable law.
9. Definitions. For purposes of this Agreement, the following terms
-----------
shall have the following respective meanings:
"Affiliate": A Person that directly, or indirectly through one or
---------
more intermediaries, controls, or is controlled by, or is under common control
with, the Person specified.
"Board": The Board of Directors of the Company.
-----
"Commission": The Securities and Exchange Commission.
----------
"Common Stock": The Common Stock of the Company, par value $.01 per
------------
share.
"Exchange Act": The Securities Exchange Act of 1934, as amended, or
------------
any successor federal statute, and the rules and regulations thereunder which
shall be in effect at the time.
"Majority Stockholder": iXL, regardless of the number or percentage of
--------------------
Registrable Securities held by iXL.
"Management Stockholders": Those individual employees of the Company
-----------------------
who become parties to this Agreement pursuant to Section 10.3.
"NASD": National Association of Securities Dealers, Inc.
----
"NASDAQ": The Nasdaq National Market.
------
"Outside Investors": As defined in the Stockholders' Agreement.
-----------------
"Person": An individual, corporation, partnership, joint venture,
------
association, limited liability company, trust or other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
16
<PAGE>
"Preferred Stock": The Company's Series A Convertible Preferred
---------------
Stock, par value $.01 per share, and the Company's Series B Convertible
Preferred Stock, par value $.01 per share.
"Qualified Public Offering": As defined in the Stockholders'
-------------------------
Agreement.
"Registrable Securities": The shares of Common Stock (or any
----------------------
successor class of common stock) beneficially owned (within the meaning of
Section 13d-3 of the Exchange Act) by the Majority Stockholder, the Outside
Investors and the Management Stockholders or any other Person made a party
hereto pursuant to Section 10.2 or 10.3 (it being agreed that, with respect to
the Outside Investors, the Preferred Stock convertible into Common Stock will be
deemed Registrable Securities for purposes of exercising rights hereunder,
provided that Section 1 hereof shall not require the registration of the offer
or sale of any such Preferred Stock as distinguished from the Common Stock into
which the Preferred Stock is convertible. With respect to the Management
Stockholders, "Registrable Securities" shall include only those shares of Common
Stock actually held by such Management Stockholders, and shall not include
unexercised options). As to any particular Registrable Securities, such
securities shall cease to be Registrable Securities when (i) a registration
-
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement, (ii) they shall have been
--
sold to the public pursuant to Rule 144 under the Securities Act, (iii) they
---
shall have been otherwise transferred and subsequent disposition of them shall
not require registration or qualification of them under the Securities Act of or
any similar state law then in force or (iv) they shall have ceased to be
--
outstanding.
"Registration Expenses": All expenses incident to the Company's
---------------------
performance of or compliance with Section 1 and Section 2, including, without
limitation, (i) registration, filing and NASD fees, (ii) fees and expenses of
- --
complying with securities or blue sky laws, (iii) fees and expenses associated
---
with listing securities on an exchange or NASDAQ, (iv) word processing,
--
duplicating and printing expenses, (v) messenger and delivery expenses, (vi)
- --
fees and disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audits or "cold comfort"
letters, (vii) reasonable fees and disbursements of any one counsel retained by
---
the sellers of Registrable Securities, which counsel shall be selected pursuant
to Section 3(c), and (viii) any fees and disbursements of underwriters
----
customarily paid by issuers or sellers of securities, but excluding underwriting
discounts and commissions and transfer taxes, if any.
17
<PAGE>
"Securities Act": The Securities Act of 1933, as amended, or any
--------------
successor federal statute, and the rules and regulations thereunder which shall
be in effect at the time.
"Stock Purchase Agreement" means the Stock Purchase Agreement, dated
------------------------
as of April __, 1999, between the Company and GE Capital Equity Investments,
Inc.
"Stockholders' Agreement": The Amended and Restated Stockholders'
-----------------------
Agreement, dated as of the date hereof, as the same shall be amended from time
to time, among the Company, iXL, GECC and the other Persons named therein.
10. Miscellaneous.
-------------
10.1 Rule 144 etc. If the Company shall have filed a registration
------------
statement pursuant to the requirements of Section 12 of the Exchange Act or a
registration statement pursuant to the requirements of the Securities Act
relating to any class of equity securities, the Company will file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the Commission thereunder, and will take such
further action as any holder of Registrable Securities may reasonably request,
all to the extent required from time to time to enable such holder to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities Act,
-
as such rule may be amended from time to time, or (b) any successor rule or
-
regulation adopted hereafter by the commission. Upon the request of any holder
of Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such requirements.
10.2 Successors, Assigns and Transferees. This Agreement shall be
-----------------------------------
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns, subject to the transfer
restrictions set forth in the Stockholders' Agreement. In addition, and provided
that an express assignment shall have been made, and a copy of which shall have
been delivered to the Company, the provisions of this Agreement which are for
the benefit of a holder of Registrable Securities shall be for the benefit of
and enforceable by any subsequent holder of any Registrable Securities (which
subsequent holder shall be deemed to be an Outside Investor hereunder),
provided that each such subsequent holder became a holder of Registrable
Securities in accordance with the Stockholders' Agreement. Notwithstanding
anything herein to the contrary, the assignors of Registrable Securities shall
continue to exercise all rights hereunder on behalf of any such transferees or
assignees and the Company shall be entitled to deal exclusively with such
assignors and rely on the consent, waiver or any other action
18
<PAGE>
by the assignors as the consent, waiver or other action, as the case may be, of
any such transferees or assignees.
10.3 Other Stockholders. In the event that any Person shall become a
------------------
party to the Stockholders' Agreement after the date hereof pursuant to Sections
13.3 and 13.4 thereof or with respect to any transferee of an Outside
Investor, then the Company (a) shall unilaterally amend this Agreement to
-
include such Person as a party hereto, as an Outside Investor or management
Stockholder hereunder, as appropriate and (b) in the event such Person is an
-
Outside Investor, the Company may unilaterally amend this Agreement to provide
such Person with additional demand rights under Section 1.2.
10.4 Stock Splits, etc. Each holder of Registrable Securities agrees
-----------------
that it will vote to effect a stock split or combination with respect to any
Registrable Securities in connection with any registration of such Registrable
Securities hereunder, or otherwise, if the managing underwriter shall advise the
Company in writing (or, in connection with an offering that is not underwritten,
if an investment banker shall advise the Company in writing) that in its opinion
such a stock split or combination would facilitate or increase the likelihood of
success of the offering.
10.5 Amendment and Modification. This Agreement may be amended,
--------------------------
modified or supplemented by the Company with the written consent of the Majority
Stockholder and a majority (by number of shares) of any other holder of
Registrable Securities (assuming conversion of Preferred Stock into Registrable
Securities) whose interests would be adversely affected by such amendment.
Notwithstanding the foregoing, this Agreement may be amended unilaterally by the
Company as provided in Section 10.3.
10.6 Governing Law. This Agreement and the rights and obligations of
-------------
the parties hereunder and the Persons subject hereto shall be governed by, and
construed and interpreted in accordance with, the law of the State of Delaware,
without giving effect to the choice of law principles thereof.
10.7 Invalidity of Provision. The invalidity or unenforceability of
-----------------------
any provision of this Agreement in any jurisdiction shall not affect the
validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of this Agreement, including that
provision, in any other jurisdiction.
10.8 Notices. All notices, requests, demands, letters, waivers and
-------
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a) delivered
-
personally, (b) mailed, certified or registered mail with postage prepaid, (c)
- -
sent by next-day or overnight mail or delivery or (d) sent by fax as follows:
-
19
<PAGE>
(i) If to the Company, to it at:
Consumer Financial Network, Inc.
1465 Northside Drive
Atlanta, Georgia 30318
Attention: Sandra Cuttler, Esq.
(ii) If to any other holder of Registrable Securities, to the address of
such holder as set forth in the books and records of the Company or to such
other person or address as any party shall specify by notice in writing to the
Company. All such notices, requests, demands, letters, waivers and other
communications shall be deemed to have been received (w) if by personal delivery
-
on the day after such delivery, (x) if by certified or registered mail, on the
-
fifth business day after the mailing thereof, (y) if by next-day or overnight
-
mail or delivery, on the day delivered or (z) if by fax, on the next day
-
following the day on which such fax was sent, provided that a copy is also sent
by certified or registered mail.
10.9 Headings; Execution in Counterparts. The headings and captions
-----------------------------------
contained herein are for convenience and shall not control or affect the meaning
or construction of any provision hereof. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and
which together shall constitute one and the same instrument.
10.10 Injunctive Relief. Each of the parties recognizes and agrees
-----------------
that money damages may be insufficient and, therefore, in the event of a breach
of any provision of this Agreement the aggrieved party may elect to institute
and prosecute proceedings in any court of competent jurisdiction to enforce
specific performance or to enjoin the continuing breach of this Agreement. Such
remedies shall, however, be cumulative and not exclusive, and shall be in
addition to any other remedy which such party may have.
10.11 Entire Agreement. This Agreement, together with the Stockholders
---------------
Agreement, is intended by the parties hereto as a final expression of their
agreement and intended to be a complete and exclusive statement of their
agreement and understanding in respect of the subject matter contained herein
and therein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
10.12 Term. This Agreement shall be effective as of the date hereof
----
and shall continue in effect thereafter until the earlier of (a) its termination
-
by the consent of
20
<PAGE>
the parties hereto or their respective successors in interest and (b) the date
-
on which no Registrable Securities (and no securities convertible into or
exchangeable for Registrable Securities) remain outstanding.
[The remainder of this page left intentionally blank]
21
<PAGE>
IN WITNESS WHEREOF, this Registration Rights Agreement has been signed
by each of the parties hereto, effective as of the date first written above.
CONSUMER FINANCIAL NETWORK, INC.
By: ______________________________
Name:
Title:
iXL ENTERPRISES, INC.
By: ______________________________
Name:
Title:
General Electric Capital Corporation
By: ______________________________
Name:
Title:
GE CAPITAL EQUITY INVESTMENTS, INC.
By: ______________________________
Name:
Title:
GENERAL ELECTRIC PENSION TRUST
By: General Electric Investment Corporation,
its investment manager
By: ______________________________
Name:
Title:
<PAGE>
Exhibit A
Management Stockholders
-----------------------
23
<PAGE>
MASTER SERVICE AGREEMENT
------------------------
This iXL Master Service Agreement (the "Agreement") is entered into this ___ day
of April, 1999 (the "Effective Date"), by and between iXL-NEW YORK, INC., a
Delaware corporation with a principal place of business at 79 Fifth Avenue, 14th
Floor, New York, New York 10003 ("iXL") and the CLIENT identified below
("Client"):
GENERAL ELECTRIC CAPITAL CORPORATION
260 Long Ridge Road
Stamford, Connecticut 06927
________________________________________________________________________________
RECITALS
--------
A. iXL is a full service interactive services provider offering various
services and products including but not limited to strategic consulting (in
the areas of, inter alia, electronic commerce and Internet business model
design, development, implementation and marketing), Web design, Web
development, multimedia development, custom software development, laptop-
based presentation products, Web site management applications, Web site
hosting, Web site marketing, online learning and training, and information
systems design and development (collectively, the "iXL Services");
B. Client desires to engage iXL to provide Client with various iXL Services on
the terms provided herein, with iXL's agreement to provide such Services
being made in part in reliance on Client's commitment concerning the
Guaranteed Payment described in Section 5 below.
NOW THEREFORE, in consideration of the mutual promises, covenants and agreements
set forth below and other good and valuable consideration, the sufficiency of
which is hereby admitted, the parties agree as follows:
1. The Agreement and Statement(s) of Work.
--------------------------------------
1.1. Client, on behalf of itself, General Electric Company and any
consolidated and nonconsolidated Affiliates thereto (collectively
"Client") hereby engages iXL to provide the iXL Services as described
in a statement or statements of work to be mutually agreed upon by
the parties ("Statement of Work"). "Affiliates" are defined in this
Agreement as entities under common Control with General Electric
Capital Corporation, with "Control" defined as power to direct
management of an entity, whether through ownership of voting
securities, partnership interest, equity, or by contract. The parties
agree that a Statement of Work shall include, among other things, a
description of the iXL Services and deliverables, performance
standards for such iXL Services, the responsibilities of the parties,
a timetable for completion of such iXL Services and deliverables, all
applicable licenses and the corresponding fees, and a breakdown of
costs. iXL hereby accepts such engagement, subject to the terms and
conditions of this Agreement, the Statement of Work, and any terms
and conditions attached to the Statement of Work.
1.2. The parties have previously entered into certain letters of intent
for iXL Services. That portion of the work performed on or after
April 1, 1999 under such letters of intent shall hereby be deemed to
have been performed pursuant to this Agreement, and shall be
transferred into Statements of Work under this Agreement. The parties
shall work diligently towards the completion of additional Statements
of Work without any unreasonable delay.
1.3. If there is any difference between the terms and conditions attached
to any Statement of Work and any other portion of this Agreement, the
terms attached to the Statement of Work shall control, with the
exception of Section 16.10 (which confirms that no joint venture,
partnership or other relationship has been created in connection with
this Agreement). In the event of a conflict between Section 16.10 of
this Agreement and any language in a Statement of Work, Section 16.10
of this Agreement shall control.
1.4. Unless otherwise agreed to in the applicable Statement of Work:
All work product of iXL either (i) existing as of the effective date
of this Agreement, or (ii) not created pursuant to this Agreement (or
any Statements of Work thereunder), including but not limited to
computer code, ideas, results, data, inventions, improvements,
developments, patents, copyrights, trade secrets, or other
proprietary rights (collectively, the "iXL Work Product") is and
remains the exclusive property of iXL, even if used by iXL in its
performance of this Agreement or any Statement of Work. Subject to
Client's payment of all fees under the applicable Statement of Work
(including license fees, if any), iXL shall grant to Client a non-
exclusive perpetual license to use the iXL Work Product for its
intended purpose under the Statement of Work.
All derivative works in and to the iXL Work Product ("iXL Derivative
Works") created by iXL pursuant to a Statement of Work hereunder
shall be the exclusive property of iXL. Subject to Client's payment
of all fees under the applicable Statement of Work (including license
fees, if any), iXL shall grant to Client a non-exclusive perpetual
license to use the iXL Derivative Works.
All work product which is created under a Statement of Work and which
does not constitute either (i) iXL Work Product, or (ii) an iXL
Derivative Work, including but not limited to computer code, ideas,
results, data, inventions, improvements, developments, patents,
copyrights, trade secrets, or other proprietary rights ("Client Work
Product") shall be assigned by iXL to Client, subject to Client's
payment of all fees under the applicable Statement of Work (including
license fees, if any). Client shall exclusively own all proprietary
rights in the Client Work Product and iXL shall have no ownership
rights in Client Work Product.
<PAGE>
Client shall grant iXL a perpetual, worldwide, nonexclusive license
to copy, distribute, transmit, display, perform, create derivative
works, and otherwise use the Client Work Product, excluding any
Client Materials (as defined in the applicable Statement of Work), in
object or source code form, in whole or in part.
2. Change Orders; Administration. Any modifications to the specifications in a
-----------------------------
Statement of Work shall require execution of a written change order by both
parties to this Agreement (a "Change Order") which shall substantially
conform with the draft form attached as Exhibit A to this Agreement. Each
Change Order complying with this section shall be deemed to be an amendment
to the applicable Statement of Work and will become part of this Agreement.
Client at its reasonable discretion reserves the right to remove a specific
consultant assigned to a Statement of Work if said consultant is not deemed
to be meeting performance expectations. In such cases, iXL agrees that a
replacement will be provided to Client within thirty (30) days.
3. Method of Performing Services and Monthly Allocation of iXL Resources.
---------------------------------------------------------------------
3.1 iXL shall determine the method, details, and means of performing the
iXL Services hereunder, subject to the standards set forth in the
Statement of Work and the approval of Client, which approval shall not
be unreasonably withheld. iXL, upon prior written approval of Client
(not to be unreasonably withheld), may engage subcontractors, including
but not limited to, any iXL subsidiary, parent or related entity or any
employee thereof, to perform any of the services provided hereunder.
3.2 During the Term (defined below) and thereafter, iXL shall retain the
right to perform any and all services for other clients, provided,
however that Client shall be treated as a priority client of iXL
whereby any iXL Services being performed for Client under any Statement
of Work shall receive priority staffing and allocation of resources as
compared to other iXL clients.
3.3 Based upon currently available information derived from the Client and
iXL's experience in the industry, iXL has established Estimated Monthly
Fees, attached as Exhibit B to this Agreement, pertaining to the
Services to be rendered hereunder. iXL shall allocate resources on a
monthly basis up to and including the aggregate amounts specified in
the Estimated Monthly Fees, to the extent iXL determines such
allocation is appropriate under the Statement(s) of Work. In the event
that the Statement(s) of Work require allocations of resources in
excess of the amounts set forth in the Estimated Monthly Fees ("Excess
Resources"), iXL shall allocate Excess Resources with respect to the
iXL Services covered by the Statement of Work within fifteen (15)
business days of the date in which iXL determines that Excess Resources
are required ("Excess Resource Allocation Period"). If iXL and Client
mutually agree that any Statement of Work requires skill and/or
experience not available at iXL, iXL shall commit to subcontract such
work to entities mutually agreeable to the parties. The Estimated
Monthly Fees are estimates only, and the payment amounts set forth in
Section 5 and the applicable Statement(s) of Work shall govern payment
to iXL hereunder.
4. Term and Termination.
--------------------
4.1. Term. This Agreement shall be effective when signed by both parties
----
and thereafter shall remain in effect for five (5) years unless
terminated pursuant to the provisions of this Section 4.
4.2 Termination of the Agreement.
-----------------------------
4.2.1 Termination for Nonpayment. In the event that Client defaults
--------------------------
in the payment of any undisputed and material amount due to iXL
under this Agreement for any reason except for termination for
cause pursuant to 4.2.3, and does not cure such default within
sixty (60) days of the date of the receipt of the invoice, then
iXL may, by issuing written notice thereof to Client, terminate
this Agreement as of a date specified in such notice of
termination, but in no event less than ten (10) business days
from the date of such notice, provided Client does not cure
such default within ten (10) days of receipt of such notice. A
"material" amount, only for purposes of this Section 4.2.1, is
two hundred fifty thousand dollars ($250,000) for a single
invoice.
4.2.2 Termination by Client. Client may terminate for convenience
---------------------
this Agreement at any time during the Term or any Renewal Term
upon sixty (60) days' prior written notice to iXL, if all
undisputed amounts due under Section 5 hereof are tendered by
Client to iXL prior to the termination date.
4.2.3 Termination for Cause. Either party may terminate this
---------------------
Agreement for "cause" (as defined below) upon written notice to
the other party; provided that "cause" shall mean (i) except as
provided in Sections 4.2.1 and 4.2.6, the other party violates,
or fails to perform or observe, any material term or condition
of this Agreement, or repeatedly violates, or fails to perform
or observe, any material term or condition of the Statements of
Work (a "material breach"), and does not cure such material
breach within sixty (60) days of receipt of such notice; or
(ii) the other party hereto becomes or is declared insolvent or
bankrupt, is the subject of any proceedings relating to its
liquidation, insolvency or for the appointment of a receiver or
similar officer for it, makes an assignment for the benefit of
all or substantially all of its creditors, or enters into an
agreement for the composition, extension, or readjustment of
all or substantially all of its obligations.
4.2.4 Effect of Termination. Upon termination of this Agreement for
---------------------
any reason except for Termination for Cause by Client pursuant
to Section 4.2.3 or Termination for failure to allocate Excess
Resources pursuant to Section 4.2.6, Client shall be obligated
to pay iXL for (i) all services rendered pursuant to any
outstanding Statements of Work through the effective date of
such termination, and (ii) the amount specified as Liquidated
---
Damages in Section 5 below, and (iii)
---
2
<PAGE>
iXL shall deliver to Client all work product and deliverables
then in progress. Upon Termination for Cause by Client as set
forth in Section 4.2.3 or Termination for failure to allocate
Excess Resources pursuant to Section 4.2.6, Client shall only
be obligated to pay iXL for all services rendered pursuant to
any outstanding Statements of Work under this Agreement through
the effective date of such termination, and iXL shall deliver
to Client all work product and deliverables then in progress.
4.2.5 Survival. Termination of this Agreement by either party
---------
pursuant to the provisions of this Section 4 shall terminate
each party's obligations under this Agreement except for the
provisions of Section 5 (Guaranteed Payment and Liquidated
Damages), Section 6 (Payments to iXL), Section 7
(Confidentiality), Section 9 (Client Representations and
Warranties), Section 10 (iXL Warranties), Section 11 (Exclusion
of Warranties), Section 12 (Limits of Liability), Section 13
(Indemnification), Section 14 (Non-Solicitation), Section 16.4
(Governing Law), and Section 16.10 (Non-Agency), all of which
shall survive termination of this Agreement.
4.2.6 Termination for failure to Allocate Excess Resources. In the
----------------------------------------------------
event that Client intends to terminate the Agreement for iXL's
failure to allocate Excess Resources, Client shall provide iXL
with ninety (90) days written notice of such intention in order
to provide iXL with the opportunity to cure such failure,
which ninety (90) day period may run concurrently with the
Excess Resources Allocation Period.
4.2.7 Termination of an Individual Statement of Work. In the event
-----------------------------------------------
that either eventpursuant to the party hereto materially
defaults in the performance of any of its duties or obligations
under a Statement of Work (except for a default in payment to
iXL) and does not substantially cure such default, or commence
a cure with an agreed-upon schedule, within sixty (60) days
after being given written notice specifying the default, then
the non-defaulting party may, by giving written notice thereof
to the defaulting party, terminate the Statement of Work as of
a date specified in such notice of termination. Upon
termination of a Statement of Work, Client shall be obligated
to pay iXL for all services rendered pursuant to the Statement
of Work through the effective date of such termination. iXL
shall deliver the deliverables for the applicable Statement(s)
of Work, including any work in progress, in exchange for
payment due therefor by Client. Termination of a Statement of
Work shall have no effect upon the Agreement or any other
Statements of Work that may be in effect under this Agreement.
4.3 Renewal. Unless terminated by the parties as set forth herein, the
-------
Agreement shall be automatically renewed five (5) years from the date
of execution, for an additional term of five (5) years ("Renewal
Term").
5. Guaranteed Payment and Liquidated Damages. For a period of one (1) year
-----------------------------------------
from the date of execution of this Agreement, Client shall pay iXL on a
monthly basis an amount equal to either (i) the actual time, materials, and
------
customary and reasonable expenses incurred by either iXL, or subcontractors
mutually agreed upon by the parties, under the Statement(s) of Work
(collectively "Actual Fees") minus any Credit (defined below) owed from the
-----
previous month(s); or (ii)
--
the monthly payment amounts specified in Exhibit B, attached hereto (the
"Estimated Monthly Fees"); whichever amount as between the preceding items
(i) and (ii) is greater. In any month where the Actual Fees are less than
Estimated Monthly Fees, the amount constituting the difference between the
Actual Fees and the Estimated Monthly Fees is defined as the "Credit". At
the end of the first year of this Agreement, if Client's cumulative Actual
Fees for the first year total less than twenty million dollars
($20,000,000), Client will receive a credit on invoices for Work in
Progress for the Carryover Period. "Work in Progress" means (i) work which
has begun by the end of the first year and (ii) work which has been
contracted for in a Statement of Work by the end of the first year. The
"Carryover Period" is the ninety (90) days immediately following the end of
the first year. The amount of the credit will equal the difference between
twenty million dollars ($20,000,000) and the cumulative amount of the
Actual Fees for the first year. Any portion of the credit unused at the end
of the Carryover Period will expire.
In the event this Agreement is terminated or otherwise cancelled for any
reason within one (1) year of the date of execution of this Agreement,
Client shall pay iXL as Liquidated Damages hereunder, but not as a penalty,
twenty million dollars ($20,000,000), less the aggregate amount of Actual
Fees paid by Client to iXL under the Agreement as of the date of
termination and/or cancellation.
The parties agree that (x) the injury caused by any breach by Client of its
obligation concerning the Guaranteed Payment hereunder would be difficult
or impossible to estimate; (y) they intend to provide for damages for such
breach rather than a penalty pursuant to this Section 5; and (z) the sum
stipulated in this Section 5 for such Liquidated Damages is a reasonable
pre-estimate of the probable loss to iXL. At any time, if iXL's Actual Fees
in the aggregate exceed twenty million dollars ($20,000,000), then Client
shall not pay the Liquidated Damages set forth in this Section 5, but
instead shall pay iXL such Actual Fees in the amount and manner set forth
in the applicable Statement(s) of Work. At the end of the Carryover Period,
Client shall forfeit any remaining credit and iXL shall have no obligation
for return of all or part of any remaining credit. This Section 5 and the
Liquidated Damages set forth in this Section 5 shall not apply to services
rendered by iXL to Client after the one (1) year period immediately
following the date of execution of this Agreement.
6. Payments to iXL.
---------------
6.1 Charges. For the iXL Services provided hereunder, Client shall pay
--------
to iXL fees in accordance with a ten percent (10%) discount on iXL's standard
hourly rates in effect at the time of performance of such services, in the
amount and manner set forth herein iXL's current hourly rates (as of the
effective date of execution of this Agreement), by category, for the New York
offices of iXL are set forth in Exhibit C. The rates set forth in Exhibit C may
be subject to change in the ordinary course of business on an annual basis, on
July 1 of each calendar year. All fees and Expenses (as defined in Section 6.2
below) incurred by iXL in the performance of the services will be billed to
Client on a monthly basis.
3
<PAGE>
6.2 Expenses. Client will pay or reimburse iXL for any out-of-pocket
--------
expenses, including, without limitation, travel and travel-related
expenses ("Expenses"), incurred by iXL at the request of or with the
approval of Client in connection with the performance of this
Agreement. Reasonable and customary expenses incurred by iXL,
including expenses incurred for travel, including local
transportation, lodging, meals, telephone expenses associated with
travel, and shipping and duplicating, will be billed to Client at
actual cost. Travel expenses incurred by iXL personnel on behalf of
Client shall be consistent with the iXL sole and exclusive travel
policy. Any expenses over $250.00 per month per Statement of Work
shall be authorized in advance by prior written consent of Client.
6.3 Taxes. Client will pay all sales, use, transfer, privilege, excise or
-----
other taxes and all duties, whether international, national, state or
local, however designated, which are levied or imposed by reason of
the transactions contemplated hereby; excluding, however, income taxes
on profits which may be levied against iXL.
6.4 Monthly Report. iXL shall provide to Client, no later than the 10th
--------------
day of each month, a master monthly report summarizing all fees and
expenses billed to Client by iXL in the previous month, including but
not limited to, a segregation of such fees and expenses by Client
business unit or entity, Statement of Work and project. For each
monthly report covering the period of one (1) year from the date of
execution of this Agreement, iXL shall include a cumulative summary of
all fees and expenses qualifying under Section 5 of this Agreement.
6.5 Time of Payment. Any sum due iXL hereunder will be due and payable
---------------
within forty-five (45) days after the later of the due date of an
invoice or the date of receipt on an invoice therefor from iXL. If
Client fails to pay any amount due within sixty (60) days from the
date of the receipt of the invoice, late charges of the lesser of 1
1/2% per month (annual rate of eighteen percent (18%)) or the maximum
allowable under applicable law shall also become payable by Client to
iXL. If Client fails to pay, when due, any amount payable hereunder or
fails to fully perform its obligations hereunder, Client agrees to
pay, in addition to any amount past due, plus interest accrued
thereon, all reasonable expenses incurred by iXL in enforcing this
Agreement, including, but not limited to, all expenses of any legal
proceeding related thereto and all reasonable attorneys' fees incurred
in connection therewith.
6.6 Dispute and Audit Rights. At any reasonable time and upon five (5)
------------------------
days of prior written notice to iXL, Client may cause an audit to be
made of iXL's records relating to iXL's fees and expenses. During the
pendency of any audit, any fees and expenses which are the subject of
the audit shall be suspended pending the completion of the audit.
Except as provided below, the cost of such audit shall be paid by
Client. Within five (5) business days of the completion of any audit,
Client shall pay to iXL any fees and expenses for the audited period
with no penalty for later payment. If it shall be determined as a
result of such audit that iXL has invoiced Client in excess of three
and one-half percent (3.5%) of the fees and expenses due pursuant to
the audit, iXL shall pay to Client the cost of the audit.
7. Confidentiality.
----------------
7.1 During the course of performance of this Agreement, each party may
disclose to the other certain confidential information as defined in
Section 7.2 below. Each party shall hold the other party's
Confidential Information in confidence and shall use its best efforts
to protect it. Each party shall not disclose the other party's
Confidential Information to any third party, provided, however that
each party may disclose Confidential Information to third parties as
needed during the course of business, where the third party has agreed
to provisions similar to this Section 7. iXL and Client shall use each
others' Confidential Information for the sole purpose of performing
under this Agreement. At the conclusion of this Agreement, each party
shall either return the other's Confidential Information in its
possession (including all copies) or shall, at the disclosing party's
direction, destroy the other party's Confidential Information
(including all copies) and certify its destruction to the disclosing
party.
7.2 "Confidential Information" means any information provided by either
party or prepared by either party (either oral, written, or digital)
upon review of such information, technical data, or know-how provided
to either party by the other (including any director, officer,
employee, agent, or representative of the other) or obtained by either
party from the other (including any director, officer, employee,
agent, or representative of the other) including but not limited to,
that which relates to research, product plans, products, services,
Clients, markets, software, developments, inventions, processes,
designs, drawings, engineering, hardware configuration information,
marketing or finances of the disclosing party. The existence of a
copyright notice on any information or material does not indicate that
the information or material is in the public domain.
7.3 The term "Confidential Information" shall not include any information
which: (a) is in the public domain at the time of disclosure or enters
the public domain following disclosure through no fault of the
receiving party, (b) the receiving party can demonstrate as already in
its possession prior to disclosure hereunder or is subsequently
disclosed to the receiving party with no obligation of confidentiality
by a third party having the right to disclose it or (c) is
independently developed by the receiving party without reference to
the disclosing party's Confidential Information.
7.4 Either party may disclose the other party's Confidential Information
to its auditors or regulators, or upon the order of any competent
court or government agency; provided that prior to disclosure the
receiving party shall inform the other party of such disclosure.
7.5 Each party agrees that its obligations provided in this Section 7 are
necessary and reasonable in order to protect the disclosing party and
its business, and each party expressly agrees that monetary damages
would be inadequate to compensate the disclosing party for any breach
by the receiving party of its covenants and agreements set forth in
this Agreement. Accordingly, each party agrees and acknowledges that
any such violation or threatened violation will cause
4
<PAGE>
irreparable injury to the disclosing party and that, in addition to
any other remedies that may be available, in law, in equity or
otherwise, the disclosing party shall be entitled to obtain injunctive
relief against the threatened breach of this Agreement or the
continuation of any such breach by the receiving party, without the
necessity of proving actual damages.
8. Retention of Proprietary Notices. In no event shall either party alter,
--------------------------------
remove, obscure, erase or deface or hide from view, any copyright,
trademark or other proprietary rights notice of the other party contained
on or incorporated into any deliverable developed hereunder.
9. Client Representations and Warranties.
-------------------------------------
9.1 Client represents and warrants that Client has full corporate power
and authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby.
9.2 This Agreement has been duly and validly executed and delivered by
Client and constitutes the valid and binding agreement of Client,
enforceable against Client in accordance with its terms.
10. iXL Warranties.
--------------
10.1 iXL represents and warrants that it has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby.
10.2 This Agreement has been duly and validly executed and delivered by iXL
and constitutes the valid and binding Agreement of iXL, enforceable
against iXL in accordance with its terms.
10.3 iXL further represent and warrants that it and its subcontractors will
perform the services in material conformity to the specifications set
forth in a Statement of Work contemplated hereunder in a professional
and workmanlike manner.
10.4 iXL represents and warrants that the iXL Services and the iXL
computer code developed by iXL hereunder shall accurately process,
provide, and/or receive date data (including without limitation
calculating, comparing, and sequencing) within, from, into, and
between centuries (including without limitation the twentieth and
twenty-first centuries), including leap year calculations, and that
neither the performance nor the functionality of the iXL Services and
iXL computer code delivered hereunder will be affected by dates prior
to, on, after, or spanning January 1, 2000. Notwithstanding the
foregoing, in no event does iXL make any warranties or representations
hereunder regarding computer code, systems, hardware, and equipment
(collectively "Date Sensitive Materials") developed, produced,
licensed, specified, or sold by parties other than iXL. Furthermore,
iXL does not warrant or represent that iXL Services and iXL computer
code will avoid producing erroneous output or otherwise malfunctioning
(with respect to date data or otherwise) if iXL's Services or computer
code interacts or interfaces with Date Sensitive Materials of Client
or any third parties that do not accurately process, provide, and/or
receive date data.
10.5 In no event whatsoever shall iXL's warranties and representations
hereunder extend or apply to any deliverables, computer code, or
software modified by any party other than iXL and its subcontractors
acting under iXL's direction.
10.6 iXL represents and warrants that it will maintain the necessary
insurance coverage as mandated by law or as reasonably required in any
Statement of Work.
11. Exclusion of Warranties. APART FROM THE SPECIFIC WARRANTIES SET OUT HEREIN
-----------------------
OR IN A STATEMENT OF WORK ATTACHED HERETO, ALL SERVICES AND PRODUCTS
PROVIDED UNDER THIS AGREEMENT ARE PROVIDED ON AN "AS IS" BASIS. NEITHER iXL
NOR ANY OF ITS AFFILIATES, EMPLOYEES, OFFICERS, DIRECTORS, AGENTS OR
LICENSORS WARRANTS THAT THE SERVICES OR PRODUCTS PROVIDED PURSUANT TO THIS
AGREEMENT WILL BE UNINTERRUPTED OR ERROR FREE, NOR DO THEY WARRANT THAT
CERTAIN RESULTS MAY BE OBTAINED BY CLIENT IN CONNECTION WITH iXL'S
RENDERING OF SERVICES OR PROVISION OF PRODUCTS HEREUNDER. iXL AND ITS
AFFILIATES, EMPLOYEES, OFFICERS, DIRECTORS, AGENTS AND LICENSORS MAKE NO
WARRANTY, GUARANTEE OR REPRESENTATION EITHER EXPRESS OR IMPLIED REGARDING
THE MERCHANTABILITY, TITLE, OR FITNESS FOR A PARTICULAR PURPOSE OF ANY
SERVICES OR PRODUCTS PROVIDED UNDER THIS AGREEMENT. iXL DOES NOT MAKE ANY
WARRANTY OR GUARANTEE FOR ANY PRODUCTS OR SERVICES PROVIDED BY VENDORS
SUGGESTED BY iXL.
12. Limits of Liability.
-------------------
12.1 NOTWITHSTANDING ANY TERM OR PROVISION CONTAINED IN THIS AGREEMENT WITH
THE EXCEPTION OF SECTION 5 HEREOF, IN NO EVENT WHATSOEVER
(EXCEPT AS DESCRIBED IN SECTION 5 HEREOF) SHALL EITHER PARTY
BE LIABLE TO THE OTHER OR TO ANY OTHER PERSON, FIRM OR CORPORATION,
FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL, EXEMPLARY OR
PUNITIVE DAMAGES, OR OTHER SIMILAR TYPE OF DAMAGES, INCLUDING BUT NOT
LIMITED TO DAMAGES BASED UPON LOSS OF PROFITS AND/OR LOSS OF BUSINESS
ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT, THE
PERFORMANCE THEREOF, THE USE OF THE PRODUCTS PROMISED OR SERVICES
DELIVERED PURSUANT TO THIS AGREEMENT, AND/OR ANY PARTY'S ALLEGED
BREACH OF THIS AGREEMENT, WHETHER OR NOT EITHER PARTY IS INFORMED,
KNEW OR SHOULD HAVE KNOWN, OF THE POSSIBILITY OF SUCH DAMAGES IN
ADVANCE.
5
<PAGE>
12.2 UNDER NO CIRCUMSTANCES WHATSOEVER SHALL EITHER PARTY BE LIABLE TO THE
OTHER PARTY OR ANY OTHER PERSON, FIRM OR CORPORATION, FOR DAMAGES OF
ANY KIND ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT, THE
PERFORMANCE THEREOF, THE PRODUCTS OR SERVICES DELIVERED PURSUANT TO
THIS AGREEMENT, AND/OR ANY ALLEGED BREACH OF THIS AGREEMENT, IN ANY
AMOUNT OF MONEY WHICH SHALL EXCEED THE AMOUNT OF THE ACTUAL FEE PAID
BY CLIENT TO iXL WITH RESPECT TO THE STATEMENT OF WORK UNDER WHICH THE
CLAIM IS MADE; IF THE CLAIM IS MADE UNDER THIS AGREEMENT RATHER THAN
UNDER ANY PARTICULAR STATEMENT OF WORK, NEITHER PARTY SHALL BE LIABLE
TO THE OTHER IN ANY AMOUNT OF MONEY WHICH SHALL EXCEED THE AMOUNTS
ACTUALLY PAID TO iXL HEREUNDER AS OF THE DATE OF THE CLAIM.
12.3 THE LIMITATIONS ON LIABILITY SET FORTH IN THIS SECTION SHALL APPLY TO
ALL CAUSES OF ACTION, INCLUDING, BUT NOT LIMITED TO, BREACH OF
CONTRACT, BREACH OF WARRANTY, STRICT LIABILITY, MISREPRESENTATION AND
OTHER TORTS, AND LIABILITY BASED UPON THE PROVISIONS OF ANY PART OF
THIS AGREEMENT AND ANY FEDERAL, STATE AND/OR LOCAL LAW AND/OR
ORDINANCE. NOTWITHSTANDING THE FOREGOING, THE LIMITATIONS ON LIABILITY
SET FORTH IN THIS SECTION SHALL NOT APPLY TO ANY CAUSES OF ACTION
ARISING OR RESULTING IN ANY WAY FROM THE INFRINGEMENT OR VIOLATION OF
ANY THIRD PARTY INTELLECTUAL PROPERTY RIGHTS BY THE PARTIES, OR EITHER
PARTY'S GROSS NEGLIGIGENCE OR WILLFUL MISCONDUCT.
13. Indemnification. Each party (the "Indemnifying Party") will indemnify and
---------------
hold the other party and its affiliates, officers, directors, employees,
agents and representatives harmless from and against all damages, costs,
expenses, and liabilities arising as a direct result of a breach of this
Agreement by the Indemnifying Party, including without limitation,
reasonable attorneys fees and expenses.
14. Non-Solicitation. During the term of a Statement of Work and for 6 months
-----------------
after its termination, neither party to a Statement of Work ("hiring
party") will hire or enter into a contract with an employee or former
employee of the other party ("non-hiring party") with whom the hiring party
comes into contact in connection with such Statement of Work without first
obtaining the non-hiring party's written consent, except for employees who
have been terminated for over six months.
15. Notice. Any notice required or permitted to be given under this Agreement
------
shall be in writing and deemed given and effective upon delivery if sent by
personal delivery or by facsimile transmission or five (5) days after
posting if sent by certified United States mail, return receipt requested,
with postage pre-paid and addressed as follows:
If to iXL: iXL - NEW YORK, INC.
79 Fifth Avenue, 14th Floor
New York, New York 10003
Telephone: 212-414-4900
Facsimile: 212-414-0785
Attn: Ms. Lynda Rathbone
A copy to: iXL, INC.
1888 Emery Street, N.W.
Atlanta, Georgia 30318
Attn: T. William Alvey, III, Esq.
Telephone: 404-267-3800
Facsimile: 404-267-4099
If to Client: GENERAL ELECTRIC CAPITAL CORPORATION
260 Long Ridge Road
Stamford, Connecticut 06927
Telephone: 203 357 6577
Facsimile: 203 961 2088
Attn.:
A copy to: Each Client then party to any Statement of Work under this
Agreement at the location specified in each such Statement
of Work.
16. General.
-------
16.1 Force Majeure. Subject to this Section 16.1, neither party shall be
-------------
liable to the other for any delay or failure to perform any of the
services set forth in a Statement of Work or obligations set forth in
this Agreement due to causes beyond its reasonable control ("Force
Majeure Delay"). Performance times shall be considered extended for a
period of time equivalent to the time lost because of a Force Majeure
Delay, up to and including thirty (30) days. After such thirty day
time period, the terms of Section 4.2.3 of this Agreement shall apply
to any Force Majeure Delay.
6
<PAGE>
16.2 Residual Knowledge. Subject to Section 7, nothing herein shall be
------------------
construed to prevent or in any way limit iXL from using general
knowledge, skill, and expertise acquired in the performance of this
Agreement in any current or subsequent endeavors. Client shall have
no interest in such endeavors.
16.3 Assignment. This Agreement may not be assigned by either party to
----------
any other person(s), firm(s), corporation(s) or other entities
without the prior express written approval of the other party, which
approval shall not be unreasonably withheld; provided that either
party may assign all or any portion of this Agreement to an entity
under common control with the assigning party without approval but
with notice to the other party.
16.4 Governing Law. This Agreement shall be governed by and construed
-------------
solely and exclusively in accordance with the laws of the state of
New York, without reference to its conflicts of law principles. Any
and all disputes between the parties that cannot be settled by
mutual agreement shall be resolved solely and exclusively in the
local and federal courts located within the Southern District of New
York, and Client hereby consents to the jurisdiction of such courts
and irrevocably waives any objections thereto, including without
limitation, on the basis of improper venue or forum non conveniens.
16.5 Severability. If any of the provisions of this Agreement is or
------------
becomes illegal, unenforceable, or invalid (in whole or in part for
any reason), the remainder of this Agreement shall remain in full
force and effect without being impaired or invalidated in any way.
16.6 Headings. The titles and headings of the various sections and
--------
in this Agreement are intended solely for convenience of reference
and are notintended to explain, modify or place any construction or
limitation upon any of the provisions of this Agreement.
16.7 Entire Agreement. No representations or statements of any kind made
----------------
by either party that are not expressly stated herein or in any
written amendment hereto shall be binding on such party. The parties
agree this Agreement, its Exhibits, Attachments, and all Statements
of Work and Exhibits thereto, shall constitute the complete and
exclusive statement of the agreement between them, and supersede all
prior or contemporaneous proposals, oral or written, and all other
communications between them relating to the subject matter hereof.
16.8 No Third-Party Beneficiaries. Nothing in this Agreement is intended
----------------------------
to, or shall, create any third-party beneficiaries, whether intended
or incidental, and neither party shall make any representations to
the contrary.
16.9 No Implied Waiver. No term, provision or clause of this Agreement
-----------------
shall be deemed waived and no breach excused unless such waiver or
consent shall be in writing and executed by a duly authorized
representative of each party. Any consent by any party to, or waiver
of, a breach by the other, whether express or implied, shall not
constitute a consent to, waiver of, or excuse for any different or
subsequent breach.
16.10 Non-Agency. Nothing in this Agreement shall be construed to make
----------
the parties partners, joint venturers, representatives or agents of
each other, nor shall either party so represent to any third person.
The parties hereunder are acting in performance of this Agreement as
independent contractors engaged in the operation of their own
respective businesses. A party's employees, agents or
representatives are not employees or agents of the other party and
are not entitled to any of the other party's benefits. Neither party
shall be responsible for payment of the other party's workers'
compensation, disability benefits or unemployment insurance, nor
shall it be responsible for withholding or paying employment related
taxes for the other party or its employees.
16.11 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original and
all of which taken together shall constitute a single agreement.
IN WITNESS WHEREOF, this Agreement was executed by the parties as of the date
first written above.
IXL-NEW YORK, INC. GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ U. Bertram Ellis, Jr. By: /s/ Nigel D.T. Andrews
___________________________________ ___________________________________
Name: U. Bertram Ellis, Jr. Name: Nigel D.T. Andrews
_________________________________ __________________________________
Title: Chief Executive Officer Title: Executive Vice President
________________________________ _________________________________
7
<PAGE>
EXHIBIT A
---------
IXL MASTER SERVICE AGREEMENT STATEMENT OF WORK
----------------------------------------------
CHANGE ORDER
------------
Change Order No.____ to Statement of Work No._____
Client or iXL shall complete Question 1. iXL shall complete the remainder of
the Change Order, except for the approval/rejection portion, which shall be
completed by Client in its sole discretion. Each section may be as long or
short as the circumstances require. Additional pages may be attached as
necessary.
1. Describe changes, modifications, or additions to the services.
These modifications were requested by: ____ Client _____ iXL
______________________________________ __________________________
Signature of Client Project Manager Date
______________________________________ __________________________
Signature of iXL Project Manager Date
2. Modifications, clarifications or supplements by iXL or Client to
description of desired changes or additions requested in Section1
above, if any. State any modifications, clarifications, or supplements
to the deliverables, time table, and/or responsibilities of the
parties.
3. Necessity, availability and assignment of requisite iXL and/or Client
personnel and/or resources to make requested modification or
additions.
4. Impact on Costs, delivery schedule, and other requirements.
a. Changes in Costs:
b. Changes in delivery schedule:
c. Changes to any other requirements:
Change Order Is:
_____Approved and Accepted _____Rejected
____________________________________ __________________
Signature of Client Project Manager Date
____________________________________ __________________
Signature of iXL Project Manger Date
<PAGE>
EXHIBIT B
---------
ESTIMATED MONTHLY FEES
----------------------
<TABLE>
<S> <C>
--------------------------------------
April, 1999 $ 200,000
--------------------------------------
May $ 400,000
--------------------------------------
June $ 800,000
--------------------------------------
July $ 1,200,000
--------------------------------------
August $ 1,200,000
--------------------------------------
September $ 1,600,000
--------------------------------------
October $ 2,000,000
--------------------------------------
November $ 2,400,000
--------------------------------------
December $ 2,400,000
--------------------------------------
January, 2000 $ 2,600,000
--------------------------------------
February $ 2,600,000
--------------------------------------
March $ 2,600,000
--------------------------------------
TOTAL $20,000,000
--------------------------------------
</TABLE>
9
<PAGE>
EXHIBIT C
---------
IXL
---
PROJECT MANAGEMENT
MANAGE PROJECT MANAGEMENT EFFORTS INCLUDING ESTABLISHING THE
PROJECT AND TEAM GOALS, CREATING THE PROJECT BUDGET AND SCHEDULE,
AND MANAGING AND DISSEMINATING ALL INTERNAL AND EXTERNAL PROJECT
COMMUNICATION.
. Senior Project Manager $200/hr
. Project Manager $160/hr
. Associate Project Manager $100/hr
ENGINEERING
Manage technical services efforts, including technical needs
analysis, hardware architecture, software implementation design,
software development, software documentation and installation of
custom third-party software.
