ASSET PURCHASE AGREEMENT
between
SKYLINK NETWORK, INC.
and
MIRAGE COMPUTERS, INC.
and
MIRAGE INTERNET COMMUNICATIONS, INC.
January 12, 2000
TABLE OF CONTENTS
ARTICLE I Sale and Purchase; Liabilities Assumed 1
1.1 Asset Purchase 1
1.2 Mirage Internet Communications, Inc. 1
1.3 Consideration for the Assets 2
1.4 Assumption of Liabilities 2
1.5 Closing 3
1.6 Effective Time 3
ARTICLE II Representations and Warranties of Buyer 3
2.1 Corporate Organization 3
2.2 Authorization 3
2.3 Consents and Approvals 4
2.4 No Conflict 4
ARTICLE IIIRepresentations and Warranties of Seller and Stockholder 4
3.1 Corporate Organization 4
3.2 Authorization 4
3.3 Consent and Approvals 5
3.4 Litigation 5
3.5 Stock Ownership and Authority 5
3.6 No Conflicts 5
3.7 Title to Assets 5
3.8 Compliance with Laws; Authorization 5
ARTICLE IV Conditions Precedent to Obligations 6
4.1 Conditions to Obligations of Buyer 6
4.2 Conditions of Seller and Stockholder 7
ARTICLE V Closing 7
5.1 Deliveries of Seller at Closing 7
5.2 Deliveries of Buyer at Closing 8
ARTICLE VI Indemnification 8
6.1 Survival of Representations, Warranties and Agreements 8
6.2 Indemnification 8
6.3 Limitations on Indemnification 9
6.4 Procedure for Indemnification with Respect to Third-Party Claims 9
6.5 Procedure for Indemnification with Respect to Non-Third-Party Claims 10
ARTICLE VI Covenants 10
7.1 Covenant Not to Compete 10
7.2 Covenant Against Hiring 11
7.3 Due Diligence Access 11
7.4 Conduct of Interim Operations 11
7.5 Tax Covenants 12
7.6 Changes to Disclosure Schedule 13
7.7 Liabilities 13
ARTICLE VIII Termination 13
8.1 Termination of Agreement 13
ARTICLE IX Miscellaneous Provisions 14
9.1 No Negotiations by Seller and the Stockholder 14
9.2 Notice 14
9.3 Entire Agreement 15
9.4 Binding Effect; Assignment 15
9.5 No Third-Party Beneficiaries 15
9.6 Counterparts 15
9.7 Expenses 15
9.8 Waiver; Consent 15
9.9 Other and Further Covenants 15
9.10 Governing Law 15
9.11 Public Announcements 15
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made and entered
into on January 12, 1999, between Skylink Network, Inc., a Nevada corporation
("Seller") and Xxx Xxxxxx, the sole Stockholder of Seller ("Stockholder"), on
the one hand, and Mirage Computers, Inc., a Nevada Corporation, and Mirage
Internet Communications, Inc., a Nevada Corporation (collectively "Buyer"),
on the other.
WHEREAS, Seller owns and operates a staffing services business
concentrating in the computer and information technology areas located in Las
Vegas, Nevada, and desires to sell the Assets (as defined herein) upon the
terms and conditions hereinafter stated;
WHEREAS, for Federal income tax purposes, it is intended that the Asset
Purchase qualify as a reorganization under the provisions of Section
368(a)(1)(C) of the Internal Revenue Code of 1986, as amended; and
WHEREAS, Buyer desires to purchase substantially all of the Assets from
Seller ("Asset Purchase") upon the terms and conditions hereinafter stated.
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein contained, the parties hereto agree as follows:
ARTICLE I
Sale and Purchase; Liabilities Assumed
1.1 Asset Purchase. At the Closing (as defined herein), to be effective
as of the Effective Time (as defined herein), Seller shall sell, convey,
assign, transfer and deliver to Buyer, free and clear of all liens and
encumbrances of any kind except those disclosed in the disclosure schedule
attached hereto (the "Disclosure Schedule") all of the personal property of
Seller (other than the domain name XxxXxxxXxxXxxx.xxx) other than those
assets, rights and interests, tangible or intangible, inclusive of but not
limited to those assets those which are listed by category on the attached
Exhibit A (the "Assets"), and all books and records which relate to the
Assets (except for books and records which Seller is required by law to
retain in its possession, copies of which will be provided to Buyer);
provided, however, that there shall be excluded from the Assets those assets
listed on the attached Exhibit A-1.
1.2 Mirage Internet Communications, Inc. The assets sold by the Seller
to the Buyer will, following the Effective Time, be combined with the
business of Buyer's Internet technology group ("MICI"), a wholly owned
subsidiary of Buyer and will be operated under the name of that corporation.
MICI will operate following the Effective Time out of the location currently
used by Seller to operate its business, provided that sufficient space is
available at such location for the personnel and facilities of MICI.
