EXHIBIT 10.11
ASSET PURCHASE AGREEMENT
by and among
SKYNET HOLDINGS, INC.
and
FLEET ACQUISITION CORP.
as the Buyers
NEVADA FLEET MANAGEMENT, INC.
as Seller
Dated March 11, 1999
TABLE OF CONTENTS
Page
1. DEFINITIONS........................................................................................ 1
1.1 Definitions.................................................................................. 1
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1.2 Interpretation Provisions.................................................................... 8
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2. SALE AND PURCHASE OF ASSETS AND VEHICLES........................................................... 9
2.1 Agreement to Sell and Purchase Assets and Vehicles........................................... 9
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2.2 Responsibility for Liabilities............................................................... 9
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2.3 Taking of Necessary Action; Further Action...................................................11
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3. PAYMENT OF THE PURCHASE CONSIDERATION..............................................................11
3.1 Purchase Consideration.......................................................................11
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3.2 Escrow Provisions............................................................................11
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3.3 Post-Closing Review of Closing Balance Sheet; Adjustment to Purchase
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Consideration............................................................................12
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4. REPRESENTATIONS OF SELLER..........................................................................13
4.1 Organization and Standing of Seller..........................................................14
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4.2 Due Authorization............................................................................14
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4.3 No Conflict or Violation; Consents...........................................................14
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4.4 Real Property................................................................................14
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4.5 Personal Property............................................................................15
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4.6 Litigation...................................................................................16
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4.7 Environmental Matters........................................................................16
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4.8 Third Party Consents.........................................................................16
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4.9 Labor Matters................................................................................17
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4.10 Intellectual Property.......................................................................17
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4.11 Financial Statements; Books and Records.....................................................18
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4.12 Insurance...................................................................................18
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4.13 Accounts Receivable.........................................................................18
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4.14 Tax Matters.................................................................................18
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4.15 Bulk Sales Compliance and Transfer Taxes....................................................19
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4.16 Contracts...................................................................................19
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4.17 Customers...................................................................................20
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4.18 Employee Benefit Matters....................................................................20
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4.19 No Significant Agreements Excluded..........................................................20
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4.20 Compliance with Law.........................................................................20
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4.21 SkyNet Shares...............................................................................21
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4.22 Absence of Certain Changes or Events........................................................22
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4.23 Brokers' Fees...............................................................................22
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4.24 Full Disclosure.............................................................................22
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5. REPRESENTATIONS OF SKYNET AND SUB..................................................................23
5.1 Organization and Standing of SkyNet..........................................................23
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5.2 Organization and Standing of Sub.............................................................23
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5.3 Authorization and Enforceability.............................................................23
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5.4 No Conflict or Violation; Consents...........................................................24
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5.5 SkyNet Shares................................................................................24
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5.6 Approval.....................................................................................24
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5.7 Brokers' Fees................................................................................24
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5.8 Absence of Certain Changes or Events.........................................................24
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5.9 Litigation...................................................................................25
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5.10 Third Party Consents........................................................................26
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5.11 Financial Statements; Books and Records.....................................................26
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5.12 Insurance...................................................................................26
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5.13 Tax Matters.................................................................................27
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5.14 Full Disclosure.............................................................................27
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6. CLOSING............................................................................................27
6.1 Closing......................................................................................27
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6.2 Obligations of Seller........................................................................28
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6.3 Obligations of SkyNet and Sub................................................................29
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6.4 Further Documents or Necessary Action........................................................29
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7. COVENANTS AND AGREEMENTS...........................................................................29
7.1 Conduct of Business Pending the Closing......................................................29
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7.2 Access By the Buyers; Confidentiality........................................................30
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7.3 Access By Seller; Confidentiality............................................................30
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7.4 Notice of Breach or Failure of Condition.....................................................31
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7.5 Contract Consents...........................................................................31
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7.6 Production of Schedules and Exhibits.........................................................31
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7.7 Best Efforts.................................................................................32
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7.8 Exclusive Dealing............................................................................32
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8. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYERS......................................................32
8.1 Representations True at Closing..............................................................32
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8.2 Performance..................................................................................32
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8.3 No Adverse Changes...........................................................................32
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8.4 Litigation...................................................................................33
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8.5 Due Diligence................................................................................33
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8.6 Transportation Agreement.....................................................................33
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8.7 Registration Rights Agreement................................................................33
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8.8 Transitional Sublease........................................................................33
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8.9 Replacement Las Vegas Facility...............................................................33
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8.10 Assignment of Leases........................................................................33
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8.11 Escrow Agreement............................................................................33
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8.12 Certificate.................................................................................34
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9. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER......................................................34
9.1 Representations True at Closing..............................................................34
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9.2 Performance..................................................................................34
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9.3 No Adverse Changes...........................................................................34
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9.4 Litigation...................................................................................34
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9.5 Governmental Consents........................................................................34
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9.6 Transportation Agreement.....................................................................35
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9.7 Registration Rights Agreement................................................................35
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9.8 Due Diligence................................................................................35
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9.9 Escrow Agreement.............................................................................35
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9.10 Replacement Las Vegas Facility..............................................................35
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9.11 Interstate and Intrastate Operational Authority.............................................35
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9.12 Third Party Consents........................................................................35
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9.13 Assignment of Lease.........................................................................35
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9.14 Certificate.................................................................................36
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10. POST CLOSING COVENANTS............................................................................36
10.1 Access to Books and Records.................................................................36
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10.2 Restrictions on Transfer of SkyNet Stock....................................................36
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10.3 Employee Matters............................................................................36
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10.4 Real Property Lease Matters.................................................................37
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10.5 Transfer of Right to Use the Name "Fleet Delivery Service"..................................37
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11. NON-COMPETITION...................................................................................38
11.1 Covenant Not to Compete.....................................................................38
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11.2 Covenant Not to Disclose....................................................................38
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11.3 Remedies....................................................................................38
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11.4 Invalidity..................................................................................39
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12. INDEMNIFICATION AND RELATED MATTERS...............................................................39
12.1 Survival of Representations.................................................................39
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12.2 Indemnification by Seller...................................................................39
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12.3 Indemnification by the Buyers...............................................................40
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12.4 Third Party Claims..........................................................................40
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13. TERMINATION.......................................................................................41
13.1 Termination by Mutual Consent...............................................................41
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13.2 Termination Upon Breach or Default..........................................................41
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13.3 Termination Based Upon Failure of Conditions................................................41
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13.4 Termination on Termination Date.............................................................42
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14. GENERAL...........................................................................................42
14.1 Entire Agreement............................................................................42
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14.2 Binding Effect; Benefits; Assignment........................................................42
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14.3 Headings....................................................................................42
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14.4 Amendment and Waiver........................................................................42
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14.5 Governing Law...............................................................................43
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14.6 Arbitration.................................................................................43
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14.7 Public Disclosure...........................................................................43
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14.8 Notices.....................................................................................43
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14.9 Counterparts................................................................................44
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14.10 Expenses...................................................................................45
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14.11 Invalidity.................................................................................45
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Schedules
1.1.1 Assets
1.1.2 Vehicles
2.2.1.2.2 Letter of Western Technologies, Inc.
2.2.2.3 Liabilities for Employee Benefits
3.3.3 Allocation of Purchase Price
4.1 Organization and Standing of Seller
4.3 No Conflict or Violation; Consent
4.4.3 Leased Real Property
4.5.2 Owned Personal Property
4.6 Litigation
4.9.1 List of Employees
4.9.2 Labor Matters
4.9.4 Severance Agreement
4.10.1 Intellectual Property Assets
4.11.1 Seller's Financial Statements
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4.12 Sellers Insurance Policies or Binders
4.14.1 Seller's Tax Returns
4.14.2 Seller's Payment of Taxes
4.14.3 Seller Audits, Investigations or Claims
4.16.1 Contracts
4.16.2 Material Compliance of Contracts
4.17 List of Customers dated February 28, 1999
4.22 No Adverse Business Changes
5.1 Organization and Standing of SkyNet
5.2 Organization and Standing of Sub
5.4 No Conflicts or Violations; Consents
5.8 No Material Adverse Changes to Buyers
5.9 Litigation
5.12 Buyers' Insurance Policies
5.11.1 SkyNet Financial Statements
5.13.1 Buyers - Filing of Tax Returns
5.13.2 Buyers - Payment of Taxes
5.13.3 Buyers - Audits, Investigations, Claims
6.2.7 Vehicles Sales Agreement
7.5 Contract Consents
Exhibits
A IRS Form 8594
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ASSET PURCHASE AGREEMENT
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This ASSET PURCHASE AGREEMENT (the "Agreement") is made as of March
11, 1999, by and among SKYNET HOLDINGS, INC., a publicly-owned Delaware
corporation ("SkyNet") and FLEET ACQUISITION CORP. ("Sub"), a Nevada corporation
which is a wholly-owned subsidiary of SkyNet (SkyNet and Sub are collectively
referred to as the "Buyers"), and NEVADA FLEET MANAGEMENT, INC., a Nevada
corporation (the "Seller").
WITNESSETH:
WHEREAS, Seller operates a routed courier delivery business (the
"Business") from various locations in Nevada, California, Oregon, Washington,
Arizona [and Utah]; and
WHEREAS, SkyNet currently operates a worldwide courier business; and
WHEREAS, Seller desires to sell certain assets it currently owns and
uses in the Business as conducted as of the date hereof, which assets are
specifically described on a schedule hereto or elsewhere in this Agreement,
including contract rights, intellectual property rights and the goodwill and
going concern value of such Business; and
WHEREAS, (i) Seller wishes to cease operating the Business; (ii) the
Buyers wish to purchase certain of the assets used by Seller in the Business and
acquire from the Seller certain vehicles, owned by Seller and used by Seller in
the Business.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, agreements and representations herein contained, and for other good
and legal consideration, the receipt and sufficiency of which is hereby
acknowledged, Seller and the Buyers, intending to be legally bound hereby, agree
as follows:
1. DEFINITIONS
1.1 Definitions.
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When used in this Agreement, the following terms, in their singular
and plural forms, shall have the meanings assigned to them below:
"Accounts Payable" means the accounts payable reflected on the Closing
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Balance Sheet.
"Accounts Receivable" means the accounts receivable reflected on the
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Closing Balance Sheet.
"Act" means the Securities Act of 1933, as amended.
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"Affiliate Vehicles" is defined in Section 6.2.7.
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"Agreement" is defined in the initial paragraph hereof.
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"Ancillary Agreements" means the Escrow Agreement, the Registration
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Rights Agreement, the Transitional Sublease and the Transportation Agreement.
"Assets" means (i) those assets specifically identified on Schedule
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1.1.1 hereto used by the Seller in the Business in its two Las Vegas facilities,
and (ii) all of Seller's tangible assets used in the operation of the Business
located in its Satellite Locations, including without limitation office
furniture and office equipment, machinery and trade equipment, vehicle
maintenance equipment, spare automotive parts, computers, computer peripherals
and, fixtures, and (iii) certain intangible assets owned by Seller and used in
the Business, limited to:
(a) all of Seller's interest in and to the Contracts;
(b) non-privileged operating data and records of Seller since January
1, 1997, limited to, all client and customer lists and records, referral
sources, research and development reports and records, production reports and
records, configuration files, operating guides and manuals, sales literature,
copies of the Records, telephone numbers (including voice, fax and pager
numbers) used at any of Seller's locations, correspondence and other similar
documents relating to the Business;
(c) all of the intellectual property owned by Seller and used in
connection with the Business, including all trade secrets, know-how, processes,
methods, plans, research data, marketing plans and strategies, forecasts,
trademarks, service marks, trade names, patents and patent rights, logos and
copyrights and, subject to the provisions of Section 10.5 hereof, all rights to
use the name "Fleet Delivery Service";
(d) the goodwill and going concern value of the Business;
(e) all cash and bank accounts of the Seller as of the Closing Date;
and
(f) all Accounts Receivable and obligations for Accounts Payable
incurred in the Ordinary Course of Business.
"Business" means Seller's routed courier service, as conducted by
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Seller as of the date of Closing and during all relevant periods covered by the
Financial Statements.
"Buyers" is defined in the initial paragraph hereof.
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"Buyers' Closing Balance Sheet" is defined in Section 3.3.2.
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"Claim" means (i) a claim or demand for any and all Liabilities,
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damages, losses, obligations, deficiencies, encumbrances, penalties, costs and
expenses, including reasonable attorneys' fees, resulting from, related to or
arising out of (A) any inaccuracy in any representation, any misrepresentation
or non-fulfillment of any covenant set forth in this Agreement or in any
Ancillary Agreement; (B) Seller' ownership of the Assets; (C) any and all
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Proceedings, demands, assessments, audits, judgments and claims arising out of
any of the foregoing; (ii) any adjustment to the Purchase Consideration required
pursuant to Section 3.3.3 hereof.
"Closing" is defined in Section 6.1.
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"Closing Balance Sheet" means the unaudited balance sheet of Seller,
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dated as of February 28, 1999, to be prepared and delivered by Seller to the
Buyers on the Closing Date (who shall acknowledge to the Seller receipt thereof
when delivered), which balance sheet shall be prepared in accordance with GAAP.
"Closing Date" is defined in Section 6.1.
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"Contract" means all agreements, contracts, leases (whether for real
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or personal property), purchase orders, undertakings, covenants not to compete,
employment agreements, confidentiality agreements, licenses, instruments,
obligations and commitments to which Seller is a party or by which Seller or any
of the Assets are bound or affected, whether written or oral.