. Director of Engineering $240/hr
. Technical Lead $220/hr
. Systems Architect $220/hr
. Systems Engineer $200/hr
. Senior Software Engineer $200/hr
. Researcher $200/hr
. Production Manager--Schedule technical resources and manage
deadlines & technical project flow $180/hr
. Software Engineer $160/hr
STRATEGY CONSULTING
Identify and successfully implement interactive business design
opportunities. Perform market analysis, financial modeling,
relationship marketing and brand marketing, developing creative
solutions to improve business communications.
. Engagement Leader $300/hr
. Senior Consultant $250/hr
. Consultant $200/hr
. Analyst $150/hr
INFORMATION ARCHITECTURE
Analyze, define and organize information and interactivity for
optimal delivery to the end-user.
Work with Engineering and Creative Services to produce flow,
functional specification, and user interface design. Perform
focus group and usability testing.
. Lead Information Architect $240/hr
. Information Architect $180/hr
. Associate Information Architect $120/hr
CREATIVE SERVICES
Manage creative services efforts, including strategic branding,
marketing & graphic design.
Work with programmers and information architects on interface
design and technical integration, creating backgrounds,
interactive menus, icons, charts, graphics & illustrations.
. Creative Director $240/hr
. Art Director $200/hr
. Graphic Designer $120/hr
. Production Manager--Schedule creative resources and manage
deadlines & creative project flow. 120/hr$
. Site Author--Generate and implement Web pages, including
HTML , XML and JavaScript authoring, advanced scripting
(DHTML, CSS, VBScript), graphic processing and page
optimization.
Senior Site Author $160/hr
Associate Site Author $120/hr
Maintenance $120/hr
10
<PAGE>
Exhibit 10.57
- --------------------------------------------------------------------------------
WARRANT AGREEMENT
among
iXL Enterprises, Inc.
and
GE Capital Equity Investments, Inc.
Dated as of
April 7, 1999
- --------------------------------------------------------------------------------
<PAGE>
WARRANT AGREEMENT
-----------------
This WARRANT AGREEMENT is dated as of April 7, 1999 (the
"Agreement"), and entered into by and among iXL Enterprises, Inc., a Delaware
---------
corporation (the "Company"), and GE Capital Equity Investments, Inc. ("GECC,"
------- ----
and together with subsequent holders of the Warrants subject hereto, the
"Holders").
- --------
WHEREAS, in consideration of GECC entering into a Master Services
Agreement with the Company on the date hereof (the "Services Agreement"), the
------------------
Company is issuing to GECC warrants to purchase an aggregate of 1,000,000 shares
(subject to adjustment as provided herein) of the Company's Class A Common
Stock, par value $.01 per share (the "Common Stock"). The warrants referred to
------------
in this paragraph are referred to herein as the "Warrants"; and the shares of
--------
Common Stock issuable upon exercise of the Warrants are referred to herein as
the "Warrant Shares";
---------------
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
SECTION 1. Warrant Certificates. Simultaneously with the execution hereof,
the Company will issue and deliver to GECC a certificate or certificates shall
be substantially in the form set forth as Exhibit A attached hereto. Warrant
-------
Certificates shall be dated the date of issuance by the Company.
- ------------
SECTION 2. Execution of Warrant Certificates. Warrant Certificates shall
be signed on behalf of the Company by its Chairman of the Board or its Chief
Executive Officer, President or any Vice President. Each Warrant Certificate
shall also be signed on behalf of the Company by its Secretary or an Assistant
Secretary.
SECTION 3. Restrictions on Transfer; Registration of Transfers and
Exchanges. Prior to any proposed transfer of the Warrants or the Warrant Shares,
unless such transfer is made pursuant to an effective registration statement
under the Securities Act of 1933, as amended (the "Securities Act"),
--------------
the transferring Holder will deliver to the Company an opinion of counsel,
reasonably satisfactory in form and substance to the Company, to the effect that
the Warrants or Warrant Shares, as applicable, may be sold or otherwise
transferred without registration under the Securities Act. No Warrants may be
<PAGE>
transferred to any Holder unless the issuance of Warrant Shares to such Holder
upon the exercise of such Warrants would be exempt from registration under the
Securities Act. Upon original issuance thereof, and until such time as the same
shall have been registered under the Securities Act or sold pursuant to Rule 144
promulgated thereunder (or any similar rule or regulation) each Warrant
Certificate shall bear the legend included on the first page of Exhibit A,
unless in such opinion of counsel, such legend is no longer required by the Act.
Notwithstanding the foregoing, each Holder of Warrants and Warrant Shares agrees
that it will not transfer such securities for 180 days after any public offering
of Common Stock (or security convertible into Common Stock) by the Company
unless the managing underwriter for such offering decides such restriction is
unnecessary, and each Holder agrees to execute any agreement or document
reasonably requested by any such underwriter which relates to such restriction.
Subject to the foregoing, the Company shall from time to time register the
transfer of any outstanding Warrant Certificates in the Warrant Register to be
maintained by the Company upon surrender thereof accompanied by a written
instrument or instruments of transfer in form reasonably satisfactory to the
Company, duly executed by the registered Holder or Holders thereof or by the
duly appointed legal representative thereof or by a duly authorized attorney.
Upon any such registration of transfer, a new Warrant Certificate shall be
issued to the transferee Holder(s) and the surrendered Warrant Certificate shall
be canceled and disposed of by the Company.
SECTION 4. Warrants; Exercise of Warrants. Subject to the terms of this
Agreement, each Holder shall have the right, which may be exercised at any time
during the period commencing on the first anniversary of the date hereof and
ending at 5:00 p.m., New York City time, on the date which is three years after
the date hereof (the "Expiration Date"), to receive from the Company the number
---------------
of fully paid and nonassessable Warrant Shares (and such other consideration)
which the Holder may at the time be entitled to receive on exercise of such
Warrants and payment of the Exercise Price (as defined below) for such Warrant
Shares. Each Warrant not exercised prior to 5:00 p.m., New York time, on the
Expiration Date shall become void and all rights thereunder and all rights in
respect thereof under this Agreement shall cease as of such time. No adjustments
as to dividends will be made upon exercise of the Warrants, except as otherwise
expressly provided herein.
The price at which each Warrant shall be exercisable (the "Exercise
--------
Price") shall be equal $15.00.
A Warrant may be exercised upon surrender to the Company at its office
designated for such purpose of the Warrant Certificate or Certificates to be
exercised with the form of election to purchase attached thereto duly filled in
and signed, and upon
2
<PAGE>
payment to the Company of the Exercise Price for the number of Warrant Shares in
respect of which such Warrants are then exercised. Payment of the aggregate
Exercise Price shall be made by delivering for surrender and cancellation to the
Company Warrants with an aggregate Surrender Value (as hereinafter defined), as
of the date of such exercise, equal to the Exercise Price for the Warrants being
exercised. For the purposes of this paragraph, the "Surrender Value" of any
Warrant is equal to the Fair Market Value, as of the date of such surrender, of
the Warrant Shares issuable upon the exercise of such Warrant, minus the
Exercise Price of such Warrant. Fair Market Value means with respect to a
Warrant Share at any date: (i) if shares of Common Stock are being sold pursuant
-
to a public offering under an effective registration statement under the
Securities Act which has been declared effective and Fair Market Value is being
determined as of the closing of the public offering, the higher of (x) the "per
share price to public" specified for such shares in the final prospectus for
such public offering and (y) the Fair Market Value determined under clauses
(ii), (iii) or (iv), as applicable below; (ii) subject to clause (i) above, if
--
shares of Common Stock are then listed or admitted to trading on any national
securities exchange or traded on any national market system, the average of the
daily closing prices for the 20 trading days before such date; (iii) subject to
---
clause (i) above if no shares of Common Stock are then listed or admitted to
trading on any national securities exchange or traded on any national market
system, the average of the reported closing bid and asked prices thereof on such
date in the over-the-counter market as shown by the Nasdaq Stock Market or, if
such shares are not then quoted in such system, as published by the National
Quotation Bureau, Incorporated or any similar successor organization, and in
either case as reported by any member firm of the New York Stock Exchange
selected by the Company; or (iv) subject to clause (i) above if no shares of
--
Common Stock are then listed or admitted to trading on any national securities
exchange or traded on any national market system, if no closing bid and asked
prices thereof are then so quoted or published in the over-the-counter market,
the Fair Market Value of a Warrant Share as determined in good faith by the
Board of Directors of the Company.
Subject to the provisions of Section 5 hereof, upon such surrender of
Warrant Certificates and payment of the Exercise Price, the Company shall issue
and cause to be delivered, as promptly as practicable, to or upon the written
order of the Holder and in such name or names as such Holder may designate a
certificate or certificates for the number of full Warrant Shares issuable upon
the exercise of such Warrants (and such other consideration as may be
deliverable upon exercise of such Warrants) together with cash for fractional
Warrant Shares as provided in Section 9. The certificate or certificates for
such Warrant Shares shall be deemed to have been issued and the person so named
therein shall be deemed to have become a holder of record of such Warrant Shares
as of the date of the surrender of such Warrants and payment of the Exercise
Price, irrespective of the date of delivery of such certificate or certificates
for Warrant Shares.
3
<PAGE>
Each Warrant shall be exercisable, at the election of the Holder thereof,
either in full or from time to time in part and, in the event that a Warrant
Certificate is exercised in respect of fewer than all of the Warrant Shares
issuable on such exercise at any time prior to the date of expiration of the
Warrants, a new certificate evidencing the remaining Warrant or Warrants will be
issued and delivered pursuant to the provisions hereof.
All Warrant Certificates surrendered upon exercise of Warrants shall be
canceled and disposed of by the Company. The Company shall keep copies of this
Agreement and any notices given or received hereunder available for inspection
by the Holders during normal business hours at its office.
SECTION 5. Payment of Taxes. The Company will pay all documentary stamp
taxes and other governmental charges (excluding all foreign, federal or state
income, franchise, property, estate, inheritance, gift or similar taxes) in
connection with the issuance or delivery of the Warrants hereunder, as well as
all such taxes attributable to the initial issuance or delivery of Warrant
Shares upon the exercise of Warrants and payment of the Exercise Price. The
Company shall not, however, be required to pay any tax that may be payable in
respect of any subsequent transfer of the Warrants or any transfer involved in
the issuance and delivery of Warrant Shares in a name other than that in which
the Warrants to which such issuance relates were registered, and, if any such
tax would otherwise be payable by the Company, no such issuance or delivery
shall be made unless and until the person requesting such issuance has paid to
the Company the amount of any such tax, or it is established to the reasonable
satisfaction of the Company that any such tax has been paid.
SECTION 6. Mutilated or Missing Warrant Certificates. If a mutilated
Warrant Certificate is surrendered to the Company, or if the Holder of a Warrant
Certificate claims and submits an affidavit or other evidence satisfactory to
the Company to the effect that the Warrant Certificate has been lost, destroyed
or wrongfully taken, the Company shall issue a replacement Warrant Certificate.
If reasonably required by the Company, such Holder must provide an indemnity
bond, or other form of indemnity, sufficient in the reasonable judgment of the
Company to protect the Company from any loss which it may suffer if a Warrant
Certificate is replaced. If GECC or any other institutional Holder (or nominee
thereof) is the owner of any such lost, stolen or destroyed Warrant Certificate,
then the affidavit of an authorized officer of such owner, setting forth the
fact of loss, theft or destruction and of its ownership of the Warrant
Certificate at the time of such loss, theft or destruction shall be accepted as
satisfactory evidence thereof and no further indemnity shall be required as a
condition to the execution and delivery of a new Warrant Certificate other than
the unsecured written agreement of such owner to indemnify the Company.
4
<PAGE>
SECTION 7. Reservation of Warrant Shares. The Company shall at all times
reserve and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued Common Stock or its authorized and issued Common
Stock held in its treasury, for the purpose of enabling it to satisfy any
obligation to issue Warrant Shares upon exercise of Warrants, the maximum number
of shares of Common Stock which may then be deliverable upon the exercise of all
outstanding Warrants.
The Company or, if appointed, any transfer agent for the Common Stock (the
"Transfer Agent") will be irrevocably authorized and directed at all times to
--------------
reserve such number of authorized shares as shall be required for such purpose.
The Company shall keep a copy of this Agreement on file with any such Transfer
Agent. The Company will supply any such Transfer Agent with duly executed
certificates for such purposes and will provide or otherwise make available all
other consideration that may be deliverable upon exercise of the Warrants. The
Company will furnish any such Transfer Agent a copy of all notices of
adjustments and certificates related thereto, transmitted to each Holder
pursuant to Section 10 hereof.
Before taking any action which would cause an adjustment pursuant to
Section 8 hereof to reduce the Exercise Price below the then par value of the
Warrant Shares, the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares at the Exercise Price
as so adjusted.
The Company covenants that all Warrant Shares and other capital stock
issued upon exercise of Warrants will, upon payment of the Exercise Price
therefor and issue thereof, be validly authorized and issued, fully paid,
nonassessable, free of preemptive rights and free, subject to Section 5 hereof,
from all taxes, liens, charges and security interests with respect to the issue
thereof.
SECTION 8. Adjustment of Exercise Price and Warrant Number. The number of
shares of Common Stock issuable upon the exercise of each Warrant (the "Warrant
-------
Number") is initially one. The Warrant Number is subject to adjustment from time
- ------
to time upon the occurrence of the events enumerated in, or as otherwise
provided in, this Section 8.
(a) Adjustment for Change in Capital Stock
--------------------------------------
If the Company:
(1) pays a dividend or makes a distribution on its Common Stock in
shares of its Common Stock;
5
<PAGE>
(2) subdivides or reclassifies its outstanding shares of Common Stock
into a greater number of shares;
(3) combines or reclassifies its outstanding shares of Common Stock
into a smaller number of shares; or
(4) issues by reclassification of its Common Stock any shares of its
capital stock (other than reclassification arising solely as a result of a
change in the par value or no par value of the Common Stock);
then the Warrant Number and the Exercise Price in effect immediately prior to
such action shall be proportionately adjusted so that the holder of any Warrant
thereafter exercised shall receive the aggregate number and kind of shares of
capital stock of the Company which it would have received immediately following
such action if such Warrant had been exercised immediately prior to such action
for the same aggregate consideration that such holder would have paid if such
Warrant had been exercised immediately prior to such action.
The adjustment shall become effective immediately after the record date in
the case of a dividend or distribution and immediately after the effective date
in the case of a subdivision, combination or reclassification.
Such adjustment shall be made successively whenever any event listed above
shall occur.
The Company shall not issue shares of Common Stock as a dividend or
distribution on any class of capital stock other than Common Stock unless (i)
the Warrant Holders also receive such dividend or distribution on a ratable
basis or (ii) the appropriate adjustment to the Warrant Number and Exercise
Price is made under this Section 8.
(b) Notice of Adjustment
--------------------
Whenever the Warrant Number is adjusted, the Company shall provide the
notices required by Section 10 hereof.
(c) Voluntary Increase
------------------
The Company from time to time may increase the Warrant Number by any
amount for any period of time (including, without limitation, permanently) if
the period is at least 20 Business Days and if the increase is irrevocable
during the period.
6
<PAGE>
Whenever the Warrant Number is increased, the Company shall mail to the Holders
a notice of the increase. The Company shall mail the notice at least 15 days
before the date the increased Warrant Number takes effect. The notice shall
state the increased Warrant Number and the period it will be in effect.
An increase of the Warrant Number under this Subsection (c) (other than a
permanent increase) does not change or adjust the Warrant Number otherwise in
effect for purposes of subsection (a) of this Section 8.
(d) Reorganizations
---------------
In case of any capital reorganization or reclassification, other than in
the cases referred to in Section 8(a) hereof, or the consolidation or merger of
the Company with or into another corporation (other than a merger or
consolidation in which the Company is the continuing corporation and which does
not result in any reclassification of any of the outstanding shares of the
Company's capital stock into shares of other stock or other securities or
property), or the sale of the property of the Company as an entirety or
substantially as an entirety (collectively, such actions being hereinafter
referred to as "Reorganizations"), there shall thereafter be deliverable upon
---------------
exercise of any Warrant (in lieu of the number of shares of Common Stock
theretofore deliverable) the number of shares of stock or other securities or
property to which a holder of the number of shares of Common Stock that would
otherwise have been deliverable upon the exercise of such Warrant would have
been entitled upon such Reorganization if such Warrant had been exercised in
full immediately prior to such Reorganization. In the event that the Warrants
are not exercised in connection with such Reorganization, appropriate
adjustment, as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a duly adopted resolution
certified by the Company's Secretary or Assistant Secretary, shall be made in
the application of the provisions herein set forth with respect to the rights
and interests of Holders so that the provisions set forth herein shall
thereafter be applicable, as nearly as possible, in relation to any shares or
other property thereafter deliverable upon exercise of Warrants.
The Company shall not effect any such Reorganization unless prior to or
simultaneously with the consummation thereof, (i) notice of such Reorganization
shall be given to each of the Holders of the Warrants, and (ii) the successor
corporation (if other than the Company) resulting from such Reorganization or
the corporation purchasing or leasing such assets or other appropriate
corporation or entity shall expressly assume, by a supplemental Warrant
Agreement or other acknowledgment executed and delivered to the Holder(s), the
obligation to deliver to each such Holder
7
<PAGE>
such shares of stock, securities or assets as, in accordance with the foregoing
provisions, such Holder may be entitled to purchase, and all other obligations
and liabilities under this Agreement.
If any event occurs of the type similar to the provisions of this Section
8 but not expressly provided for by such provisions, then the Board of Directors
of the Company will make an appropriate adjustment in the Warrant Number so as
to protect the Holders, provided, that no such adjustment will decrease the
--------
applicable Warrant Number as otherwise determined by this Section 8.
(e) Form of Warrants
----------------
Irrespective of any adjustments in the Exercise Price or the number or
kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement but shall nevertheless be exercisable for the
adjusted number of Warrant Shares at the adjusted Exercise Price.
SECTION 9. Fractional Interests. The Company shall not be required to
issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be presented for exercise in full at the same time by the same
Holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 9,
be issuable on the exercise of any Warrants (or specified portion thereof), the
Company shall, pay an amount in cash equal to the Fair Market Value of the
Warrant Share so issuable, multiplied by such fraction.
SECTION 10. Notices to Warrant Holders. Upon any adjustment pursuant to
Section 8 hereof, the Company shall promptly thereafter (i) cause to be filed
with the Company a certificate of an officer of the Company setting forth the
Warrant Number and Exercise Price after such adjustment and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculations are based, and (ii) cause to be given to each of the Holders at its
address appearing on the Warrant Register written notice of such adjustments.
Where appropriate, such notice may be given in advance and included as a part of
the notice required to be mailed under the other provisions of this Section 10.
In case:
8
<PAGE>
(a) the Company shall authorize the issuance to all holders of shares of
Common Stock of rights, options or warrants to subscribe for or purchase shares
of Common Stock or of any other subscription rights or warrants;
(b) the Company shall authorize the distribution to all holders of shares
of Common Stock of assets, including cash, evidences of its indebtedness, or
other securities;
(c) of any consolidation or merger to which the Company is a party and for
which approval of any shareholders of the Company is required, or of the
conveyance or transfer of the properties and assets of the Company substantially
as an entirety, or of any reclassification or change of Common Stock issuable
upon exercise of the Warrants (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination), or a tender offer or exchange offer for shares of
Common Stock;
(d) of the voluntary or involuntary dissolution, liquidation or winding up
of the Company; or
(e) the Company proposes to take any action that would require an
adjustment to the Warrant Number pursuant to Section 8 hereof; then the Company
shall cause to be given to each of the Holders at its address appearing on the
Warrant Register, at least 20 days prior to the applicable record date
hereinafter specified, or the date of the event in the case of events for which
there is no record date, in accordance with the provisions of Section 11 hereof,
a written notice stating (i) the date as of which the holders of record of
-
shares of the capital stock of the Company to be entitled to receive any such
rights, options, warrants or distribution are to be determined, or (ii) the
--
initial expiration date set forth in any tender offer or exchange offer for
shares of the capital stock of the Company, or (iii) the date on which any such
---
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up is expected to become effective or consummated, and the date as of which it
is expected that holders of record of shares of the capital stock of the Company
shall be entitled to exchange such shares for securities or other property, if
any, deliverable upon such reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up. The failure to give the notice
required by this Section 10 or any defect therein shall not affect the legality
or validity of any distribution, right, option, warrant, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up, or the vote upon
any action.
9
<PAGE>
Nothing contained in this Agreement or in any Warrant Certificate shall be
construed as conferring upon the Holders (prior to the exercise of such
Warrants) the right to vote or to consent or to receive notice as shareholder in
respect of the meetings of shareholders or the election of Directors of the
Company or any other matter, or any rights whatsoever as shareholders of the
Company; provided, however, that nothing in the foregoing provision is intended
to detract from any rights explicitly granted to any Holder hereunder.
SECTION 11. Notices to the Company and Warrant Holders. All notices and
other communications provided for or permitted hereunder shall be made by hand-
delivery, first-class mail, telex, telecopier, or overnight air courier
guaranteeing next day delivery:
(a) if to GECC, to the address specified on the signature page executed by
GECC; and
(b) if to the Company, iXL Enterprises, Inc., 1888 Emery Street, N.W.,
Atlanta, Georgia, 30318, Telecopy no. (404) 267-3801, Attention: Mr. M. Wayne
Boylston, with a copy to Minkin & Snyder PC, One Buckhead Plaza, 3060 Peachtree
Road, N.E., Suite 1100, Atlanta, Georgia 30305, Telecopy No. (404) 261-5064,
Attention: James S. Altenbach, Esq., with an additional copy to Debevoise &
Plimpton, 875 Third Avenue, New York, New York 10022, Telecopy No. (212) 909-
6836, Attention: Margaret A. Davenport, Esq. and with an additional copy to
Kelso & Company, 320 Park Avenue, Suite 2400, New York, New York 10022,
Attention: James J. Connors II, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed (so long as a
fax copy is sent and receipt acknowledged within two business days after
mailing); when answered back if telexed; when receipt acknowledged, if
telecopied; and the next business day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery. The parties may
change the addresses to which notices are to be given by giving five days' prior
written notice of such change in accordance herewith.
SECTION 12. Certain Supplements and Amendments. The Company may from time
to time supplement or amend this Agreement without the approval of any Holders
in order to cure any ambiguity or to correct or supplement any provision
contained herein which may be defective or inconsistent with any other provision
herein; provided that any such supplement or amendment shall not in any way
adversely affect the interests of the Holders.
10
<PAGE>
SECTION 13. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or GECC shall bind and inure to
the benefit of their respective successors and assigns hereunder, provided that
this Agreement shall not be assignable by any Holder if such Holder has not
complied with the transfer restrictions of Section 3 hereof. Any such
assignment in violation of Section 3 shall be null and void.
SECTION 14. Termination. This Agreement shall terminate if all Warrants
have been exercised or shall have expired or been canceled pursuant to this
Agreement, provided, that any rights of any party accrued with respect hereto
--------
prior to the termination of this Agreement shall survive such termination.
SECTION 15. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK (PROVIDED THAT DETERMINATIONS RELATING TO
CORPORATE LAW SHALL BE CONSTRUED IN ACCORDANCE WITH THE DELAWARE GENERAL
CORPORATION LAW). THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT AND THE WARRANTS, AND IRREVOCABLY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,
JURISDICTION OF THE AFORESAID COURTS. THE COMPANY AGREES THAT IT WILL NOT
COMMENCE ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY OTHER JURISDICTION. THE
COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. NOTWITHSTANDING THE FOREGOING, NOTHING HEREIN SHALL AFFECT
THE RIGHT OF ANY HOLDER OF A WARRANT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE COMPANY IN ANY OTHER JURISDICTION.
EACH OF THE PARTIES HERETO HEREBY WAIVES THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF
11
<PAGE>
THE OTHER DOCUMENTS, OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER
OF GECC'S INVESTMENT IN THE COMPANY CONTEMPLATED HEREBY. THE SCOPE OF THIS JURY
TRIAL WAIVER SHALL BE LIMITED TO DISPUTES BETWEEN THE COMPANY AND GECC AND SHALL
NOT EXTEND TO DISPUTES BETWEEN THE COMPANY AND ANY OTHER PERSON.
SECTION 16. Benefits of This Agreement. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company and the
Holders any legal or equitable right, remedy or claim under this Agreement; but
this Agreement shall be for the sole and exclusive benefit of the Company and
the Holders.
SECTION 17. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
SECTION 18. Amendments and Waivers. Subject to Section 13, the Company
agrees it will not solicit, request or negotiate for or with respect to any
proposed waiver or amendment of any of the provisions of this Agreement or any
Warrant unless each Holder (irrespective of the amount of Warrants then owned by
it) shall substantially concurrently be informed thereof by the Company and
shall be afforded the opportunity of considering the same and shall be supplied
by the Company with sufficient information (including any offer of remuneration)
to enable it to make an informed decision with respect thereto which information
shall be the same as that supplied to each other Holder. The Company will not,
directly or indirectly, pay or cause to be paid any remuneration whether by way
of supplement or additional interest fee or otherwise, to any Holder as
consideration for or as an inducement to the entering into by any Holder of any
waiver or amendment of any of the terms and provisions of this Agreement or any
Warrant unless such remunerations is concurrently paid on the same terms,
ratably to each Holder whether or not such Holder signs such waiver or consent,
provided that the foregoing is not intended to preclude the adoption of any
amendment or the giving of any waiver by the Holders of a majority of the
Warrants to the extent permitted by the other provisions of this Section 18.
SECTION 19. Representations and Warranties of the Company. The Company
hereby represents and warrants to the Holder that:
(a) none of the Company's filings with the SEC, including, without
limitation, the Company's Registration Statement on Form S-1 relating to the
initial public offering of the Company's common stock, contain any untrue
statement of material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading;
(b) this Agreement has been duly authorized by all necessary corporate
action on the part of the Company and has been validly executed and delivered by
the Company and, assuming the due authorization, execution and delivery thereof
by GECC, constitutes a legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
The Company has duly authorized and reserved a sufficient number of shares of
Common Stock for issuance upon exercise of the Warrants and the Warrant Shares,
when issued upon exercise of the Warrants in accordance with the terms of this
Agreement and the Warrants, will be duly authorized, validly issued and fully
paid and nonassessable, free of preemptive rights with no personal liability
attached to the ownership thereof.
(c) No Violation or Conflict; No Default. (1) Neither the execution,
delivery or performance of this Agreement, nor the compliance with its
obligations hereunder, nor the consummation of the transactions contemplated
hereby will:
(i) violate or conflict with any provision of the certificate of
incorporation or bylaws of the Company or any of its subsidiaries;
(ii) violate or conflict with any statute, law, rule or regulation or
any judgment, decree, order, regulation or rule of any court or
governmental authority or body (collectively, "Laws") applicable to the
Company or any of its subsidiaries or by which any of their respective
properties or assets may be subject; or
(iii) violate, be in conflict with, or constitute a breach or default
(or any event which, with the passage of time or notice or both, would
become a default) under, or permit the termination of, or require the
consent of any person or entity under, result in the creation or
imposition of any lien upon any property of the Company or its
subsidiaries under, result in the loss (by the Company or any
subsidiary) or modification in any manner adverse to the Company and
its subsidiaries of any right or benefit under, or give to any other
person or entity any right of termination, amendment, acceleration,
repurchase or repayment, increased payments or cancellation under, any
mortgage, indenture, note, debenture, agreement, lease, license,
permit, franchise or other instrument or obligation, whether written or
oral (collectively, "Contracts") to which the Company or any of its
subsidiaries is a party or by which their properties may be bound or
affected, except as would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect upon the
business, operations, prospects, properties, assets or condition
(financial or otherwise) of the Company and its subsidiaries, taken as
a whole, or a material adverse effect on the ability of the Company to
perform its obligations under this Agreement.
(2)The execution and delivery of this Agreement does not, and the
performance of its obligations under this Agreement and the consummation of the
transaction contemplated hereby will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
body under any Laws, except for required filings under the Securities Act or
state "blue sky" laws.
(d) Assuming the correctness of the representations and warranties of GECC
set forth in Section 20 hereof, the offer and sale of the Warrants to GECC
hereunder is exempt from the registration and prospectus delivery requirements
of the Securities Act.
(e) The representations and warranties of the Company contained in this
Section 19 shall survive until the first anniversary of the date hereof.
SECTION 20. GECC represents and warrants to the Company that:
(a) it is purchasing the Warrants solely for its own account and not as
nominee or agent for any other person and not with a view to, or for offer or
sale in connection with, any current distribution thereof (within the meaning of
the Securities Act) that would cause the original purchase of the Warrants to be
in violation of the securities laws of the United States of America or any state
thereof, without prejudice, however, to its right at all times to sell or
otherwise dispose of all or any part of the Warrants pursuant to a registration
statement under the Securities Act or pursuant to an exemption from the
registration requirements of the Securities Act, and subject, nevertheless, to
the disposition of its property being at all times within its control.
(b) (1) GECC is knowledgeable, sophisticated and experienced in business
and financial matters and in investing in privately held and public business
enterprises; it has previously invested in securities similar to the Warrants
and it acknowledges that the Warrants have not been registered under the
Securities Act and understands that the Warrants must be held indefinitely
unless they are subsequently registered under the Securities Act or such sale is
permitted pursuant to an available exemption from such registration requirement;
it is able to bear the economic risk of its investment in the Warrants and is
presently able to afford the complete loss of such investment; and it is an
"accredited investor" as defined in Regulation D promulgated under the
Securities Act.
(c) GECC did not make its investment decision to purchase the Warrants
based on any form of general solicitation or general advertising used by the
Company, including, but not limited to, advertisements, articles, notices or
other communications published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.
(d) GECC is a "qualified institutional buyer" as defined in Rule 144A
promulgated under the Securities Act.
SECTION 21. Issue Taxes. The Company agrees to pay (A) all income
taxes (including any tax on or based upon net income, or gross income, or income
as specially defined, or earnings, or profits, or selected items of income,
earnings or profits) and all gross receipts, sales, use, ad valorem, transfer,
franchise, license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property or windfall profits taxes, alternative or add-on
minimum taxes, customs duties or other taxes, fees, assessments or charges of
any kind whatsoever, together with any interest and any penalties, additions to
tax or additional amounts imposed by any taxing authority (domestic or foreign)
and (B) any liability for the payment of any amount of the type described in the
immediately preceding clause (A) as a result of being a "transferee" (within the
meaning of Section 6901 of the U.S Internal Revenue Code or any other law) of
another individual or entity or a member of an affiliated or combined group
("Taxes") (other than Taxes in the nature of income, franchise or gift taxes)
and governmental fees arising in connection with the issuance, sale, delivery or
transfer by the Company to each Holder of the Warrants and the Warrant Shares,
as the case may be, and any modification of any of such Warrants or Warrant
Shares and will hold such Holder harmless without limitation as to time against
any and all liabilities with respect to all such Taxes and fees.
SECTION 22. Initial Public Offering. Upon the initial public offering of
the Company (the "IPO"), the Warrant Shares shall automatically be defined as
shares of the common stock of the Company, which will be identical to the Common
Stock, except that there will be one vote per share of such common stock (it
being understood that as of the IPO, there will be only one class of common
stock of the Company).
12
<PAGE>
[Signature pages follow]
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement
to be duly executed as of the day and year first above written.
iXL ENTERPRISES, INC.
/s/ M. Wayne Boylston
By:__________________________________
Name: M. Wayne Boylston
Title: Executive Vice President
Addresses for Notices:
GE CAPITAL EQUITY INVESTMENTS, INC.
/s/ Jeffrey Coats
By:__________________________________
Name: Jeffrey Coats
Title: Vice President
14
<PAGE>
EXHIBIT A
[Form of Warrant Certificate]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON
______________, 1999, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR
OTHERWISE DISTRIBUTED EXCEPT IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE ACT, OR IN COMPLIANCE WITH RULE 144 OR
PURSUANT TO ANOTHER EXEMPTION THEREFROM. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO A WARRANT AGREEMENT DATED AS OF APRIL 7, 1999, AMONG
THE ISSUER OF SUCH SECURITIES (THE "COMPANY") AND GE CAPITAL EQUITY INVESTMENTS,
INC. THE TRANSFER OF THIS CERTIFICATE IS SUBJECT TO THE CONDITIONS SPECIFIED IN
SUCH AGREEMENT AND THE COMPANY RESERVES THE RIGHT TO REFUSE THE TRANSFER OF THIS
CERTIFICATE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH
TRANSFER. A COPY OF SUCH AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE
COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST.
No. _________ _________ Warrants
Warrant Certificate
iXL Enterprises, Inc.
This Warrant Certificate certifies that GE Capital Equity Investments,
Inc., or registered assigns, is the registered holder of the number of
Warrants (the "Warrants") set forth above to purchase Common Stock, par value
--------
$.01 per share (the "Common Stock"), of iXL Enterprises, Inc., a Delaware
------------
corporation (the "Company"). Each Warrant entitles the Holder upon exercise to
-------
receive from the Company one fully paid and nonassessable share of Common Stock
(a "Warrant Share"), at an exercise price (the "Exercise Price") of $15.00
------------- --------------
payable as provided in the Warrant Agreement, upon surrender of this Warrant
Certificate and payment of the Exercise Price at the office of the Company
designated for such purpose, but only subject to the conditions set forth herein
and in the Warrant Agreement referred to hereinafter. The number of Warrant
Shares issuable upon exercise of the Warrants and the Exercise Price are subject
to adjustment upon the occurrence of certain events, as set forth in the Warrant
Agreement. Each
<PAGE>
Warrant is exercisable at any time during the period commencing on the first
anniversary of the date hereof and ending at 5:00 p.m., New York City time, on
the date which is five years after the date hereof.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants, and are issued or to be issued pursuant to a
Warrant Agreement dated as of April 7, 1999 (the "Warrant Agreement"),
-----------------
duly executed and delivered by the Company, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Company and the holders (the words
"holders or holder" meaning the registered holders or registered holder) of the
- -------- ------
Warrants. A copy of the Warrant Agreement may be obtained by the holder hereof
upon written request to the Company. Capitalized terms used and not defined
herein shall have the meaning ascribed thereto in the Warrant Agreement.
The holder of Warrants evidenced by this Warrant Certificate may exercise
such Warrants under and pursuant to the terms and conditions of the Warrant
Agreement by surrendering this Warrant Certificate, with the form of election to
purchase set forth hereon (and by this reference made a part hereof) properly
completed and executed, together with payment of the Exercise Price made by
delivering for surrender and cancellation to the Company Warrants with an
aggregate Surrender Value (as defined in Section 4 of the Warrant Agreement), as
of the date of such exercise, equal to the Exercise Price for the Warrants being
exercised. In the event that upon any exercise of Warrants evidenced hereby the
number of Warrants exercised shall be less than the total number of Warrants
evidenced hereby, there shall be issued by the Company to the holder hereof or
its registered assignee a new Warrant Certificate evidencing the number of
Warrants not exercised.
Warrant Certificates, when surrendered at the office of the Company by the
registered holder thereof in person or by legal representative or attorney duly
authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Subject to the terms and conditions of the Warrant Agreement, upon due
presentation for registration of transfer of this Warrant Certificate at the
office of the Company a new Warrant Certificate or Warrant Certificates of like
tenor and evidencing in the aggregate a like number of Warrants shall be issued
to the transferee(s) in exchange for this Warrant Certificate, subject to the
limitations provided in the Warrant Agreement,
2
<PAGE>
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company may deem and treat the registered holder(s) thereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
Neither the Warrants nor this Warrant Certificate entitles any holder hereof to
any rights of a stockholder of the Company.
Upon the initial public offering of the Company (the "IPO"), the Warrant
Shares shall automatically be defined as shares of the common stock of the
Company, which will be identical to the Common Stock, except that there will be
one vote per share of such common stock (it being understood that as of the IPO,
there will be only one class of common stock of the Company).
IN WITNESS WHEREOF, iXL Enterprises, Inc. has caused this Warrant
Certificate to be signed by its Chairman of the Board, President or Vice
President and by its Secretary or Assistant Secretary.
Dated: _____________, 1999
iXL ENTERPRISES, INC.
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
3
<PAGE>
FORM OF ELECTION TO PURCHASE
(To Be Executed Upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive __________ shares of Common
Stock and herewith tenders payment for such shares to the Company in the form of
Warrants to purchase __________ Warrant Shares with an aggregate Surrender Value
(as defined in Section 4 of the Warrant Agreement) of $__________.
The undersigned requests that a certificate for such shares be registered
in the name of _______________, whose address is
_______________________________, and that such shares be delivered to
__________________, whose address is ___________________________.
If said number of shares is less than all of the shares of Common Stock
purchasable hereunder, the undersigned requests that a new Warrant Certificate
representing the remaining balance of such shares be registered in the name of
________________________, whose address is _______________________________, and
that such Warrant Certificate be delivered to _____________________, whose
address is ________________________________.
Signature(s):_________________________
NOTE: The above signature(s) must
correspond with the name
written upon the face of this
Warrant Certificate in every
particular, without alteration
or enlargement or any change
whatever. If this Warrant is
held of record by two or more
joint owners, all such owners
must sign.
Date: ____________
<PAGE>
FORM OF ASSIGNMENT
(To be signed only upon assignment of Warrant Certificate)
FOR VALUE RECEIVED, hereby sells, assigns and transfers unto
_____________ whose address is _________________________ and whose social
security number or other identifying number is _________________________, the
within Warrant Certificate, together with all right, title and interest therein
and to the Warrants represented thereby, and does hereby irrevocably constitute
and appoint _____________________, attorney, to transfer said Warrant
Certificate on the books of the within-named Company, with full power of
substitution in the premises.
Signature(s):_________________________
NOTE: The above signature(s) must
correspond with the name
written upon the face of this
Warrant Certificate in every
particular, without alteration
or enlargement or any change
whatever. If this Warrant is
held of record by two or more
joint owners, all such owners
must sign.
Date: ____________
<PAGE>
EXHIBIT 10.58
================================================================================
STOCK PURCHASE AGREEMENT
among
CONSUMER FINANCIAL NETWORK, INC.
and
GE CAPITAL EQUITY INVESTMENTS, INC.
Dated as of April 7, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I DEFINITIONS.......................................................................... 1
Section 1.1 Definitions................................................................... 1
Section 1.2 Rules of Construction......................................................... 7
ARTICLE II
SALE AND PURCHASE OF PREFERRED STOCK......................................................... 8
Section 2.1 Sale and Purchase of Preferred Stock.......................................... 8
Section 2.2 Closing of Transaction........................................................ 8
Section 2.3 Issue Taxes................................................................... 9
ARTICLE III
CLOSING CONDITIONS........................................................................... 9
Section 3.1 Conditions to Obligations of the Investor..................................... 9
Section 3.2 Conditions to Obligations of the Company at the Closing....................... 11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................ 13
Section 4.1 Due Incorporation and Good Standing........................................... 13
Section 4.2 Capitalization................................................................ 13
Section 4.3 Subsidiaries.................................................................. 14
Section 4.4 Authority..................................................................... 14
Section 4.5 Authorization, Etc. of Preferred Stock........................................ 15
Section 4.6 No Violation or Conflict; No Default.......................................... 15
Section 4.7 No Material Adverse Change; Financial Statements.............................. 16
Section 4.8 Full Disclosure............................................................... 17
Section 4.9 Private Offering.............................................................. 17
Section 4.10 No Brokers.................................................................... 18
Section 4.11 Litigation.................................................................... 18
Section 4.12 Labor Relations............................................................... 18
Section 4.13 Taxes......................................................................... 19
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 4.14 Environmental Matters........................................................ 20
Section 4.15 ERISA........................................................................ 21
Section 4.16 Intellectual Property........................................................ 22
Section 4.17 Compliance with Laws......................................................... 22
Section 4.18 Agreements................................................................... 23
Section 4.19 Year 2000.................................................................... 23
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR............................................... 24
Section 5.1 Organization and Standing.................................................... 24
Section 5.2 Purchase for Own Account..................................................... 24
Section 5.3 Accredited Investor; No General Solicitation................................. 24
Section 5.4 Authorization; Consents...................................................... 24
Section 5.5 ERISA........................................................................ 25
ARTICLE VI
COVENANTS.................................................................................... 26
Section 6.1 Compliance with Laws; Maintenance of Licenses................................ 26
Section 6.2 Information to Prospective Holders........................................... 26
Section 6.3 Inspection of Properties and Records......................................... 26
Section 6.4 Financial Statements......................................................... 27
Section 6.5 Indemnification for Finder's Fees............................................ 27
Section 6.6 HSR Filing................................................................... 28
Section 6.7 Publicity; Press Releases.................................................... 28
Section 6.8 Lock-up...................................................................... 28
Section 6.9 Consent...................................................................... 28
Section 6.10 Securities Act Registration Statements....................................... 28
Section 6.11 Reasonable Best Efforts...................................................... 29
Section 6.12 Access to Information........................................................ 30
Section 6.13 Use of Proceeds.............................................................. 30
ARTICLE VII
MISCELLANEOUS................................................................................ 30
Section 7.1 Notices...................................................................... 30
Section 7.2 Successors and Assigns....................................................... 31
Section 7.3 No Waivers; Amendments....................................................... 32
Section 7.4 Counterparts................................................................. 32
Section 7.5 Section Headings............................................................. 32
Section 7.6 GOVERNING LAW; SUBMISSION TO JURISDICTION;................................... 32
Section 7.7 Entire Agreement............................................................. 33
</TABLE>
Exhibits
A - Series A Certificate of Designations
B - Series B Certificate of Designations
C - Opinion of Minkin & Snyder
D - Stockholders Agreement
E - Investors Agreement
F - Registration Rights Agreement
G - Amendment to Certificate of Incorporation
ii
<PAGE>
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is dated as of April 7,
---------
1999, and entered into by and among Consumer Financial Network, Inc., a Delaware
corporation (the "Company"), and GE Capital Equity Investments, Inc.
-------
Corporation, a Delaware corporation (the "Investor").
--------
In consideration of the mutual covenants and agreements set forth herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound hereby, the
Company and the Investor mutually agree, as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the following terms
-----------
shall have the following meanings:
"Affiliate," as applied to any specified Person, shall mean any other
---------
Person that, directly or indirectly, controls, is controlled by or is under
common control with such specified Person. For purposes of the foregoing,
"control," when used with respect to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of Voting Securities,
by contract or otherwise, and the terms "controlled" and "controlling" shall
have meanings correlative to the foregoing. In the case of a Person who is an
individual, the term "Affiliate" shall include, with respect to such specified
Person (i) members of such specified Person's immediate family (as defined in
-
Instruction 2 of Item 404(a) of Regulation S-K under the Securities Act) and
(ii) trusts, the trustee or the beneficiaries of which are such specified Person
--
or members of such Person's immediate family as determined in accordance with
the foregoing clause (i). Notwithstanding the foregoing, the Investor and its
respective Affiliates shall not be deemed Affiliates of the Company for purposes
of this Agreement.
"Audit" means any audit, assessment of Taxes, other examination by any Tax
-----
Authority, proceeding or appeal of such proceeding relating to Taxes.
"Board of Directors" means, as to any Person, the board of directors of
------------------
such Person.
<PAGE>
"Business Day" means each day other than Saturdays, Sundays and days when
------------
commercial banks are required or authorized by law or executive order to be
closed for business in New York, New York.
"Capital Stock" means any and all shares, interests, participations or
-------------
other equivalents (however designated) of or in capital stock, including,
without limitation, all common stock and preferred stock.
"Certificate of Incorporation" means the Amended and Restated Certificate
----------------------------
of Incorporation.
"Certificates of Designations" means the Series A Certificate of
----------------------------
Designations and the Series B Certificate of Designations.
"Charter Documents" means the certificate of incorporation, bylaws and any
-----------------
other organizational document, as amended.
"Closing" and "Closing Date" each has the meaning ascribed thereto in
------- ------------
Section 2.2(a).
"Code" means the Internal Revenue Code of 1986, as amended from time to
----
time, and any successor statute or law thereto.
"Common Stock" means all classes of the common stock of the Company, par
------------
value $.01 per share.
"Consolidated" or "consolidated," when used with reference to any
------------ ------------
accounting term, means the amount described by such accounting term, determined
on a consolidated basis in accordance with GAAP, after elimination of
intercompany items.
"Contracts" has the meaning ascribed thereto in Section 4.6(a)(3).
---------
"Documents" means this Agreement, the Certificate of Incorporation, the
---------
Certificates of Designations, the Investors Agreement, the Registration Rights
Agreement and the Stockholders' Agreement, collectively, or each of such
documents singularly, and any documents or instruments contemplated by or
executed in connection with any of them or any of the transactions contemplated
hereby or thereby.
"Employee Benefit Plan" has the meaning ascribed thereto in Section 4.15.
---------------------
2
<PAGE>
"Environmental Claim" means any claim, action, cause of action,
-------------------
investigation of which the Company or any of its Subsidiaries, including any of
their management employees, are aware, or written notice by any Person alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries or penalties) arising out
of, based on or resulting from (a) the presence, or release into the
-
environment, of any Material of Environmental Concern at any location owned,
leased, used or operated by the Company or any of its Subsidiaries, or (b)
-
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law.
"Environmental Laws" means all Federal, state, local and foreign laws and
------------------
regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata and natural resources), including,
without limitation, laws and regulations relating to emissions, discharges,
releases or threatened releases of Materials of Environmental Concern, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environmental Concern.
"Equity Interest" means (i) with respect to a corporation, any and all
--------------- -
issued and outstanding Capital Stock and warrants, options or other rights to
acquire Capital Stock and (ii) with respect to a partnership, limited liability
--
company or similar Person, any and all units, interests, or other equivalents
of, or other ownership interests in any such Person and warrants, options or
other rights to acquire any such units or interests.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and any successor statute or law thereto.
"ERISA Affiliate" has the meaning ascribed thereto in Section 4.15.
---------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
------------
the rules and regulations of the SEC thereunder, and any successor statute or
law thereto.
"GAAP" means those generally accepted accounting principles and practices
----
which are recognized as such from time to time by the American Institute of
Certified Public Accountants acting through its Accounting Principles Board or
by the Financial Accounting Standards Board or through other appropriate boards
or committees thereof and which are consistently applied for all periods after
the date hereof.
"Governmental Body" means any Federal, state, local or foreign
-----------------
governmental authority or regulatory body, any subdivision, agency, commission
or authority thereof or
3
<PAGE>
any quasi-governmental or private body exercising any governmental regulatory
authority thereunder and any Person directly or indirectly owned by and subject
to the control of any of the foregoing, or any court, arbitrator or other
judicial or quasi-judicial tribunal.
"Holder" or "Holders" means the Investor and any Affiliate of the Investor
------ -------
that is or becomes a holder of any of the Preferred Stock, in each case, so long
as such Person holds any Preferred Stock.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
-------
as amended, and the rules and regulations thereunder.