1.3 Consideration for the Assets.
(a) Stock Portion of Purchase Price. The stock consideration shall
be paid in $450,000 of Rule 144 Restricted Common Shares
("Stock Portion").
(i) The number of shares issued for the $450,000 Stock Portion shall be
determined by dividing $450,000 by the closing stock price of
Buyer's common stock on January 4, 2000 ($3.50). Resulting in the
Stock Portion of 128,571 shares.
(ii) The 128,571 shares issued pursuant to the Stock Portion shall
contain the following Legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE "ACT"). THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
A CURRENT AND EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT WITH RESPECT TO SUCH SHARES, OR AN OPINION
SATISFACTORY TO THE ISSUER AND ITS COUNSEL TO THE
EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER THE
ACT.
1.4 Assumption of Liabilities.
(a) In connection with the acquisition by Buyer of the Assets as of the
Effective Time, Buyer shall assume only those liabilities under the Material
Contracts (as defined herein) of Seller that are expressly identified on the
attached Exhibit B. Buyer does not hereby, and will not at any time be
required to, assume, pay, perform or discharge any other obligations, claims,
liabilities, costs or expenses of Seller, including without limitation any of
the following: (i) any liability in respect of separation or severance pay to
any person employed by Seller; (ii) any liability under any plan, fund,
program, policy or arrangement under which any persons are provided or
promised pensions, retirement income, deferred compensation or profit-
sharing; (iii) any liability under any plan, fund, program or arrangement
under which any persons are provided or promised bonuses, incentive pay,
severance pay, vacations or vacation pay, salary continuation, medical
insurance or benefits, savings benefits, stock options, life insurance or
death benefits, travel or accident benefits or unemployment benefits; (iv)
any liability for occupational health and safety or environmental matters;
(v) any liability of Seller (including without limitation any liability or
potential liability with respect to any consolidated return filed or to be
filed by any person) for federal, state or local income or other taxes or
penalties or interest thereon; (vi) any pending or threatened litigation
against Seller or any affiliate of Seller; (vii) any intercompany loans,
advances or other obligations owed by Seller to any affiliate of Seller; and
(viii) liability of any kind, direct or indirect, fixed or contingent,
arising out of, resulting from or relating to actions taken or omitted to be
taken by Seller prior to, on or after the Closing Date.
(b) Notwithstanding anything to the contrary in this Agreement, to the
extent that the assignment hereunder of any Material Contract shall require
the consent of any other party (or in the event that any of the same shall be
non-assignable), neither this Agreement nor any action taken pursuant to its
provisions shall constitute an assignment or an agreement to assign if such
assignment or attempted assignment would constitute a breach thereof or
result in the loss or diminution thereof; provided, however, that in each
such case, Seller and the Stockholder shall use their best efforts to obtain
the consent of such other party to an assignment to Buyer. If such consent is
not obtained and is waived by Buyer prior to the Closing, Seller and the
Stockholder shall cooperate with Buyer in any reasonable arrangement designed
to provide for Buyer the benefits under any such contract from and after the
Effective Time.
1.5 Closing. The closing of the transactions contemplated hereby (the
"Closing") shall take place at 3:00 p.m., local time, on January 12, 2000, at
the officers of Sperry Young & Xxxxxxxxxx, at 0000 X. Xxxxxxxx Xx., Xxxxx
000, Xxx Xxxxx, Xxxxxx, or on such other date or at such other place as the
parties may agree. The date and time of the Closing are sometimes referred to
herein as the "Closing Date".
1.6 Effective Time. The "Effective Time" shall mean 12:01 a.m., Las
Vegas local time, on January 13, 2000. The parties agree that (i) between the
Closing Date and the Effective Time the business of Skylink Network shall be
operated for the benefit of and at the risk of Seller and the Stockholder
(with Seller hereby agreeing to insure against and hold Buyer harmless with
respect to risk of loss or damage to the Assets during such time) and (ii)
the transfer of the Assets to Buyer and the assumption of any liabilities
hereunder by Buyer shall be effective from and after the Effective Time
without further action by the parties hereto.
ARTICLE 11
Representations and Warranties of Buyer
Buyer hereby represents and warrants to Seller and Stockholder that:
2.1 Corporate Organization. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of Nevada and has all
requisite power and authority to enter into this Agreement, perform its
obligations hereunder and consummate the Asset Purchase.
2.2 Authorization. All necessary and appropriate corporate action has
been taken by Buyer with respect to the execution and delivery of this
Agreement and the performance of its obligations hereunder, and this
Agreement constitutes a valid and binding obligation of Buyer enforceable
against it in accordance with its terms.
2.3 Consents and Approvals. To the best of Buyer's knowledge, no
consent, approval, order or authorization of, or registration, declaration or
filing with, any governmental or regulatory authority or agency is required
in connection with the execution and delivery of this Agreement by Buyer or
its performance of the terms hereof or for the validity or enforceability
thereof.
