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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement"), dated as of June
30, 1999, is by and among NeoSoft, Inc., a Texas corporation (the "Company"),
Xxxxx Xxxxx and Xxxx Xxxxxxxxxx, shareholders of the Company (each, a
"Shareholder," and collectively, the "Shareholders"), Internet America, Inc., a
Texas corporation ("Parent") and GEEK Houston, Inc., a Texas corporation and
wholly owned subsidiary of Parent (the "Merger Sub").
W I T N E S S E T H:
WHEREAS, the Company is in the business of providing Internet access to
customers, both individuals and businesses, in the Texas market;
WHEREAS, the respective Boards of Directors of the Company, the Merger
Sub and Parent have adopted resolutions approving and adopting the proposed
merger (the "Merger") of the Merger Sub with and into the Company upon the terms
and conditions hereinafter set forth in this Agreement; and
WHEREAS, the Shareholders, who own approximately 95% of the outstanding
common stock of the Company, desire to enter into this Agreement for the purpose
of evidencing their consent to the consummation of the Merger and for the
purpose of making certain representations, warranties, covenants and agreements;
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants herein contained, and on the terms and subject to the
conditions herein set forth, the parties hereby agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1. DEFINITIONS. In addition to terms otherwise defined in
this Agreement, as used in this Agreement, the following terms shall have the
meanings set forth below:
"Closing" shall mean the closing of the transactions contemplated by
this Agreement.
"Closing Date" shall mean the date hereof.
ARTICLE II.
THE MERGER
SECTION 2.1. THE MERGER. Subject to the terms and conditions of this
Agreement, at the Closing, the Merger Sub will be merged with and into the
Company and the separate corporate existence of the Merger Sub shall thereupon
cease. The Company (sometimes referred to herein
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as the "Surviving Corporation") shall be the surviving corporation in the
Merger. The Merger shall have the effects set forth in the applicable provisions
of the Texas Business Corporation Act (the "TBCA").
SECTION 2.2. EFFECTIVE TIME OF THE MERGER. The parties hereto shall
cause Articles of Merger (the "Articles of Merger") that meet the requirements
of the applicable provisions of the TBCA to be properly executed and filed with
the Secretary of State of Texas on the Closing Date. The Merger shall be
effective at the time of acceptance of the filing of the Articles of Merger with
the Secretary of State of the State of Texas in accordance with the TBCA or at
such later time which the parties hereto shall have agreed upon and designated
in such filing as the effective time of the Merger (the "Effective Time").
SECTION 2.3. THE SURVIVING CORPORATION.
(a) ARTICLES OF INCORPORATION. The Articles of Incorporation of the
Company shall be the Articles of Incorporation of the Surviving
Corporation.
(b) BYLAWS. The Bylaws of the Company as in effect immediately prior to
the Effective Time shall be the Bylaws of the Surviving Corporation.
(c) DIRECTORS AND OFFICERS. The directors and officers of the Company
immediately prior to the Effective Time shall be the initial directors
and officers of the Surviving Corporation and shall hold office from
the Effective Time until their respective successors are duly elected
or appointed and qualify in the manner provided in the Articles of
Incorporation and Bylaws of the Surviving Corporation, or as otherwise
provided by law.
SECTION 2.4. CONVERSION OF SHARES. At the Effective Time, by virtue of
the Merger and without any action on the part of Company, Parent, the Merger Sub
or any holder of capital stock of any of them, subject to the limitations
contained herein:
(a) each share of common stock of the Company (the "Company Common
Stock") issued and outstanding immediately prior to the Effective Time
shall be automatically converted into the right to receive in cash the
amount that is equal to $7.3 million divided by the number of issued
and outstanding shares of Company Common Stock as set forth on Schedule
3.4.
(b) each share of common stock of the Merger Sub issued and outstanding
immediately prior to the Effective Time shall automatically be
converted into and become one share of Common Stock of the Surviving
Corporation and shall constitute the only outstanding shares of capital
stock of the Surviving Corporation.
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SECTION 2.5. STOCK CERTIFICATES. At or following the Effective Time,
each holder of an outstanding certificate or certificates representing Company
Common Stock shall surrender the same to the Company and the Company shall, in
exchange therefor, cause to be issued to the holder of such certificate(s) cash
in accordance with Section 2.4, less any amount required to be withheld under
applicable federal, state or local tax requirements, and the surrendered
certificate(s) shall be cancelled. From and after the Effective Time, all shares
of the Company Common Stock converted in accordance with Section 2.4 shall no
longer be outstanding and shall automatically be cancelled and retired and shall
cease to exist. Until surrendered and exchanged, each certificate of Company
Common Stock shall represent solely the right to receive cash in accordance with
Section 2.4, without interest and less any tax withholding. From and after the
Effective Time, all certificates representing the common stock of Merger Sub
shall be deemed for all purposes to represent the number of shares of common
stock of the Surviving Corporation into which they are converted in accordance
with Section 2.4.