"Court Order" means any judgment, decision, consent decree,
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injunction, ruling or order of any foreign, federal, state or local court or
governmental agency, department or authority that is binding on any Person or
its property under applicable law.
"Employees" means all Persons employed by Seller on a full or part-
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time basis, together with any Person retained as an independent contractor or
subcontractor, as of the relevant date.
"Encumbrance" means any claim, lien, pledge, option, charge, easement,
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security interest, deed of trust, mortgage, right-of-way, encroachment, building
or use restriction, conditional sales agreement, encumbrance or other right of
third parties, whether voluntarily incurred or arising by operation of law, and
includes any agreement to give any of the foregoing in the future, and any
contingent sale or other title retention agreement or lease in the nature
thereof.
"Environmental Claims" means all notices of violation, liens, claims,
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demands, suits, or causes of action for any damage, including, without
limitation, personal injury, property damage (including, without limitation, any
depreciation or diminution of property values), lost use of property or
consequential damages, arising directly or indirectly out of Environmental
Conditions or Environmental Laws. By way of example only (and not by way of
limitation), Environmental Claims include (i) violations of or obligations under
any contract related to Environmental Laws or Environmental Conditions between
any Seller and any other person, (ii) actual or threatened damages to natural
resources, (iii) claims for nuisance or its statutory equivalent, (iv) claims
for the recovery of response costs, or administrative or judicial orders
directing the performance of investigations, responses or remedial actions under
any Environmental Laws, (v) requirements to implement "corrective action"
pursuant to any order or permit issued pursuant to the Resource Conservation and
Recovery Act, as amended ("RCRA"),
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or similar provisions of applicable state law, (vi) claims related to
Environmental Laws or Environmental Conditions for restitution, contribution, or
indemnity, (vii) fines, penalties or liens of any kind against property related
to Environmental Laws or Environmental Conditions, (viii) claims related to
Environmental Laws or Environmental Conditions for injunctive relief or other
orders or notices of violation from federal, state or local agencies or courts,
and (ix) with regard to any present or former employees, claims relating to
exposure to or injury from Environmental Conditions.
"Environmental Conditions" means the state of the environment,
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including natural resources (e.g., flora and fauna), soil, surface water, ground
water, any drinking water supply, subsurface strata or ambient air, relating to
or arising out of the use, handling, storage, treatment, recycling, generation,
transportation, release, spilling, leaking, pumping, pouring, emptying,
discharging, injecting, escaping, leaching, disposal, dumping or threatened
release of Hazardous Substances by Seller or any of their predecessors or
successors in interest, or by their respective agents, representatives,
employees or independent contractors when acting in such capacity on behalf of
any Seller. With respect to Environmental Claims by third parties,
Environmental Conditions also include the exposure of persons to Hazardous
Substances at the work place or the exposure of persons or property to Hazardous
Substances migrating from or otherwise emanating from or located on property
owned or occupied by any Seller.
"Environmental Laws" means all applicable federal, state, district and
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local laws, all rules or regulations promulgated thereunder, and all orders,
consent orders, judgments, notices, permits or demand letters issued,
promulgated or entered pursuant thereto, relating to pollution or protection of
the environment (including, without limitation, ambient air, surface water,
ground water, land surface, or subsurface strata), including, without
limitation, (i) laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals, industrial materials, wastes or
other substances into the environment and (ii) laws relating to the
identification, generation, manufacture, processing, distribution, use,
treatment, storage, disposal, recovery, transport or other handling of
pollutants, contaminants, chemicals, industrial materials, wastes or other
substances. Environmental Laws shall include, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"), the Toxic Substances Control Act, as amended, the Hazardous
Materials Transportation Act, as amended, RCRA, the Clean Water Act, as amended,
the Safe Drinking Water Act, as amended, the Clean Air Act, as amended, the
Occupational Safety and Health Act, as amended, and all analogous laws
promulgated or issued by any state or other Governmental Authority.
"Environmental Reports" means any and all written analyses, summaries
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or explanations, in the possession or control of any Seller, of (a) any
Environmental Conditions in, on or about the properties of any Seller, or (b)
any Seller's compliance with Environmental Laws.
"Escrow Agent" means Xxxx X. Xxxxx.
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"Escrow Agreement" is defined in Section 3.2.1.
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"Escrow Shares" is defined in Section 3.2.1.
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"Excluded Assets" means all other interests held by and assets owned
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by the Seller not specifically identified in Schedule 1.1.2 or located at the
Satellite Locations, including but not limited to:
(a) the minutes corporate book and corporate records and corporate
seal of Seller;
(b) the shares of capital stock of Seller; and
(c) all claims of Seller, its agents or affiliates against third
parties, whether known or unknown, contingent or otherwise, including any and
all claims relating to former employee Xxxxxxxx Xxxxxx;
(d) all privileged files and records, including but not limited to any
and all: insurance material, files and policies; employee personnel files;
employee medical, drug, and workers compensation files; claims files; legal
files (including but not limited to any and all material relating to former
employee Xxxxxxxx Xxxxxx); and material relating to claims against third
parties;
(e) other property interests (including leasehold improvements not
constituting fixtures under applicable law); and
(f) operating licenses from all governmental agencies in all states.
"Facilities" means all real property and related facilities leased by
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Seller, all as identified or listed on Schedule 4.4.3.
"Financial Statements" means (a) the balance sheets of Seller as of
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December 31, 1998 and December 31, 1997 and the related statements of income,
changes in stockholders' equity and cash flows of Seller, and all notes thereto,
for the years then ended, together with the audit report of McGladrey & Xxxxxx,
LLP thereon.
"GAAP" means generally accepted accounting principles in the United
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States, consistently applied.
"Governmental Authority" means any foreign, federal, state, regional
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or local authority, agency, body, court or instrumentality, regulatory or
otherwise, which, in whole or in part, was formed by or operates under the
auspices of any foreign, federal, state, regional or local government.
"Hazardous Substances" means all pollutants, contaminants, chemicals,
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wastes, and any other carcinogenic, ignitable, corrosive, reactive, toxic or
otherwise hazardous substances or materials (whether solids, liquids or gases)
subject to regulation, control or remediation under Environmental Laws. By way
of example only, the term Hazardous Substances includes petroleum, urea
formaldehyde, flammable, explosive and radioactive materials, PCBs, pesticides,
herbicides, asbestos, sludge, slag, acids, metals, solvents and waste waters.
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"Indemnified Party" is defined in Section 12.4.
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"Knowledge" or "to the knowledge" of a party (or similar phrases)
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means to the extent of matters (i) which are actually known by such party or
(ii) which, based on facts of which such party is aware, would be known to a
reasonable Person in similar circumstances exercising reasonable judgment, and
when used in the context of Seller shall be deemed to include the knowledge of
the officers, directors and shareholders of Seller.
"Law" means any common law and any federal, state, regional, local or
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foreign law, rule, statute, ordinance, rule, order or regulation.
"Liabilities" means liabilities, obligations, claims or debts of
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Seller of any type or nature, whether matured, unmatured, contingent or unknown,
including, without limitation, tort, contract or other claims asserted against
Seller which are based on acts or omissions occurring on, before or after the
Closing Date.
"Lien" means any lien, charge, covenant, condition, easement, adverse
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claim, demand, encumbrance, security interest, option, pledge, or any other
title defect, easement or restriction of any kind.
"Material Adverse Effect" or "Material Adverse Change" or a similar
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phrase means, with respect to any Person, (a) any material adverse effect on or
material adverse change with respect to (i) the business, operations and assets
(taken as a whole), liabilities (taken as a whole), condition (financial or
otherwise) or results of operations, of such Person and its subsidiaries, taken
as a whole, or (ii) the right or ability of such Person or any of its
subsidiaries to consummate any of the transactions contemplated hereby or (b)
any event or condition which, with the giving or receipt of notice or the
occurrence or nonoccurrence of any other circumstance, action or event, would
reasonably be expected to constitute a "Material Adverse Effect" on or "Material
Adverse Change" with respect to such Person. Notwithstanding the foregoing, a
Material Adverse Effect or Material Adverse Change shall not include any
decrease in the number of customers or clients serviced by Seller, nor would it
include any loss of any particular clients or customers of Seller, nor the
consequences of any of such events, on or after the date of this Agreement.
"Major Customer" is defined in Section 7.5.
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"1993 Act" means the Securities Act of 1933.
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"1934 Act" means the Securities Exchange Act of 1934.
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"Ordinary Course of Business" means the ordinary course of business
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consistent with past custom and practice (including with respect to quantity and
frequency).
"Permits" means all licenses, permits, franchises, approvals,
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authorizations, consents or orders of, or filings with, any governmental
authority, whether foreign, federal, state
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or local, necessary or desirable for the current conduct or operation of the
Business or ownership of the Assets of such Person.
"Person" means any individual, corporation (including any non-profit
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corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Authority.
"Proceeding" means any, arbitration, hearing, litigation, or suit
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(whether civil, criminal or, administrative) commenced, brought, conducted, or
heard by or before, or otherwise involving, any administrative law, civil or
criminal judge or any mediator, Governmental Authority or arbitrator.
"Purchase Consideration" is defined in Section 3.1.1.
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"Records" means all financial, accounting and personnel records of
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Seller relating to the Business.
"Registration Rights Agreement" means the Registration Rights
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Agreement by and between Seller and SkyNet in form and substance to be agreed by
the parties and delivered at the Closing.
"Regulations" means any laws, statutes, ordinances, regulations,
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rules, notice requirements, court decisions, agency guidelines, principles of
law and orders of any foreign, federal, state or local government and any other
governmental department or agency, including without limitation energy, motor
vehicle safety, public utility, zoning, building and health codes, Environmental
Laws, occupational safety and health and laws respecting employment practices,
employee documentation, terms and conditions of employment and wages and hours.
"Related Documents" means this Agreement and each document or
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instrument executed in connection with the consummation of the transactions
contemplated herein.
"Satellite Locations" means Seller's facilities in (i) Reno (Sparks),
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Nevada; (ii) Seattle, Tacoma (Fife) and Everett, Washington; (iii) Sacramento,
California; and (iv) Phoenix, Arizona.
"Securities Reports" is defined in Section 4.21.2.
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"Sellers" is defined in the initial paragraph of this Agreement.
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"SkyNet Indemnified Party" is defined in Section 12.2.1.
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"Tax Return" means any report, return, document, declaration or other
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information or filing required to be supplied to any taxing authority or
jurisdiction (foreign or domestic) with respect to Taxes, including information
returns, any documents with respect to or accompanying requests for the
extension of time in which to file any such report, return, document,
declaration or other information.
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"Taxes" mean any and all taxes, charges, fees, levies or other
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assessments, including income, gross receipts, excise, real or personal
property, sales, withholding, social security, retirement, unemployment,
occupation, use, service, license, net worth, payroll, franchise and transfer
and recording, imposed by the Internal Revenue Service or any taxing authority
(whether domestic or foreign, including any federal, state, county, local or
foreign government or any subdivision or taxing agency thereof (including a U.S.
possession)), whether computed on a separate, consolidated, unitary, combined or
any other basis; and such term shall include any interest whether paid or
received, fines, penalties or additional amounts attributable to, or imposed
upon, or with respect to, any such taxes, charges, fees, levies or other
assessments.
"Termination Date" means March 30, 1999.
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"Transitional Sublease" means the sublease of certain real property
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located in Las Vegas, Nevada by and between Seller, as sublessor, and Sub, as
sublessee, in form and substance agreeable to the parties and to be delivered at
Closing.
"Vehicles" means those vehicles to be sold by Seller to Sub hereunder,
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as identified on Schedule 1.1.2 hereto.
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"Working Capital" means the excess of Seller's current assets over
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Seller's current liabilities, subject to adjustments mutually agreeable to the
parties relating to the elimination's of intercompany items, each as reflected
on the Closing Balance Sheet.
1.2 Interpretation Provisions.
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1.2.1 The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement, and article, section,
schedule and exhibit references are to this Agreement unless otherwise
specified. The meaning of defined terms shall be equally applicable to the
singular and plural forms of the defined terms. The term "or" is disjunctive but
not necessarily exclusive. The terms "include" and "including" are not limiting
and mean "including without limitation."
1.2.2 References to agreements and other documents shall be deemed to
include all subsequent amendments and other modifications thereto.
1.2.3 References to statutes shall include all regulations promulgated
thereunder and references to statutes or regulations shall be construed as
including all statutory and regulatory provisions consolidating, amending or
replacing the statute or regulation.
1.2.4 The captions and headings of this Agreement are for convenience
of reference only and shall not affect the construction of this Agreement. 1.2.5
The schedules and exhibits to this Agreement are a material part hereof and
shall be treated as if fully incorporated into the body of the Agreement.
8
2. SALE AND PURCHASE OF ASSETS AND VEHICLES
2.1 Agreement to Sell and Purchase Assets and Vehicles.
--------------------------------------------------
2.1.1 Subject to the terms and conditions hereof and on the basis of
and in reliance upon the covenants, agreements and representations set forth
herein, on the Closing Date Seller shall sell and deliver the Assets and
Vehicles to Sub, and Sub shall purchase the Assets and Vehicles from Seller. The
Assets and Vehicles shall be sold, transferred and conveyed by Seller to Sub on
an "as is, where is" basis, with no express or implied warranties of any kind
other than that the Assets and Vehicles shall be free and clear of any and all
Liens, and Buyers agree such construction with respect to warranties is
reasonable.