2.4 No Conflict. Neither the execution and delivery of this Agreement
by Buyer nor the consummation by Buyer of the Asset Purchase will (i)
conflict with or result in a breach of any provision of the Articles of
Incorporation or Bylaws of Buyer, (ii) violate, conflict with or result in a
breach of any provision of, or constitute a default (or an event which, with
the giving of notice, the passage of time or otherwise, would constitute a
default) under, or entitle any party (with the giving of notice, the passage
of time or otherwise) to terminate, accelerate or cause a default under, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of Buyer, under any agreement,
indenture, or instrument, binding on Buyer or its properties or assets, or
(iii) violate any judgment, order, decree, stipulation, injunction or charge
of any court, administrative agency or commission or other governmental
authority or instrumentality by which Buyer is bound.
ARTICLE III
Representations and Warranties of Seller and Stockholder
Seller and the Stockholder jointly and severally represent and warrant
to Buyer that;
3.1 Corporate Organization. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada.
Seller has all requisite power and authority and, except as set forth on the
Disclosure Schedule, all governmental licenses, authorizations, consents and
approvals necessary to own, lease and operate its respective properties and
conduct its respective businesses as presently or as currently proposed to be
conducted. Seller is not qualified to do business as a foreign corporation in
any jurisdiction, and neither the nature of the business conducted by it nor
the property it owns, leases or operates requires it to qualify to do
business as a foreign corporation in any jurisdiction except where the
failure to be so qualified would not have a Material Adverse Effect on
Seller. "Material Adverse Effect" as used in this Agreement means, with
respect to any event, act, condition or occurrence, a material adverse effect
upon any of (i) with respect to Seller, the properties, assets, liabilities,
business, results of operations, prospects or condition (financial or
otherwise) of Seller, and (ii) with respect to the Seller, the Stockholder or
Buyer, the ability of either Seller, the Stockholder or Buyer, as the case
may be, to consummate the Asset Purchase or to perform their obligations set
forth herein.
3.2 Authorization. Seller has the power and authority, and Stockholder
has the capacity and legal right, to execute, deliver and perform this
Agreement and to consummate the Asset Purchase. This Agreement has been
executed and delivered by the Seller and Stockholder and constitutes the
valid and binding obligation of each of them. Seller's Board of Directors and
the Stockholder have approved the execution, delivery and performance of this
Agreement by Seller.
3.3 Consent and Approvals. To the best of Seller's and each
Stockholder's knowledge, and except as set forth in the disclosure schedule
attached hereto (the "Disclosure Schedule"), no consent, approval, order or
authorization of, or declaration or filing with, any governmental or
regulatory authority or agency is required in connection with the execution
and delivery of this Agreement by Seller and such Stockholder or its and his
performance of the terms hereof or for the validity or enforceability thereof
as to it and him.
3.4 Litigation. Except as set forth in the Disclosure Schedule, there
is no claim, litigation, arbitration, action, suit, proceeding, investigation
or inquiry, administrative or judicial, pending or, to the best knowledge of
Seller and Stockholder, threatened, against Seller or Seller's assets or
business, at law or in equity, before any federal, state or local court,
regulatory agency, or governmental authority which is reasonably likely to
have a Material Adverse Effect on Seller. Except as set forth on the
Disclosure Schedule, Seller is not a party to or subject to the provisions of
any judgment which may have a Material Adverse Effect on it.
3.5 Stock Ownership and Authority. The Stockholder owns beneficially
and of record all the stock.
3.6 No Conflicts. Except as set forth on the Disclosure Schedule,
neither the execution and delivery of this Agreement by Seller and
Stockholder nor the consummation by Seller and Stockholder of the Asset
Purchase will (i) conflict with or result in a breach of any provision of the
Articles of Incorporation or the Bylaws of Seller, (ii) violate, conflict
with or result in the breach of any term, condition or provision under any
law or regulation applicable to Seller or Stockholder or any of Seller's
assets, (iii) except for third-party consents to assignment required under
the Material Contracts, violate, conflict with or result in a breach of any
provision of, or constitute a default (or an event which, with the giving of
notice, the passage of time or otherwise, would constitute a default) under,
or entitle any party (with the giving of notice, the passage of time or
otherwise) to terminate, accelerate or cause a default under, or result in
the creation of any lien, security interest, charge or encumbrance upon any
of the properties or assets of Seller under, any agreement, indenture, or
instrument binding on Seller or Stockholder or upon any of their respective
properties or assets, or (iv) violate any judgment, order, decree,
stipulation, injunction or charge of any court, administrative agency or
commission or other governmental or regulatory authority or instrumentality
by which Seller or either Stockholder is bound.
3.7 Title to Assets. Except as set forth on the Disclosure Schedule,
Seller has marketable title to all furniture, fixtures, equipment, and
machinery (the "Fixed Assets") and good title to all other Assets, in all
cases free and clear of all liens, charges, security interests or other
encumbrances of any nature whatsoever other than statutory liens for taxes.
