ASSET PURCHASE AGREEMENT
among
SKYLYNX COMMUNICATIONS, INC.
a Colorado corporation,
and
SKYLYNX COMMUNICATIONS OF PACIFIC NORTHWEST, INC.
a Delaware corporation,
and
XXXXXX.XXX, INC.
a Washington corporation,
and
Xxxxx Xxxx and Xxxx Xxxxx
TABLE OF CONTENTS
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Page
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RECITALS 1
TERMS OF AGREEMENT 1
ARTICLE 1 PURCHASE AND SALE OF ASSETS 1
1.1 Description of Assets 1
1.2 Non-Assignment of Certain Customer Accounts 3
1.3 Accounts Receivable 3
1.4 Proration of May 1999 Net Income 4
1.5 Change of Names 4
ARTICLE 2 PURCHASE PRICE AND RETENTION 4
2.1 Purchase Price 4
2.2 Liabilities 4
ARTICLE 3 CLOSING 5
3.1 Time and Place 5
3.2 Deliveries by Seller and Shareholders 5
3.3 Payment of Purchase Price 5
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PURCHASER AND SKYLYNX 6
4.1 Corporate Status 6
4.2 Corporate Power and Authority 6
4.3 Enforceability 6
4.4 No Violation 6
4.5 SkyLynx Common Stock 7
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE SELLERS 7
5.1 Corporate Status 7
5.2 Power and Authority 7
5.3 Enforceability 8
5.4 Y2K. 8
5.5 Subsidiaries 8
5.6 No Violation 8
5.7 Taxes 8
5.8 No Commissions 8
5.9 Financial Statements 8
5.10 Changes Since the Current Balance Sheet 9
5.11 Litigation 9
5.12 Liabilities. 9
5.13 Indebtedness 10
5.14 Environmental Matters 10
5.15 Real Property, Leases and Significant Personal Property 10
5.16 Good Title, Adequacy and Condition 11
5.17 Compliance with Laws 11
5.18 Absence of Certain Changes or Events 11
5.19 Intellectual Property 11
5.20 Accounts Receivable 12
5.21 Licenses and Permits 12
5.22 Contracts, Customer Lists and Employment Matters 12
5.23 Predecessor Status, Etc 13
5.24 Spin-Off by Seller 13
5.25 Records of Seller 13
5.26 Accuracy of Information Furnished by Seller and the
Shareholders 13
5.27 Investment Intent 13
5.28 Acknowledgment Regarding Disclosure of Certain Materials 13
5.29 Survival 14
ARTICLE 6 CONDUCT OF BUSINESS PENDING THE CLOSING 14
6.1 Conduct of Business by Seller Pending the Closing 14
ARTICLE 7 CERTAIN AGREEMENTS AND COVENANTS OF THE PARTIES 15
7.1 Further Assurances 15
7.2 Confidentiality, Publicity 15
7.3 No Other Discussions 16
7.4 Due Diligence Investigation 16
7.5 Related Party Agreements 16
7.6 Cooperation 16
7.7 Other Actions 16
7.8 Notification of Certain Matters 17
7.9 Payoff and Estoppel Letters 17
7.10 Accounting Treatment 17
7.11 Covenant Not to Compete 17
7.12 Employment 19
ARTICLE 8 CONDITIONS TO THE OBLIGATIONS OF PURCHASER AND SKYLYNX 19
8.1 Accuracy of Representations and Warranties; Compliance
with Obligations 20
8.2 No Material Adverse Change or Destruction of Property 20
8.3 Corporate Certificate 20
8.4 Consent 20
8.5 No Adverse Litigation 20
8.6 Opinion of Counsel 20
8.7 General 21
ARTICLE 9 CONDITIONS TO THE OBLIGATIONS OF THE SELLERS 21
9.1 Accuracy of Representations and Warranties and Compliance with
Obligations 21
9.2 Other Conditions 21
9.3 Corporate Certificates 21
9.4 No Adverse Litigation 21
ARTICLE 10 NON-ASSUMPTION OF LIABILITIES; INDEMNIFICATION 21
10.1 Non-Assumption of Liabilities; Indemnification 21
10.2 Assumption of Specific Liabilities 22
10.3 Survival of Representations and Warranties 22
10.4 Matters Involving Third Parties 23
ARTICLE 11 SECURITIES LAW MATTERS 23
11.1 Disposition of Shares 23
11.2 Legend 23
11.3 Contractual Restriction Legend 24
11.4 Delivery of the Hold Back Shares 24
11.5 No Bar 24
ARTICLE 12 DEFINITIONS 25
12.1 Defined Terms 25
ARTICLE 13 TERMINATION, AMENDMENT AND WAIVER 26
13.1 Termination 26
13.2 Effect of Termination 26
ARTICLE 14 GENERAL PROVISIONS 26
14.1 Notices 26
14.2 Entire Agreement 28
14.3 Expenses 28
14.4 Amendment; Binding Effect; Assignment 28
14.5 Counterparts 28
14.6 Governing Law: Interpretation 28
14.7 Access to Records 28
14.8 Attorneys' Fees 28
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is entered into and
made effective as of May 6, 1999 ("Effective Date"), by and among SKYLYNX
COMMUNICATIONS, INC., a Colorado corporation ("SkyLynx"), SKYLYNX
COMMUNICATIONS OF PACIFIC NORTHWEST, INC., a Delaware corporation, a wholly-
owned subsidiary of SkyLynx ("Purchaser"), XXXXXX.XXX, INC., a Washington
corporation ("Seller"), and each of those persons, jointly and severally, who
are all of the shareholders of Seller, namely: Xxxxx Xxxx and Xxxx Xxxxx,
which persons are hereinafter collectively referred to as the "Shareholders."
Shareholders and Seller are hereinafter collectively referred to as the
"Sellers." Certain other capitalized terms used herein are defined in
Article 12 and throughout this Agreement.
RECITALS
A. Seller is engaged in the business of providing internet service
(the "Business") with its headquarters located at 6627 South 191st Place,
Suite F100, in Kent, Washington, and is qualified to do business in the State
of Washington;
B. Seller has facilities and operations in the State of Washington;
C. The Shareholders hold all of the outstanding capital stock of
Seller, and Purchaser is unwilling to enter into this Agreement without the
covenants and promises of Shareholders herein set forth; and
D. Purchaser desires to purchase and acquire certain assets,
properties, and contractual rights of Seller used in connection with the
Business, and Seller desires to sell such assets, properties, and contractual
rights to Purchaser, all on the terms and subject to the conditions
hereinafter set forth.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants
and agreements contained herein, the parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 DESCRIPTION OF ASSETS. Upon the terms and subject to the
conditions set forth in this Agreement, Seller does hereby grant, convey,
sell, transfer and assign to Purchaser the following assets, properties, and
contractual rights of Seller (collectively, the "Assets"), wherever located,
subject to the exclusions hereinafter set forth:
(a) all machinery, leasehold improvements, construction in
progress, furniture and fixtures, computer equipment and monitors, routers,
servers, computer software, and any other fixed assets owned by Seller and
used in the operations of the Business, including, without limitation, the
fixed assets listed on Schedule 1.1(a) attached hereto and made a part hereof
(the "Equipment");
(b) all real property interests (whether owned or leased) used
or for use in the Business (the "Real Property"), as specifically described on
Schedule 1.1(b) attached hereto and made a part hereof, and all improvements
thereon;
(c) all motor vehicles used or for use in the Business, and all
radios, attachments, and accessories now located in or on such motor vehicles
(the "Rolling Stock"), as the same are listed and more completely described by
manufacturer, model number and model year on Schedule 1.1(c), attached hereto
and made a part hereof;
(d) all of Seller's interests and rights and benefits under any
leases of machinery, vehicles, equipment, tools, furniture, fixtures or other
fixed assets;
(e) all contractual rights of Seller with Seller's customers
(whether oral or in writing, and including without limitation all ISP Service
Agreements and Customer Agreements to which Seller is a party, and all
accounts receivable relating to services prior to the Closing (the "Accounts
Receivable"), which relate to the conduct of the Business and all other rights
to provide services to customers of Seller (the "Customer Accounts"), and all
commitments, lists, leases, permits, licenses, consents, approvals, franchises
and other instruments relating to the Customer Accounts (the "Related
Documents"); a complete and accurate list of the Customer Accounts and the
Related Documents is set forth on Schedule 1.1(e), attached hereto and made a
part hereof, and true and complete copies of all Customer Accounts (or
descriptions of unwritten arrangements) and Related Documents in printed or in
electronic format shall be delivered to Purchaser simultaneously with the
execution and delivery of this Agreement;
(f) the contracts and other agreements to which Seller is a
party listed on Schedule 1.1(f) (the "Assumed Contracts");
(g) all of Seller's inventory of parts, supplies and accessories
of every kind, nature and description used or for use in connection with the
Business (the "Inventory");
(h) all proprietary rights of Seller, including, without
limitation, all right, title and interest of Seller in and to all trade
secrets, slogans, processes, rights, symbols, trademarks, service marks,
logos, and trade names used in the Business;
(i) all permits, licenses (including Class C licenses),
franchises, consents and other approvals and operating rights relating to the
Business that are assignable or transferable, which are more completely
described and set forth on Schedule 1.1(i), attached hereto and made a part
hereof, true and complete copies of which are attached to Schedule 1.1(i);
(j) all communications equipment (together with any rights to
frequencies related thereto) used in connection with the Business, wherever
located;
(k) all right, title and interest of Seller in and to all
telephone and telecopier numbers used by Seller in the conduct of the
Business;
(l) all of Seller's right, title and interest in and to the name
"XxxXxx.Xxx", and any other names used in connection with the Business and the
rights to use such names (the "Business Names");
(m) all manual and automated routing and billing information and
components thereof, including, without limitation, all routing and billing
computer software and programs containing any customer information;
(n) all operating data and records of Seller, including, without
limitation, all of Seller's existing documents, files and other material
related to all current or past customers of the Business, financial,
accounting and credit records, correspondence, budgets and other similar
documents and records;
(o) all of the good will of the Business;
(p) all cash, securities, investment property, and other such
assets of Seller, including all amounts on deposit with Seller; and
(q) all other tangible and intangible assets used in the
Business, including those set forth on Seller's balance sheet dated as of
December 31, 1998, a copy of which is attached as Schedule 1.1(q) hereto.