SECTION 2.6. DISSENTING SHARES. Each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time not voted in
favor of the Merger, the holder of which has given written notice of the
exercise of dissenter's rights and has perfected such rights as required by the
TBCA is herein called a "Dissenting Share." Dissenting Shares shall not be
converted into or represent the right to receive cash pursuant to Section 2.4
and shall be entitled only to such rights as are available to such holder
pursuant to the TBCA, unless the holder thereof shall have withdrawn or
forfeited his dissenter's rights. Each holder of Dissenting Shares shall be
entitled to receive the value of such Dissenting Shares held by him in
accordance with the applicable provisions of the TBCA. The Company will promptly
pay to any holder of Dissenting Shares such amount as such holder shall be
entitled to receive in accordance with the applicable provisions of the TBCA. If
any holder of Dissenting Shares shall effectively withdraw or forfeit his
dissenter's rights under the TBCA, such Dissenting Shares shall be converted
into the right to receive cash in accordance with Section 2.4.
SECTION 2.7. SPECIAL PROVISIONS. Xxxxx Xxxxx and Xxxx Xxxxxxxxxx shall
each enter into a Noncompetition Agreement with Parent (the "Noncompetition
Agreements"), the form of which is set forth in Schedule 5.1(d). Xxxxx Xxxxx and
Xxxx Xxxxxxxxxx shall each enter into a Consulting Agreement with Parent (the
"Consulting Agreements"), the form of which is set forth in Schedule 5.1(g).
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SHAREHOLDERS
The Company and each Shareholder jointly and severally represent and
warrant that the following are true and correct as of date hereof and will be
true and correct through the Closing Date as if made on that date:
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SECTION 3.1. ORGANIZATION AND GOOD STANDING; QUALIFICATION. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the state of Texas, with all requisite corporate power and authority to
carry on the business in which it is engaged, to own the properties it owns, to
execute and deliver this Agreement and the other agreements, instruments and
documents contemplated hereby and to consummate the transactions contemplated
hereby and thereby. The Company is duly qualified and licensed to do business
and is in good standing in all jurisdictions where the nature of its business
makes such qualification necessary, except where the failure to be qualified or
licensed would not have a material adverse effect on the business of the
Company.
SECTION 3.2. AUTHORIZATION AND VALIDITY. The execution, delivery and
performance by the Company of this Agreement and the other agreements,
instruments and documents contemplated hereby, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized by the
Company, its board of directors and shareholders. This Agreement and each other
agreement, instrument and document contemplated hereby has been duly executed
and delivered by the Company and each Shareholder, enforceable against the
Company and each Shareholder in accordance with their respective terms, except
as may be limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies.
SECTION 3.3. NO VIOLATION. Neither the execution, delivery or
performance of this Agreement or the other agreements, instruments and documents
contemplated hereby nor the consummation of the transactions contemplated hereby
or thereby will (i) conflict with, or result in a violation or breach of the
terms, conditions or provisions of, or constitute a default under, the Articles
of Incorporation or Bylaws of the Company or any agreement, indenture or other
instrument under which the Company or any shareholder of the Company is bound or
to which any of the Company's assets or properties are subject, or result in the
creation or imposition of any security interest, lien, charge or encumbrance
upon any of the Company's assets or properties or (ii) violate or conflict with
any judgment, decree, order, statute, rule or regulation of any court or any
public, governmental or regulatory agency or body having jurisdiction over the
Company, any shareholder of the Company or the Company's assets or properties.
SECTION 3.4. CAPITALIZATION. The authorized and issued capital stock of
the Company and the ownership interest of each shareholder of the Company are
set forth on Schedule 3.4. No shares of the capital stock of the Company are
held in the treasury of the Company. All of the issued and outstanding shares of
capital stock of the Company are duly authorized, validly issued, fully paid and
nonassessable. No shares of capital stock of the Company have been issued or
disposed of in violation of the preemptive rights of any of the Company's
shareholders. All accrued dividends on the capital stock of the Company, whether
or not declared, have been paid in full. There are no outstanding or authorized
options, rights, warrants, calls, convertible securities, rights to subscribe,
conversion rights or other agreements or commitments to which the Company is a
party or which are binding upon the Company providing for the issuance by the
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Company or transfer by the Company of additional shares of its capital stock and
the Company has not reserved any shares of its capital stock for issuance, nor
are there any outstanding stock option rights, phantom equity or similar rights,
contracts, arrangements or commitments. There are no voting trusts or any other
agreements or understandings with respect to the voting of the Company's capital
stock. The Company has no ownership interest in any of the capital stock of any
other corporation or any equity, profit sharing, participation or other interest
in any corporation, partnership, joint venture or other entity.
SECTION 3.5. CONSENTS. No consent, authorization, approval, permit or
license of, or filing with, any governmental or public body or authority, any
lender or lessor or any other person or entity is required to authorize, or is
required in connection with, the execution, delivery and performance of this
Agreement or the agreements, instruments and documents contemplated hereby on
the part of the Company or any shareholder.