"Investor" has the meaning ascribed thereto in the recitals to this
--------
Agreement.
"Investors Agreement" means the Investors Agreement, to be dated as of the
-------------------
Closing Date, between the Company, iXL and the Investors named herein, as set
forth as Exhibit E hereto.
"iXL" means iXL Enterprises, Inc., a Delaware corporation.
---
"Laws" has the meaning ascribed thereto in Section 4.6.
----
"Legal Requirements" means, as to any Person, all Federal, state, local or
------------------
foreign laws, statutes, rules, regulations, ordinances, judgments, orders,
decrees, permits, certificates, requirements, regulations and restrictions of
any Governmental Body applicable to such Person or any of its properties or
assets.
"Lien" means any mortgage, pledge, lien, encumbrance, charge or adverse
----
claim affecting title or resulting in a charge against real or personal
property, or security interest of any kind (including, without limitation, any
conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell and any filing of any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Material Adverse Effect" means (a) a material adverse effect upon the
----------------------- -
business, operations, prospects, properties, assets or condition (financial or
otherwise) of the Company and its Subsidiaries, taken as a whole or (b) a
-
material adverse effect on the ability of the Company to perform its obligations
under this Agreement or any of the other Documents.
"Materials of Environmental Concern" means chemicals, pollutants,
----------------------------------
contaminants, industrial, toxic or hazardous wastes, substances or constituents,
petroleum and
4
<PAGE>
petroleum products (or any by-product or constituent thereof), asbestos or
asbestos-containing materials, or PCBs.
"Notices" has the meaning ascribed thereto in Section 7.1.
-------
"Permitted Lien" shall mean the following Liens: (a) Liens existing on
-------------- -
the Closing Date as listed on Schedule 1.1; (b) Liens for taxes, assessments or
------------ -
other governmental charges or levies not yet due; (c) statutory Liens of
-
landlords, carriers, warehousemen, mechanics, materialmen and other Liens
imposed by law created in the ordinary course of business of the Company
consistent with past practices for amounts not yet due; (d) Liens (other than
-
any Lien imposed by ERISA) incurred or deposits made in the ordinary course of
business of the Company consistent with past practices in connection with
worker's compensation, unemployment insurance or other types of social security;
and (e) with respect to interests in real property, minor defects of title,
-
easements, rights-of-way, restrictions and other similar charges or encumbrances
not materially detracting from the value or materially interfering with the use
of such real property.
"Person" means an individual, partnership, corporation, trust, limited
------
liability company, association or unincorporated organization or a government or
agency or political subdivision thereof.
"Preferred Stock" means the Series A Preferred Stock and the Series B
---------------
Preferred Stock.
"Proceedings" means any legal, administrative or arbitration action, suit,
-----------
complaint, charge, hearing, inquiry, investigation or proceeding (including any
partial or threatened proceedings).
"Property" or "property" means any assets or property of any kind or
-------- --------
nature whatsoever, real, personal or mixed (including fixtures), whether
tangible or intangible, provided that the terms "Property" or "property," when
used with respect to any Person, shall not include securities issued by such
Person.
"QPO" means a "Qualified Public Offering" as such term is defined in the
---
Stockholders' Agreement.
"Registration Rights Agreement" means the Amended and Restated
-----------------------------
Registration Rights Agreement, to be dated the Closing Date, among the Company,
iXL and the Investor, as set forth as Exhibit F hereto.
5
<PAGE>
"Rule 144A" means Rule 144A as promulgated by the SEC under the Securities
---------
Act, as amended from time to time, and any successor rule or regulation thereto.
"SEC" means the Securities and Exchange Commission and any successor
---
thereto.
"Series A Certificate of Designations" means the Certificate of
------------------------------------
Designations, Powers, Preferences and Relative, Participating, Optional and
Other Special Rights of the Series A Convertible Preferred Stock, filed by the
Company with the Secretary of State of the State of Delaware on or about
November 2, 1998, to be amended and filed on or before the Closing Date as set
forth as Exhibit A hereto.
"Series B Certificate of Designations" means the Certificate of
------------------------------------
Designations, Powers, Preferences and Relative, Participating, Optional and
Other Special Rights of the Series B Convertible Preferred Stock, to be filed on
or before the Closing Date with the Secretary of State of the State of Delaware,
as set forth as Exhibit B hereto.
"Series A Preferred Stock" means the Series A Convertible Preferred Stock
------------------------
of the Company, $.01 par value per share.
"Series B Preferred Stock" means the Series B Convertible Preferred Stock
------------------------
of the Company, par value $.01 per share.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations of the SEC thereunder, and any successor statute or law
thereto.
"Stockholders' Agreement" means the Amended and Restated Stockholders'
-----------------------
Agreement, to be dated as of the Closing Date, among the Company and the
stockholders named therein, as set forth as Exhibit D hereto.
"Subsidiary" of any person means (a) a corporation in which such Person, a
---------- -
subsidiary of such Person, or such Person and one or more subsidiaries of such
Person, directly or indirectly, at the date of determination, has either (i) a
-
majority ownership interest or (ii) the power, under ordinary circumstances, to
--
elect, or to direct the election of, a majority of the board of directors of
such corporation, or (b) a partnership in which such Person, a subsidiary of
-
such Person, or such Person and one or more subsidiaries of such Person (i) is,
-
at the date of determination, a general partner of such partnership, or (ii) has
--
a majority ownership interest in such partnership or the right to elect, or to
direct the election of, a majority of the governing body of such partnership, or
(c) any other
-
6
<PAGE>
Person (other than a corporation or a partnership) in which such Person, a
subsidiary of such Person, or such Person and one or more subsidiaries of such
Person has either (i) at least a majority ownership interest or (ii) the power
- --
to elect, or to direct the election of, a majority of the directors or
other governing body of such Person.
"Tax Authority" means the Internal Revenue Service and any other domestic
-------------
or foreign governmental authority responsible for the administration of any
Taxes.
"Taxes" shall mean with respect to any Person, (A) all income taxes
-----
(including any tax on or based upon net income, or gross income, or income as
specially defined, or earnings, or profits, or selected items of income,
earnings or profits) and all gross receipts, sales, use, ad valorem, transfer,
franchise, license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property or windfall profits taxes, alternative or add-on
minimum taxes, customs duties or other taxes, fees, assessments or charges of
any kind whatsoever, together with any interest and any penalties, additions to
tax, or additional amounts imposed by any taxing authority (domestic or foreign)
on such Person and (B) any Liability for the payment of any amount of the type
described in the immediately preceding clause (A) as a result of being a
"transferee" (within the meaning of Section 6901 of the Code or any other Law)
of another Person or a member of an affiliated or combined group.
"Tax Returns" shall mean all Federal, state, local and foreign tax
-----------
returns, declarations, statements, reports, schedules, forms and information
returns and any amended Tax Return relating to Taxes.
"Transactions" has the meaning ascribed thereto in Section 4.4.
------------
"Voting Securities" means any class of Equity Interests of a Person
-----------------
pursuant to which the holders thereof have, at the time of determination, the
general power under ordinary circumstances to vote for the election of
directors, managers, trustees or general partners of such Person (irrespective
of whether or not at the time any other class or classes will have or might have
the general power under ordinary circumstances to vote for the election of
directors, managers, trustees or general partners by reason of the happening of
any contingency).
Section 1.2 Rules of Construction. Unless the context otherwise
---------------------
requires:
(a) a term has the meaning assigned to it;
(b) "or" is not exclusive;
(c) words in the singular include the plural, and words in the plural
include the singular;
(d) provisions apply to successive events and transactions; and
(e) "herein," "hereof," "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any particular section or other
subdivision.
7
<PAGE>
ARTICLE II
SALE AND PURCHASE OF PREFERRED STOCK
Section 2.1 Sale and Purchase of Preferred Stock. On the Closing Date,
-------------------------------------
subject to the terms and conditions set forth herein and in reliance on the
respective representations and warranties contained herein of the Company, on
the one hand, and the Investor, on the other hand, the Company shall issue and
sell to the Investor, and the Investor shall purchase, an aggregate of
16,190,475 shares of Series B Preferred Stock, for an aggregate purchase price
of $49,999,424.90.
Section 2.2 Closing of Transaction.
----------------------
(a) Closing. The closing (the "Closing") hereunder with respect to the
------- -------
issuance and sale of the Series B Preferred Stock shall take place at the
offices of Debevoise & Plimpton, 875 Third Avenue, New York, New York, 10022, on
the earlier of (i) August 31, 1999 and (ii) the closing of the initial public
offering of the common stock of iXL, provided that the termination or expiration
--------
of the waiting period under the HSR Act applicable to the Transactions shall
have occurred by such date (the "Closing Date"). At the Closing, the Company
------------
will deliver to the Investor the certificates for the Preferred Stock to be
purchased by the Investor (registered on the Company's stock register in the
Investor's name or the name of such nominee or nominees as the Investor may
request), dated the Closing Date, against payment of the purchase price therefor
by intra-bank or Federal funds bank wire transfer of same day funds to such bank
account within the United States as the Company shall have designated at least
two Business Days prior to the Closing.
(b) Fees and Expenses. Provided that the Closing occurs, the Company
-----------------
agrees to pay or reimburse all reasonable expenses of the Investor relating to
this Agreement, including, but not limited to:
(1) the Investor's expenses incurred in connection with the
transactions contemplated by this Agreement and the other Documents, including
the reasonable fees and other charges and expenses of the Investor's counsel
incurred in connection herewith or with the other Documents;
(2) any reasonable fees and other charges and expenses (including
the reasonable fees and other charges and expenses of counsel) incurred in
connection with any registration or qualification of the Series B Preferred
Stock required in connection with the offer and sale of the Series B Preferred
Stock to the Investor pursuant to this Agreement under the securities or "blue
sky" laws of any jurisdiction requiring such
8
<PAGE>
registration or qualification or in connection with obtaining any exemptions
from such requirements; and
(3) the Investor's or Holder's expenses (including the reasonable fees and
other expenses of counsel) relating to any amendment to, or modification of, or
any waiver or consent under, this Agreement, the Series B Preferred Stock or any
of the other Documents.
Reimbursement of the expenses to which such Investor is entitled
pursuant to this Section 2.2(b), including, without limitation, the reasonable
fees and other charges and expenses of such Investor's counsel, shall be made
concurrently with the Closing by intra-bank or Federal funds bank wire transfer
of same day funds, or at such other time and in such other manner as the Company
and the Investors may agree.
Section 2.3 Issue Taxes. The Company agrees to pay all Taxes (other
-----------
than Taxes of the Investor in the nature of income, franchise or gift taxes) and
governmental fees arising in connection with the issuance, sale, delivery or
transfer of Series B Preferred Stock by the Company to the Investor and, as the
case may be, the execution and delivery of the other Documents and any
modification thereof, and will hold the Investor harmless without limitation as
to time against any and all liabilities with respect to all such Taxes and fees.
ARTICLE III
CLOSING CONDITIONS
Section 3.1 Conditions to Obligations of the Investor. The obligations
-----------------------------------------
of the Investor to purchase and pay for the Series B Preferred Stock to be
delivered to the Investor at the Closing shall be subject to the satisfaction
(or waiver by the Investor) of each of the following conditions at or before the
Closing:
(a) Delivery of Documents. The Company shall have delivered to the
---------------------
Investor, in form and substance satisfactory to the Investor, the following:
(i) Certificates representing the 16,190,475 shares of the Series B
Preferred Stock, duly executed by the Company.
(ii) An opinion, dated the Closing Date and addressed to the Investor,
from Minkin & Snyder, a professional corporation, counsel for the Company, as
to the matters set forth in Exhibit C.
(iii) A copy of the Certificate of Incorporation and the Certificates of
Designations, together with good standing certificates from the State of
Delaware and from all states in which the laws thereof require the Company to
be qualified and/or licensed to do business, except where the failure to be
so qualified would not result in a Material Adverse Effect, each to be dated
a recent date prior to the Closing Date and certified by the Secretary of
State.
9
<PAGE>
(iv) A certificate of the Secretary of the Company dated the Closing Date
certifying (A) the bylaws of the Company, (B) resolutions of the Board of
- -
Directors, authorizing the execution, delivery and performance of this
Agreement and the other Documents and the consummation of the transactions
contemplated hereby and thereby, including the issuance of the Series B
Preferred Stock to the Investor pursuant to this Agreement and (C) as to the
-
incumbency and genuineness of the signatures of the officers of the Company.
(v) A certificate of an officer of the Company, dated the Closing Date,
certifying as to the satisfaction of the conditions specified in Sections
3.1(b) and 3.1(d).
(vi) Such additional information and materials as the Investor may
reasonably and timely request.
(b) Compliance with Agreements. The Company shall have performed and
--------------------------
complied with all agreements, covenants and conditions contained herein, in each
of the other Documents and in any other document contemplated hereby or thereby
which are required by the terms hereof or thereof to be performed or complied
with by the Company on or before the Closing Date.
(c) Completion of Other Transactions. Simultaneously with or prior to
--------------------------------
the sale to the Investor of the Series B Preferred Stock hereunder, the Company
shall have executed and delivered the Investors Agreement, the Registration
Rights Agreement and the Stockholders' Agreement and shall have filed with the
Secretary of State of the State of Delaware the Certificate of Incorporation and
the Certificates of Designations.
(d) Representations and Warranties. All of the representations and
------------------------------
warranties of the Company contained herein or in any of the other Documents
shall be true and correct in all material respects on and as of the Closing
Date, except those representations and warranties of the Company that speak as
of a certain date, which representations and warranties shall have been true and
correct in all material respects as of such date both before and after giving
effect to the transactions contemplated hereby and by the other Documents.
(e) Proceedings Satisfactory. All proceedings taken in connection with
------------------------
the sale of the Series B Preferred Stock, the transactions contemplated hereby,
and all documents and papers relating thereto, shall be reasonably satisfactory
to the Investor. The Investor and its counsel shall have received copies of
such documents and papers as they may
10
<PAGE>
reasonably request in connection therewith, or as a basis for the opinions to be
delivered pursuant to Section 3.1(a)(ii), all in form and substance satisfactory
to the Investor.
(f) Consents and Permits. The Company shall have received all consents,
--------------------
permits, approvals and authorizations and sent or made all notices, filings,
registrations and qualifications as may be required pursuant to any law,
statute, regulation or rule (Federal, state, local or foreign) including,
without limitation, the HSR Act, or pursuant to any other agreement, order or
decree to which it is a party or to which it is subject, in connection with the
transactions to be consummated on or prior to the Closing Date as contemplated
by this Agreement or any of the other Documents.
(g) No Material Adverse Change. There shall not have been any material
--------------------------
adverse change in the properties, business, operations, prospects, assets,
condition (financial or otherwise) of the Company and its Subsidiaries, taken as
a whole since December 31, 1998.
(h) No Material Judgment or Order. The waiting period under the HSR Act
-----------------------------
applicable to the Transactions shall have terminated, and there shall not be on
the Closing Date any judgment or order of a court of competent jurisdiction or
any ruling of any Federal, state or local Governmental Body that, in the
reasonable judgment of the Investor or its counsel, would prohibit the sale or
issuance of the Series B Preferred Stock hereunder or would subject the Company
or the Investor to any material penalty or liability if the Series B Preferred
Stock were to be issued and sold hereunder or the other Transactions are
consummated.
(i) No Material Proceedings. No Proceeding shall have been pending or
-----------------------
threatened as of the Closing Date to restrain, prohibit or otherwise challenge
the Transactions, nor shall any Governmental Body have notified either party to
this Agreement that the consummation of the Transactions hereby would constitute
a violation of the laws of the United States or the laws of any State thereof or
the laws of the jurisdiction to which such Governmental Body is subject and that
it intends to commence proceedings to restrain the consummation of such
transactions, to force divestiture if the same are consummated or to materially
modify the terms or results of such Transactions unless such Governmental Body
shall have withdrawn such notice, or has otherwise indicated in writing that it
will not take any action.
Section 3.2 Conditions to Obligations of the Company at the Closing.
-------------------------------------------------------
The obligations of the Company to sell and issue the Series B Preferred Stock to
be delivered to the Investor at the Closing shall be subject to the satisfaction
or waiver of each of the following conditions on or before the Closing Date:
11
<PAGE>
(a) Delivery of Documents. the Investor shall have delivered to the
---------------------
Company satisfactory evidence of its authorization to consummate the
Transactions.
(b) Completion of Other Transactions. Simultaneously with or prior to
--------------------------------
the sale to the Investor of the Preferred Stock to hereunder:
(1) the Investor shall have executed and delivered the Investors
Agreement, Stockholders' Agreement and the Registration Rights Agreement.
(c) The Investor shall have performed and complied with all agreements,
covenants and conditions contained herein, in each of the other Documents and in
any other document contemplated hereby or thereby which are required by the
terms hereof or thereof to be performed or complied with by the Investor on or
before the Closing Date.
(d) Representations and Warranties. All of the representations and
------------------------------
warranties of the Investor contained herein or in any of the other Documents to
which it is a party shall be true and correct in all material respects on and as
of the Closing Date, except for those representations and warranties of the
Investor that speak as of a certain date, which representations and warranties
shall have been true and correct in all material respects as of such date, both
before and after giving effect to the transactions contemplated hereby and by
the other Documents.
(e) HSR Act; No Material Judgment or Order. The waiting period under the
--------------------------------------
HSR Act applicable to the Transactions shall have terminated, and there shall
not be on the Closing Date any judgment or order of a court of competent
jurisdiction or any ruling of any Federal, state or local Governmental Body that
prohibits the sale or issuance of the Preferred Stock to the Investor hereunder
or would subject the Company to any material penalty or liability if the Series
B Preferred Stock were to be issued and sold to the Investor hereunder or the
other Transactions are consummated.
(f) No Material Proceedings. No Proceeding shall have been pending or
-----------------------
threatened as of the Closing Date to restrain, prohibit or otherwise challenge
the Transactions, nor shall any Governmental Body have notified either party to
this Agreement that the consummation of the Transactions hereby would constitute
a violation of the laws of the United States or the laws of any State thereof or
the laws of the jurisdiction to which such Governmental Body is subject and that
it intends to commence proceedings to restrain the consummation of such
transactions, to force divestiture if the same are consummated or to materially
modify the terms or results of such Transactions
12
<PAGE>
unless such Governmental Body shall have withdrawn such notice, or has otherwise
indicated in writing that it will not take any action.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investor on the date hereof and
as of the Closing as follows:
Section 4.1 Due Incorporation and Good Standing. The Company has been
-----------------------------------
duly incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware with corporate power and authority to
own, lease and operate its properties, to conduct its business as currently
conducted and as proposed to be conducted and to enter into and perform its
obligations under this Agreement and the other Documents to which it is a party.
The Company is duly qualified as a foreign corporation to transact business and
is in good standing in each jurisdiction in which such qualification is required
except where the failure to be so qualified would not reasonably be expected to
have a Material Adverse Effect.
Section 4.2 Capitalization. (a) As of the Closing, the authorized
--------------
capital stock of the Company will consist of (1) 250,000,000 shares of Common
-
Stock, and (2) 70,000,000 shares of blank check preferred stock, 13,333,334
-
shares of which have been designated as the Series A Preferred Stock and
16,190,475 shares of which have been designated as the Series B Preferred Stock.
After giving effect to the transactions contemplated hereby, (i) there will be
-
issued and outstanding (A) 100,000,000 shares of Common Stock, (B) 13,333,334
- -
shares of Series A Preferred Stock, all of which are validly issued and fully
paid and nonassessable and (C) 16,190,475 shares of Series B Preferred Stock,
-
all of which will be validly issued and fully paid and nonassessable, and (ii)
--
there will be reserved for issuance 29,523,809 shares of Common Stock to be
issued upon conversion of the Preferred Stock. Except as set forth above and on
Schedule 4.2 hereto, after giving effect to the Closing, no Equity Interests of
the Company or any Subsidiary of the Company will be issued or outstanding and
there are not, and at the Closing Date there will not be, any options,
agreements, instruments or securities relating to the issued or unissued Equity
Interests of the Company or any Subsidiary of the Company, or obligating the
Company or any Subsidiary of the Company to issue, transfer, grant or sell any
Equity Interests in the Company or any Subsidiary of the Company.
13
<PAGE>
(b) The Company has complied with all federal and state securities laws
in connection with the issuance of all outstanding Equity Interests, except
where such failure would not have a Material Adverse Effect.
(c) Except as listed on Schedule 4.2, and except as contemplated by the
Documents, there are no preemptive rights, voting agreements, transfer
restrictions (except those imposed by applicable federal and state securities
laws), or registration rights (except as set forth in the Registration Rights
Agreement) affecting the Equity Interests in the Company.
Section 4.3 Subsidiaries. Schedule 4.3 hereto sets forth a list of all
------------
Subsidiaries of the Company and the respective state or jurisdiction of
incorporation or organization. All of the issued or outstanding Equity Interests
of such Subsidiaries have been duly and validly issued and are fully paid and
nonassessable and are owned, directly or indirectly, by the Company. Each
Subsidiary of the Company is duly incorporated and is in good standing in its
respective state or jurisdiction of incorporation and has the corporate
authority to own, lease or operate its properties and to conduct its business as
currently conducted and as proposed to be conducted. Each Subsidiary of the
Company is duly qualified to transact business and is in good standing as a
foreign corporation in each state or jurisdiction in which such qualification is
required, except where the failure to be so qualified would not reasonably be
expected to have a Material Adverse Effect.
Section 4.4 Authority. The Company has all necessary corporate power
---------
and authority to execute and deliver this Agreement and each of the other
Documents, and to perform its obligations hereunder and thereunder, and to
consummate the transactions contemplated hereby and thereby (the
"Transactions"). The execution and delivery of this Agreement and the other
------------
Documents have been authorized by all necessary corporate action on the part of
the Company and no other corporate proceedings or approvals are required on the
part of the Company to authorize this Agreement or the other Documents or to
consummate the Transactions. This Agreement has been, and, at the Closing, the
Investors Agreement, the Registration Rights Agreement and the Stockholders'
Agreement will have been, duly and validly executed and delivered by the
Company. Assuming the due authorization, execution and delivery of the
applicable Documents by the other parties thereto, other than iXL, this
Agreement constitutes, and each of the Investors Agreement, the Stockholders'
Agreement and the Registration Rights Agreement will constitute at the Closing,
the legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with each of its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to or affecting creditors' rights
generally and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
14
<PAGE>
Section 4.5 Authorization, Etc. of Preferred Stock The issuance and
--------------------------------------
sale of the Series B Preferred Stock have been duly authorized by all necessary
corporate action on the part of the Company and the Series B Preferred Stock,
when issued to the Investor for the consideration set forth herein, will be duly
authorized, validly issued and fully paid and non-assessable, free of preemptive
rights, with no personal liability attached to the ownership thereof.
Section 4.6 No Violation or Conflict; No Default. (a) None of the
------------------------------------
nature of the business of the Company or any of its Subsidiaries, the execution,
delivery or performance by the Company of this Agreement or the other Documents,
the compliance by the Company with its obligations hereunder or thereunder, the
consummation of the Transactions, and the issuance, sale or delivery of the
Series B Preferred Stock will:
(1) violate or conflict with any provision of the Charter Documents of
the Company or any of its Subsidiaries;
(2) violate or conflict with any statute, law, rule or regulation or any
judgment, decree, order, regulation or rule of any court or governmental
authority or body (collectively, "Laws") applicable to the Company or any of
----
its Subsidiaries or by which any of their respective properties or assets may
be subject, except (solely with respect to the nature of the business of the
Company and its Subsidiaries) where such violation would not reasonably be
expected to have a Material Adverse Effect; or
(3) violate, be in conflict with, or constitute a breach or default (or
any event which, with the passage of time or notice or both, would become a
default) under, or permit the termination of, or require the consent of any
Person under, result in the creation or imposition of any Lien upon any
property of the Company or any of its Subsidiaries under, result in the loss
(by the Company or any of its Subsidiaries) or modification in any manner
adverse to the Company and its Subsidiaries of any right or benefit under, or
give to any other Person any right of termination, amendment, acceleration,
repurchase or repayment, increased payments or cancellation under, any
mortgage, indenture, note, debenture, agreement, lease, license, permit,
franchise or other instrument or obligation, whether written or oral
(collectively, "Contracts") to which the Company or any of its Subsidiaries
---------
is a party or by which their properties are bound or affected except as would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(b) The Company is not in default (without giving effect to any grace or
cure period or notice requirement) under any Contract, its Certificate of
Incorporation, the Series A Certificate of Designations or bylaws or any
applicable judgments or orders,
15
<PAGE>
except where such default would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(c) The execution and delivery of this Agreement and the other Documents
do not, and the performance of its obligations under this Agreement and the
other Documents and the consummation of the Transactions will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Body under any Laws, except for (i) notification pursuant
-
to, and expiration or termination of the waiting period under, the HSR Act, (ii)
--
required filings under the Securities Act or state "blue sky" laws and (iii)
---
those filings or notifications listed on Schedule 4.6 hereto.
Section 4.7 No Material Adverse Change; Financial Statements.
------------------------------------------------
(a) Except as set forth on Schedule 4.7 hereto, subsequent to December
31, 1998, there has not been (i) any material adverse change in the properties,
-
business, prospects, operations, assets or condition (financial or otherwise) of
the Company and its Subsidiaries taken as a whole, (ii) any asset or property of
--
the Company made subject to a Lien of any kind, other than Permitted Liens,
(iii) any waiver of any valuable right of the Company or any Subsidiary, or the
---
cancellation of any material debt or material claim held by the Company or any
Subsidiary, (iv) any payment of dividends on, or other distributions with
--
respect to, or any direct or indirect redemption or acquisition of, any shares
of the capital stock of the Company, or any agreement or commitment therefor,
(v) any mortgage, pledge, sale, assignment or transfer of any material tangible
-
or intangible assets of the Company, except in the ordinary course of business,
(vi) any loan by the Company or any Subsidiary to any officer, director,
--
employee, consultant or direct or indirect stockholder or any agreement or
commitment therefor, other than travel expense advances made by the Company to
its officers, directors, employees, consultants or stockholders in the ordinary
course of business, (vii) any material damage, destruction or loss (whether or
---
not covered by insurance) affecting the assets of the Company or any Subsidiary
or (viii) any increase, direct or indirect, in the compensation paid or payable
----
to any officer, director, employee, or consultant of the Company or any
Subsidiary other than in the ordinary course of business.
(b) The Company has heretofore furnished the Investor with a true and
complete copy of (i) (A) the audited financial statements of the Company for the
-
years ended December 31, 1996, 1997 and (B) the draft audited year-end financial
statements of the Company (which are being audited as of the date hereof) for
the year ended December 31, 1998. Such financial statements present fairly in
all material respects the financial position, results of operations,
shareholders' equity and cash flows of the Company 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 each in accordance with
GAAP
16
<PAGE>
consistently applied throughout the periods involved. Except as set forth on
Schedule 4.7, since December 31, 1998, the Company has not incurred any
liabilities or obligations (whether absolute, accrued, fixed, contingent, or
otherwise and whether due or to become due) of any nature, except for
liabilities, obligations or contingencies (a) which are reflected in the audited
-
balance sheet of the Company at December 31, 1998, (b) which were incurred in
-
the ordinary course of business after December 31, 1998, (c) which would not,
-
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, or (d) which arise as a result of this Agreement or the other
-
Documents. Since December 31, 1998, there has been no change in any significant
accounting (including tax accounting) policies, practices or procedures of the
Company.
(c) Except as set forth on Schedule 4.7, the Company has good and
marketable title to all properties, interests in properties and assets, real,
personal and mixed, tangible or intangible, used in the conduct of its business,
free and clear of all Liens other than Permitted Liens.
Section 4.8 Full Disclosure. Neither this Agreement, the financial
---------------
statements referred to in Section 4.7 nor any other Document contains any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made.
Section 4.9 Private Offering. Assuming the correctness of the
----------------
representations and warranties set forth in Sections 5.1, 5.2 and 5.3 hereof,
the offer and sale of the Series B Preferred Stock to the Investor hereunder is
exempt from the registration and prospectus delivery requirements of the
Securities Act. No form of general solicitation or general advertising was used
by the Company and its representatives in respect of the Series B Preferred
Stock, including, but not limited to, advertisements, articles, notices or other
communications published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.
Section 4.10 No Brokers. Except as may be set forth in Schedule 4.10,
----------
the Company has not engaged any broker, finder, commission agent or other such
intermediary in connection with the sale of the Series B Preferred Stock and the
Transactions, and the Company is under no obligation to pay any broker's or
finder's fee or commission or similar payment in connection with such
Transactions.
Section 4.11 Litigation. (a) Except as set forth on Schedule 4.11,
----------
there is no Proceeding, whether commenced, or to the knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries or any of
their respective
17
<PAGE>
properties or assets, except for such Proceedings that would not reasonably be
expected to have, singly or in the aggregate, a Material Adverse Effect, and
there is no Proceeding seeking to restrain, enjoin, prevent the consummation of
or otherwise challenge this Agreement or any of the other Documents or the
Transactions.
(b) Neither the Company nor any of its Subsidiaries is subject to (i) any
-
judgment, order or decree of any Governmental Body, or (ii) any rule or
--
regulation of any Governmental Body that has had a Material Adverse Effect or
that would reasonably be expected to have, singly or in the aggregate, a
Material Adverse Effect.
Section 4.12 Labor Relations. (a) Neither the Company nor any of its
--------------- -
Subsidiaries, nor any Person for whom the Company or any of its Subsidiaries is
or may be responsible by law or contract, is engaged in any unfair labor
practice that would reasonably be expected to have, singly or in the aggregate,
a Material Adverse Effect. There is (i) no unfair labor practice charge or
-
complaint pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries, or any Person for whom the Company or any of
its Subsidiaries is or may be responsible by law or contract, before the
National Labor Relations Board or any corresponding state, local or foreign
agency, and no grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is so pending or threatened, (ii) no strike,
--
labor dispute, slowdown or stoppage pending or threatened against the Company or
any of its Subsidiaries, or any Person for whom either the Company or any of its
Subsidiaries is or may be responsible by law or contract, and (iii) no union
---
representation claim or question existing with respect to the employees of the
Company or any of its Subsidiaries, or any Person for whom either the Company or
any of its Subsidiaries is or may be responsible by law or contract, and no
union organizing activities taking place. Neither the Company nor any of its
Subsidiaries, nor any Person for whom the Company or any of its Subsidiaries is
or may be responsible by law or contract, is a party to any collective
bargaining agreement.
(b) Except as set forth on Schedule 4.12 or such as would not
reasonably be expected to have in a Material Adverse Effect, neither the Company
nor any of its Subsidiaries has violated any applicable Laws relating to
employment or employment practices or the terms and conditions of employment,
including, without limitation, discrimination in the hiring, promotion or pay of
employees, wages, hours of work, plant closings and layoffs, collective
bargaining, immigration and occupational safety and health. To the knowledge of
the Company or any of its Subsidiaries, no charges with respect to or relating
to the Company or any of its Subsidiaries are pending before the Equal
Employment Opportunity Commission or any other corresponding state agency, and
the Company and each of its Subsidiaries have at all times been in material
compliance with all Legal Requirements prohibiting discrimination in the
workplace including, without limitation, laws and regulations that prohibit
discrimination and/or harassment on account
18
<PAGE>
of race, national origin, religion, gender, disability, age, immigration status,
workers compensation status or otherwise.
Section 4.13 Taxes. Except as set forth on Schedule 4.13:
-----
(a) The Company and its Subsidiaries have timely filed or will timely
file or cause to be timely filed, all Tax Returns (or extensions) required by
Law to be filed by any of the Company or its Subsidiaries. All such Tax Returns
and amendments thereto are or will be true, complete and correct in all material
respects.
(b) The Company and its Subsidiaries have paid, or where payment is not
yet due, have established, or will establish or cause to be established on or
before the Closing Date, an adequate accrual for the payment of all Taxes due
with respect to any period ending prior to or as of the Closing Date.
(c) No Audit by a Tax Authority is pending or threatened with respect to
any Tax Returns filed by, or Taxes due from, the Company or its Subsidiaries. No
issue has been raised by any Tax Authority in any Audit of the Company or its
Subsidiaries that if raised with respect to any other period not so audited
would reasonably be expected to result in a material proposed deficiency for any
period not so audited. No deficiency or adjustment for any Taxes has been
threatened, proposed, asserted or assessed against the Company or its
Subsidiaries. There are no liens for Taxes upon the assets of the Company or its
Subsidiaries, except liens for current Taxes not yet due.
(d) Neither the Company nor its Subsidiaries has given or been requested
to give any waiver of statutes of limitations relating to the payment of Taxes
or has executed powers of attorney with respect to Tax matters, which will be
outstanding as of the Closing Date.
(e) Neither the Company nor its Subsidiaries is a party to, or is bound by
any tax sharing, cost sharing, or similar agreement or policy relating to Taxes.
(f) Neither the Company nor its Subsidiaries has entered into agreements
that would result in the disallowance of any tax deductions pursuant to Section
280G of the Code. No "consent" within the meaning of Section 341(f) of the Code
has been filed with respect to the Company or its Subsidiaries.
19
<PAGE>
Section 4.14 Environmental Matters.
---------------------
(a) Each of the Company and its Subsidiaries is in compliance with all
Environmental Laws, except where such non-compliance would not reasonably be
expected to have a Material Adverse Effect, and neither the Company nor any of
its Subsidiaries has received any written communication that alleges that the
Company or its Subsidiaries is not in compliance with any Environmental Laws,
and there are no circumstances that may prevent or interfere with such
compliance in the future.
(b) There is no Environmental Claim pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries with respect
to the operations or business of the Company or its Subsidiaries, or against any
person or entity whose liability for any Environmental Claim the Company or its
Subsidiaries has retained or assumed either contractually or by operation of
law.
(c) To the Company's knowledge, there are no past or present actions,
activities, circumstances, conditions, events or incidents, including, without
limitation, the release, emission, discharge, presence or disposal of any
Material of Environmental Concern, that could form the basis of any
Environmental Claim against the Company or its Subsidiaries, or against any
person or entity whose liability for any Environmental Claim the Company or its
Subsidiaries has retained or assumed either contractually or by operation of
law, which would reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect.
(d) Without in any way limiting the generality of the foregoing, Schedule
4.14 sets forth (i) all permits, licenses and other governmental authorizations
-
held by the Company and its Subsidiaries, or required for any of their
operations or business, under any Environmental Law, including the current
status of each such permit, license and authorization, (ii) all on-site and to
--
the knowledge of the Company off-site locations where the Company or any of its
Subsidiaries has stored, disposed or arranged for the disposal of Materials of
Environmental Concern, (iii) to the knowledge of the Company, all underground
---
storage tanks, and the capacity and contents of such tanks, located on property
owned, leased or controlled by the Company or its Subsidiaries, (iv) to the
--
knowledge of the Company, the location and condition of any asbestos or lead
(including furnishings or lead-based paints) contained in or forming part of any
building, building component, structure or office space owned, leased or
controlled by the Company or its Subsidiaries, and (v) to the knowledge of the
-
Company, all PCBs or PCB-containing items that are used or stored at any
property owned, leased or controlled by the Company or its Subsidiaries.
20
<PAGE>
Section 4.15 ERISA. (a) Except as set forth on Schedule 4.15, none of
-----
the Company nor any of its Subsidiaries, or any other trade or business, whether
or not incorporated, that together with the Company or its Subsidiaries would be
deemed a "single employer" (within the meaning of Section 4001 of ERISA) (an
"ERISA Affiliate") is a "party in interest" (as defined in Section 3(14) of
ERISA) or a "disqualified person" (within the meaning of Section 4975 of the
Code), with respect to any profit-sharing, pension or retirement plan, program,
arrangement or agreement, or any other "employee benefit plan" (within the
meaning of Section 3(3) of ERISA) or any "plan" (within the meaning of Section
4975 of the Code) (collectively, each such plan, program, arrangement or
agreement an "Employee Benefit Plan").
---------------------
(b) With respect to each Employee Benefit Plan: (i) each Employee Benefit
-
Plan has been administered in compliance in all material respects, with its
terms including, but not limited to, any provisions relating to contributions
thereunder, and is in compliance in all material respects with the applicable
provisions of ERISA, the Code and all other Federal, state and other applicable
laws, rules and regulations, as they relate to such Employee Benefit Plans; (ii)
--
no "employee pension benefit plan" (as defined in Section 3(2) of ERISA) has
been the subject of a "reportable event" (as defined in Section 4043 of ERISA)
and there have been no "prohibited transactions" (as described in Section 4975
of the Code or Title I of ERISA) effected by the Company or any of its
Subsidiaries with respect to any Employee Benefit Plan and, to the knowledge of
the Company or any of its Subsidiaries, there have been no "prohibited
transactions" (as described in Section 4975 of the Code or Title I of ERISA)
effected by any Person other than the Company or any of its Subsidiaries with
respect to any Employee Benefit Plan; (iii) there are no proceedings, suits or
---
material claims (other than routine claims for benefits) pending or to the
knowledge of the Company threatened with respect to any Employee Benefit Plan,
the assets of any trust thereunder or the Employee Benefit Plan sponsor with
respect to the design or operation of any Employee Benefit Plan; (iv) no
--
condition exists or event or transaction has occurred in connection with any
Employee Benefit Plan that has resulted or is reasonably likely to result in the
Company or any of its Subsidiaries or any such ERISA Affiliate incurring any
liability, fine or penalty except as would not reasonably be expected to have,
singly or in the aggregate, a Material Adverse Effect; (v) no Employee Benefit
-
Plan is or ever has been subject to Title IV of ERISA and neither the Company
nor any of its Subsidiaries has any liability under Title IV of ERISA, whether
actual or contingent; and (vi) no amounts payable pursuant to any Employee
--
Benefit Plan will, in connection with the transactions contemplated under this
Agreement, the other Documents, fail for any reason to be deductible for Federal
income tax purposes.
Section 4.16 Intellectual Property. Each of the Company and its
---------------------
Subsidiaries owns or possesses adequate licenses or other rights to use all
material intellectual property, including but not limited to trademarks, service
marks, trade names, copyrights,
21
<PAGE>
computer software, and know-how, necessary to conduct its business as currently
conducted and as proposed to be conducted, and neither the Company nor any of
its Subsidiaries has received any written notice of infringement of or conflict
with asserted rights of others with respect to the use of such intellectual
property that would reasonably be expected to have a Material Adverse Effect. To
the knowledge of the Company, all intellectual property used in its business as
currently conducted and as proposed to be conducted is valid and enforceable and
the Company has performed all acts and has paid all required fees and taxes to
maintain all registrations and applications of such intellectual property in
full force and effect, except for any failure to do so which would not
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any of its Subsidiaries, in the conduct of their respective businesses as
now conducted or as proposed to be conducted, infringes or conflicts with any
right of any third party known to the Company, where such infringement or
conflict would reasonably be expected to have a Material Adverse Effect. Neither
the Company nor any of its Subsidiaries is, nor will it be as a result of the
execution and delivery of this Agreement and the other Documents or the
performance of any obligations hereunder and thereunder, in breach of any
license or other agreement relating to any intellectual property, except as
would not reasonably be expected to have a Material Adverse Effect. To the
knowledge of the Company, no third party is infringing or has infringed any
intellectual property of the Company or its Subsidiaries except for any
infringement that would not reasonably be expected to have a Material Adverse
Effect. Schedule 4.16 hereto lists all registered intellectual property owned or
licensed by the Company or its Subsidiaries.
Section 4.17 Compliance with Laws. Each of the Company and its
--------------------
Subsidiaries has obtained and has maintained in good standing any licenses,
permits, consents and authorizations required to be obtained by it under all
Legal Requirements relating to its business, other than those licenses, permits,
consents and authorizations the absence of which would not reasonably be
expected to have, singly or in the aggregate, a Material Adverse Effect, and any
such licenses, permits, consents and authorizations remain in full force and
effect, except as to any of the foregoing, the absence of which would not
reasonably be expected to have, singly or in the aggregate, a Material Adverse
Effect. Each of the Company and its Subsidiaries is in compliance, in all
material respects, with all Laws and there is no pending or, to the Company's
knowledge, threatened, Proceedings against either the Company or its
Subsidiaries pursuant to any Legal Requirements, other than any such Proceedings
which would not reasonably be expected to have, singly or in the aggregate, a
Material Adverse Effect.
Section 4.18 Agreements. Except as set forth on Schedule 4.18, neither
----------
the Company nor any of its Subsidiaries is a party to any written or oral (a)
-
Contract with any labor union; (b) Contract for the future purchase of fixed
-
assets or for the future purchase of materials, supplies or equipment in excess
of normal operating requirements; (c)
-
22
<PAGE>
Contract for the employment of any officer, individual employee or other person
on a fulltime basis or any contract with any Person on a consulting basis; (d)
-
agreement or indenture relating to the borrowing of money or to the mortgaging,
pledging or otherwise placing a Lien on any assets of the Company or any of its
Subsidiaries; (e) guaranty of any obligation for borrowed money; (f) material
- -
lease or agreement under which the Company or any of its Subsidiaries is lessee
of or holds or operates any property, real or personal, owned by any other
party; (g) material lease or agreement under which the Company or any of its
-
Subsidiaries is lessor of or permits any third party to hold or operate any
property, real or personal, owned or controlled by the Company or any of its
Subsidiaries; (h) agreement or other commitment for capital expenditures in
-
excess of $100,000; (i) Contract, agreement or commitment under which the
-
Company or any of its Subsidiaries is obligated to pay any broker's fees,
finder's fees or any such similar fees, to any third party in connection with
the transactions contemplated herein; or (j) any other Contract, agreement,
-
arrangement or understanding which is material to the business of the Company
and its Subsidiaries, taken as a whole. All such Contracts constitute the valid
and binding obligations of the Company or its Subsidiaries, as the case may be,
and, to the best knowledge of the Company, the other parties thereto,
enforceable in accordance with their terms, except as enforcement may be limited
by general principles of equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally. For the purposes of this
Section 4.18, "material" shall mean any Contract calling for payments from one
party to the other of more than $100,000.00.
Section 4.19 Year 2000. The Company represents and warrants that its
---------
computer system and software are able to accurately process date data, including
but not limited to, calculating comparing and sequencing from, into and between
the twentieth century (through the year 1999), the year 2000 and the twenty-
first century, including leap year calculations.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor represents and warrants to the Company that:
Section 5.1 Organization and Standing. The Investor is a corporation or
-------------------------
other legally recognizable entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization.
Section 5.2 Purchase for Own Account. The Investor is purchasing the
------------------------
Series B Preferred Stock to be purchased by it solely for its own account and
not as nominee or
23
<PAGE>
agent for any other person and not with a view to, or for offer or sale in
connection with, any current distribution thereof (within the meaning of the
Securities Act) that would cause the original purchase of the Series B Preferred
Stock to be in violation of the securities laws of the United States of America
or any state thereof, without prejudice, however, to its right at all times to
sell or otherwise dispose of all or any part of such Series B Preferred Stock
pursuant to a registration statement under the Securities Act or pursuant to an
exemption from the registration requirements of the Securities Act, and subject,
nevertheless, to the disposition of its property being at all times within its
control.
Section 5.3 Accredited Investor; No General Solicitation. (a) The
-------------------------------------------- -
Investor is knowledgeable, sophisticated and experienced in business and
financial matters and in investing in privately held business enterprises; it
has previously invested in securities similar to the Series B Preferred Stock
and it acknowledges that the Series B Preferred Stock has not been registered
under the Securities Act and understands that the Series B Preferred Stock must
be held indefinitely unless they are subsequently registered under the
Securities Act or such sale is permitted pursuant to an available exemption from
such registration requirement; it is able to bear the economic risk of its
investment in the Series B Preferred Stock and is presently able to afford the
complete loss of such investment; and it is an "accredited investor" as defined
in Regulation D promulgated under the Securities Act.
(b) The Investor did not make its investment decision to purchase the
-
Series B Preferred Stock based on any form of general solicitation or general
advertising used by the Company or iXL, including, but not limited to,
advertisements, articles, notices or other communications published in any
newspaper, magazine or similar medium or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
Section 5.4 Authorization; Consents. (a) The Investor has taken all
-----------------------
corporate actions necessary to authorize it (i) to execute, deliver and perform
-
all of its obligations under this Agreement, (ii) to perform all of its
--
obligations under the Documents and (iii) to consummate the transactions
---
contemplated hereby and thereby. Assuming the due authorization, execution and
delivery of the applicable Documents by the other parties thereto, this
Agreement constitutes a legally valid and binding obligation of the Investor
enforceable against it in accordance with its terms, except for (A) the effect
-
thereon of bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting the rights of creditors generally and (B)
-
limitations imposed by Federal or state law or equitable principles upon the
specific enforceability of any of the remedies, covenants or other provisions
thereof and upon the availability of injunctive relief or other equitable
remedies.
24
<PAGE>
(b) The execution and delivery by the Investor of this Agreement and the
other Documents to which the Investor is a party do not, and the performance of
its obligations under this Agreement and the other Documents and the
consummation of the Transactions will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Body under any Laws, except for (i) notification pursuant to and expiration or
-
termination of the waiting period under the HSR Act, (ii) required filings under
--
the Securities Act or state "blue sky" laws and (iii) where the failure to
---
obtain such consents, approvals, authorizations or permits or to make such
filings or notifications, would not, individually or in the aggregate,
reasonably be expected to prevent or materially delay the consummation of the
Transactions.
Section 5.5 ERISA. The Investor represents that either:
-----
(a) it is not acquiring the Series B Preferred Stock for or on behalf of
any Employee Benefit Plan;
(b) the assets used to acquire the Series B Preferred Stock are assets of
an insurance company general account and the purchase of the Preferred Stock
would be exempt under the provisions of Prohibited Transaction Class Exemption
95-60;
(c) the assets used to acquire the Series B Preferred Stock are assets of
a "venture capital operating company" or "real estate operating company" (as
defined in 29 C.F.R ' 25 10.3-101); or
(d) if it is otherwise acquiring the Series B Preferred Stock on behalf
of an employee pension benefit plan, an employee welfare benefit plan or a
"Plan," either directly or through an investment fund (such as a bank collective
investment fund or insurance company pooled separate account), then, assuming
that the plans identified to such Investor by the Company in writing are the
only employee benefit plans (as defined in Section 3 of ERISA) or Plans with
respect to which the Company is a "party in interest" or "disqualified person"
(as such terms are defined in section 3 of ERISA and section 4975 of the Code,
respectively), either
(i) no part of the funds to be used to purchase the Series B
Preferred Stock constitutes assets allocable to any trust that contains
assets of any of such employee benefit plans, or
(ii) exemption from the prohibited transaction rules applies such that
the use of such funds does not constitute a non-exempt prohibited
transaction in violation of section 406 of ERISA or section 4975 of the
Code, which could be subject to a civil
25
<PAGE>
penalty assessed pursuant to section 502 of ERISA or a tax imposed under
section 4975 of the Code.
