AGREEMENT AND PLAN OF REORGANIZATION
Dated as of
August 5, 1997
between
SkyLynx Express Holdings, Inc.
NETWORK SYSTEM TECHNOLOGIES, INC.
and
ALLIED WIRELESS, INC.
TABLE OF CONTENTS
SECTION 1: GENERAL DEFINITIONS -1-
1.1 Best Knowledge -1-
1.2 Business Day -2-
1.3 Code -2-
1.4 Erisa -2-
1.5 Exchange Act -2-
1.6 Fiscal Year -2-
1.7 Governmental Authority -2-
1.8 Governmental Requirement -2-
1.9 IRS -2-
1.10 Legal Requirements -2-
1.11 Ownership Interest -2-
1.12 Person -3-
1.13 Section -3-
1.14 Securities Act -3-
1.15 Taxes -3-
SECTION 2: EXCHANGE OF SECURITIES -3-
2.1 Exchange of Common Stock -3-
2.2 NST/SkyLynx Reorganization -3-
2.3 Allied Recapitalization -3-
2.4 Consultation Fees and Agreements -4-
2.5 Private Financing -4-
2.6 Determination of Issuable Allied Shares -4-
2.7 Income Tax Considerations -5-
2.8 Compliance with Securities Laws -5-
SECTION 3: CLOSING -5-
3.1 General Procedure -5-
3.2 Time and Place -5-
3.3 Covenants Regarding Closing -5-
3.4 Conditions to Obligation of Allied -6-
3.5 Conditions to Obligation of SkyLynx -9-
3.6 Specific Items to be Delivered at the Closing -12-
3.7 Election of Directors and Executive Officers of Allied -13-
3.8 Post Closing Matters -14-
SECTION 4: REPRESENTATIONS AND WARRANTIES BY SKYLYNX -14-
4.1 Organization and Standing -15-
4.2 Subsidiaries, etc -15-
4.3 Qualification -15-
4.4 Corporate Authority -15-
4.5 Financial Statements -15-
4.6 Capitalization of the Corporation -16-
4.7 Taxes -16-
4.8 No Actions, Proceedings, etc -16-
4.9 Post Balance Sheet Changes -16-
4.10 No Breaches -17-
4.11 Condition of the Corporation's Assets -17-
4.12 Inventory -17-
4.13 Accounts Receivable -17-
4.14 Corporate Acts and Proceedings -17-
4.15 Registered Rights and Proprietary Information -18-
4.16 Changes in Suppliers and Customers -19-
4.17 No Liens or Encumbrances -19-
4.18 Employee Matters -19-
4.19 Legal Proceedings and Compliance with Law -20-
4.20 Contract Schedules -20-
4.21 Labor Matters -21-
4.22 Insurance -21-
4.23 Environmental -21-
4.24 Disclosure of Information -22-
SECTION 5: COVENANTS OF SKYLYNX -23-
5.1 Preservation of Business -23-
5.2 Ordinary Course -23-
5.3 Negative Covenants -23-
5.4 Access to Books and Records, Premises, etc -24-
5.5 Compensation -24-
5.6 No Solicitation -24-
SECTION 6: REPRESENTATIONS AND WARRANTIES OF ALLIED -25-
6.1 Organization and Standing -25-
6.2 Subsidiaries, etc -25-
6.3 Qualification -25-
6.4 Corporate Authority -25-
6.5 Financial Statements -26-
6.6 Capitalization of the Corporation -26-
6.7 Taxes -27-
6.8 No Actions, Proceedings, etc -27-
6.9 Post Balance Sheet Changes -27-
6.10 No Breaches -28-
6.11 Condition of the Corporation's Assets -28-
6.12 Inventory -28-
6.13 Accounts Receivable -28-
6.14 Corporate Acts and Proceedings -28-
6.15 Registered Rights and Proprietary Information -29-
6.16 Changes in Suppliers and Customers -30-
6.17 No Liens or Encumbrances -30-
6.18 Employee Matters -30-
6.19 Legal Proceedings and Compliance with Law -30-
6.20 Contracts -31-
6.21 Labor Matters -32-
6.22 Insurance -32-
6.23 Environmental -32-
6.24 Disclosure of Information -33-
SECTION 7: COVENANTS OF ALLIED -33-
7.1 Preservation of Business -33-
7.2 Ordinary Course -34-
7.3 Negative Covenants -34-
7.4 Access to Books and Records, Premises, etc -34-
7.5 Compensation -35-
7.6 Post-Closing Financing -35-
7.7 No Solicitation -35-
7.8 Audited Financial Statements and Bring-Downs -36-
7.9 Delivery of Additional Filings -36-
SECTION 8: TERMINATION -37-
8.1 Termination -37-
8.2 Effect of Termination -37-
SECTION 9: REMEDIES FOR BREACH -37-
9.1 Remedies for Breach -37-
SECTION 10: NONDISCLOSURE OF CONFIDENTIAL INFORMATION -37-
10.1 Nondisclosure of Confidential Information -37-
10.2 No Publicity -38-
SECTION 11: EXPENSES -39-
SECTION 12: MISCELLANEOUS -39-
12.1 Attorney's Fees -39-
12.2 No Brokers -39-
12.3 Survival and Incorporation of Representations -39-
12.4 Incorporation by Reference -39-
12.5 Parties in Interest -40-
12.6 Amendments and Waivers -40-
12.7 Waiver -40-
12.8 Governing Law - Construction -40-
12.9 Limitation of Actions -40-
12.10 Representations and Warranties -40-
12.11 Notices -40-
12.12 Fax/Counterparts -42-
12.13 Captions -42-
12.14 Severability -42-
12.15 Good Faith Cooperation and Additional Documents -42-
12.16 Specific Performance -42-
12.17 Assignment -42-
12.18 Time -43-
EXHIBITS
Exhibit 2.1 SkyLynx Express Holdings, Inc. List of Holders of SkyLynx
Common Stock
Exhibit 2.2 SkyLynx Express Holdings, Inc. contract rights, licenses,
intellectual property rights, technology and other tangible
and intangible assets
Exhibit 3.4(o) SkyLynx Form of Shareholder Assignment
Exhibit 3.4(u) Opinion of Xxxxxx Xxxxxxxx, J.R. Xxxxxxxx, Inc., counsel for
SkyLynx, dated as of the Closing Date
Exhibit 3.5(w) Opinion of Xxxxxx & Xxxxxxx, llc, counsel for Allied, dated
as of the Closing Date
Exhibit 3.7(a) Reconstituted Board of Directors of Allied Wireless, Inc.
Exhibit 4.7 SkyLynx Express Holdings, Inc. Exceptions to Timely Filing
of Taxes; Tax Related Disputes
Exhibit 4.8 SkyLynx Express Holdings, Inc. Pending or Threatened
Actions or Proceedings
Exhibit 4.9 SkyLynx Express Holdings, Inc. Post Balance Sheet
Changes
Exhibit 4.11 SkyLynx Express Holdings, Inc. Third Party Proprietary
Interest in Intangible Assets
Exhibit 4.12 SkyLynx Express Holdings, Inc. Exceptions to Inventory
Valuation, Condition and Marketability
Exhibit 4.13 SkyLynx Express Holdings, Inc. Exceptions to Collectability
of Accounts Receivable (Material Counterclaims or Set-Offs)
Exhibit 4.15 SkyLynx Express Holdings, Inc. Patents, Other Registered
Rights and Proprietary Information
Exhibit 4.16 SkyLynx Express Holdings, Inc. Changes in Suppliers and
Customers
Exhibit 4.17 SkyLynx Express Holdings, Inc. Liens or Encumbrances
Exhibit 4.18 SkyLynx Express Holdings, Inc. Current Employees
Exhibit 4.19 SkyLynx Express Holdings, Inc. Pending or Threatened Legal,
Administrative, or Other Proceedings or Governmental
Investigation, Exceptions to Compliance with Laws,
Ordinances, Requirements, Regulations, or Orders
Exhibit 4.20(a) SkyLynx Express Holdings, Inc. Material Contract Agreements
Exhibit 4.20(b) SkyLynx Express Holdings, Inc. Labor Contracts, Employment
Agreements and Collective Bargaining Agreements
Exhibit 4.20(c) SkyLynx Express Holdings, Inc. Liens or Security Interest
Securing Indebtedness
Exhibit 4.20(d) SkyLynx Express Holdings, Inc. Profit Sharing, Pension,
Stock Option, Severance pay, Retirement, Bonus, Deferred
Compensation, Group Life and Health Insurance or other
Employee Benefit Plans, Agreements, Arrangements or
Commitments
Exhibit 4.20(e) SkyLynx Express Holdings, Inc. Other Material Documents or
Instruments
Exhibit 4.21(f) SkyLynx Express Holdings, Inc. Defaults or Breaches of
Existing Contracts, Agreements, Leases, Licenses, Plans,
Arrangements and Commitments
Exhibit 4.22 SkyLynx Express Holdings, Inc. Insurance Coverage
Exhibit 4.23 SkyLynx Express Holdings, Inc. Environmental Concerns:
Hazardous Waste Production, Storage, etc.