SECTION 3.6. TITLE; LEASED ASSETS. The Company owns no real property.
Set forth on Schedule 3.6(a) is a list of all tangible and intangible personal
property owned by the Company (collectively, the "Personal Property"). The
Company has good, valid and marketable title to all of the Personal Property. A
list and brief description of all leases of personal and real property to which
the Company is a party, either as lessor or lessee, are set forth in Schedule
3.6 (b). All such leases are valid and enforceable in accordance with their
respective terms except as may be limited by applicable bankruptcy, insolvency
or similar laws affecting creditors' rights generally or the availability of
equitable remedies. The Personal Property and the leased personal property
referred to in this paragraph constitute the only personal property used in the
conduct of the business of the Company. Except as set forth in Schedule 3.6(c),
the Company owns, leases or otherwise possesses a right to use all assets used
in the conduct of the business of the Company, which will not be impaired by the
consummation of the transactions contemplated hereby.
SECTION 3.7. TAXES.
(a) For purposes of this Agreement, "taxes" shall include all federal,
state, local and foreign income, property, sales, excise and other taxes,
tariffs or governmental charges of any nature whatsoever, together with all
interest, penalties, fines and other additions imposed in respect thereof.
(b) Except as set forth on Schedule 3.7(b), all taxes of the Company
which have become due (without regard to any extension of time for payment and
whether or not shown on any tax return) have been paid. The Company has withheld
and paid over all taxes required to have been withheld and paid over and has
complied with all information reporting and back-up withholding requirements
relating to taxes. There are no liens with respect to taxes on any of the assets
of the Company, other than liens for taxes not yet due and payable.
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(b) All tax returns and information statements required to have been
filed by the Company have been timely filed (taking into account duly granted
extensions) and are true, correct and complete in all respects. The Company is
not currently the beneficiary of any extension of time within which to file any
tax return, and no claim has ever been made by any governmental authority in a
jurisdiction where the Company does not file tax returns that the Company is or
may be subject to taxation by that jurisdiction.
(c) The unpaid taxes of the Company for all periods ending on or before
December 31, 1998 did not exceed the amount of the current liability accruals
for taxes (exclusive of reserves for deferred taxes established to reflect
timing differences) reflected on the balance sheet of the Company as of December
31, 1998, and the unpaid taxes of the Company for all periods ending on or
before the Closing Date will not exceed the amount of such current liability
accruals reflected in the Company's books and records as of the Closing Date.
(d) No deficiencies exist or have been asserted or are expected to be
asserted with respect to taxes of the Company and the Company has not received
notice (verbally or in writing) nor does it expect to receive notice that it has
not filed a tax return or paid any taxes required to be filed or paid by it. No
audit, examination, investigation, action, suit, claim or proceeding relating to
the determination, assessment or collection of any tax of the Company is
currently in process, pending or, to the best knowledge of the Company and
Shareholders, threatened (verbally or in writing). No waiver or extension of any
statute of limitations relating to the assessment or collection of any tax of
the Company is in effect. There are no outstanding requests for rulings with any
tax authority relating to taxes of the Company.
(d) The Company is not and has never been a party to any tax sharing
agreement or arrangement (formal or informal, verbal or in writing) and is not
and has never been liable for the taxes of any other person, whether by law or
contract. Neither the Company nor any shareholder of the Company (or any direct
or indirect owner of any shareholder) is a "foreign person" as defined in
Section 1445(f)(3) of the Code. The Company has not made any payments, obligated
itself to make any payments or become a party to any agreement that under any
circumstance could obligate it or any successor or assignee of it to make any
payments that are not or will not be deductible under Code Section 280G, or that
would be subject to excise tax under Code Section 4999. The Company does not and
has not ever held, directly or indirectly, any "United States real property
interest" as that term is used in Section 897(a) of the Code. The Company is not
required to make any adjustment under Code Section 481(a) by reason of a change
in accounting method or otherwise.
SECTION 3.8. COMPLIANCE WITH LAWS. The Company and its shareholders
have complied with all laws, regulations and licensing requirements, including
without limitation, environmental laws and requirements. There are no existing
violations of, or any existing, pending or threatened investigation or inquiry
with respect to any federal, state or local law or regulation. The
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Company possesses all necessary licenses, franchises, permits and governmental
authorizations to conduct the Company's business as now conducted, and the
Surviving Corporation shall continue to possess all such licenses, franchises,
permits and governmental authorizations after the consummation of this
Agreement.
SECTION 3.9. FINDER'S FEE. Neither the Company nor any of its
shareholders has incurred any obligation for any finder's, broker's or agent's
fee in connection with the transactions contemplated hereby.
SECTION 3.10. LITIGATION. There are no legal actions or administrative
proceedings or investigations instituted, or to the best knowledge of the
Company and each Shareholder, threatened, against or affecting, or that could
affect, the Company, any of the Company's assets or properties or the business
of the Company. Neither the Company nor any Shareholder knows of any basis for
any such action, proceeding or investigation.