All of the foregoing assets, properties and contractual rights described in
Section 1.1(a) through (q) are hereinafter sometimes collectively called the
"Assets."
1.2 NON-ASSIGNMENT OF CERTAIN CUSTOMER ACCOUNTS. Notwithstanding
anything to the contrary in this Agreement, to the extent that the assignment
hereunder of any Customer Account shall require the consent of any third
party, 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 shall
use its best efforts to obtain the consent of such other party to such
assignment to Purchaser. If such consent is not obtained, Seller shall
cooperate with Purchaser in any reasonable arrangement designed to provide for
Purchaser the benefits under any such Customer Account, including, without
limitation, an adjustment of the Purchase Price set forth in Section 2.1
hereof and enforcement for the account and benefit of Purchaser, of any and
all rights of Seller against any other person arising out of the breach or
cancellation of any such Customer Account by such other person, or otherwise.
Attached hereto as Schedule 1.2 is a list of all Customer Accounts requiring
consent to their assignment.
1.3 ACCOUNTS RECEIVABLE. As described in Section 1.1(e) above, the
Accounts Receivable are to be conveyed to Purchaser at the Closing. However,
if Seller receives any payments after the Closing in connection with the
Accounts Receivable, then Seller shall forward such payments to Purchaser on a
regular basis (but at least monthly), together with an itemized list of the
sources thereof. Attached hereto as Schedule 1.3 is a true and complete list
of all Accounts Receivable of Seller as of April 30, 1999.
1.4 PRORATION OF MAY 1999 NET INCOME. As of the date which is
seventy-five (75) days after the Closing Date, Purchaser and Seller shall meet
to account for amounts paid in respect of Accounts Receivable relating to
services performed for customers in the month of May 1999, and the amount of
expenses incurred or paid in respect of May 1999 ("May 1999 Expenses"). To
the extent that May 1999 Revenues exceed May 1999 Expenses (with the
difference being "May 1999 Net Income"), Seller shall be entitled to a portion
thereof equal to May 1999 Net Income times a fraction, the numerator of which
equals the number of days prior to the Closing Date in May and the denominator
of which is 31.
1.5 CHANGE OF NAMES. On the Closing Date, Seller shall cease doing
business under Seller's current Business Names or any name the same as or
similar to XxxXxx.Xxx or any other symbol, trademark, service xxxx, logo, or
trade name now used by Seller. Seller shall, on the Closing Date, deliver to
Purchaser, in form suitable for filing, such certificates, consents and other
documents as are necessary to effect the transfer of the registration of the
Business Names conveyed by Seller pursuant to this Agreement in the State of
Washington and in any other relevant jurisdiction.
ARTICLE 2
PURCHASE PRICE AND RETENTION
2.1 PURCHASE PRICE. On the Closing Date, Purchaser shall deliver in
consideration for the Assets and the restrictive covenants set forth herein,
an aggregate of Four Hundred Thousand Dollars ($400,000) payable as follows:
(a) Two Hundred Thousand Dollars ($200,000) in immediately available funds to
Seller, and (b) that certain number of shares of Common Stock of SkyLynx,
$.001 par value, having an aggregate Market Value, as defined herein, equal to
Two Hundred Thousand Dollars ($200,000) (the "Shares"), which Shares shall be
issued equally to each of the Shareholders in consideration for the restricted
covenants set forth herein, including but not limited to, the covenant not to
compete, as described in Section 7.11; provided, however, that twenty percent
(20%) of the Shares (the "Hold Back Shares") shall be retained by Purchaser
for a period of one (1) year from the Closing Date (the "Hold Back Period") as
security for the obligations of the Sellers (including without limitation the
indemnification obligations set forth in Article 10 hereof), and Seller
acknowledges that forfeiture of the Hold Back Shares may be required pursuant
to Articles 10 and 11 hereof. In addition to all other rights and remedies
which Purchaser may have with respect to the Hold Back Shares, Purchaser shall
have all rights and remedies of a secured party under the Colorado Uniform
Commercial Code and other applicable law with respect to the Hold Back Shares.
It is agreed and understood that the Shares are "restricted securities" under
the Securities Act of 1933, as amended, and as such, such shares are
unregistered and are not readily tradeable in the public capital markets for a
period of at least one (1) year after their issuance.
2.2 LIABILITIES. Except in connection with obligations incurred after
the Closing in connection with contracts assumed by Purchaser hereunder,
Purchaser is not assuming any liabilities of Sellers. In particular, no
liabilities arising or accruing prior to the Closing are being assumed by
Purchaser hereunder.
ARTICLE 3
CLOSING
3.1 TIME AND PLACE. Subject to the terms and conditions of this
Agreement, the closing of the purchase and sale of the Assets (the "Closing")
shall take place on May 7, 1999, 10:00 a.m., P.S.T., or such other time
mutually agreed by both parties, at the offices of XxXxxxxxx, Will and Xxxxx
located at 0000 Xxxx Xxxx Xxxx, Xxxxx Xxxx, Xxxxxxxxxx, 00000. The date on
which the Closing occurs shall be referred to as the "Closing Date."
3.2 DELIVERIES BY SELLER AND SHAREHOLDERS. At the Closing, Seller and
Shareholders shall deliver to Purchaser the following executed documents:
(a) a General Conveyance, Assignment and Xxxx of Sale, in form
and substance satisfactory to Purchaser, and Sellers, conveying, selling,
transferring, and assigning to Purchaser all of the Assets (the "Xxxx of
Sale");
(b) Certificates of Title and/or registrations to the Rolling
Stock property endorsed to Purchaser;
(c) a receipt acknowledging payment by Purchaser of the Purchase
Price;
(d) fully executed consents to the assignment of the Customer
Accounts, if any, in form and substance satisfactory to Purchaser;
(e) the documents evidencing Seller's change of Business Names
as required by Section 1.5;
(f) a certified copy of the resolutions of the Shareholders and
directors of Seller authorizing the execution, delivery and performance of
this Agreement, the sale of the Assets to Purchaser, and the consummation of
the transactions contemplated herein, and a certificate of secretary of
Seller, dated the Closing Date, that such resolutions were duly adopted and
are in full force and effect, along with an incumbency certificate of Seller;
(g) required consents for assignment of leases, if any;
(h) the assignment of the Permits described on Schedule 5.21;
(i) an opinion of counsel to Seller and Shareholder, in form and
substance reasonably satisfactory to Purchaser;
(j) consents to the assignment of Assumed Contracts, if any; and
(k) such other documents or separate instruments of sale,
assignment or transfer reasonably required by Purchaser.
3.3 PAYMENT OF PURCHASE PRICE. Purchaser shall pay the Purchase Price
in accordance with Section 2.1.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND SKYLYNX
As a material inducement to Sellers to enter into this Agreement and to
consummate the transactions contemplated hereby, Purchaser and SkyLynx
represent and warrant to Sellers that the statements contained in this Article
4, except as set forth in any schedules to the subsections of this Article 4
delivered by Purchaser and SkyLynx to the Sellers on the date hereof (such
schedules hereinafter collectively referred to as the "Disclosure Schedules"
and, individually, as a "Disclosure Schedule"), if any, which schedules may be
required to be supplemented from time to time by Purchaser and SkyLynx after
the date of this Agreement in order to make such representations and
warranties true as of the date such representation and warranties are given:
(i) are correct and complete as of the date of this Agreement; (ii) will be
correct as of the Effective Date and the Closing Date (as though made then and
as though the Effective Date and the Closing Date, respectively, were
substituted for the date of this Agreement throughout this Article 4); and
(iii) shall survive the Closing.
4.1 CORPORATE STATUS. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and SkyLynx is a corporation duly organized, validly existing and in good
standing under the laws of the State of California. Each of Purchaser and
SkyLynx has the requisite power and authority to own or lease its respective
properties and to carry on its respective business as now being conducted.
4.2 CORPORATE POWER AND AUTHORITY. Each of Purchaser and SkyLynx has
the corporate power and authority to execute and deliver this Agreement, to
perform its respective obligations hereunder and to consummate the
transactions contemplated hereby. Each of Purchaser and SkyLynx has taken all
action necessary to authorize the execution and delivery of this Agreement,
the performance of its respective obligations hereunder and the consummation
of the transactions contemplated hereby.
4.3 ENFORCEABILITY. This Agreement has been duly executed and
delivered by Purchaser and SkyLynx and constitutes a legal, valid, and binding
obligation of Purchaser and SkyLynx, enforceable against Purchaser and SkyLynx
in accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting
the enforcement of creditors' rights generally and general equitable
principles regardless of whether such enforceability is considered in a
proceeding at law or in equity.
4.4 NO VIOLATION. The execution and consummation of this Agreement by
Purchaser and SkyLynx will not: (i) contravene any provision of the
certificate of incorporation or bylaws of Purchaser or articles of
incorporation or bylaws of SkyLynx; (ii) violate or conflict with any law,
statute, ordinance, rule, regulation, decree, writ, injunction, judgment, or
order of any Governmental Authority or of any arbitration award which is
either applicable to, binding upon, or enforceable against Purchaser or
SkyLynx; or (iii) require the consent, approval, authorization, or permit of,
or filing with or notification to, any Governmental Authority, any court or
tribunal or any other Person.