2.1.2 In addition to the foregoing, the parties will, upon request and
without additional consideration, at and subsequent to the Closing Date, execute
and deliver all such further instruments of conveyance and transfer and
confirmation thereof as may be reasonably requested by Sub in order to make
further effective the provisions of this Agreement and to assure the transfers
and vesting of title provided for by this Agreement. All such transfers and
assignments of title shall vest and be effective on the Closing Date.
2.2 Responsibility for Liabilities.
------------------------------
2.2.1 Except as otherwise provided in this Agreement, the Buyers shall
not assume any Liabilities of Seller by virtue of this Agreement or otherwise,
including, without limitation, the following:
2.2.1.1 any obligation or liability related to warranty claims
which relate to goods or services sold by Seller prior to Closing;
2.2.1.2 liabilities relating to environmental matters arising
prior to the Closing except as follows:
2.2.1.2.1 Buyers had Phase I Environmental Assessments
completed on February 26 and 27, 1999 for the following Seller's leased
facilities:
000 Xxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx, XX
0000 Xxxx Xxxxxxxx Xxxxxx, Xxx Xxxxx, XX
0000 XX 00xx Xxxxx, Xxxxxxxx, XX
0000 Xxxxxxxxx Xxxx Xxxxx, Xxxxxxx, XX
2.2.1.2.2 Buyers and Sellers thoroughly reviewed the
above Phase I Environmental Assessments. Buyers and Sellers acknowledge the
receipt of the March 10, 1999 letter from Xxxxxxxxxxx Xxxxx, director of
Environmental Services at Western Technologies (hereinafter "WT"),
regarding WT's opinion of the "environmental issues of significance" for
Seller's facilities in Portland, Seattle, Sparks, and Las Vegas. WT's
letter is attached as Schedule 2.2.1.2.2. Buyers and Seller agree
------------------
9
that Seller is responsible for all costs or claims of any kind relating to
items that, in WT's opinion, are "environmental issues of significance",
and nothing else.
2.2.1.3 any liability or obligation under Contracts (except for
agreements described in Section 2.2.1.6), agreements, arrangements and
understandings of Seller arising prior to the Closing Date other than Seller's
obligations arising on or after the Closing Date as set forth in the Contracts
or any other written or oral agreements and modifications thereto;
2.2.1.4 any liability for Seller's obligation under its lease of
real property located in the State of Utah;
2.2.1.5 Seller's obligation for corporate Taxes arising as a
result of the transactions contemplated by this Agreement;
2.2.1.6 any intercompany debt or other liability between Seller,
and any shareholder or affiliate of Seller, and any obligations of Seller under
any agreements between it and any affiliate of or party otherwise related, by
common ownership or otherwise, to Seller in effect as or the date of this
Agreement, and
2.2.1.7 any other liability or obligation of Seller, whether
known or unknown, absolute or contingent.
2.2.2 Except as otherwise provided in this Section 2.2, the Buyers
shall assume, and the Seller shall not retain, the following Liabilities:
2.2.2.1 Seller's obligations under Accounts Payable incurred in
the Ordinary Course of Business prior to the Closing Date;
2.2.2.2 any obligation or liability related to Taxes or warranty
claims which relate to goods or services sold by the Buyers after Closing;
2.2.2.3 claims or obligations related to the Seller's Employees
arising before the Closing Date, limited to accrued vacation and sick days and
all other accrued benefits, as of the Closing Date (as provided for on the
Closing Balance Sheet and specifically identified on Schedule 2.2.2.3 hereof);
----------------
2.2.2.4 claims or obligations related to the Buyers' employees
arising after the Closing Date, including, without limitation, severance claims,
vacation and sick days and all other accrued benefits;
2.2.2.5 liabilities relating to environmental matters arising
after Closing; 2.2.2.6 any liability or obligation under contracts, agreements,
arrangements and understandings of the Buyers arising on or after the Closing
Date;
2.2.2.7 any obligation for Taxes (other than Seller's corporate
Taxes) arising as a result of the transactions contemplated by this Agreement,
including without
10
limitation transfer taxes and vehicle registration expenses incident to the sale
of the Assets and the Vehicles;
2.2.2.8 any intercompany debt or other liability between Buyers
or any shareholder or affiliate of Buyers or Sub; and
2.2.2.9 any other liability or obligation of the Buyers, whether
known or unknown, absolute or contingent.
2.3 Taking of Necessary Action; Further Action.
------------------------------------------
Seller and each Buyer shall take such reasonable lawful action as may
be reasonably necessary or appropriate in order to effect the consummation of
the transactions contemplated by this Agreement as promptly as practicable. If,
at any time after the Closing Date, any such further action is reasonably
necessary or desirable to carry out the purposes of this Agreement, to vest Sub
with full right, title and possession to all the property, rights, privileges,
power and franchises of Seller, the officers and directors of each of the Buyers
and Seller are fully authorized in the name of their respective corporations or
otherwise to take, and will take, all such lawful and necessary action.
3. PAYMENT OF THE PURCHASE CONSIDERATION
3.1 Purchase Consideration.
----------------------
3.1.1 Purchase Consideration
----------------------
The purchase consideration ("Purchase Consideration") for the Assets
and the Vehicles shall consist of 1,358,790 newly-issued shares of common stock
of SkyNet (the "SkyNet Stock").
3.1.2 Allocation of Closing Purchase Consideration.
---------------------------------------------
The Closing Purchase Price shall be allocated in accordance with
Schedule 3.3 hereto. Each of the parties shall timely file Internal Revenue
------------
Service Form 8594 in substantially the form attached hereto as Exhibit B.
3.2 Escrow Provisions.
-----------------
11
3.2.1 Notwithstanding the other provisions of this Article 3, at the
Closing the Buyers and Seller shall deliver to the Escrow Agent, registered in
the name of each Seller, that number of shares of SkyNet Stock equal to fifty
percent of the total number of shares of SkyNet Stock to be delivered by SkyNet
pursuant to Section 3.1.1 (the "Escrow Shares"). The Escrow Shares shall be held
by the Escrow Agent pursuant to the terms of an Escrow Agreement acceptable in
form and substance to the parties and to be delivered at the Closing (the
"Escrow Agreement").
3.2.2 In the event a Claim arises under this Agreement as to which the
parties agree a SkyNet Indemnified Party is entitled to indemnification or as to
which the arbitration proceeding provided for under Section 14.6 has been
completed, the SkyNet Indemnified Party shall be entitled to receive in
settlement of such Claim a distribution out of the Escrow Shares of such number
of Escrow Shares as are equal in "value" to the amount of the Claim. For the
purposes hereof, the "value" of the Escrow Shares shall be measured in the
following manner. To the extent of Claims made under Section 3.3 hereof, such
Claims shall be resolved by ascribing a "value" to the Escrow Shares to be
distributed to the SkyNet Indemnified Party of $1.86 per share. All Claims made,
if any, on account of Seller's indemnification obligations under Section 12.2
hereof shall be resolved by ascribing a "value" to the Escrow Shares being
distributed to the SkyNet Indemnified Party of $4.00 per share.
3.2.3 Except for Escrow Shares with a value (determined in accordance
with Section 3.2.2) equal to the amount of any Claims by SkyNet Indemnified
Parties that may be pending at such time, on (i) the six month anniversary of
the Closing Date, Escrow Agent shall retain one-half of the original number of
Escrow Shares and shall distribute the remainder to Seller in accordance with
the Escrow Agreement, and (ii) on the one year anniversary of the Closing Date,
Seller shall be entitled to delivery from the Escrow Agent any Escrow Shares
that have not been delivered to, or required to have been delivered to, SkyNet
Indemnified Parties pursuant to Section 3.2.2, Article 12 hereof or the Escrow
Agreement on or prior to such date. At all times that all or any part of the
Escrow Shares are held by the Escrow Agent, (i) all dividends or distributions
made with respect to the Escrow Shares shall be deposited with the Escrow Agent
and held in accordance with the Escrow Agreement and (ii) Seller shall have the
sole right and power to exercise all voting rights pertaining to all or any part
of the Escrow Shares.
3.3 Post-Closing Review of Closing Balance Sheet; Adjustment to Purchase
--------------------------------------------------------------------
Consideration
-------------
3.3.1 The parties acknowledge that the amount of Working Capital is
based on Seller's estimate of the current assets and current liabilities as of
the date of the Closing Date as reflected on the Closing Balance Sheet. In order
to assist the parties in calculating accurately the Working Capital, Seller's
Closing Balance Sheet shall be dated as of February 28, 1999, prepared in
accordance with GAAP and provided to the Buyers on the Closing Date.
3.3.2 Following their receipt of the Closing Balance Sheet, the Buyers
shall review and, if necessary, prepare a revised balance sheet for Seller as of
the Closing Date (the
12
"Buyers' Closing Balance Sheet"), which balance sheet shall be prepared i n
accordance with GAAP, and a calculation of Working Capital based thereon. The
Buyers shall submit the Buyers' Closing Balance Sheet to Seller not later than
thirty days following their receipt of the Closing Balance Sheet and shall use
their best efforts to deliver the Buyers' Closing Balance Sheet to the Seller as
soon as possible following the Closing Date. The Sellers agree to cooperate with
the Buyers in connection with the preparation of the Buyers' Closing Balance
Sheet.
3.3.3 The Seller shall, within 15 days following receipt the Buyers'
Closing Balance Sheet, advise the Buyers in writing of whether Seller disputes
any of the items presented therein. If Seller fails to so notify the Buyers, the
Buyers' Closing Balance Sheet shall be deemed final and binding on the parties
as of the fifteenth day following Seller' receipt of the Buyers' Closing Balance
Sheet. If Seller notifies the Buyers of a dispute with respect to any items
presented in the Buyers' Closing Balance Sheet within such 15-day period, the
parties shall seek to resolve such dispute in good faith. In the event the
parties are unable to resolve such dispute within 30 days following delivery of
the dispute notice, such dispute shall be referred to a nationally recognized
accounting firm mutually selected by the parties (or if the parties shall fail
to agree on such selection, such accounting firm shall be selected by lot from
one firm selected by the Buyers' independent public accountants and one firm
selected by Seller's independent public accountants), which firm shall be
requested to seek to resolve such dispute within 30 days after such dispute is
referred to such firm. The determination of such dispute by such accounting firm
shall be binding on the parties hereto. The fees and expenses of such accounting
firm in resolving such dispute shall be borne 50% by the Buyers and 50% by
Seller.
3.3.4 If, after (i) Seller has accepted the Buyers' Closing Balance
Sheet, or (ii) resolving any dispute as to the Buyers' Closing Balance Sheet, or
the manner in which the amount of Working Capital was calculated therein, in
accordance with Section 3.3.3 hereof, (A) the Working Capital is less than as
reflected on the Closing Balance Sheet, the Purchase Consideration shall be
reduced dollar-for-dollar by the amount of such deficiency and (B) if the
Working Capital exceeds the amount reflected on the Closing Balance Sheet, the
Purchase Consideration shall be increased dollar-for-dollar by the amount of
such excess; In order to effect a decrease in the Purchase Consideration, a
number of Escrow Shares equal to the amount of the deficiency divided by the
value of such shares as determined in accordance with Section 3.2.2 hereof shall
be released from escrow and delivered to SkyNet for cancellation. In order to
effect an increase in the Purchase Consideration, SkyNet shall issue and deliver
to Seller a number of additional shares of SkyNet Stock equal to (1) the amount
of the excess divided by (2) $1.86. Such cancellation or issuance shall be
effected within ten business days following final agreement of the parties or
determination in accordance with Section 3.3.3 that such decrease or increase is
applicable.
4. REPRESENTATIONS OF SELLER
As an inducement of the Buyers to enter into this Agreement, Seller
hereby makes, as of the date hereof and as of the Closing Date, the following
representations to the Buyers, except as otherwise set forth in written
disclosure schedules (the "Seller's Schedules")
13
which shall be delivered to the Buyers prior to the date of Closing, a copy of
which is attached hereto. The Seller's Schedules are numbered to correspond to
the various sections of this Article 4 setting forth certain exceptions to the
representations contained in this Article 4 and certain other information called
for by this Agreement. Unless otherwise specified, no disclosure made in any
particular Seller's Schedule shall be deemed made in any other Schedule unless
expressly made therein (by cross-reference or otherwise).
4.1 Organization and Standing of Seller.
-----------------------------------
Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada. Seller has all requisite
corporate power and authority to sell the Assets, free and clear of any and all
Liens. A certified copy of Seller's Articles of Incorporation and Bylaws are
attached to Schedule 4.1.
------------
4.2 Due Authorization.
-----------------
This Agreement has been duly authorized, executed and delivered by
Seller and constitutes a valid and binding agreement of Seller, enforceable in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, moratorium, and other similar laws relating
to, limiting or affecting the enforcement of creditors rights generally or by
the application of equitable principles. As of the Closing all corporate action
on the part of Seller required under applicable law in order to consummate the
transactions contemplated hereby will have occurred. Seller represents that (i)
the approval of its stockholders is not required by Law or Seller's Articles of
Incorporation or Bylaws in order to consummate the transactions contemplated by
this Agreement; or (ii) such approval has been obtained.