SECTION 3.11. CORPORATE RECORDS. Copies of the Articles of
Incorporation and Bylaws of the Company, both as amended, are attached hereto as
Schedule 3.11 and are true, correct and complete copies thereof, as in effect on
the date hereof. The minute books of the Company, copies of which have been
delivered to Parent, contain accurate minutes of all meetings of, and accurate
consents to all actions taken without meetings by, the board of directors (and
any committees thereof) and the shareholders of the Company since the formation
of the Company.
SCHEDULE 3.12. FINANCIAL STATEMENTS; LIABILITIES. Attached as Schedule
3.12(a) are the Company's unaudited balance sheet and related unaudited
statement of income for each of the twelve-month periods ended December 31 for
the 1999, 1998 and 1997 calendar years and for each monthly period through April
30, 1999 (collectively, the "Financial Statements"). The Financial Statements
are true, correct and complete, are in accordance with the books and records of
the Company, fairly present the financial condition and results of operations of
the Company as of the dates and for the periods indicated and have been prepared
on a consistent basis with prior periods. The Financial Statements reflect all
known liabilities of the Company, accrued, contingent or otherwise (asserted or
unasserted), arising out of transactions effected or events occurring on or
prior to the dates thereof. All known liabilities of the Company, accrued,
contingent or otherwise (asserted or unasserted) arising out of transactions
effected or events occurring from May 1, 1999 through the Closing Date are set
forth on Schedule 3.12(b). All reserves shown in the Financial Statements are
appropriate, reasonable and sufficient to provide for losses thereby
contemplated. All tangible assets used in the conduct of the business of the
Company are reflected in the Financial Statements. Except as set forth in
Schedules 3.12(a) or (b), the Company is not liable upon or with respect to, or
obligated in any other way to provide funds in respect of or to guarantee or
assume in any manner, any debt, obligation or dividend of any person,
corporation, association, partnership, joint venture, trust or other entity, and
neither the Company nor the Shareholders know of any basis for the assertion of
any other claims or
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liabilities of any nature or in any amount.
SCHEDULE 3.13. EMPLOYEE MATTERS. Schedule 3.13 contains a complete and
accurate list of the names, titles and cash compensation, including without
limitation wages, salaries, bonuses (discretionary and formula) and other cash
compensation (the "Cash Compensation") of all salaried employees of the Company.
In addition, Schedule 3.13 contains a complete and accurate description of (i)
all accrued but unpaid Cash Compensation, vacation, sick leave and all other
benefits as of the Closing Date for all employees of the Company and (ii) any
promised increases in Cash Compensation of such persons that have not yet been
effected. Schedule 3.13 contains a complete and accurate list of all
compensation plans, arrangements or practices (the "Compensation Plans")
sponsored by the Company or to which the Company contributes on behalf of its
employees. The Compensation Plans include without limitation plans, arrangements
or practices that provide for severance pay, deferred compensation, incentive,
bonus or performance awards, and stock ownership or stock options. Except as set
forth on Schedule 3.13, the Company is not a party to any employment agreements
with respect to its employees (including but not limited to employee leasing
agreements, employee services agreements and noncompetition agreements). Except
as set forth in Schedule 3.13, the Company does not sponsor or contribute to on
behalf of its employees, and has not sponsored or contributed to in the three
years preceding the date of this Agreement, any employee benefit plan within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended. The Company (i) has been and is in compliance with all laws, rules,
regulations and ordinances respecting employment and employment practices, terms
and conditions of employment and wages and hours, and (ii) is not liable for any
arrears of wages or penalties for failure to comply with any of the foregoing.
The Company has not engaged in any unfair labor practice or discriminated on the
basis of race, color, religion, sex, national origin, age or handicap in its
employment conditions or practices. There are no (i) unfair labor practice
charges or complaints or racial, color, religious, sex, national origin, age or
handicap discrimination charges or complaints pending or, to the best knowledge
of the Company and Shareholders, threatened against the Company before any
federal, state or local court, board, department, commission or agency nor, to
the best knowledge of the Company and Shareholders, does any basis therefor
exist or (ii) existing or, to the best knowledge of the Company and
Shareholders, threatened labor strikes, disputes, grievances, controversies or
other labor troubles affecting the Company, nor, to the best knowledge of the
Company and Shareholders, does any basis therefor exist. All employees of the
Company are citizens of, or are authorized to be employed in, the United States.
SECTION 3.14. COMMITMENTS. Except as set forth on Schedule 3.14, the
Company has not entered into, nor are the assets or the business of the company
bound by, whether or not in writing, any agreement, contract, document or
obligation, whether written or oral (collectively, the "Commitments"). True,
correct and complete copies of the written Commitments, and true, correct and
complete written descriptions of the oral Commitments, have been delivered to
Parent. There are no existing defaults, events of default or events,
occurrences, acts or omissions
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that, with the giving of notice or lapse of time or both, would constitute
defaults by the Company, and no penalties have been incurred nor are amendments
pending, with respect to the Commitments and the Commitments are in full force
and effect. Neither the Company nor any of the shareholders of the Company has
received notice of the exercise of any right to cancel or terminate any
Commitment. No customer or supplier of the Company has refused, or communicated
that it will or may refuse, to purchase or supply goods or services, as the case
may be, or has communicated that it will or may substantially reduce the amounts
of goods and services that it is willing to purchase from, or sell to, the
Company.