4.5 SKYLYNX COMMON STOCK. Upon the Closing and the issuance and
delivery of certificates representing the Shares to Shareholders, the Shares
will be validly issued, fully paid and non-assessable shares of Common Stock
of SkyLynx and subject to no Liens.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
As a material inducement to Purchaser and SkyLynx to enter into this
Agreement and to consummate the transactions contemplated hereby, the Sellers,
jointly and severally, represent and warrant to Purchaser and SkyLynx that the
statements contained in this Article 5, except as set forth in the Disclosure
Schedules to the subsections of this Article 5 delivered by the Sellers to
Purchaser and SkyLynx on the date hereof, if any, which Disclosure Schedules
may be required to be supplemented from time to time by the Sellers after the
date of this Agreement in order to make such representations and warranties
true as of the date such representations and warranties are given: (i) are
correct and complete as of the date of this Agreement; (ii) will be correct as
of the Effective Date and the Closing Date (as though made then and as though
the Effective Date and the Closing Date, respectively, were substituted for
the date of this Agreement throughout this Article 5); and (iii) shall survive
the Closing. Nothing in the Disclosure Schedules shall be deemed adequate to
disclose an exception to a representation or warranty made herein unless the
Disclosure Schedule identifies the exception with particularity and describes
the relevant facts in detail. In addition, nothing in the Disclosure
Schedules shall be deemed to limit the indemnification provisions set forth in
Article 10 hereof. Without limiting the generality of the foregoing, the mere
listing (or inclusion of a copy) of a document or other item shall not be
deemed adequate to disclose an exception to a representation or warranty made
herein (unless the representation or warranty has to do with the existence of
a document or other item itself). Nothing in this paragraph shall require the
disclosure of an exception on more than one (1) Disclosure Schedule made a
part of this Agreement; provided, however, that in all such instances, the
Disclosure Schedule on which the requested information is located must be
cross-referenced on the appropriate Disclosure Schedule.
5.1 CORPORATE STATUS. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Washington and is
in good standing and is qualified to conduct business under all applicable
laws, regulations, ordinances, and orders of Governmental Authorities to carry
on its business, including but not limited to, the laws of the State of
Washington and has the requisite power and authority to own or lease its
properties and to carry on the Business as now being conducted. Seller is
duly authorized and qualified, under all applicable laws, regulations,
ordinances, and orders of Governmental Authorities, to carry on the Business
in the places and in the manner as now conducted except where the failure to
be so authorized or qualified would not have a Material Adverse Effect on the
Business.
5.2 POWER AND AUTHORITY. Each of the Sellers has taken all action
necessary to authorize the execution and delivery of this Agreement, the
performance of his or its obligations hereunder and the consummation of the
transactions contemplated hereby. Each Seller has the requisite competence
and authority to execute and deliver this Agreement, to perform his or its
respective obligations hereunder and to consummate the transactions
contemplated hereby.
5.3 ENFORCEABILITY. This Agreement has been duly executed and
delivered by each Seller, and constitutes the legal, valid and binding
obligation of each Seller, enforceable against each Seller in accordance with
its terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting the
enforcement of creditors' rights generally and general equitable principles
regardless of whether such enforceability is considered in a proceeding at law
or in equity.
5.4 Y2K. All computer hardware or software included in the Assets,
including without limitation, microcode, firmware, system and application
programs, files, databases and computer services, the failure or
disfunctionality of which would either individually or in the aggregate would
have a Material Adverse Effect on the Business is Y2K Compliant. Y2K
Compliant means that such hardware or software will (a) process date data from
at least the years 1900 through 2001 without error or interruption, and (b)
maintain functionality with respect to the introduction, processing or output
of records continuing dates falling on or after January 1, 2000.
5.5 SUBSIDIARIES. Seller does not presently own of record or
beneficially, or control, directly or indirectly, any capital stock,
securities convertible into capital stock, or any other equity interest in any
corporation, association or business entity, nor is Seller, directly or
indirectly, a participant in any joint venture, partnership or other non-
corporate entity, except as provided in Schedule 5.5.
5.6 NO VIOLATION. The execution and consummation of this Agreement
will not: (i) contravene any provision of the articles of incorporation or
bylaws of Seller (the "Charter Documents"); (ii) violate or conflict with any
law, statute, ordinance, rule, regulation, decree, writ, injunction, judgment
or order of any Governmental Authority or of any arbitration award, which is
either applicable to, binding upon or enforceable against Seller, its assets
or securities, or any Seller; (iii) conflict with, result in any breach of, or
constitute a default (or an event which would, with the passage of time or the
giving of notice or both, constitute a default) under, or give rise to a right
to terminate, amend, modify, abandon or accelerate, any Contract which is
applicable to, binding upon or enforceable against any Seller or the assets or
securities of Seller; (iv) result in or require the creation or imposition of
any Lien upon or with respect to any of the assets or securities of Seller; or
(v) to the best of each of the Shareholder's or Seller's knowledge, require
the consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority, any court or tribunal or any
other Person.
5.7 TAXES. Sellers acknowledge and agree that the Purchaser has made
no representations to Sellers regarding the tax consequences of any amounts
received by Sellers pursuant to this Agreement. Sellers agree to pay federal
or state taxes which are required by law to be paid with respect to this
Agreement
5.8 NO COMMISSIONS. None of the Shareholders or Seller has incurred
any obligation for any finder's or broker's or agent's fees or commissions or
similar compensation in connection with the transactions contemplated hereby.
5.9 FINANCIAL STATEMENTS. The Sellers have delivered to Purchaser the
financial statements of Seller for the year ending December 31, 1998, and a
balance sheet for the three month period ending March 31, 1999, including the
notes thereto, (collectively, the "Financial Statements"), copies of which are
attached hereto as Schedule 5.9. The balance sheet dated as of March 31,
1999, of Seller included in the Financial Statements is referred to herein as
the "Current Balance Sheet." The Financial Statements fairly present the
financial position of Seller pertaining to the Assets at each of the balance
sheet dates and the results of operations for the periods covered thereby, and
have been prepared in accordance with generally accepted accounting principles
consistently applied in respect of cash basis accounting except for the lack
of footnotes accompanying Financial Statements, throughout the periods
indicated. The books and records of Seller fully and fairly reflect all
transactions, properties, assets, and liabilities of Seller. There are no
material special or non-recurring items of income or expense during the
periods covered by the Financial Statements, and the Current Balance Sheet
does not reflect any write-up or revaluation increasing the book value of any
assets, except as specifically disclosed in the notes thereto. The Financial
Statements reflect all adjustments necessary for a fair presentation of the
financial information contained therein.
5.10 CHANGES SINCE THE CURRENT BALANCE SHEET. Except as provided in
Schedule 5.10, since the date of the Current Balance Sheet, Seller has not:
(i) sold, leased or transferred any of its properties or assets; (ii) made or
obligated itself to make capital expenditures consistent with past practice;
(iii) incurred any obligations or liabilities (including any indebtedness) or
entered into any transaction or series of transactions other than in the
ordinary course of business, except for this Agreement and the transactions
contemplated hereby; (iv) waived, cancelled, compromised or released any
rights; (v) made or adopted any change in its accounting practice or policies;
(vi) made any adjustment to its books and records; (vii) entered into any
transaction with any Affiliate other than transactions in the ordinary course
of business consistent with past practice; (viii) terminated, amended, or
modified any agreement; (ix) imposed any security interest or other Lien on
any of its assets; (x) entered into any other transaction or was subject to
any event which had or may have a Material Adverse Effect on Seller or the
Business; (xi) except as contemplated in this section, engaged in any other
transaction out of the ordinary course of the Business; (xii) paid any
dividends or made any distribution of cash or property to the Shareholders
(except for payment of their regular salaries); or (xiii) agreed to do or
authorized any of the foregoing.
5.11 LITIGATION. Except as provided in Schedule 5.11, there is no
action, suit, or other legal or administrative proceeding or governmental
investigation pending or to any Seller's knowledge threatened against, by or
affecting any of the Shareholders, Seller, the Business, or the assets of
Seller, or which questions the validity or enforceability of this Agreement or
the transactions contemplated hereby, and to any Seller's knowledge there is
no basis for any of the foregoing. There are no outstanding orders, decrees
or stipulations issued by any Governmental Authority in any proceeding to
which the Shareholders or Seller is or was a party which have not been
complied with in full or which continue to impose any material obligations on
the Assets.
5.12 LIABILITIES. Schedule 5.12 sets forth all liabilities or
obligations, whether accrued, absolute, contingent or otherwise, of Seller not
reflected on the Current Balance Sheet, including: (i) liabilities and
obligations existing on the date hereof, incurred in the ordinary course of
business consistent with past practice since the date of the Current Balance
Sheet; and (ii) liabilities incurred in the ordinary course of Business prior
to the date of the Current Balance Sheet which were not required to be
recorded thereon, including but not limited to liabilities arising out of
guarantees, repurchases of any of Seller's securities, and indemnification
agreements (the liabilities and obligations referenced in (i) and (ii) above
are referred to as the "Designated Liabilities"). None of the Designated
Liabilities relates to any breach of contract, breach of warranty, tort
infringement, or violation of law, and none arose out of any action, suit,
claim, governmental investigation, or arbitration proceeding.
5.13 INDEBTEDNESS. Schedule 5.13 sets forth the outstanding principal
amount of and outstanding interest on (as of the date set forth in the
Schedule) all indebtedness for borrowed money and capitalized lease
obligations (including the outstanding principal amount and accrued but unpaid
interest and the name of the lender) owed to a bank or any other Person by
Seller and the name and telephone number of Seller's contact at such bank or
other Person.
5.14 ENVIRONMENTAL MATTERS. To the best of each of the Sellers'
knowledge, Seller has not received any notice (nor would there be any basis
for such a notice) from any local, state or federal agency having jurisdiction
over the Business, Seller's operations, properties, or assets or
responsibility for the enforcement of local, state, or federal environmental,
health, and safety laws (as defined in this Section) of any violation of any
environmental, health and safety laws by Seller or its officers or employees,
in connection with the Assets.