Exhibit 6.4 Allied Wireless, Inc. Corporate Authority
Exhibit 6.5 Allied Wireless, Inc. Financial Statements
Exhibit 6.7 Allied Wireless, Inc. Exceptions to Timely Filing of Taxes;
Tax Related Disputes
Exhibit 6.8 Allied Wireless, Inc. Actions, Proceedings, Orders, Writs,
Injunctions, Decrees, Liability for Damages
Exhibit 6.18 Allied Wireless, Inc. Benefit Plans, Arrangements or
Understandings
Exhibit 6.19 Allied Wireless, Inc. Pending or Threatened Legal,
Administrative, or Other Proceedings or Governmental
Investigation, Exceptions to Compliance with Laws,
Ordinances, Requirements, Regulations, or Orders
Exhibit 6.23 Allied Wireless, Inc. Environmental Concerns: Hazardous
Waste Production, Storage, etc.
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT ("Agreement") is made and entered into effective this 5th
day of August, 1997, by and between ALLIED WIRELESS, INC., a Colorado
corporation having its principal place of business at 000 Xxxxx 00xx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000 ("Allied"), and SkyLynx Express Holdings, Inc., a
Delaware corporation having its principal place of business at 00 Xxxxx Xxxxxx
Xxxxxx, Xxxxx 000, Xxx Xxxx, Xxxxxxxxxx 00000 ("SkyLynx") (hereafter Allied
and SkyLynx may collectively be referred to as the "Companies"); and NETWORK
SYSTEM TECHNOLOGIES, INC., a California corporation, having its principal
place of business at 00 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxx, Xxxxxxxxxx
00000 ("NST").
WITNESSETH
WHEREAS, NST is the owner of certain assets including, inter alia, rights
to use existing products and rights to certain technology and products, as
well as future products and rights which may be required by NST through other
relationships (the "Assets"); and
WHEREAS, NST has agreed to form and organize SkyLynx as a wholly-owned
subsidiary and to undertake a tax-free reorganization, pursuant to which NST
will transfer and assign to SkyLynx the Assets solely in exchange for shares
of common stock of SkyLynx; and
WHEREAS, Allied desires to acquire all but in no event less than 80% of
the issued and outstanding shares of common stock of SkyLynx owned by its
shareholder ("Shareholder") which shall consist exclusively of NST, subject to
the terms and conditions set forth in this Agreement; and
WHEREAS, Allied has agreed to undertake a private offering of shares of
its common stock pursuant to Rule 504 of Regulation D under the Securities Act
(the "Private Offering") in which it will raise a minimum of $750,000 and a
maximum of $1,000,000 prior to and as a condition to the Closing herein; and
WHEREAS, certain affiliates of Allied have agreed to remain engaged
following the Closing in the process of raising an additional $9,000,000
pursuant to the business plan of SkyLynx;
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, and other good and
valuable consideration, the receipt and adequacy whereof is hereby
acknowledged, the parties agree as follows:
SECTION 1: GENERAL DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings set forth below:
1.1 Best Knowledge. "Best Knowledge" shall mean both what a Person knew
as well as what the Person should have known had the Person exercised
reasonable diligence. When used with respect to a Person other than a natural
person, the term "Best Knowledge" shall include matters that are known or
should have known as the result of the exercise of reasonable diligence to the
current directors and executive officers of the Person.
1.2 Business Day. "Business Day" means any day which is not a Saturday,
Sunday or a permitted or required bank holiday in San Francisco, California.
1.3 Code. "Code" means the Internal Revenue Code of 1986, as amended.
1.4 Erisa. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
1.5 Exchange Act. "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
1.6 Fiscal Year. "Fiscal Year" shall mean a twelve-month period
beginning January 1.
1.7 Governmental Authority. "Governmental Authority" shall mean any and
all foreign, federal, state or local governments, governmental institutions,
public authorities and governmental entities of any nature whatsoever, and any
subdivisions or instrumentalities thereof, including, but not limited to,
departments, boards, bureaus, commissions, agencies, courts, administrations
and panels, and any division or instrumentalities thereof, whether permanent
or ad hoc and whether now or hereafter constituted or existing.
1.8 Governmental Requirement. "Governmental Requirement" shall mean any
and all laws (including, but not limited to, applicable common law
principles), statutes, ordinances, codes, rules regulations, interpretations,
guidelines, directions, orders, judgments, writs, injunctions, decrees,
decisions or similar items or pronouncements, promulgated, issued, passed or
set forth by any Governmental Authority.
1.9 IRS. "IRS" means the Internal Revenue Service.
1.10 Legal Requirements. "Legal Requirements" means applicable common
law and any statute, ordinance, code or other laws, rule, regulation, order,
technical or other standard, requirement, judgment, or procedure enacted,
adopted, promulgated, applied or followed by any governmental authority,
including, without limitation, any order, decree, award, verdict, findings of
fact, conclusions of law, decision or judgment, whether or not final or
appealable, of any court, arbitrator, arbitration board or administrative
agency.
1.11 Ownership Interest. "Ownership Interest" shall mean any form of
direct or indirect interest in the ownership, equity or profits of SkyLynx or
Allied, whether certificated or non-certificated, issued or unissued,
contingent or otherwise, including, without limitation, the following:
shares, or the right thereto, executory rights to receive shares, options,
warrants, instruments or obligations convertible into shares or profit
interests.
1.12 Person. "Person" shall mean any natural person, any Governmental
Authority and any entity the separate existence of which is recognized by any
Governmental Authority or Governmental Requirement, including, but not limited
to, corporations, partnerships, joint ventures, joint stock companies, trusts,
estates, companies and associations, whether organized for profit or
otherwise.
1.13 Section. Unless otherwise stated herein, the term "Section" when
used in this Agreement shall refer to the Sections of this Agreement.
1.14 Securities Act. "Securities Act" shall mean the Securities Act of
1933, as amended.
1.15 Taxes. "Tax" and "Taxes" shall mean any and all income, excise,
franchise or other taxes and all other charges or fees imposed or collected by
any Governmental Authority or pursuant to any Governmental Requirement, and
shall also include any and all penalties, interest, deficiencies, assessments
and other charges with respect thereto.
SECTION 2: EXCHANGE OF SECURITIES
2.1 Exchange of Common Stock. Subject to the terms and conditions
hereinafter set forth, on the Closing Date, NST as the sole Shareholder of
SkyLnyx shall deliver to Allied, and Allied shall accept from each such
holder, an aggregate of up to 100% of the issued and outstanding shares of
Common Stock, _______ par value, of SkyLynx (the "SkyLynx Common Stock") in
exchange for an aggregate of up to a number of shares of Allied Common Stock,
$.001 par value (the "Common Exchange Shares"), determined in accordance with
Section 2.6 below. Hereafter the Common Exchange Shares shall be referred to
as the "Exchange Shares."