SECTION 3.15. INSURANCE. The Company carries property, liability,
workers' compensation and such other types of insurance as is customary in the
industry of the insured. All of such policies are valid and enforceable
policies, issued by insurers of recognized responsibility in amounts and against
such risks and losses as is customary in the industry of the insured. Such
insurance policies shall be outstanding and duly in force without interruption
up to and including the Closing Date. True, complete and correct copies of all
such policies have heretofore been provided to Parent.
SECTION 3.16. OWNERSHIP INTERESTS OF INTERESTED PERSONS. No officer,
supervisory employee, manager or member of the Company, or their respective
spouses or children, owns directly or indirectly, on an individual or joint
basis, any material interest in, or serves as an officer or director of, any
customer or supplier of the Company, or any organization that has a material
contract or arrangement with the Company. Except for the ownership of publicly
traded securities constituting less than one percent (1%) of the total issued
and outstanding securities of the same class, none of the shareholders owns
directly or indirectly any interests or has any investment in any corporation,
business or other person that is a competitor of the Company.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant that
the following are true and correct as of the date hereof:
SECTION 4.1. ORGANIZATION AND GOOD STANDING. Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the state of Texas, with all requisite corporate power and authority to carry
on the business in which it is engaged, to own the properties it owns, to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby.
SECTION 4.2. AUTHORIZATION AND VALIDITY. The execution, delivery and
performance by Merger Sub of this Agreement and the other agreements,
instruments and documents contemplated hereby, and the consummation of the
transactions contemplated hereby and thereby,
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have been duly authorized by Parent and Merger Sub. This Agreement and each
other agreement, instrument and document contemplated hereby and executed by
Parent and Merger Sub have been duly executed and delivered by Parent and Merger
Sub and constitute legal, valid and binding obligations of parent and Merger
Sub, enforceable against same in accordance with their respective terms, except
as may be limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies.
SECTION 4.3. NO VIOLATION. Neither the execution, delivery or
performance of this Agreement or the other agreements, instruments and documents
contemplated hereby nor the consummation of the transactions contemplated hereby
or thereby will (i) conflict with, or result in a violation or breach of the
terms, conditions and provisions of, or constitute a default under, the Articles
of Incorporation or Bylaws of Merger Sub or any agreement, indenture or other
instrument under which Merger Sub is bound or (ii) violate or conflict with any
judgment, decree, order, statute, rule or regulation of any court or any public,
governmental or regulatory agency or body having jurisdiction over Merger Sub or
the properties or assets of Merger Sub.
ARTICLE V.
CLOSING DELIVERIES AND CONDITIONS PRECEDENT
SECTION 5.1. DELIVERIES OF THE COMPANY AND SHAREHOLDERS. At the
Closing, the Company and Shareholders (as the case may be) shall deliver to
Merger Sub and/or Parent, as appropriate, the following, all of which shall be
in a form satisfactory to counsel to Merger Sub and Parent:
(a) resignations from the officers and directors of the Company, dated
as of the Effective Time;
(b) a copy of the resolutions of the Board of Directors of the Company
and the resolutions of the shareholders of the Company authorizing the
execution, delivery and performance of this Agreement and all related documents
and agreements, each certified by the Company's Secretary as being true and
correct copy of the original thereof subject to no modifications or amendments;
(c) a certificate, dated within five (5) days of the Closing Date, of
the Secretary of State of Texas establishing that the Company is in existence,
has paid all franchise taxes and otherwise is in good standing to transact
business in its state of incorporation;
(d) the executed Noncompetition Agreements of Xxxxx Xxxxx and Xxxx
Xxxxxxxxxx in the form attached hereto as Schedule 5.1(d);
(e) a certificate of the President of the Company certifying that the
Company has
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performed its agreements contained in this Agreement required to be performed by
Closing and that the representations and warranties of the Company contained in
this Agreement shall be true and correct in all material respects on and as of
Closing;
(f) a certificate of each Shareholder certifying that the Shareholders
have performed their agreements contained in this Agreement required to be
performed by Closing and that the representations and warranties of the
Shareholders contained in this Agreement are true and correct in all material
respects on and as of Closing;
(g) the executed Consulting Agreements of Xxxxx Xxxxx and Xxxx
Xxxxxxxxxx in the form attached hereto as Schedule 5.1(g);
(h) such other documents as shall be necessary or appropriate, as
Parent or Merger Sub may reasonably request in connection with the transactions
contemplated hereby.