5.15 REAL PROPERTY, LEASES AND SIGNIFICANT PERSONAL PROPERTY.
Schedule 5.15 sets forth:
(a) All real property owned by Seller;
(b) All personal property owned by Seller or used by the
Business as of the Current Balance Sheet date, included on the Current Balance
Sheet, all of which is included in the accounts reflected on the Current
Balance Sheet;
(c) All other personal property of Seller acquired since the
Current Balance Sheet date; and
(d) All leases for real and personal property to which Seller is
a party involving real or personal property, including in each case true,
complete and correct copies of all such leases and including an indication as
to which real and personal property is currently owned, or was formerly owned,
by any of the Shareholders or Seller. All of the material machinery and
equipment and all other tangible assets of Seller are in good working order
and condition, ordinary wear and tear excepted, and have been maintained in
accordance with industry practice. All leases set forth in Schedule 5.15, are
in full force and effect and constitute valid and binding agreements of Seller
and constitute valid and binding agreements of the other parties thereto in
accordance with their respective terms, and all fixed assets used by Seller
are either owned by Seller or leased under a valid agreement. Schedule 5.15
also sets forth a summary description of all plans or projects involving the
opening of new operations or the acquisition of any real property or existing
business, with respect to which Seller has made any material expenditure in
the one-year period prior to the date of the Agreement, or entered into a
written commitment therefor, which if pursued by Seller would require
additional expenditures of capital.
5.16 GOOD TITLE, ADEQUACY AND CONDITION.
(a) Seller has, and at Closing will have, good and marketable
title to the Assets with full power to sell, transfer and assign the same,
free and clear of any Lien, and by virtue of the grant, conveyance, sale,
transfer, and assignment of Assets hereunder, Purchaser shall receive good and
marketable title to all of the Assets, free and clear of all Liens.
(b) The Assets constitute, in the aggregate, all of the assets
and properties necessary for the conduct of the Business in the manner in
which and to the extent to which such business is currently being conducted
and, except as provided in Schedule 5.16, include, without limitation, all
tangible and intangible assets owned by Seller including all vehicles,
equipment and inventory (more particularly described in Schedule 5.16), and
all Contracts, customer lists, intellectual property, cash and accounts
receivable, and licenses and permits of Seller.
5.17 COMPLIANCE WITH LAWS. Except as provided in Schedule 5.17 and to
the best of Seller's and the Shareholders' knowledge, Seller is in compliance
with all laws and regulations and is not in violation of any order of any
court or federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality having jurisdiction over
Seller and there are no claims, actions, suits or proceedings pending or, to
the knowledge of Seller or any of the Shareholders, threatened, against or
affecting Seller or the Business, at law or in equity, before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality having jurisdiction over any of them, and no
notice of any such claim, action, suit or proceeding, whether pending or
threatened, has been received.
5.18 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since January 1, 1999,
except as provided in Schedule 5.18, there has not been: (i) any Material
Adverse Change in the Business, or (ii) any material loss, damage, or other
casualty to the Assets. Since January 1, 1999, the Seller has operated the
Business in the ordinary course of business consistent with past practice and
has not: (i) incurred or failed to pay or satisfy any material obligation or
liability (whether accrued, contingent or otherwise) relating to the
operations of the Business except in the ordinary course of business
consistent with past practice; (ii) incurred or failed to discharge or satisfy
any Lien other than Liens arising in the ordinary course of business that do
not, individually or in the aggregate, interfere with the use, operation,
enjoyment or marketability of any of the Assets, all of which shall be
released as of the Closing Date; (iii) sold or transferred any of the Assets
of the Business or canceled any debts or claims or waived any rights material
to the Business relating to the operations of the Business, except in the
ordinary course of business consistent with past practices; (iv) defaulted on
any material obligation; (v) entered into any transaction material to the
Business, amended or terminated any arrangement material to the Business or
relating to the Business, except in the ordinary course of business consistent
with past practice; or (vi) entered into any agreement or made any commitment
to do any of the foregoing.
5.19 INTELLECTUAL PROPERTY. Schedule 5.19 hereto sets forth a true and
complete list of all of the Sellers' patents, patent applications, licenses,
copyrights, copyright registrations, copyright registration applications,
trade names, trademarks, trademark registrations, trademark applications,
servicemarks, servicemark registrations and servicemark applications, domain
names, IP addresses, trade secrets and similar rights, and any applications in
respect thereto (the "Intellectual Property") used by the Sellers in whole or
in part for the conduct of the Business as now conducted. All the
Intellectual Property is owned by the Sellers free and clear of any and all
Liens, and no licenses for the use of any of such rights have been granted by
the Shareholders or Seller to any third parties. All of such rights are valid
and enforceable and are adequate and appropriate for the Business as now
conducted. Except as listed on Schedule 5.19, all of such rights will be
acquired by Purchaser at the Closing, and the transfer of and use by Purchaser
of such rights will not require the consent of any other person. To the
Shareholders' and Seller's best knowledge, the operation of the Business does
not infringe in any way on or conflict with any registered or unregistered
patent, trademark, trade name, copyright, license or other right, of any
person, and the Sellers do not license any such right from others. The
Sellers do not know of any person who has wrongfully used, or threatened to
use, any of the Intellectual Property. No claim is pending or threatened or
has been made within the past five (5) years, to the effect that any such
infringement or conflict has occurred. The Intellectual Property is adequate
and appropriate for the Business as now conducted, and the Sellers' rights in
the same are valid and subsisting. The Sellers have the full right to use
their name in every jurisdiction where they do business.
5.20 ACCOUNTS RECEIVABLE. Except as provided in Schedule 5.20, all of
the Accounts Receivable of Seller are valid and legally binding, represent
bona fide transactions, and arose in the ordinary course of business of
Seller. To the best of Seller's and the Shareholders' knowledge, all of such
Accounts Receivable posted on or after October 1, 1998, are good and
collectible receivables and will be collected in full in accordance with the
terms of such Accounts Receivable, without set-off or counterclaims; provided,
however, that to the extent that the Accounts Receivable are not collected,
the allowance for doubtful accounts contained in the Current Financial
Statement is adequate based on Seller's historical experience.
5.21 LICENSES AND PERMITS. Except as provided in Schedule 5.21, and to
the best of Seller's and Shareholders' knowledge, Seller possesses all
licenses and required governmental or official approvals, permits or
authorizations (collectively, the "Permits") for its Business and operations.
All Permits are valid and in full force and effect, Seller is in compliance in
all material respects with their requirements, and no proceeding is pending or
to Seller's or any Shareholder's knowledge threatened to revoke or amend any
of the Permits. None of the Permits is or will be impaired or in any way
affected by the execution and delivery of this Agreement or the transactions
contemplated hereby.
5.22 CONTRACTS, CUSTOMER LISTS AND EMPLOYMENT MATTERS. Schedule 5.22
lists all customers and contracts of Seller that account for more than 1% of
Seller's annual gross revenue, all contracts of Seller requiring payment or
performance involving $10,000 or more, and all contracts and obligations with
a term longer than one (1) year (collectively, the "Material Contracts"). All
of the Material Contracts: (i) are valid and binding obligations of the
parties; (ii) are not in default and will not become in default solely upon
notice or the passage of time without curative action; and (iii) will remain
in full force and effect following the Closing, without requiring the consent
of the other parties thereto and without causing a default, right to terminate
or right to modify any terms under any such Material Contracts,
notwithstanding any provisions in any such Material Contracts which may set
forth a restriction or change in control of Seller. Seller has delivered to
Purchaser true, complete and correct copies of all Material Contracts prior to
Closing. None of the parties to the Material Contracts (which include all of
Seller's significant Customers) has cancelled or substantially reduced or, to
the knowledge of Seller or any of the Shareholders, is currently attempting or
threatening to cancel any Material Contract or substantially reduce
utilization of the services provided by Seller, and Seller has complied with
all commitments and obligations pertaining to any Material Contract, and is
not in default under any such Material Contract, and no notice of default has
been received.
5.23 PREDECESSOR STATUS, ETC. There have been no predecessor
corporations of Seller for the past five (5) years. Seller has not been a
subsidiary or division of another corporation or part of an acquisition which
was later rescinded.
5.24 SPIN-OFF BY SELLER. Within the preceding two (2) years, there has
not been any sale, spin-off or split-up of material assets of Seller or any
other person or entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with, Seller.
5.25 RECORDS OF SELLER. All material corporate actions taken by Seller
have been duly authorized or ratified. All accounts, books, ledgers and
official and other records of Seller have been fully, properly and accurately
kept and completed in all material respects, and there are no material
inaccuracies or discrepancies of any kind contained therein.
5.26 ACCURACY OF INFORMATION FURNISHED BY SELLER AND THE SHAREHOLDERS.
No statement or information contained in this Agreement and the various
Disclosure Schedules and Annexes attached hereto or in any certificate
furnished to Purchaser pursuant hereto, contains or shall contain any material
untrue statement of a fact or omits or shall omit any material fact necessary
to make the information contained therein not misleading. The Sellers have
provided Purchaser with true, accurate and complete copies of all documents
listed or described in the various Disclosure Schedules attached hereto. If
the Sellers become aware of any fact or circumstance which would change a
representation or warranty of Seller in this Agreement, the party with such
knowledge shall immediately give notice of such fact or circumstance to
Purchaser. However, such notification shall not relieve the Sellers of their
obligation under this Agreement, and at the sole option of Purchaser, the
truth and accuracy of any and all warranties and representations of Seller at
the date of this Agreement shall be a precondition to the consummation of this
transaction.
5.27 INVESTMENT INTENT. The Shareholders are acquiring the Shares
hereunder for their own account and not with a view to, or for the sale in
connection with, any distribution of any of the Shares, except in compliance
with applicable federal and state securities laws. The Shareholders have had
the opportunity to discuss the transactions contemplated hereby with Purchaser
and SkyLynx and have had the opportunity to obtain such information pertaining
to Purchaser and SkyLynx as has been requested, including but not limited to,
filings made by SkyLynx with the Securities and Exchange Commission (the
"SEC") under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
5.28 ACKNOWLEDGMENT REGARDING DISCLOSURE OF CERTAIN MATERIALS. The
Shareholders hereby acknowledge and warrant that each of the Shareholders has
been provided access to the following information: (i) all material books and
records of Purchaser; (ii) all material contracts and documents relating to
the transaction contemplated by this Agreement; (iii) all documents required
to be provided to the Shareholders pursuant to Rule 502 of the Exchange Act by
SkyLynx; and (iv) the opportunity to question the appropriate executive
officers and partners of Purchaser and SkyLynx.