2.2 NST/SkyLynx Reorganization. Prior to the Closing Date, NST shall
undertake a reorganization pursuant to which NST shall form and organize
SkyLynx as a wholly-owned subsidiary and transfer to SkyLynx certain rights
and properties of NST in exchange for SkyLynx shares of Common Stock (the
"Reorganization"). The Reorganization shall be undertaken in such a manner as
to qualify for a tax-free reorganization under Section 351 of the Code, and
the parties hereby agree to undertake all reasonable actions necessary both
before and after the consummation of the Reorganization to effect such
treatment. In connection with the Reorganization, NST shall transfer to
SkyLynx solely in exchange for shares of SkyLynx common stock certain contract
rights, licenses, technology and other tangible and intangible assets (the
"Assets") more fully described on Exhibit 2.2 hereof. Immediately following
the Reorganization, SkyLynx shall have outstanding shares of Common Stock
issued to NST in connection with the Reorganization and no other shares of
common stock, preferred stock, equity securities, options, warrants,
convertible debentures or other securities exercisable to purchase or
convertible into shares of SkyLynx equity securities. Further, immediately
following the Reorganization, SkyLynx shall have only those debts, liabilities
or obligations as Allied may agree.
2.3 Allied Recapitalization. Prior to the Closing of the Exchange,
Allied shall eliminate, either through the payment, forgiveness or conversion
into equity or some other means satisfactory to SkyLynx, all debt of Allied.
To the extent that Allied eliminates debt by conversion of debt to equity, the
securities issued in connection with such conversion (the "Conversion Shares")
shall be included in the shares of Allied Common Stock outstanding prior to
the Exchange for purposes of Section 2.7 below.
2.4 Consultation Fees and Agreements. The parties acknowledge that in
connection with the negotiation, preparation, execution and consummation of
the Exchange, the parties hereto have engaged the services of one or more
consultants. The parties agree that in consideration of their services,
Allied shall be authorized to issue to such consultants, in the aggregate,
shares of common stock of Allied (the "Consultant Shares") which will
represent, immediately following the Exchange, up to 4.7% of the total issued
and outstanding shares of Allied Common Stock. Such shares shall be issued by
Allied without registration under the Securities Act in reliance upon an
exemption from the registration requirements thereof contained in Section 4(2)
thereof. Such shares shall be "restricted securities" under the Securities
Act and shall have customary piggyback registration rights. The Consultant
Shares shall be included in the shares deemed to be outstanding prior to the
Exchange for the purposes of determining the number of shares issuable in the
Exchange pursuant to 2.7 hereof.
2.5 Private Financing. Immediately following the execution of this
Agreement, and prior to the Effective Date of the Exchange, Allied agrees to
undertake a private offering of shares of its common stock exclusively to
persons who qualify as "accredited investors" within the meaning of
Rule 501(a) of Regulation D of the Securities Act (the "Private Offering").
The Private Offering shall be undertaken and structured in a manner to raise
gross proceeds of a minimum of $750,000, all-or-none ("Minimum Offering") and
a maximum of $1,000,000, best efforts ("Maximum Offering") before deduction of
offering expenses not to exceed $25,000. The Private Offering shall be
undertaken without registration under the Securities Act in reliance upon an
exemption from such registration requirements contained in Rule 504,
Regulation D thereunder. Allied agrees to undertake the Private Offering in
conformity with all applicable Legal Requirements including, without
limitation, applicable federal and state securities laws. The net proceeds of
the Private Offering shall be utilized after the Effective Date for the
completion of various high-speed modem access contracts and expenditures
reasonably related thereto. All shares of equity securities of Allied sold in
the Private Offering ("Private Offering Shares") shall be added to the Allied
Shares deemed outstanding on the Effective Date for purposes of determining
the number of Exchange Shares issuable to the Shareholders on the Effective
Date of the Exchange pursuant to Section 2.6 hereof. The completion by Allied
of the Private Offering shall be a condition precedent to the Closing of the
Exchange by SkyLynx.
2.6 Determination of Issuable Allied Shares. The number of Exchange
Shares issuable to the Shareholder on the Closing Date pursuant to Section 2.1
shall be a number such that if 100% of the issued and outstanding shares of
SkyLynx Common Stock are tendered for exchange for Exchange Shares, the
aggregate number of shares of Allied Common Stock issuable in the Exchange to
the Shareholder shall represent, in the aggregate, after giving effect to the
issuance, if any, of the Conversion Shares, Consultant Shares and Private
Offering Shares, 80% of the total issued and outstanding shares of Allied
Common Stock on a fully diluted basis immediately following consummation of
the Exchange. By way of example, the following table illustrates the relative
equity positions of the following parties immediately following the Exchange,
assuming a total of 125,000,000 shares of Allied Common Stock will be issued
and outstanding immediately following the Exchange:
Allied Wireless Stockholders 12,500,000 (10%)
Consultants 5,833,333 (4.7%)
Private Offering Shares and Conversion Shares 6,666,667 (5.3%)
SkyLynx Shareholder (NST) 100,000,000 (80%)
Total Outstanding 125,000,000 (100%)
2.7 Income Tax Considerations. It is the intention of the parties
hereto that the exchange of stock contemplated by this Agreement will qualify
for treatment as a tax-free reorganization under Section 368(a)(1)(B) of the
Internal Revenue Code of 1986, as amended, and the parties hereby agree to
undertake all reasonable actions necessary both before and after the
consummation of the Exchange to effect such treatment.
2.8 Compliance with Securities Laws. The Exchange provided for in
Sections 2.1 above shall be undertaken in reliance upon an exemption from the
registration requirements contained in Section 5 of the Securities Act
contained in Section 4(2). Allied shall take such actions as may be necessary
or advisable in order consummate the Exchange in conformity with applicable
laws including, without limitation, federal and state securities laws; and
SkyLynx, together with its directors and officers, agrees to take such actions
as may be necessary or advisable upon the reasonable request of Allied to
consummate the Exchange in conformity with such Legal Requirements.
SECTION 3: CLOSING
3.1 General Procedure. Subject to the terms and conditions hereinafter
set forth, at the Closing each party shall deliver such documents, instruments
and materials as may be reasonably required in order to effectuate the intent
and provisions of this Agreement, and all such documents, instruments and
materials shall be satisfactory in form and substance to counsel for each
party.
3.2 Time and Place. Upon the terms and subject to the conditions set
forth in this Agreement, the Exchange transactions contemplated by Section 2.1
shall be consummated and closed (the "Closing") at 10:00 a.m. at the offices
of _______________________________ on the earlier of (i) sixty (60) days
following the date of this Agreement, and (ii) five Business Days after the
date on which the conditions set forth in Sections 3.4 and 3.5 shall have been
satisfied or waived or such other time, date and place as the parties shall
agree upon (the date of the Closing being herein referred to as the "Closing
Date").
3.3 Covenants Regarding Closing. SkyLynx and Allied each hereby
covenant and agree that they shall (i) use reasonable efforts to cause each of
their respective Exhibits to be prepared and exchanged with the other party,
and its legal counsel, within ten (10) business days following the execution
of this Agreement, except to the extent the express terms of this Agreement
provide for a different time period for such delivery to be accomplished,
(ii) use reasonable efforts to cause all of their respective representations
and warranties set forth in this Agreement, and Exhibits hereto, to be true on
and as of the Closing Date, (iii) use reasonable efforts to cause all of their
respective obligations that are to be fulfilled on or prior to the Closing
Date to be so fulfilled, (iv) use reasonable efforts to cause all conditions
to the Closing set forth in this Agreement to be satisfied on or prior to the
Closing Date, and (v) use reasonable efforts to deliver to each other at the
Closing the certificates, updated lists, notices, consents, authorizations,
approvals, agreements, transfer documents, receipts and amendments required
hereby (with such additions or exceptions to such items as are necessary to
make the statements set forth in such items true and correct, provided that if
any such additions or exceptions cause any of the conditions to its respective
obligations hereunder as set forth herein below not to be performed, satisfied
or fulfilled, such additions and exceptions shall in no way limit the rights
of the parties hereto to terminate this Agreement or refuse to consummate the
transactions contemplated hereby).