SECTION 5.2. DELIVERIES OF PARENT AND MERGER SUB. At the Closing,
Merger Sub and Parent shall deliver to the Company and/or the Shareholders, as
appropriate, the following, all of which shall be in a form satisfactory to
counsel to the Company:
(a) a copy of the resolutions of the Board of Directors of the Merger
Sub and the resolutions of the shareholders of the Merger Sub authorizing the
execution, delivery and performance of this Agreement and all related documents
and agreements, each certified by the Merger Sub's Secretary as being true and
correct copy of the original thereof subject to no modifications or amendments;
(b) the executed Noncompetition Agreements; and
(c) the executed Consulting Agreements.
SECTION 5.3. MERGER SUB'S AND PARENT'S CONDITIONS TO CLOSING. The
obligations of Merger Sub and Parent hereunder are subject to fulfillment at or
prior to the Closing of each of the following conditions: (i) the transactions
contemplated herein shall have been duly approved by the board of directors of
Merger Sub and Parent; and (ii) Merger Sub and Parent shall have received all of
the closing deliveries set forth in Section 5.1.
SECTION 5.4. COMPANY'S CONDITIONS TO CLOSING. The obligations of the
Company hereunder are subject to fulfillment at or prior to the Closing of each
of the following conditions: (i) the transactions contemplated herein shall have
been duly approved by the board of directors of the Company; and (ii) the
Company shall have received all of the closing deliveries set forth in Section
5.2.
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ARTICLE VI.
POST CLOSING MATTERS
SECTION 6.1. FURTHER INSTRUMENTS OF TRANSFER. Following the Closing, at
the request of Parent, the Company and Shareholders shall deliver any further
instruments of transfer reasonably requested by Parent, and take all reasonable
action as may be necessary or appropriate to carry out more effectively the
provisions of this Agreement and to establish and protect the rights created in
favor of the parties hereunder.
SECTION 6.2. TAX MATTERS. Each party hereto shall provide to each of
the other parties hereto such cooperation and information as any of them
reasonably may request in filing any income tax return, amended return or claim
for refund, determining a liability for income taxes or a right to refund of
such taxes or in conducting any audit or other proceeding in respect of such
taxes. Such cooperation and information shall include providing copies of all
relevant portions of returns, together with relevant accompanying schedules,
work papers, documents relating to rulings or other determinations by taxing
authorities and records concerning the ownership and tax basis of property,
which such party may possess.
SECTION 6.3. EMPLOYEE BONUS. Following the Closing, Parent and/or the
Company agree to make certain bonus payments totaling $700,000 to certain
employees of the Company as instructed by the Shareholders in writing after the
Closing. Parent and/or the Company will forward such payments to the employees
within four days after receiving written instructions from Shareholders.
ARTICLE VII.
REMEDIES
SECTION 7.1. INDEMNIFICATION BY THE SHAREHOLDERS. Subject to the terms
and conditions of this Article, each Shareholder jointly and severally agree to
indemnify, defend and hold Parent, the Surviving Corporation and their
respective directors, officers, agents, attorneys and affiliates (the "Purchaser
Indemnitees") harmless from and against all losses, claims, obligations,
demands, assessments, penalties, liabilities, costs, damages, attorneys' fees
and expenses (collectively, "Damages"), asserted against or incurred by such
indemnities by reason of or resulting from:
(a) a breach of any representation, warranty or covenant of the Company
or a Shareholder contained herein, in any schedule or certificate delivered
hereunder, or in any agreement executed in connection with the transactions
contemplated hereby;
(b) any liabilities, contingent or otherwise (known or unknown and
asserted or unasserted) arising out of the Company's conduct or its business
prior to Closing and the liabilities of the Company created prior to Closing or
arising out of transactions effected or events
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occurring on or prior to the Closing Date (including, without limitation,
litigation matters which arose from events or circumstances occurring on or
prior to the closing Date), except as disclosed herein (unless such liability is
specifically a subject of indemnification hereunder);
(c) all taxes upon or arising from the transactions contemplated
hereby;
(d) all taxes of the Company with respect to any taxable period ending
on or before the Closing Date (or for any taxable period beginning before and
ending after the Closing Date to the extent allocable to the portion of such
period beginning before and ending on the Closing Date) to the extent such taxes
exceed the amount of the current liability accruals for taxes (exclusive of
reserves for deferred Taxes established to reflect timing differences) reflected
in the Company's books and records as of the Closing Date; provided that for
purposes of this subsection, the portion of any tax attributable to a taxable
year or period beginning before and ending after the Closing Date shall be
determined by apportioning the tax for the entire year or period based upon the
number of days in the year or period, except that any such tax measured by
income or receipts shall be apportioned based upon actual results of operations
through the end of the Closing Date;
(e) all expenses of the Company and Shareholders related to this
transaction, including, without limitation, the fees of the Company's and
Shareholders' legal counsel and accountants; and
(f) all amounts owed by the Company to NeoSoft Productions and X.
Xxxxxxxxxx.