Except as set forth in the Disclosure Schedule, including the Cisco 7513
router subject to lease, all of the Fixed Assets are usable in the regular
and ordinary course of business.
3.8 Compliance with Laws; Authorization. To the best of Seller's
knowledge, except as set forth on the Disclosure schedule, Seller is in
compliance in all material respects with all applicable laws, statutes,
orders, rules, regulations, policies or guidelines promulgated, or judgments,
decisions or orders entered, by any federal or state court or governmental
authority applicable to Seller, its business or its properties (collectively,
the "Applicable Laws"). To the best of Seller's knowledge, except as set
forth on the Disclosure Schedule, Seller is not under investigation with
respect to, nor has it been charged with or given notice of any violation of,
any of the Applicable Laws. For purposes hereof, Seller will be deemed in
compliance in all material respects with Applicable Laws if a violation
thereof would not have a Material Adverse Effect on the continued operations
of Seller in the manner in which it is currently conducting its business.
ARTICLE IV
Conditions Precedent to Obligations
4.1 Conditions to Obligations of Buyer. Each and every obligation of
Buyer to be performed under this Agreement shall be subject to the
satisfaction by Seller and the Stockholder at or prior to the Closing Date of
each of the following conditions (unless waived in writing by Buyer);
(a) Representations and Warranties. The representations and
warranties set forth in Article III of this Agreement shall have been true
and correct in all material respects when made and shall be true and correct
in all material respects at and as of the Closing Date as though such
representations and warranties were made as of the Closing Date.
(b) Performance of Agreement. Seller and Stockholder shall have
fully performed and complied with the covenants, conditions and other
obligations under this Agreement which are to be performed or complied with
by them at or prior to the Closing Date.
(c) Consents. All applicable third-party approvals or consents,
including consents and approvals under Material Contracts, shall have been
received or satisfied.
(d) No Adverse Change. There shall not have been any Material
Adverse Effect with respect to Seller or its business since the date of this
Agreement.
(e) No Adverse Proceeding. There shall not be pending or
threatened any claim, action, litigation or proceeding (judicial or
administrative) or governmental investigation against Buyer, Seller or
Stockholder for the purpose of enjoining or preventing the consummation of
this Agreement, or otherwise claiming that this Agreement or the consummation
of the Asset Purchase is illegal.
(f) Certificate. Seller shall have delivered to Buyer at the
Closing a certificate signed on its behalf by one of its officers, dated the
date of Closing, to the effect that the conditions set forth in subsections
(a) through (e) of this Section 4.1 have been satisfied to the best knowledge
of such officer.
(g) Employee Agreement and Option Agreement. At the Closing, the
Stockholder will execute and deliver to Buyer an employment agreement (the
"Employment Agreement") and an option agreement (the "Option Agreement")
substantially in the form of Exhibits D and E attached hereto.
4.2 Conditions of Seller and Stockholder. Each and every obligation of
Seller and Stockholder to be performed under this Agreement shall be subject
to the satisfaction by Buyer at or prior to the Closing Date of the following
conditions (unless waived in writing by Seller and Stockholder):
(a) Representations and Warranties. The representations and
warranties of Buyer set forth in Article II of this Agreement shall have been
true and correct when made, and shall be true and correct at and as of the
Closing Date as though such representations and warranties were made as of
the Closing Date.
(b) Performance of Agreement. Buyer shall have fully performed and
complied with the covenants, conditions and other obligations under this
Agreement which are to be performed or complied with by it at or prior to the
Closing Date.
(c) Consents. All applicable third-party approvals or consents
shall have been received or satisfied.
(d) No Adverse Proceedings. There shall not be pending or
threatened any claim, action, litigation or proceeding (judicial or
administrative) or governmental investigation against Buyer, Seller or
Stockholder for the purpose of enjoining or preventing the consummation of
the Asset Purchase, or otherwise claiming that this Agreement or the
consummation of the Asset Purchase is illegal.
(e) Certificate. Buyer shall have delivered to Seller at the
Closing a certificate signed on its behalf by one of its officers, dated the
date of the Closing Date, to the effect that the conditions set forth in
subsections (a) through (d) of this Section 4.2 have been satisfied to the
best knowledge of such officer.
(f) Purchase Price. Buyer shall have paid the Purchase Price at
the Closing in accordance with Section 1.3 hereof.
(g) Employee Agreements and Option Agreements. At the Closing,
Buyer will execute and deliver to Stockholder the Employment Agreements and
the Option Agreements.
(h) No Adverse Change. There shall not have been any Material
Adverse Effect with respect to Buyer or its business since the date of this
Agreement.
ARTICLE V
Closing
5.1 Deliveries of Seller at Closing. At the Closing, Seller and the
Stockholder will deliver or cause to be delivered to Buyer the following at
Seller's expense:
(a) Certified copies of minutes reflecting the authorization by
the Board of Directors of Seller and by the Stockholder of the execution,
delivery and performance of this Agreement and consummation of the Asset
Purchase.
(b) The Option Agreement and the Employment Agreement.