5.29 SURVIVAL. Each of the representations and warranties set forth in
this Article 5 shall survive the Closing.
ARTICLE 6
CONDUCT OF BUSINESS PENDING THE CLOSING
6.1 CONDUCT OF BUSINESS BY SELLER PENDING THE CLOSING. Except as
provided in Schedule 6.1, Seller and the Shareholders, jointly and severally,
covenant and agree that, except as otherwise expressly required or permitted
by the terms of this Agreement, between the date of this Agreement and the
Closing, the business of Seller shall be conducted only in, and Seller shall
not take any action except in, the ordinary course of business consistent with
past practice. Seller and the Shareholders shall use its or their reasonable
best efforts to preserve intact Seller's business organizations, to keep
available the services of its current officers, employees and consultants, and
to preserve its present relationships with customers, suppliers and other
Persons with which it has business relations. By way of amplification and not
limitation, Seller shall not, except as expressly required or permitted by the
terms of this Agreement between the date of this Agreement and the Closing,
directly or indirectly, do or propose or agree to do any of the following
without the prior written consent of Purchaser:
(a) amend or otherwise change its Charter Documents;
(b) issue, sell, pledge, dispose of, encumber, or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of any of its
assets, tangible or intangible, except in the ordinary course of business
consistent with past practice; or any shares of its capital stock of any
class, or any options, warrants, convertible securities or other rights of any
kind to acquire any shares of such capital stock;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to
any of its capital stock or other securities;
(d) sell, lease or transfer any of its properties or assets
(other than in the ordinary course of business consistent with past practice),
or acquire (including, without limitation, for cash or shares of stock, by
merger, consolidation or acquisition of stock or assets) any interest in any
corporation, partnership or other business organization or division thereof or
any assets; or make any investment either by purchase of stock or securities,
contributions of capital or property transfer, or purchase any property or
assets of any other Person (except in the ordinary course of business
consistent with past practice); make or obligate itself to make capital
expenditures out of the ordinary course of business consistent with past
practice; other than in the ordinary course of business consistent with past
practice, incur any obligations or liabilities including, without limitation,
any indebtedness for borrowed money, issue any debt securities or assume,
guarantee or endorse or otherwise as an accommodation become responsible for,
the obligations of any Person, or make any loans or advances, modify,
terminate, amend or enter into any Contract other than as expressly required
or permitted herein or in the ordinary course of business consistent with past
practice, or impose any security interest or other Lien on any of its assets
other than in the ordinary course of business consistent with past practice;
(e) pay any bonus to its officers or employees, or increase the
compensation payable or to become payable to its officers or employees or,
except as presently bound to do, grant any severance or termination pay to, or
enter into any employment or severance agreement with, any of its directors,
officers or employees, or establish, adopt, enter into or amend or take any
action to accelerate any rights or benefits which any collective bargaining,
bonus, profit sharing trust, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the benefit
of any directors, officers or employees;
(f) take any action with respect to accounting policies or
procedures other than in the ordinary course of business and in a manner
consistent with past practices;
(g) pay, discharge or satisfy any existing claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of due and payable
liabilities reflected or reserved against in the Financial Statements, as
appropriate, or liabilities incurred after the date thereof in the ordinary
course of business and consistent with past practice or delay paying any
amount payable beyond forty-five (45) days following the date on which it is
due, except to the extent being contested in good faith;
(h) enter into any transaction or agreement with any of the
Sellers or an Affiliate thereof except for such transactions or agreements
expressly permitted herein; or
(i) agree, in writing or otherwise, to take or authorize any of
the foregoing actions or any action which would make any representation or
warranty in Article 5 untrue or incorrect in any respect.
ARTICLE 7
CERTAIN AGREEMENTS AND COVENANTS OF THE PARTIES
7.1 FURTHER ASSURANCES. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with
all of the terms of this Agreement and the transactions contemplated hereby
and to satisfy the conditions set forth in Articles 8 and 9. The Sellers
shall cause Seller to comply with all of the covenants of Seller under this
Agreement. The Sellers covenant and agree to deliver to Purchaser at the
Closing the certificates, opinions and other documents required to be
delivered to Purchaser pursuant to Article 8, and Purchaser covenants and
agrees to deliver to the Sellers the certificates and other documents required
to be delivered to the Sellers pursuant to Article 9.
7.2 CONFIDENTIALITY, PUBLICITY. Except as required by law, none of
the parties hereto shall disclose the terms of this transaction to any third
party nor make any public announcement related to this Agreement or the
transactions contemplated hereby without the prior notification of the other
parties hereto. The disclosing party shall provide the other parties with a
copy of all public announcements proposed to be made by such parties which
relate to this Agreement or the transactions contemplated hereby prior to the
release of such announcements to the public.
7.3 NO OTHER DISCUSSIONS. Until this Agreement is terminated as
herein provided, none of the Shareholders, Seller, or its Affiliates,
employees, agents, and representatives will: (i) initiate, encourage the
initiation by others of discussions or negotiations with third parties or
respond to solicitations by third persons relating to any merger, sale, or
other disposition of any substantial part of the assets, the Business or the
properties of Seller (whether by merger, consolidation, sale of stock, sale of
assets, or otherwise); or (ii) enter into any agreement or commitment (whether
or not binding) with respect to any of the foregoing transactions. The
Sellers will immediately notify Purchaser if any third party attempts to
initiate any solicitation, discussion, or negotiation with respect to any of
the foregoing transactions.
7.4 DUE DILIGENCE INVESTIGATION. Purchaser shall be entitled to
conduct, prior to Closing, a due diligence investigation of Seller, its assets
and the Business. Seller shall provide Purchaser and its designated agents
and consultants with reasonable access during normal business hours to
Seller's business and the assets and all books, records, documents,
correspondence and other materials ("Proprietary Documents") related thereto
which Purchaser, its agents and consultants reasonably require to conduct such
due diligence review; provided, however, that without the prior consent of
Seller, Purchaser shall not contact, interview, meet, solicit or otherwise
discuss the transactions contemplated by this Agreement with any customers,
employees, or suppliers of Seller. Purchaser agrees to keep strictly
confidential and not to disclose to third parties all or any portion of
Proprietary Documents. Upon termination of this Agreement, Purchaser shall
return all Proprietary Documents, copies, extracts, and summaries thereof, in
any form or medium, in its possession, to Seller.
7.5 RELATED PARTY AGREEMENTS. Set forth in Schedule 7.5 are all of
the existing agreements between Seller and its Affiliates and between the
Seller and the Shareholders affecting the Assets, the Business, or the
Sellers' ability to perform their respective obligations hereunder, and unless
otherwise stated, such agreements shall continue to survive after the Closing.
7.6 COOPERATION. Each of the parties agrees to cooperate with the
other in the preparation and filing of all forms, notifications, reports and
information, if any, required or reasonably deemed advisable pursuant to any
law, rule or regulation in connection with the transactions contemplated by
this Agreement and to use their respective best efforts to agree jointly on a
method to overcome any objections by any Governmental Authority to any such
transactions.
7.7 OTHER ACTIONS. Prior to the Closing, each of the parties hereto
shall take all appropriate actions, and do, or cause to be done, all things
necessary, proper or advisable under any applicable laws, regulations, and
contracts to consummate and make effective the transactions contemplated
herein, including, without limitation, obtaining all licenses, permits,
consents, approvals, authorizations, qualifications, and orders of any
Governmental Authority and parties to Contracts with Seller as are necessary
for the consummation of the transactions contemplated hereby. Each of the
parties shall make on a prompt and timely basis all governmental or regulatory
notifications and filings required to be made by it for the consummation of
the transactions contemplated hereby. The parties also agree to use best
efforts to defend all lawsuits or other legal proceedings challenging this
Agreement or the consummation of the transactions contemplated hereby and to
lift or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the transactions
contemplated hereby.
7.8 NOTIFICATION OF CERTAIN MATTERS. The Sellers shall give prompt
notice to Purchaser of the occurrence or non-occurrence of any event which
would likely cause any representation or warranty contained herein to be
untrue or inaccurate, or any covenant, condition, or agreement contained
herein not to be complied with or satisfied.
7.9 PAYOFF AND ESTOPPEL LETTERS. Prior to the Closing, the Sellers
shall request and deliver to Purchaser, with respect to any Indebtedness
affecting the Assets, the Business, or the Sellers' ability to perform their
respective obligations hereunder, payoff and estoppel letters from such
holders of any Indebtedness, which letters shall contain payoff amounts, per
diem interest, wire transfer instructions and an agreement to deliver to
Purchaser, upon full payment of any such Indebtedness, UCC-3 termination
statements, satisfactions of mortgage or other appropriate releases and any
original promissory notes or other evidences of indebtedness marked canceled.
7.10 ACCOUNTING TREATMENT. Sellers and Purchaser agree to follow tax
accounting treatment and allocations in respect of the sale of the Assets
consistent with the treatment and allocations described in Schedule 7.10.