ARTICLE VI
COVENANTS
Section 6.1 Compliance with Laws; Maintenance of Licenses. The Company
---------------------------------------------
shall, and shall cause each of its Subsidiaries to, comply with all Legal
Requirements (including all Environmental Laws) to which any of them is subject,
and maintain, obtain and keep in effect all licenses, permits, franchises and
other governmental authorizations necessary to the ownership or operation of its
properties or the conduct of its businesses, except to the extent that the
failure to so comply or maintain, obtain and keep in effect would not reasonably
be expected to have, singly or in the aggregate, a Material Adverse Effect.
Section 6.2 Information to Prospective Holders. Provided that a sale
----------------------------------
pursuant to Rule 144A is available to the Holders, until the closing of a QPO,
the Company shall, upon the request of any Holder, deliver to such Holder and
any prospective purchaser designated by such Holder promptly following the
request of such Holder or such prospective purchaser the information which such
Holder or prospective purchaser may reasonably request in order to comply with
the information requirements of Rule 144A.
Section 6.3 Inspection of Properties and Records. Until the closing of
------------------------------------
a QPO, the Company agrees to allow, and to cause each of its Subsidiaries to
allow, each Holder who continues to hold Series B Preferred Stock with an
aggregate liquidation value of at least $1,000,000 (or, such Persons as any of
them may designate) (individually and collectively, "Inspectors"), subject to
----------
appropriate agreements as to confidentiality, (i) to visit and inspect any of
-
the properties of the Company or any of its Subsidiaries, (ii) to examine all
--
their books of account, records, reports and other papers and to make copies and
extracts therefrom, (iii) to discuss its affairs, finances and accounts with its
---
officers and employees, and (iv) to discuss the financial condition of the
--
Company and its Subsidiaries with their independent accountants upon reasonable
notice to the Company of its intention to do so and so long as the Company shall
be given the reasonable opportunity to participate in such discussions (and by
this provision the Company authorizes such accountants to have such discussions
with the Inspectors). All such visits, examinations and discussions set forth
in the preceding sentence shall be at such reasonable times and as often as may
be reasonably requested.
26
<PAGE>
Section 6.4 Financial Statements. Until the closing of a QPO, the
--------------------
Company will deliver to each Holder who continues to hold Preferred Stock with
an aggregate liquidation value of at least $2,000,000:
(a) Not more than 30 days after the end of each month, beginning with
April, 1999, a consolidated balance sheet of the Company as at the end of such
month and the related consolidated statements of income of the Company for such
month and (in the case of all months other than the first month of such fiscal
year) for the period from the beginning of the current fiscal year to the end of
such month, and setting forth, in each case in comparative form, figures for the
corresponding month and each previous month and period in the Company's budget
for the current fiscal year, certified by the chief financial officer of the
Company as fairly presenting in all material respects the financial condition of
the Company as at the dates indicated and the results of their operations for
the periods indicated, prepared in accordance with GAAP consistently applied
except for the absence of footnotes and subject to changes resulting from
periodic adjustments; and
(b) Not more than 90 days after the end of each fiscal year of the
Company, a consolidated balance sheet of the Company as of such year and the
related consolidated statements of income and cash flows of the Company for such
year, corresponding figures from the preceding fiscal year, and in the case of
such consolidated financial statements, accompanied by a report thereon of Price
Waterhouse Coopers or such other independent public accountants of recognized
national standing selected by the Company, which report shall state that such
consolidated financial statements were prepared in accordance with GAAP
consistently applied and present fairly in all material respects the
consolidated financial condition of the Company as of the dates indicated; and
(c) Not later than 30 days prior to the start of each fiscal year
beginning with the fiscal year beginning January 1, 2000, monthly and annual
management projections and budgets for such fiscal year.
Section 6.5 Indemnification for Finder's Fees. The Company hereby
---------------------------------
agrees to indemnify the Investor, each of its Affiliate and each director,
officer, partner, employee, counsel, agent or representative thereof against and
hold them harmless from all losses, claims, damages or other liabilities arising
from any finder's or other brokers or investment banker fees with respect to any
finder, broker or investment banker retained by or authorized to act on behalf
of, iXL, the Company or any of its respective Subsidiaries, with respect to the
transactions contemplated hereunder.
Section 6.6 HSR Filing. Each party hereto agrees to (i) take reasonable
---------- -
best efforts to prepare and file, as soon as practicable after the date hereof,
but in any event in not more than 10 Business Days from the date hereof, the
notification required under the
27
<PAGE>
HSR Act with respect to the Transactions, (ii) request early termination of the
--
waiting period with respect thereto, and (iii) diligently respond to any
---
inquiries arising therefrom.
Section 6.7 Publicity; Press Releases. Neither party hereto shall issue
-------------------------
any press release or make any public disclosure (other than any public
disclosure required by law) identifying or describing the Investor's investment
in the Company contemplated hereby or any of the other Transactions unless such
press release or public disclosure is approved by the other party in writing and
in advance, provided, however, that this Section 6.7 shall not prevent iXL from
disclosing any such information required to be disclosed by the federal
securities laws in a registration statement filed by iXL pursuant to the
Securities Act or in any of its filings pursuant to the Exchange Act.
Section 6.8 Lock-up. The Investor agrees that it shall not Transfer (as
-------
such term is defined in the Stockholders' Agreement) any shares of Preferred
Stock or Common Stock issuable upon conversion of Preferred Stock for 180 days
after any underwritten public offering of shares of common stock of iXL unless
the managing underwriter for such offering decides such restriction is
unnecessary, and each Holder agrees to execute any agreement or document
reasonably requested by any such underwriter which relates to such restriction;
provided, however, that this Section 6.8 shall not apply to (a) transfers
pursuant to Section 1.2(i) or Section 2 of the Stockholders' Agreement, (b) any
transfer pursuant to the exercise of incidental registration rights of the
Investor or (c) any transfer required under the Investors Agreement or
explicitly permitted under Sections 1(c) or 2(c) of the Investors Agreement.
Section 6.9 Consent. The Investor hereby consents to the amendment (and
-------
if desirable, restatement) of the Certificate of Incorporation attached hereto
as Exhibit G, the amendment to the Series A Certificate of Designations and the
creation of the Series B Preferred Stock and agrees to execute and deliver any
instruments which are necessary to reflect such consent.
Section 6.10 Securities Act Registration Statements. Except for
--------------------------------------
securities of the Company registered on Form S-4 or Form S-8 promulgated under
the Securities Act or any successor forms thereto, the Company shall not file
any registration statement under the Securities Act covering any securities
unless it shall first have given the Investor written notice thereof. In
connection with any registration statement referred to in this Section 6.11, the
Company will indemnify, to the extent permitted by law, the Investor, its
partners, officers and directors and each person, if any, who controls the
Investor within the meaning of Section 15 of the Securities Act, against all
losses, claims, damages, liabilities and expenses caused by any untrue statement
or alleged untrue statement of a material fact contained in any registration
statement or prospectus or any preliminary prospectus or any amendment thereof
or supplement thereto or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary
28
<PAGE>
to make the statements therein not misleading, except insofar as such losses,
claims, damages, liabilities or expenses are caused by any untrue statement or
alleged untrue statement or omission or alleged omission contained in written
information furnished to the Company by such Investor for use in such
registration statement. If, in connection with any such registration statement,
the Investor shall furnish written information to the Company expressly for use
in the registration statement, the Investor will indemnify, to the extent
permitted by law, the Company, its directors, each of its officers who sign such
registration statement and each person, if any, who controls the Company within
the meaning of the Securities Act against all losses, claims, damages,
liabilities and expenses caused by any untrue statement or alleged untrue
statement of a material fact or any omission or alleged omission of a material
fact required to be stated in the registration statement or prospectus or any
preliminary prospectus or any amendment thereof or supplement thereto or
necessary to make the statements therein not misleading, but only to the extent
that such untrue statement or alleged untrue statement or such omission or
alleged omission is contained in information so furnished in writing by such
Investor for use therein, provided, however, that in no case shall the Investor
be liable or responsible for any amount in excess of the net amount of proceeds
(after taking into account underwriters' discounts and commissions) actually
received by the Investor from the sale of securities pursuant to such
registration statement, prospectus or preliminary prospectus.
Section 6.11 Reasonable Best Efforts. Each of the parties hereto agrees
-----------------------
to use its reasonable best efforts to take, or cause to be taken, all
appropriate action, and to do, or cause to be done, all actions required to be
done by such party pursuant to this Agreement in the most expeditious manner
practicable, including, but not limited to, the satisfaction of all conditions
to the Closing.
Section 6.12 Access to Information. From and after the date hereof and
---------------------
until the Closing Date, the Company shall make available for inspection by the
Investor or its representatives, during normal business hours, the Company's
books and records and all other documents reasonably requested by the Investor
or its representatives to permit the Investor and its representatives to make
reasonable inspection and examination of the business and affairs of the
Company.
Section 6.13 Use of Proceeds. The Company shall use the proceeds from
---------------
the sale of the Series B Preferred Stock for general corporate purposes,
including without limitation, research and development, marketing and technology
capital improvements.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Notices. All notices, demands, requests, consents or
-------
approvals (collectively, "Notices") required or permitted to be given hereunder
-------
or which are given with respect to this Agreement shall be in writing and shall
be personally delivered or mailed, registered or certified, return receipt
requested, postage prepaid (or by a substantially similar method), or
delivered by a reputable overnight courier service with charges prepaid, or
transmitted by hand delivery, telegram, telex or facsimile, addressed as set
forth below, or such other address (and with such other copy) as such party
shall have specified most recently by written notice. Notice shall be deemed
given or delivered on the date of service or transmission if personally served
or transmitted by telegram, telex or facsimile. Notice otherwise sent as
provided herein shall be deemed given or delivered on
29
<PAGE>
the third Business Day following the date mailed or on the next Business Day
following delivery of such notice to a reputable overnight courier service.
To the Company:
Consumer Financial Network, Inc.
Two Park Place
1888 Emery Street, 2nd Floor
Atlanta, Georgia, 30318
Attention: Sandra H. Cuttler
Telecopy No.: (770) 291-7099
with a copy (which shall not constitute Notice) to:
Minkin & Snyder, PC
One Buckhead Plaza
3060 Peachtree Street, N.E., Suite 1100
Atlanta, Georgia 30305
Attention: James S. Altenbach, Esq.
Telecopy No.: (404) 261-5064
and
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Margaret A. Davenport
Telecopy No.: (212) 909-6836
with an additional copy (which shall not constitute Notice) to:
Kelso & Company
320 Park Avenue
24th Floor
New York, New York 10022
Attention: James J. Connors II, Esq.
Telecopy No.: (212) 223-2379
30
<PAGE>
To the Investor:
General Electric Capital Corporation
120 Long Ridge Road
Stamford, CT 06927
Attention: General Counsel of GE Equity
Telecopy: (203) 357-3047
with a copy (which shall not constitute Notice) to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: William M. Gutowitz, Esq.
Telecopy No.: (212) 310-8167
To any subsequent Holder:
To the address specified by such Holder to the Company upon such Holder's
purchase of the Series B Preferred Stock.
Section 7.2 Successors and Assigns. This Agreement shall be binding upon
----------------------
and shall inure to the benefit of the parties hereto, and their respective
successors and permitted assigns; provided that (i) neither this Agreement nor
-
any rights or obligations hereunder may be transferred or assigned by the
Company (except by operation of law in any merger) and (ii) neither this
--
Agreement nor any rights or obligations hereunder may be transferred or assigned
by any Holder except to any Person to whom such Holder has transferred Series B
Preferred Stock to the extent not prohibited by the Stockholders' Agreement.
Section 7.3 No Waivers; Amendments. (a) No failure or delay by any party
----------------------
in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
(b) This Agreement may not be amended or modified, nor may any provision
hereof be waived, other than by a written instrument signed by (x) the Company
-
and (y) each Holder to which any such amendment pertains.
-
31
<PAGE>
Section 7.4 Counterparts. This Agreement may be signed in counterparts,
------------
each of which shall constitute an original and which together shall constitute
one and the same agreement.
Section 7.5 Section Headings. The section headings contained in this
----------------
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
Section 7.6 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
---------------------------------------------------------
TRIAL. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
- -----
LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN
THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OR RULES OF CONFLICT OF LAWS
TO THE EXTENT SUCH PRINCIPLES OR RULES WOULD REQUIRE OR PERMIT THE APPLICATION
OF THE LAWS OF ANOTHER JURISDICTION.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK IN RESPECT OF ANY ACTION ARISING OUT OF OR RELATING TO THIS
AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE COMPANY
AGREES THAT IT WILL NOT COMMENCE ANY SUCH ACTION IN ANY OTHER JURISDICTION. EACH
OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH ACTION BROUGHT IN ANY SUCH
COURT AND ANY CLAIM THAT ANY SUCH ACTION BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. NOTWITHSTANDING THE FOREGOING, NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE HOLDER TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE COMPANY IN ANY OTHER JURISDICTION.
EACH OF THE PARTIES HERETO HEREBY WAIVES THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE OTHER DOCUMENTS, OR ANY DEALINGS BETWEEN THEM RELATING
TO
32
<PAGE>
THE SUBJECT MATTER OF THE HOLDER'S INVESTMENT IN THE COMPANY CONTEMPLATED
HEREBY. THE SCOPE OF THIS JURY TRIAL WAIVER SHALL BE LIMITED TO DISPUTES BETWEEN
THE COMPANY AND THE HOLDER AND SHALL NOT EXTEND TO DISPUTES BETWEEN THE COMPANY
AND ANY OTHER PERSON.
Section 7.7 Entire Agreement. This Agreement, together with the other
----------------
Documents, constitutes the entire agreement and understanding among the parties
hereto with respect to the subject matter hereof and thereof and supersedes any
and all prior agreements, documents, projections, representations, warranties
and understandings, written or oral, relating to the subject matter hereof.
Section 7.8 Severability. Any term or provision of this Agreement which
------------
is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdictions, it being intended that
all rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.
Section 7.9 Further Assurances. The Company shall, and shall cause each
------------------
of its Subsidiaries to, at its cost and expense, upon request of any Holder,
duly execute and deliver, or cause to be duly executed and delivered, to such
Holder such further instruments and do or cause to be done such further acts as
may be necessary or proper in the reasonable opinion of such Holder to carry out
more effectually the provisions and purposes of this Agreement and the other
Documents.
Section 7.10 Survival of Representations, Warranties and Agreements; No
----------------------------------------------------------
Recourse. The representations, warranties and agreements of the Investor and
- --------
the Company in this Agreement shall survive the Closing until the date that is
12 months from the date hereof. Notwithstanding the foregoing, the covenants
contained in Article VI and the agreements contained in this Article VII shall
survive the Closing indefinitely. In no event shall any Holder have any recourse
against the present or former directors, officers or stockholders of the Company
or any of its Affiliates with respect to any representation, warranty or
agreement made by the Company in this Agreement, except in the case of fraud, in
which case such Holder's rights shall be governed by applicable state law.
Section 7.11 Disclosure of Financial Information. Each Holder is hereby
-----------------------------------
authorized to deliver a copy of any financial statement or any other information
relating to the business, operations or financial condition of the Company or
each of its Subsidiaries which may be furnished to it hereunder or otherwise, to
any other Holder, any court,
33
<PAGE>
Governmental Body claiming to have jurisdiction over such Holder, to the
National Association of Insurance Commissioners or similar organization, as may
be required or appropriate in response to any summons or subpoena in connection
with any litigation, to the extent necessary to comply with any law, order,
regulation or ruling applicable to such Holder, or to any rating agency, in
order to protect its investment hereunder; provided, however, that prior to
disclosing any such information, such Holder shall provide the Company with
prompt written notice so that the Company may seek a protective order or other
appropriate remedy if the Company reasonably determines that such information
must be kept confidential.
Each Holder is hereby authorized to deliver a copy of any financial
statement or any other information relating to the business, operations or
financial condition of the Company or each of its Subsidiaries which may be
furnished to it hereunder or otherwise, to any Person which shall, or shall have
any right or obligation to, succeed to all or any part of such Holder's interest
in any of the Series B Preferred Stock (or any Common Stock into which such
Series B Preferred Stock is convertible) and this Agreement or to any actual
purchaser or assignee thereof; provided, however, that no disclosure may be made
unless such other Person first executes a confidentiality agreement reasonably
acceptable to the Company with respect to any such information disclosed.
Section 7.12 Termination. At any time after August 31, 1999, either
-----------
party may terminate this Agreement if the Closing shall not have taken place by
August 31, 1999, unless the failure to consummate the Closing is the result of a
willful and material breach by the party seeking to terminate this Agreement.
In the event of the termination of this Agreement pursuant to this Section 7.12,
this Agreement shall be of no further force and effect.
34
<PAGE>
IN WITNESS WHEREOF, this Stock Purchase Agreement has been signed by each of the
parties hereto as of the date first written above.
CONSUMER FINANCIAL NETWORK, INC.
Address: By: /s/ M. Wayne Boylston
- ------- _____________________________
Title: Executive Vice President
___________________________
GE CAPITAL EQUITY INVESTMENTS, INC.
By: General Electric Investment Corporation,
its investment manager
120 Long Ridge Road By: /s/ Patrick J. McNeela
Stamford, CT 06927 --------------------------------
Title: Vice President
-----------------------------
<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
NAME OF INVESTOR PREFERRED STOCK PURCHASED AGGREGATE PURCHASE
---------------- ------------------------- ------------------
PRICE
-----
<S> <C> <C> <C>
1 GE Capital Equity 16,190,475 shares of Series B $49,999,424.90
Investments, Inc. Convertible Preferred Stock
</TABLE>
36
<PAGE>
CERTIFICATE OF DESIGNATIONS,
POWERS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL
AND OTHER SPECIAL RIGHTS
OF THE
SERIES B CONVERTIBLE PREFERRED STOCK
OF
CONSUMER FINANCIAL NETWORK, INC.
Pursuant to Section 151
-----------------------
of the Delaware General Corporation Law
---------------------------------------
The undersigned, , a duly elected officer of
CONSUMER FINANCIAL NETWORK, INC. (the "Corporation"), a corporation duly
organized and existing under the General Corporation Law of the State of
Delaware, does hereby certify that pursuant to the authority contained in
Article 4th of the Corporation's Amended and Restated Certificate of
Incorporation, and in accordance with the provisions of Sections 103 and 151 of
the Delaware General Corporation Law, the Corporation's Board of Directors has
adopted the following resolution creating the following class of the
Corporation's $.01 par value Convertible Preferred Stock and determining the
voting powers, designations, powers, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations and
restrictions thereof, of such class:
RESOLVED, that, pursuant to authority conferred upon the Board of
Directors by the Amended and Restated Certificate of Incorporation of the
Corporation (the "Certificate of Incorporation"), 16,190,475 shares of the
Preferred Stock of the Corporation shall be hereby designated Series B
Convertible Preferred Stock, liquidation value $3.0882 per share (the "Series B
Preferred Stock"). The designations, powers, preferences, and relative,
participating, optional and other special rights and the qualifications,
limitations and restrictions of the Series B Preferred Stock in addition to
those set forth in the Certificate of Incorporation of the Corporation shall be
as follows (all terms used herein without definition shall have the meaning
assigned thereto in Section 8 hereof):
1. Voting Rights. Except as otherwise provided by applicable law, each
-------------
holder of the Series B Preferred Stock (i) shall be entitled to vote with the
-
holders of the Common Stock on all matters submitted for a vote of holders of
the Common Stock, (ii) shall be entitled to a number of votes per share of
--
Series B Preferred Stock equal to the Conversion Rate then in effect and (iii)
---
shall be entitled to notice of any stockholders' meeting in accordance with the
certificate of incorporation and by-laws of the Corporation.
2. Dividends. (a) Dividends on the Common Stock. The Corporation may
--------- -----------------------------
make distributions (as defined below) on the Common Stock, provided that no
distributions shall be declared or paid with respect to the Common Stock without
there
<PAGE>
2
being contemporaneously declared and paid a dividend on the Series B Preferred
Stock (with the same record and payment date) so that each share of Series B
Preferred Stock shall receive a dividend equal to the distribution paid per
share of Common Stock times the number of shares of Common Stock into which the
Preferred Stock is then convertible. For the purpose of this Section 2, unless
the context otherwise requires, "distribution" shall mean the transfer of cash
or property by the Corporation without consideration, whether by way of dividend
or otherwise, payable other than in Common Stock, or the purchase or redemption
of shares of the Corporation for cash or property, including any such transfer,
purchase or redemption by a subsidiary of the Corporation.
(b) Dividends on the Series A Preferred Stock. The Corporation may make
-----------------------------------------
distributions on the Series A Preferred Stock, provided that no distributions
shall be declared or paid with respect to the Series A Preferred Stock without
there being contemporaneously declared and paid a dividend on the Series B
Preferred Stock (with the same record and payment date) so that each share of
Series B Preferred Stock and each share of Series A Preferred Stock shall
receive a dividend pro rata based on the relative number of shares of Common
--------
Stock into which each such respective share of Series B Preferred Stock and
Series A Preferred Stock is convertible.
3. Liquidation. (a) Liquidation Value. In the event of any Liquidation
----------- -----------------
Event, the holders of the Series B Preferred Stock shall be entitled pari passu
to be paid, before any distribution or payment is made upon any Common Stock,
but on a pari passu basis with the holders of the Series A Preferred Stock and
any other parity securities hereafter authorized and issued by the Corporation
("Parity Securities"), an amount in cash equal to the Liquidation Value of each
share of the Series B Preferred Stock held by them, plus an amount equal to all
declared and unpaid dividends thereon. If upon any Liquidation Event, the
Corporation's assets to be distributed among the holders of the Series A
Preferred Stock, the Series B Preferred Stock and any other Parity Securities
are insufficient to permit payment in full of the Liquidation Value to the
holders of the Series B Preferred Stock, the Series A Preferred Stock and any
other Parity Securities, such assets shall be distributed ratably among them
based upon the respective amounts that would be payable on the Series B
Preferred Stock, the Series A Preferred Stock and any other Parity Securities if
all amounts payable thereon were paid in full.
(b) Notice of Liquidation Event. At least fifteen (15) days' previous
---------------------------
notice by mail, postage prepaid, shall be given to the holders of record of the
Series B Preferred Stock of any Liquidation Event, such notice to be addressed
to each such holder at the address of such holder appearing on the books of the
Corporation or given by such holder to the Corporation for the purpose of
notice, or if no such address appears or is so given, at the place where the
principal office of the Corporation is located. Such notice shall
<PAGE>
3
state the anticipated date fixed for the Liquidation Event, the Liquidation
Value, and shall call upon such holder to surrender to the Corporation on said
date at the place designated in the notice such holder's certificate or
certificates representing their Series B Preferred Stock; provided that failure
to so surrender such certificate or certificates shall not affect such holder's
rights under this Section 3.
(c) No Participation in Balance. Upon any Liquidation Event, after the
---------------------------
holders of the Series B Preferred Stock have been paid in full the amounts to
which they are entitled pursuant to Section 3(a), the holders of Series B
Preferred Stock shall not share in any remaining assets of the Corporation
pursuant to this Section 3.
(d) Adjustment to Liquidation Value. If the Corporation subdivides (by
-------------------------------
any stock split, stock dividend, recapitalization or otherwise) Series B
Preferred Stock into a greater number of shares, the Liquidation Value of such
Series B Preferred Stock will be pro portionately reduced, and if the
Corporation combines (by reverse stock split or otherwise) Series B Preferred
Stock into a lesser number of shares, the Liquidation Value of such Series B
Preferred Stock will be proportionately increased.
4. Conversion. (a) Conversion Right; Conversion Rate; Corporation's
---------- ------------------------------------------------
Option to Convert. Subject to the provisions of this Section 4, a holder of
- -----------------
Series B Preferred Stock shall have the right at any time, at such holder's
option, to convert its outstanding shares of Series B Preferred Stock, in whole
or in part, into the number of shares of Common Stock derived by multiplying the
number of shares of Series B Preferred Stock to be converted by the Conversion
Rate (as defined in Section 4(c) hereof) then in effect. In addition, upon the
occurrence of a Qualified Public Offering, the Corporation shall have the right,
at its option, to convert the then outstanding shares of Series B Preferred
Stock, in whole or in part, into the number of shares of Common Stock derived by
multiplying the number of shares of Series B Preferred Stock to be converted by
the Conversion Rate then in effect.
(b) Exercise of Conversion Right. The right to convert shall be exercised
----------------------------
by the holder thereof by giving at least 10 days' prior written notice to the
Corporation that the holder elects to convert a stated number of shares of
Series B Preferred Stock into Common Stock and by surrender of a certificate or
certificates for the shares so to be converted to the Corporation at its
principal office (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to the holder or holders of the
Series B Preferred Stock) at any time during its usual business hours on the
date set forth in such notice, together with a statement of the name or names
(with address) in which the certificate or certificates for shares of Common
Stock shall be issued.
<PAGE>
4
(c) Conversion Rate.
---------------
(i) The initial rate of conversion for the Series B Preferred Stock is
1.00 (the "Conversion Rate"). In order to prevent dilution of the conversion
rights granted under this Section 4 the Conversion Rate will be subject to
adjustment from time to time pursuant to this Section 4(c).
(ii If and whenever the Corporation shall issue or sell any shares of its
Common Stock including pursuant to any rights or options to subscribe for or to
purchase Common Stock or any stock or other securities convertible into or
exchangeable for Common Stock (such rights or options being herein called
"Options" and such convertible or exchangeable stock or securities being herein
called "Convertible Securities") for a consideration per share less than the
Antidilution Price, then the Conversion Rate in effect immediately prior to such
issuance or sale shall be increased to the product of (1) the then effective
-
Conversion Rate multiplied by (2) a fraction, the numerator of which shall be
-
the sum of (w) the number of shares of Common Stock Deemed Outstanding
immediately prior to such issuance or sale plus (x) the number of shares of
Common Stock so issued or sold and the denominator of which shall be the sum of
(y) the number of shares of Common Stock Deemed Outstanding immediately prior to
such issuance or sale plus (z) the number of shares of Common Stock that could
-
have been purchased with the total consideration received by the Corporation in
such issuance or sale had such shares been purchased at a purchase price per
share equal to the Antidilution Price. Notwithstanding the foregoing, no
adjustment to the Conversion Rate shall be made for the issuance or sale of any
shares of Common Stock which constitute Excluded Shares (other than issuances of
the type referred to in clauses (v) and (vi) of the definition of Excluded
Shares in the Investors Agreement, as to which such adjustment to the Conversion
Rate shall be made pursuant to the terms hereof).
(ii If the Corporation at any time subdivides (by any stock split, stock
dividend, recapitalization or otherwise) one or more classes of its outstanding
shares of its Common Stock into a greater number of shares, the Conversion Rate
in effect immediately prior to such subdivision will be proportionately
increased, and if the Corporation at any time combines (by reverse stock split
or otherwise) one or more classes of its outstanding shares of its Common Stock,
the Conversion Rate in effect immediately prior to such combination will be pro
portionately reduced.
(iv In case the Corporation shall declare a dividend or make any other
distribution upon any stock of the Corporation payable in (a) Common Stock or
(b) Options or Convertible Securities without making a ratable distribution
thereof to holders
<PAGE>
5
of Series B Preferred Stock (based upon the number of shares
of Common Stock into which such Series B Preferred Stock would be convertible,
assuming conversion), then the Conversion Rate in effect immediately prior to
the declaration of such dividend or distribution shall be increased to the
product of (1) the then effective Conversion Rate multiplied by (2) a fraction,
- -
the numerator of which shall be the number of shares of Common Stock Deemed
Outstanding immediately after such declaration and the denominator of which
shall be the number of shares of Common Stock Deemed Outstanding immediately
prior to such declaration.
(v) Effect on Conversion Rate of Certain Events. For purposes of
-------------------------------------------
determining the adjusted Conversion Rate, the following will be applicable:
(A) Change in Number of Options, Option Price or Conversion Rate. If the
-------------------------------------------------------------
number of Options available, the purchase price provided for in any Options, the
additional con sideration, if any, payable upon the conversion or exchange of
any Convertible Securities, or the rate at which any Convertible Securities are
convertible into or exchangeable for Common Stock shall change at any time
(other than a change resulting from the antidilution provisions thereof), the
Conversion Rate in effect at the time of such change will be readjusted to the
Conversion Rate which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed number,
purchase price, additional consideration or changed conversion rate, as the case
may be, at the time initially granted, issued or sold; provided, however, that
-------- -------
if such adjustment would result in a decrease of the Conversion Rate then in
effect, such adjustment will not be effective until 20 days after written notice
thereof has been given by the Corporation to all holders of the Series B
Preferred Stock (and then only with respect to the shares of Series B Preferred
Stock outstanding and not previously converted to Common Stock as of such
effective date).
(B) Treatment of Expired Options and Unexercised Convertible Securities.
-------------------------------------------------------------------
Upon the expiration of any Option or the termination of any Option or the
termination of any right to convert or exchange any Convertible Security without
the exercise of any such Option or right, the Conversion Rate then in effect
hereunder will be adjusted to the Conversion Rate which would have been in
effect at the time of such expiration or termination had such Option or
Convertible Security, to the extent outstanding immediately prior to such
expiration or termination, never been issued.
(vi) Notwithstanding anything to the contrary set forth herein, no
adjustment to the Conversion Rate under clause (ii) above shall take effect with
respect to any Common Stock, Options or Convertible Securities which are sold,
issued, deemed sold or deemed
<PAGE>
6
issued to a holder of Series B Preferred Stock pursuant to the exercise of such
holder's preemptive rights pursuant to Section 5 of the Investors Agreement.
(d) Reorganization, Reclassification, Consolidation, Merger or Sale. Any
---------------------------------------------------------------
capital reorganization, reclassification, consolidation, merger or sale of all
or substantially all of the Corporation's assets to another Person which is
effected in such a way that holders of Common Stock are entitled to receive
(either directly or upon subsequent liquidation) stock, securities or assets
with respect to or in exchange for Common Stock is referred to herein as an
"Organic Change." Prior to the consummation of any Organic Change, the
Corporation will make appropriate provisions to ensure that each of the holders
of Series B Preferred Stock will thereafter have the right to acquire and
receive such shares of stock, securities, cash or other assets as such holder
would have received in connection with such Organic Change if such holder had
converted its Series B Preferred Stock immediately prior to such Organic Change.
The Corporation will not effect any such consolidation, merger or sale, unless
prior to the consummation thereof, the successor corporation (if other than the
Corporation) resulting from consolidation or merger or the Corporation
purchasing such assets assumes by written instrument the obligation to deliver
to each such holder such shares of stock, securities or assets as, in accordance
with the foregoing provisions, such holder may be entitled to acquire.
(e) Certain Events. If any event occurs of a type similar to that
--------------
contemplated by the provisions of this Section 4 but not expressly provided for
by such provisions, then the Corporation's Board of Directors will make an
appropriate adjustment in the applicable Conversion Rate so as to protect the
rights of the holders of Series B Preferred Stock; provided, however, that no
-------- -------
such adjustment will decrease the applicable Conversion Rate as otherwise
determined pursuant to this Section 4 or decrease the number of shares of Common
Stock issuable upon conversion of each share of Series B Preferred Stock.
(f) Notices.
-------
(i) The Corporation will, to the extent practicable, give written notice
to all holders following the commencement of proceedings for any of the
following events so as to give holders of Series B Preferred Stock at least 20
days prior notice to the consummation of any such event within which to exercise
their rights to convert: (A) any Liquidation Event, or (B) any event causing an
- -
adjustment in the Conversion Rate.
(ii As soon as practicable following any adjustment of a Conversion Rate,
the Corporation will give written notice thereof to all holders of Series B
Preferred Stock.
<PAGE>
7
(iii The Corporation will give written notice to all holders of Series B
Preferred Stock at least 20 days prior to the date on which the Corporation
closes its books or fixes a record date (a) with respect to any dividend or
-
distribution upon Common Stock, (b) with respect to any pro rata subscription
-
offer to holders of Common Stock or (c) for determining rights to vote with
-
respect to any Organic Change, dissolution or liquidation.
(iv The Corporation will also give written notice to the holders of
Series B Preferred Stock at least 20 days prior to the date on which any Organic
Change will take place.
5. Mechanics of Conversion. (a) Issuance of Certificates; Time
----------------------- ------------------------------
Conversion Effected. Promptly after the receipt of the written notice referred
- -------------------
to in Section 4(b) hereof, and surrender of the certificate or certificates for
the share or shares of the Series B Preferred Stock to be converted, the
Corporation shall issue and deliver, or cause to be issued and delivered, to the
holder, registered in such name or names as such holder may direct, a
certificate or certificates for the number of shares of Common Stock issuable
upon the conversion of such share or shares of Series B Preferred Stock. At the
effective time of conversion, the rights of the holder of such share or shares
of Series B Preferred Stock shall cease, and the Person or Persons in whose name
or names any certificate or certificates for shares of Common Stock shall be
issuable upon such conversion shall be deemed to have become the holder or
holders of record of the shares represented thereby.
(b) Fractional Shares; Partial Conversion. No payment or adjustment shall
-------------------------------------
be made upon any conversion on account of any cash dividends paid or payable on
the Common Stock issued upon such conversion. In case the number of shares of
Series B Preferred Stock represented by the certificate or certificates
surrendered pursuant to Section 4 exceeds the number of shares converted, the
Corporation shall, upon such conversion execute and deliver to the holder
thereof, at the expense of the Corporation, a new certificate or certificates
for the number of shares of Series B Preferred Stock represented by the
certificate or certificates surrendered which are not to be converted. If any
fractional interest in a share of Common Stock is deliverable upon any such
conversion, the Corporation, in lieu of delivering fractional shares thereof,
shall pay to the holder surrendering the Series B Preferred Stock for conversion
an amount in cash equal to the Fair Market Value of such fractional interest as
of the date of conversion.
(c) Stock to be Reserved. The Corporation will at all times reserve and
--------------------
keep available out of its authorized Common Stock or its treasury shares, solely
for the purpose of issue upon the conversion of the Series B Preferred Stock as
herein provided, such number of shares of Common Stock as shall then be issuable
upon the conversion of
<PAGE>
8
all outstanding shares of Series B Preferred Stock. The Corporation covenants
that all shares of Common Stock which shall be so issued shall be duly and
validly issued and fully paid and nonassessable and free from all liens and
charges with respect to the issue thereof. The Corporation will take all such
action as may be necessary to assure that all such shares of Common Stock may be
so issued without violation of any applicable law or regulation.
(d) No Reissuance of Preferred Stock. Shares of Series B Preferred Stock
--------------------------------
which are converted into shares of Common Stock as provided herein or which are
repurchased by the Corporation shall not be reissued and the authorized number
of Series B Preferred Stock shall be reduced upon the conversion of such Series
B Preferred Stock or the repurchase thereof by the Corporation by the number of
shares of such converted or repurchased Series B Preferred Stock.
(e) Issue Tax. The issuance of certificates for shares of Common Stock
---------
upon conversion of the Series B Preferred Stock shall be made without charge to
the holders thereof for any issuance tax in respect thereof, provided that the
Corporation shall not be required to pay any income or similar taxes of a holder
arising in connection with a conversion or any tax that may be payable in
respect of any transfer involved in the issuance and delivery of any
certificates in a name other than that of the holder of the Series B Preferred
Stock which is being converted.
(f) Closing of Books. The Corporation will at no time close its transfer
----------------
books against the transfer of any Series B Preferred Stock or of any shares of
Common Stock issued or issuable upon the conversion of any shares of Series B
Preferred Stock in any manner that interferes with the timely conversion of such
Series B Preferred Stock.
(g) Determination of Fair Market Value. The Fair Market Value will be
----------------------------------
determined in the manner set forth in the Stockholders' Agreement provided,
however, that any appraisal used to determine Fair Market Value must have
occurred less than three months prior to the date of such conversion, and shall
have been deemed by the Board of Directors to be reasonably current. If there
exists no such appraisal at the date of conversion, the Corporation shall
promptly commission an appraisal for such purpose.
6. Redemption. The holder of any share or shares of Series B Preferred
----------
Stock shall have the right at its option to require the Corporation, upon thirty
(30) days prior written notice, to redeem any or all of the Series B Preferred
Stock held by such holder on or after December 31, 2005 (or, if such date is not
a business day, the first business day immediately after such date). Such
redemption as contemplated by this Section 6 shall be at a redemption price per
share equal to the Liquidation Value plus an amount equal to all declared and
unpaid dividends with respect to such share, if any. The Corporation shall
<PAGE>
9
give prompt written notice to all holders of Series B Preferred Stock of the
exercise by a holder of Series B Preferred Stock of its right to require the
Corporation to redeem under this Section 6. If applicable law limits the ability
of the Corporation to redeem all of the shares of Series B Preferred Stock
requested to be so redeemed, the Corporation shall redeem Series B Preferred
Stock, to the extent permitted by law, on a pro rata basis as to those holders
of Series B Preferred Stock requesting redemption and shall redeem the remainder
of such Series B Preferred Stock on such pro rata basis from time to time as and
to the extent legally permitted.
7. Preferred Shareholder Approvals. Without the prior vote or consent of
-------------------------------
the holders of a majority of the Series B Preferred Stock, voting as a separate
class, the Corporation shall not:
(a) amend, alter, or repeal its Certificate of Incorporation or its Bylaws
in a manner adverse to either (i) the holders of the Series B Preferred Stock or
-
(ii) any other rights or benefits of General Electric Capital Corporation or any
--
of its Affiliates that own Stock of the Corporation, under agreements relating
to their equity interests in the Corporation;
(b) redeem any shares of Common Stock (i) except pursuant to Sections 3
or 4 of the Stockholders' Agreement or (ii) unless greater than 80% of the
--
Common Stock is redeemed simultaneously and on a pro rata basis pursuant to
Section 2.3 of the Stockholders' Agreement and, so long as such section is in
effect, in accordance with Section 1(c) of the Investors Agreement.
(c) declare or pay any dividend or distribution in respect of any of the
Corporation's capital stock (except for distributions following a Liquidation
Event, in accordance with Section 3 above) other than any dividend or
distribution required pursuant to the terms of an equity security the issuance
of which was approved by the holders of a majority of the Series B Preferred
Stock.
(d) enter into any transaction with an Affiliate, other than Excluded
Affiliate Transactions, except as in the ordinary course of business or approved
by the Board of Directors; or
(e) authorize or issue any additional shares of Series B Preferred Stock
or any additional class or series of capital stock of the Corporation that shall
rank senior to or on parity with the Series B Preferred Stock as to dividends,
redemption, distributions or payments in respect of the occurrence of a
Liquidation Event; provided, however, that the Corporation may authorize and
-------- -------
issue additional series of preferred stock (other than
<PAGE>
10
Series B Preferred Stock) ranking on parity with (and not senior to) the Series
B Preferred Stock if (and only so long as) the liquidation value per share
equals the purchase price per share paid to the Corporation for such shares of
preferred stock (subject to any adjustments to the liquidation value pursuant to
the applicable certificate of designations) and the terms of such additional
series of preferred stock are no more favorable to the holders thereof than the
terms of the Series B Preferred Stock.
8. Definitions.
-----------
For purposes herein, the following terms shall have the meanings
indicated:
"Affiliate" shall mean (i) any Person directly or indirectly controlling,
-
controlled by, or under common control with the Corporation; (ii) any Person,
--
directly or indirectly owning or controlling 10% or more of the outstanding
voting securities of such Person; and (iii) any officer or director of the
---
Corporation.
"Antidilution Price" shall mean $3.0882; provided that if the Conversion
Rate is increased or decreased pursuant to Section 4(c)(iii) hereof, then the
Antidilution Price in effect at the time shall be proportionately reduced (in
the event of any such increase in the Conversion Rate) or increased (in the
event of any such reduction in the Conversion Rate).
"Board of Directors" shall mean the Board of Directors of the Corporation.
"Common Stock" means the Common Stock of the Corporation, par value $.01
per share.
"Common Stock Deemed Outstanding" shall mean:
(a) the number of shares of Common Stock actually outstanding at such
time, plus
(b) the number of shares of Common Stock issuable upon the exercise,
exchange or conversion of all outstanding securities exercisable or exchangeable
for, or convertible into, shares of Common Stock for which, as of the most
recent Appraisal Date, the value of the Common Stock into which such securities
are exercisable or exchangeable exceeds the exercise price or conversion price
therefor.
"Excluded Affiliate Transactions" shall mean:
<PAGE>
11
(a) the CFN Technology Services Agreement between iXL and the Corporation;
(b) the Tax Allocation Agreement, among iXL and its subsidiaries
(including the Corporation and its subsidiaries);
(c) travel expense advances made by the Corporation to its officers,
directors, employees, consultants or stockholders in the ordinary course of
business, professional fees incurred in the ordinary course of business, and all
transactions in the ordinary course of business with customers of the
Corporation who constitute Affiliates.
"Excluded Shares" shall have the meaning ascribed thereto in the Investors
Agreement.
"Fair Market Value" shall mean the value of one share of Common Stock as
determined pursuant to Section 5(g) hereof.
"iXL" shall mean iXL Enterprises, Inc.
"Investors Agreement" shall mean the Investors Agreement, dated as of __,
1999, among the Corporation, iXL and the Investors named therein.
"Liquidation Event" shall mean any liquidation, dissolution, or winding up
of the Corporation, whether voluntary or involuntary.
"Liquidation Value" of any share of Series B Preferred Stock shall be
$3.0882, as adjusted from time to time by Section 3(d) hereof.
"Person" means an individual, a partnership, a corporation, a limited
liability company, a trust, a joint venture, an unincorporated organization or
any department or agency thereof.
"Qualified Public Offering" shall have the meaning assigned thereto in the
Stock holders' Agreement.
"Series A Preferred Stock" means the Series A Convertible Preferred Stock
of the Corporation, par value $.01 per share.
"Stockholders' Agreement" means the Amended and Restated Stockholders'
Agreement, dated as of the date hereof, among the Corporation and the
Stockholders
<PAGE>
12
named therein, as the same may be amended from time to time in accordance with
the provisions thereof.
[the remainder of the page left intentionally blank]
<PAGE>
13
IN WITNESS WHEREOF, this Certificate has been duly executed and
acknowledged by the ____________________________________ of the Corporation this
__ day of _________ 1999.
CONSUMER FINANCIAL NETWORK, INC.
By:
----------------------------------
<PAGE>
EXHIBIT 10.59
================================================================================
SECURITIES PURCHASE AGREEMENT
among
iXL ENTERPRISES, INC.
and
THE INVESTORS NAMED HEREIN
2,000,000 Shares of Common Stock
and
Warrants to Purchase 1,500,000 Shares of Common Stock
Dated as of April 7, 1999
================================================================================
<PAGE>
Table of Contents
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS...................................................... 1
Section 1.1 Definitions...................................................... 1
Section 1.2 Rules of Construction............................................ 7
ARTICLE II PURCHASE AND SALE OF SECURITIES.................................. 7
Section 2.1 Issue and Sale of Securities..................................... 7
Section 2.2 Purchase and Sale of Securities.................................. 8
Section 2.3 Issue Taxes...................................................... 9
ARTICLE III CLOSING CONDITIONS............................................... 10
Section 3.1 Conditions to Obligations of the Investors....................... 10
Section 3.2 Conditions to Obligations of the Company......................... 13
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................... 14
Section 4.1 Due Incorporation and Good Standing.............................. 14
Section 4.2 Capitalization................................................... 14
Section 4.3 Subsidiaries..................................................... 15
Section 4.4 Authority........................................................ 15
Section 4.5 Authorization, Etc. of Shares.................................... 15
Section 4.6 Authorization, Etc. of Warrant Agreement and Warrant Shares...... 16
Section 4.7 No Violation or Conflict; No Default............................. 16
Section 4.8 No Material Adverse Change; Financial Statements................. 17
Section 4.9 Full Disclosure.................................................. 18
Section 4.10 Private Offering................................................. 18
Section 4.11 No Brokers....................................................... 19
Section 4.12 Litigation....................................................... 19
Section 4.13 Labor Relations.................................................. 19
Section 4.14 Taxes............................................................ 20
Section 4.15 Environmental Matters............................................ 21
Section 4.16 ERISA............................................................ 22
Section 4.17 Intellectual Property Rights..................................... 23
Section 4.18 Compliance with Laws............................................. 23
Section 4.19 Agreements....................................................... 24
Section 4.20 Year 2000........................................................ 24
Section 4.21 SEC Reports...................................................... 24
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
ARTICLE V REPRESENTATIONS AND WARRANTIES OF EACH INVESTOR................................... 25
Section 5.1 Organization and Standing......................................................... 25
Section 5.2 Purchase for Own Account.......................................................... 25
Section 5.3 Accredited Investor; No Solicitation.............................................. 25
Section 5.4 Qualified Institutional Buyer..................................................... 26
Section 5.5 Authorization..................................................................... 26
Section 5.6 ERISA............................................................................. 26
ARTICLE VI COVENANTS......................................................................... 27
Section 6.1 Inspection of Properties and Records.............................................. 27
Section 6.2 Financial Statements.............................................................. 27
Section 6.3 Indemnification for Finder's Fees................................................. 28
Section 6.4 Publicity; Press Releases......................................................... 28
Section 6.5 Lock-Up........................................................................... 28
Section 6.6 HSR Filing........................................................................ 29
ARTICLE VII MISCELLANEOUS..................................................................... 29
Section 7.1 Notices........................................................................... 29
Section 7.2 Successors and Assigns............................................................ 30
Section 7.3 No Waivers; Amendments............................................................ 30
Section 7.4 Counterparts...................................................................... 31
Section 7.5 Section Headings.................................................................. 31
Section 7.6 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL................... 31
Section 7.7 Entire Agreement.................................................................. 32
Section 7.8 Severability...................................................................... 32
Section 7.9 Further Assurances................................................................ 32
Section 7.10 No Survival of Representations and Warranties; No Recourse........................ 32
Section 7.11 Termination....................................................................... 32
Section 7.12 Disclosure of Financial Information............................................... 33
Exhibit A - Form of Warrant Agreement
Exhibit B - Form of Minkin & Snyder Opinion
Exhibit C - Form of Agreement to be Bound to the Registration Rights Agreement
</TABLE>
ii
<PAGE>
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the "Agreement") is dated as of April
---------
7, 1999, and entered into by and among iXL Enterprises, Inc., a Delaware
corporation (the "Company"), and the investors listed on the signature pages
-------
hereto (each an "Investor" and collectively, the "Investors").