Notwithstanding the above paragraphs, the Shareholders shall not be
required to indemnify Purchaser Indemnitees in respect of any Damages until the
aggregate amount of such Damages exceeds $50,000, whereupon the Shareholders
shall be required to indemnify the Purchaser Indemnitees in respect of such
Damages only to the extent that such Damages exceed $50,000.
SECTION 7.2. INDEMNIFICATION BY PARENT. Subject to the terms and
conditions of this Article, Parent hereby agree to indemnify, defend and hold
Shareholders and their agents, attorneys and affiliates harmless from and
against all Damages asserted against or incurred by any of such indemnities by
reason of or resulting from
(a) a breach by Merger Sub of any representation, warranty or covenant
of Merger Sub contained herein or in any exhibit, schedule or certificate
delivered hereunder, or in any agreement executed in connection with the
transactions contemplated hereby; and
(b) enforcement of the guarantees described on Schedule 7.2.
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SECTION 7.3. CONDITIONS OF INDEMNIFICATION. The respective obligations
and liabilities of the Shareholders and Parent (the "indemnifying party") to the
other or the Surviving Corporation (the "party to be indemnified") under
Sections 7.1 and 7.2 with respect to claims resulting from the assertion of
liability by third parties shall be subject to the following terms and
conditions:
(a) Promptly after receipt of notice of commencement of any action
evidenced by service of process or other legal pleading, the party to be
indemnified shall give the indemnifying party written notice thereof together
with a copy of such claim, process or other legal pleading, and the indemnifying
party shall have the right to undertake the defense thereof by representatives
of its own choosing and at its own expense; provided that the party to be
indemnified may participate in the defenses with counsel of its own choice, the
fees and expenses of which counsel shall be paid by the party to be indemnified
unless (i) the indemnifying party has agreed to pay such fees and expenses, (ii)
the indemnifying party has failed to assume the defense of such action or (iii)
the named parties to any such action (including any impleaded parties) include
both the indemnifying party and the party to be indemnified and the party to be
indemnified has been advised by counsel that there may be one or more legal
defenses available to it that are different from or additional to those
available to the indemnifying party (in which case, if the party to be
indemnified informs the indemnifying party in writing that it elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such action on behalf of
the party to be indemnified, it being understood, however, that the indemnifying
party shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys at any time for the
party to be indemnified, which firm shall be designated in writing by the party
to be indemnified).
(b) In the event that the indemnifying party, by the thirtieth (30th)
day after receipt of notice of any such claim (or, if earlier, by the tenth
(10th) day preceding the day on which an answer or other pleading must be served
in order to prevent judgment by default in favor of the person asserting such
claim), does not elect to defend against such claim, the party to be indemnified
will (upon further notice to the indemnifying party) have the right to undertake
the defense, compromise or settlement of such claim on behalf of and for the
account and risk of the indemnifying party and at the indemnifying party's
expense, subject to the right of the indemnifying party to assume the defense of
such claims at any time prior to settlement, compromise or final determination
thereof.
(c) Notwithstanding the foregoing, the indemnifying party shall not
settle any claim without the consent of the party to be indemnified, such
consent not to be unreasonably withheld, unless such settlement involves only
the payment of money and the claimant provides to the party to be indemnified a
release from all liability in respect of such claim. If the settlement of the
claim involves more than the payment of money, the indemnifying party shall not
settle the claim without the prior consent of the party to be indemnified. The
party to be indemnified and the
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indemnifying party will each cooperate with all reasonable requests of the
other.
SECTION 7.4. WAIVER. No waiver by any party of any default or breach by
another party of any representation, warranty, covenant or condition contained
in this Agreement, any exhibit or any document, instrument or certificate
contemplated hereby shall be deemed to be a waiver of any subsequent default or
breach by such party of the same or any other representation, warranty, covenant
or condition. No act, delay, omission or course of dealing on the part of any
party in exercising any right, power or remedy under this Agreement or at law or
in equity shall operate as a waiver thereof or otherwise prejudice any of such
party's rights, powers and remedies. All remedies, whether at law or in equity,
shall be cumulative and the election of any one or more shall not constitute a
waiver of the right to pursue other available remedies.
SECTION 7.5. REMEDIES EXCLUSIVE. The remedies provided in this Article
shall be exclusive of any other rights or remedies available to one party
against the other, either at law or in equity, except in the case of fraud.
SECTION 7.6. COSTS, EXPENSES AND LEGAL FEES. Subject to the provisions
of Sections 7.1 and 7.2, whether or not the transactions contemplated hereby are
consummated, each party hereto shall bear its own costs and expenses (including
attorneys' fees), except that (a) each party hereto agrees to pay the costs and
expenses (including reasonable attorneys' fees and expenses) incurred by the
other parties in successfully enforcing any of the terms of this Agreement or
proving that another party breached any of the terms of this Agreement; and (b)
the Shareholders shall bear all transaction expenses of the Company, including
without limitation, the fees of the Company's legal counsel and accountants.