7.11 COVENANT NOT TO COMPETE. In order to ensure that Purchaser will
realize the benefits of the transactions contemplated hereby, the Sellers
agree with Purchaser that the Sellers will not, directly or indirectly, alone
or as a partner, joint venturer, officer, director, employee, consultant,
agent, independent contractor, trustee, custodian, fiduciary, lender, or
security holder of any company, business, or entity, or otherwise:
(a) for a period of eighteen (18) months following the Closing
Date, engage in, or finance or provide financial assistance with respect to,
any business conducted by Seller in the preceding eighteen (18) months,
including, without limitation, the Business, in the Restricted Territory;
provided, however, that, the beneficial ownership of less than five percent
(5%) of the shares of stock of any corporation having a class of equity
securities actively traded on a national securities exchange or over-the-
counter market shall not be deemed, in and of itself, to violate the
prohibitions of this section;
(b) for a period of eighteen (18) months following the Closing
Date, directly or indirectly: (i) induce any Person which is a customer of
Seller to patronize any business directly or indirectly in competition with
the Business in the Restricted Territory; (ii) canvass, solicit, or accept
from any Person which is a customer of the Business in the Restricted
Territory, any such competitive business; or (iii) request or advise any
Person which has a business relationship with the Business in the Restricted
Territory to withdraw, curtail, or cancel any such Person's business with the
Business;
(c) for a period of eighteen (18) months following the Closing
Date, directly or indirectly employ, or solicit the employment of, any person
who was employed by Seller or the Purchaser at or within the prior six (6)
months, or in any manner seek to induce any such person to leave his or her
employment; provided, however, that the Sellers may hire any employee that is
terminated by Purchaser; and
(d) at any time following the Closing Date, directly or
indirectly, in any way utilize, disclose, copy, reproduce, or retain in its or
their possession Seller's proprietary rights or records, including, but not
limited to, any of its customer lists.
Sellers expressly agree that Purchaser has a legitimate business
interest justifying the existence of this Section 7.11. Sellers acknowledge
that Seller may be exposed to: (i) certain information and document of
Purchaser that derive independent economic value, actual or potential, from
not being generally known to, and not being readily ascertainable, by proper
means, by other persons who can obtain economic value from its disclosure or
use which is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy (the "Trade Secrets"); (ii) valuable
confidential business and professional information of Purchaser that does not
otherwise qualify as Trade Secrets of Purchaser; (iii) substantial
relationships of Purchaser with specific prospective or existing customers,
and clients of Purchaser; and (iv) the customer, and client goodwill
associated with Purchaser's businesses.
Purchaser and the Sellers have carefully considered the nature and
extent of the restrictions imposed by this Section 7.11 (collectively, the
"Restrictive Covenant") and the rights and remedies conferred upon Purchaser
under the Restrictive Covenant and hereby expressly acknowledge and agree
that: (i) any restricted period and the Restricted Territory and all other
restrictions contained in the Restrictive Covenant are designed to eliminate
competition which would otherwise be unfair to Purchaser; (ii) the Restrictive
Covenant is reasonable and necessary and fully required to protect the
legitimate business interests of Purchaser; (iii) Purchaser's legitimate
business interests extend throughout the State of Washington and Purchaser
currently has, customers, arrangements, and relationships throughout the State
of Washington; (iv) the Restrictive Covenant imposes a reasonable restraint
upon the Sellers; (v) any violation of the terms of the Restrictive Covenant
could have a substantial detrimental effect on Purchaser's business; (vi) the
Restrictive Covenant does not stifle the Sellers' inherent skill and
experience; (vii) the Restrictive Covenant does not confer a benefit upon
Purchaser disproportionate to the detriment to Seller; and (viii) the Sellers
expressly acknowledge that the Sellers shall have the ability to practice the
Sellers' profession outside of the Restricted Territory and that the
Restrictive Covenant shall not inhibit the Sellers' ability to practice the
Sellers' profession.
The Sellers hereby agree and acknowledge that Purchaser would suffer
irreparable harm if any of the Sellers violate the Restrictive Covenant and
that any damages resulting from any violation of the Restrictive Covenant
would be difficult to ascertain and, for that reason, the Sellers expressly
agree that, in the event of any violation of the Restrictive Covenant,
Purchaser shall be entitled to equitable relief, including preliminary and
permanent injunctive relief restraining any such violation of any or all of
the Restrictive Covenant either directly or indirectly, from any court of
competent jurisdiction, without proof of actual damages and without posting
bond, and such right of Purchaser shall be cumulative and shall in no way
limit any other remedies which Purchaser may have (including, without
limitation, the right to seek monetary damages). Purchaser and each of the
Sellers hereby agree that Purchaser may assign, without limitation, the
foregoing restrictive covenants to any successor to Purchaser's business or
any of Purchaser's Companies.
The Sellers acknowledge that the Restrictive Covenant has been called to
the attention of Seller and Seller understands that the Restrictive Covenant
is a material covenant of this Agreement and that Purchaser would not have
entered into this Agreement without the existence of the Restrictive Covenant.
Purchaser and Seller further agree that, in the event of any litigation at law
or at equity with regard to the enforcement or interpretation of the
Restrictive Covenant, Purchaser shall be entitled to be reimbursed by the
Sellers for all reasonable attorneys' fees and costs which Purchaser and
Purchaser's Affiliates incur, at all levels of all such litigation, including
without limitation, pre-trial and appellate levels.
If a court having jurisdiction over this Agreement shall determine that
any restricted period or the Restricted Territory or any other restriction
contained in the Restrictive Covenant is overbroad or is unenforceable for any
reason whatsoever, it is the intention of Purchaser and Seller that the
Restrictive Covenant shall not thereby be terminated or void, but shall be
deemed amended to the extent required by such court to render it valid and
enforceable to the greatest extent permissible by such court and the
applicable law and public policy.
If any Seller violates the Restrictive Covenant, and Purchaser's
successors and assigns or any of Purchaser's Affiliates bring legal action for
injunctive or other relief, such party bringing the action shall not, as a
result of the time involved in obtaining the relief, be deprived of the
benefit of the full period of the Restrictive Covenant. Accordingly, for any
time period any Seller is in violation of the Restrictive Covenant, such time
period shall not be included in calculating the Restricted Period.
7.12 EMPLOYMENT.
(a) Purchaser agrees to hire Xxxxx Xxxx to perform the duties as
more fully set forth in Schedule 7.12 for a period of one (1) year following
the Closing (the "Term"), at an annualized salary of Sixty-Five Thousand
Dollars ($65,000), less applicable tax withholdings or other deductions
required by law; provided, however, that Purchaser shall have the option, at
its sole election, to extend the Term for successive one (1) year periods, by
providing such individual written notice of such election no later than sixty
(60) days prior to the end of the Term or any extensions thereof. Xxxxx Xxxx
shall also be entitled to such incentive compensation as may be determined by
the Board of Directors from time to time, which compensation shall be based on
certain objectives and achievement of such milestones, as determined by the
Purchaser's Board of Directors in its sole discretion.
(b) Seller has agreed to and has expressly represented to
Purchaser that Seller will be terminating the employment of Xxxxx Xxxx and all
of Seller's current employees effective as of the Closing Date; provided,
however, that Seller will remain responsible for all salary, benefit, and tax
matters pertaining to each individual's former employment with Seller.
Effective as of the Closing, Purchaser agrees to employee Xxxx Xxxxx and Xxxxx
Xxxxx, current employees of Seller, on an at-will employment basis, at an
initial hourly rate of $9.00 and $8.00, respectively.
ARTICLE 8
CONDITIONS TO THE OBLIGATIONS OF PURCHASER AND SKYLYNX
The obligations of Purchaser and SkyLynx to effect the transactions
contemplated hereby shall be subject to the fulfillment at or prior to the
Closing Date of the following conditions, any or all of which may be waived in
whole or in part by Purchaser or SkyLynx;
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES; COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of the Shareholders and
Seller contained in this Agreement shall be true and correct in all material
respects at and as of the Closing Date with the same force and effect as
though made at and as of that time except: (i) for changes specifically
permitted by or disclosed pursuant to this Agreement; and (ii) that those
representations and warranties which address matters only as of a particular
date shall remain true and correct as of such date. The Shareholders and
Seller shall have performed and complied with all of their obligations
required by this Agreement to be performed or complied with at or prior to the
Closing Date, including those obligations set forth in Article 7 herein. The
Shareholders and Seller shall have delivered to Purchaser and SkyLynx a
certificate, dated as of the Closing Date, duly signed, certifying that all
such obligations have been performed and complied with.
8.2 NO MATERIAL ADVERSE CHANGE OR DESTRUCTION OF PROPERTY. Between
January 1, 1999, and the Closing Date: (i) there shall have been no Material
Adverse Change in Seller or the Business; (ii) there shall have been no
adverse federal, state, or local legislative or regulatory change affecting in
any material respect the service or products of Seller or the Business; and
(iii) no material portion of the Assets shall have been damaged by fire,
flood, casualty, riot, or other cause (regardless of insurance coverage for
such damage), and there shall have been delivered to Purchaser and SkyLynx a
certificate to that effect, dated as of the Closing Date and signed by the
Sellers.
8.3 CORPORATE CERTIFICATE. Seller shall have delivered to Purchaser
and SkyLynx copies of resolutions adopted by its Board of Directors and the
Shareholders authorizing the transactions contemplated by this Agreement,
certified as of the Closing Date by the Secretary of Seller as being true,
correct, and complete.
8.4 CONSENT. Seller and the Shareholders shall have received consents
to the transactions contemplated hereby and waivers of rights to terminate or
modify any material rights or obligations of Seller and the Shareholders from
any person from whom such consent or waiver is required under any contract to
which the Shareholders, Seller, or the Assets are bound, or who, as a result
of the transactions contemplated hereby, would have such rights to terminate
or modify such contracts, either by the terms thereof or as a matter of law.
Without limiting the foregoing, the Sellers shall have received all necessary
consents to the transactions contemplated by this Agreement including, without
limitation, the transfer and assignment of all operating permits necessary for
the operation of the Business, and shall have provided all proper
notifications to and obtained all necessary consents from such local,
municipal, state or governmental authorities as may be necessary in order to
consummate the transactions contemplated hereunder.
8.5 NO ADVERSE LITIGATION. There shall not be pending or threatened
any action or proceeding by or before any court or other governmental body
which shall seek to restrain, prohibit, invalidate or collect damages arising
out of the transactions contemplated hereby, and which, in the judgment of
Purchaser and SkyLynx, makes it inadvisable to proceed with the transactions
contemplated hereby.