-------- ---------
In consideration of the mutual covenants and agreements set forth herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound hereby, the
Company agrees, and each of the Investors agrees, severally but not jointly, as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the following terms
-----------
shall have the following meanings:
"Affiliate," as applied to any specified Person, shall mean any other
---------
Person that, directly or indirectly, controls, is controlled by or is under
common control with such specified Person. For purposes of the foregoing,
"control," when used with respect to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of Voting Securities,
by contract or otherwise, and the terms "controlled" and "controlling" shall
have meanings correlative to the foregoing. In the case of a Person who is an
individual, the term "Affiliate" shall include, with respect to such specified
Person (i) members of such specified Person's immediate family (as defined in
-
Instruction 2 of Item 404(a) of Regulation S-K under the Securities Act) and
(ii) trusts, the trustee or the beneficiaries of which are such specified Person
--
or members of such Person's immediate family as determined in accordance with
the foregoing clause (i). Notwithstanding the foregoing, the Investors and their
respective Affiliates shall not be deemed Affiliates of the Company for purposes
of this Agreement.
"Audit" shall mean any audit, assessment of Taxes, other examination by
-----
any Tax Authority, proceeding or appeal of such proceeding relating to Taxes.
"Business Day" shall mean each day other than Saturdays, Sundays and days
------------
when commercial banks are required or authorized by law or executive order to be
closed for business in New York, New York.
<PAGE>
"Charter Documents" means the certificate of incorporation, bylaws and any
-----------------
other organizational document, as amended or restated (or both) to date, of the
Company, or any of its Subsidiaries, as applicable.
"Closing" has the meaning ascribed thereto in Section 2.2(b).
------- --------------
"Closing Date" has the meaning ascribed thereto in Section 2.2(b).
------------ --------------
"Code" means the Internal Revenue Code of 1986, as amended, or any similar
----
Federal law then in force, and the rules and regulations promulgated thereunder,
all as the same may from time to time be in effect.
"Common Stock" has the meaning ascribed thereto in Section 2.1.
------------ -----------
"Consolidated" or "consolidated," when used with reference to any
------------ ------------
accounting term, means the amount described by such accounting term, determined
on a consolidated basis in accordance with GAAP, after elimination of
intercompany items.
"Contracts" has the meaning ascribed thereto in Section 4.7(a)(3).
--------- -----------------
"Documents" means this Agreement, the Warrant Agreement and the
---------
Registration Rights Agreement, collectively, or each of such documents
singularly, and any documents or instruments contemplated by or executed in
connection with any of them or any of the transactions contemplated hereby or
thereby.
"Employee Benefit Plan" has the meaning ascribed thereto in Section 4.16.
--------------------- ------------
"Environmental Claim" means any claim, action, cause of action,
-------------------
investigation of which the Company or any of its Subsidiaries, including any of
their management employees, are aware, or written notice by any Person alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries or penalties) arising out
of, based on or resulting from (a) the presence, or release into the
environment, of any Material of Environmental Concern at any location owned,
leased, used or operated by the Company or any of its Subsidiaries, or (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law.
"Environmental Laws" means all Legal Requirements relating to pollution or
------------------
protection of human health or the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata and
natural resources),
2
<PAGE>
including, without limitation, laws and regulations relating to emissions,
discharges, releases or threatened releases of Materials of Environmental
Concern, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern.
"Equity Interest" means (i) with respect to a corporation, any and all
---------------
issued and outstanding capital stock and warrants, options or other rights to
acquire capital stock and (ii) with respect to a partnership, limited liability
company or similar Person, any and all units, interests, or other equivalents
of, or other ownership interests in any such Person and warrants, options or
other rights to acquire any such units or interests.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and any successor statute or law thereto.
"ERISA Affiliate" has the meaning ascribed thereto in Section 4.16.
--------------- ------------
"GAAP" means United States generally accepted accounting principles.
----
"Governmental Body" shall mean any Federal, state, local or foreign
-----------------
governmental authority or regulatory body, any subdivision, agency, commission
or authority thereof or any quasi-governmental or private body exercising any
governmental regulatory authority thereunder and any Person directly or
indirectly owned by and subject to the control of any of the foregoing, or any
court, arbitrator or other judicial or quasi-judicial tribunal.
"Holder" or "Holders" means each Investor and any Affiliate or Related
------ -------
Person of any Investor that is or becomes a holder of any of the Securities, in
each case, so long as such Person holds any Securities.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
-------
as amended, and the rules and regulations thereunder.
"Inspectors" has the meaning ascribed thereto in Section 6.2.
---------- -----------
"Intellectual Property Rights" means all industrial and intellectual
----------------------------
property rights, including, without limitation, patents, patent applications,
patent rights, trademarks, trademark applications, trade names, service marks,
service mark applications, copyrights, copyright applications, know-how, trade
secrets, proprietary processes and formulae, confidential information,
franchises, licenses, inventions, instructions, marketing materials, trade
dress, logos and designs and all documentation and media constituting,
describing or relating to the foregoing, including manuals, memoranda and
records.
3
<PAGE>
"Investors" means the investors signatory to this Agreement.
---------
"IPO" has the meaning ascribed thereto in Section 2.2(a).
--- --------------
"Kelso" means collectively Kelso Investment Associates V, L.P., a Delaware
-----
limited partnership, and Kelso Equity Partners V, L.P., a Delaware limited
partnership.
"Laws" has the meaning ascribed thereto in Section 4.7(a)(2).
---- -----------------
"Legal Requirements" means, as to any Person, all Federal, state, local or
------------------
foreign laws, statutes, rules, regulations, ordinances, judgments, orders,
decrees, permits, certificates, requirements, regulations and restrictions of
any Governmental Body applicable to such Person or any of its properties or
assets.
"Liability" means any liability or obligation, whether known or unknown,
---------
asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated
or unliquidated and whether due or to become due, regardless of when asserted.
"Lien" means any mortgage, pledge, lien, encumbrance, charge or adverse
----
claim affecting title or resulting in a charge against real or personal
property, or security interest of any kind (including, without limitation, any
conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell and any filing of any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Material Adverse Effect" means (a) a material adverse effect upon the
----------------------- -
business, operations, prospects, properties, assets or condition (financial or
otherwise) of the Company and its Subsidiaries, taken as a whole, or (b) a
-
material adverse effect on the ability of the Company to perform its obligations
under this Agreement or any of the other Documents.
"Materials of Environmental Concern" means chemicals, pollutants,
----------------------------------
contaminants, industrial, toxic or hazardous wastes, substances or constituents,
petroleum and petroleum products (or any by-product or constituent thereof),
asbestos or asbestos-containing materials or PCBs.
"Notices" has the meaning ascribed thereto in Section 7.1.
------- -----------
"Permitted Lien" shall mean the following Liens: (a) Liens existing on
--------------
the Closing Date as listed on Schedule 1.1; (b) Liens for taxes, assessments or
------------
other governmental charges or levies not yet due; (c) statutory Liens of
landlords, carriers,
4
<PAGE>
warehousemen, mechanics, materialmen and other Liens imposed by law created in
the ordinary course of business of the Company consistent with past practices
for amounts not yet due; (d) Liens (other than any Lien imposed by ERISA)
incurred or deposits made in the ordinary course of business of the Company
consistent with past practices in connection with worker's compensation,
unemployment insurance or other types of social security; and (e) with respect
to interests in real property, minor defects of title, easements, rights-of-way,
restrictions and other similar charges or Liens not materially detracting from
the value or materially interfering with the use of such real property.
"Person" means an individual, partnership, corporation, trust or
------
unincorporated organization or a government or agency or political subdivision
thereof.
"Proceeding" means any legal, administrative or arbitration action, suit,
----------
complaint, charge, hearing, inquiry, investigation or proceeding (including any
partial or threatened proceedings).
"Registration Rights Agreement" has the meaning ascribed thereto in
-----------------------------
Section 2.1.
- -----------
"Registration Statement" means the Company's Registration Statement on
----------------------
Form S-1 and all amendments thereto, as filed with the SEC.
"Related Person" means, with respect to any Investor, (i) any officer,
-------------- -
director or partner of, or Person controlling, such Investor or (ii) any other
--
Person that is (x) an Affiliate of such Investor, (y) an Affiliate of the
- -
general partner(s), investment manager(s) or investment advisor(s) of such
Investor or (z) an investment fund, investment account or investment entity
-
whose investment manager, investment advisor or general partner thereof is such
Investor or an Affiliate of such Investor.
"SEC" means the Securities and Exchange Commission and any successor
---
thereto.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations of the SEC thereunder, and any successor statute or law
thereto.
"Security" or "Securities" has the meaning ascribed thereto in Section
-------- ---------- -------
2.1.
"Shares" has the meaning ascribed thereto in Section 2.1.
------ -----------
"Stockholders' Agreement" means the Second Amended and Restated
-----------------------
Stockholders' Agreement, among the Company and the Investors named therein,
dated as of August 14, 1998.
"Subsidiary" of any person means (a) a corporation in which such Person, a
---------- -
subsidiary of such Person, or such Person and one or more subsidiaries of such
Person, directly or indirectly, at the date of determination, has either (i) a
-
majority ownership
5
<PAGE>
interest or (ii) the power, under ordinary circumstances, to elect, or to
--
direct the election of, a majority of the board of directors of such
corporation, or (b) a partnership in which such Person, a subsidiary of such
-
Person, or such Person and one or more subsidiaries of such Person (i) is, at
-
the date of determination, a general partner of such partnership, or (ii) has
--
a majority ownership interest in such partnership or the right to elect, or to
direct the election of, a majority of the governing body of such partnership, or
(c) any other Person (other than a corporation or a partnership) in which such
-
Person, a subsidiary of such Person, or such Person and one or more subsidiaries
of such Person has either (i) at least a majority ownership interest or (ii) the
- --
power to elect, or to direct the election of, a majority of the directors or
other governing body of such Person.
"Tax" means any Taxes and the term "Taxes" means, with respect to any
--- -----
Person, (A) all income taxes (including any tax on or based upon net income, or
gross income, or income as specially defined, or earnings, or profits, or
selected items of income, earnings or profits) and all gross receipts, sales,
use, ad valorem, transfer, franchise, license, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property or windfall profits
taxes, alternative or add-on minimum taxes, customs duties or other taxes, fees,
assessments or charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts imposed by any taxing
authority (domestic or foreign) on such Person and (B) any Liability for the
payment of any amount of the type described in the immediately preceding clause
(A) as a result of being a "transferee" (within the meaning of Section 6901 of
the Code or any other Law) of another Person or a member of an affiliated or
combined group.
"Tax Authority" means the Internal Revenue Service and any other domestic
-------------
or foreign governmental authority responsible for the administration of any
Taxes.
"Tax Returns" shall mean all Federal, state, local and foreign tax
-----------
returns, declarations, statements, reports, schedules, forms and information
returns and any amended Tax Return relating to Taxes.
"Transactions" has the meaning ascribed thereto in Section 4.4.
------------ -----------
"Transfer" means any direct or indirect sale, assignment, mortgage,
--------
transfer, pledge, hypothecation or other disposition or transfer.
"Voting Securities" means any class of equity interests of a Person
-----------------
pursuant to which the holders thereof have, at the time of determination, the
general power under ordinary circumstances to vote for the election of
directors, managers, trustees or general partners of such Person (irrespective
of whether or not at the time any other class or classes will have or might have
the general power under ordinary circumstances to vote
6
<PAGE>
for the election of directors, managers, trustees or general partners by reason
of the happening of any contingency).
"Warrant Agreement" means the Warrant Agreement between the Company and
-----------------
the Investors, to be entered into at the Closing pursuant to this Agreement,
substantially in the form of Exhibit A hereto.
"Warrants" has the meaning ascribed thereto in Section 2.1.
-------- -----------
"Warrant Shares" has the meaning ascribed thereto in Section 2.1.
-------------- -----------
Section 1.2 Rules of Construction. Unless the context otherwise
---------------------
requires:
(a) a term has the meaning assigned to it;
(b) "or" is not exclusive;
(c) words in the singular include the plural, and words in the plural
include the singular;
(d) provisions apply to successive events and transactions; and
(e) "herein," "hereof," "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any particular section or other
subdivision.
ARTICLE II
PURCHASE AND SALE OF SECURITIES
Section 2.1 Issue and Sale of Securities. The Company has authorized
----------------------------
the issuance and sale to the Investors, in the respective amounts set forth
below such Investor's name on the signature page hereto, of (i) an aggregate of
-
2,000,000 shares of the Company's common stock, par value $.01 (the "Common
------
Stock"), to be issued to the Investors and (ii) warrants (the "Warrants") to
- ----- -- --------
purchase an aggregate of 1,500,000 shares of Common Stock, subject to adjustment
as set forth in the Warrant Agreement. The shares of Common Stock issued on the
Closing Date pursuant to this Agreement (the "Shares") and the Warrants are
------
referred to herein as a "Security" and collectively as the "Securities" and the
-------- ----------
shares of Common Stock issuable upon exercise of the Warrants are referred to
herein as the "Warrant Shares." Each Holder of Securities will have certain
--------------
registration rights with respect to the Shares and the Warrant Shares as set
forth in the
7
<PAGE>
Registration Rights Agreement, dated as of April 30, 1996, by and among the
Company and certain stockholders of the Company (the "Registration Rights
-------------------
Agreement").
- ----------
Each Warrant shall be substantially in the form attached as Exhibit A to
the Warrant Agreement. Each Warrant shall be dated the date of its issuance.
The Warrants will be exercisable in the manner provided in the Warrant Agreement
for a number of Warrant Shares as provided in the Warrant Agreement. The terms
and provisions contained in the Warrant Agreement and in the Warrants shall
constitute, and are hereby expressly made, a part of this Agreement and, to the
extent applicable, the Company and the Holders, by their execution and delivery
of this Agreement, expressly agree to such terms and provisions and to be bound
thereby.
Section 2.2 Purchase and Sale of Securities. (a) Purchase and Sale.
------------------------------- -----------------
Subject to the terms and conditions set forth herein and in reliance on the
respective representations and warranties of the Company, on the one hand, and
the Investors, on the other hand, contained herein, the Company agrees to sell
to each Investor, and each of the Investors agrees, severally but not jointly,
to purchase from the Company (i) the shares of Common Stock indicated on Annex 1
- -------
attached hereto for an aggregate purchase price equal to the product of (A) the
-
"per share price to public" specified for the shares of Common Stock in the
final prospectus for the Company's initial public offering of Common Stock
contemplated by the Registration Statement (the "IPO") times (B) the aggregate
--- ----- -
number of Shares being purchased by such Investor as indicated on Annex 1 and
-------
(ii) the Warrants for the consideration reflected in the Warrant Agreement.
- ---
(b) Closing. The purchase and sale of the Securities shall take place at
-------
a closing (the "Closing") at the offices of Debevoise & Plimpton, 875 Third
-------
Avenue, New York, New York, 10022, on the later of (i) the date of the closing
of the IPO and (ii) the second Business Day after the termination of the waiting
--
period applicable to the Transactions under the HSR Act (the "Closing Date").
------------
At the Closing, the Company will deliver to each of the Investors the Securities
to be purchased by such Investor (registered in such Investor's name or the name
of such nominee or nominees as such Investor may request), dated the Closing
Date, against payment of the purchase price therefor by intra-bank or Federal
funds bank wire transfer of same day funds to such bank account within the
United States as the Company shall designate at least two Business Days prior to
the Closing.
(c) Fees and Expenses. Provided that the Closing occurs, the Company
-----------------
agrees to pay or reimburse all expenses relating to this Agreement, including
but not limited to:
(1) each Investor's expenses incurred in connection with the transactions
contemplated by this Agreement and the other Documents, including, without
8
<PAGE>
limitation, costs incurred in connection with such Investor's review of the
Company's business and operations, including the reasonable fees and other
charges and expenses of the Investor's counsel incurred in connection
herewith or with the other Documents;
(2) any reasonable fees and other charges and expenses (including the
reasonable fees and other charges and expenses of counsel) incurred in
connection with any registration or qualification of the Securities required
in connection with the offer and sale of the Securities pursuant to this
Agreement under the securities or "blue sky" laws of any jurisdiction
requiring such registration or qualification or in connection with obtaining
any exemptions from such requirements; and
(3) each Investor's or Holder's expenses (including the reasonable fees
and other charges and expenses of their counsel) relating to any amendment
to, or modification of, or any waiver or consent or preservation of rights
under, this Agreement, the Securities or any of the other Documents.
Reimbursement of the expenses to which such Investor is entitled pursuant
to this Section 2.2(c), including, without limitation, the reasonable fees and
--------------
other charges and expenses of such Investor's counsel, shall be made
concurrently with the Closing by intra-bank or Federal funds bank wire transfer
of same day funds, or at such other time and in such other manner as the Company
and the Investors may agree.
(d) Other Investors. The obligations of each Investor shall be several
---------------
and not joint, and no Investor shall be liable or responsible for the acts of
any other Investor under this Agreement.
Section 2.3 Issue Taxes. The Company agrees to pay all Taxes (other
-----------
than Taxes in the nature of income, franchise or gift taxes) and governmental
fees arising in connection with the issuance, sale, delivery or transfer by the
Company to each Holder of the Shares, the Warrants and the Warrant Shares, as
the case may be, and the execution and delivery of the other Documents and any
modification of any of such Securities and Documents and will hold such Holder
harmless without limitation as to time against any and all liabilities with
respect to all such Taxes and fees.
ARTICLE III
CLOSING CONDITIONS
9
<PAGE>
Section 3.1 Conditions to Obligations of the Investors. The obligations
------------------------------------------
of each Investor to purchase and pay for the Securities to be delivered to such
Investor at the Closing shall be subject to the satisfaction (or waiver by the
Investors) of each of the following conditions on or before the Closing Date:
(a) Delivery of Documents. The Company shall have delivered to each
---------------------
Investor, in form and substance satisfactory to such Investor, the following:
(i) The Shares and Warrants being purchased by such Investor, duly
executed by the Company, in the aggregate number set forth below such
Investor's name on the signature pages hereto.
(ii) An opinion, dated the Closing Date and addressed to each Investor,
from Minkin & Snyder, a professional corporation, counsel for the Company, as
to the matters set forth in Exhibit B attached hereto.
(iii) Copies of the certificate of incorporation of the Company, together
with good standing certificates from the state of its incorporation, from the
state in which its principal place of business is located, and from all
states in which the laws thereof require the Company to be qualified and/or
licensed to do business, except where the failure to be so qualified would
not result in a Material Adverse Effect, each to be dated a recent date prior
to the Closing Date and certified by the applicable Secretary of State or
other authorized governmental entity.
(iv) a certificate of the Secretary of the Company, dated the Closing
Date, certifying (A) a copy of the bylaws of the Company, (B) resolutions of
- -
the Board of Directors of the Company, authorizing the execution, delivery
and performance of this Agreement, the Warrant Agreement and the other
Documents to which the Company is a party and the consummation of the
transactions contemplated hereby and thereby, including the issuance of the
Shares and Warrants pursuant to this Agreement, and (C) as to the incumbency
-
and genuineness of the signatures of the officers of the Company.
(v) A certificate of an officer of the Company, dated the Closing Date,
certifying as to the satisfaction of conditions specified in Sections 3.1(b)
and 3.1(d).
(vi) Such additional information and materials as any Investor may
reasonably request.
(b) Compliance with Agreements. The Company shall have performed and
--------------------------
complied in all material respects with all agreements, covenants and conditions
contained
10
<PAGE>
herein, in each of the other Documents and in any other document contemplated
hereby or thereby which are required to be performed or complied with by the
Company on or before the Closing Date.
(c) Completion of Other Transactions. Simultaneously with or prior to
--------------------------------
the sale to each Investor of the Securities to be purchased by such Investor:
(i) The Company shall have executed and delivered the Warrant Agreement.
(ii) The Company shall have executed and delivered an Agreement to be
Bound to the Registration Rights Agreement of the Company, dated as of the
Closing Date, in the form of Exhibit C attached hereto, with respect to each
Investor other than General Electric Capital Corporation ("GECC").
(iii) The IPO shall have been consummated.
(iv) All the other Investors listed in the signature pages hereof shall
have consummated their purchase of securities pursuant to this Agreement.
(v) The Company shall have executed and delivered the necessary
documentation, reasonably satisfactory to the parties hereto, to make the
Investors parties to the Stockholders' Agreement.
(d) Representations and Warranties. All of the representations and
------------------------------
warranties of the Company contained herein or in any of the other Documents
shall be true and correct in all material respects on and as of the Closing
Date, except those representations and warranties of the Company that speak as
of a certain date, which representations and warranties shall have been true and
correct in all material respects as of such date, both before and after giving
effect to the transactions contemplated hereby and by the other Documents.
(e) Proceedings Satisfactory. All proceedings taken in connection with
------------------------
the sale of the Securities, the transactions contemplated hereby, and all
documents and papers relating thereto, shall be reasonably satisfactory to such
Investor. Such Investor and its counsel shall have received copies of such
documents and papers as they may reasonably request in connection therewith, or
as a basis for the opinions to be delivered pursuant to Section 3.1(a)(ii), all
------------------
in form and substance satisfactory to such Investor.
(f) Consents and Permits. The Company shall have received all consents,
--------------------
permits, approvals and authorizations and sent or made all notices, filings,
registrations and qualifications as may be required pursuant to any law,
statute, regulation or rule (Federal, state, local or foreign) or pursuant to
any other agreement, order or decree to which any of them is a party or to which
any of them is subject, in connection with the transactions to be consummated on
or prior to the Closing Date as contemplated by this Agreement or any of the
other Documents.
(g) No Material Adverse Change. There shall not have been any material
--------------------------
adverse change in the properties, business, operations, assets, prospects,
condition
11
<PAGE>
(financial or otherwise) of the Company and its Subsidiaries taken as a whole
since December 31, 1998.
(h) No Material Judgment or Order. There shall not be on the Closing
-----------------------------
Date any judgment or order of a court of competent jurisdiction or any ruling of
any Federal, state or local Governmental Body that, in the reasonable judgment
of any Investor or its counsel, would prohibit the sale or issuance of the
Securities hereunder or subject the Company or any Investor to any material
penalty or liability if the Securities were to be issued and sold hereunder or
the other Transactions are consummated.
(i) HSR Act. The waiting period under the HSR Act applicable to the
-------
Transactions shall have been terminated.
(j) No Material Proceedings. No Proceeding shall have been pending or
-----------------------
threatened as of the Closing Date to restrain, prohibit or otherwise challenge
the Transactions, nor shall any Governmental Body have notified any party to
this Agreement that the consummation of the Transactions hereby would constitute
a violation of the laws of the United States or the laws of any State thereof or
the laws of the jurisdiction to which such Governmental Body is subject and that
it intends to commence proceedings to restrain the consummation of such
transactions, to force divestiture if the same are consummated or to materially
modify the terms or results of such Transactions unless such Governmental Body
shall have withdrawn such notice, or has otherwise indicated in writing that it
will not take any action.
Section 3.2 Conditions to Obligations of the Company. The obligations
----------------------------------------
of the Company to sell and issue the Securities to be delivered to each Investor
at the Closing shall be subject to the satisfaction (or waiver by the Company)
of each of the following conditions on or before the Closing Date:
(a) Completion of Other Transactions. Simultaneously with or prior to
--------------------------------
the sale to each Investor of the Securities to be purchased by such Investor:
(i) All of the other Investors listed in the signature pages hereof shall
have consummated their purchase of Securities pursuant to this Agreement.
(ii) The IPO shall have been consummated.
(iii) Each Investor (other than GECC) shall have executed and delivered an
Agreement to be Bound to the Registration Rights Agreement of the Company in
the form of Exhibit C attached hereto.
(iv) Each Investor shall have executed and delivered necessary
documentation reasonably satisfactory to the parties hereto, to become a
party to the Stockholders' Agreement.
12
<PAGE>
(b) Representations and Warranties. All of the representations and
------------------------------
warranties of the Investors contained herein or in any of the other Documents
shall be true and correct in all material respects on and as of the Closing
Date, except for those representations and warranties of the Investors that
speak as of a certain date, which representations and warranties shall have been
true and correct in all material respects as of such date, both before and after
giving effect to the transactions contemplated hereby and by the other
Documents.
(c) Compliance with Agreements. Each Investor shall have performed and
--------------------------
complied in all material respects with all agreements, covenants and conditions
contained herein, in each of the other Documents to which it is a party and in
any other document contemplated hereby or thereby which are required to be
performed or complied with by such Investor on or before the Closing Date.
(d) No Material Judgment or Order. There shall not be any judgment or
-----------------------------
order of a court of competent jurisdiction or any ruling of any Federal, state
or local Governmental Body that prohibits the sale or issuance of the Securities
to the Investors or that would subject the Company to any material penalty or
liability if the Securities were to be issued and sold hereunder or the other
Transactions are consummated.
(e) HSR Act. The waiting period under the HSR Act applicable to the
-------
Transactions shall have been terminated.
(f) Material Proceedings. No Proceeding shall have been pending or
--------------------
threatened as of the Closing Date to restrain, prohibit or otherwise challenge
the Transactions, nor shall any Governmental Body have notified any party to
this Agreement that the consummation of the Transactions hereby would constitute
a violation of the laws of the United States or the laws of any State thereof or
the laws of the jurisdiction to which such Governmental Body is subject and that
it intends to commence proceedings to restrain the consummation of such
transactions, to force divestiture if the same are consummated or to materially
modify the terms or results of such Transactions unless such Governmental Body
shall have withdrawn such notice, or has otherwise indicated in writing that it
will not take any action.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investors on the date hereof
and as of the Closing as follows:
13
<PAGE>
Section 4.1 Due Incorporation and Good Standing. The Company has been
-----------------------------------
duly incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware with corporate power and authority to
own, lease and operate its properties, to conduct its business as currently
conducted and as proposed to be conducted and to enter into and perform its
obligations under this Agreement and the other Documents to which it is a party.
The Company is duly qualified as a foreign corporation to transact business and
is in good standing in each jurisdiction in which such qualification is
required.
Section 4.2 Capitalization. (a) The capitalization of the Company as
--------------
of December 31, 1998 is as described on Schedule 4.2. As of the Closing Date,
------------
after giving effect to the Transactions and immediately after the closing of the
IPO, the capitalization of the Company will be as described as "pro forma as
adjusted" on Schedule 4.2. Except as described as "pro forma as adjusted" on
-------------
Schedule 4.2, as of the Closing and after giving effect to the Transactions, no
- ------------
Equity Interests of the Company will be issued or outstanding and there will be
no options, agreements, instruments or securities relating to the issued or
unissued Equity Interests of the Company or any Subsidiary of the Company, or
obligating the Company or any Subsidiary of the Company to issue, transfer,
grant or sell any Equity Interests in the Company or any Subsidiary.
(b) The Company has complied in all material respects with all federal and
state securities laws in connection with the issuance of all outstanding Equity
Interests.
(c) Except as listed on Schedule 4.2, and except as contemplated by the
------------
Documents, there are no preemptive rights, voting agreements, transfer
restrictions (except those imposed by applicable federal and state securities
laws) or registration rights (except as set forth in the Registration Rights
Agreement) affecting the Equity Interests in the Company.
Section 4.3 Subsidiaries. Schedule 4.3 hereto sets forth a list of all
------------ ------------
Subsidiaries of the Company and the respective state or jurisdiction of
incorporation or organization. Except as set forth on Schedule 4.3, all of the
------------
issued or outstanding Equity Interests of such Subsidiaries have been duly and
validly issued and are fully paid and nonassessable and are owned, directly or
indirectly, by the Company. Each Subsidiary of the Company is duly incorporated
and is in good standing in its respective state or jurisdiction of incorporation
and has the corporate authority to own, lease or operate its properties and to
conduct its business as currently conducted and as proposed to be conducted.
Each Subsidiary of the Company is duly qualified to transact business and is in
good standing as a foreign corporation in each state or jurisdiction in which
such qualification is required, except where the failure to be so qualified
would not reasonably be expected to have a Material Adverse Effect.
14
<PAGE>
Section 4.4 Authority. The Company has all necessary corporate power
---------
and authority to execute and deliver this Agreement and each of the other
Documents to which it is a party, and to perform its obligations hereunder and
thereunder, and to consummate the transactions contemplated hereby and thereby
(the "Transactions"). The execution and delivery of this Agreement and the
------------
other Documents to which it is a party have been authorized by all necessary
corporate action on the part of the Company and no other corporate proceedings
or approvals are required on the part of the Company to authorize this Agreement
or the other Documents to which it is a party or to consummate the Transactions.
This Agreement has been duly and validly executed and delivered by the Company
and, assuming the due authorization, execution and delivery thereof by the
Investors, constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
Section 4.5 Authorization, Etc. of Shares. The issuance and sale of the
-----------------------------
Shares have been duly authorized by all necessary corporate action on the part
of the Company and the Shares, when issued to the Investors for the
consideration set forth herein, will be duly authorized, validly issued and
fully paid and non-assessable, free of preemptive rights with no personal
liability attached to the ownership thereof.
Section 4.6 Authorization, Etc. of Warrant Agreement and Warrant Shares.
-----------------------------------------------------------
The Warrant Agreement has been duly authorized by all necessary corporate action
on the part of the Company and, at the Closing, will be validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery thereof by the Investors, will constitute a legal, valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally and by general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law). The Company has duly authorized and reserved a
sufficient number of shares of Common Stock for issuance upon exercise of the
Warrants and the Warrant Shares, when issued upon exercise of the Warrants in
accordance with the terms of the Warrant Agreement and the Warrants, will be
duly authorized, validly issued and fully paid and nonassessable, free of
preemptive rights with no personal liability attached to the ownership thereof.
Section 4.7 No Violation or Conflict; No Default. (a) Neither the
------------------------------------
execution, delivery or performance of this Agreement or any of the other
Documents by the
15
<PAGE>
Company, nor the compliance with its obligations hereunder or thereunder, nor
the consummation of the transactions contemplated hereby and thereby, nor the
issuance, sale or delivery of the Securities will:
(1) violate or conflict with any provision of the Charter Documents of
the Company or any of its Subsidiaries;
(2) violate or conflict with any statute, law, rule or regulation or any
judgment, decree, order, regulation or rule of any court or governmental
authority or body (collectively, "Laws") applicable to the Company or any of
----
its Subsidiaries or by which any of their respective properties or assets may
be subject; or
(3) violate, be in conflict with, or constitute a breach or default (or
any event which, with the passage of time or notice or both, would become a
default) under, or permit the termination of, or require the consent of any
Person under, result in the creation or imposition of any Lien upon any
property of the Company or its Subsidiaries under, result in the loss (by the
Company or any Subsidiary) or modification in any manner adverse to the
Company and its Subsidiaries of any right or benefit under, or give to any
other Person any right of termination, amendment, acceleration, repurchase or
repayment, increased payments or cancellation under, any mortgage, indenture,
note, debenture, agreement, lease, license, permit, franchise or other
instrument or obligation, whether written or oral (collectively, "Contracts")
---------
to which the Company or any of its Subsidiaries is a party or by which their
properties may be bound or affected, except as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
(b) The execution and delivery of this Agreement and the other Documents
to which the Company is a party do not, and the performance of its obligations
under this Agreement and the other Documents and the consummation of the
Transactions will not, require any consent, approval, authorization or permit
of, or filing with or notification to, any Governmental Body under any Laws,
except for (i) notification pursuant to, and expiration or termination of the
-
waiting period under, the HSR Act and (ii) required filings under the Securities
--
Act or state "blue sky" laws.
Section 4.8 No Material Adverse Change; Financial Statements. (a)
------------------------------------------------
Except as set forth on Schedule 4.8 hereto, subsequent to December 31, 1998,
------------
there has not been (i) any material adverse change in the properties, business,
prospects, operations, assets or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole, (ii) any asset or property of the
Company made subject to a Lien of any kind, other than a Permitted Lien, (iii)
any waiver of any valuable right of the Company or any Subsidiary, or the
cancellation of any material debt or material claim held by the Company or any
16
<PAGE>
Subsidiary, (iv) any payment of dividends on, or other distributions with
respect to, or any direct or indirect redemption or acquisition of, any shares
of the capital stock of the Company, or any agreement or commitment therefor,
(v) any mortgage, pledge, sale, assignment or transfer of any material tangible
or intangible assets of the Company, except in the ordinary course of business,
(vi) any loan by the Company or any Subsidiary to any officer, director,
employee, consultant or direct or indirect stockholder or any agreement or
commitment therefor in excess of $100,000, other than travel expense advances
made by the Company to its officers, directors, employees, consultants or
stockholders in the ordinary course of business, (vii) any material damage,
destruction or loss (whether or not covered by insurance) affecting the assets
of the Company or any Subsidiary or (viii) any increase, direct or indirect, in
the compensation paid or payable to any officer, director, employee or
consultant of the Company or any Subsidiary other than in the ordinary course of
business.
(b) The Company has heretofore furnished the Purchasers with a true and
complete copy of (i) the audited financial statements of iXL Interactive
Excellence, Inc. (n/k/a iXL, Inc.) as of and for the years ended December 31,
1993, 1994 and 1995, and as of and for the four-month period ended April 30,
1996; (ii) audited combined financial statements for Creative Video, Inc. (n/k/a
iXL, Inc.), Creative Video Library, Inc. and Entrepreneur Television, Inc. as of
and for the years ending December 31, 1993, 1994 and 1995, and as of and for the
four-month period ended April 30, 1996; (iii) the audited consolidated financial
statements for the Company and its Subsidiaries as of and for the eight months
ended December 31, 1996; (iv) the audited consolidated financial statements for
the Company and its Subsidiaries as of and for the year ending December 31,
1997; and (v) the audited consolidated financial statements for the Company and
its Subsidiaries as of and for the year ending December 31, 1998. Such
financial statements present fairly in all material respects the consolidated
financial position, results of operations, cash flows, and shareholders' equity
of the Company 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 each in accordance with GAAP consistently applied throughout the
periods involved. Except as set forth on Schedule 4.8, since December 31, 1998,
------------
neither the Company nor any of its Subsidiaries has incurred any liabilities or
obligations (whether absolute, accrued, fixed, contingent, liquidated,
unliquidated or otherwise and whether due or to become due) of any nature,
except for liabilities, obligations or contingencies (a) which are reflected in
the audited balance sheet of the Company at December 31, 1998, (b) which were
incurred in the ordinary course of business after December 31, 1998 and
consistent with past practices, (c) which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect or (d) which
arise as a result of this Agreement or the other Documents. Since December 31,
1998, there has been no change in any significant accounting (including tax
accounting) policies, practices or procedures of the Company or its
Subsidiaries. All
17
<PAGE>
financial statements concerning the Company and its Subsidiaries that will
hereafter be furnished by the Company and its Subsidiaries to the Investors or
any Holder pursuant to this Agreement will be prepared in accordance with GAAP
consistently applied (except as disclosed therein) (except for, in the case of
the unaudited financial statements, the exclusion of footnotes and normal year
end adjustments) and will present fairly in all material respects the financial
condition of the entities covered thereby as at the dates thereof and the
results of their operations for the periods then ended.
(c) Except as set forth on Schedule 4.8, the Company has good and
marketable title to all properties, interests in properties and assets, real,
personal and mixed, tangible or intangible, used in the conduct of its business,
free and clear of all Liens other than Permitted Liens.
Section 4.9 Full Disclosure. Neither this Agreement, the financial
---------------
statements referred to in Section 4.8 nor any Document contains any untrue
-----------
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made.
Section 4.10 Private Offering. Assuming the correctness of the
----------------
representations and warranties set forth in Sections 5.2 and 5.3, and the
--------------------
compliance by the Investors with Section 6.7 hereof, the offer and sale of the
-----------
Securities to the Investors hereunder is exempt from the registration and
prospectus delivery requirements of the Securities Act.
Section 4.11 No Brokers. Except as may be set forth on Schedule 4.11,
---------- -------------
the Company has not engaged any broker, finder, commission agent or other such
intermediary in connection with the sale of the Securities and the transactions
contemplated by this Agreement and the other Documents, and the Company is under
no obligation to pay any broker's or finder's fee or commission or similar
payment in connection with such transactions.
Section 4.12 Litigation. (a) Except as set forth on Schedule 4.12,
---------- -------------
there is no Proceeding, whether commenced, or to the knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries or any of
their respective properties or assets, except for such Proceedings that would
not reasonably be expected to have, singly or in the aggregate, a Material
Adverse Effect, and there is no Proceeding seeking to restrain, enjoin, prevent
the consummation of or otherwise challenge this Agreement or any of the other
Documents or the Transactions.
(b) Neither the Company nor any of its Subsidiaries is subject to (i) any
judgment, order or decree of any Governmental Body or (ii) any rule or
regulation of any
18
<PAGE>
Governmental Body that has had a Material Adverse Effect or that would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
Section 4.13 Labor Relations. (a) Neither the Company nor any of its
---------------
Subsidiaries, nor any Person for whom the Company or any of its Subsidiaries is
or may be responsible by law or contract, is engaged in any unfair labor
practice that would reasonably be expected to have, singly or in the aggregate,
a Material Adverse Effect. There is (i) no unfair labor practice charge or
complaint pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries, or any Person for whom the Company or any of
its Subsidiaries is or may be responsible by law or contract, before the
National Labor Relations Board or any corresponding state, local or foreign
agency, and no grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is so pending or threatened, (ii) no strike,
labor dispute, slowdown or stoppage pending or threatened against the Company or
any of its Subsidiaries, or any Person for whom either the Company or any of its
Subsidiaries is or may be responsible by law or contract, and (iii) no union
representation claim or question existing with respect to the employees of the
Company or any of its Subsidiaries, or any Person for whom either the Company or
any of its Subsidiaries is or may be responsible by law or contract, and no
union organizing activity taking place. Neither the Company nor any of its
Subsidiaries, nor any Person for whom the Company or any of its Subsidiaries is
or may be responsible by law or contract, is a party to any collective
bargaining agreement.
(b) Except as disclosed on Schedule 4.13 or such as would not reasonably
-------------
be expected to result in a Material Adverse Effect, neither the Company nor any
of its Subsidiaries has violated any Laws relating to employment or employment
practices or the terms and conditions of employment, including, without
limitation, discrimination in the hiring, promotion or pay of employees, wages,
hours of work, plant closings and layoffs, collective bargaining, immigration
and occupational safety and health. Except as disclosed on Schedule 4.13, to
-------------
the knowledge of the Company or any of its Subsidiaries, no charges with respect
to or relating to the Company or any of its Subsidiaries are pending before the
Equal Employment Opportunity Commission or any other corresponding state agency,
and the Company and each of its Subsidiaries have at all times been in material
compliance with all Legal Requirements prohibiting discrimination in the
workplace including, without limitation, Legal Requirements that prohibit
discrimination and/or harassment on account of race, national origin, religion,
gender, disability, age, immigration status, workers compensation status or
otherwise.
Section 4.14 Taxes. Except as otherwise disclosed in Schedule 4.14:
----- -------------
(a) The Company and its Subsidiaries have timely filed or will timely
file or cause to be timely filed, all Tax Returns (or extensions) required by
any Laws to be
19
<PAGE>
filed by any of them prior to or as of the Closing Date (other than non-
material sales tax returns). All such Tax Returns and amendments thereto are
or will be true, complete and correct in all material respects.
(b) The Company and its Subsidiaries have paid, or where payment is not
yet due, have established, or will establish or cause to be established on or
before the Closing Date, an adequate accrual for the payment of, all Taxes
due with respect to any period ending prior to or as of the Closing Date.
(c) No Audit by a Tax Authority is pending or threatened with respect to
any Tax Returns filed by, or Taxes due from, the Company or its Subsidiaries.
No issue has been raised by any Tax Authority in any Audit of the Company or
its Subsidiaries that if raised with respect to any other period not so
audited would reasonably be expected to result in a material proposed
deficiency for any period not so audited. No deficiency or adjustment for
any Taxes has been threatened, proposed, asserted or assessed against the
Company or its Subsidiaries. There are no liens for Taxes upon the assets of
the Company or its Subsidiaries, except liens for current Taxes not yet due.
(d) Neither Company nor its Subsidiaries have given or been requested to
give any waiver of statutes of limitations relating to the payment of Taxes
or has executed powers of attorney with respect to Tax matters, which will be
outstanding as of the Closing Date.
(e) Neither the Company nor its Subsidiaries are a party to, or are bound
by any tax sharing, cost sharing or similar agreement or policy relating to
Taxes.
(f) Neither the Company nor its Subsidiaries have entered into agreements
that would result in the disallowance of any tax deductions pursuant to
Section 280G of the Code. No "consent" within the meaning of Section 341(f)
------------ --------------
of the Code has been filed with respect to the Company or its Subsidiaries.
Section 4.15 Environmental Matters. (a) Each of the Company and its
---------------------
Subsidiaries is in compliance with all Environmental Laws, except where such
non-compliance would not reasonably be expected to have a Material Adverse
Effect, and neither the Company nor any of its Subsidiaries has received any
written communication that alleges that the Company or its Subsidiaries is not
in compliance with any Environmental Laws, and there are no circumstances that
may prevent or interfere with such compliance in the future.
20
<PAGE>
(b) There is no Environmental Claim pending or to the knowledge of the
Company threatened against the Company or any of its Subsidiaries with respect
to the operations or business of the Company or its Subsidiaries, or against any
person or entity whose liability for any Environmental Claim the Company or its
Subsidiaries has retained or assumed either contractually or by operation of
law.
(c) To the Company's knowledge, there are no past or present actions,
activities, circumstances, conditions, events or incidents, including, without
limitation, the release, emission, discharge, presence or disposal of any
Material of Environmental Concern, that could form the basis of any
Environmental Claim against the Company or its Subsidiaries, or against any
person or entity whose liability for any Environmental Claim the Company or its
Subsidiaries has retained or assumed either contractually or by operation of
law, which would reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect.
(d) Without in any way limiting the generality of the foregoing, Schedule
--------
4.15(d) sets forth (i) all permits, licenses and other governmental
- -------
authorizations held by the Company and its Subsidiaries, or required for any of
their operations or business, under any Environmental Law, including the current
status of each such permit, license and authorization, (ii) all on-site and to
the knowledge of the Company off-site locations where the Company or any of its
Subsidiaries has stored, disposed or arranged for the disposal of Materials of
Environmental Concern, (iii) to the knowledge of the Company, all underground
storage tanks, and the capacity and contents of such tanks, located on property
owned, leased or controlled by the Company or its Subsidiaries, (iv) to the
knowledge of the Company, the location and condition of any asbestos or lead
(including furnishings or lead-based paints) contained in or forming part of any
building, building component, structure or office space owned, leased or
controlled by the Company or its Subsidiaries, and (v) to the knowledge of the
Company, all PCBs or PCB-containing items that are used or stored at any
property owned, leased or controlled by the Company or its Subsidiaries.
Section 4.16 ERISA. (a) Except as set forth on Schedule 4.16, neither
----- -------------
the Company nor its Subsidiaries, or any other trade or business, whether or not
incorporated that together with the Company or its Subsidiaries would be deemed
a "single employer" (within the meaning of Section 4001 of ERISA (an "ERISA
-----
Affiliate") is a "party in interest" (as defined in Section 3(14) of ERISA) or a
- ---------
"disqualified person" (within the meaning of Section 4975 of the Code), with
respect to any profit-sharing, pension or retirement plan, program, arrangement
or agreement, or any other "employee benefit plan" (within the meaning of
Section 3(3) of ERISA) or any "plan" (within the meaning of Section 4975 of the
Code) (collectively, each such plan, program, arrangement or agreement an
"Employee Benefit Plan").
- ----------------------
21
<PAGE>
(b) With respect to each Employee Benefit Plan: (i) each Employee Benefit
Plan has been administered in compliance in all material respects with its
terms, including, but not limited to, any provisions relating to contributions
thereunder, and is in compliance in all material respects with the applicable
provisions of ERISA, the Code and all other Laws as they relate to such Employee
Benefit Plans; (ii) no "employee pension benefit plan" (as defined in Section
3(2) of ERISA) has been the subject of a "reportable event" (as defined in
Section 4043 of ERISA) and there have been no "prohibited transactions" (as
described in Section 4975 of the Code or Title I of ERISA) effected by the
Company or its Subsidiaries with respect to any Employee Benefit Plan and, to
the knowledge of the Company and its Subsidiaries, there have been no
"prohibited transactions" (as described in Section 4975 of the Code or Title I
of ERISA) effected by any Person other than the Company or its Subsidiaries with
respect to any Employee Benefit Plan; (iii) there are no proceedings, suits or
material claims (other than routine claims for benefits) pending or to the
knowledge of the Company or its Subsidiaries threatened with respect to any
Employee Benefit Plan, the assets of any trust thereunder or the Employee
Benefit Plan sponsor with respect to the design or operation of any Employee
Benefit Plan; (iv) no condition exists or event or transaction has occurred in
connection with any Employee Benefit Plan that has resulted or is reasonably
likely to result in the Company or its Subsidiaries or any such ERISA Affiliate
incurring any liability, fine or penalty except as would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect;
(v) no Employee Benefit Plan is or ever has been subject to Title IV of ERISA
and neither the Company nor its Subsidiaries has any liability under Title IV of
ERISA, whether actual or contingent; and (vi) no amounts payable pursuant to any
Employee Benefit Plan will, in connection with the Transactions, fail for any
reason to be deductible for Federal income tax purposes.
Section 4.17 Intellectual Property Rights. Each of the Company and its
----------------------------
Subsidiaries owns or possesses adequate licenses or other rights to use all
Intellectual Property Rights material to its business as currently conducted and
as proposed to be conducted, and neither the Company nor any of its Subsidiaries
has received any written notice of infringement of or conflict with asserted
rights of others with respect to the use of Intellectual Property Rights, which
would reasonably be expected to result in any Material Adverse Effect. To the
knowledge of the Company, all Intellectual Property Rights material to its
business as currently conducted and as proposed to be conducted are valid and
enforceable and the Company has performed all acts and has paid all required
fees and taxes to maintain all registrations and applications of such
Intellectual Property Rights in full force and effect. Neither the Company nor
any of its Subsidiaries, in the conduct of their business as now conducted or as
proposed to be conducted, infringes or conflicts with any right of any third
party, known to the Company, where such infringement or conflict would
reasonably be expected to result in any Material Adverse Effect. Neither the
Company nor any of its Subsidiaries is, nor will it be as a result of the
22
<PAGE>
execution and delivery of this Agreement and the other Documents or the
performance of any obligations hereunder and thereunder, in breach of any
license or other agreement relating to any Intellectual Property Rights, except
as would not reasonably be expected to have a Material Adverse Effect. To the
knowledge of the Company, no third party is infringing or has infringed any
Intellectual Property Rights of the Company or its Subsidiaries.