3.4 Conditions to Obligation of Allied. The obligation of Allied to
complete the Exchange on the Closing Date on the terms set forth in this
Agreement is, at the option of Allied, subject to the satisfaction or written
waiver by Allied of each of the following conditions:
(a) Accuracy of Representations and Warranties. The
representations and warranties made by SkyLynx in this Agreement shall be true
and correct in all material respects on and as of the Closing Date with the
same force and effect as though such representations and warranties had been
made on the Closing Date, except to the extent that such representations and
warranties expressly relate to an earlier date in which case they shall have
been true and correct as of such earlier date.
(b) Compliance with Covenants. All covenants which SkyLynx is
required to perform, satisfy or comply with on or before the Closing Date
shall have been fully complied with or performed in all material respects.
(c) Corporate Approvals. Any action required to be taken by the
Board of Directors of SkyLynx or its Shareholders to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby shall have been duly and validly taken.
(d) Consents and Approvals. To the extent that any material lease,
mortgage, deed of trust, contract or agreement to which SkyLynx is a party
shall require the consent of any person to the Exchange or any other
transaction provided for herein, such consent shall have been obtained and
Allied shall have received reasonably satisfactory evidence thereof; provided,
however, that SkyLynx shall not make, as a condition for the obtaining of any
such consent, any agreements or undertakings not approved in writing by Allied
to the extent that such condition otherwise has an effect on Allied. Allied
shall have been furnished with evidence satisfactory to it of the timely
consent or approval of, filing with or notice to, each Governmental Authority
or Person which in the good faith judgment of Allied is necessary or required
with respect to the execution and delivery by SkyLynx and the consummation by
SkyLynx of the transactions contemplated hereby.
(e) Review and Due Diligence. Allied, its investment bankers,
legal counsel and/or auditors shall have had the opportunity to complete, and
shall have completed, a satisfactory due diligence investigation of SkyLynx,
together with a satisfactory review of SkyLynx's corporate status and
SkyLynx's property, all of which shall be satisfactory in form and substance
to Allied in its sole discretion.
(f) No Litigation, Etc. No action, investigation, litigation or
arbitration or proceeding by or before any Governmental Authority, or before
any arbitral, mediation panel or tribunal of any kind shall have been
instituted or threatened (i) to restrain or prohibit the transactions
contemplated by this Agreement, or (ii) to claim that the consummation of any
such transaction is illegal or (iii) which, if determined adversely, would
effect adversely Allied or SkyLynx following consummation of the transactions
contemplated hereby and SkyLynx shall have delivered to Allied a certificate
dated as of the Closing Date and executed by SkyLynx, stating that to its Best
Knowledge, no such items exist. No governmental authority or arbitral,
mediation panel or tribunal of any kind shall have taken any other action as a
result of which the management of Allied, in its sole discretion, reasonably
deems it inadvisable to proceed with the transactions contemplated by this
Agreement.
(g) No Material Adverse Change. No material adverse change in the
business, property or assets of SkyLynx shall have occurred, and no loss or
damage to any of the assets, whether or not covered by insurance, with respect
to SkyLynx hereto has occurred, and SkyLynx shall have delivered to Allied a
certificate dated as of the Closing Date to such effect.
(h) Update of Contracts. SkyLynx shall have delivered to Allied an
accurate list, as of the Closing Date, showing (i) all agreements, contracts
and commitments of the type listed on Exhibit 4.20 entered into since the date
of this Agreement; and (ii) all other agreements, contracts and commitments
related to the businesses or the assets of SkyLynx entered into since the date
of this Agreement, together with true, complete and accurate copies of all
such documents (the "SkyLynx New Contracts"). Allied shall have had the
opportunity to review and approve the SkyLynx New Contracts of the other, and
any of the Companies shall have the right to delay the Closing for up to ten
(10) days if it in its sole discretion deems such delay necessary to enable it
to adequately review the SkyLynx New Contracts.
(i) No Adverse Information. The investigations with respect to
SkyLynx, the assets and the respective businesses performed by Allied's
respective professional advisors and other representatives shall not have
revealed any information concerning SkyLynx, its assets, liabilities or its
business that has not been made known to Allied, in writing prior to the date
of this Agreement and that, in the opinion of such party and its advisors,
materially and adversely affects the business or assets of the other party or
the viability of the transaction contemplated by this Agreement.
(j) Ordinary Course of Business. During the period from the date
of this Agreement until the Closing Date, SkyLynx shall have carried on its
business in the ordinary and usual course, and shall have delivered to Allied
a certificate to that effect.
(k) Liens. SkyLynx shall have delivered to Allied a reasonably
current lien and judgment search (both state and county levels in each
jurisdiction where the party is qualified to or is doing business or owns
material assets) confirming the absence of any judicial liens, security
interests, tax liens and similar such liens affecting any of its business or
assets.
(l) Approval of Counsel. All actions, proceedings, instruments and
documents required or incidental to carry out this Agreement, including all
schedules and exhibits thereto, and all other related legal matters shall have
been approved by Xxxxxx & Xxxxxxx, llc, counsel to Allied.
(m) Other Documents. SkyLynx shall have delivered or caused to be
delivered all other documents, agreements, resolutions, certificates or
declarations as Allied or its attorneys may have reasonably requested.
(n) Compliance with Securities Laws. Allied shall have undertaken
all actions necessary or advisable to consummate the Private Offering and
Exchange in conformity with all Governmental Requirements including, without
limitation, applicable federal and state securities laws.
(o) Shareholder Assignments. At Closing, not less than eighty
percent (80%) of the combined voting power of the issued and outstanding
shares of SkyLynx Common Stock shall have been delivered for exchange pursuant
to Section 2 of this Agreement. Surrendering SkyLynx Shareholders shall have
executed and delivered to Allied Assignments substantially in the form of
Exhibit 3.4(o) hereto assigning to Allied their SkyLynx Common Stock.
(p) Appraisal Rights and/or Dissenters' Rights. At or prior to
Closing, no beneficial or record owner of any outstanding shares of SkyLynx
Common Stock shall have exercised or shall have given notice to Allied or
SkyLynx of their intent to exercise any rights under applicable state law, if
any, to dissent from the Exchange or obtain the payment of the fair market
value of such shares of SkyLynx Common Stock in lieu of participating in the
Exchange in accordance with the terms and subject to the conditions set forth
herein.
(q) Reorganization. Prior to Closing, NST shall have completed the
Reorganization by forming, organizing and transferring the Assets to SkyLynx
upon terms and subject to the conditions of this Agreement.
(r) Non-Disclosure. On or prior to Closing, all current directors,
officers and other personnel of Allied and all agents, advisors and
consultants to Allied with access to the Allied Registered Rights and the
Allied Proprietary Information and/or the SkyLynx Registered Rights and the
SkyLynx Proprietary Information, shall have executed and delivered to Allied a
confidential information agreement restricting such person's right to disclose
any confidential or proprietary information of Allied or of SkyLynx.
(s) Private Offering. Allied shall have successfully completed and
closed upon the Minimum Offering in the Private Offering.
(t) Financial Advisory Fees. At or prior to Closing, all
obligations or commitments of Allied and SkyLynx to their respective financial
advisors and investment bankers shall have been paid or otherwise satisfied
through the issuance of the Consultant Shares, and Allied and SkyLynx shall
each have been delivered and received such written consents, approvals,
estoppel certificates or other instruments or undertakings from its advisors
or other third parties as each may deem reasonable, necessary or advisable.