8.6 OPINION OF COUNSEL. Purchaser and SkyLynx shall have received an
opinion dated as of the Closing Date from counsel for Seller and the
Shareholders, in substantially the form attached hereto as Annex I.
8.7 GENERAL. All actions taken by the Sellers in connection with the
consummation of the transaction contemplated hereby and all certificates,
opinions and other documents required to effect the transactions contemplated
hereby, will be reasonably satisfactory in form and substance to Purchaser and
SkyLynx.
ARTICLE 9
CONDITIONS TO THE OBLIGATIONS OF THE SELLERS
The obligations of the Sellers to effect the transactions contemplated
hereby shall be subject to the fulfillment at or prior to the Closing Date of
the following conditions, any or all of which may be waived in whole or in
part by the Sellers:
9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of Purchaser and SkyLynx
contained in this Agreement shall be true and correct in all material respects
at and as of the Closing Date with the same force and effect as though made at
and as of that time except: (i) for changes specifically permitted by or
disclosed pursuant to this Agreement; and (ii) that those representations and
warranties which address matters only as of a particular date shall remain
true and correct as of such date. Purchaser and SkyLynx shall have performed
and complied in all material respects with all of its respective obligations
required by this Agreement to be performed or complied with at or prior to the
Closing Date. Purchaser and SkyLynx shall have delivered to the Sellers a
certificate, dated as of the Closing Date, and signed by an executive officer
thereof, certifying that such representations and warranties are true and
correct, and that all such obligations have been performed and complied with,
in all material respects.
9.2 OTHER CONDITIONS. At the Closing, Purchaser shall have delivered
to the Sellers the Purchase Price.
9.3 CORPORATE CERTIFICATES. Purchaser and SkyLynx shall have
delivered to Seller copies of resolutions adopted by their respective Board of
Directors authorizing the transactions contemplated by this Agreement
certified as of the Closing Date by the Secretary of Purchaser and SkyLynx as
being true, correct, and complete.
9.4 NO ADVERSE LITIGATION. There shall not be pending or threatened
any action or proceeding by or before any court or other governmental body
which shall seek to restrain, prohibit, invalidate, or collect damages arising
out of the transactions contemplated hereby, and which, in the judgment of the
Sellers, makes it inadvisable to proceed with the transactions contemplated
hereby.
ARTICLE 10
NON-ASSUMPTION OF LIABILITIES; INDEMNIFICATION
10.1 NON-ASSUMPTION OF LIABILITIES; INDEMNIFICATION.
(a) The Sellers agree, jointly and severally, to indemnify and
hold Purchaser, SkyLynx and their respective Affiliates harmless from and
against the aggregate of all expenses, losses, costs, deficiencies,
liabilities and damages (including, without limitation, related counsel and
paralegal fees and expenses) incurred or suffered by Purchaser and SkyLynx
(collectively, "Indemnifiable Damages") resulting from or arising out of:
(i) any material breach of a representation or warranty made by the Sellers in
or pursuant to this Agreement; (ii) any material breach of the covenants or
agreements made by the Sellers in this Agreement; (iii) any material
inaccuracy in any certificate delivered by the Sellers pursuant to this
Agreement; (iv) any material misrepresentation in or omission from any
Disclosure Schedule to this Agreement; (v) any liability of the Sellers to
creditors of the Sellers which is imposed on Purchaser or SkyLynx whether as a
result of bankruptcy proceedings or otherwise and whether as an account
payable by the Sellers or as a claim of alleged fraudulent conveyance or
preferential payments within the meaning of the United States Bankruptcy Code
or otherwise; (vi) the existence of creditors of the Sellers which are not
disclosed to Purchaser; or (vii) any violation by the Sellers of the
requirements of any governmental authority relating to the reporting and
payment of federal, state, local or other income, sales, use, franchise,
excise, payroll, property or other tax liabilities of the Sellers which occurs
or exists prior to the Closing Date. The indemnity obligation contained in
this Section 10.1(a) shall continue for a period of three (3) years from and
after the Closing Date; provided, however, that the indemnity obligations
hereunder shall continue indefinitely with respect to any claim arising from
or relating to matters for which Purchaser or SkyLynx shall have provided
notice to the Sellers of Purchaser's or SkyLynx' intent to seek
indemnification for such claims prior to the expiration of such three (3) year
period.
(b) The Sellers agree, jointly and severally, to indemnify and
hold Purchaser, SkyLynx and their respective Affiliates harmless from and
against the aggregate of all Indemnifiable Damages resulting from or arising
out of any occurrence or circumstance (whether known or unknown) which occurs
or exists on or prior to the Closing Date and which constitutes, or which by
the lapse of time or giving notice (or both) would constitute, a breach or
default by the Sellers under any lease, Contract or other instrument or
agreement whether written or oral. The indemnity obligation contained in this
Section 10.1(b) shall continue for a period of two (2) years from and after
the Closing Date. Notwithstanding the foregoing time limitation, the
obligation of the Sellers to indemnify Purchaser or SkyLynx hereunder shall
continue indefinitely with respect to any claim arising from or relating to
matters for which Purchaser or SkyLynx shall have received a formal demand or
allegation from a third party and provided notice thereof to the Sellers and
of Purchaser's or SkyLynx' intent to seek indemnification for such claims
hereunder within two (2) years of the Closing Date.
10.2 ASSUMPTION OF SPECIFIC LIABILITIES. Purchaser and SkyLynx agrees
to perform all of the Sellers' contractual obligations related to the Assets
and the Business to the extent, and only to the extent, such obligations have
been expressly assumed by Purchaser or SkyLynx hereunder and that they first
mature and are required to be performed by Purchaser or SkyLynx after the
close of business on the Closing Date. Purchaser and SkyLynx agree to
indemnify and hold Sellers harmless from all reasonable expenses, losses,
costs, deficiencies, liabilities and damages, including attorneys' fees,
arising solely from events occurring after the Closing related to Purchaser's
ownership of the Assets and Purchaser's conduct of the Business.
10.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by Seller and the Shareholders in this
Agreement or pursuant hereto shall survive for a period of three (3) years
following the Closing Date. Notwithstanding any knowledge of facts determined
or determinable by any party by investigation, each party shall have the right
to fully rely on the representations, warranties, covenants, and agreements of
the other parties contained in this Agreement or in any other documents or
papers delivered in connection herewith. Each representation, warranty,
covenant and agreement of the parties contained in this Agreement is
independent of each other representation, warranty, covenant and agreement.
10.4 MATTERS INVOLVING THIRD PARTIES.
(a) If any third party shall notify Purchaser, SkyLynx, or any
of the Sellers with respect to any matter (a "Third Party Claim") which may
give rise to a claim for indemnification against the other party under this
Article 10, then the party receiving such Third Party Claim shall promptly
notify the other parties in writing; provided, however, that no delay on the
part of the notifying party in notifying the other parties shall relieve such
party from any obligation hereunder unless (and then solely to the extent) the
indemnifying party is thereby prejudiced.
(b) Purchaser and SkyLynx will have the right to defend against
all Third Party Claims with counsel of its choice reasonably satisfactory to
the Sellers. If any of the Sellers is the notifying party, such party may
retain separate co-counsel at its sole cost and expense and participate in the
defense of the Third Party Claim. None of the parties will consent to the
entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving to the notifying party by the third
party of a release of all liability in respect of such Third Party Claim or
which seeks an injunction, specific performance, or a declaration of rights or
other equitable relief that, in the good faith judgment of notifying party,
will likely have a material adverse effect on the notifying party's operations
without the prior written consent of the notifying party (which shall not to
be withheld unreasonably).
ARTICLE 11
SECURITIES LAW MATTERS
11.1 DISPOSITION OF SHARES. The Shareholders represent and warrant
that the Shares being acquired by Shareholders hereunder are being acquired
and will be acquired for their own account, and will not be sold or otherwise
disposed of, except pursuant to (a) an exemption from the registration
requirements under the Securities Act, which does not require the filing by
SkyLynx with the SEC of any registration statement, offering circular or other
documents, in which case, the Seller shall first supply to SkyLynx an opinion
of counsel (which counsel and opinions shall be satisfactory to SkyLynx) that
such exception is available, or (b) an effective registration statement filed
by SkyLynx with the SEC under the Securities Act.
11.2 LEGEND. The certificates representing the Shares shall bear the
following legend:
THE SALE OF THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"). NO SALE, HYPOTHECATION, PLEDGE OR OTHER DISPOSITION OF
THESE SECURITIES MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATING THERETO UNLESS THE SALE OR OTHER DISPOSITION IS
MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT OR THE HOLDER OF
SUCH SECURITIES PROVIDES AN OPINION OF COUNSEL SATISFACTORY TO
SKYLYNX COMMUNICATIONS, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE ACT.
11.3 CONTRACTUAL RESTRICTION LEGEND.
The Hold Back Shares shall bear the following legend:
THE SALE OR OTHER TRANSFER OF THE SHARES REPRESENTED HEREBY HAS
BEEN CONTRACTUALLY RESTRICTED. THE HOLDER AGREES THAT SUCH SHARES
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED WITHOUT THE PRIOR WRITTEN
CONSENT OF SKYLYNX COMMUNICATIONS, INC., UNTIL THE EXPIRATION OF
SUCH RESTRICTION ON MAY 6, 2000.
11.4 DELIVERY OF THE HOLD BACK SHARES.
At the end of the Hold Back Period, the Contractual Restriction Legend
found in Section 11.3 shall be removed from the Hold Back Shares to reflect
the expiration of the Hold Back Period. SkyLynx shall cause shares to be
issued and delivered to the Shareholders, subject to adjustments that may be
required to the Hold Back Shares, including but not limited to, stock splits,
dividends, redemptions, and any forfeiture of the Hold Back Shares, or any
portion thereof; provided, however, that should an adjustment or forfeiture to
the Hold Back Shares be required, Purchaser or SkyLynx shall provide to the
Shareholders a written accounting of any adjustments that may be made by
Purchaser or SkyLynx.