4.3 No Conflict or Violation; Consents.
----------------------------------
Except as set forth on Schedule 4.3, none of the execution, delivery
------------
or performance of this Agreement or any Ancillary Agreement, the consummation of
the transactions contemplated hereby or thereby, nor compliance by Seller with
any of the provisions hereof or thereof, will (a) violate or conflict with any
provision of the governing documents of Seller or, (b) violate any applicable
Regulation or Court Order. Except as set forth on Schedule 4.3, no notices to,
------------
declaration, filing or registration with, approvals or consents of, or
assignments by, any Persons (including any federal, state or local governmental
or administrative authorities) are necessary to be made or obtained by Seller in
connection with the execution, delivery or performance of this Agreement or any
Ancillary Agreement or the consummation of the transactions contemplated hereby
or thereby.
4.4 Real Property.
-------------
4.4.1 General. Seller leases all real property necessary for the
conduct of its business as presently conducted.
4.4.2 Owned Real Property. Seller does not own any real property.
14
4.4.3 Leased Real Property. Schedule 4.4.3 sets forth all Leases
pursuant to which Facilities are leased by Seller (as lessee), true and correct
copies of which have been delivered to SkyNet. To Seller's knowledge, such
Leases constitute all written Leases, subleases or other occupancy agreements
pursuant to which Seller occupies or uses Facilities. Seller has good and valid
leasehold title to, and enjoys peaceful and undisturbed possession of, all
leased property described in such Leases (the "Leased Property"), free and clear
of any and all Encumbrances created by Seller. With respect to each such parcel
of Leased Property (i) to the knowledge of Seller, there are no pending or
threatened condemnation proceedings relating to such Leased Property or any
portion thereof, (ii) to the knowledge of Seller, neither Seller nor third party
has entered into any sublease, license, option, right, concession or other
agreement or arrangement, written or oral, granting to any person the right to
use or occupy such Leased Property or any portion thereof or interest therein
and (iii) to its knowledge, Seller has not received notice of any pending or
threatened special assessment relating to such Leased Property or otherwise have
any knowledge of any pending or threatened special assessment relating thereto.
To Seller's knowledge each leased Facility is supplied with utilities necessary
for the operation of such Facility as currently conducted.
4.4.4 With respect to each Lease listed on Schedule 4.4.3, (i) to the
knowledge of Seller there has been no material default under any such Lease by
Seller or by any other party, (ii) such Lease is a valid and binding obligation
of Seller, is in full force and effect with respect to Seller and is enforceable
against Seller, in accordance with its terms, except as the enforceability
thereof may be limited by (1) applicable bankruptcy, insolvency, moratorium,
reorganization, fraudulent conveyance or similar laws in effect which affect the
enforcement of creditors' rights generally or (2) general principles of equity,
whether considered in a proceeding at law or in equity, (iii) no action has been
taken by Seller, and no event has occurred which, with notice or lapse of time
or both, would permit termination, modification or acceleration by a party
thereto other than Seller without the consent of Seller under any such Lease
that is material to Seller, (iv) no party has repudiated in writing any term
thereof or threatened in writing to terminate, cancel or not renew any such
Lease that is material to Seller and (v) Seller has not assigned, transferred,
conveyed, mortgaged or encumbered any interest therein or in any leased property
subject thereto (or any portion thereof).
4.5 Personal Property.
-----------------
4.5.1 General. Seller owns or leases all personal property assets
necessary for the conduct of its Business as presently conducted.
4.5.2 Owned Personal Property. Except as set forth in Schedule 4.5.2,
--------------
Seller has good and marketable title to all such personal property owned by it,
free and clear of any and all Encumbrances. To the knowledge of Seller, any
exceptions from such personal property being transferred free and clear of all
Encumbrances are not, in the aggregate, material. With respect to each such item
of personal property (i) there are no Leases, subleases, licenses, options,
rights, concessions or other agreements, written or oral, granting to any party
or parties the right of use of any portion of such item of personal property,
(ii) there are no outstanding options or rights of first refusal in favor of any
other party to purchase any such item of personal property or any
15
portion thereof or interest therein and (iii) there are no parties (other than
Seller and its Employees) who are in possession of or who are using any such
item of personal property.
4.6 Litigation.
----------
4.6.1 Except as set forth in Schedule 4.6, to the knowledge of Seller
------------
there is no pending Proceeding:
4.6.1.1 that has been commenced by or against Seller or that
otherwise relates to or may materially affect the Business, or any of the Assets
or Vehicles; or
4.6.1.2 that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
transactions hereunder.
4.6.2 To the knowledge of Seller, no such Proceeding has been
threatened.
4.6.3 There is no Court Order to which Seller or any of the Assets
or Vehicles is subject.
4.7 Environmental Matters.
---------------------
4.7.1 Seller has not received any notice to the effect that, or
otherwise have knowledge that Seller is not in compliance in any material
respect with, or is in violation of, any such Environmental Laws or Permits
required thereunder.
4.7.2 To the knowledge of Seller, there are no existing Environmental
Claims against Seller, nor has it received any written notification or otherwise
have any knowledge, of any allegation of any actual, or potential responsibility
for, or any inquiry or investigation regarding, any disposal, release or
threatened release at any location of any Hazardous Substance generated by
Seller.
4.7.3 To the knowledge of Seller, there have been no releases (i.e.,
----
any past or present releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, disposing, or dumping) of
Hazardous Substances in quantities exceeding the reportable quantities as
defined under federal or state law by Seller on, upon or into the Facilities
during Seller's occupancy thereof other than those authorized by Environmental
Laws including, the Permits required thereunder.
4.7.4 To the knowledge of Seller, there are no consent decrees,
consent orders, judgments, judicial or administrative orders or agreements
(other than Permits) with or liens by, any Governmental Authority or quasi-
governmental entity relating to any Environmental Law which specifically
regulate, obligate or bind Seller by name.
4.8 Third Party Consents.
--------------------
16
Except as set forth elsewhere in this Agreement, to the knowledge of
Seller there are no authorizations, consents, approvals or notices required to
be obtained or given by Seller or waiting periods required to expire, in order
that this Agreement and the transactions provided for herein may be consummated
by Seller.
4.9 Labor Matters.
-------------
4.9.1 Schedule 4.9.1 contains a list of Employees as of March 13,
--------------
1999 (which list shall be provided on or before March 19, 1999). Seller has
provided the Buyers with a table setting forth the current salary or hourly
wages and other compensation payable by Seller to each of such Employees (the
"Salary Table").
4.9.2 Except as set forth on Schedule 4.9.2, Seller is not a party to
--------------
any agreement with respect to its Employees with any labor organization, group
or association. There is no unfair labor practice charge or complaint against
Seller pending before the National Labor Relations Board or any other
governmental agency arising out of Seller's activities which if adversely
determined would result in a Material Adverse Effect on Seller.
4.9.3 Seller is in material compliance with all applicable
Regulations respecting employment practices, terms and conditions of employment,
wages and hours, equal employment opportunity, and the payment of social
security and similar taxes.
4.9.4 Except as set forth on Schedule 4.9.4, Seller has not entered
--------------
into any severance arrangement in respect of any present or former Employee that
will result in any obligation of Buyers or Seller to make any payment to any
present or former Employee following termination of employment or upon
consummation of the transactions contemplated by this Agreement. Buyers
specifically acknowledge that they have reached an agreement with Mr. Xxxxx
Pontecelli respecting a severance payment to Mr. Pontecelli by Sub in the event
Mr. Pontecelli is not employed by Sub immediately following the Closing. Seller
shall have no liability for or obligation to Buyers in respect of such
agreement.
4.10 Intellectual Property.
---------------------
4.10.1 Schedule 4.10.1 sets forth a list and description of all
---------------
intellectual property Assets in which, to Seller's knowledge, Seller has an
interest and which is used in or material to the Business (the "Intellectual
Property").
4.10.2 With respect to each item of Intellectual Property, without
any further action by, consent of or payment of additional fees, royalties or
other compensation to any other person or entity, the Buyers will be entitled to
exclusive use of the Intellectual Property to the same extent Seller was
entitled to use such Intellectual Property prior to the Closing Date. To
Seller's knowledge, Seller's use of the Intellectual Property does not infringe
or conflict with any rights of patent, copyright, trademark or trade secret of
any other party. Seller has not received any notice of infringement or conflict
with (and has no knowledge of any threatened claim of infringement or conflict
with) asserted rights of others with respect to any Intellectual Property used
by Seller in the Business.
17
4.11 Financial Statements; Books and Records.
---------------------------------------
4.11.1 The Financial Statements and the Closing Balance Sheet
fairly present the Assets and Liabilities of Seller and financial condition and
results of operations indicated thereby and were prepared in accordance with
GAAP. The Financial Statements comply in all material respects with the
requirements of Regulation S-X promulgated under the 1934 Act. A copy of the
Financial Statements is attached hereto as Schedule 4.11.1.
----------------
4.11.2 Seller maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed
with management's authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in accordance with GAAP and to
maintain accountability for assets, (iii) access to assets is permitted only in
accordance with management's authorization and (iv) the recorded accountability
for assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
4.12 Insurance.
---------
Schedule 4.12 sets forth a list of substantially all of Seller's
-------------
policies or binders of insurance as of the date of this Agreement (generally
showing as to each policy or binder the carrier, policy number, coverage limits,
expiration dates, and a general description of the type of coverage provided),
of which Seller is the owner, insured or beneficiary. To its knowledge, Seller
is not in default under any of such policies or binders, and has not failed to
give any notice or to present any claim under any such policy or binder in a due
and timely fashion. Such policies and binders are in full force and effect on
the date hereof and shall be kept in full force and effect by Seller through the
Closing Date.
4.13 Accounts Receivable.
-------------------
The Accounts Receivable reflected in the Closing Balance Sheet, and
all Accounts Receivable arising since December 31, 1998, represent bona fide
claims against debtors for sales, services performed or other charges arising on
or before the date of recording thereof, and all the goods delivered and
services performed which gave rise to said accounts were delivered or performed
in accordance with the applicable orders, Contracts or customer requirements.
All such Accounts Receivable are fully collectible in the ordinary course of
business except to the extent of an amount not in excess of the reserve for
doubtful accounts reflected on the Closing Balance Sheet.
4.14 Tax Matters.
-----------
4.14.1 Filing of Tax Returns. Except as set forth in Schedule 4.14.1, to
----------------
Seller's knowledge, Seller has timely filed with the appropriate taxing
authorities all Tax Returns in respect of Taxes required to be filed through the
date hereof. The Tax Returns filed are complete and accurate in all material
respects. Except as specified in Schedule 4.14.1, Seller has not requested any
---------------
extension of time within which to file Tax Returns in respect of any Taxes.
18
4.14.2 Payment of Taxes. All Taxes due from Seller, or for which it
could be liable, in respect of periods (or portions thereof) beginning before
the Closing Date have been timely paid or an adequate reserve (in conformity
with GAAP) has been established therefor, as set forth in Schedule 4.14.2 or the
------
Financial Statements, and Seller has no material Liability for Taxes in excess
of the amounts so paid or reserves so established.
4.14.3 Audits, Investigations or Claims. To Seller's knowledge, no
deficiencies for Taxes of Seller have been claimed, proposed or assessed by any
taxing or other governmental authority. There are no pending or, to the
knowledge of Seller, threatened audits, assessments or other Actions for or
relating to Taxes of Seller. Audits of federal, state and local Tax Returns by
the relevant taxing authorities have been completed for the periods set forth on
Schedule 4.14.3 and, except as set forth in such Schedule, Seller has not been
---------------
notified that any taxing authority intends to audit a Tax Return for any other
period. No extension of a statute of limitations relating to Taxes is in effect
with respect to Seller.
4.15 Bulk Sales Compliance and Transfer Taxes.
----------------------------------------
Neither the sale and transfer of the Assets and Vehicles to be
acquired pursuant to this Agreement will result in or be subject to any law
pertaining to bulk sales or transfers which either: (i) makes such sales or
transfers ineffective as to creditors of Seller or (ii) exposes the Buyers to
liabilities asserted by creditors of Seller.
4.16 Contracts.
---------
4.16.1 Except as set forth on Schedule 4.16.1, to the knowledge of
---------------
Seller, all Contracts have been executed by all parties, and are in all material
respects in full force and effect as of the date hereof. All Contracts will
continue to be binding in accordance with their respective terms and
modifications until their respective expiration or termination dates. Seller is
not subject to any liability or payment resulting from renegotiation of amounts
paid it under any Contract with the government of the United States or any
agency, department or other subdivision thereof.
4.16.2 Except as set forth in Schedule 4.16.2:
----------------
4.16.2.1 To the knowledge of Seller, Seller is, and at all times
since December 31, 1998 has been, in material compliance with all applicable
terms and requirements of each Contract under which Seller has any obligation or
liability;
4.16.2.2 Seller has not given to or received from any other Person,
at any time since December 31, 1998, any notice or other communication (whether
oral or written) regarding any actual, alleged, possible, or potential material
violation or material breach of, or default under, any Contract.
19
4.16.3 There are no renegotiations of, attempts to renegotiate, or, to
the knowledge of Seller, outstanding rights to renegotiate any material amounts
paid or payable to Seller under any Contracts with any Person and to the
knowledge of Seller, no such Person has made written demand for such
renegotiation.
4.17 Customers.
---------
Schedule 4.17 is a substantially complete listing all of the customers
-------------
of the Business as of February 28, 1999.
4.18 Employee Benefit Matters.
------------------------
4.18.1 Except as may be required under applicable Laws, the Buyers will
not be subject to any obligations or liability under any of the Employee Plans.