(c) A Xxxx of Sale in form satisfactory to Buyer.
5.2 Deliveries of Buyer at Closing. At the Closing, Buyer will deliver
or cause to be delivered to Seller the following;
(a) The Purchase Price as set forth in Section 1.3(a) hereof;
(b) The Option Agreement and the Employment Agreement;
(c) The certificate referred to in Section 4.2(e) of this
Agreement;
(d) Certified copies of resolutions adopted by the Board of
Directors of Buyer authorizing the execution, delivery and
performance of this Agreement and consummation of the Asset
Purchase.
ARTICLE VI
Indemnification
6.1 Survival of Representations, Warranties and Agreements. Subject to
the limitations set forth in Section 6.3 of this Agreement, all
representations, warranties and covenants of the parties contained herein
shall survive execution and delivery of this Agreement.
6.2 Indemnification.
(a) Subject to the limitations set forth in Section 6.3 of this
Agreement, Seller and the Stockholder hereby covenants and agrees jointly and
severally to indemnify and hold harmless Buyer, from and against any and all
losses, liabilities, damages, demands, claims, suits, actions, judgments or
causes of action, assessments, costs and expenses, including, without
limitation, interest, penalties, attorney's fees, any and all expenses
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts
paid in settlement of any claim or litigation (collectively, "Damages"),
asserted against, resulting to, imposed on or incurred or suffered by Buyer
directly or indirectly, as a result of or arising from (i) any breach of any
of the representations, warranties or covenants made by Seller and the
Stockholder, (ii) any liability of Seller not specifically assumed by Buyer
hereunder, (iii) any Federal income Taxes attributable to Seller, any state,
local or foreign income or franchise Taxes attributable to Seller, or any
sales, use or similar Taxes for any Pre-Effective Tax Period, and (iv)
Seller's operation of the business prior to the Effective Time (collectively,
"Buyer's Indemnifiable Claims").
(b) Buyer hereby covenants and agrees to indemnify and hold
harmless Seller and the Stockholder, as the case may be, from and against any
and all Damages asserted against, resulting to, imposed on or incurred or
suffered by Seller or Stockholder, directly or indirectly, as a result of or
arising from (i) any breach of any of the representations, warranties or
covenants made by Buyer in this Agreement, (ii) any liability specifically
assumed by Buyer hereunder and (iii) Buyer's operation of the business after
the Effective Time (other than Damages arising from or as a result of either
Stockholder's gross negligence or willful misconduct) (collectively,
"Seller's Indemnifiable Claims").
(c) Buyer's Indemnifiable Claims and Seller's Indemnifiable Claims
are collectively referred to hereinafter as "Indemnifiable Claims."
6.3 Limitations on Indemnification. Rights to Indemnification hereunder
are subject to the following limitations:
(a) The obligations of indemnity provided herein with respect to
the representations and warranties set forth in Articles II and III shall
terminate on the second anniversary of the Closing Date.
(b) The foregoing provisions of this Section notwithstanding, if,
prior to the termination of any obligation to indemnify as provided for
herein, written notice of a claimed breach is given by Buyer, Seller or the
Stockholder, or a suit or action based upon a claimed breach is commenced
against any party, no party shall be precluded from pursuing such claimed
breach or suit or action, or from recovering from the other party hereunder
(whether through the courts or otherwise) on the claim, suit or action, by
reason of the termination otherwise provided for above.
6.4 Procedure for Indemnification with Respect to Third-Party Claims.
(a) If a party (the "Indemnitee") determines to seek
indemnification under this Article with respect to Indemnifiable Claims
resulting from the assertion of liability by third parties, it shall give
notice to the other party (the "Indemnifying Party") within 30 days of the
Indemnitee's becoming aware of any such Indemnifiable Claim; the notice shall
set forth such information with respect thereto as is then reasonably
available to the Indemnitee. In case any such liability is asserted against
the Indemnitee, and the Indemnitee notifies the Indemnifying Party thereof,
the Indemnifying Party will be entitled, if it so elects by written notice
delivered to the Indemnitee within 30 days after receiving the Indemnitee's
notice, to assume the defense thereof with counsel reasonably satisfactory to
the Indemnitee at all times during the defense of such liability.
Notwithstanding the foregoing, (i) the Indemnitee shall also have the right
to employ its own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of the Indemnitee (so long as the
Indemnifying Party continues to defend such matter); (ii) the Indemnitee
shall not have any obligation to give any notice of any assertion of
liability by a third party unless such assertion is in writing; and (iii) the
rights of the Indemnitee to be indemnified hereunder in respect of
Indemnifiable Claims shall be deemed forfeited by its failure to give notice
pursuant to the foregoing only to the extent that the Indemnifying Party is
materially prejudiced by such failure to give notice. With respect to any
assertion of liability by a third party that results in an Indemnifiable
Claim, the parties hereto shall make reasonably available to each other all
relevant information in their possession material to any such assertion. The
Indemnifying Party may not compromise or settle an Indemnifiable Claim
without the written consent of the Indemnitee.