Section 4.18 Compliance with Laws. Each of the Company and its
--------------------
Subsidiaries has obtained and has maintained in good standing any licenses,
permits, consents and authorizations required to be obtained by it under all
Legal Requirements relating to its business, the absence of which would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, and any such licenses, permits, consents and authorizations
remain in full force and effect, except as to any of the foregoing the absence
of which would not reasonably be expected to have, singly or in the aggregate, a
Material Adverse Effect. Each of the Company and its Subsidiaries is in
compliance, in all material respects, with all Laws and there is no pending or,
to the Company's knowledge, threatened, Proceedings against either the Company
or its Subsidiaries pursuant to any Legal Requirements, other than any such
Proceedings which, if adversely determined, would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.
Section 4.19 Agreements. Except as set forth on Schedule 4.19 hereto,
---------- -------------
the Company and its Subsidiaries are not a party to any written or oral (a)
Contract with any labor union; (b) material Contract for the future purchase of
fixed assets or for the future purchase of materials, supplies or equipment in
excess of normal operating requirements; (c) Contract for the employment of any
officer, individual employee or other person on a full-time basis or any
contract with any Person on a consulting basis providing for a payment to such
officer, employee or other person in excess of $250,000 per year; (d) agreement
or indenture relating to the borrowing of money or to the mortgaging, pledging
or otherwise placing a material Lien on any assets of the Company; (e) guaranty
of any material obligation for borrowed money; (f) material lease or agreement
under which the Company is lessee of or holds or operates any property, real or
personal, owned by any other party; (g) material lease or agreement under which
the Company is lessor of or permits any third party to hold or operate any
property, real or personal, owned or controlled by the Company; (h) agreement or
other commitment for capital expenditures in excess of $1,000,000; (i) Contract,
agreement or commitment under which the Company is obligated to pay any broker's
fees, finder's fees or any such similar fees, to any third party in connection
with the Transactions; or (j) any other Contract, agreement, arrangement or
understanding, other than customer contracts, which is material to the business
of the Company. All such Contracts constitute the valid and binding obligations
of the Company and, to the knowledge of the Company, the other parties thereto,
23
<PAGE>
enforceable in accordance with their terms, except as enforcement may be limited
by general principles of equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally. For the purposes of this
Section 4.19, "material" shall mean any Contract involving more than $2,000,000.
- ------------
Section 4.20 Year 2000. The Company represents and warrants that its
---------
computer system and software are able to accurately process date data, including
but not limited to, calculating comparing and sequencing from, into and between
the twentieth century (throughout the year 1999), the year 2000 and the twenty-
first century, including leap year calculations.
Section 4.21 SEC Reports. None of the Company's filings with the SEC,
-----------
including, without limitation, the Company's Registration Statement on Form S-1
relating to the IPO, contain any untrue statement of material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
Section 4.22 Stockholders' Agreement. As of the Closing, the
-----------------------
Stockholders' Agreement of the Company shall have been amended and restated
substantially in the form as heretofore presented to GECC by the Company.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF EACH INVESTOR
Each Investor (as to itself only) represents and warrants to the Company
that:
Section 5.1 Organization and Standing. Such Investor is a corporation
-------------------------
or other legally recognizable entity duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization.
Section 5.2 Purchase for Own Account. Such Investor is purchasing the
------------------------
Securities to be purchased by it solely for its own account and not as nominee
or agent for any other person and not with a view to, or for offer or sale in
connection with, any current distribution thereof (within the meaning of the
Securities Act) that would cause the original purchase of the Securities to be
in violation of the securities laws of the United States of America or any state
thereof, without prejudice, however, to its right at all times to sell or
otherwise dispose of all or any part of such Securities pursuant to a
registration statement under the Securities Act or pursuant to an exemption from
the registration requirements of the Securities Act, and subject, nevertheless,
to the disposition of its property being at all times within its control.
24
<PAGE>
Section 5.3 Accredited Investor; No Solicitation. (a) Such Investor is
------------------------------------ -
knowledgeable, sophisticated and experienced in business and financial matters
and in investing in privately held and public business enterprises; it has
previously invested in securities similar to the Securities and it acknowledges
that the Securities have not been registered under the Securities Act and
understands that the Securities must be held indefinitely unless they are
subsequently registered under the Securities Act or such sale is permitted
pursuant to an available exemption from such registration requirement; it is
able to bear the economic risk of its investment in the Securities and is
presently able to afford the complete loss of such investment; and it is an
"accredited investor" as defined in Regulation D promulgated under the
Securities Act.
(b) Neither Investor made its investment decision to purchase the
-
Securities based on any form of general solicitation or general advertising used
by the Company, including, but not limited to, advertisements,
articles, notices or other communications published in any newspaper, magazine
or similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation or general
advertising.
Section 5.4 Qualified Institutional Buyer. Such Investor is a
-----------------------------
"qualified institutional buyer" as defined in Rule 144A promulgated under the
Securities Act.
Section 5.5 Authorization. Each Investor has taken all actions
-------------
necessary to authorize it (i) to execute, deliver and perform all of its
-
obligations under this Agreement, (ii) to perform all of its obligations under
--
the Documents and (iii) to consummate the transactions contemplated hereby and
---
thereby. This Agreement is a legally valid and binding obligation of each
Investor enforceable against it in accordance with its terms, except for (a) the
-
effect thereon of bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting the rights of creditors generally and (b)
-
limitations imposed by Federal or state law or equitable principles upon the
specific enforceability of any of the remedies, covenants or other provisions
thereof and upon the availability of injunctive relief or other equitable
remedies.
Section 5.6 ERISA. Each such Investor represents that either:
-----
(a) it is not acquiring the Securities for or on behalf of any Employee
Benefit Plan;
(b) the assets used to acquire the Securities are assets of an insurance
company general account and the purchase of the Securities would be exempt under
the provisions of Prohibited Transaction Class Exemption 95-60;
25
<PAGE>
(c) the assets used to acquire the Securities are assets of a "venture
capital operating company" or "real estate operating company" (as defined in 29
C.F.R ' 25 10.3-101); or
(d) if it is otherwise acquiring the Securities on behalf of an employee
pension benefit plan, an employee welfare benefit plan or a "Plan," either
directly or through an investment fund (such as a bank collective investment
fund or insurance company pooled separate account), then, assuming that the
plans identified to such Investor by the Company in writing are the only
employee benefit plans (as defined in Section 3 of ERISA) or Plans with respect
to which the Company is a "party in interest" or "disqualified person" (as such
terms are defined in section 3 of ERISA and section 4975 of the Code,
respectively), either
(i) no part of the funds to be used to purchase the Securities
constitutes assets allocable to any trust that contains assets of any of such
employee benefit plans, or
(ii) exemption from the prohibited transaction rules applies such that
the use of such funds does not constitute a non-exempt prohibited transaction
in violation of section 406 of ERISA or section 4975 of the Code, which could
be subject to a civil penalty assessed pursuant to section 502 of ERISA or a
tax imposed under section 4975 of the Code.
ARTICLE VI
COVENANTS
Section 6.1 Compliance with Laws; Maintenance of Licenses. The Company
---------------------------------------------
shall, and shall cause each of its Subsidiaries to, comply with all Legal
Requirements (including all Environmental Laws) to which any of them is subject,
and maintain, obtain and keep in effect all licenses, permits, franchises and
other governmental authorizations necessary to the ownership or operation of its
properties or the conduct of its businesses, except to the extent that the
failure to so comply or maintain, obtain and keep in effect would not reasonably
be expected to have, singly or in the aggregate, a Material Adverse Effect.
Section 6.2 Inspection of Properties and Records. Until the closing of
------------------------------------
the IPO, the Company agrees to allow, and to cause each of its Subsidiaries to
allow, each Investor or subsequent Holder who continues to hold Shares with an
original cost of at least $1,000,000 (or, such Persons as any of them may
designate) (individually and collectively, "Inspectors"), subject to appropriate
----------
agreements as to confidentiality, (i) to visit and
-
26
<PAGE>
inspect any of the properties of the Company or any of its Subsidiaries, (ii) to
--
examine all their books of records, reports and other papers and to make copies
and extracts therefrom, (iii) to discuss its affairs, finances and accounts with
---
its officers employees, and (iv) to discuss the financial condition of the
--
Company and Subsidiaries with their independent accountants upon reasonable
notice to the Company of its intention to do so and so long as the Company shall
l be given the reasonable opportunity to participate in such discussions (and by
this provision the Company authorizes such accountants to have such discussions
with the Inspectors). All such visits, examinations and discussions set forth in
the preceding sentence shall be at such reasonable times and as often as may be
reasonably requested.
Section 6.3 Financial Statements. (a) Until the closing of the IPO,
--------------------
the Company will deliver to each Investor or subsequent Holder who continues to
hold Shares with an original cost of at least $1,000,000:
(i) Not more than 30 days after the end of each month, a consolidated
balance sheet of the Company as at the end of such month and the related
consolidated statements of income of the Company for such month and (in the case
of all months other than the first month of such fiscal year) for the period
from the beginning of the current fiscal year to the end of such month, and
setting forth, in each case in comparative form, figures for the corresponding
month and each previous month and period in the Company's budget for the current
fiscal year, certified by the chief financial officer of the Company as fairly
presenting in all material respects the financial condition of the Company as at
the dates indicated and the results of their operations for the periods
indicated, prepared in accordance with GAAP consistently applied except for the
absence of footnotes and subject to changes resulting from periodic adjustments;
and
(ii) Not more than 90 days after the end of each fiscal year of the
Company, a consolidated balance sheet of the Company as of such year and the
related consolidated statements of income and cash flows of the Company for such
year, corresponding figures from the preceding fiscal year, and in the case of
such consolidated financial statements, accompanied by a report thereon of
PriceWaterhouseCoopers or such other independent public accountants of
recognized national standing selected by the Company, which report shall state
that such consolidated financial statements were prepared in accordance with
GAAP consistently applied and present fairly in all material respects the
consolidated financial condition of the Company as of the dates indicated; and
(b) Following the closing of the IPO, the Company will deliver to each
Investor or subsequent Holder who owns Shares all financial information made
available generally to its stockholders.
27
<PAGE>
Section 6.4 Indemnification for Finder's Fees. The Company hereby
---------------------------------
agrees to indemnify each Investor, each Affiliate of an Investor, and each
director, officer, partner, employee, counsel, agent or representative thereof
against and hold them harmless from all losses, claims, damages or other
liabilities arising from any finder's or other brokers or investment banker fees
with respect to any finder, broker or investment banker retained by or
authorized to act on behalf of, the Company or any of its Subsidiaries with
respect to the transactions contemplated hereunder.
Section 6.5 Publicity; Press Releases. Neither the Company nor any of
-------------------------
the Investors shall issue any press release or make any public disclosure
regarding the Investors' investment in the Company contemplated hereby (other
than as set forth in the Registration Statement, any amendment thereto or any
other securities laws filing) unless such press release or public disclosure is
approved by a majority in interest of the Investors or the Company, as the case
may be, in advance.
Section 6.6 Lock Up. Each Investor agrees that it shall not Transfer
-------
any shares of Common Stock or Warrant Shares for 180 days after any underwritten
public offering of shares of Common Stock (including in the IPO) unless the
managing underwriter for such offering decides such restriction is unnecessary,
and each Investor agrees to execute any agreement or document reasonably
requested by any such underwriter which relates to such restriction; provided,
however, that this Section 6.6 shall not apply to transfers to an Investor's
Affiliates or pursuant to the exercise of any incidental registration rights of
an Investor.
Section 6.7 No Purchases in the IPO. Each Investor agrees that it shall
-----------------------
not purchase any shares of the Common Stock in the IPO. GE Capital Equity
Investments, Inc. further agrees that it shall send written notice to the
General Counsel of each of the subsidiaries of General Electric Capital
Corporation advising them that such subsidiaries should not purchase any shares
of the Common Stock in the IPO.
Section 6.8 HSR Filing. Each party hereto agrees to (i) take reasonable
---------- -
best efforts to prepare and file, as soon as practicable after the date hereof,
but in any event in not more than 15 Business Days from the date hereof, the
notification required by it under the HSR Act with respect to the Transactions,
(ii) request early termination of the waiting period with respect thereto,
--
and (iii) diligently respond to any inquiries arising therefrom.
---
ARTICLE VII
MISCELLANEOUS
Section 7.1 Notices. All notices, demands, requests, consents or
-------
approvals (collectively, "Notices") required or permitted to be given hereunder
-------
or which are given
<PAGE>
with respect to this Agreement shall be in writing and shall be personally
delivered or mailed, registered or certified, return receipt requested, postage
prepaid (or by a substantially similar method), or delivered by a reputable
overnight courier service with charges prepaid, or transmitted by hand delivery,
telegram, telex or facsimile, addressed as set forth below, or such other
address (and with such other copy) as such party shall have specified most
recently by written notice. Notice shall be deemed given or delivered on the
date of service or transmission if personally served or transmitted by telegram,
telex or facsimile. Notice otherwise sent as provided herein shall be deemed
given or delivered on the third Business Day following the date mailed or on the
next Business Day following delivery of such notice to a reputable overnight
courier service.
To the Company:
iXL Enterprises, Inc.
Two Park Place
1888 Emery Street, 2nd Floor
Atlanta, Georgia, 30318
Attention: Mr. M. Wayne Boylston
Telecopy No.: (404) 267-3801
with a copy (which shall not constitute Notice) to:
Minkin & Snyder, PC
One Buckhead Plaza
3060 Peachtree Street, N.E., Suite 1100
Atlanta, Georgia 30305
Attn: James S. Altenbach, Esq.
Telecopy No.: (404) 261-5064
with an additional copy (which shall not constitute Notice) to:
Kelso & Company
320 Park Avenue
24th Floor
New York, New York 10022
Attn: James J. Connors II, Esq.
Telecopy No.: (212) 223-2379
with an additional copy (which shall not constitute Notice) to:
29
<PAGE>
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attn: Margaret A. Davenport, Esq.
Telecopy No.: (212) 909-6836
To the Investors:
To the address specified on the signature page executed by each such
Investor.
with a copy (which shall not constitute Notice) to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attn: William Gutowitz, Esq.
Telecopy No.: (212) 310-8007
Section 7.2 Successors and Assigns. This Agreement shall be binding
----------------------
upon and shall inure to the benefit of the parties hereto, and their respective
successors and permitted assigns; provided that (i) neither this Agreement nor
-
any rights or obligations hereunder may be transferred or assigned by the
Company (except by operation of law in any merger) and (ii) neither this
--
Agreement nor any rights or obligations hereunder may be transferred or assigned
by any Investor except to any Affiliate to whom such Investor has transferred
Securities.
Section 7.3 No Waivers; Amendments. (a) No failure or delay by any
----------------------
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
(b) This Agreement may not be amended or modified, nor may any provision
hereof be waived, other than by a written instrument signed by (x) the Company
-
and (y) each Investor.
-
Section 7.4 Counterparts. This Agreement may be signed in counterparts,
------------
each of which shall constitute an original and which together shall constitute
one and the same agreement.
30
<PAGE>
Section 7.5 Section Headings. The section headings contained in this
----------------
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
Section 7.6 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
---------------------------------------------------------
TRIAL. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
- -----
LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN
THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK IN RESPECT OF ANY ACTION ARISING OUT OF OR RELATING TO THIS
AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE COMPANY
AGREES THAT IT WILL NOT COMMENCE ANY SUCH ACTION IN ANY OTHER JURISDICTION. EACH
OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH ACTION BROUGHT IN ANY SUCH
COURT AND ANY CLAIM THAT ANY SUCH ACTION BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. NOTWITHSTANDING THE FOREGOING, NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE INVESTORS TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE COMPANY IN ANY OTHER JURISDICTION.
EACH OF THE PARTIES HERETO HEREBY WAIVES THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE OTHER DOCUMENTS, OR ANY DEALINGS BETWEEN THEM RELATING
TO THE SUBJECT MATTER OF THE INVESTORS' INVESTMENT IN THE COMPANY CONTEMPLATED
HEREBY. THE SCOPE OF THIS JURY TRIAL WAIVER SHALL BE LIMITED TO DISPUTES BETWEEN
THE COMPANY AND THE INVESTORS AND SHALL NOT EXTEND TO DISPUTES BETWEEN THE
COMPANY AND ANY OTHER PERSON.
31
<PAGE>
Section 7.7 Entire Agreement. This Agreement, together with the other
----------------
Documents, constitutes the entire agreement and understanding among the parties
hereto with respect to the subject matter hereof and thereof and supersedes any
and all prior agreements and understandings, written or oral, relating to the
subject matter hereof.
Section 7.8 Severability. Any term or provision of this Agreement which
------------
is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdictions, it being intended that
all rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.
Section 7.9 Further Assurances. The Company shall, and shall cause each
------------------
of its Subsidiaries to, at its cost and expense, upon request of any Investor or
Holder, duly execute and deliver, or cause to be duly executed and delivered, to
such Investor or Holder such further instruments and do or cause to be done such
further acts as may be necessary or proper in the reasonable opinion of such
Investor or Holder to carry out more effectually the provisions and purposes of
this Agreement and the other Documents.
Section 7.10 No Survival of Representations and Warranties; No Recourse.
----------------------------------------------------------
The representations and warranties in this Agreement shall not survive the
Closing, other than the representations and warranties of the Company set forth
in Sections 4.4, 4.5, 4.6, 4.7, 4.10 and 4.21 hereof, which shall survive until
the first anniversary of the Closing. In no event shall the Investors have any
recourse against the present or former directors, officers or stockholders of
the Company or any of its Affiliates with respect to any representation,
warranty or agreement made by the Company in this Agreement, except in the case
of fraud, in which case the Investor's right shall be governed by applicable
law.
Section 7.11 Termination. At any time after August 31, 1999, any
-----------
party may terminate this Agreement if the Closing shall not have taken place by
August 31, 1999, unless the failure to consummate the Closing is the result of a
willful and material breach by the party seeking to terminate this Agreement. In
the event of the termination of this Agreement pursuant to this Section 7.11,
this Agreement shall be of no further force and effect.
Section 7.12 Disclosure of Financial Information. Each Holder is hereby
-----------------------------------
authorized to deliver a copy of any financial statement or any other information
relating to the business, operations or financial condition of the Company or
each of its Subsidiaries which may be furnished to it hereunder or otherwise, to
any other Holder, any court, Governmental Body claiming to have jurisdiction
over such Holder, to the National Association of Insurance Commissioners or
similar organizations, as may be required or
32
<PAGE>
appropriate in response to any summons or subpoena in connection with any
litigation, to the extent necessary to comply with any law, order, regulation or
ruling applicable to such Holder, or to any rating agency, in order to protect
its investment hereunder; provided, however, that prior to disclosing any such
information, such Holder shall provide the Company with prompt written notice so
that the Company may seek a protective order or other appropriate remedy if the
Company reasonably determines that such information must be kept confidential.
Each Holder is hereby authorized to deliver a copy of any financial
statement or any other information relating to the business, operations or
financial condition of the Company or each of its Subsidiaries which may be
furnished to it hereunder or otherwise, to any Person which shall, or shall have
any right or obligation to, succeed to all or any part of such Holder's interest
in any of the Securities and this Agreement or to any actual or prospective
purchaser or assignee thereof; provided, however, that no disclosure may be made
unless such other Person first executes a confidentiality agreement acceptable
to the Company with respect to any such information disclosed.
[Signature pages follow]
33
<PAGE>
IN WITNESS WHEREOF, this Securities Purchase Agreement has been duly executed
by the parties set forth below as of the date first written above.
iXL ENTERPRISES, INC.
By: /s/ M. Wayne Boylston
----------------------------
Title: Executive Vice President
-------------------------
Address:
- -------
GE CAPITAL EQUITY INVESTMENTS, INC.
120 Long Ridge Road By: /s/ Jeffrey Coats
Stamford, CT 06927 ----------------------------
Title: Managing Director
-------------------------
Address:
- -------
GENERAL ELECTRIC PENSION TRUST
3003 Summer St. By: General Electric Investment
Stanford, CT 06495 Corporation, its Investment Manager
By: /s/ Patrick J. McNeela
-----------------------------
Title: Vice President
--------------------------
<PAGE>
Annex 1
Name of Investor Securities Purchased
GE Capital Equity Investments, Inc. 1,500,000 shares of Common Stock
1,500,000 Warrants
General Electric Pension Trust 500,000 shares of Common Stock
35
<PAGE>
EXHIBIT 10.60
Exhibit A to the Securities Purchase Agreement
___________________________________________________________________________
FORM OF
WARRANT AGREEMENT
among
iXL Enterprises, Inc.
and
GE Capital Equity Investments, Inc.
Dated as of
____________, 1999
___________________________________________________________________________
<PAGE>
WARRANT AGREEMENT
-----------------
This WARRANT AGREEMENT is dated as of May __, 1999 (the "Agreement"), and
---------
entered into by and among iXL Enterprises, Inc., a Delaware corporation (the
"Company"), and GE Capital Equity Investments, Inc. ("GECC," and together with
------- ----
subsequent holders of the Warrants subject hereto, the "Holders").
-------
WHEREAS, in connection with the Securities Purchase Agreement, dated as of
April 7, 1999, among the Company, GECC and General Electric Pension Trust, and
in consideration of (a) GECC's agreement to help develop and implement a
-
mutually satisfactory marketing plan for the Company including a coordinated
promotional campaign extending for one year and emphasizing GECC's continuing
and growing relationship with the Company and Consumer Financial Network, Inc.
("CFN"), and (b) GECC's agreement to use its commercially reasonable efforts to
--- -
implement, within GECC's intranet, the electronic access to CFN's entire
platform and developing a mutually satisfactory plan of implementation and
employee communication with respect thereto, the Company is issuing to GECC
warrants to purchase an aggregate of 1,500,000 shares (subject to adjustment as
provided herein) of the Company's Common Stock, par value $.01 per share (the
"Common Stock"). The warrants referred to in this paragraph are referred to
------------
herein as the "Warrants" and the shares of Common Stock issuable upon exercise
of the Warrants are referred to herein as the "Warrant Shares";
--------------
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
SECTION 1. Warrant Certificates. Simultaneously with the execution
hereof, the Company will issue and deliver to GECC a certificate or certificates
evidencing the Warrants (the "Warrant Certificates"). Such certificate or
--------------------
certificates shall be substantially in the form set forth as Exhibit A attached
hereto. Warrant Certificates shall be dated the date of issuance by the
Company.
SECTION 2. Execution of Warrant Certificates. Warrant Certificates shall
be signed on behalf of the Company by its Chairman of the Board or its Chief
Executive Officer, President or any Vice President. Each Warrant Certificate
shall also be signed on behalf of the Company by its Secretary or an Assistant
Secretary.
<PAGE>
SECTION 3. Restrictions on Transfer; Registration of Transfers and
Exchanges. Prior to any proposed transfer of the Warrants or the Warrant
Shares, unless such transfer is made pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "Securities Act"),
--------------
the transferring Holder will deliver to the Company an opinion of counsel,
reasonably satisfactory in form and substance to the Company, to the effect that
the Warrants or Warrant Shares, as applicable, may be sold or otherwise
transferred without registration under the Securities Act. No Warrants may be
transferred to any Holder unless the issuance of Warrant Shares to such Holder
upon the exercise of such Warrants would be exempt from registration under the
Securities Act. Upon original issuance thereof, and until such time as the same
shall have been registered under the Securities Act or sold pursuant to Rule 144
promulgated thereunder (or any similar rule or regulation) each Warrant
Certificate shall bear the legend included on the first page of Exhibit A,
unless in such opinion of counsel, such legend is no longer required by the Act.
Notwithstanding the foregoing, each Holder of Warrants and Warrant Shares agrees
that it will not transfer such securities for 180 days after any public offering
of Common Stock (or security convertible into Common Stock) by the Company
unless the managing underwriter for such offering decides such restriction is
unnecessary, and each Holder agrees to execute any agreement or document
reasonably requested by any such underwriter which relates to such restriction.
Subject to the foregoing, the Company shall from time to time register the
transfer of any outstanding Warrant Certificates in the Warrant Register to be
maintained by the Company upon surrender thereof accompanied by a written
instrument or instruments of transfer in form reasonably satisfactory to the
Company, duly executed by the registered Holder or Holders thereof or by the
duly appointed legal representative thereof or by a duly authorized attorney.
Upon any such registration of transfer, a new Warrant Certificate shall be
issued to the transferee Holder(s) and the surrendered Warrant Certificate shall
be canceled and disposed of by the Company.
SECTION 4. Warrants; Exercise of Warrants. Subject to the terms of this
Agreement, each Holder shall have the right, which may be exercised at any time
during the period commencing on the first anniversary of the date hereof and
ending at 5:00 p.m., New York City time, on the date which is five years after
the date hereof (the "Expiration Date"), to receive from the Company the number
---------------
of fully paid and nonassessable Warrant Shares (and such other consideration)
which the Holder may at the time be entitled to receive on exercise of such
Warrants and payment of the Exercise Price (as defined below) for such Warrant
Shares. Each Warrant not exercised prior to 5:00 p.m., New York time, on the
Expiration Date shall become void and all rights thereunder and all rights in
respect thereof under this Agreement shall cease as of such time. No adjustments
as to dividends
2
<PAGE>
will be made upon exercise of the Warrants, except as otherwise expressly
provided herein.
The price at which each Warrant shall be exercisable (the "Exercise Price")
--------------
shall be equal to[INSERT IPO PRICE].
A Warrant may be exercised upon surrender to the Company at its office
designated for such purpose of the Warrant Certificate or Certificates to be
exercised with the form of election to purchase attached thereto duly filled in
and signed, and upon payment to the Company of the Exercise Price for the number
of Warrant Shares in respect of which such Warrants are then exercised. Payment
of the aggregate Exercise Price shall be made by delivering for surrender and
cancellation to the Company Warrants with an aggregate Surrender Value (as
hereinafter defined), as of the date of such exercise, equal to the Exercise
Price for the Warrants being exercised. For the purposes of this paragraph, the
"Surrender Value" of any Warrant is equal to the Fair Market Value, as of the
date of such surrender, of the Warrant Shares issuable upon the exercise of such
Warrant, minus the Exercise Price of such Warrant. Fair Market Value means with
respect to a Warrant Share at any date: (i) if shares of Common Stock are being
-
sold pursuant to a public offering under an effective registration statement
under the Securities Act which has been declared effective and Fair Market Value
is being determined as of the closing of the public offering, the higher of (x)
the "per share price to public" specified for such shares in the final
prospectus for such public offering and (y) the Fair Market Value determined
under clauses (ii), (iii), or (iv), as applicable below; (ii) subject to clause
(i) above, if shares of Common Stock are then listed or admitted to trading on
any national securities exchange or traded on any national market system, the
average of the daily closing prices for the 20 trading days before such date;
(iii) subject to clause (i) above if no shares of Common Stock are then listed
---
or admitted to trading on any national securities exchange or traded on any
national market system, the average of the reported closing bid and asked prices
thereof on such date in the over-the-counter market as shown by the Nasdaq Stock
Market or, if such shares are not then quoted in such system, as published by
the National Quotation Bureau, Incorporated or any similar successor
organization, and in either case as reported by any member firm of the New York
Stock Exchange selected by the Company; or (iv) subject to clause (i) above if
--
no shares of Common Stock are then listed or admitted to trading on any national
securities exchange or traded on any national market system, if no closing bid
and asked prices thereof are then so quoted or published in the over-the-counter
market, the Fair Market Value of a Warrant Share as determined in good faith by
the Board of Directors of the Company.
Subject to the provisions of Section 5 hereof, upon such surrender of
Warrant Certificates and payment of the Exercise Price, the Company shall issue
and cause to be
3
<PAGE>
delivered, as promptly as practicable, to or upon the written order of the
Holder and in such name or names as such Holder may designate a certificate or
certificates for the number of full Warrant Shares issuable upon the exercise of
such Warrants (and such other consideration as may be deliverable upon exercise
of such Warrants) together with cash for fractional Warrant Shares as provided
in Section 9. The certificate or certificates for such Warrant Shares shall be
deemed to have been issued and the person so named therein shall be deemed to
have become a holder of record of such Warrant Shares as of the date of the
surrender of such Warrants and payment of the Exercise Price, irrespective of
the date of delivery of such certificate or certificates for Warrant Shares.
Each Warrant shall be exercisable, at the election of the Holder thereof,
either in full or from time to time in part and, in the event that a Warrant
Certificate is exercised in respect of fewer than all of the Warrant Shares
issuable on such exercise at any time prior to the date of expiration of the
Warrants, a new certificate evidencing the remaining Warrant or Warrants will be
issued and delivered pursuant to the provisions hereof.
All Warrant Certificates surrendered upon exercise of Warrants shall be
canceled and disposed of by the Company. The Company shall keep copies of this
Agreement and any notices given or received hereunder available for inspection
by the Holders during normal business hours at its office.
SECTION 5. Payment of Taxes. The Company will pay all documentary stamp
taxes and other governmental charges (excluding all foreign, federal or state
income, franchise, property, estate, inheritance, gift or similar taxes) in
connection with the issuance or delivery of the Warrants hereunder, as well as
all such taxes attributable to the initial issuance or delivery of Warrant
Shares upon the exercise of Warrants and payment of the Exercise Price. The
Company shall not, however, be required to pay any tax that may be payable in
respect of any subsequent transfer of the Warrants or any transfer involved in
the issuance and delivery of Warrant Shares in a name other than that in which
the Warrants to which such issuance relates were registered, and, if any such
tax would otherwise be payable by the Company, no such issuance or delivery
shall be made unless and until the person requesting such issuance has paid to
the Company the amount of any such tax, or it is established to the reasonable
satisfaction of the Company that any such tax has been paid.
SECTION 6. Mutilated or Missing Warrant Certificates. If a mutilated
Warrant Certificate is surrendered to the Company, or if the Holder of a Warrant
Certificate claims and submits an affidavit or other evidence satisfactory to
the Company to the effect that the Warrant Certificate has been lost, destroyed
or wrongfully taken, the Company shall issue a replacement Warrant Certificate.
If reasonably required by the Company, such Holder must provide an indemnity
bond, or other form of indemnity, sufficient in the
4
<PAGE>
reasonable judgment of the Company to protect the Company from any loss which it
may suffer if a Warrant Certificate is replaced. If GECC or any other
institutional Holder (or nominee thereof) is the owner of any such lost, stolen
or destroyed Warrant Certificate, then the affidavit of an authorized officer of
such owner, setting forth the fact of loss, theft or destruction and of its
ownership of the Warrant Certificate at the time of such loss, theft or
destruction shall be accepted as satisfactory evidence thereof and no further
indemnity shall be required as a condition to the execution and delivery of a
new Warrant Certificate other than the unsecured written agreement of such owner
to indemnify the Company.
SECTION 7. Reservation of Warrant Shares. The Company shall at all times
reserve and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued Common Stock or its authorized and issued Common
Stock held in its treasury, for the purpose of enabling it to satisfy any
obligation to issue Warrant Shares upon exercise of Warrants, the maximum number
of shares of Common Stock which may then be deliverable upon the exercise of all
outstanding Warrants.
The Company or, if appointed, any transfer agent for the Common Stock (the
"Transfer Agent") will be irrevocably authorized and directed at all times to
--------------
reserve such number of authorized shares as shall be required for such purpose.
The Company shall keep a copy of this Agreement on file with any such Transfer
Agent. The Company will supply any such Transfer Agent with duly executed
certificates for such purposes and will provide or otherwise make available all
other consideration that may be deliverable upon exercise of the Warrants. The
Company will furnish any such Transfer Agent a copy of all notices of
adjustments and certificates related thereto, transmitted to each Holder
pursuant to Section 10 hereof.
Before taking any action which would cause an adjustment pursuant to
Section 8 hereof to reduce the Exercise Price below the then par value of the
Warrant Shares, the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares at the Exercise Price
as so adjusted.
The Company covenants that all Warrant Shares and other capital stock
issued upon exercise of Warrants will, upon payment of the Exercise Price
therefor and issue thereof, be validly authorized and issued, fully paid,
nonassessable, free of preemptive rights and free, subject to Section 5 hereof,
from all taxes, liens, charges and security interests with respect to the issue
thereof.
SECTION 8. Adjustment of Exercise Price and Warrant Number. The number of
shares of Common Stock issuable upon the exercise of each Warrant (the "Warrant
-------
5
<PAGE>
Number") is initially one. The Warrant Number is subject to adjustment from
- ------
time to time upon the occurrence of the events enumerated in, or as otherwise
provided in, this Section 8.
(a) Adjustment for Change in Capital Stock
--------------------------------------
If the Company:
(1) pays a dividend or makes a distribution on its Common Stock in
shares of its Common Stock;
(2) subdivides or reclassifies its outstanding shares of Common Stock
into a greater number of shares;
(3) combines or reclassifies its outstanding shares of Common Stock
into a smaller number of shares; or
(4) issues by reclassification of its Common Stock any shares of its
capital stock (other than reclassification arising solely as a result of a
change in the par value or no par value of the Common Stock);
then the Warrant Number and the Exercise Price in effect immediately prior to
such action shall be proportionately adjusted so that the holder of any
Warrant thereafter exercised shall receive the aggregate number and kind of
shares of capital stock of the Company which it would have received
immediately following such action if such Warrant had been exercised
immediately prior to such action for the same aggregate consideration that
such holder would have paid if such Warrant had been exercised immediately
prior to such action.
The adjustment shall become effective immediately after the record date in
the case of a dividend or distribution and immediately after the effective
date in the case of a subdivision, combination or reclassification.
Such adjustment shall be made successively whenever any event listed above
shall occur.
The Company shall not issue shares of Common Stock as a dividend or
distribution on any class of capital stock other than Common Stock unless (i)
the Warrant Holders also receive such dividend or distribution on a ratable
basis or (ii) the appropriate adjustment to the Warrant Number and Exercise
Price is made under this Section 8.
6
<PAGE>
(b) Notice of Adjustment
--------------------
Whenever the Warrant Number is adjusted, the Company shall provide the
notices required by Section 10 hereof.
(c) Voluntary Increase
------------------
The Company from time to time may increase the Warrant Number by any amount
for any period of time (including, without limitation, permanently) if the
period is at least 20 Business Days and if the increase is irrevocable during
the period. Whenever the Warrant Number is increased, the Company shall mail
to the Holders a notice of the increase. The Company shall mail the notice at
least 15 days before the date the increased Warrant Number takes effect. The
notice shall state the increased Warrant Number and the period it will be in
effect.
An increase of the Warrant Number under this Subsection (c) (other than a
permanent increase) does not change or adjust the Warrant Number otherwise in
effect for purposes of subsection (a) of this Section 8.
(d) Reorganizations
---------------
In case of any capital reorganization or reclassification, other than in
the cases referred to in Section 8(a) hereof, or the consolidation or merger
of the Company with or into another corporation (other than a merger or
consolidation in which the Company is the continuing corporation and which
does not result in any reclassification of any of the outstanding shares of
the Company's capital stock into shares of other stock or other securities or
property), or the sale of the property of the Company as an entirety or
substantially as an entirety (collectively, such actions being hereinafter
referred to as "Reorganizations"), there shall thereafter be deliverable upon
---------------
exercise of any Warrant (in lieu of the number of shares of Common Stock
theretofore deliverable) the number of shares of stock or other securities or
property to which a holder of the number of shares of Common Stock that would
otherwise have been deliverable upon the exercise of such Warrant would have
been entitled upon such Reorganization if such Warrant had been exercised in
full immediately prior to such Reorganization. In the event that the
Warrants are not exercised in connection with such Reorganization,
appropriate adjustment, as determined in good faith by the Board of Directors
of the Company, whose determination shall be described in a duly adopted
resolution certified by the Company's Secretary or Assistant Secretary, shall
be made in the application of the provisions herein set forth with respect to
the rights and interests of Holders so that the provisions set forth herein
shall thereafter be applicable, as nearly as possible, in
7
<PAGE>
relation to any shares or other property thereafter deliverable upon exercise
of Warrants.
The Company shall not effect any such Reorganization unless prior to or
simultaneously with the consummation thereof, (i) notice of such
Reorganization shall be given to each of the Holders of the Warrants, and
(ii) the successor corporation (if other than the Company) resulting from
such Reorganization or the corporation purchasing or leasing such assets or
other appropriate corporation or entity shall expressly assume, by a
supplemental Warrant Agreement or other acknowledgment executed and delivered
to the Holder(s), the obligation to deliver to each such Holder such shares
of stock, securities or assets as, in accordance with the foregoing
provisions, such Holder may be entitled to purchase, and all other
obligations and liabilities under this Agreement.
If any event occurs of the type similar to that contemplated by the
provisions of this Section 8 but not expressly provided for by such provisions,
then the Board of Directors of the Company will make an appropriate adjustment
in the Warrant Number so as to protect the Holders, provided, that no such
--------
adjustment will decrease the applicable Warrant Number as otherwise determined
by this Section 8.
(e) Form of Warrants
----------------
Irrespective of any adjustments in the Exercise Price or the number or kind
of shares purchasable upon the exercise of the Warrants, Warrants theretofore
or thereafter issued may continue to express the same price and number and
kind of shares as are stated in the Warrants initially issuable pursuant to
this Agreement but shall nevertheless be exercisable for the adjusted number
of Warrant Shares at the adjusted Exercise Price.
SECTION 9. Fractional Interests. The Company shall not be required to issue
fractional Warrant Shares on the exercise of Warrants. If more than one Warrant
shall be presented for exercise in full at the same time by the same Holder, the
number of full Warrant Shares which shall be issuable upon the exercise thereof
shall be computed on the basis of the aggregate number of Warrant Shares
purchasable on exercise of the Warrants so presented. If any fraction of a
Warrant Share would, except for the provisions of this Section 9, be issuable on
the exercise of any Warrants (or specified portion thereof), the Company shall,
pay an amount in cash equal to the Fair Market Value of the Warrant Share so
issuable, multiplied by such fraction.
SECTION 10. Notices to Warrant Holders. Upon any adjustment pursuant to
Section 8 hereof, the Company shall promptly thereafter (i) cause to be filed
with the
8
<PAGE>
Company a certificate of an officer of the Company setting forth the Warrant
Number and Exercise Price after such adjustment and setting forth in reasonable
detail the method of calculation and the facts upon which such calculations are
based, and (ii) cause to be given to each of the Holders at its address
appearing on the Warrant Register written notice of such adjustments. Where
appropriate, such notice may be given in advance and included as a part of the
notice required to be mailed under the other provisions of this Section 10.
In case:
(a) the Company shall authorize the issuance to all holders of shares of
Common Stock of rights, options or warrants to subscribe for or purchase
shares of Common Stock or of any other subscription rights or warrants;
(b) the Company shall authorize the distribution to all holders of shares
of Common Stock of assets, including cash, evidences of its indebtedness, or
other securities;
(c) of any consolidation or merger to which the Company is a party and for
which approval of any shareholders of the Company is required, or of the
conveyance or transfer of the properties and assets of the Company
substantially as an entirety, or of any reclassification or change of Common
Stock issuable upon exercise of the Warrants (other than a change in par
value, or from par value to no par value, or from no par value to par value,
or as a result of a subdivision or combination), or a tender offer or
exchange offer for shares of Common Stock;
(d) of the voluntary or involuntary dissolution, liquidation or winding up
of the Company; or
(e) the Company proposes to take any action that would require an
adjustment to the Warrant Number pursuant to Section 8 hereof;
then the Company shall cause to be given to each of the Holders at its
address appearing on the Warrant Register, at least 20 days prior to the
applicable record date hereinafter specified, or the date of the event in the
case of events for which there is no record date, in accordance with the
provisions of Section 11 hereof, a written notice stating (i) the date as of
-
which the holders of record of shares of the capital stock of the Company to
be entitled to receive any such rights, options, warrants or distribution are
to be determined, or (ii) the initial expiration date set forth in any tender
--
offer or exchange offer for shares of the capital stock of the Company, or
(iii) the date on which any such consolidation, merger, conveyance, transfer,
----
dissolution, liquidation or winding up is expected to become effective or
9
<PAGE>
consummated, and the date as of which it is expected that holders of record
of shares of the capital stock of the Company shall be entitled to exchange
such shares for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up. The failure to give the notice required by this
Section 10 or any defect therein shall not affect the legality or validity of
any distribution, right, option, warrant, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up, or the vote upon any
action.
Nothing contained in this Agreement or in any Warrant Certificate shall be
construed as conferring upon the Holders (prior to the exercise of such
Warrants) the right to vote or to consent or to receive notice as shareholder
in respect of the meetings of shareholders or the election of Directors of
the Company or any other matter, or any rights whatsoever as shareholders of
the Company; provided, however, that nothing in the foregoing provision is
intended to detract from any rights explicitly granted to any Holder
hereunder.
SECTION 11. Notices to the Company and Warrant Holders. All notices and
other communications provided for or permitted hereunder shall be made by hand-
delivery, first-class mail, telex, telecopier, or overnight air courier
guaranteeing next day delivery:
(a) if to GECC, to the address specified on the signature page executed by
GECC; and
(b) if to the Company, iXL Enterprises, Inc., 1888 Emery Street, N.W.,
Atlanta, Georgia, 30318, Telecopy no. (404) 267-3801, Attention: Mr. M. Wayne
Boylston, with a copy to Minkin & Snyder PC, One Buckhead Plaza, 3060
Peachtree Road, N.E., Suite 1100, Atlanta, Georgia 30305, Telecopy No. (404)
261-5064, Attention: James S. Altenbach, Esq., with an additional copy to
Debevoise & Plimpton, 875 Third Avenue, New York, New York 10022, Telecopy
No. (212) 909-6836, Attention: Margaret A. Davenport, Esq. and with an
additional copy to Kelso & Company, 320 Park Avenue, Suite 2400, New York,
New York 10022, Attention: James J. Connors II, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed (so long as a
fax copy is sent and receipt acknowledged within two business days after
mailing); when answered back if telexed; when receipt acknowledged, if
telecopied; and the next business day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery. The parties
10
<PAGE>
may change the addresses to which notices are to be given by giving five days'
prior written notice of such change in accordance herewith.
SECTION 12. Certain Supplements and Amendments. The Company may from time
to time supplement or amend this Agreement without the approval of any Holders
in order to cure any ambiguity or to correct or supplement any provision
contained herein which may be defective or inconsistent with any other provision
herein; provided that any such supplement or amendment shall not in any way
adversely affect the interests of the Holders.
SECTION 13. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or GECC shall bind and inure to the benefit
of their respective successors and assigns hereunder, provided that this
Agreement shall not be assignable by any Holder if such Holder has not complied
with the transfer restrictions of Section 3 hereof. Any such assignment in
violation of Section 3 shall be null and void.
SECTION 14. Termination. This Agreement shall terminate if all Warrants
have been exercised or shall have expired or been canceled pursuant to this
Agreement, provided, that any rights of any party accrued with respect hereto
--------
prior to the termination of this Agreement shall survive such termination.
SECTION 15. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK (PROVIDED THAT DETERMINATIONS RELATING TO
CORPORATE LAW SHALL BE CONSTRUED IN ACCORDANCE WITH THE DELAWARE GENERAL
CORPORATION LAW). THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT AND THE WARRANTS, AND IRREVOCABLY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,
JURISDICTION OF THE AFORESAID COURTS. THE COMPANY AGREES THAT IT WILL NOT
COMMENCE ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY OTHER JURISDICTION. THE
COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
AND ANY CLAIM
11
<PAGE>
THAT ANY SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. NOTWITHSTANDING THE FOREGOING, NOTHING HEREIN SHALL AFFECT THE RIGHT OF
ANY HOLDER OF A WARRANT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY
OTHER JURISDICTION.
EACH OF THE PARTIES HERETO HEREBY WAIVES THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE OTHER DOCUMENTS, OR ANY DEALINGS BETWEEN THEM RELATING
TO THE SUBJECT MATTER OF GECC'S INVESTMENT IN THE COMPANY CONTEMPLATED HEREBY.
THE SCOPE OF THIS JURY TRIAL WAIVER SHALL BE LIMITED TO DISPUTES BETWEEN THE
COMPANY AND GECC AND SHALL NOT EXTEND TO DISPUTES BETWEEN THE COMPANY AND ANY
OTHER PERSON.
SECTION 16. Benefits of This Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Holders any legal or equitable right, remedy or claim under this Agreement; but
this Agreement shall be for the sole and exclusive benefit of the Company and
the Holders.
SECTION 17. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
SECTION 18. Amendments and Waivers. Subject to Section 13, the Company
agrees it will not solicit, request or negotiate for or with respect to any
proposed waiver or amendment of any of the provisions of this Agreement or any
Warrant unless each Holder (irrespective of the amount of Warrants then owned by
it) shall substantially concurrently be informed thereof by the Company and
shall be afforded the opportunity of considering the same and shall be supplied
by the Company with sufficient information (including any offer of remuneration)
to enable it to make an informed decision with respect thereto which information
shall be the same as that supplied to each other Holder. The Company will not,
directly or indirectly, pay or cause to be paid any remuneration whether by way
of supplement or additional interest fee or otherwise, to any Holder as
consideration for or as an inducement to the entering into by any Holder of any
waiver or amendment of any of the terms and provisions of this Agreement or any
Warrant unless such remunerations is concurrently paid on the same terms,
ratably to each Holder whether or not such Holder signs such waiver or consent,
provided that the foregoing is
12
<PAGE>
not intended to preclude the adoption of any amendment or the giving of any
waiver by the Holders of a majority of the Warrants to the extent permitted by
the other provisions of this Section 18.
[Signature pages follow]
13
<PAGE>
EXHIBIT 10.61
FORM OF INVESTMENT AGREEMENT
INVESTORS AGREEMENT, dated as of _____, 1999, among Consumer Financial
Network, Inc. (the "Company"), iXL Enterprises, Inc. ("iXL") and General
Electric Capital Corporation ("GECC") and GE Capital Equity Investments, Inc.
(the "Investors").
WHEREAS, certain of the Investors have entered into a Stock Purchase
Agreement with the Company pursuant to which they are purchasing on the date
hereof, an aggregate of 16,190,475 shares of Series B Preferred Stock of the
Company;
WHEREAS, GECC holds up to 13,333,334 shares of Series A Preferred Stock of
the Company;
WHEREAS, the parties hereto have entered into an Amended and Restated
Stockholders' Agreement, dated as of the date hereof (the "Stockholders'
Agreement");
WHEREAS, the parties desire to modify and supplement certain provisions of
the Stockholders' Agreement and provide for additional covenants and agreements
relating to the shares of Series A Preferred Stock and Series B Preferred Stock
(collectively the "Preferred Stock") held by the Investors and the shares of
common stock of the Company, par value $.01 per share (the "Common Stock"); into
which the Preferred Stock is convertible;
WHEREAS, any capitalized term used herein without definition shall have
the meaning specified in the Stockholders Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
1. Restrictions on Issuances of Securities. The Company shall not issue
---------------------------------------
or otherwise Transfer any of its equity securities without the prior written
consent of the Investors except as otherwise expressly provided in this Section
1.