The term "Employee Plans" refers to all employment contracts, employee benefit
plans as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), pension plans, bonus, profit sharing, stock
option or other agreements or arrangements, including any hospitalization,
disability or other insurance plans, vacation and sick pay policies, or any
other employee fringe benefit plan providing for employee benefits to which
Seller is a party or by which Seller is bound in connection with the Business.
Except to the extent otherwise assumed by the Buyers under this Agreement or
with respect to Sub's agreement with Mr. Xxxxx Pontecelli, the Buyers are not
responsible for any severance pay or other payments on account of termination by
Seller of any of the Employees of Seller.
4.18.2 None of the Employee Plans is a "multi-employer plan" as defined
in Section 3(37) of ERISA.
4.18.3 In each case where Seller or any affiliate has terminated a
defined benefit pension plan that is subject to Title I of ERISA relating to the
employees of the Business, assets have been sufficient so that all required
benefits in fact have been provided. As of the Closing, Seller will terminate
the Employees under the current terms and conditions of its Employee Plans.
4.19 No Significant Agreements Excluded.
----------------------------------
To the knowledge of Seller, there are no supplier or customer
agreements, contracts or commitments to which Seller is a party that are of
material importance to the ongoing operation of the Business by the Buyers that
are not being transferred to the Buyers under the terms of this Agreement.
4.20 Compliance with Law.
-------------------
To the knowledge of Seller, Seller has conducted the Business in
compliance with applicable Regulations and Court Orders. Seller has not
received any notice to the effect that, or has otherwise been advised that,
Seller is not in compliance with such Regulations or Court Orders.
20
4.21 SkyNet Stock.
------------
4.21.1 The SkyNet Stock is not being registered under the Act on
the basis of the statutory exemption provided by Section 4(2) thereof, relating
to transactions not involving a public offering, and SkyNet's reliance on the
statutory exemption thereof is based in part on the representations of Seller
contained in this Agreement;
4.21.2 Seller represents (a) that it has, or as of the Closing,
will have reviewed such reports and registration statements of SkyNet as have
been filed with the Securities and Exchange Commission and the Confidential
Private Placement Memorandum dated December 22, 1998, as supplemented (the
"Securities Reports") and that it has such knowledge and experience in financial
and business matters that it is capable of utilizing the information set forth
therein concerning SkyNet to evaluate the risk of investing in SkyNet; (b) that
it has been advised that the SkyNet Stock to be issued by SkyNet will not be
registered under the Act, except as otherwise provided in this Agreement or the
Registration Rights Agreement, and accordingly, Seller may only be able to sell
or otherwise dispose of such shares in accordance with Rule 144 or except as
otherwise provided in this Agreement; (c) that the SkyNet Stock will be held for
investment and not with a view to, or for resale in connection with the public
offering or distribution thereof; (d) that the SkyNet Stock so issued will not
be sold without registration thereof under the Act (unless such shares are
subject to registration or in the opinion of counsel to SkyNet an exemption from
such registration is available), or in violation of any law; and (e) that the
certificate or certificates representing the SkyNet Stock will be imprinted with
a legend in form and substance substantially as follows:
'THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF REGISTRATION, OR THE AVAILABILITY OF AN
EXEMPTION FROM REGISTRATION, UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, BASED ON AN OPINION LETTER OF COUNSEL FOR THE
COMPANY OR A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE
COMMISSION."
and SkyNet is hereby authorized to notify its transfer agent of the status of
the SkyNet Stock and to take such other action including, but not limited to,
the placing of a "stop-transfer" order on the transfer agent's books and records
to assure compliance with the Act.
4.21.3 Seller has, either upon the date hereof or before the
Closing hereunder, been afforded the opportunity to review and is familiar with
the Securities Reports and has based its decision to invest solely on the
information contained therein, and the information contained within this
Agreement and the associated exhibits and schedules, and has not been furnished
with any other literature, prospectus or other information except as included in
the Reports or this Agreement; and
21
4.21.4 Seller understands that no federal or state agency has
approved or disapproved the SkyNet Stock, passed upon or endorsed the merits of
the transfer of such shares set forth within this Agreement, or made any finding
or determination as to the fairness of such shares for investment.
4.22 Absence of Certain Changes or Events.
------------------------------------
Except as set forth on Schedule 4.22, since December 31, 1998 there
-------------
has not been any:
4.22.1 Material Adverse Change with respect to Seller or the
Business;
4.22.2 failure to operate the Business in the ordinary course
consistent with past practice so as to use its commercially reasonable efforts
to preserve the Business intact and to preserve the continued services of its
Employees and the goodwill of suppliers, customers and others having business
relations with Seller;
4.22.3 sale, assignment, license, transfer or Encumbrance of any of
the Assets, tangible or intangible, singly or in the aggregate, other than sales
of products and services in the ordinary course of business and consistent with
past practice;
4.22.4 new Contracts, or extensions, modifications, terminations or
renewals thereof, except for Contracts entered into, modified or terminated in
the ordinary course of business and consistent with past practice;
4.22.5 damage, destruction or loss (whether or not covered by
insurance) having a Material Adverse Effect on the Assets or the Business of
Seller;
4.22.6 amendment of the articles of incorporation or bylaws of any
Seller;
4.22.7 failure to pay any material obligation of Seller when due;
4.22.8 cancellation of any indebtedness or waiver of any rights of
substantial value to Seller, except in the ordinary course of business and
consistent with past practice; or
4.22.9 agreement by Seller to do any of the foregoing.
4.23 Brokers' Fees.
-------------
No broker, finder or other person or entity acting in a similar
capacity has participated on behalf of Seller in connection with the
transactions contemplated by this Agreement. The Sellers have not incurred any
Liability for brokers' fees, finders' fees, agents' commissions or other similar
forms of compensation in connection with this Agreement or the transactions
contemplated hereby.
4.24 Full Disclosure.
---------------
22
Neither this Agreement, including all exhibits and schedules and other
closing documents, nor any other financial statement, document or other
instrument heretofore or hereafter furnished by Seller to the Buyers in
connection with the transaction contemplated herein, contains or will contain
any untrue statement of any material fact or, to the knowledge of Seller, omit
or will omit to state any material fact required to be stated in order to make
such statement, information, document or other instruments, in light of the
circumstances in which they are made, not misleading. No representation by
Seller in this Agreement and no statement contained in any Disclosure Schedule
to this Agreement contains any untrue statement of a material fact, or, to the
knowledge of Seller, omits to state a material fact necessary to make the
statements contained therein, in light of the circumstances in which they are
made, not misleading.
5. REPRESENTATIONS OF SKYNET AND SUB
As an inducement of Seller to enter into this Agreement, SkyNet and
Sub hereby make as of the date hereof and as of the Closing Date, the following
representations to Seller, except as otherwise set forth in written disclosure
schedules (the "Buyers' Schedules") which shall be delivered to Seller prior to
the Closing, a copy of which is attached hereto. The Buyers' Schedules are
numbered to correspond to the various sections of this Article 5 setting forth
certain exceptions to the representations contained in this Article 5 and
certain other information called for by this Agreement. Unless otherwise
specified, no disclosure made in any particular Buyers' Schedule shall be deemed
made in any other Buyers' Schedule unless expressly made therein (by cross-
reference or otherwise).
5.1 Organization and Standing of SkyNet.
-----------------------------------
SkyNet is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. SkyNet has all requisite
corporate power and authority to enter into this Agreement. A certified copy of
SkyNet's Certificate of Incorporation and Bylaws are attached as Schedule 5.1.
------------
5.2 Organization and Standing of Sub.
--------------------------------
Sub is a corporation duly organized, validly existing and in good
standing in the State of Nevada. Sub has all requisite corporate power and
authority to enter into this Agreement. A certified copy of Sub's Articles of
Incorporation and Bylaws are attached as Schedule 5.2.
5.3 Authorization and Enforceability
--------------------------------
This Agreement has been duly authorized, and executed the Buyers and
constitutes a valid and binding agreement of each of the Buyers, enforceable in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, moratorium, and other similar laws relating
to, limiting or affecting the enforcement of creditors rights generally or by
the application of equitable principles. As of the Closing all corporate action
on the part of each Buyer required under applicable law in order to consummate
the
23
transactions contemplated hereby will have occurred. The Buyers represent
that (i) the approval of its stockholders is not required by Law or SkyNet's
Certificate of Incorporation, Sub's Articles of Incorporation or the Buyers'
Bylaws in order to consummate the transactions contemplated by this Agreement;
or (ii) such approval has been obtained.
5.4 No Conflict or Violation; Consents.
----------------------------------
Except as set forth on Schedule 5.4, none of the execution, delivery
------------
or performance of this Agreement or any Ancillary Agreement, the consummation of
the transactions contemplated hereby or thereby, nor compliance by each of the
Buyers with any of the provisions hereof or thereof, will (a) violate or
conflict with any provision of the governing documents of any Buyer, (b)
violate, conflict with, or result in a material breach of (with or without
notice of passage of time) under, or result in the termination of, or accelerate
the performance required by, or result in a right to terminate, accelerate,
modify or cancel under, or require a notice under, or result in the creation of
any Encumbrance upon any of its respective assets under, any Contract, lease,
sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, security interest or
other arrangement to which any Buyer is a party or by which any Buyer is bound
or to which any of its respective assets are subject, (c ) violate any
applicable Regulation or Court Order or (d) impose any Encumbrance on any assets
of any Buyer. Except as set forth on Schedule 5.4, no notices to, declaration,
------------
filing or registration with, approvals or Consents of, or assignments by, any
Persons (including any federal, state or local governmental or administrative
authorities) are necessary to be made or obtained by any Buyer in connection
with the execution, delivery or performance of this Agreement or any Ancillary
Agreement or the consummation of the transactions contemplated hereby or
thereby.
5.5 SkyNet Stock.
------------
The SkyNet Stock to delivered by SkyNet at Closing pursuant to Section
3.1.1 hereof shall be validly and legally issued, free and clear of any and all
Liens, and fully paid and non-assessable.
5.6 Approval.
--------
The Board of Directors of each of SkyNet and Sub has approved the
execution of this Agreement and the transactions contemplated thereby.
5.7 Brokers' Fees.
-------------
Neither SkyNet nor Sub has incurred any liability for brokers' fees,
finders' fees, agents' commissions or other similar forms of compensation in
connection with this Agreement or the transactions contemplated hereby for which
Seller shall have any responsibility.
5.8 Absence of Certain Changes or Events.
------------------------------------
24
Except as disclosed in the Securities Reports or on Schedule 5.8,
------------
since June 30, 1998, there has not been any:
5.8.1 Material Adverse Change with respect to either of the Buyers;
5.8.2 failure by the Buyers to operate their business in the ordinary
course so as to use its commercially reasonable efforts to preserve the business
and the continued services of their employees and the goodwill of suppliers,
customers and others having business relations with the Buyers;
5.8.3 sale, assignment, license, transfer or Encumbrance of any and all of
the assets of Buyers, tangible or intangible, singly or in the aggregate, other
than sales of products and services in the ordinary course of business and
consistent with past practice;
5.8.4 new contracts, or extensions, modifications, terminations or
renewals thereof, except for contracts entered into, modified or terminated in
the ordinary course of business and consistent with past practice;
5.8.5 actual termination of any material customer account or group of
accounts or actual material reduction in purchases or royalties payable by any
such customer;
5.8.6 damage, destruction or loss (whether or not covered by insurance)
having a Material Adverse Effect on the assets or the business of Buyers;
5.8.7 amendment of the articles of incorporation or bylaws of Buyers;
5.8.8 failure to pay any material obligation of Buyers when due;
5.8.9 cancellation of any indebtedness or waiver of any rights of
substantial value to Buyers;
5.8.10 agreement by Buyers to do any of the foregoing;
5.9 Litigation.
----------
5.9.1 Except as disclosed in the Securities Reports or set forth in
Schedule 5.9, there is no pending Proceeding:
------------
5.9.1.1 that has been commenced by or against any of the Buyers or
that otherwise relates to or may affect Buyers' business, or any of the Buyers'
assets; or
5.9.1.2 that challenges, or that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the transactions
hereunder.
25
5.9.2 To the knowledge of each of the Buyers, no such Proceeding has been
threatened.
5.9.3 There is no Court Order to which any of the Buyers or any of the
assets owned or used by the Buyers is subject.
5.10 Third Party Consents.
--------------------
There are no authorizations, consents, approvals or notices required
to be obtained or given by any of the Buyers or waiting periods required to
expire, in order that this Agreement and the transactions provided for herein
may be consummated by each of the Buyers.
5.11 Financial Statements; Books and Records.
---------------------------------------
5.11.1 The financial statements of SkyNet contained in the
Securities Reports fairly present the assets and liabilities of Buyers and their
financial condition and results of operations indicated thereby and were
prepared in accordance with GAAP. The Financial Statements comply in all
material respects with the requirements of Regulation S-X promulgated under the
1934 Act. A copy of SkyNet's Financial Statements is attached hereto as Schedule
--------
5.11.1.
------
5.11.2 Buyers maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed
with management's authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in accordance with GAAP and to
maintain accountability for assets, (iii) access to assets is permitted only in
accordance with management's authorization and (iv) the recorded accountability
for assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
5.12 Insurance.
---------
Schedule 5.12 sets forth a list of the Buyers' policies or binders of
-------------
insurance as of the date of this Agreement (generally showing as to each policy
or binder the carrier, policy number, coverage limits, expirations dates and a
general description of the type of coverage provided), of which the Buyers are
the owner, insured or beneficiary). To the knowledge of Buyers, the policies of
insurance maintained by the Buyers are sufficient for (i) compliance with all
applicable Laws and Regulations and all of the Contracts, (ii) covering all
reasonably foreseeable damage to and liabilities or contingencies relating to
Buyers' conduct of their respective businesses. Buyers are not in default under
any of such policies or binders, and has not failed to give any notice or to
present any claim under any such policy or binder in a due and timely fashion.