(b) In the event that the Indemnifying Party, within 30 days after
receipt of the aforesaid notice of an Indemnifiable Claim, fails to assume
the defense of the Indemnitee against such Indemnified Claim, the Indemnitee
shall have the right to undertake the defense and to compromise or settle
such action on behalf of and for the account and risk of the Indemnifying
Party.
6.5 Procedure for Indemnification with Respect to Non-Third-Party
Claims. If the Indemnitee asserts the existence of an Indemnifiable Claim
giving rise to Damages (but excluding claims resulting from the assertion of
liability by third parties), it shall give written notice to the Indemnifying
Party specifying the nature and amount of the claim asserted. If the
Indemnifying Party, within 30 days after the mailing of notice by the
Indemnitee, shall not give written notice to the Indemnitee announcing its
intent to contest such assertion of the Indemnitee, such assertion by the
Indemnitee shall be deemed accepted and agreed to by the Indemnifying Party.
ARTICLE VII
Covenants
7.1 Covenant Not to Compete. (a) Except as limited to Stockholder's
ownership of the domain name XxxXxxxXxxXxxx.xxx which shall remain the right
of Stockholder, the Stockholder covenants and agrees that, for a period of
two years following the date hereof, except on behalf of Buyer, he shall not
engage, directly or indirectly, whether on his own account or as a
Stockholder, partner, joint venturer or agent of any person, firm,
corporation (including seller) or other entity, or otherwise, directly or
indirectly, in any or all of the following activities:
(i) Enter into or engage in the technical staffing business in the
Las Vegas, Nevada metropolitan area (the "Territory") (a "Competing
Business") as an officer, sales person, marketing agent, consultant,
supervisor or similar position; or
(ii) Solicit customers or business patronage for any Competing
Business; or
(iii) Promote or assist, financially or otherwise, any person,
firm, association, corporation or other entity engaged in any Competing
Business in the Territory; provided, however, that the foregoing covenant
shall not be deemed to have been violated by the ownership of shares of any
class of capital stock of any corporation (other than Seller) so long as the
aggregate beneficial or record holdings of Seller and its affiliates
(including Stockholder) represent less than five percent (5%) of the
outstanding shares of such class of capital stock.
(b) Injunctive Relief. If a Stockholder breaches the covenant provided
herein, or if Buyer shall have reason to believe that a Stockholder intends
to, or is attempting to, breach this covenant, then in any such event Buyer
shall be entitled to seek an injunction in any court having jurisdiction to
enforce this covenant, and shall be entitled to recover from such Stockholder
any and all damages resulting, directly or indirectly, from said breach.
(c) Reformation. If the time or area of limitations, or both, contained
in this covenant are held by any court of competent jurisdiction to be
unreasonable or otherwise unenforceable, such covenant shall nevertheless be
enforceable for such lesser time or area, or both, as the court shall find
reasonable. Stockholder acknowledge having consulted as to such covenant with
counsel, fully understand the content of the same and agree, in view of the
relevant facts, that the limitations contained herein are reasonable.
7.2 Covenant Against Hiring. Seller and the Stockholder understand that
in Buyer's view it is essential to the successful operation of a technical
staffing business in the Territory that Buyer retain substantially unimpaired
Seller's current operating organization. Seller and the Stockholder covenant
and agree that neither of them, nor any affiliate of either of them, without
the prior written consent of Buyer, shall take any action which would induce
any employee or representative of Seller prior to the Effective Time not to
become or continue as an employee or representative of Buyer.
7.3 Due Diligence Access. From the date of this Agreement until the
Closing, to enable Buyer to conduct due diligence, and following the Closing
to the extent needed by Buyer and its accountants to conduct and complete a
financial audit of Seller and its operations, Seller and the Stockholder
shall make or cause to be made available to Buyer: (i) members of management
of Seller for personal interviews; (ii) the Assets; and (iii) all books of
account, contracts, agreements, commitments, authorizations, insurance
policies, records and documents of every character relating to Seller's
business for examination. Accordingly, Seller and Stockholder shall permit
Buyer and its representatives, attorneys, accountants and agents to have
access to the same at all reasonable times and places.
7.4 Conduct of Interim Operations. From the date hereof to the Closing
Date:
(a) Affirmative Covenants. Seller shall do the following:
(1) Operations. Conduct its business as presently conducted in the
usual, regular, and ordinary course and scope, and do all things in the
ordinary course of business, consistent with past practice, necessary to
preserve, renew, and keep in full force and effect all rights and franchises
that are necessary to continue its business.
(2) Corporate Existence. Maintain its corporate existence, good
standing, and qualification to transact business in the State of Nevada.
(3) Compliance with Applicable Laws. Substantially comply with all
Applicable Laws and timely pay all amounts that, if unpaid, would have a
Material Adverse Effect on the Seller's business affairs or prospects.