SECTION 7.7. CLAIMS PERIOD. Any claims for Damages must be made prior
to the expiration of the applicable periods set forth in Section 8.6, and as to
any such claim that is presented to the indemnifying party within the applicable
period set forth in Section 8.6, such obligation to indemnify shall continue to
survive until such claim is finally resolved or disposed of.
ARTICLE VIII.
MISCELLANEOUS
SECTION 8.1. AMENDMENT. This Agreement may be amended, modified or
supplemented only by an instrument in writing executed by all the parties
hereto.
SECTION 8.2. ASSIGNMENT. Neither this Agreement nor any right created
hereby or in any agreement entered into in connection with the transactions
contemplated hereby shall be assignable by any party hereto, except by Parent or
Merger Sub to an affiliate of Parent or Merger Sub.
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SECTION 8.3. PARTIES IN INTEREST; NO THIRD PARTY BENEFICIARIES. Except
as otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective heirs, legal
representatives, successors and assigns of the parties hereto. Neither this
Agreement nor any other agreement contemplated hereby shall be deemed to confer
upon any person not a party hereto or thereto any rights or remedies hereunder
or thereunder.
SECTION 8.4. ENTIRE AGREEMENT. This Agreement and the agreements
contemplated hereby constitute the entire agreement of the parties regarding the
subject matter hereof, and supersede all prior agreements and understandings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof.
SECTION 8.5. SEVERABILITY. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable and this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal invalid or unenforceable provision or by its severance
herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this Agreement a
provision as similar in its terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
SECTION 8.6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations, warranties and covenants contained herein shall survive the
Closing and all statements contained in any certificate, schedule or other
instrument delivered by or on behalf of the Company, a Shareholder, Merger Sub
or Parent pursuant to this Agreement shall be deemed to have been
representations and warranties by the Company, Shareholders, Merger Sub or
Parent, as the case may be, and, notwithstanding any provision in this Agreement
to the contrary, shall survive the Closing for a period of eighteen (18) months,
except for representations, warranties and indemnification provisions with
respect to any environmental, tax or tax-related matters which shall survive the
Closing until the running of any applicable statutes of limitation.
SECTION 8.7. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS (BUT NOT THE RULES GOVERNING
CONFLICTS OF LAWS) OF THE STATE OF TEXAS.
SECTION 8.8. CAPTIONS. The captions in this Agreement are for
convenience of reference only and shall not limit or otherwise affect any of the
terms or provisions hereof.
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SECTION 8.9. CONFIDENTIALITY; PUBLICITY AND DISCLOSURES. Each party
shall keep this Agreement and its terms confidential, and shall make no press
release or public disclosure, either written or oral, regarding the transactions
contemplated by this Agreement without the prior knowledge and consent of the
other parties hereto; provided that the foregoing shall not prohibit any
disclosure to attorneys, accountants, investment bankers or other agents of the
parties or as required by law.
SECTION 8.10. NOTICE. Any notice or communication hereunder or in any
agreement entered into in connection with the transactions contemplated hereby
must be in writing and given by depositing the same in the United States mail,
addressed to the party to be notified, postage prepaid and registered or
certified with return receipt requested, by facsimile transmission or by
delivering the same in person. Such notice shall be deemed received on the date
on which it is hand-delivered or transmitted by facsimile or on the third (3rd)
business day following the date on which it is so mailed. For purposes of
notice, the addresses of the parties shall be:
If to Merger Sub: GEEK Houston, Inc.
One Dallas Centre
000 X. Xx. Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: President
Fax No.: (000) 000-0000
If to Parent: Internet America, Inc.
One Dallas Centre
000 X. Xx. Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: President
Fax No.: (000) 000-0000
With copy to: Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxxx L.L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
If to the Company: NeoSoft, Inc.
0000 Xx. Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: President
Fax No.: (___) _________
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If to the Shareholders: Xxxxx Xxxxx
Xxxx Xxxxxxxxxx
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Fax No.: (___) __________
With copy to: Xxxx Xxxxxx
Mayor, Day, Xxxxxxxx & Xxxxxx, X.X.
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
Any party may change its address for notice by written notice given to the other
parties in accordance with this Section.
SECTION 8.11. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
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EXECUTED as of the date first above written.
COMPANY:
NEOSOFT, INC.
By: /s/ Xxxxx Xxxxx
----------------------------
Xxxxx Xxxxx, President
SHAREHOLDERS:
/s/ Xxxxx Xxxxx
----------------------------
Xxxxx Xxxxx
/s/ Xxxx Xxxxxxxxxx
----------------------------
Xxxx Xxxxxxxxxx
MERGER SUB:
GEEK HOUSTON, INC.
By: /s/ Xxxxxxx Xxxxxx
----------------------------
Xxxxxxx Xxxxxx, President
PARENT:
INTERNET AMERICA, INC.
By: /s/ Xxxxxxx Xxxxxx
----------------------------
Xxxxxxx Xxxxxx, President and
Chief Executive Officer