Such policies and binders are in full force and effect on the date of the
signing this Agreement and name Seller as an additional named insured to the
extent necessary under the Transportation Agreement or any Contract with any
Major Customer.
26
5.13 Tax Matters.
-----------
5.13.1 Filing of Tax Returns. Except as set forth in the Securities
Reports or on Schedule 5.13.1, Buyers have timely filed with the appropriate
---------------
taxing authorities all Tax Returns in respect of Taxes required to be filed
through the date hereof. The Tax Returns filed are complete and accurate in all
material respects.
5.13.2 Payment of Taxes. All Taxes due from Buyers or which each could
be liable, in respect of periods (or portions thereof) beginning before the
Closing Date have been timely paid or an adequate reserve (in conformity with
GAAP) has been established therefor, as set forth in Schedule 5.13.2 or their
---------------
respective financial statements, and Buyers have no material Liability for Taxes
in excess of the amounts so paid or reserves so established.
5.13.3 Audits, Investigations or Claims. No deficiencies for Taxes of
Buyers have been claimed, proposed or assessed by any taxing or other
governmental authority. Except as set forth on Schedule 5.13.3, there are no
------
pending or, to the knowledge of Buyers threatened audits, assessments or other
Actions for or relating to any Liability in respect of Taxes of Buyers.
5.14 Full Disclosure.
---------------
Neither this Agreement, including all exhibits and schedules and other
closing documents, nor any other financial statement, document or other
instrument heretofore or hereafter furnished by the Buyers to Seller in
connection with the transaction contemplated herein, contains or will contain
any untrue statement of any material fact or, to the knowledge of the Buyers,
omit or will omit to state any material fact required to be stated in order to
make such statement, information, document or other instruments, in light of the
circumstances in which they are made, not misleading. No representation by the
Buyers in this Agreement and no statement contained in any Disclosure Schedule
to this Agreement contains any untrue statement of a material fact, or, to the
knowledge of the Buyers, omits to state a material fact necessary to make the
statements contained therein, in light of the circumstances in which they are
made, not misleading.
6. CLOSING
6.1 Closing.
-------
Subject to satisfaction or waiver of all conditions precedent set
forth in Sections 8 and 9 of this Agreement, the closing of the transactions
contemplated by this Agreement (the "Closing") shall take place on March 15,
1999 or the day on which the last of the conditions precedent set forth in
either Section 8 or 9 of this Agreement is fulfilled (the "Closing Date") or at
such other time, date and place as the parties may agree. The Closing shall be
conducted at the offices of Fleet Delivery Service at 10:00 a.m. or at such
other times as the parties may designate. The effective date and time of this
Agreement and the transactions contemplated hereby shall be 12:01 a.m. Pacific
Standard Time on March 15, 1999.
27
6.2 Obligations of Seller.
---------------------
At or prior to the Closing, Seller shall deliver to the Buyers, in
each case, in form and substance satisfactory to the Buyers:
6.2.1 an Assignment and Xxxx of Sale in form and substance acceptable to
the parties and such other instruments of transfer or assignment as shall be
necessary or appropriate to vest in Sub good and marketable title to the Assets;
6.2.2 an Assignment and Xxxx of Sale in form and substance acceptable to
the parties and such other instruments of transfer or assignment as shall be
necessary or appropriate to vest in Sub good and marketable title to the
Vehicles;
6.2.3 copies of all of the Assets which are in the form of documentation,
including without limitation, customer contracts, customer lists, employment
contracts, personnel records, maintenance contracts and configuration files.
6.2.4 a certificate of the Chief Executive Officer or President of Seller,
dated as of the Closing Date, to the effect that (1) all of the representations
made by Seller upon the execution and delivery of this Agreement remain true and
correct as of the Closing Date and (2) Seller has performed and complied with in
all material respects all of the covenants, agreements and obligations set forth
in this Agreement to be performed or complied with by it on or prior to the
Closing Date;
6.2.5 copies of resolutions adopted by the Board of Directors of Seller
duly authorizing and approving the execution of this Agreement and the
consummation of the transactions contemplated hereby, certified by an
appropriate officer as being true and correct as of the Closing Date;
6.2.6 each of the Ancillary Agreements;
6.2.7 A Vehicle Sale Agreement in form and substance acceptable to the
parties between the Buyers and certain affiliates of Seller pursuant to which
the motor vehicles identified on Schedule 6.2.7 hereof (the "Affiliate
--------------
Vehicles") will be purchase by Sub and sold by the owners thereof as of the
Closing Date;
6.2.8 an undertaking of Seller's certified public accountants to provide
to SkyNet as may be reasonably requested from time to time following the Closing
Date such consents and other assistance as may be required to permit SkyNet to
comply with its requirements under the 1933 Act and the 1934 Act, including
without limitation, consents to the inclusion of the Financial Statements and
their report thereon in periodic reports, registration statements, or other
filings of SkyNet under the 1933 Act or the 1934 Act from time to time. Costs
incident to such requests shall be borne by the Buyers.
6.2.9 such other documents as may be described in Articles 8 and 9 of this
Agreement.
28
6.3 Obligations of SkyNet and Sub.
-----------------------------
At the Closing, SkyNet and Sub shall deliver:
6.3.1 the SkyNet Stock, in accordance with Article 3 of this Agreement;
6.3.2 a certificate of the Chief Executive Officer or President of SkyNet
and Sub, dated as of the Closing Date, to the effect that (i) all of the
representations made by the Buyers upon the execution and delivery of this
Agreement remain true and correct as of the Closing Date and (ii) SkyNet and Sub
have performed and complied with in all material respects all of the covenants,
agreements and obligations set forth in this Agreement to be performed or
complied with by it on or prior to the Closing Date;
6.3.3 copies of resolutions adopted by the Board of Directors of each of
SkyNet and Sub duly authorizing and approving the execution of this Agreement
and the consummation of the transactions contemplated hereby, certified by an
appropriate officer as being true and correct as of the Closing Date;
6.3.4 each of the Ancillary Agreements;
6.3.5 The Vehicle Sale Agreement described in Section 6.2.7 above; and
6.3.6 such other documents as may be described in Articles 8 and 9 of this
Agreement.
6.4 Further Documents or Necessary Action.
-------------------------------------
The Buyers and Seller each agree to take all such further actions on
or after the Closing Date as may be necessary, desirable or appropriate in order
to confirm or effectuate the transactions contemplated by this Agreement. Costs
incident to the performance of such obligations shall be borne by the party
requesting the performance by the other party.
7. COVENANTS AND AGREEMENTS
Seller covenants to and agrees with the Buyers, and each of the Buyers
covenants to and agrees with Seller, as follows:
7.1 Conduct of Business Pending the Closing.
---------------------------------------
During the period from the date of this Agreement to the Closing Date,
Seller shall conduct its business operations in the ordinary and usual course
and shall maintain its records and books of account in a manner consistent with
prior periods. Seller shall exercise reasonable efforts to preserve intact the
present business organization and personnel of Seller and the present goodwill
of Seller with persons having business dealings with it. Except as otherwise
required or contemplated hereby, Seller further covenants and agrees that, from
the date of this Agreement to the Closing Date, it shall not, without the
consent of the Buyers:
29
7.1.1 enter into any negotiations, discussions or agreements contemplating,
affecting or respecting the Assets or Vehicles or any of the Seller' ability to
transfer the Assets or Vehicles;
7.1.2 enter into any negotiations, discussions or agreements contemplating
or respecting the acquisition of Seller or any material Asset or the Vehicles
identified hereunder (other than in the ordinary course of business), whether
through a sale of stock, a merger or consolidation, the sale of all or
substantially all of the assets of Seller, any type of recapitalization or
otherwise;
7.1.3 incur any Liabilities or take any action that would materially
diminish the value of the Assets or Vehicles;
7.1.4 take any action which would materially interfere with or prevent
performance of this Agreement; or
7.1.5 engage in any activity or enter into any transaction which would be
inconsistent in any material respect with any of the representations or
covenants set forth in this Agreement, as if such representations and covenants
were made at a time subsequent to such activity or transaction and all
references to the date of this Agreement were deemed to be such later date.
7.2 Access By the Buyers; Confidentiality.
-------------------------------------
During the period from the date of this Agreement to the Closing Date,
Seller shall cause the Buyers, its agents and representatives to be given
reasonable access during normal business hours to the premises, buildings,
offices, books, records, assets (including the Assets), Liabilities, operations,
contracts, files (excluding restricted files, such as personnel, medical, claims
and legal files), financial and tax information and other operational data and
information of Seller, and shall cooperate with the Buyers in conducting its due
diligence investigation of Seller; provided that such access shall not
--------
unreasonably interfere with the normal operations and employee relationships of
Seller and shall be in compliance with all applicable Law. All information
provided to or learned by the Buyers as a result of such access or otherwise in
connection with the transactions contemplated by this Agreement shall be held in
confidence.
7.3 Access By Seller; Confidentiality.
---------------------------------
During the period from the date of this Agreement to the Closing Date,
the Buyers shall cause Seller, its agents and representatives to be given full
access during normal business hours to the premises, buildings, offices, books,
records, assets, liabilities, operations, contracts, files, personnel, financial
and tax information and other data and information of the Buyers, and shall
cooperate with Seller in conducting its due diligence investigation of the
Buyers; provided that such access shall not unreasonably interfere with the
--------
normal operations and employee relationships of the Buyers and shall be in
compliance with all applicable Law. The Buyers shall provide Seller with copies
of all reports and/or filings it makes with the Securities and Exchange
Commission from the date hereof through the Closing. All information provided
to or learned by
30
Seller as a result of such access or otherwise in connection
with the transactions contemplated by this Agreement shall be held in
confidence.
7.4 Notice of Breach or Failure of Condition.
----------------------------------------
Sellers and the Buyers agree to give prompt notice to the other of the
occurrence of any event or the failure of any event to occur that might preclude
or interfere with the timely satisfaction of any condition precedent to the
obligations of Seller or the Buyers under this Agreement.
7.5 Contract Consents.
------------------
Buyers agree to use their best efforts to obtain agreement from the
Seller's customers identified on Schedule 7.5 (individually, a "Major Customer"
------------
and collectively, the "Major Customers") to the assignment of all Seller's post-
Closing Contract obligations, liabilities and rights by Seller to Sub.
Specifically:
7.5.1 Within ten days of the date of this Agreement, one or more of
Buyer's representatives will accompany one or more of Seller's representatives
to meetings with authorized representatives of each of the Major Customers, and
any other client from which Buyers and Seller mutually agree a consent to
assignment is required.
7.5.2 At those meetings, a request shall be made to each Major Customer to
consent in writing to Seller's assignment of all of its contract obligations,
liabilities and rights to Sub. An Agreement to Assign, in form and substance
acceptable to Buyers and Seller, shall be signed by an authorized representative
of both Buyers and Seller and shall be presented to the Major Customer
representative at such meeting. In the event a Major Customer elects not to sign
a consent to the assignment of the Contract is not received within ten days of
the meeting, Seller shall be entitled to cancel such contract without liability
to Buyers and without adjustment to the Purchase Consideration.
7.5.3 Buyers agree that as of the Closing Date, Seller shall have assigned
all obligations, liabilities and rights to all Assets (including Contracts, and
any other contract or agreement, oral or written, between Seller and its
clients, customers, suppliers, subcontractors, and independent contractors in
the operation of the Business). Buyers shall acknowledge the assignment of all
such post-Closing obligations, liabilities and rights to all such Assets,
notwithstanding contrary provisions in any of the Contracts or any other
document or agreement which purport to prohibit such an assignment without prior
consent.
7.6 Production of Schedules and Exhibits.
------------------------------------
Not less than five (5) days prior to the Closing, each of the parties
hereto shall produce, to the extent not previously completed, the Schedules and
Exhibits required to be prepared pursuant to this Agreement. The Schedules and
Exhibits prepared subsequent to the execution of this Agreement shall be given
such force and effect as though such Schedules and Exhibits were produced at the
time of the execution of this Agreement.
31
7.7 Best Efforts.
------------
The Sellers and the Buyers shall use their respective best efforts to
obtain all consents or approvals necessary to bring about the satisfaction of
the conditions required to be performed, fulfilled or complied with by them
pursuant to this Agreement and to take or cause to be taken all action, and to
do or cause to be done all things, necessary, proper or advisable under
applicable Laws to consummate and make effective the transactions contemplated
by this Agreement as expeditiously as practicable.
7.8 Exclusive Dealing.
-----------------
In consideration of the Buyers expending considerable time and
expenses in connection with the transactions contemplated in this Agreement,
including those incurred for due diligence inquiries and legal fees, Seller
hereby covenants and agrees that until sixty (60) days after the date on which
this Agreement is terminated pursuant to Article 13 (except in the event of a
termination of this Agreement by Seller as a result of a breach by Buyers of
their obligations hereunder or by the Buyers under the condition set forth in
Section 8.5 hereof), Seller will not, directly or indirectly, through any
representative or otherwise, solicit or entertain offers from, negotiate with or
in any manner encourage, discuss, accept or consider any proposal of any other
person relating to the acquisition of the Assets, in whole or in part, whether
directly or indirectly, through purchase, merger, consolidation or otherwise.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYERS
All obligations of the Buyers under this Agreement are subject to the
satisfaction by Seller at or before the Closing of all of the following
conditions, except to the extent expressly waived in writing by the Buyers:
8.1 Representations True at Closing.
-------------------------------
The representations of Seller contained in this Agreement shall have
been true and correct in all material respects when made and shall be true and
correct in all material respects on the Closing Date as though such
representations were made again on the Closing Date.