(4) Insurance. Maintain all insurance.
(5) Litigation. Advise Buyer immediately of any lawsuit threatened
or filed against Seller or Stockholder.
(6) Payment of Debt. Duly and punctually pay all of Seller's
indebtedness in accordance with the terms and conditions of such indebtedness
as and when due.
(7) Material Loss. Immediately notify Buyer of any event causing
or that may reasonably be expected to cause a material loss to Seller with
respect to the Assets or result in a material decline in value of the Assets
or the Seller's business or prospects.
(8) Preservation of Business. Employ all reasonable efforts to
preserve the Seller's business intact, to keep available to Buyer the present
employees of the Seller, and to maintain good relations with suppliers and
customers and others having business relations with the Seller.
(b) Negative Covenants. Seller shall not do any of the following:
(1) New Encumbrances. Create, incur, assume, or suffer to exist
any new encumbrance (including, but not limited to, charges on property
purchased under conditional sales or other title retention agreements) on any
of the Assets other than in the ordinary course and scope of the Seller's
business.
(2) Disposition of Assets. Sell, dispose of, mortgage, pledge,
grant a security interest in or otherwise dispose of or encumber any Asset or
interests therein other than in the ordinary course and scope of the Seller's
business.
(3) Contracts. Enter into any contracts or agreements, or amend,
modify, or terminate any contracts or agreements, except in the ordinary
course and scope of the Seller's business;
7.5 Tax Covenants.
(a) Seller, Stockholder and Buyer shall reasonably cooperate, and shall
cause their respective affiliates, officers, employees, agents, auditors and
representatives reasonably to cooperate, in preparing and filing all Returns
relating to Taxes, including maintaining and making available to each other
all records necessary in connection with Taxes and in resolving all disputes
and audits with respect to all taxable periods relating to Taxes.
(b) All transfer, documentary stamp, sales, use, registration and other
such Taxes and related fees (including any penalties, interest and additions
to Tax) incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by Seller; and Buyer shall cooperate in
timely making all filings as may be required to comply with the provisions of
such Tax laws.
(c) Any personal property or similar taxes with respect to the Assets
attributable to the Pre-Effective Tax Period shall be borne by Seller.
7.6 Changes to Disclosure Schedule. Between the date of this Agreement
and the Closing Date, Seller and Stockholder shall promptly inform Buyer of
events, circumstances, or other developments that occur between such dates
that would have been described in the Disclosure Schedule had such events,
circumstances or other developments occurred on or prior to the date of this
Agreement. Having so informed Buyer, Seller and Stockholder shall provide
Buyer with such further information regarding such event, circumstance or
development as Buyer reasonably requests. Within three business days of
Buyer's receipt of such additional information, Buyer shall notify Seller and
Stockholder that: (i) Seller and Stockholder may amend the Disclosure
Schedule to describe such event, circumstance or other development, without
liability to Seller or Stockholder; or (ii) Buyer intends to terminate this
Agreement pursuant Section 8.1(b).
7.7 Liabilities. Seller shall pay all of its liabilities as they become
due, whether due prior to, on or after the Effective Time (other than
liabilities expressly assumed hereunder by Buyer).
ARTICLE VIII
Termination
8.1 Termination of Agreement. This Agreement may be terminated at any
time prior to the Closing:
(a) by mutual written consent of all parties;
(b) by either Buyer or Seller and the Stockholder if any of the
representations or warranties of the other party contained herein shall be
inaccurate or untrue in an material respect and such inaccuracy cannot
reasonably be expected to be cured prior to the Closing;
(c) by either Buyer or Seller and the Stockholder if any obligation,
term or condition to be performed, kept or observed by such other party
hereunder has not been performed, kept or observed in any material respect at
or prior to the time specified in this Agreement;
(d) by either Buyer or Seller and the Stockholder if any permanent
injunction or other order of a court or other competent authority preventing
the consummation of the transactions contemplated by this Agreement shall
have become final and nonappealable;
(e) by either Buyer or Seller and the Stockholder, if not then in
material breach of any of its obligations hereunder, if the Closing has not
occurred by February 1, 2000.
Any termination pursuant to this Section 8.1 shall be effective upon
notice thereof having been given to the non-terminating party in accordance
with Section 9.2 hereof.
No party hereto shall be liable to any other party hereto if this
Agreement is terminated pursuant to Section 8.1(a), (b) or (d).
ARTICLE IX
Miscellaneous Provisions
9.1 No Negotiations by Seller and the Stockholder. Unless and until
this Agreement has been properly terminated pursuant to Article VIII hereof,
neither Seller nor either Stockholder shall directly or indirectly, through
any officer, director, agent, employee, representative or otherwise, make,
solicit, initiate or encourage the submission of proposals or offers, or
accept offers, from any person (including any of its officers or employees)
relating to any recapitalization, merger, consolidation or other business
combination involving Seller, any sale of all or a substantial portion of the
assets of Seller, or the sale of any material equity interest in Seller (any
of the foregoing, a "Competing Transaction"). During such period, neither
Seller nor the Stockholder shall, directly or indirectly, participate in any
negotiations regarding, furnish to any other person any information with
respect to, or otherwise cooperate, assist or participate in, any effort or
attempt by any third party to propose or effect any Competing Transaction.