11.5 NO BAR.
If the Hold Back Shares are insufficient to set off any claim for any
Indemnifiable Damages hereunder (or have been delivered in whole or part to
the Shareholders prior to the making or resolution of such claim), then
Purchaser or SkyLynx may take any action or exercise any remedy available to
them by appropriate legal proceeding to collect the Indemnifiable Damages.
ARTICLE 12
DEFINITIONS
12.1 DEFINED TERMS. As used herein, the following terms shall have the
following meanings:
"Affiliate" shall have the meaning ascribed to it in Rule 12b-2 of the
General Rules and Regulations under the Securities and Exchange Act of 1934,
as in effect on the date hereof.
"Common Stock" shall mean shares of common stock of the Purchaser,
$0.001 par value.
"Contract" means any indenture, lease, sublease, license, loan
agreement, mortgage, note, indenture, restriction, will, trust, commitment,
obligation, or other contract, agreement, or instrument, whether written or
oral.
"Governmental Authority" means any nation or government, any state,
regional, local, or other political subdivision thereof, and any entity or
official exercising executive, legislative, judicial, regulatory, or
administrative functions of or pertaining to government.
"Knowledge" or "to the best knowledge" or similar terms as used in this
Agreement, unless otherwise specifically defined herein, shall mean the actual
or constructive knowledge, after due inquiry and investigation, of each of the
Shareholders, the officers and directors of Seller, and its key employees in
managerial roles.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien,
or charge of any kind (including, but not limited to, any conditional sale or
other title retention agreement, any lease in the nature thereof, and the
filing of or agreement to give any financing statement under the Uniform
Commercial Code or comparable law or any jurisdiction in connection with such
mortgage, pledge, security interest, encumbrance, lien, or charge).
"Market Value" means the average closing price of a share of the Common
Stock on the over-the-counter market for the ten (10) trading days immediately
preceding the Closing Date.
"Material Adverse Change (or Effect)" means a change (or effect), in the
condition (financial or otherwise), properties, assets, liabilities, rights,
obligations, operations, business or prospects which change (or effect)
individually or in the aggregate, is materially adverse to such condition,
properties, assets, liabilities, rights, obligations, operations, business or
prospects.
"Person" means an individual, partnership, corporation, business trust,
joint stock corporation, estate, trust, unincorporated association, joint
venture, Governmental Authority or other entity, of whatever nature.
"Restricted Territory" means the area within a two hundred fifty (250)
mile radius of downtown Kent, Washington.
"Shares" shall have the meaning set forth in Section 2.1(b) above.
"Tax Return" means any tax return, filing or information statement
required to be filed in connection with or with respect to any Taxes; and
"Taxes" means all taxes, fees or other assessments, including, but not
limited to, income, excise, property, sales, franchise, intangible,
withholding, social security, and unemployment taxes imposed by any federal,
state, local, or foreign governmental agency, and any interest or penalties
related thereto.
ARTICLE 13
TERMINATION, AMENDMENT AND WAIVER
13.1 TERMINATION. This Agreement may be terminated at any time prior
to the Closing:
(a) by mutual written consent of all of the parties hereto at
any time prior to Closing; or
(b) by Purchaser in the event of a material breach by the
Sellers of any provision of this Agreement; or
(c) by either party if the Closing shall not have occurred by
May 31, 1999, notwithstanding the diligent efforts of all parties, and the
parties hereto have not agreed to extend the date to close.
13.2 EFFECT OF TERMINATION. Except as expressly stated herein, in the
event of termination of this Agreement pursuant to Section 13.1, this
Agreement shall forthwith become void; provided, however, that nothing herein
shall relieve any party from liability for the willful breach of any of its
representations, warranties, covenants or agreements set forth in this
Agreement. Purchaser shall immediately return to the Sellers any and all
documents pursuant to Section 7.4.
ARTICLE 14
GENERAL PROVISIONS
14.1 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered (and shall
be deemed delivered) by certified or registered mail (first class postage pre-
paid), guaranteed overnight delivery, or facsimile transmission if such
transmission is confirmed by delivery by certified or registered mail (first
class postage pre-paid) or guaranteed overnight delivery, to the following
addresses and telecopy numbers (or to such other addresses or telecopy numbers
which such party shall designate in writing to the other party):
(a) If to Purchaser or, following the Closing:
SkyLynx Communications of Pacific Northwest, Inc.
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Chairman
Fax: (000) 000-0000
With a copy to:
XxXxxxxxx, Will & Xxxxx
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Xx., Esq.
Fax: (000) 000-0000
(b) If to SkyLynx or following the Closing:
SkyLynx Communications, Inc.
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Chairman
Fax: (000) 000-0000
With a copy to:
XxXxxxxxx, Will & Xxxxx
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Xx., Esq.
Fax: (000) 000-0000
(c) If to the Sellers prior to the Closing:
XxxXxx.Xxx, Inc.
0000 Xxxxx 000xx Xxxxx, Xxxxx X000
Xxxx, XX 00000
Attention: Xxxxx Xxxx
If to the Sellers after the Closing:
Xxxxx Xxxx
c/o: XxxXxx.Xxx, Inc.
0000 Xxxxx 000xx Xxxxx, Xxxxx X000
Xxxx, XX 00000
With a copy to:
West & Xxxxxxx
000 Xxxxx Xxxxxx, X.X.
Xxxxxx, XX 00000
Attention: Xxx Xxxxxxx, Esq.
Fax: (000) 000-0000
14.2 ENTIRE AGREEMENT. This Agreement (including the Disclosure
Schedules and the Annexes attached hereto) and other documents delivered at
the Closing pursuant hereto, contains the entire understanding of the parties
in respect of its subject matter and supersedes all prior agreements and
understandings (oral or written) between or among the parties with respect to
such subject matter. The Disclosure Schedules and the Annexes constitute a
part hereof as though set forth in full above.
14.3 EXPENSES. Except as otherwise provided herein, the parties shall
pay their own fees and expenses, including their own accounting and counsel
fees, incurred in connection with the negotiation and preparation of this
Agreement or any transaction contemplated hereby. Sellers shall be liable for
all sales, application, or transfer taxes or other such fees and costs
incurred in connection with this Agreement or any transaction contemplated
hereby.
14.4 AMENDMENT; BINDING EFFECT; ASSIGNMENT. This Agreement may not be
modified, amended, supplemented, canceled or discharged, except by written
instrument executed by all parties. The rights and obligations of this
Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Except as expressly provided herein, the
rights and obligations of this Agreement may not be assigned by the Sellers
without the prior written consent of Purchaser.
14.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together
shall constitute one and the same instrument.
14.6 GOVERNING LAW: INTERPRETATION. This Agreement shall be construed
in accordance with and governed for all purposes by the laws of the State of
Colorado applicable to contracts executed and to be wholly performed within
such State.
14.7 ACCESS TO RECORDS. After the Closing Date, the Sellers shall have
upon ten (10) days advance written notice reasonable access during regular
business hours to the books and records of Seller that are necessary to permit
the Sellers to exercise their rights hereunder and to obtain any information
necessary for their personal and corporate tax matters.
14.8 ATTORNEYS' FEES. If any party to this Agreement shall bring any
action for any relief against any other party, declaratory or otherwise,
arising out of or in connection with this Agreement or the breach or
interpretation hereof, the losing party shall pay to the prevailing party a
reasonable sum for attorney fees incurred in bringing such suit and/or
enforcing any judgment granted therein, all of which shall be deemed to have
accrued upon the commencement of such action and shall be paid whether or not
such action is prosecuted to judgment. Any judgment or order entered in such
action shall contain a specific provision providing for the recovery of
attorney fees and costs incurred in enforcing such judgment. For the purposes
of this section, attorney fees shall include, without limitation, fees
incurred in the following: (1) post-judgment motions; (2) contempt
proceedings; (3) garnishment, levy, and debtor and third party examination;
(4) collection proceedings; and (5) discovery.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly made effective as of the day and year first above written.
SKYLYNX COMMUNICATIONS, INC.
a Colorado corporation
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
SKYLYNX COMMUNICATIONS OF PACIFIC
NORTHWEST, INC.
a Delaware corporation
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
XXXXXX.XXX, INC.
a Washington corporation
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
-----------------------------------
XXXXX XXXX
-----------------------------------
XXXX XXXXX
LIST OF SCHEDULES
Schedule 1.1(a) -- Description of Equipment
Schedule 1.1(b) -- Description of Real Property
Schedule 1.1(c) -- Rolling Stock
Schedule 1.1(e) -- Related Documents
Schedule 1.1(f) -- Assumed Contracts
Schedule 1.1(i) -- Approvals and Operating Rights
Schedule 1.1(q) -- Tangible and Intangible Assets
Schedule 1.2 -- Non-Assignment of Certain Customer Accounts
Schedule 1.3 -- Accounts Receivable
Schedule 5.5 -- Subsidiaries
Schedule 5.9 -- Financial Statements
Schedule 5.10 -- Changes Since the Current Balance Sheet
Schedule 5.11 -- Litigation
Schedule 5.12 -- Liabilities
Schedule 5.13 -- Indebtedness
Schedule 5.15 -- Real Property, Leases and Significant Personal Property
Schedule 5.16 -- Good Title, Adequacy and Condition
Schedule 5.17 -- Compliance With Laws
Schedule 5.18 -- Absence of Certain Changes or Events
Schedule 5.19 -- Intellectual Property
Schedule 5.20 -- Accounts Receivable
Schedule 5.21 -- Licenses and Permits
Schedule 5.22 -- Contracts, Customer Lists and Employment Matters
Schedule 6.1 -- Conduct of Business Pending Closing
Schedule 7.5 -- Related Party Agreements
Schedule 7.10 -- Accounting Treatment
Schedule 7.12 -- Description of Duties