8.2 Performance.
-----------
The Sellers shall have performed and complied in all material respects
with all agreements and conditions required by this Agreement to be performed or
complied with by Seller prior to or at the Closing.
8.3 No Adverse Changes.
------------------
Except as contemplated by this Agreement, there shall have been no
material adverse change in the condition, prospects, Assets, business or
operations, financial or otherwise, of Seller from December 31, 1998 to the
Closing Date.
32
8.4 Litigation.
----------
On the Closing Date, there shall not be any pending or threatened
Proceedings in any court or by or before any Governmental Authority with a view
to seek, or in which it is sought, to restrain or prohibit the consummation of
the transactions contemplated by this Agreement or in which it is sought to
obtain divestiture, rescission or damages in connection with the transactions
contemplated by this Agreement.
8.5 Due Diligence.
-------------
The Buyers shall have completed, to their satisfaction, a due
diligence review of the financial condition, results of operations, properties,
assets, liabilities, business and prospects of Seller.
8.6 Transportation Agreement.
------------------------
Seller shall have entered into a Transportation Agreement agreeable in
form and substance to the parties.
8.7 Registration Rights Agreement.
-----------------------------
The Registration Rights Agreement agreeable in form and substance to
the parties shall have been executed and delivered by Seller.
8.8 Transitional Sublease.
---------------------
The Transitional Sublease shall have been executed and delivered by
Seller.
8.9 Replacement Las Vegas Facility.
------------------------------
Sub shall have entered into a Lease Agreement for the new site of its
Las Vegas, Nevada operations.
8.10 Assignment of Leases.
--------------------
The landlords under each of the Leases identified on Schedule 4.4.3
--------------
shall have consented to the assignment of such leases from Seller to Sub and
delivered a Consent to Lease Assignment and Estoppel Certificate agreeable in
form and substance to the parties.
8.11 Escrow Agreement.
----------------
Seller shall have executed and delivered the Escrow Agreement.
33
8.12 Certificate.
-----------
Seller have delivered to the Buyers a certificate, dated as of the
Closing Date, of the Sellers to the effect that the conditions set forth in
Sections 8.1, 8.2, 8.3, 8.4, and 8.10 have been satisfied.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
All obligations of Seller under this Agreement are subject to the
satisfaction by the Buyers at or before the Closing of all of the following
conditions, except to the extent expressly waived in writing by Seller:
9.1 Representations True at Closing.
-------------------------------
The representations of the Buyers contained in this Agreement shall
have been true and correct in all material respects when made and shall be true
and correct in all material respects on the Closing Date as though such
representations were made again on the Closing Date.
9.2 Performance.
-----------
The Buyers shall have performed and complied, in all material
respects, with all agreements and conditions required by this Agreement to be
performed or complied with by the Buyers prior to or at the Closing.
9.3 No Adverse Changes.
------------------
Except as contemplated by this Agreement, there shall have been no
Material Adverse Change in the condition, business or operations, financial or
otherwise, of the Buyers from June 30, 1998 to the Closing Date except as
otherwise set forth in the Securities Reports.
9.4 Litigation.
----------
On the Closing Date, there shall not be any pending Proceedings in any
court or by or before any Governmental Authority with a view to seek, or in
which it is sought, to restrain or prohibit the consummation of the transactions
contemplated by this Agreement or in which it is sought to obtain divestiture,
rescission or damages in connection with the transactions contemplated by this
Agreement and no investigation by any Governmental Authority shall be pending
which might result in any such Proceeding.
9.5 Governmental Consents.
---------------------
All requirements for the valid consummation by the Buyers of the
transactions contemplated by this Agreement shall have been applied for by
Buyers, and all authorizations, consents, waivers, approvals or other actions by
any Governmental Authority or third party
34
which are required for the consummation of the transactions contemplated by this
Agreement shall have been applied for by Buyers.
9.6 Transportation Agreement.
------------------------
The Transportation Agreement shall have been executed and delivered by
Sub.
9.7 Registration Rights Agreement.
-----------------------------
The Registration Rights Agreement shall have been executed and
delivered by SkyNet.
9.8 Due Diligence.
-------------
The Seller shall have completed, to its satisfaction, a due diligence
review of the financial condition, results of operations, properties, assets,
liabilities, business and prospects of the Buyers.
9.9 Escrow Agreement.
----------------
SkyNet and Sub shall have executed and delivered the Escrow Agreement
and delivered the Escrow Shares to the Escrow Agent hereunder.
9.10 Replacement Las Vegas Facility.
------------------------------
Sub shall have entered into a Lease Agreement for the new site of its
Las Vegas, Nevada operations.
9.11 Interstate and Intrastate Operational Authority.
-----------------------------------------------
Buyers shall have applied for and made diligent efforts in a timely
manner to obtain all necessary interstate and intrastate operational authority,
and to expeditiously and accurately complete the appropriate forms and
procedures to obtain such authority.
9.12 Third Party Consents.
--------------------
All statutory requirements, if any, for the valid consummation by
Seller of the transactions contemplated by this Agreement shall have been
fulfilled and all authorizations, consents, waivers, approvals or other actions
by any third party which are required for the consummation of the transactions
contemplated by this Agreement shall have been received and shall be in full
force and effect.
9.13 Assignment of Lease.
-------------------
Each of the Leases described on Schedule 4.4.3 shall have been
--------------
assigned from Seller to Sub, and each lessor under such lease shall have
consented to such assignment.
35
9.14 Certificate.
-----------
The Buyers shall have delivered to Seller a certificate, dated as of
the Closing Date, to the effect that the conditions set forth in Sections 9.1,
9.2, 9.3, 9.4, 9.9, 9.12 and 9.13 have been satisfied.
10. POST CLOSING COVENANTS
Seller covenants to and agrees with the Buyers, and each of the Buyers
covenants to and agrees with Seller, as follows:
10.1 Access to Books and Records.
---------------------------
Following the Closing Date, Buyers and Seller agree to provide the
other party with access to each of the Books and Records as they may reasonably
request from time to time in order to permit the requesting party to comply with
the requirements of any federal or state laws or requests of federal or state
regulatory agencies as may exist from time to time or as may be necessary to
prepare its audited financial statements for periods following the Closing Date.
Costs incident to requests under this Section shall be borne by the requesting
party.
10.2 Restrictions on Transfer of SkyNet Stock.
----------------------------------------
In order to assist in compliance with federal and state securities
laws and to further the purposes of this Agreement, Seller agrees that it will
not, except as may be permitted or contemplated by the Registration Rights
Agreement, sell, transfer, pledge, hypothecate or otherwise encumber any of the
SkyNet Stock until the one year anniversary of the Closing Date.
10.3 Employee Matters.
----------------
10.3.1 As of the Closing Date, all of the Employees identified on
Schedule 4.9.1 shall cease to be employees of Seller, and Sub agrees that it
--------------
will hire substantially all such persons as of the Closing Date. Buyer further
agrees that it shall not terminate more than 40 of these or other employees in
any single city or operating location, within 90 days of the date of the sale.
10.3.2 Buyer is aware that the International Brotherhood of Teamsters,
Chauffeurs, Warehousemen, and Helpers of America, Local 631, has petitioned the
National Labor Relations Board to become the exclusive bargaining representative
of Seller's full time and regular part time drivers and warehouse employees
(excluding all office clericals, dispatchers, assistant dispatchers, guards and
supervisors, as defined in the National Labor Relations Act as amended) employed
at the Employer's 0000 Xxxx Xxxxxxxx Xxx, Xxx Xxxxx, Xxxxxx facility. The
Teamsters Union has won a representation election for the above described
bargaining unit. Seller, consistent with its obligations under the National
Labor Relations Act, has extended recognition to the Teamsters Union as the
exclusive bargaining representative of the above described bargaining unit. Sub
agrees that, as of the Closing Date, it will hire at least a majority
36
of the employees in the above described bargaining unit and to recognize the
above-named union as the exclusive bargaining representative for those employees
in such bargaining unit that are employed by Sub following the Closing.
10.4 Real Property Lease Matters.
---------------------------
10.4.1 Real Property Leases. To the extent the conditions in Sections
--------------------
9.14 and 8.10 of this Agreement to Seller's and the Buyer's obligation to
perform their respective obligations under this Agreement have not been
satisfied as of the Closing Date and waived by the parties, Sub and Seller shall
make best efforts in good faith to timely contact those landlords, landowners,
Realtors, property managers or property brokers who have legal authority to
change tenancies or tenants as to the Leases, and to expeditiously complete the
appropriate forms and procedures, to assign the Leases and any liabilities
thereunder, to Sub as the Closing Date, Buyer shall be solely liable for any and
all costs required for such lease assignment.
10.4.2 Rental of Las Vegas Facility. To assist the transition of the
----------------------------
Assets and Vehicles to Sub, Seller shall, pursuant to the Transitional Sublease
in form and substance acceptable to the parties, sublease to Sub Seller's leased
facilities at 0000 Xxxx Xxxxxxxx Xxx., and 0000 Xxxx Xx, Xxxxx X, Xxx Xxxxx,
Xxxxxx. which facilities Sub agrees to vacate within 60 days of the Closing
Date. Sub agrees to a month-to-month rental on such properties, to be
responsible for all utilities, maintenance and repairs without exception, and to
additionally pay Seller the following monthly rates:
Rental for each 30-day Monthly Rental
Location period following the following the 60th day
--------------------------------- Closing Date after the Closing Date
---------------------- -----------------------
0000 Xxxx Xxxxxxxx Xxx. $6,000 monthly $65,000
0000 Xxxx Xx., Xxxxx X $2,000 monthly $15,000
10.5 Transfer of Right to Use the Name "Fleet Delivery Service".
----------------------------------------------------------
The parties acknowledge and agree that, until such time as the
Transportation Agreement shall terminate, Seller shall retain the sole and
exclusive right to use the name "Fleet Delivery Service." At such time as Sub
has obtained all required interstate and intrastate authorities to conduct the
Business, the Transportation Agreement shall terminate, and (i) Seller shall
immediately thereafter make all filings required to relinquish its right to use
the name "Fleet Delivery Service" and (ii) Sub shall take all actions necessary
to avail itself of the right to use the name "Fleet Delivery Service"
thereafter.
10.6 Compliance with Law.
-------------------
The Buyers agree that they shall use their respective best efforts to
comply with all applicable Laws on and after the Closing Date.
37
11. NON-COMPETITION
11.1 Covenant Not to Compete.
-----------------------
11.1.1 For a period of two (2) years after the Closing Date, Seller agrees
that neither it nor any person or entity directly or indirectly controlling,
controlled by or under common control with Seller, shall compete with the Buyers
in the non-passenger carrier business. The term "Restricted Area" shall mean the
six states of Arizona, California, Oregon, Nevada, Utah and Washington.
11.1.2 Notwithstanding the foregoing, the performance by Seller of (i) any
services required of regulated carriers pursuant to applicable Law, which the
parties hereto acknowledge as of the date of this Agreement to consist of the
transportation, on an exigent or emergency basis, of materials to or from
medical laboratories or hospitals, and (ii) the transport of baggage in
taxicabs, buses, minibuses or limousines, shall not constitute competition in
the non-passenger carrier business for purposes of the foregoing covenant not to
compete.
11.2 Covenant Not to Disclose.
------------------------
Seller agrees that it possesses certain data and knowledge of
operations of the Business which are proprietary in nature and confidential,
including, without limitation, trade secrets, which if disclosed to the public
may have a Material Adverse Effect on the Buyers on or after the Closing Date
(collectively, the "Confidential Information"). The Seller covenants and agrees
that it will not, at any time after the Closing, reveal, divulge or make known
to any person (other than the Buyers) or use for its own account or for the
account of any person, firm, corporation or other organization any Confidential
Information which is included in the Assets, except to the extent that such
information is in the public domain. In the event that Seller is requested or
required (by oral question or request for information or documents in any legal
Proceeding, interrogatory, subpoena, civil investigative demand or similar
process) to disclose any Confidential Information, Seller will notify the Buyers
promptly of the request or requirement so that the Buyers may seek an
appropriate protective order or waive compliance with the provisions of this
Section 11.2. If, in the absence of a protective order or the receipt of a
waiver hereunder, Seller nonetheless is, on the advice of counsel, compelled to
disclose any Confidential Information to any tribunal or else stand liable for
contempt, Seller may disclose the Confidential Information to the tribunal;
provided, however, that Seller shall use its best efforts to obtain, at the
--------
request of the Buyers, an order or other assurance that confidential treatment
will be accorded to such portion of the Confidential Information required to be
disclosed as the Buyers shall designate.
11.3 Remedies.
--------
The parties hereto recognize that damages in the event of breach of
this Article 11 would be difficult, if not impossible, to ascertain, and it is
therefore agreed that the Buyers, in addition to and without limiting any other
remedy or right it may have, shall have the right to an injunction or other
equitable relief in any court of competent jurisdiction enjoining any such
38
breach. The existence of this right shall not preclude any other rights and
remedies at law or in equity which the Buyers or Seller may have.