(u) Opinion of Counsel. Allied shall have received an opinion of
Xxxxxx Xxxxxxxx, J.R. Xxxxxxxx, Inc., counsel for SkyLynx, dated as of the
Closing Date substantially in the form of Exhibit 3.4(u) hereto.
3.5 Conditions to Obligation of SkyLynx. The obligations of SkyLynx on
the Closing Date under the terms set forth in this Agreement are, at the
option of SkyLynx, subject to the satisfaction or written waiver by SkyLynx of
each of the following conditions:
(a) Accuracy of Representations and Warranties. The
representations and warranties made by Allied in this Agreement shall be true
and correct in all material respects on and as of the Closing Date with the
same force and effect as though such representations and warranties had been
made on the Closing Date, except to the extent that such representations and
warranties expressly relate to an earlier date in which case they shall have
been true and correct as of such earlier date.
(b) Compliance with Covenants. All covenants which Allied are
required to perform, satisfy or comply with on or before the Closing Date
shall have been fully complied with or performed in all material respects.
(c) Corporate Approvals. Any action required to be taken by the
Board of Directors of Allied and shareholders to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby shall have been duly and validly taken.
(d) Consents and Approvals. To the extent that any material lease,
mortgage, deed of trust, contract or agreement to which Allied is a party
shall require the consent of any person to the exchange of Allied's shares of
Common Stock or any other transaction provided for herein, such consent shall
have been obtained and SkyLynx shall have received reasonably satisfactory
evidence thereof; provided, however, that Allied shall not make, as a
condition for the obtaining of any such consent, any agreements or
undertakings not approved in writing by SkyLynx to the extent that such
condition otherwise has an effect on SkyLynx or Allied. SkyLynx shall have
been furnished with evidence satisfactory to it of the timely consent or
approval of, filing with or notice to, each Governmental Authority or Person
which in the good faith judgment of SkyLynx is necessary or required with
respect to the execution and delivery by Allied and the consummation by Allied
of the transactions contemplated hereby.
(e) Review and Due Diligence. SkyLynx, its investment bankers,
legal counsel and/or auditors shall have had the opportunity to complete, and
shall have completed, a satisfactory due diligence investigation of Allied,
its assets and liabilities, together with a satisfactory review of Allied's
corporate status and the marketability of title to Allied's property, all of
which shall be satisfactory in form and substance to SkyLynx in its sole
discretion.
(f) No Litigation, Etc. No action, investigation, litigation or
arbitration or proceeding by or before any Governmental Authority, or before
any arbitral, mediation panel or tribunal of any kind shall have been
instituted or threatened (i) to restrain or prohibit the transactions
contemplated by this Agreement or (ii) to claim that the consummation of any
such transaction is illegal or (iii) which, if determined adversely, would
effect adversely Allied or SkyLynx following consummation of the transactions
contemplated hereby and the Companies shall have delivered to each other
certificates dated as of the Closing Date and executed by such parties,
stating that to their Best Knowledge, no such items exist. No Governmental
Authority or arbitral or mediation panel or tribunal of any kind shall have
taken any other action as a result of which the management of SkyLynx, in its
sole discretion, reasonably deems it inadvisable to proceed with the
transactions contemplated by this Agreement.
(g) No Material Adverse Change. No material adverse change in the
business, property, assets or liabilities of any Company shall have occurred,
and no loss or damage to any of the assets, whether or not covered by
insurance, with respect to Allied hereto has occurred, and Allied shall have
delivered to SkyLynx a certificate dated as of the Closing Date to such
effect.
(h) Update of Contracts. Allied shall have delivered to SkyLynx an
accurate list, as of the Closing Date, showing (i) all agreements, contracts
and commitments of the type listed on Exhibit 6.20 entered into since the date
of this Agreement; and (ii) all other agreements, contracts and commitments
related to the businesses or the assets of Allied entered into since the date
of this Agreement, together with true, complete and accurate copies of all
such documents (the "Allied New Contracts"). SkyLynx shall have had the
opportunity to review and approve the Allied New Contracts, and SkyLynx shall
have the right to delay the Closing for up to ten (10) days if it in its sole
discretion deems such delay necessary to enable it to adequately review the
Allied New Contracts.
(i) No Adverse Information. The investigations with respect to
Allied, the assets, liabilities and their respective businesses performed by
SkyLynx's respective professional advisors and other representatives shall not
have revealed any information concerning Allied, its assets, liabilities or
business that has not been made known to SkyLynx, in writing prior to the date
of this Agreement and that, in the opinion of SkyLynx and its advisors,
materially and adversely affects the business, liabilities or assets of Allied
or the viability of the transactions contemplated by this Agreement.
(j) Ordinary Course of Business. During the period from the date
of this Agreement until the Closing Date, Allied shall have undertaken no
material business operations and shall have delivered to SkyLynx a certificate
to that effect.
(k) Liens. Allied shall have delivered to SkyLynx a reasonably
current lien and judgment search (both state and county levels in each
jurisdiction where the party is qualified to or is doing business or owns
material assets) confirming the absence of any judicial liens, security
interests, tax liens and similar such liens affecting the business or assets
of Allied or any subsidiary, except for Permitted Liens identified in Section
6.17.
(l) Approval of Counsel. All actions, proceedings, instruments and
documents required or incidental to carry out this Agreement, including all
schedules and exhibits thereto, and all other related legal matters shall have
been approved as to substance and form by J.R. Xxxxxxxx, Inc, counsel to
SkyLynx.
(m) Other Documents. Allied shall have delivered or caused to be
delivered all other documents, agreements, resolutions, certificates or
declarations as SkyLynx or its attorneys may have reasonably requested.
(n) Compliance with Securities Laws. Allied shall otherwise have
undertaken all actions necessary or advisable to consummate the Private
Offering and Exchange in conformity with all Governmental Requirements,
including, without limitation, applicable federal and state securities laws.
(o) Appraisal Rights and/or Dissenters' Rights. At or prior to
Closing, no beneficial or record owner of any outstanding shares of SkyLynx
Common Stock shall have exercised or shall have given notice to Allied or
SkyLynx of their intent to exercise any rights under applicable state law, if
any, to dissent from the Exchange or obtain the payment of the fair market
value of such shares of SkyLynx Common Stock in lieu of participating in the
Exchange in accordance with the terms and subject to the conditions set forth
herein.
(p) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Exchange shall be in effect.
(q) Non-Disclosure. On or prior to Closing, all current directors,
officers and other personnel of SkyLynx and all agents, advisors and
consultants to SkyLynx with access to the SkyLynx Registered Rights and the
SkyLynx Proprietary Information and/or the Allied Registered Rights and the
Allied Registered Rights, shall have executed and delivered to SkyLynx a
confidential information agreement restricting such person's right to disclose
any confidential or proprietary information of Allied or of SkyLynx.
(r) Private Offering. Allied shall have successfully completed and
closed upon the Minimum Offering in the Private Offering.
(s) Financial Advisory Fees. At or prior to Closing, all
obligations or commitments of Allied and SkyLynx to their respective financial
advisors and investment bankers shall have been paid or otherwise satisfied
through the issuances of the Consultant Shares, and Allied and SkyLynx shall
each have been delivered and received such written consents, approvals,
estoppel certificates or other instruments or undertakings from its advisors
or other third parties as each may deem reasonable, necessary or advisable.
(t) Reorganization. Prior to Closing, NST shall have completed the
Reorganization by forming, organizing and transferring the Assets to SkyLynx
upon terms and subject to the conditions of this Agreement.
(u) Shareholder Assignments. At Closing, not less than eighty
percent (80%) of the combined voting power of the issued and outstanding
shares of SkyLynx Common Stock shall have been delivered for exchange pursuant
to Section 2 of this Agreement. Surrendering SkyLynx Shareholders shall have
executed and delivered to Allied Assignments substantially in the form of
Exhibit 3.4(o) hereto assigning to Allied their SkyLynx Common Stock.