Seller and the Stockholder shall notify Buyer of any Competing Transaction or
any inquiry relating to a possible Competing Transaction and shall deliver to
Buyer any information furnished to or by any such third party.
9.2 Notice. All notices, requests, demands and other communications
required or permitted under this Agreement shall be deemed to have been duly
given and made if in writing and served either by personal delivery (which
shall include delivery by Federal Express or similar services) to the party
for whom it is intended or by being deposited postage prepaid, certified or
registered mail, return receipt requested (or such form of mail as may be
substituted therefore by postal authorities), in the United States mail,
bearing the address shown in this Agreement for, or such other address as may
be designated in writing hereafter by, such party:
If to Buyer: With a copy to:
Mirage Computers, Inc. Xxxxxx X. Xxxxxxxxxx, Esq.
0000 Xxxxx Xxxxx Xx. Sperry Young & Xxxxxxxxxx
Xxx Xxxxx, Xxxxxx 00000 0000 X. Xxxxxxxx Xx. Xxxxx 000
Xxxx: Xxxxxx X. Xxxxxxx Xxx Xxxxx, Xxxxxx 00000
If to Stockholder or Seller: With a copy to:
Xxx Xxxxxx Xxxx X. Xxxxxxxx, Esq.
0000 Xxxxx Xxxxxxxxxx Xxxx 0000 X. Xxxxx Xxxxxx Xxxxxxx
Xxxxx X Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000 Xxxxxxxxx, XX 00000
9.3 Entire Agreement. This Agreement, the Exhibits, the Appendices and
the Disclosure Schedule embody the entire agreement and understanding of the
parties hereto with respect to the subject matter hereof, and supersede all
prior agreements and understandings relative to said subject matter.
9.4 Binding Effect; Assignment. This Agreement and the various rights
and obligations arising hereunder shall inure to the benefit of and be
binding upon Buyer, its representatives, successors and assigns, and Seller,
its representatives, successors and assigns, and each Stockholder, his heirs,
legal representatives and assigns. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be transferred or assigned
(by operation of law or otherwise) by any party hereto without the prior
written consent of the other parties, except that Seller shall assign its
rights hereunder, including all rights to the Share Portion and the Option
Portion, to the Stockholder upon dissolution of Seller.
9.5 No Third-Party Beneficiaries. Nothing herein, expressed or implied,
is intended or shall be construed to confer upon or give to any person, firm,
corporation or legal entity, other than the parties hereto, any rights,
remedies or other benefits under or by reason of this Agreement.
9.6 Counterparts. This Agreement may be executed simultaneously in
multiple counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
9.7 Expenses. Each of the parties hereto will bear its own costs and
expenses (including legal, accounting and consulting fees and expenses)
incurred in connection with this Agreement and the Asset Purchase.
9.8 Waiver; Consent. This Agreement may not be changed, amended,
terminated, rescinded or discharged (other than in accordance with its
terms), in whole or in part, except by a writing executed by the parties
hereto, and no waiver of any of the provisions or conditions of this
Agreement or any of the rights of a party hereto shall be effective or
binding unless such waiver shall be in writing and signed by the party
claimed to have given or consented thereto.
9.9 Other and Further Covenants. The parties shall, in good faith,
execute such other and further instruments, assignments or documents as may
be necessary for the consummation of the transactions contemplated by this
Agreement, and shall assist and cooperate with each other in connection with
these activities.
9.10 Governing Law. This Agreement shall in all respects be construed in
accordance with and governed by the laws of the State of Nevada, without
regard to any, such laws relating to choice or conflict of laws.
9.11 Public Announcements. Neither Buyer nor Seller shall, without the
prior written consent of the other, make any public announcement or any
release to trade publications or to the press or make any statement to any
competitor, customer or any other third party with respect to the
transactions contemplated herein, except such announcement, release or
statement necessary in the opinion of its counsel to comply with applicable
requirements of law. The parties hereto agree that upon execution of this
Agreement and on the Closing Date, they shall jointly prepare press releases
for appropriate dissemination.
9.12 Miscellaneous. All shares issued for the Stock Portion of the
purchase price shall be subject to full "piggy-back" registration rights.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
SKYLINK NETWORK, INC. MIRAGE COMPUTERS, INC.
By: /s/ Xxx Xxxxxx By: /s/ Xxx Xxxxxxxxxxx
Xxx Xxxxxx, President Xx. Xxx Xxxxxxxxxxx, President
STOCKHOLDER:
/s/ Xxx Xxxxxx
Xxx Xxxxxx
EXHIBIT A-1
EXCLUDED ASSETS
The domain name of XxxXxxxXxxXxxx.xxx.