11.4 Invalidity.
----------
It is the desire and intent of the parties to this Agreement that the
provisions of this Article 11 shall be enforced to the fullest extent
permissible under applicable Law. If any particular provisions or portion of
this Article shall be adjudicated to be invalid or unenforceable, this Article
shall be deemed amended to delete therefrom or restrict the application of such
provision or portion adjudicated to be invalid or unenforceable to the extent
(but only to the extent) required to render such provision or portion valid and
enforceable, such amendment to apply only with respect to the operation of such
Article in the particular jurisdiction in which such adjudication is made.
12. INDEMNIFICATION AND RELATED MATTERS
12.1 Survival of Representations.
---------------------------
The representations contained in this Agreement, the schedules and
exhibits hereto, and any agreement, document, instrument or certificate
delivered hereunder, including the Related Documents, shall survive the Closing
until the two year anniversary of the Closing Date; provided, that the
--------
representations contained in Sections 4.7, 4.14, 4.18 and 5.12 shall not
terminate until the expiration of any applicable statute of limitations.
12.2 Indemnification by Seller.
-------------------------
12.2.1 Seller shall indemnify each of SkyNet and Sub (individually, a
"SkyNet Indemnified Party" and collectively, "SkyNet Indemnified Parties")
jointly and severally against, defend and hold each harmless from the following:
12.2.1.1 any liability, loss, damage or deficiency resulting from or
arising out of any inaccuracy in or breach of any representation by Seller in
this Agreement;
12.2.1.2 any liability of Seller not expressly assumed by the Buyers
under the terms of this Agreement;
12.2.1.3 any liability, loss, damage or deficiency resulting from or
arising out of any breach or nonperformance of any covenant or obligation made
or incurred by Seller in this Agreement; and
12.2.1.4 any and all reasonable costs and expenses (including
reasonable legal and accounting fees) related to any of the foregoing. In the
event that the Buyers makes a Claim which is determined pursuant to the
arbitration proceeding specified in Section 14.6 hereof to be without reasonable
basis in law or fact, the Buyers shall bear all reasonable costs and
39
expenses (including court costs and reasonable legal and accounting fees),
incurred by Seller in investigating and defending against such Claim.
12.2.2 The Buyers shall be entitled to offset any amounts due to it under
this Section 12.2 against the Escrow Shares to the extent Escrow Shares are
available, which shall be the limit of Seller's liability for this Section and
any and all of Seller's liability arising from or relating to this Agreement.
12.3 Indemnification by the Buyers.
-----------------------------
SkyNet and Sub shall jointly and severally indemnify Seller against,
defend and hold it harmless from the following:
12.3.1 any liability, loss, damage or deficiency resulting from or arising
out of any inaccuracy in or breach of any representation by the Buyers in this
Agreement;
12.3.2 any liability, loss, damage or deficiency resulting from or arising
out of any breach or nonperformance of any covenant or obligation made or
incurred by the Buyers in this Agreement, including but not limited to any and
all performance or payment obligations arising following Closing under any and
all contracts and agreements Seller entered into prior to the Closing Date which
are assumed by Sub hereunder; and
12.3.3 any and all reasonable costs and expenses (including reasonable
legal and accounting fees) related to any of the foregoing. In the event that
Seller make a Claim which is determined pursuant to the arbitration proceeding
specified in Section 14.6 hereof to be without reasonable basis in law or fact,
Seller shall bear all reasonable costs and expenses (including court costs and
reasonable legal and accounting fees), incurred by the Buyers in investigating
and defending against such Claim.
12.4 Third Party Claims.
------------------
12.4.1 If any Proceeding (including, without limitation, negotiations with
federal, state, local or foreign tax authorities) shall be threatened or
commenced by a third party in respect of which a party (an "Indemnified Party")
may make a Claim hereunder, the Indemnified Party shall notify the party
obligated to indemnify such party hereunder (the "Indemnifying Party") to that
effect with reasonable promptness (so as to not prejudice such party's rights)
after the commencement or threatened commencement of such Proceeding, and the
Indemnifying Party shall have the opportunity to defend against such Proceeding
(or, if the Proceeding involves to a significant extent matters beyond the scope
of the indemnity provisions contained herein, those Claims that are covered
hereby), subject to the limitations set forth below.
12.4.2 If the Indemnifying Party elects to defend against any Proceeding
(or, as described in the preceding parenthetical in Section 12.4.1, above, one
or more claims relating thereto), the Indemnifying Party shall notify the
Indemnified Party to that effect with reasonable
40
promptness. In such case, the Indemnified Par ty shall have the right to employ
its own counsel and participate in the defense of such matter, but the fees and
expenses of counsel shall be at the expense of the Indemnified Party unless the
employment of such counsel at the expense of the Indemnifying Party shall have
been authorized in writing by the Indemnifying Party.
12.4.3 Any party granted the right to direct the defense of a threatened
or actual Proceeding hereunder shall: (i) keep the other party fully informed of
material developments in the Proceeding at all stages thereof; (ii) promptly
submit to the other party copies of all pleadings, responsive pleadings, motions
and other similar legal documents and papers received in connection with the
Proceeding; (iii) permit the other party and its counsel, to the extent
practicable, to confer on the conduct of the defense of the Proceeding; and (iv)
to the extent practicable, permit the other party and its counsel an opportunity
to review all legal papers to be submitted prior to their submission. The
parties shall make available to each other and each other's counsel and
accountants all of its or their books and records relating to the Proceeding,
and each party shall render to the other such assistance as may be reasonably
required in order to insure the proper and adequate defense of the Proceeding.
The parties shall use their respective good faith efforts to avoid the waiver of
any privilege of either party.
12.4.4 The assumption of the defense of any matter by an Indemnifying
Party shall not constitute an admission of responsibility to indemnify or in any
manner impair or restrict such party's rights to later seek reimbursement of its
costs and expenses if the Indemnifying Party had no indemnification obligation
under this Agreement with respect to such matter. An Indemnifying Party may
elect to assume the defense of a matter at any time during the pendency of such
matter, even if initially such party did not elect to assume such defense, so
long as such assumption at such later time would not prejudice the rights of the
Indemnified Party. No settlement of a matter by the Indemnified Party shall be
binding on an Indemnifying Party for purposes of such party's indemnification
obligations hereunder.
13. TERMINATION
13.1 Termination by Mutual Consent.
-----------------------------
At any time prior to the Closing, this Agreement may be terminated by
the mutual written consent of Seller and the Buyers without liability on the
part of Seller or the Buyers.
13.2 Termination Upon Breach or Default.
----------------------------------
If Seller or the Buyers shall materially default in the observance or
in the due and timely performance of any of the covenants contained in this
Agreement, or if there shall have been a material inaccuracy in or breach by any
of the parties of any of the representations set forth in this Agreement, the
other party may, upon written notice and a reasonable opportunity to cure,
terminate this Agreement, without prejudice to its rights and remedies available
at law, including the right to recover expenses, costs and other damages.
13.3 Termination Based Upon Failure of Conditions.
--------------------------------------------
41
If any of the conditions of this Agreement to be complied with or
performed by a party on or before the Closing Date, shall not have been complied
with or performed in all material respects by such date and such noncompliance
or nonperformance shall not have been waived in writing by the other party, the
party to whom the benefit of such condition runs may, upon written notice,
terminate this Agreement, without prejudice to its or their rights and remedies
available under law, including the right to recover expenses, costs and other
damages.
13.4 Termination on Termination Date.
-------------------------------
If Closing shall not have occurred (other than through the failure of
any party seeking to terminate this Agreement to comply fully with its
obligations under this Agreement) on or before the Termination Date, or such
later date as the parties may agree upon, this Agreement shall automatically
terminate, without prejudice to any party's rights and remedies available under
law, including the right to recover expenses, costs and other damages.
14. GENERAL
14.1 Entire Agreement.
----------------
This Agreement, and the exhibits and schedules hereto and the
agreements specifically referred to herein, including the Ancillary Documents,
set forth the entire agreement and understanding of Seller and the Buyers in
respect of the transactions contemplated hereby and supersede all prior
agreements, arrangements and understandings relating to the subject matter
hereof. No representation, promise, inducement or statement of intention has
been made by Seller or the Buyers that is not embodied in this Agreement or in
the documents specifically referred to herein and neither Seller nor the Buyers
shall be bound by or liable for any alleged representation, promise, inducement
or statement of intention not so set forth.
14.2 Binding Effect; Benefits; Assignment.
------------------------------------
The terms of this Agreement shall be binding upon, inure to the
benefit of and be enforceable by and against Seller and its successors and
authorized assigns, and the Buyers and its successors and authorized assigns.
Nothing in this Agreement, express or implied, is intended to confer upon any
other person any rights or remedies under or by reason of this Agreement except
as expressly indicated herein. Neither Seller nor the Buyers shall assign any
of their respective rights or obligations under this Agreement to any other
person, firm or corporation without the prior written consent of the other
party.
14.3 Headings.
--------
The headings of the sections and paragraphs of this Agreement have
been inserted for convenience of reference only and shall in no way restrict or
otherwise modify any of the terms or provisions hereof.
14.4 Amendment and Waiver.
--------------------
42
This Agreement may be amended, modified, superseded or canceled and
any of the terms, covenants, representations or conditions hereof may be waived
only by a written instrument executed by Seller and the Buyers or, in the case
of a waiver, by or on behalf of the party waiving compliance.
14.5 Governing Law.
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of Nevada as applicable to contracts made and to be
performed in Nevada, without regard to conflict of laws principles.
14.6 Arbitration.
-----------
Any controversy or claim arising out of or relating to this Agreement,
or the breach thereof, shall be determined by binding arbitration applying the
laws of the State of Nevada as set forth in Section 14.6 hereof. Any
arbitration pursuant to this Agreement shall be conducted in Xxxxx County,
Nevada in accordance with the Nevada arbitration rules. The arbitration shall
be final and binding upon all the parties (so long as the award was not procured
by corruption, fraud or undue means) and the arbitrator's award shall not be
required to include factual findings or legal reasoning. The arbitrator(s) may
award the prevailing party reasonable attorneys' fees and other legal expenses
incurred in connection with the arbitration proceeding. Judgment on the award
rendered by the arbitrator(s) shall be entered in district court in Xxxxx
County, Nevada.
14.7 Public Disclosure.
-----------------
Except as required by Law, neither the Buyers nor Seller shall make
any public disclosure of the existence or terms of this Agreement or the
transactions contemplated hereby without the prior written consent of the other
party, which consent shall not be unreasonably withheld. In the event that
Seller or the Buyers determines that the disclosure of the existence or terms of
this Agreement is required by Law, such party shall so notify the other parties
and shall provide to the other party a copy of any such public disclosure prior
to releasing the same.
14.8 Notices.
-------
All notices, requests, demands and other communications to be given
pursuant to the terms of this Agreement shall be in writing and shall be deemed
to have been duly given if hand delivered, sent by overnight mail by a
nationally recognized overnight delivery service or mailed first class, postage
prepaid:
(a) If to Seller:
Xx. Xxxx X. Xxxxx
Nevada Fleet Management, Inc.
0000 Xxxx Xxxxxxxx Xxxxxx
00
Xxx Xxxxx, Xxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Xxxxx X. Xxxxxxx, Esquire
Nevada Fleet Management, Inc.
0000 Xxxx Xxxxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and
Xx. Xxxxxx Xxxxxxxx
000 X. Xxxxxxx
Xxx Xxxxx, XX 00000
(b) If to the Buyers:
SkyNet Holdings, Inc.
Fleet Acquisition Corp.
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx
Attention: Xx. Xxx Xxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxx, Esq.
Xxxxxxxx Ingersoll Professional Corporation
Eleven Xxxx Xxxxxx, 00xx Xxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Either party may change its address by prior written notice to the other party.
14.9 Counterparts.
---- ------------
This Agreement may be executed in counterparts, each of which when so
executed shall be deemed to be an original and such counterparts shall together
constitute one and the same instrument. A facsimile signature on any
counterpart shall be deemed to be an original signature.
44
14.10 Expenses.
----- --------
Each party shall pay their own respective expenses, costs and fees
incurred in connection with the negotiation, preparation, execution and delivery
of this Agreement and each of the Related Documents and the consummation of the
transactions contemplated hereby, including, without limitation, the fees and
expenses of their respective legal counsel, accountants and financial advisors.
14.11 Invalidity.
----- ----------
In the event that any one or more of the provisions contained in this
Agreement or in any other instrument referred to herein shall, for any reason,
be held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein shall be held to be invalid, illegal or unenforceable in any
jurisdiction, such provisions shall be deemed amended to the extent necessary
for such provisions to be valid, reasonable and enforceable in such
jurisdiction; provided, however, that such provisions shall not be deemed
amended for purposes of their enforcement in any jurisdiction in which such
provisions would be valid, legal and enforceable without amendment.
45
IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase
Agreement to be duly executed as of the day and year first above written.
SKYNET HOLDINGS, INC.
By: /s/ Xxxxxxxxx Xxxxx
--------------------------------------
Xxxxxxxxx Xxxxx, President and Chief
Executive Officer
FLEET ACQUISITION CORP.
By: /s/ Xxxxxxxxx Xxxxx
--------------------------------------
Xxxxxxxxx Xxxxx, President and Chief
Executive Officer
NEVADA FLEET MANAGEMENT, INC.
By: /s/ Xxxxxx Xxxxxxxx
--------------------------------------
Xxxxxx Xxxxxxxx, Vice President
46