(v) Elimination of Outstanding Debts. At or prior to Closing,
Allied shall have effected the elimination of all outstanding debts and
obligations pursuant to the provisions of Section 2.3 above.
(w) Opinion of Counsel. SkyLynx will have received an opinion of
Xxxxxx & Xxxxxxx, llc, counsel for Allied, dated as of the Closing Date,
substantially in the form of Exhibit 3.5(w) hereto.
3.6 Specific Items to be Delivered at the Closing. The parties shall
deliver the following items to the appropriate party at the Closing of the
transactions contemplated by this Agreement.
(a) To be delivered by SkyLynx:
(i) A certificate dated the Closing Date of SkyLynx, signed by
the President of SkyLynx stating that the representations
and warranties of SkyLynx set forth in this Agreement are
true and correct in all material respects. Said
certificate shall further verify and affirm that all
consents or waivers, if any, which may be necessary to
execute and deliver this Agreement have been obtained and
are in full force and effect.
(ii) A certificate dated the Closing Date of SkyLynx, signed by
the President and the Chief Financial Officer of SkyLynx,
in form and substance satisfactory to Allied and its legal
counsel, certifying that all conditions precedent set
forth in this Agreement to the obligations of SkyLynx to
close, have been fulfilled or waived in writing, and that
no event of default hereunder and no event which, with the
giving of notice or passage of time, or both, would be an
event of default, has occurred as of such date.
(iii) Certificates dated the Closing Date of SkyLynx, signed by
the Secretary of SkyLynx, (I) certifying attached copies
of resolutions duly adopted by the Board of Directors of
SkyLynx, authorizing the execution of this Agreement and
the other transactions to be consummated pursuant thereto;
(ii) certifying the names and incumbency of the officers
of SkyLynx who executed the Agreement and any certificates
delivered pursuant to this Section 3.6(a) for and on
behalf of SkyLynx; (iii) certifying the authenticity of
copies of the Articles of Incorporation and Bylaws of
SkyLynx; and (iv) certifying the authenticity of a
reasonably current Certificate of Good Standing, from all
jurisdictions in which the company is qualified to conduct
business.
(iv) Opinion of Xxxxxx Xxxxxxxx, J.R. Xxxxxxxx, Inc., counsel
to SkyLynx, substantially in the form of Exhibit 3.4(u).
(b) To be delivered by Allied:
(i) Certificate or certificates representing the number of
shares of Allied Common Stock determined in accordance
with Section 2.6 to be deposited with the Exchange Agent
for the benefit of the holders of shares of SkyLynx Common
Stock for exchange in accordance with the provisions of
Section 2 of this Agreement; and
(ii) A certificate dated the Closing Date of Allied, signed by
the President of Allied stating that the representations
and warranties of Allied set forth in this Agreement are
true and correct in all material respects. Said
certificate shall further verify and affirm that all
consents or waivers, if any, which may be necessary to
execute and deliver this Agreement have been obtained and
are in full force and effect.
(iii) A certificate dated the Closing Date of Allied, signed by
the Chief Executive Officer and the Chief Financial
Officer of Allied, in form and substance satisfactory to
SkyLynx and its legal counsel, certifying that all
conditions precedent set forth in this Agreement to the
obligations of Allied to close, have been fulfilled or
waived in writing, and that no event of default hereunder
and no event which, with the giving of notice or passage
of time, or both, would be an event of default, has
occurred as of such date.
(iv) Certificates dated the Closing Date of Allied, signed by
the Secretary of Allied, (i) certifying attached copies of
resolutions duly adopted by the Board of Directors of
Allied, authorizing the execution of this Agreement and
the other transactions to be consummated pursuant thereto;
(ii) certifying the names and incumbency of the officers
of Allied who executed the Agreement and any certificates
delivered pursuant to this Section 3.6(b) for and on
behalf of Allied; (iii) certifying the authenticity of
copies of the Articles of Incorporation and Bylaws of
Allied and its Subsidiaries; and (iv) certifying the
authenticity of a reasonably current Certificate of Good
Standing, from all jurisdictions in which Allied and its
Subsidiaries are qualified to conduct business.
(v) Opinion of Xxxxxx & Xxxxxxx, llc, counsel to Allied,
substantially in the form of Exhibit 3.5(w).
3.7 Election of Directors and Executive Officers of Allied.
(a) At Closing, the following actions shall be taken to
reconstitute the Board of Directors of Allied such that it is comprised of
only the persons set forth on Exhibit 3.7(a)
(b) At Closing, all executive officers of Allied shall tender their
resignations, and the newly constituted Board of Directors shall nominate and
elect in their sole discretion persons to serve as executive officers of
Allied until the next regular annual meeting of the Company's Board of
Directors.
(c) At Closing, the following employees of SkyLynx may execute and
enter into written employment agreements with SkyLynx pursuant to which they
will provide services upon such terms as the newly-constituted Board of
Directors and such persons shall mutually agree:
Name Position
---- --------
Xx Xxxxx President
Xxxxxxx Xxxxxxxx Vice President
Xxxxxxx X. Xxxxxxxx Vice President and
Co-General Counsel
Base salary and incentive compensation shall be reviewed annually and
subject to increase upon agreement of SkyLynx and the employee. To the extent
they satisfy the eligibility requirements, the foregoing employees shall be
eligible to participate in the SkyLynx Stock Incentive Plan and other employee
benefit programs maintained or developed by SkyLynx during the term of
employment. Such participant shall be equivalent to the extent of the
participation in benefit programs offered to other employees of SkyLynx or
their subsidiaries of comparable rank and responsibility. The employment
agreements shall also contain customary provisions respecting non-competition,
confidentiality and noninterference.
3.8 Post Closing Matters.
(a) As soon as practicable following the Effective Date of the
Exchange, Allied shall schedule and conduct a special meeting of its
shareholders at which the shareholders of Allied shall be requested to ratify
and approve (i) a change in Allied's name to "SkyLynx Express Holdings, Inc.,"
(ii) a reverse stock split of the outstanding securities by a factor to be
mutually agreed upon by the parties, and a concomitant increase in the stated
par value of Allied's common stock, (iii) the adoption of a Stock Incentive
Plan pursuant to which Allied shall be authorized to grant incentive stock
options, non-qualified stock options and other rights to acquire securities of
Allied to officers, directors, key employees and consultants, and (iv) such
other matters as the Board of Directors may determine. All of the foregoing
is subject to ratification or nullification by the Board of Directors selected
by the Shareholders after the Exchange is consummated.
SECTION 4: REPRESENTATIONS AND WARRANTIES BY SKYLYNX
As a material inducement to Allied to enter into this Agreement and with
the understanding and expectations that Allied will be relying thereon in
consummating the Exchange contemplated hereunder, SkyLynx (hereinafter
referred to as the "Corporation" or "SkyLynx " for the purposes of this
Section 4 only) represents and warrants as follows:
4.1 Organization and Standing. SkyLynx is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own its assets and
properties and to carry on its business as it is now being conducted.
4.2 Subsidiaries, etc. Except as set forth on Exhibit 4.2, the
Corporation does not have any direct or indirect Ownership Interest in any
corporation, partnership, joint venture, association or other business
enterprise.
4.3 Qualification. Except as set forth on Exhibit 4.3 and for any
jurisdiction where the failure to be qualified to engage in business as a
foreign corporation would not have a material adverse affect on the
Corporation, the Corporation is not qualified to engage in business as a
foreign corporation in any state other than Delaware and there is no other
jurisdiction wherein the character of the properties presently owned by the
Corporation or the nature of the activities presently conducted by the
Corporation makes necessary the qualification, licensing or domestication of
the Corporation as a foreign corporation.