(a) The provisions of this Section 1 shall not prohibit the Company
from issuing or otherwise Transferring equity securities in one or more
transactions constituting, in the aggregate for all issuances or Transfers by
the Company after the date hereof, not more than either 20% of the total
outstanding equity interests in the Company or 20% of the outstanding voting
interests in the Company without the consent of the Investors. Notwithstanding
the foregoing, the consent of the Investors shall be required for any issue or
Transfer of equity securities by the Company to any of the entities listed as
"Restricted Entities" on the Schedule of Potential Investors delivered by the
Investors to the Company and iXL on April __, 1999 provided that the Company
--------
shall provide each of the Investors with written notice of any proposed issuance
or Transfer to any such
<PAGE>
2
person or entity in reasonable detail (which notice shall specify that failure
to object to such issuance or Transfer within 10 business days after receipt of
such notice will be deemed consent thereto under this Section 1) and if no
Investor objects to such proposed issuance in writing to the Company within such
10 business day period, then the Investors shall be deemed to have granted such
consent.
(b) If the Company proposes to issue or Transfer equity securities in
one or more transactions constituting, in the aggregate for all issuances or
Transfers by the Company (including, without limitation, those permitted under
Section 1(a)) after the date hereof, more than either 20% of the total
outstanding equity interests in the Company or 20% of the total outstanding
--
voting interests in the Company, but not more than 80% of the total outstanding
equity interests in the Company or 80% of the total outstanding voting interests
--
in the Company, then the Company must obtain the prior written consent of the
Investors thereto, provided that the Company shall provide each of the Investors
--------
with written notice of any such proposed issuance or Transfer to any such person
or entity in reasonable detail (which notice shall specify that failure to
object to such issuance or Transfer within 10 business days after receipt of
such notice will be deemed consent thereto under this Section 1) and if no
Investor objects to such proposed issuance or Transfer in writing to the Company
within such 10 business day period, then the Investors shall be deemed to have
granted such consent. Notwithstanding the foregoing, the Company shall have the
right to issue or Transfer equity securities in one or more transactions
constituting in the aggregate not more than 20% of the Company's total
outstanding equity or voting securities (which when taken together with any
issuances pursuant to Section 1(a) and this Section 1(b) would constitute, in
the aggregate, not more than 40% of the Company's equity or voting securities)
if such equity securities are issued or Transferred to one of the Pre-Approved
Investors set forth on the Schedule of Potential Investors referred to in
Section 1(a).
(c) The provisions of this Section 1 shall not prohibit the Company
from issuing or otherwise Transferring to one or more Buyers in one or more
Organic Change transactions subject to Section 2.3 of the Stockholders
Agreement, equity securities constituting, in the aggregate, more than 80% of
the Company's total outstanding equity or voting securities (such percentage of
equity securities so Transferred being the "Applicable Percentage") if not later
than the consummation of such issuance or Transfer, (i) the proceeds from such
-
issuances or Transfers are used to redeem equity securities from the Company's
equity holders on a pro rata basis (except as provided below), (ii) not less
--
than the Applicable Percentage of the equity securities of the Company held by
the GE Investors are so redeemed, (iii) the Sale Proceeds (as defined in Section
---
3(b)) attributable to each redemption, pursuant to clause (ii) above and clause
(vi) below, of Series B Preferred Stock (and with respect to Series B Preferred
Stock that has already
<PAGE>
3
been converted, any Common Stock issued upon conversion
shall represent at least a 35% internal rate of return to such Investor in
respect of the Series B Preferred Stock (and the Common Stock issued upon
conversion of any thereof) so redeemed, (iv) the aggregate proceeds received by
--
the Investors pursuant to clause (ii) above represent at least a $50 million
gain on the shares being redeemed, (v) the Sale Proceeds attributable to each
-
redemption pursuant to clause (ii) above and clause (vi) below, upon such
conversion shall be paid to each Investor in cash or Marketable Securities (as
defined in Section 3) to the extent of the Sale Proceeds ensuring compliance
with subsections (iii) and (iv) above and (vi) if any of the equity securities
--
of the Company held by an Investor would not otherwise be redeemed on the terms
described in clause (iii) above, such Investor shall be given the option (which
must be exercised) to either (x) require that all (but not less than all) of
such Investor's remaining equity interests in the Company be redeemed by the
Company not later than the consummation of the related Organic Change for the
same per share redemption price, and on the same terms, as is described in
clauses (i) and (iii) above or (y) as to any Preferred Stock that the Investor
does not elect to be so redeemed, convert such Preferred Stock into Common Stock
upon the closing of the related Organic Change in accordance with Section 4(a)
of the Series A or B Certificate of Designation. The option referred to in
clause (iv) above shall be exercised by such Investor within 15 business days
after receipt by such Investor of notice from the Company describing such option
and the circumstances giving rise thereto, together with all information that
the Investor may reasonably request in order to enable such Investor to make a
complete and informed decision with respect thereto.
(d) The provisions of this Section 1 shall not apply to any equity
securities issued by the Company in a Qualified Public Offering or to the
issuance of any Excluded Shares (as defined in Section 10 hereof) except for any
issuance described in paragraph (v) of such definition. All calculations
relating to proposed issuance or Transfer of the Company's equity securities for
purposes of this Section 1 shall be determined on a pro forma basis, giving
effect to the proposed issuance. In determining the respective percentages of
equity or voting securities that are (or will after such issuance be deemed)
outstanding for purposes of this Section 1, securities, warrants or other rights
that are, or in the future may become, exercisable or convertible into equity
securities of the Company will be evaluated under 1(a), (b) and (c) above on
both pre-conversion and post-conversion basis, with the greater percentage
threshold achieved being the one that applies; provided that any such
--------
securities, warrants or other rights that are outstanding and not the subject of
the proposed issuance or Transfer by the Company and that are either not at the
time exercisable or convertible or are not "in the money" will only be evaluated
under 1(a), (b) and (c) on a pre-conversion basis. The percentage calculations
for purposes of this Section 1 shall be made independently of any of the
Company's equity securities purchased by the Investors pursuant to their
preemptive rights set forth
<PAGE>
4
in Section 5 hereof. Any "Transfer" by the Company
for purposes of this Section 1 shall not include the registration by the
Company, in its capacity as a transfer agent with respect to equity securities
of the Company, of any Transfers of equity securities by any equity holders of
the Company. For all purposes of this Agreement, "equity securities" shall
include, without limitation, convertible debt.
2. Restrictions on Sales by iXL. iXL (which, for purposes of this Section
----------------------------
2, shall be deemed to include its affiliates) shall not Transfer any of its
equity securities in the Company without the prior written consent of the
Investors except as provided in this Section 2.
(a) The provisions of this Section 2 shall not prohibit iXL from
Transferring equity securities of the Company in one or more transactions
constituting, in the aggregate for all Transfers by the Company after the date
hereof, not more than either 20% of the total outstanding equity interests in
the Company or 20% of the outstanding voting interests in the Company without
the consent of the Investors. Notwithstanding the foregoing, the consent of the
Investors shall be required for any Transfer of the Company's equity securities
by iXL to any of the entities listed as "Restricted Entities" on the Schedule of
Potential Investors referred to in Section 1(a) hereof; provided that iXL shall
--------
provide each of the Investors with written notice of any proposed Transfer to
any such person or entity in reasonable detail (which notice shall specify that
failure to object to such Transfer within 10 business days after receipt of such
notice will be deemed consent thereto under this Section 2) and if no Investor
objects to such proposed Transfer in writing to the iXL within such 10 business
day period, then the Investors shall be deemed to have granted such consent.
(b) If iXL proposes to Transfer equity securities of the Company in one or
more transactions constituting in the aggregate for all Transfers by iXL
(including, without limitation, those permitted under Section 2(a)) after the
date hereof, more than either 20% of the total outstanding equity interests in
the Company or 20% of the total outstanding voting interests in the Company, but
--
not more than 80% of the total outstanding equity interests in the Company or
--
80% of the total outstanding voting interests in the Company, then iXL must
obtain the prior written consent of the Investors thereto, provided that iXL
--------
shall provide each of the Investors with written notice of any such proposed
Transfer to any such person or entity in reasonable detail (which notice shall
specify that failure to object to such Transfer within 10 business days after
receipt of such notice will be deemed consent thereto under this Section 2) and
if no Investor objects to such proposed Transfer in writing to the Company
within such 10 business day period, then the Investors shall be deemed to have
granted such consent. Notwithstanding the foregoing, iXL shall have the right
to sell equity securities of the Company in one or more
<PAGE>
5
transactions constituting in the aggregate not more than 20% of the Company's
equity or voting securities (which, when taken together with any sales pursuant
to Section 2(a) and this Section 2(b) would constitute, in the aggregate, not
more than 40% of the Company's equity or voting securities) if such equity
securities are sold to one of the Pre-Approved Investors set forth on the
Schedule of Potential Investors referred to in Section 1(a) hereof.
(c) The provisions of this Section 2 shall not prohibit iXL from
Transferring, pursuant to Section 2.2 or 2.3 of the Stockholders Agreement,
equity securities to one or more Buyers in one or more transactions
constituting, in the aggregate, more than 80% of the Company's total outstanding
equity or voting securities pursuant to Section 2.2 or 2.3 of the Stockholders
Agreement and require the Investors to participate in such sale on a pro rata
basis in accordance with Section 2.2 or 2.3 of the Stockholders Agreement if (i)
iXL shall require that the Investors participate in such sale, pro rata with iXL
(except as provided below), to the maximum extent iXL is entitled to do so under
Section 2.2 or 2.3 (as applicable) of the Stockholders Agreement, (ii) the Sale
--
Proceeds attributable to the sale by each Investor, pursuant to clause (i) above
and clause (v) below, of Series B Preferred Stock (and with respect to Series B
Preferred Stock that has already been converted, any Common Stock issued upon
such conversion) and shall be equal to the higher of (x) the amount otherwise
payable in accordance with Section 2.2 or 2.3 of the Stockholders Agreement or
(y) an amount representing a 35% internal rate or return to such Investor in
respect of the Series B Preferred Stock (or any Common Stock issued upon
conversion thereof) so sold, (iii) the aggregate Sale Proceeds received by the
---
Investors represent at least a $50 million gain on the shares being sold in,
(iv) the Sale Proceeds received pursuant to clause (i) above and clause (v)
--
below shall be paid to each Investor in cash or Marketable Securities to the
extent of the proceeds ensuring compliance with subsections (ii)(y) and (iii)
above and (v) if, notwithstanding clause (i) above, any of the equity securities
of the Company held by an Investor would not otherwise be sold on the terms
described in clause (ii) above, such Investor shall be given the option (which
must be exercised) to either (x) require that all (but not less than all) of
such Investor's remaining equity interests in the Company be sold in the manner
and on the terms described in (ii) above not later than of date of iXL's
Transfer pursuant to this Section 2(c) or (y) as to any Preferred Stock that the
Investor does not elect to be sold and that would otherwise remain outstanding,
convert such Preferred Stock into Common Stock in accordance with Section 4(a)
of the Series A or B Certificate of Designation upon the closing of the
transaction(s) under Section 2.2 or 2.3 (as applicable) of the Stockholders
Agreement. The option referred to in clause (iii) above shall be exercised by
such Investor within 15 business days after receipt by such Investor of notice
from describing such option and the circumstances giving rise thereto, together
with all
<PAGE>
6
information that the Investor may reasonably request in order to enable such
Investor to make a complete and informed decision with respect thereto.
(d) The provisions of this Section 2 shall not apply to any equity
securities sold by iXL in an underwritten registered public offering or pursuant
to Rule 144 in a broker's market transaction or to an affiliate of iXL that
agrees to be bound by this Agreement. The percentage calculations for purposes
of Section 2(a) and (b) shall be made independently of any equity securities
held by the Investors which are included in any sale pursuant to Section 2.1 of
the Stockholders Agreement but for purposes of Section 2(c) shall include any
equity securities held by the Investors which are included in any sale pursuant
to Section 2.2 or 2.3 of the Stockholders Agreement.
3. Certain Agreements; Provisions Applicable to Both Section 1 and Section
-----------------------------------------------------------------------
2. (a) Any purchasers of the Company's equity securities issued pursuant to
- -
Section 1(a) or sold pursuant to Section 2(a) shall not be given, with respect
to any of their equity interests in the Company, any covenants, agreements or
rights that are more favorable or more comprehensive than those set forth in
this Agreement from either the Company or iXL or either of their Affiliates
unless such covenants , agreements or rights are extended to the Investors with
respect to their equity interests in the Company.
(b) Notwithstanding Sections 1 and 2 above, the number of shares of
equity securities of the Company that shall at any time and from time to time be
issued or Transferred by the Company pursuant to Section 1 shall be aggregated
with the number of shares of equity securities of the Company that shall at any
time and from time to time be Transferred by iXL pursuant to Section 2 or vice
versa for purposes of calculating each of the applicable percentage thresholds
set forth in Sections 1(a), (b) and (c) and Sections 2(a), (b) and (c) (it being
the intent of the parties that all such percentage thresholds be a measure of
the combined issuances and Transfers of Company equity securities by iXL and its
affiliates and/or the Company). "Internal rate of return" for purposes of
Section 1(c) and 2(c) shall be calculated as follows:
Internal rate of return = [(A/B) upward caret (1/C)]-1
Where:
. A = the aggregate cash sales or redemption price (including the fair market
value of any or Marketable Securities) received by the applicable Investor in
respect of the sale or redemption of the related Series B Preferred Stock or
Common Stock issued upon conversion of any thereof (the "Sales Proceeds").
<PAGE>
7
. B = the aggregate purchase price paid by such Investor for such Investor's
Series B Preferred Stock (or any Series B Preferred Stock previously
converted into Common Stock) pursuant to the Stock Purchase Agreement
relating to the Series B Preferred Stock, dated as of April 7, 1999.
. upward caret = raised to the power of
. C = Number of years (including fractions thereof) between April __, 1999
and the date of receipt by the applicable Investor of the Sales Proceeds.
. "Marketable Securities" means any registered freely transferable (except
for any lock-up period required by law or the purchaser of the Company
provided the Investors are not treated less favorably than iXL) equity
securities that are listed and actively traded on a national securities
exchange or the NASDAQ system.
4. Termination of the Investors' Rights. (a) Except as provided in
------------------------------------
Section 4(b) below, upon the occurrence of a Qualified Public Offering the
rights of the Investors under Section 2.1 and 9 of the Stockholders' Agreement
and the provisions of Sections 1,2, 3, 5, 6, 7 and 9 of this Agreement shall
terminate (other than any rights thereunder accruing prior to the date of such
termination).
(b) If iXL, together with its Affiliates, continues to hold either more
than 50% of the outstanding equity securities of the Company or more than 50% of
the outstanding voting securities of the Company after a Qualified Public
Offering, then, for so long as iXL and its Affiliates continue to hold more than
any such 50% interest, the Investors shall have the right to designate two
members to the board of directors of the Company pursuant to Section 9 of the
Stockholders' Agreement and the Investors will retain their tag-along rights
pursuant to Section 2.1 of the Stockholders' Agreement.
(c) If at any time prior to a Qualified Public Offering, the Investors
cease to own, in the aggregate, at least 10% of the Company's outstanding equity
securities whether due to sales, transfers, dilution or otherwise (to the extent
effected in compliance with this Agreement and the Stockholders Agreement), then
the Investors' rights hereunder (other than rights relating to obligations which
accrued prior to such cessation) will automatically terminate, other than the
right to designate members to the board of directors of the Company pursuant to
Section 9 of the Stockholders' Agreement and the tag-along rights pursuant to
Section 2.1 of the Stockholders' Agreement. If the Investors cease to own in
the aggregate, at least 5% of the Company's outstanding equity securities
whether due to sales, transfers, dilution or otherwise (to the extent effected
in compliance
<PAGE>
8
with this Agreement and the Stockholders Agreement), then, as provided in
Section 9.1 of the Stockholder's Agreement, the Investors will automatically
cease to have any rights to designate directors pursuant to the Stockholders'
Agreement or this Investors Agreement and, if requested by the Company, the
Investors shall request of each designee of the Investors to the Company's board
of directors that such designee shall resign from the Company's board of
directors.
5. Preemptive Rights. (a) Following the date hereof, if the Company
-----------------
proposes to sell, issue or grant any equity securities or other securities or
rights, directly or indirectly convertible into or exercisable or exchangeable
for any capital stock or other equity securities (other than any Excluded Shares
as defined in Section 9 hereof or any shares issued by the Company in any
underwritten public offering) to any person or entity, then each Investor that
owns Preferred Stock shall have the right, on the same terms and conditions of
the proposed sale, issuance or grant and exercisable within 30 days after the
Company has given such Investor notice of such proposed sale, issuance or grant,
to purchase a percentage of the shares or securities to be sold, issued or
granted equal to such Investor's percentage ownership of Common Stock of the
Company, (determined as if all Preferred Stock were converted to Common Stock),
as of the business day immediately prior to the date of such sale, issuance or
grant. If any such Investor exercises any such preemptive rights, the purchase
of shares or securities by such Investor will be governed by and subject to the
terms and conditions applicable to the person or entity to whom the sale,
issuance or grant was initially proposed to be made, subject to the provisions
of Section 5(b).
(b) If the Company issues equity securities (other than Excluded
Shares) for non-cash consideration, the Investors' rights pursuant to Section
5(a) hereof to purchase a percentage of such equity securities will be for a
cash purchase price equal to the fair market value (as determined by the Board
of Directors of the Company in good faith) of such non-cash consideration.
6. Approval Rights. The holders of Series A and Series B Preferred Stock
---------------
will have the approval rights set forth in Section 7 of the Series A and Series
B Certificates of Designation. In addition, the Company agrees that it shall
not issue or Transfer (without the prior written consent of the Investors) any
equity securities of the Company for which, the per security cash consideration
is less than the "Antidilution Price" (as such term is defined in the Series B
Certificate of Designations) in effect at the time. The per security cash
consideration shall be computed on an "as converted" or "as exercised" basis for
convertible securities (including convertible debt) and with respect to non-
convertible voting preferred, shall be computed on the basis of the number of
votes per share. Such approval right will not apply to issuances of equity
securities (a) included in
-
<PAGE>
9
paragraphs (i), (viii) or (ix) of the definition of Excluded Shares; (b)
-
included in paragraphs (ii), (iii) or (iv) of the definition of Excluded Shares
which, when taken together and aggregated for all such issuances does not exceed
10% of the Company's total outstanding equity securities; and (c) the issuance
-
of any equity securities upon the conversion or exercise of any equity security,
the issuance of which has previously been approved by the Investors.
7. Board Approval. For so long as any of the Investors hold equity
--------------
securities of the Company, the Company will not take the following actions
without the approval (in accordance with the Company's By-Laws) of the board of
directors of the Company: (i) material transactions with Affiliates other than
-
wholly-owned subsidiaries; (ii) the acquisition of or material investment in any
--
business unit or the sale of equity securities or assets of all or substantially
all of any business unit; (iii) the incurrence of material indebtedness; (iv)
--- --
management compensation (it being understood that so long as the Investors have
a representative on the compensation committee of the Company, approval by the
compensation committee will be sufficient) and (v) capital expenditures
-
materially in excess of amounts provided for in the most recent budget approved
by the board of directors of the Company.
8. Investor Action. Any consent or approval to be provided by the
---------------
Investors hereunder shall be deemed the action of all the Investors if provided
by a majority in interest of the Investors.
9. Definition of Excluded Shares. "Excluded Shares" means (i) any shares
----------------------------- -
of Common Stock issued upon conversion of the Preferred Stock or any shares of
any other series of preferred stock which has been issued in accordance with the
terms of this Agreement, the Stockholders Agreement and the Series A and Series
B Certificate of Designations, (ii) any Common Stock issued upon exercise of any
--
options granted pursuant to the Stock Option Plan or any other options issued to
any employees of the Company pursuant to any option plan approved by the
Compensation Committee of the Board, (iii) any options exercisable into Common
---
Stock issued pursuant to the Stock Option Plan, (iv) employee stock options
--
issued pursuant to any option plans approved by the Compensation Committee of
the Board, (v) any equity securities issued in connection with any business
-
combination, (vi) any securities issued in connection with any stock split,
--
stock dividend or recapitalization of the Company which affects all equity
holders proportionately and does not involve sales or issuance of equity to one
or more third parties, (vii) any securities issued to any entity in connection
---
with a loan or lease by such entity to the Company, if such loan or lease
transaction and such issuance of securities has been approved by the Board and
such securities, when taken together and aggregated with all prior issuances
under this subsection (vii), do not exceed 5% of the Company's
<PAGE>
10
total outstanding equity securities, (viii) any securities issued upon a spin-
----
off of the Company to the stockholders of iXL and (ix) any securities issued in
--
a Qualified Public Offering.
10. Assignment. Neither this Agreement nor any provision hereof may be
----------
assigned or transferred, whether by operation of law or otherwise, by any of the
Investors without the prior consent of the Company and iXL, except to their
respective Affiliates provided that any such Affiliate transferee agrees in
--------
writing to be bound hereby. Any Affiliate of an Investor that becomes an
assignee of any rights hereunder shall be deemed to be an Investor hereunder.
11. Termination. Any party to this Agreement who ceases to own any
-----------
shares of Preferred Stock or Common Stock shall cease to be a party to this
Agreement and thereafter shall have no rights or obligations hereunder, provided
--------
that any sale, transfer or other disposition by such party was made in
compliance with the terms hereof and of the Stockholders' Agreement.
12. Governing Law. This Agreement and the rights and obligations of the
-------------
parties hereunder shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Delaware, without giving effect to the
choice of law principles thereof.
13. Notices. All notices, requests, demands, waivers and other
-------
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (a) delivered
-
personally, (b) mailed, certified or registered mail with postage prepaid, (c)
- -
sent by next-day or overnight mail or delivery or (d) sent by as follows:
-
(i) if to the Company or iXL, to it at:
--------------
Consumer Financial Network, Inc. or (as applicable)
iXL Enterprises, Inc.
Two Park Place
1888 Emery Street
2nd Floor
Atlanta, Georgia 30318
Attention: Mr. M. Wayne Boylston
Telecopier number: (404) 267-3801
<PAGE>
11
with a copy (which, in each case, shall not
constitute notice) to:
Minkin & Snyder
3060 Peachtree Road, Suite 1100
Atlanta, Georgia 30305
Telecopier number: (404) 233-5824
Attention: James S. Altenbach, Esq.
and
Kelso & Company
320 Park Avenue
24th Floor
New York, New York 10022
Telecopier number: (212) 223-2379
Attention: James J. Connors, II, Esq.
and
Debevoise & Plimpton
875 Third Avenue
New York, NY 10022
Telecopier number: (212) 909-6836
Attention: Margaret A. Davenport, Esq.
(ii) If to an Investor, the address or fax number listed on the
signature page hereof.
or to such other person or address as any party shall specify by notice in
writing to the Company. All such notices, requests, demands, waivers and other
communications shall be deemed to have been received (w) if by personal delivery
-
on the day after such delivery, (x) if by certified or registered mail, on the
-
seventh business day after the mailing thereof, (y) if by next-day or overnight
-
mail or delivery, on the day delivered, (z) if by fax on the next day following
-
the day on which such fax was sent, provided that a copy is also sent by
certified or registered mail.
14. Headings; Execution in Counterparts. The headings and captions
-----------------------------------
contained herein are for convenience and shall not control or affect the meaning
or construction of
<PAGE>
12
any provision hereof. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and which together
shall constitute one and the same instrument.
15. Construction. In the event of any conflict or inconsistency between
------------
any of the terms of this Agreement and any of the terms of the Stockholders
Agreement, the terms of this Agreement shall prevail; provided that no such
resolution shall derogate from the rights of the Investors under the
Stockholders Agreement.
16. Injunctive Relief. The equity securities of the Company can not
------------------
readily be purchased or sold in the open market, and for that reason, among
others, the parties hereto will be irreparably damaged in the event of a breach
of any provision of this Agreement if this Agreement is not specifically
enforced. Each of the parties therefore agrees that in the event of a breach of
any provision of this Agreement the aggrieved party may elect to institute and
prosecute proceedings in any court of competent jurisdiction to enforce specific
performance or to enjoin the continuing breach of this Agreement. Such remedies
shall, however, be cumulative and not exclusive, and shall be in addition to any
other remedy which any party may have. Each party hereby irrevocably submits to
the non-exclusive jurisdiction of the state and federal courts in New York for
the purposes of any suit, action or other proceeding arising out of or based
upon this Agreement or the subject matter herein. Each party hereby consents to
service of process by mail made in accordance with Section 13.
IN WITNESS WHEREOF the parties have executed this Agreement as of the date
first above written.
IXL ENTERPRISES, INC.
By:
----------------------------
CONSUMER FINANCIAL NETWORK, INC.
By:
----------------------------
<PAGE>
13
GE CAPITAL EQUITY INVESTMENTS, INC.
By:
----------------------------
GENERAL ELECTRIC CAPITAL CORPORATION
By:
----------------------------
<PAGE>
EXHIBIT 10.62
================================================================================
FORM OF
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
among
CONSUMER FINANCIAL NETWORK, INC.
and
THE INVESTORS NAMED HEREIN
Dated as of , 1999
--------------------
================================================================================
<PAGE>
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT (the "Agreement"), dated as
---------
of __________, 1999, among Consumer Financial Network, Inc., a Delaware
corporation (the "Company"), iXL Enterprises, Inc., a Delaware corporation
("iXL"), General Electric Capital Corporation, a New York corporation ("GECC").
--- ----
GE Capital Equity Investments, Inc. ("GECEI") and General Electric Pension Trust
("GEPT"), together with any other non-employee Persons who became stockholders
of the Company and whose names are set forth on Schedule 1 hereto (the "Outside
-------
Investors"), those employees of the Company who have become stockholders of the
- ---------
Company and whose names are set forth on Schedule 2 hereto (the "Management
----------
Stockholders"), and the Persons who become parties to this Agreement pursuant to
- ------------
Section 13. Certain capitalized terms used herein are defined in Section 7.
WHEREAS, iXL currently holds all the issued and outstanding Common Stock
of the Company, par value $.01 per share;
WHEREAS, GECC currently owns 13,333,334 shares of the Company's Series A
Convertible Preferred Stock (the "Series A Preferred Stock");
-------------------------
WHEREAS, contemporaneously with the execution and delivery hereof, the
Company will sell to GECEI and GEPT, and GECEI and GEPT will purchase from the
Company pursuant to the Stock Purchase Agreement, an aggregate of 16,190,475
shares of the Company's Series B Convertible Preferred Stock (the "Series B
--------
Preferred Stock"; and, together with the Series A Preferred Stock, the
- ---------------
"Preferred Stock");
- ----------------
WHEREAS, the Company may establish a Stock Option Plan after the date
hereof pursuant to which the Management Stockholders will be issued options,
from time to time, exercisable into Common Stock;
WHEREAS, the parties wish to set forth certain rights and obligations with
respect to their ownership of Common Stock and Preferred Stock;
WHEREAS, certain capitalized terms used herein without definition are
defined in Section 8;
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and obligations set forth in this Agreement, the parties hereto agree
as follows:
1. Restrictions on Transfer of Stock.
---------------------------------
<PAGE>
2
1.1 Restrictions on Transfers to Third Parties by iXL. iXL may,
-------------------------------------------------
directly or indirectly, Transfer all or any portion of its shares of Common
Stock or other equity securities of the Company or any interest therein now or
thereafter owned by it to any third party or any Affiliate, at any time, subject
to (a) the rights of the other Stockholders set forth in Section 2.1; (b) the GE
- -
Investors' rights set forth in the Investors Agreement and (c) Sections 13.1 and
-
13.2.
1.2 Restrictions on Transfers to Third Parties by the Outside
---------------------------------------------------------
Investors. Subject to any applicable securities laws, any Outside Investor may,
- ---------
at any time, directly or indirectly, Transfer all or any portion of its shares
of Stock or any interest therein now or thereafter owned by it (a) to any
-
Affiliate of such Outside Investor other than GEFA, (b) pursuant to Section 2.1
-
(Tag Along Rights), Section 2.2 (Drag Along Rights), Section 2.3 (Sale of the
Company), such Outside Investors' registration rights under the Registration
Agreement, or with respect to any GE Investor, pursuant to Section 1(c) or
Section 2.1 of the Investors Agreement or (c) any third party (other than any
-
online aggregator of financial services or a controlling affiliate of any such
online aggregator for which such online aggregator constitutes 20% or more of
its revenues), provided that any such sale pursuant to this subsection (c) shall
not be consummated within 180 days of the closing of the initial public offering
for the common stock of iXL and shall be subject to the provisions of Section
1.6 (right of first offer) and Section 2.1 (tag-along rights) hereof.
1.3 Restrictions on Transfers to Third Parties by Management
--------------------------------------------------------
Stockholders.
- ------------
(a) Prior to the earlier of (i) the closing of a Qualified Public
-
Offering and (ii) December 31, 2003 (such period is hereinafter referred to as
--
the "Restricted Period") no Management Stockholder may Transfer Stock or any
-----------------
interest therein now or hereafter owned by any Management Stockholder, except
for any (A) Transfer by such Management Stockholder to a transferee permitted
-
under Section 1.4(a) or a pledge or Transfer of shares of Stock by such
Management Stockholder permitted under Section 1.4(b), (B) involuntary Transfer
-
to a third party permitted under Section 1.7, (C) sale to a third party pursuant
-
to Section 2, (D) sale to the Company pursuant to Section 3 or 4, (E) sale
- -
pursuant to the Registration Rights Agreement or (F) Transfer approved by the
-
Board.
(b) After the Restricted Period, Transfers of Stock or any interest
therein, now or hereafter owned by any Management Stockholder to any third party
will be subject to Section 1.5 and Section 2.
<PAGE>
3
1.4 Permitted Transferees.
---------------------
(a) Affiliates, Trusts, etc. A Management Stockholder may Transfer
-----------------------
any shares of Stock (i) with the prior written consent of the Company's Board of
-
Directors (the "Board"), which consent shall not be unreasonably withheld, to
-----
(w) a trust the beneficiaries of which are such Stockholder, such Stockholder's
-
spouse, parents, lineal descendants, or any other Person approved by the Board,
(x) a corporation the shareholders of which are such Stockholder, such
-
Stockholder's spouse, parents, lineal descendants, or any other Person approved
by the Board, (y) a limited partnership, the general partner of which is (1)
- -
such Stockholder, such Stockholder's spouse, parents, lineal descendants, or any
other Person approved by the Board or (2) a corporation, limited partnership or
-
limited liability company, the majority of the voting power of which is owned by
such Stockholder, such Stockholder's spouse, parents, lineal descendants, or any
other Person approved by the Board, or (z) a limited liability company, the
-
majority of the voting power of which is owned by such Stockholder, such
Stockholder's spouse, parents, lineal descendants, or any other Person approved
by the Board; or (ii) in case of such Stockholder's death, by will or by the
--
laws of intestate succession to executors, administrators, testamentary
trustees, legatees or beneficiaries. In addition to the foregoing, any
Permitted Transferee of the Management Stockholders may Transfer shares of Stock
back to such transferring Stockholder or to another Permitted Transferee of such
transferring Stockholder, provided, however, that prior to any Permitted
Transferee ceasing to be a Permitted Transferee of the transferring Stockholder,
such Permitted Transferee shall be obligated to transfer such Stock back to such
transferring Stockholder or to a Permitted Transferee of such transferring
Stockholder.
(b) Security Agreements. The Management Stockholders may pledge any
-------------------
or all shares of Stock now or hereafter owned by such Management Stockholder or
grant a security interest therein to secure indebtedness of such Management
Stockholder owing to the Company so long as such indebtedness was incurred for
the sole purpose of paying all or part of the purchase price of such Stock or
for the purpose of refinancing indebtedness incurred for such purpose, provided,
however, that any transferee pursuant to this subsection (b) shall acquire only
a security interest in such Stock entitling such transferee to the proceeds from
any sale of such Stock made in compliance with the terms of this Agreement and
shall not acquire title to such Stock or any other rights incident thereto. The
pledge agreements or other related financing agreements of any Stockholder shall
be subject to and acknowledge the rights of the Company and the other
Stockholders set forth herein.
1.5 Rights of First Refusal on Sales by Management Stockholders
-----------------------------------------------------------
<PAGE>
4
(a) At any time after the Restricted Period, each of the Management
Stockholders may sell all or any portion of such Management Stockholder's Stock
to any third party, provided that no such Management Stockholder may so sell any
Stock to any third party after the Restricted Period unless such Stockholder
shall first have complied with the provisions of this Section 1.5.
(b) If any of the Management Stockholders (for purposes of this
Section 1.5, an "Offering Management Stockholder") shall have received a bona
-------------------------------
fide offer or offers from a third party or parties, other than a Permitted
Transferee, to purchase a number of shares of Stock exceeding ten per cent (10%)
of the aggregate number of shares of Stock held by such Offering Management
Stockholder as of the date hereof (other than pursuant to a Qualified Public
Offering), then prior to selling such shares of Stock to such third party or
parties, such Offering Management Stockholder shall deliver to the Company, iXL
and the Outside Investors that own Preferred Stock a letter (the "Offer Letter")
------------
signed by such Offering Management Stockholder setting forth with respect to
such Offering Management Stockholder and such third party or parties the
following information:
(i) the name of such third party or parties;
(ii) the prospective purchase price per share of each class of
Stock;
(iii) all material terms and conditions contained in the offer of
such third party or parties;
(iv) such Offering Management Stockholder's offer (irrevocable
by its terms for 60 days following receipt) to sell first to the
Company and then to iXL and each Outside Investor that owns Preferred
Stock all (but not less than all) of the shares of Stock covered by the
offer of the third party or parties (the "Offered Stock"), for a
-------------
purchase price per share of Stock, and on the same terms and conditions
contained in the offer of the third party or parties (the "Offer"); and
-----
(v) closing arrangements and a closing date (not less than 60
nor more than 90 days following the date of such letter) for any
purchase and sale that may be effected by the Company, iXL or the
Outside Investors.
For 30 days following the receipt of the Offer Letter, the Company shall
have the right to purchase the Offered Stock for the same price per share and on
the same terms and conditions set forth in the Offer. If the Company does not
exercise such right within
<PAGE>
5
such 30 day period then iXL and/or the Outside Investors owning Preferred Stock
shall have the right for the next succeeding 30 days to elect to purchase the
Offered Stock for the same price per share and on the same terms and conditions
set forth in the Offer. If iXL or any of the Outside Investors elects to
purchase such Offered Stock, each shall have the right to purchase on a pro rata
basis its share of such Offered Stock (based on the number of shares of Common
Stock held by iXL and the number of shares of Common Stock into which the
Preferred Stock held by iXL or the Outside Investor, as the case may be, would
then be convertible). Any amount of such Stock not so purchased by iXL or an
Outside Investor so entitled to purchase may be purchased by iXL and the other
Outside Investors entitled to purchase on a pro rata basis and so on until all
of such Stock has been purchased.
(c) If the Company, iXL or any of the Outside Investors that owns
Preferred Stock accepts the Offer to purchase the Offered Stock, the closing of
the purchase and sale pursuant to such acceptance shall take place at the
offices of the Company on the date set forth in the Offer Letter, or at such
other place or on such other date as the applicable parties may agree or such
later date as may be necessary to obtain any required regulatory approvals. If,
upon the expiration of sixty (60) days following receipt by the Company, iXL and
the Outside Investors that own Preferred Stock of the Offer Letter, the Company,
iXL and such Outside Investors have all elected to not exercise their right of
first refusal pursuant to this Section 1.5, the Offering Management Stockholder
may sell to such third party or parties all, but not less than all, of the
Offered Stock, for the purchase price and on the other terms and conditions
contained in such Offer. Prior to consummating any such sale, the Offering
Management Stockholder shall, upon request from iXL or such Outside Investor,
provide such requesting party with reasonable supporting documentation with
respect to the terms and conditions of any such sale to a third party so as to
demonstrate such Offering Management Stockholder's compliance with the
provisions of the preceding sentence. If such sale has not been completed
within ninety (90) days after the expiration of such sixty (60) day period, the
Offered Stock covered by such Offer may not thereafter be sold by such Offering
Management Stockholder unless the procedures set forth in this Section 1.5 shall
have again been complied with.
1.6 Right of First Offer for Sales by Outside Investors.
---------------------------------------------------
(a) No Outside Investor may sell any Stock to any third party unless
such Outside Investor shall first have complied with the provisions of this
Section 1.6. Notwithstanding anything to the contrary in this Agreement, the
provisions of this Section 1.6 shall not apply to any sale of Stock by an
Outside Investor (i) to any Affiliate
<PAGE>
6
thereof or (ii) pursuant to Section 2.1, 2.2 or 2.3 hereof, an underwritten
public offering or Section 1(c) or 2 of the Investors Agreement.
(b) If an Outside Investor (an "Offering Outside Investor") desires to
-------------------------
sell any of its shares of Stock, then prior to selling such shares, such
Offering Outside Investor shall first deliver to the Company, iXL and the other
Outside Investors a letter (the "Offer Letter") signed by such Offering Outside
------------
Investor setting forth:
(i) the prospective purchase price per share of Stock and the number
-
of shares of Stock such Offering Outside Investor desires to sell;
(ii) any other material terms and conditions of such sale;
--
(iii) such Offering Outside Investor's offer (irrevocable by its
---
terms for 10 Business Days following receipt) to sell to the Company,
iXL and the Outside Investors all of the shares of Stock described in
the Offer Letter (the "Offered Securities"), for a purchase price per
------------------
share of Stock, and on the same terms and conditions contained in the
Offer Letter (the "Offer"); and
-----
(iv) closing arrangements and a closing date (not less than 50 nor
--
more than 75 days following the receipt of the Offer Letter) for any
purchase and sale that may be effected by the Company, iXL or any
Outside Investor.
(c) After the receipt of the Offer Letter, the Company shall have 15
days to elect whether to purchase the shares covered by the Offer Letter. If
the Company does not make such election, iXL and each Outside Investor shall
have the right (exercisable within the 15 day period referred to in the
preceding sentence) in which to notify the Offering Outside Investor whether it
elects to purchase its pro rata portion of the shares covered by the Offer
Letter on the terms set forth in the Offer Letter (which election shall be
irrevocable). iXL's and each Outside Investor's pro rata share of the Offered
Securities shall be based on the number of shares of Common Stock held by iXL
and each Outside Investor, including the number of shares of Common Stock into
which the Preferred Stock held by iXL and each such Outside Investor would then
be convertible. If iXL or any Outside Investor declines the right to purchase
its pro rata share, then such amount shall be offered to iXL and the Outside
Investors on a pro rata basis, and so on (up to the 60 day limit referred to
below) until all the Offered Securities have been either accepted or declined.
All elections by iXL and any Outside Investors to accept or purchase Offered
Securities shall be irrevocable. The purchase of such Offered Securities by
either the Company, iXL or any Outside Investor must be consummated within 60
days of the expiration of the 15 day period referred to in the first sentence of
<PAGE>
7
this Section 1.6(c) and the Offering Outside Investor will extend the proposed
closing date up to such 60 day limit if requested. If all of the Offered
Securities are not accepted, then the Offering Outside Investor may sell all of
the Offered Securities for the purchase price and on substantially the same
other terms and conditions contained in the Offer. Prior to consummating any
such sale, the Offering Outside Stockholder shall, upon the request of the
Company, iXL or any Outside Investor, provide such requesting Person with
reasonable supporting documentation with respect to the terms and conditions of
any such sale to a third party so as to demonstrate such Offering Outside
Investor's compliance with the provisions of the preceding sentence. If such
sale to a third party has not been completed within 90 days from the last day of
the 60-day closing period referred to above, then the Offered Securities covered
by such Offer may not thereafter be sold by such Offering Outside Investor
unless the procedures set forth in this Section 1.6 shall have again been
complied with.
1.7 Involuntary Transfers. Any transfer (an "Involuntary Transfer")
--------------------- --------------------
of title or beneficial ownership of shares of Stock upon default, foreclosure,
forfeit, court order, or otherwise than by a voluntary decision on the part of
any Management Stockholder (a "Transferring Stockholder"), other than any
transfer upon death of a Management Stockholder, shall be void unless such
Stockholder complies with this Section 1.7 and enables the Company, iXL and the
Outside Investors that own Preferred Stock to exercise in full their rights
hereunder. Upon any Involuntary Transfer, the Company, iXL and the Outside
Investors that own Preferred Stock shall have the right to purchase such shares
pursuant to this Section 1.7 and the Person to whom such shares have been
transferred (the "Involuntary Transferee") shall have the obligation to sell
----------------------
such shares in accordance with this Section 1.7. Upon the Involuntary Transfer
of any shares of Stock, such Transferring Stockholder shall promptly (but in no
event later than five days after such Involuntary Transfer) furnish written
notice to the Company, iXL and the Outside Investors that own Preferred Stock
indicating that the Involuntary Transfer has occurred, specifying the name of
the Involuntary Transferee, giving a detailed description of the circumstances
giving rise to, and stating the legal basis for, the Involuntary Transfer.
Subject to the provisions of Section 8, upon the receipt of such notice, and for
30 days thereafter, the Company shall have the right to purchase, and the
Involuntary Transferee shall have the obligation to sell, all (but not less than
all) Stock acquired by the Involuntary Transferee for a purchase price equal to
the Carrying Value of such Stock. If the Company fails to exercise within such
30-day period its rights hereunder to purchase all, but not less than all, of
the shares of Stock acquired by the Involuntary Transferee, for a period of 30
days thereafter, iXL and the Outside Investors that own Preferred Stock shall
have the right to purchase on a pro rata basis, and the Involuntary Transferee
shall have the obligation to sell, all (but not less than all) of the shares of
Stock acquired by the Involuntary Transferee for a purchase price equal to the
Carrying Value of such Stock.
<PAGE>
8
iXL and each of the Outside Investors that owns Preferred Stock may purchase
such Stock on a pro rata basis (based on the number of shares of Common Stock
held by iXL and the number of shares of Common Stock into which the Preferred
Stock held by the Outside Investors would then be convertible). Any amount of
such Stock not so purchased by iXL or an Outside Investor entitled to purchase
may be purchased by the other Outside Investors that own Preferred Stock or iXL
proportionally to their ownership of Common Stock (assuming conversion of
Preferred Stock), and so on until all of such Stock has been purchased.
2. Tag Along and Drag Along Rights.
-------------------------------
2.1 Tag Along Rights. (a) No Stockholder (for purposes of this
----------------
Section 2.1, the "Offering Stockholder") may sell any shares of Stock to any
--------------------
non-Affiliated third party (except through a sale pursuant to a registered
underwritten public offering) if such shares, together with all shares of Stock
previously sold by such Offering Stockholder to third parties (except through a
sale pursuant to an underwritten registered public offering), would represent
more than ten percent (10%) of the sum of (i) the aggregate number of shares of
-
Common Stock held by the Offering Stockholder as of the date hereof plus (ii)
--
the aggregate number of shares of Common Stock into which the shares of
Preferred Stock, if any, held by the Offering Stockholder as of the date thereof
would be ultimately convertible, unless each of the other Stockholders, other
------
than the Management Stockholders, is offered the right, on a pro rata (except as
otherwise provided in Sections 1(c) and 2(c) of the Investors Agreement) basis
(based on the number of shares of Common Stock owned by such Stockholder
including the number of shares of Common Stock into which the Preferred Stock
would then be convertible) to participate in any such sale by selling to such
non-Affiliated third party its pro rata portion of Common Stock, in the event
the Offering Stockholder is selling Common Stock, and Preferred Stock in the
event the Offering Stockholder is selling Preferred Stock, for a purchase price
per share of Common Stock or Preferred Stock, as the case may be, and on other
terms and conditions, not less favorable to such Stockholder than those
applicable to the Offering Stockholder.
(b) This Section 2.1 shall not apply to (i) sales of Common Stock by
-
any Management Stockholder holding less than one per cent (1%) of the aggregate
number of outstanding shares of Common Stock at such time, calculated on a fully
diluted basis, so long as the aggregate purchase price of such Common Stock is
less than $500,000, or (ii) sales of Stock by an Outside Investor pursuant to
--
Section 2.1, 2.2 or 2.3 hereof or Section 1(c) or 2(c) of the Investors
Agreement.
<PAGE>
9
(c) The GE Investors' rights under this Section 2.1 are modified and
supplemented by the Investors Agreement.
2.2 Drag Along Rights. (a) If iXL proposes to sell or otherwise
-----------------
Transfer shares of Common Stock to any third party (except through a sale
pursuant to a Qualified Public Offering, to an Affiliate of iXL or to a Person
that is a stockholder of iXL on the date hereof (or any Affiliate of such
stockholder), which if sold would effect a Change of Control then, if requested
by iXL, each other holder of shares of Stock shall join iXL in any such sale on
a pro rata basis by complying fully with Section 2.2(b). The material terms and
conditions of such sale, including, without limitation, the purchase price per
share of Common Stock, shall be the same for all holders of Common Stock. In
furtherance of the foregoing, each holder of shares of Preferred Stock hereby
agrees that, if requested by iXL, such holder shall convert those shares of
Preferred Stock which will be sold or transferred pursuant to this Section 2.2
into Common Stock pursuant to Section 4(a) of the applicable Certificate of
Designations, and the shares of Common Stock issued upon the conversion of such
Stock shall be subject to the provisions of this Section 2.2.
(b) Each Stockholder who is required to join iXL in a sale pursuant to
Section 2.2(a) shall, at the request of iXL, (i) transfer, upon receipt of the
-
purchase price therefor, such Stockholder's pro rata portion of the shares of
Common Stock to any third party purchaser or purchasers free and clear of all
security interests, liens, claims or encumbrances, (ii) execute and deliver any
--
agreement being executed and delivered by iXL (or no less favorable agreement
than the one being signed by iXL) containing such representations and warranties
(or, at the option of such Stockholder, indemnities in respect of
representations and warranties and representations and warranties relating
exclusively to such Stockholder's ownership and title to its shares of Common
Stock and the ability of such Stockholder to participate in such sale) and other
terms as iXL may deem to be reasonably necessary or desirable to consummate such
transaction, provided, however, that no Stockholder shall be required to provide
indemnification, in the aggregate, in an amount that is in excess of either its
pro rata portion of the related liability or the purchase price received by
such Stockholder in such sale, except in the case of such Stockholder's
fraudulent acts, or to make any representations or warranties which such
Stockholder reasonably believes to be false, (iii) vote in favor of any such
---
transaction of which iXL has voted in favor and (iv) execute and deliver such
--
instruments of conveyance and assignment and take such other actions as
reasonably requested by iXL in order to consummate such transaction.
(c) Notwithstanding the foregoing, iXL's rights under this Section
(2.2) with respect to any shares of Stock held by any of the GE Investors shall
not be
<PAGE>
10
applicable except in the circumstances, and subject to the terms and conditions,
set forth in Section 2(c) of the Investors Agreement.