4.4 Corporate Authority. Except as set forth on Exhibit 4.4 hereto,
neither the execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby nor compliance by the Corporation with
any on the provisions hereof will
(a) conflict with or result in a breach of any provision of its
Articles of Incorporation or By-Laws;
(b) result in a default (or give rise to any right of termination,
cancellation, or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which the Corporation is a party, or by which any
of its properties or assets may be bound except for such default (or right of
termination, cancellation, or acceleration) as to which requisite waivers or
consents shall either have been obtained by the Corporation prior to the
Closing Date or the obtaining of which shall have been waived by Allied; or
(c) violate any order, writ, injunction, decree or, to the
Corporation's Best Knowledge, any statute, rule or regulation applicable to
the Corporation or any of its properties or assets. No consent or approval by
any Governmental Authority is required in connection with the execution and
delivery by the Corporation of this Agreement or the consummation by the
Corporation of the transactions contemplated hereby.
4.5 Financial Statements. The Corporation represents and warrants to
Allied that it was formed and organized on July _______, 1997 and that except
for consummating the Reorganization described in Section 2.2 above has
conducted no operations. As of the date of this Agreement and as of the
Closing Date, the Corporation does not have any liabilities or payables,
absolute or contingent, known or unknown, except for liabilities or payables
set forth on Exhibit 4.5 hereto.
4.6 Capitalization of the Corporation. The authorized capital stock of
SkyLynx consists of: (i) ___________ shares of Preferred Stock, $_____ par
value, of which no shares are issued and outstanding, and (ii) ___________
shares of Common Stock, $_____ par value, of which ___________ shares are
issued and outstanding. The names of the record owners of the issued and
outstanding Common Stock are set forth on Exhibit 2.1 hereto. All issued and
outstanding shares of SkyLynx Common Stock have been duly authorized and
validly issued and are fully paid and non-assessable. There are no other
outstanding rights, options, warrants, subscriptions, calls, convertible
securities or agreement of any character or nature under which the Company is
or may become obligated to issue any shares of its capital stock of any kind,
other than those shares indicated in this Section as presently outstanding and
shares issuable in accordance with the terms of this Agreement.
4.7 Taxes. Except as set forth in Exhibit 4.7, the Corporation has
filed (or has obtained extensions for filing) all income, excise, sales,
corporate franchise, property, payroll and other tax returns or reports
required to be filed by it, as of the date hereof by the United States of
America, any state or other political subdivision thereof or any foreign
country and has paid all Taxes or assessments shown to be due on such returns
or reports. To the Best Knowledge of the Corporation, except as set forth in
Exhibit 4.7, the amounts set up as provisions for Taxes in the Latest
Financial Statements are sufficient for the payment of all unpaid federal,
foreign, state or local Taxes of the Corporation accrued for or applicable to
all periods ended on or prior to the date of this Agreement, or which may
subsequently be determined to be owing by the Corporation with respect to all
periods ending on or prior to the Closing Date, subject to normal year-end
adjustments, which will not be material. There are no present disputes as to
Taxes of any nature payable by the Corporation.
4.8 No Actions, Proceedings, etc. Except as listed on the attached
Exhibit 4.8, there is no action or proceeding (whether or not purportedly on
behalf of the Corporation) pending or to its knowledge threatened by or
against the Corporation which might result in any material adverse change in
the condition, financial or otherwise, of the Corporation's business or
assets. No order, writ or injunction or decree has been issued by, or
requested of any court or Governmental Agency which does nor may result in any
material adverse change in the Corporation's assets or properties or in the
financial condition or the business of the Corporation. Except for
liabilities referred to in attached Exhibit 4.8, the Corporation is not liable
for damages to any employee or former employee as a result of any violation of
any state, federal or foreign laws directly or indirectly relating to such
employee or former employee.
4.9 Post Balance Sheet Changes. Except as set forth on the attached
Exhibit 4.9 and as contemplated by this Agreement, since _________________,
the Corporation has not (a) issued, bought, redeemed or entered into any
agreements, commitments or obligations to sell, buy or redeem any shares of
its capital stock; (b) incurred any obligation or liability (absolute or
contingent), other than current liabilities incurred, and obligations under
contracts entered into, in the ordinary course of business; (c) discharged or
satisfied any lien or encumbrance or paid any obligation or liability
(absolute or contingent), other than current liabilities incurred in the
ordinary course of business; (d) mortgaged, pledged or subjected to lien
charges, or other encumbrance any of its assets, other than the lien of
current or real property taxes not yet due and payable; (e) waived any rights
of substantial value, whether or not in the ordinary course of business; (f)
suffered any damage, destruction or loss, whether or not covered by insurance,
materially and adversely affecting its assets or its business; (g) made or
suffered any amendment or termination of any material contract or any
agreement which adversely affects its business; (h) received notice or had
knowledge of any labor trouble other than routine grievance matters, none of
which is material; (i) increased the salaries or other compensation of any of
its directors, officers or employees or made any increase in other benefits to
which employees may be entitled, other than employee salary increases made in
the ordinary course of business and reflected on an Exhibit hereto; (j) sold,
transferred or otherwise disposed of any of its assets, other than in the
ordinary course of business; (k) declared or made any distribution or payments
to any of its shareholders, officers or employees, other than wages and
salaries made to employees in the ordinary course of business; (l) revalued
any of its assets; or (m) entered into any transactions not in the ordinary
course of business.
4.10 No Breaches. The Corporation is not in violation of, and the
consummation of the transactions contemplated hereby do not and will not
result in any material breach of, any of the terms or conditions of any
mortgage, bond, indenture, agreement, contract, license or other instrument or
obligation to which the Corporation is a party or by which its assets are
bound; nor will the consummation of the transactions contemplated hereby cause
SkyLynx to violate any statute, regulation, judgment, writ, injunction or
decree of any court, threatened or entered in a proceeding or action in which
the Corporation is, was or may be bound or to which any of the Corporation's
assets are subject.
Exhibit 4.11, SkyLynx's assets are currently in good and usable condition
and there are no defects or other conditions which, in the aggregate, materially
and adversely affect the operation or values of such assets taken as a whole.
Except as disclosed on Exhibit 4.11, no person other than SkyLynx (including
any officer or employee of the Corporation) has any proprietary interest in
any know-how or other intangible assets used by the Corporation in the conduct
of its business. The Company does not currently market any products for sale.
4.12 Inventory. As of the date of this Agreement and as of the Closing
Date, the Corporation will have no inventory held for resale in the ordinary
course of business.
4.13 Accounts Receivable. As of the date of this Agreement and as of the
Closing Date, the Corporation will have no accounts receivable generated from
the sale of goods or services in the ordinary course of business.
4.14 Corporate Acts and Proceedings. This Agreement has been duly
authorized by all necessary corporate action on behalf of SkyLynx, has been
duly executed and delivered by an authorized officer of SkyLynx, and is a
valid and binding Agreement on the part of SkyLynx that is enforceable against
SkyLynx in accordance with its terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency, moratorium, fraudulent transfers,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and to judicial limitations on the enforcement of the remedy
of specific performance and other equitable remedies.
(a) Exhibit 4.15 hereto contains a true and complete list of all
patents, letters patent and patent applications, service marks, trademark and
service xxxx registrations and applications, copyright, copyright
registrations and applications, grants of licenses and rights to the
Corporation with respect to the foregoing, both domestic and foreign, claimed
by the Corporation or used or proposed to be used by the Corporation in the
conduct of its business (collectively herein, "SkyLynx Registered Rights").
Exhibit 4.15 hereto also contains a true and complete list of all and every
trade secret, know-how, process, formula, discovery, development, research,
design, technique, customer and supplier list, contracts, product development
plans, product development concepts, author contracts, marketing and
purchasing strategy, invention, and any other matter required for, incident
to, or related to the conduct of its business (hereafter collectively the
"SkyLynx Proprietary Information"). Except as described in Exhibit 4.15
hereto, the Corporation is not obligated or under any liability whatever to
make any payments by way of royalties, fees or otherwise to any owner or
licensor of, or other claimant to, any SkyLynx Registered Right or SkyLynx
Proprietary Information with respect to the use thereof in the conduct of its
business or otherwise.