2.3 Sale of the Company. (a) If after receipt by iXL of a bona fide
-------------------
offer (for the purposes of this Section 2.3, the "Offer") from a third party or
-----
parties (other than an Affiliate of iXL, a stockholder of iXL on the date hereof
or any Affiliate thereof) (the "Buyer") to purchase 80% or more of the Company,
-----
either directly or indirectly, in one or a series of related transactions,
including, without limitation, by stock purchase, recapitalization, merger,
combination, consolidation, asset sale or otherwise (each, an "Organic Change"),
--------------
and such Organic Change has been approved by the Board then, if requested by
iXL, each Stockholder shall take all steps as iXL may deem to be reasonably
necessary or desirable to consummate such transaction, including, without
limitation, (i) voting such Stockholder's Stock in favor of such transaction
-
(ii) transferring, upon receipt of the purchase price therefor, all of such
--
Stockholder's Stock to the Buyer, or , in the event iXL is Transferring less
than all, then such Stockholder's pro rata share, free and clear of all security
interests, liens, claims or encumbrances, (iii) execute and deliver any
---
agreement being executed and delivered by iXL (or no less favorable agreement
than the one being signed by iXL) containing such representations and warranties
(or, at the option of such Stockholder, indemnities in respect of
representations and warranties and representations and warranties relating
exclusively to such Stockholder's ownership and title to its shares of Common
Stock and the ability of such Stockholder to participate in such sale) and other
terms as iXL may deem to be reasonably necessary or desirable to consummate such
transaction, provided, however, that no Stockholder shall be required to provide
indemnification, in the aggregate, in an amount that is in excess of either its
pro rata portion of the related liability or the purchase price received by
such Stockholder in such sale, except in the case of such Stockholder's
fraudulent acts and (iv) executing and delivering such instruments of conveyance
--
and assignment as iXL may deem to be reasonably necessary or desirable to
consummate such transaction. Subject to Section 2.3(b) below, the terms of such
transaction, including, without limitation, the purchase price per share of
Common Stock, shall be the same for iXL as for each Stockholder, provided that
each holder of Preferred Stock, hereby agrees that, if requested by iXL, such
holder shall convert its shares of Preferred Stock into Common Stock prior to
any such Organic Change pursuant to Section 4(a) of the applicable Certificate
of Designations.
(b) Notwithstanding the foregoing, iXL's and the Company's rights under
Section 2.3(a) with respect to any shares of Stock held by any of the GE
Investors shall not be applicable except in the circumstances, and subject to
the terms and conditions, set forth in Section 2(c) of the Investors Agreement
and, in the event the transaction under
<PAGE>
11
this Section 2.3 is structured as a recapitalization to be effected by a
redemption of Stock by the Company, Section 1(c) of the Investors Agreement.
3. Sales to the Company.
--------------------
3.1 Management Stockholders. Subject to all subsections of this
-----------------------
Section 4 and Section 9, each Management Stockholder shall have the right to
sell to the Company, and the Company shall have the obligation to purchase from
such Management Stock holder, all, but not less than all, of such Management
Stockholder's shares of Stock, at a price equal to the Fair Market Value of such
Management Stockholder's Stock (as determined pursuant to Section 7) if the
employment of such Management Stockholder with the Company and all subsidiaries
thereof (a) is terminated by the Company without Cause, (b) terminates as a
- -
result of (i) the death or Disability of such Management Stockholder or (ii) the
- --
retirement of such Management Stockholder, upon or after reaching the age of 65
("Retirement"), or (iii) is terminated by the resignation of such Management
---------- ---
Stockholder for Good Reason.
3.2 Notice. If any Management Stockholder desires to sell shares of
------
Stock pursuant to Section 4.1, such Management Stockholder (or such Management
Stock holder's estate, trust or corporation, as the case may be) shall notify
the Company not more than 30 days after the occurrence of the event giving rise
to such Management Stockholder's right to sell such Management Stockholder's
shares of Stock and shall specify the number of shares of Stock such Management
Stockholder owns.
3.3 Payment. Subject to Section 9, payment for shares of Stock sold
-------
by a Management Stockholder pursuant to Section 4.1 shall be made on the date 30
days (or the first business day thereafter if the 30th day is not a business
day) following the date of the determination of Fair Market Value of such
Management Stockholder's shares of Stock. Such payment will be made by wire
transfer of funds or certified or official bank check against surrender of the
certificates for such shares.
4. Right of the Company to Purchase from Management
------------------------------------------------
Stockholders Shares of Stock.
----------------------------
4.1 Right to Purchase. Subject to all subsections of this Section 5
-----------------
and Section 9, the Company shall have the right to purchase from a Management
Stockholder, and such Management Stockholder shall have the obligation to sell
to the Company, all, but not less than all, of such Management Stockholder's
shares of Stock if such Management Stockholder's employment with the Company and
all subsidiaries thereof is terminated:
<PAGE>
12
(i) at the Fair Market Value of the shares of Stock to be pur
chased if such Management Stockholder's employment with the Company and
all subsidiaries thereof is terminated as a result of (1) the
-
termination by the Company of such employment without Cause, (2) the
-
death or Disability of such Management Stockholder, (3) the Retirement
-
of such Management Stockholder or (4) the resignation of such
-
Management Stockholder for Good Reason, or
(ii) at the lesser of the Fair Market Value or the Carrying Value
of the shares of stock to be purchased if such Management Stockholder's
employment with the Company and all subsidiaries thereof is terminated
for any reason other than as a result of an event described in
subparagraph (i) (1), (i) (2), (i) (3) or (i) (4) of this Section 5.1.
4.2 Notice. If the Company desires to purchase shares of Stock from
------
a Management Stockholder pursuant to Section 5.1, it shall notify such
Management Stockholder (or such Management Stockholder's estate, trust or
corporation, as the case may be) not more than 30 days after the occurrence of
the event giving rise to the Company's right to acquire such Management
Stockholder's shares of Stock.
4.3 Payment. Subject to Section 9, payment for shares of Stock
-------
purchased by the Company pursuant to Section 5.1 based on Fair Market Value
shall be made on the date 30 days (or the first business day thereafter if the
30th day is not a business day) following the date of the determination of Fair
Market Value, and any payment based on Carrying Value shall be made on the date
30 days (or the first business day thereafter if the 30th day is not a business
day) following the date of the notice referred to in Section 5.2. Such payment
will be made by wire transfer of funds or certified or official bank check
against surrender of the certificates for such shares.
50 Interest. Any payments based on Fair Market Value required to be
--------
made by the Company under Section 4 or 5 shall accrue simple interest at 5% per
annum from the date of termination of employment to the date the Company has
paid in full for all of the shares of stock, including, without limitation,
during any period in which the Company's purchase of such shares is prohibited
under Section 9. All payments of interest accrued hereunder shall be paid only
at the date of payment by the Company for the shares of Stock being purchased.
60 Determination of Fair Market Value.
----------------------------------
<PAGE>
13
6.1 Appraisals. The Company shall engage from time to time after
----------
January 1, 2000, but not less often than once every fiscal year, and not later
than 120 days after the end of any such fiscal year, an independent valuation
consultant or appraiser of recognized national standing as agreed to by iXL and
a majority in interest of the holders of the Preferred Stock, to appraise the
Fair Market Value of shares of Stock as of the last day of the fiscal period
then most recently ended or, at the request of the Company (including, without
limitation, for the purpose of satisfying the requirements of paragraph 5(g) of
the Series A Certificate of Designations with respect to the Series A Preferred
Stock and paragraph 5(g) of the Series B Certificate of Designations with
respect to the Series B Preferred Stock), as of any more recent date (the
"Appraisal Date"), and to prepare and deliver a report to the Company describing
- ---------------
the results of such appraisal (the "Appraisal"). If iXL and the Outside
---------
Investors do not reach agreement on an appraiser within 10 Business Days of the
event giving rise to the Appraisal then iXL and the Outside Investors (acting by
a majority in interest (based on the number of shares of Common Stock held by
such Outside Investors, including all shares into which the Preferred Stock is
convertible)) shall each select an appraiser, and such appraisers shall select a
third appraiser, who shall perform the Appraisal.
6.2 Calculation. (a) "Fair Market Value" of any share of Common
----------- -----------------
Stock shall be the fair market value or the entire Common Stock equity interest
of the Company taken as a whole, after giving effect to any increase in such
value which would result from the Company's receipt of the applicable exercise
or option price in respect of all then outstanding Convertible Securities (as
defined below) (the "Equity Value"), divided by all the issued and outstanding
------------
shares of Common Stock, together with the number of shares of Common Stock into
which any Convertible Securities would be convertible as of the most recent
Appraisal Date, without premiums for control or discounts for minority interests
or restrictions on transfer, and shall be as of the most recent Appraisal Date
and determined with reference to (i) if the Fair Market Value is being
-
determined for the purposes of Sections 4 or 5, the most recent Appraisal prior
to the date of termination of the Management Stockholder's employment, and (ii)
--
if the Fair Market Value is being determined for the purpose of Section 5(g) of
the applicable Certificate of Designations, the most recent Appraisal prior to
the date of the conversion of such Preferred Stock into Common Stock; provided,
however, in the event that the Equity Value (without giving effect to the
conversion of any outstanding shares of Preferred Stock) is less than the
aggregate Liquidation Value of all of the outstanding shares of Preferred Stock,
then the "Fair Market Value" of such share of Common Stock shall be an amount
-----------------
equal to the quotient of (i) the excess, if any, of (A) the Equity Value
- -
(without giving effect to the conversion of any outstanding shares of Preferred
Stock) over (B) the aggregate amount, if any, that the holders of the Preferred
-
Stock would have actually received pursuant to the Certificates of Designations
in respect of their shares of Preferred Stock if the
<PAGE>
14
Company had been liquidated as of the Appraisal Date divided by (ii) the
--
aggregate number of issued and outstanding shares of Common Stock, together with
the number of shares of Common Stock into which any issued and outstanding
Convertible Securities (other than outstanding shares of Preferred Stock) would
be convertible as of the most recent Appraisal Date. "Convertible Securities"
----------------------
shall mean any warrants, options, convertible stock or other rights to purchase
Common Stock (including the Preferred Stock) for which, as the most recent
Appraisal Date, the value of the Common Stock into which such warrants, options,
convertible stock or other rights to purchase Common Stock are exercisable or
convertible exceeds the exercise price or conversion price therefor.
6.3 Notice to Stockholders. After receipt of each Appraisal, the
----------------------
Company shall promptly deliver to each Stockholder a copy of the report as to
value included with such Appraisal.
7. Defined Terms. As used in this Agreement, the following terms shall
-------------
have the meanings ascribed to them below:
(a) Affiliate means, with respect to any Person, any other Person
---------
directly or indirectly, through one or more intermediaries, controlling,
controlled by, or under common control with such Person; provided that for
--------
purposes of this Agreement, GEPT shall be deemed to be an Affiliate of GECC and
each of its Affiliates.
(b) Board means the board of directors of the Company.
-----
(c) Business Day means any day other than a Saturday, Sunday or other
------------
day on which the commercial banks in New York City are authorized or required by
law to close.
(d) Carrying Value means, with respect to any share of Common Stock
--------------
being purchased by the Company: (i) (A) if such shares were acquired in
- -
exchange for cash, the price paid by the selling Stockholder for any such share,
or (B) if such shares were acquired pursuant to any merger or stock exchange
-
agreement, the value assigned to such shares in such merger or stock exchange
agreement, plus (ii) simple interest at a rate per annum equal to 5% which shall
--
be deemed to be the carrying cost, from the date of the purchase of such shares
by such selling Stockholder through the date of the Company's purchase of such
shares, less the amount of dividends paid to such Management Stockholder in
respect of such share (to the extent that the amount of such dividends does not
exceed such simple interest).
<PAGE>
15
(e) Cause means a termination of a Management Stockholder's employment
-----
by the Company or any of its subsidiaries due to (i) the continued failure
-
(other than any such failure resulting from incapacity due to reasonably
documented physical or mental illness) by such Management Stockholder
substantially to perform his duties, responsibilities or obligations as an
officer, director or employee of the Company or any of its subsidiaries after
having been given written notice of such failure to perform and after having
failed to improve such performance within the time period (which shall have been
a reasonable time period) specified in such notice or (ii) the engaging by such
--
Management Stockholder in serious misconduct which is material to the
performance by such Management Stockholder of his duties and obligations for the
Company or any of its subsidiaries, including, without limitation, gross
negligence, dishonesty, willful malfeasance, gross insubordination or gross
misconduct that is materially injurious to the Company or any of its
subsidiaries or conviction of a felony or the entering of a plea of nolo
contendere to a felony; provided, however, that with respect to any Management
Stockholder who is party to an employment agreement with the Company or an
Affiliate of the Company, the term "Cause" shall have the meaning assigned to
-----
such term in such employment agreement, if defined therein.
(f) Certificates of Designations means the Series A Certificate of
----------------------------
Designations and the Series B Certificate of Designations.
(g) Certificate of Incorporation means the Amended and Restated
----------------------------
Certificate of Incorporation of the Company, as amended, together with the
Certificates of Designations.
(h) Change of Control means any circumstance in which iXL or its then-
-----------------
existing stockholders cease to be the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 of the Securities Exchange Act of 1934, as amended), directly or
indirectly, of a majority in the aggregate of the total voting power of the
Company.
(i) Code means the Internal Revenue Code of 1986, as amended.
----
(j) Common Stock means the common stock of the Company, par value
------------
$.01 per share.
(k) Disability means the termination of the employment of any
----------
Management Stockholder by the Company or any of its subsidiaries shall be deemed
to be by reason of a "Disability" if such Management Stockholder shall have been
----------
incapable for more than six months within any 12-month period of performing his
duties, responsibilities or obligations as an officer, director or employee of
the Company or any
<PAGE>
16
of its subsidiaries on a full-time basis because of a
physical, mental or emotional incapacity resulting from injury, sickness or
disease and within 30 days after written notice of termination has been given to
such Management Stockholder, such Management Stockholder shall not have returned
to the full-time performance of his duties, responsibilities and obligations.
The date of termination in the case of a termination for "Disability" shall be
----------
the last day of the aforementioned 30 day period; provided, however, that with
respect to any Management Stockholder who is party to an employment agreement
with the Company or an Affiliate of the Company, the term "Disability" shall
----------
have the meaning assigned to such term in such employment agreement, if defined
therein.
(l) GE Investors means the "Investors" as defined in the Investors
------------
Agreement and their Affiliate transferees.
(m) GEFA means General Electric Financial Assurance, Inc., and any
----
other subsidiary or business unit of any Affiliate of GECC a material portion of
whose business is the sale of financial services products for household, family
or personal use.
(n) Investors Agreement means the Investors Agreement, dated as of
-------------------
________, 1999, among the Company, iXL and the GE Investors named therein.
(o) Good Reason means a termination of a Management Stockholder where
-----------
such Management Stockholder's employment voluntarily terminates his employment
with the Company as a result of either of the following:
(i) without the Management Stockholder's prior written consent, a
significant reduction by the Company in his current salary, other than
any such reduction which is part of a general salary reduction or other
con cessionary arrangement affecting all senior executive corporate
officers; or
(ii without the Management Stockholder's prior written consent,
the taking of any action by the Company or any of its subsidiaries that
would substantially diminish the aggregate value of the benefits
provided him under the benefit plans of the Company that may be in
effect at such time and in which he was participating, other than any
such reduction which is (A) required by law, (B) implemented in
- -
connection with a general concessionary arrangement affecting all
employees or affecting the group of employees of which the Management
Stockholder is a member or (C) generally applicable to all
-
beneficiaries of such plan.
<PAGE>
17
provided, however, that with respect to any Management Stockholder who is party
to an employment agreement with the Company or an Affiliate of the Company, the
term "Good Reason" shall have the meaning assigned to such term in such
-----------
employment agreement, if defined therein.
(p) Liquidation Value has, with respect to a share of Preferred Stock,
-----------------
the meaning provided therefor in the applicable Certificate of Designations.
(q) Management Stockholders means those employees of the Company who
-----------------------
become stockholders of the Company, are listed on Schedule 2 hereto and who
become a party to this Agreement pursuant to Sections 15.2 or 15.3
(r) November 1998 Stock Purchase Agreement means the Stock Purchase
--------------------------------------
Agreement, dated as of November 3, 1998, between the Company and GECC.
(s) Outside Investors has the meaning set forth in the first
-----------------
paragraph of this Agreement.
(t) Person means an individual, corporation, partnership, limited
------
liability company, association, trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
(u) Preferred Stock has the meaning set forth in the third recital
---------------
hereto.
(v) Qualified Public Offering means an underwritten public offering of
-------------------------
the Common Stock (i) involving (a) at least 15% of the total outstanding Common
- -
Stock on a fully diluted basis and (b) a minimum offering price of $6.00 per
-
share (adjusted proportionately for any subdivision (by any stock split, stock
dividend, recapitalization or otherwise) or combination (by reverse stock split
or otherwise)) or (ii) which has been approved by GECC.
--
(w) Registration Rights Agreement means the Amended and Restated
-----------------------------
Registration Rights Agreement, dated as of the date hereof, between the Company
and the other parties named therein, as the same may be amended from time to
time.
(x) Series A Certificate of Designations means the Certificate of
------------------------------------
Designations, Powers, Preferences and Relative, Participating, Optional and
Other Special Rights of the Series A Convertible Preferred Stock, filed by the
Company with the Secretary of State of the State of Delaware on or about
November 2, 1998, as amended.
<PAGE>
18
(y) Series B Certificate of Designations means the Certificate of
------------------------------------
Designations, Powers, Preferences and Relative, Participating, Optional and
Other Special Rights of the Series B Convertible Preferred Stock, filed by the
Company with the Secretary of State of the State of Delaware on or about
___________, 1999.
(z) Stock means all classes of the capital stock of the Company,
-----
including all classes of Common Stock and all classes and series of preferred
stock of the Company, including the Preferred Stock.
(aa) Stockholders means iXL, the Outside Investors and the
------------
Management Stockholders.
(bb) Stock Option Plan means a stock option plan of the Company, as
-----------------
the same may be amended from time to time, adopted by the Board in conformance
with Section 9.3(a) hereof.
(cc) Stock Purchase Agreement means the Stock Purchase Agreement,
------------------------
dated as of April 7, 1999, between the Company, GECEI and GEPT, as the same
shall be amended from time to time.
(dd) Transaction Documents means this Agreement, the Stock Purchase
---------------------
Agreement, the November 1998 Stock Purchase Agreement, the Registration Rights
Agreement, the Certificate of Incorporation and the Stock Option Plan, and, with
respect to iXL, the GE Investors and the Company only, the Investors Agreement,
collectively, or each of such documents singularly, and any documents or
investments contemplated by or executed in connection with any of them or any of
the transactions contemplated hereby or thereby.
(ee) Transfer means any direct or indirect sale, assignment, mortgage,
--------
transfer, pledge, hypothecation or other disposition or transfer.
8. Prohibited Purchases. Notwithstanding anything to the contrary
--------------------
herein, the Company shall not be obligated to purchase any shares of Stock from
any Management Stockholder to the extent (a) the Company is prohibited from
-
purchasing such shares by applicable law or by any debt instrument or agreement,
including any amendment, renewal, extension, substitution, refinancing,
replacement or other modification thereof (collectively, the "Loan Documents"),
--------------
to which the Company or any of its subsidiaries is or becomes a party, (b) a
-
default has occurred under any Loan Document and is con tinuing, (c) the
-
purchase of such shares would in the good faith opinion of the Board
<PAGE>
19
result in the occurrence of an event of default under any Loan Document or
create a condition which would, with notice or lapse of time or both, result in
such an event of default or (d) the purchase of such shares would, in the good
-
faith opinion of the Board, be imprudent in view of the financial condition
(present or projected) of the Company or the anticipated impact of the purchase
of such shares on the Company's ability to meet its obligations under any Loan
Document or otherwise in connection with its business and operations. If shares
of Stock that the Company has the right or obligation to purchase on any date
exceed the total amount permitted to be purchased on such date pursuant to the
preceding sentence (the "Maximum Amount"), the Company shall purchase on such
--------------
date only that number of shares of Stock equal to the Maximum Amount (and shall
not be required to purchase more than the Maximum Amount) in such amounts as the
Board shall in good faith determine, applying the following order of priority:
(i) First, the shares of Stock of all Management Stockholders
whose shares of Stock are being purchased by the Company by reason of
termination of employment due to death or Disability and, to the extent
that the number of shares of Stock that the Company is obligated to
purchase from such Management Stockholders (but for this Section 9)
exceeds the Maximum Amount, such shares of Stock pro rata among such
Management Stockholders on the basis of the number of shares of Stock
held by each of such Management Stockholders that the Company is
obligated (but for this Section 9) or has the right to purchase, and
(ii) Second, to the extent that the Maximum Amount is in excess
of the amount the Company purchases pursuant to clause (i) above, the
shares of Stock of all Management Stockholders whose shares of Stock
are being purchased by the Company by reason of termination of
employment without Cause or due to retirement or resignation for Good
Reason, up to the Maximum Amount and, to the extent that the number of
shares of Stock that the Company is obligated to purchase from such
Management Stock holders (but for this Section 9) exceeds the Maximum
Amount, such shares of stock pro rata among such Management
Stockholders on the basis of the number of shares of Stock held by each
of such Management Stockholders that the Company is obligated (but for
this Section 9) or has the right to pur chase, and
(iii) Third, to the extent the Maximum Amount is in excess of the
amounts the Company purchases pursuant to clauses (i) and (ii) above,
the shares of all other Management Stockholders whose shares of Stock
are being purchased by the Company up to the Maximum Amount and, to the
<PAGE>
20
extent that the number of shares of Stock that the Company is obligated
to purchase (but for this Section 9) from such Management Stockholders
exceeds the Maximum Amount, the shares of Stock of such Management
Stockholders in such order of priority and in such amounts as the Board
in its sole discretion shall in good faith determine to be appropriate
under the circumstances.
Notwithstanding anything to the contrary contained in this Agreement other than
the provisions of Section 1.7, if the Company is unable by reason of this
Section 9 to make any payment when due to any Management Stockholder, then,
subject to the following paragraphs, the Company shall have the option of either
(x) making such payment at the earliest practicable date permitted under this
-
Section 9 or (y) to the extent permitted under the Loan Documents, proceeding
-
with the purchase of such shares of Stock by paying for them with a promissory
note of the Company with the following terms: (i) a principal amount equal to
-
such purchase price, (ii) an interest rate equal to the greater of 5% per annum
--
and the prime rate as announced by The Chase Manhattan Bank as of the date such
promissory note is issued, (iii) a maturity date of one year and one day after
---
the maturity of the Company's Loan Documents, (iv) subordination provisions as
--
required by the Loan Documents, and (v) such other terms and conditions as the
-
Company may reasonably determine. All payments of interest accrued hereunder
shall be paid only at the date of payment by the Company for the shares of Stock
being purchased.
9. Rights of Certain Stockholders.
------------------------------
9.1 Board of Directors; Observation Rights. (a) Until the closing of
-------------------------------------- -
a Qualified Public Offering, each Stockholder agrees that from and after the
date of this Agreement it will use its best efforts to nominate and elect, and
will vote all of the shares of Stock owned or held of record by such Stockholder
to elect and, thereafter, for such period, to continue in office a Board
consisting of ten members, who will be designated for nomination and election as
follows: (i) so long as GECC and its Affiliates continue to own at least 10% of
-
the Company's Common Stock (assuming conversion of Preferred Stock into Common
Stock), GECC may designate for nomination and election three directors; so long
as GECC and its Affiliates continue to own less than 10% but at least 5% of the
Company's Common Stock (assuming conversion of Preferred Stock into Common
Stock), GECC may designate for nomination and election two directors and (ii)
--
iXL may designate for nomination and election all the directors not designated
for nomination and election by GECC. The rights of GECC set forth in the
previous sentence are personal in nature and unassignable by GECC,
notwithstanding anything to the contrary contained herein, other than to an
Affiliate thereof other than GEFA. The parties agree that the failure by GECC
to so designate for nomination and election will
<PAGE>
21
not constitute a waiver by GECC
of such right to do so in the future. The Persons designated pursuant to this
Section 9.1 for nomination and election by iXL and GECC, as the case may be, may
be changed from time to time by the nominating Person, so long as GECC has a
representative on the Board, it shall have representation on each committee
created by the Board proportional to its rights to representation hereunder or
under the Investors Agreement, provided, that with respect to the compensation
--------
committee, GECC will have the right to appoint one of the three members to such
committee and, provided further, that the Company will not create an executive
-------- --------
committee or other committee which is entitled to exercise any power or
authority of the Board without the need for subsequent Board approval with
respect thereto (except for an audit committee and a compensation committee).
GECC's designees on the Board or each committee, as the case may be, may not be
officers of GEFA.
(b) From and after the closing of a QPO, the Company will cause to be
-
nominated and the Stockholders will vote to elect (i) three directors of the
-
Company designated for nomination by iXL and (ii) that number of directors of
--
the Company which the GE Investors shall be entitled to designate for nomination
pursuant to in the Investors Agreement.
(c) In the event that either GECC does not designate for nomination and
-
election members to the Board of Directors in accordance with Section 9.1 hereof
or the GECC designees are not elected to the Board of Directors, then GECC (for
so long as GECC and its Affiliates still own at least 5% of the total
outstanding equity securities of the Company), shall have the right to have a
non-voting representative attend any meetings of the Board (including any
adjournments thereof) either in person or by such other method as shall be
allowed under the bylaws of the Company for directors, and shall further have
the right to receive any notices and materials provided to the entire Board in
their capacity as such. Any such representative shall have the right to speak
at such meetings and to make such suggestions and requests during such meetings
as such representative deems appropriate, and the Board shall consider such
suggestions and requests in good faith.
9.2 Irrevocable Proxy. In order to effectuate Section 9.1 and in
-----------------
addition to and not in lieu of Section 9.1, each Stockholder owning shares of
Stock hereby grants to the Secretary of the Company an irrevocable proxy
pursuant to Section 212(e) of the General Corporation Law of the State of
Delaware, coupled with an interest, solely for the purpose of voting all of the
shares of Stock of the Company owned by the grantor of the proxy for the
election of directors nominated in accordance with Section 9.1. Each
Stockholder agrees to take any further actions necessary to effectuate Section
9.1, including, without limitation, the calling of a special meeting of the
Stockholders in order
<PAGE>
22
to nominate and elect directors as set forth in Section 9.1. The Secretary of
the Company will exercise such proxy to give effect to this Section 9, if
necessary.
9.3 Additional Rights of Outside Investors. (a) The Company and the
-------------------------------------- -
Stockholders agree that the Board shall not adopt a stock option plan,
including, without limitation, the Stock Option Plan, or other management or
employee stock bonus, award or incentive without the approval of a majority of
the members of the compensation committee of the Board.
(b) The Outside Investors, to the extent they continue to hold Preferred
-
Stock, shall have such additional rights in respect of the Preferred Stock as
set forth in the applicable Certificate of Designations with respect to the
Preferred Stock held by such Outside Investors.
10. Stock Certificate Legends. A copy of this Agreement shall be filed
-------------------------
with the Secretary of the Company and kept with the records of the Company.
Each certificate representing shares of Stock owned by the Stockholders shall
bear the following legends:
(i THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURI
TIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE
---
OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF UN LESS AND UNTIL REGISTERED UNDER THE ACT AND
ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS SUCH OFFER,
SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION, TRANSFER OR OTHER
DIS POSITION IS EXEMPT FROM REGISTRATION OR IS OTHERWISE IN
COMPLIANCE WITH THE ACT, SUCH LAWS AND THE AMENDED AND
RESTATED STOCKHOLDERS' AGREEMENT OF THE COMPANY, DATED AS OF
___________, 1999 (THE "STOCKHOLDERS' AGREEMENT"), AS THE
-----------------------
SAME MAY BE AMENDED FROM TIME TO TIME.
(ii THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER, A VOTING AGREEMENT AND OTHER
CONDITIONS AND RESTRICTIONS, AS SPECIFIED IN THE STOCK-
<PAGE>
23
HOLDERS' AGREEMENT, COPIES OF WHICH ARE ON FILE AT THE OFFICE
OF THE COMPANY AND WILL BE FURNISHED WITHOUT CHARGE TO THE
STOCK HOLDER OF SUCH SHARES UPON WRITTEN REQUEST.
(iii THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER
WHO SO REQUESTS THE POWERS, DESIGNATIONS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL OTHER SPECIAL RIGHTS OF EACH
CLASS OR SERIES OF SHARES AUTHORIZED TO BE ISSUED AND THE
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH
PREFERENCES AND OR RIGHTS.
In addition, certificates representing shares of Stock owned by residents of
certain states shall bear any legends required by the laws of such states. All
Stockholders shall be bound by the requirements of such legends to the extent
that such legends are applicable. Upon a registration of any shares of Common
Stock, the certificate representing such shares shall be replaced, at the
expense of the Company, with certificates not bearing the legends required by
this Section 11(i) and (ii). Upon the closing of a Qualified Public Offering,
certificates representing shares of Stock shall be replaced, at the expense of
the Company, with certificates not bearing the legends required by Section
11(ii) or the applicable portions of Section 11(i).
11. No Other Arrangements or Agreements. Each of the Stockholders other
-----------------------------------
than iXL hereby represents and warrants to the Company and iXL that it has not
entered into or agreed to be bound by any other arrangements or agreements of
any kind with any other Person (other than an Affiliate of such Stockholder or
the Company) with respect to its Stock, or any interest therein, including, but
not limited to, arrangements or agreements with respect to the acquisition,
disposition or voting of shares of Stock (whether or not such agreements and
arrangements are with the Company, other Stockholders or other Persons), except
for the Transaction Documents or any other arrangements or agreements entered
into with the Company or iXL in connection therewith.
12. Amendment and Modification. This Agreement may be amended, modified
--------------------------
or supplemented only by written agreement of iXL and those Stockholders other
than iXL owning at least 51% of all shares of Common Stock (assuming conversion
of Preferred Stock to Common Stock) owned by all such Stockholders other than
iXL; provided,
<PAGE>
24
however, that if any such amendment, modification or supplement
would adversely affect (a) the rights of any of the GE Investors hereunder or
-
under the Investors Agreement, then the GE Investors; and (b) any holder of
-
Preferred Stock, the approval of those Stockholders owning at least 51% of all
the outstanding shares of Preferred Stock shall be required. If the requisite
number of Stockholders shall have agreed, the Company shall notify the other
Stockholders promptly after such amendment, modification or supplement shall
take effect. Notwithstanding the foregoing, the Company shall have the
unilateral right to amend Schedules 1 and 2 as provided in Sections 14.3 and
14.4.
13. Assignment.
----------
13. Assignment Generally. The provisions of this Agreement shall be
--------------------
binding upon and inure to the benefit of the parties hereto and their respective
heirs, legal representatives, successors and assigns, provided that, except in
connection with Transfers explicitly permitted hereunder, neither the Company
nor any Stockholder other than iXL shall assign any of its rights pursuant to
this Agreement without the prior written agreement of iXL, provided, however,
-------- -------
that the GE Investors and any transferees thereof may assign their rights under
Section 2.1 hereof to any permitted transferee of their shares of Stock. If
iXL Transfers 100% of the shares of Stock owned by it in accordance with and to
the extent permitted by the other provisions of this Agreement and, so long as
the same is in effect, the Investors Agreement, and such transfer is either to
an Affiliate of iXL or is effected in accordance with paragraph 2(c) of the
Investors Agreement, then a single transferee determined by iXL, shall be deemed
to be iXL for purposes of this Agreement and, so long as the Investors Agreement
is in effect, the Investors Agreement and such transferee must sign an
instrument of assumption (delivered to the Stockholders) agreeing to be bound
thereby. If iXL Transfers less than 100% of the Stock owned by it (in
accordance with the other provisions of this Agreement and, so long as the
Investors Agreement is in effect, the Investors Agreement and such transfer is
---
effected in accordance with paragraph 2(c) of the Investors Agreement or to an
Affiliate of iXL, then such transferee shall be required to agree (in writing
delivered to the Stockholders) to be bound by all of the terms and obligations
to which such transferring party is subject under this Agreement and the
Investors Agreement and will have only those rights of iXL under this Agreement
and the Investors Agreement as iXL in its sole discretion determines.
13. Agreements to be Bound. Notwithstanding anything to the contrary
----------------------
contained in this Agreement and in addition to the other restrictions contained
herein, any Transfer by any Management Stockholder or Outside Investor or iXL to
any Permitted Transferee or other third party (whether or not such third party
is affiliated with such transferor), except for Transfers pursuant to Section
2.3, Rule 144, an underwritten public offering or Sections 1(c) or 2(c) of the
Investors Agreement or any Involuntary
<PAGE>
25
Transfer to an Involuntary Transferee shall be permitted under the terms of this
Agreement only if such Permitted Transferee, third party or Involuntary
Transferee, as the case may be, shall agree in writing to be bound by the terms
and conditions of this Agreement pursuant to an instrument of assumption
reasonably satisfactory in substance and form to the Company and iXL (and in the
case of iXL, GECC). Upon the execution of such instrument by such third party
(and compliance with all other relevant provisions of this Agreement), such
third party shall be deemed to be a Stockholder for all purposes of this
Agreement, subject to the same obligations as the Management Stockholders or the
Outside Investors, as the case may be, and the appropriate schedule hereto will
be amended accordingly. Without limiting the generality of the foregoing, each
Management Stockholder agrees that any such Involuntary Transferee or Permitted
Transferee will be bound by such Management Stockholder's obligations under
Section 5 in the event such Management Stockholder's employment with the Company
terminates.
13. New Management Stockholders. Each of the Stockholders hereby
---------------------------
agrees that any employee of the Company or any of its subsidiaries who, after
the date of this Agreement, is offered shares of Common Stock or holds stock
options exercisable into shares of Common Stock shall, as a condition precedent
to the acquisition of such shares of Common Stock or the exercise of such stock
options, as the case may be, (i) become a party to this Agreement by executing
-
the same and (ii) if such employee is a resident of a state with a community
--
property system, cause his or her spouse to execute a Spacial Waiver in the form
of Exhibit B hereto and deliver such Agreement and Spacial Waiver, if
applicable, to the Company. Upon such execution and delivery, such employee
shall be deemed to be a Management Stockholder for all purposes of this
Agreement and the Company shall amend Schedule 2 hereto to reflect such
additional Management Stockholder.
13. New Outside Investors. Each of the Stockholders hereby
---------------------
acknowledges that on or after the date hereof the Company may, from time to
time, with the approval of the Board, and subject to the Investors Agreement in
the case of the GE Investors, offer and sell shares of Stock to various non-
employee accredited investors who will become "Outside Investors" under this
-----------------
Agreement. Any such investor shall, as a condition precedent to the acquisition
of such shares of Stock (i) become a party to this Agreement by executing the
-
same and (ii) if such investor is an individual who is a resident of a state
--
with a community property system, cause his or her spouse to execute a Spousal
Waiver in the form of Exhibit B hereto and deliver such Agreement and Spousal
Waiver, if applicable, to the Company. Upon such execution and delivery, such
Person shall be deemed to be an Outside Investor for all purposes of this
Agreement and the Company shall amend Schedule 1 hereto to reflect such
additional Outside Investor.
<PAGE>
26
14. Termination.
-----------
14. Termination Generally. Any party to, or Person who is subject
---------------------
to, this Agreement who ceases to own any shares of Stock or any interest therein
in accordance with the terms of this Agreement shall cease to be a party to, or
a Person who is subject to, this Agreement and thereafter shall have no rights
or obligations hereunder, provided that any Transfer of shares of Stock by any
Stockholder in breach of this Agreement shall not relieve such Stockholder of
liability for any such breach.
14. Termination of Rights and Obligations Under Sections 1, 2, 3, 4
---------------------------------------------------------------
and 5. All rights and obligations pursuant to Sections 1, 2, 3, 4 and 5 of this
- -----
Agreement shall terminate (other than obligations which have arisen and are
outstanding prior to termination) upon the closing of a Qualified Public
Offering, provided that with respect to the GE Investors, Section 2.1 (tag-along
--------
rights) will survive and continue until termination in accordance with the terms
of the Investors Agreement.
15. Recapitalization, Exchanges, etc. Affecting the Stock. The
-----------------------------------------------------
provisions of this Agreement shall apply to any and all shares of capital stock
of the Company or any successor or assignee of the Company (whether by merger,
consolidation, sale of assets or otherwise) which may be issued in respect of,
in exchange for, or in substitution for the shares of Stock, by reason of any
stock dividend, split, reverse split, combination, recapitalization,
reclassification, merger, consolidation, or otherwise in such a manner as to
reflect the intent and meaning of the provisions hereof.
16. No Third Party Beneficiaries. Except as otherwise provided herein,
----------------------------
this Agreement is not intended to confer upon any Person, except for the parties
hereto any rights or remedies hereunder.
17. Repurchases of Stock. If at any time the Company purchases any
--------------------
shares of Stock pursuant to this Agreement, the Company may pay the purchase
price determined under this Agreement for the shares of Stock it purchases by
wire transfer of funds or bank check in the amount of the purchase price, and
upon receipt of payment of such purchase price or, pursuant to Section 8, any
portion thereof, the selling Stockholder shall deliver the certificates
representing the number of shares of Stock being purchased in a form suitable
for transfer, duly endorsed in blank, and free and clear of any lien, claim or
encumbrance. Notwithstanding anything in this Agreement to the contrary, the
Company shall not be required to make any payment for shares of Stock purchased
hereunder until delivery to it of the certificates representing such shares. If
the Company is purchasing less than all the shares of Stock represented by a
single certificate, the Company shall deliver to the selling Stockholder a
certificate for any unpurchased shares of Stock.
<PAGE>
27
18. Further Assurances. Each party hereto shall do and perform or cause
------------------
to be done and performed all such further acts and things and shall execute and
deliver all such other agreements, certificates, instruments and documents as
any other party hereto or Person subject hereto may reasonably request in order
to carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
19. Governing Law. This Agreement and the rights and obligations of the
-------------
parties hereunder shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Delaware, without giving effect to the
choice of law principles thereof.
20. Invalidity of Provision. The invalidity or unenforceability of any
-----------------------
provision of this Agreement in any jurisdiction shall not affect the validity or
enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of this Agreement, including that provision, in any
other jurisdiction.
21. Notices. All notices, requests, demands, waivers and other
-------
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (a) delivered
-
personally, (b) mailed, certified or registered mail with postage prepaid, (c)
- -
sent by next-day or overnight mail or delivery or (d) sent by telecopier as
-
follows:
(i) if to the Company, to it at:
-------
CFN, Inc.
Two Park Place
1888 Emery Street
2nd Floor
Atlanta, Georgia 30318
Attention: Mr. M. Wayne Boylston
Telecopier number: (404) 267-3801
with a copy (which, in each case, shall not
constitute notice) to:
Minkin & Snyder
3060 Peachtree Road, Suite 1100
Atlanta, Georgia 30305
Telecopier number: (404) 233-5824
<PAGE>
28
Attention: James S. Altenbach, Esq.
and
Kelso & Company
320 Park Avenue
24th Floor
New York, New York 10022
Telecopier number: (212) 223-2379
Attention: James J. Connors, II, Esq.
and
Debevoise & Plimpton
875 Third Avenue
New York, NY 10022
Telecopier number: (212) 909-6836
Attention: Margaret A. Davenport, Esq.
(ii If to an Outside Investor, the address or telecopier number
as listed on Schedule 1.
(iii If to any Management Stockholder, to his or her address or
his telecopier number as listed on the signature page.
(iv If to any other Person who becomes a Stockholder after the
date hereof, to its address or telecopier number set forth in the
counterpart of this Agreement executed and delivered by such Stockholder
pursuant to Sections 14.2, 14.3 or 14.4;
or to such other person or address as any party shall specify by notice in
writing to the Company. All such notices, requests, demands, waivers and other
communications shall be deemed to have been received (w) if by personal delivery
-
on the day after such delivery, (x) if by certified or registered mail, on the
-
seventh business day after the mailing thereof, (y) if by next-day or overnight
-
mail or delivery, on the day delivered, (z) if by fax on the next day following
-
the day on which such fax was sent, provided that a copy is also sent by
certified or registered mail.
22. Headings; Execution in Counterparts. The headings and captions
-----------------------------------
contained herein are for convenience and shall not control or affect the meaning
or construction of
<PAGE>
29
any provision hereof. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and which together
shall constitute one and the same instrument.
23. Entire Agreement. This Agreement and the Transaction Documents
----------------
embody the entire agreement and understanding of the parties hereto in respect
of the subject matter contained herein and supersede all prior agreements,
understandings, representations and warranties among the parties with respect to
such subject matter.
24. Injunctive Relief. The shares of Stock cannot readily be purchased
-----------------
or sold in the open market, and for that reason, among others, the Company and
Stockholders will be irreparably damaged in the event this Agreement is not
specifically enforced. Each of the parties therefore agrees that in the event
of a breach of any provision of this Agreement the aggrieved party may elect to
institute and prosecute proceedings in any court of competent jurisdiction to
enforce specific performance or to enjoin the continuing breach of this
Agreement. Such remedies shall, however, be cumulative and not exclusive, and
shall be in addition to any other remedy which the Company or any Stockholder
may have. Each Stockholder hereby irrevocably submits to the non-exclusive
jurisdiction of the state and federal courts in New York for the purposes of any
suit, action or other proceeding arising out of or based upon this Agreement or
the subject matter hereof. Each Stockholder hereby consents to service of
process by mail made in accordance with Section 21.
25. Construction. Notwithstanding anything to the contrary set forth in
------------
this Agreement, nothing set forth in this Agreement shall derogate than the
rights of the GE Investors contained in the Investors Agreement. In the event
of any conflict or inconsistency between any terms of this Agreement and the
Investors Agreement, the terms of the Investors Agreement will prevail, provided
that no such resolution shall derogate from any of the rights of the GE
Investors under this Agreement.
[The remainder of this page left intentionally blank.]
<PAGE>
IN WITNESS WHEREOF, this Stockholders' Agreement has been signed by each
of the parties hereto as of the date first above written.
CONSUMER FINANCIAL NETWORK, INC.
By:
----------------------------------
Title:
-------------------------------
iXL ENTERPRISES, INC.
By:
----------------------------------
Title:
-------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION
By:
----------------------------------
Title:
-------------------------------
<PAGE>
Schedule 1
----------
OUTSIDE INVESTORS
1. General Electric Capital Corporation
120 Long Ridge Road
Stanford, CT 06927
Telecopier Number: 203-357-3047
Attention: General Counsel of GE Equity
With a copy (which shall not constitute notice) to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Telecopier number: (212) 310-8007
Attention: William M. Gutowitz, Esq.
<PAGE>
Schedule 2
----------
2 MANAGEMENT STOCKHOLDERS:
----------------------------------------
Name:
Address:
----------------------------------------
----------------------------------------
Name:
Address:
----------------------------------------
----------------------------------------
Name:
Address:
----------------------------------------
----------------------------------------
Name:
Address:
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES
------------
The following are wholly owned subsidiaries of the iXL Enterprises, Inc.
unless otherwise noted:
COMPANY STATE OF INCORPORATION
- ------- ----------------------
Consumer Financial Network, Inc./1/ Delaware
CFN Agency, Inc./2/ Delaware
CFN Finance, Inc./2/ Delaware
Creative Video Library, Inc. Georgia
iXL, Inc. Delaware
iXL-Boston, Inc. Delaware
iXL-Charlotte, Inc. Delaware
iXL-Chicago, Inc. Delaware
iXL-Connecticut, Inc. Delaware
iXL-DC, Inc. Delaware
iXL-Denver, Inc. Delaware
iXL-London, Ltd. United Kingdom
iXL-Los Angeles, Inc. Delaware
iVisit, Inc./3/ Delaware
iXL-Madrid, S.A. Spain
Campana New Media, S.L./4/ Spain
The Other Media, S.L./4/ Spain
iXL-Memphis, Inc. Delaware
iXL-New York, Inc. Delaware
iXL-Richmond, Inc. Delaware
iXL-San Diego, Inc. Delaware
iXL-San Francisco, Inc. Delaware
LAVA Gesellschaft fur Digitale Medien Germany
Denovo New Media Limited/5/ United Kingdom
1. Consumer Financial Network, Inc. is owned 88% by iXL Enterprises, Inc., and
12% by General Electric Capital Corporation.
2. CFN Agency, Inc. and CFN Finance, Inc. are each a wholly-owned subsidiary of
Consumer Financial Network, Inc.
3. iVisit, Inc. is a wholly-owned subsidiary of iXL Los Angeles, Inc.
4. Campana New Media, S.L. and The Other Media, S.L. are wholly-owned
subsidiaries of iXL-Madrid, S.A.
5. Denovo New Media Limited is a wholly-owned subsidiary of iXL-London,
Ltd.
<PAGE>
Consent of Independent Accountants
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our reports as of the dates and relating
to the financial statements of the companies listed below.
Company Date of Report
------- --------------
iXL Enterprises, Inc. February 5, 1999
BoxTop Interactive, Inc. October 3, 1997
Green Room Productions, L.L.C. September 3, 1998
Digital Planet July 13, 1998
Micro Interactive, Inc. June 26, 1998
CommerceWAVE, Inc. August 21, 1998
Spinners Incorporated September 4, 1998
Tekna, Inc. September 24, 1998
Larry Miller Productions, Inc. November 10, 1998
We also consent to the application of our report on iXL Enterprises, Inc. to the
Financial Statement Schedules for the period from May 1, 1996 (commencement of
operations) through December 31, 1996 and the years ended December 31, 1997 and
1998 listed under Item 16(b) of this Registration Statement when such schedules
are read in conjunction with the financial statements referred to in our report.
The audits referred to in such report also included these schedules. We also
consent to the references to us under the heading "Experts" in such Prospectus.
PricewaterhouseCoopers LLP
Atlanta, Georgia
April 7, 1999
<PAGE>
Exhibit 99.1
GARY C. WENDT
3003 Summer Street, 5th Floor
Stamford, Connecticut 06904
March 24, 1999
IXL Enterprises, Inc.
1888 Emery Street, N.W.
Atlanta, Georgia 30318
Re: Consent to be Named in Registration Statement
In connection with my agreement to become a director of iXL Enterprises,
Inc., a Delaware corporation ("iXL"), I hereby consent to being named in any
registration statement for the registration of the securities of iXL filed with
the Securities and Exchange Commission, including any amendment or amendments
thereto (each a "Registration Statement"). This consent is being given to comply
with the applicable requirements of the Securities Act of 1933, as amended, and
the rules and regulations thereunder, including without limitation Rule 438 of
Regulation C thereof.
I also grant my permission to include a copy of this consent as a part
of any Registration Statement.
Sincerely yours,
/s/ Gary C. Wendt
-------------------------------
Gary C. Wendt