(b) Except as described in Exhibit 4.15 hereto, to the
Corporation's Best Knowledge, the Corporation owns and has the unrestricted
right to use the SkyLynx Registered Rights and SkyLynx Proprietary Information
required for or incident to the design, development, manufacture, operation,
sale and use of all products and services sold or rendered or proposed to be
sold or rendered by the Corporation or relating to the conduct or proposed
conduct of its business free and clear of any right, title, interest, equity
or claim of others. As soon as practicable following the execution of this
Agreement, and except as described in Exhibit 4.15 hereto, the Corporation
agrees to take all necessary steps (including without limitation entering into
appropriate confidentiality, assignment of rights and non-competition
agreements with all officers, directors, employees and consultants of the
Corporation and others with access to or knowledge of the SkyLynx Proprietary
Information) to safeguard and maintain the secrecy and confidentiality of, and
its proprietary rights in, the SkyLynx Proprietary Information and all related
documentation and intellectual property rights therein necessary for the
conduct or proposed conduct of its business.
(c) Except as described in Exhibit 4.15 hereto, the Corporation has
not sold, transferred, assigned, licensed or subjected to any right, lien,
encumbrance or claim of others, any SkyLynx Proprietary Information, including
without limitation any SkyLynx Registered Right, or any interest therein,
related to or required for the design, development, manufacture, operation,
sale or use of any product or service currently under development or
manufactured, or proposed to be developed, sold or manufactured, by it.
Exhibit 4.15 contains a true and complete list and description of all licenses
of SkyLynx Proprietary Information granted to the Corporation by others or to
others by the Corporation. Except as described in Exhibit 4.15 hereto, there
are no claims or demands of any person pertaining to, or any proceedings that
are pending or threatened, which challenge the rights of the Corporation in
respect of any SkyLynx Proprietary Information used in the conduct of its
business.
(d) Except as described in Exhibit 4.15 hereto, the Corporation
owns and on the Closing Date shall own, has and shall have, holds and shall
hold, exclusively all right, title and interest in the SkyLynx Registered
Rights, free and clear of all liens, encumbrances, restrictions, claims and
equities of any kind whatsoever, has and shall have the exclusive right to
use, sell, license or dispose of, and has and shall have the exclusive right
to bring action for the infringement of the SkyLynx Registered Rights and the
SkyLynx Proprietary Information. To the Best Knowledge of Corporation, the
marketing, promotion, distribution or sale by the Corporation of any products
or interests subject to the SkyLynx Registered Rights or making use of SkyLynx
Proprietary Information shall not constitute an infringement of any patent,
copyright, trademark, service xxxx or misappropriation or violation of any
other party's proprietary rights or a violation of any license or agreement by
the Corporation. Except as described in Exhibit 4.15 hereto, to the knowledge
of the Corporation after due inquiry no facts or circumstances exist that
could result in the invalidation of any of the SkyLynx Registered Rights.
4.16 Changes in Suppliers and Customers. Except as disclosed on Exhibit
4.16, the Corporation is not aware of any fact which indicates that any of the
suppliers supplying products, components or materials to the Corporation
intends to cease selling such products to the Corporation nor is the
Corporation aware of any fact which indicates that any major customer of the
Corporation intends to terminate its business relations with the Corporation.
4.17 No Liens or Encumbrances. The Corporation has good and marketable
title to all of the property and assets, tangible and intangible, employed in
the operations of its business, free of any material mortgages, security
interests, pledges, easements or encumbrances of any kind whatsoever except as
set forth on the attached Exhibit 4.17 and except for such property and assets
as may be leased by SkyLynx, and except for any property which is the subject
of Sections 4.12, 4.13 or 4.15.
4.18 Employee Matters. Exhibit 4.18 attached hereto contains a true,
complete and accurate list of all employees of the Corporation and the
remuneration of each (including wages, salaries and fringe benefits). The
Corporation has no information or facts indicating that any employee listed on
Exhibit 4.18 intends to terminate his/her employment relationship with the
Corporation prior or subsequent to the Closing Date, except as may be required
by this Agreement. Except as specifically described on Exhibit 4.18, the
Corporation has no employee benefit plans (including, but not limited to,
pension plans and health or welfare plans), arrangements or understandings,
whether formal or informal. The Corporation does not now and has never
contributed to a "multi-employer plan" as defined in Section 400(a)(3) of the
ERISA. The Corporation has complied with all applicable provisions of ERISA
and all rules and regulations promulgated thereunder, and neither the
Corporation nor any trustee, administrator, fiduciary, agent or employee
thereof has at any time been involved in a transaction that would constitute a
"prohibited transaction" within the meaning of Section 406 of ERISA as to any
covered plan of the Corporation. The Corporation is not a party to any
collective bargaining or other union agreement. The Corporation has not,
within the past five (5) years had, or been threatened with, any union
activities, work stoppages or other labor trouble with respect to its
employees which had a material adverse effect on the Corporation, its business
or assets. Except as set forth in Exhibit 4.9, the Corporation has not made
any commitment or agreements to increase the wages or modify the conditions or
terms of employment of any of the employees of the Corporation used in
connection with its business, and between the date of this Agreement and the
Closing Date, the Corporation will not make any agreement to increase the
wages or modify the conditions or terms of employment of any of the employees
of the Corporation used in the conduct of its business, without the prior
written consent of all parties hereto.
4.19 Legal Proceedings and Compliance with Law. Except as set forth in
Exhibit 4.19, SkyLynx has not received notice of any legal, administrative,
arbitration or other proceeding or governmental investigation pending or
threatened (including those relating to the health, safety, employment of
labor, or protection of the environment) pertaining to SkyLynx which might
result in the aggregate in money damages payable by SkyLynx in excess of
insurance coverage or which might result in a permanent injunction against
SkyLynx. Except as set forth in such Exhibit, SkyLynx has substantially
complied with, and is not in default in any respect under any laws,
ordinances, requirements, regulations, or orders applicable to the business of
SkyLynx, the violation of which might materially and adversely affect it.
Except as set forth in such Exhibit, SkyLynx is not a party to any agreement
or instrument, nor is it subject to any charter or other corporate restriction
or any judgment, order, writ, injunction, decree, rule, regulation, code or
ordinance which materially and adversely affects, or might reasonably be
expected materially and adversely to affect the business, operations,
prospects, property, assets or condition, financial or otherwise, of SkyLynx.
4.20 Contract Schedules. Attached as Exhibits 4.20(a) to 4.20(e) hereto
are an accurate list of the following:
(a) All contracts, leases, agreements, covenants, licenses,
instruments or commitments of SkyLynx pertaining to the business of SkyLynx
calling for the payment of $5,000 or more or which is otherwise material to
the business of SkyLynx, including, without limitation, the following:
(i) Licenses and contracts held in the ordinary course of
business;
(ii) Executory contracts for the purchase, sale or lease of any
assets;
(iii) Management or consulting contracts;
(iv) Patent, trademark and copyright applications,
registrations or licenses, and know-how, intellectual
property and trade secret agreements or other licenses;
(v) Note agreements, loan agreements, indentures and the like,
other than those entered into and executed in the ordinary
course of business;
(vi) All sales, agency, distributorship or franchise
agreements; and
(vii) Any other contracts not in the ordinary course of
business.
(b) All labor contracts, employment agreements and collective
bargaining agreements to which SkyLynx is a party.
(c) All instruments evidencing any liens or security interest
securing any indebtedness of SkyLynx covering any asset of SkyLynx.
(d) All profit sharing, pension, stock option, severance pay,
retirement, bonus, deferred compensation, group life and health insurance or
other employee benefit plans, agreements, arrangements or commitments of any
nature whatsoever, whether or not legally binding, and all agreements with any
present or former officer, director or shareholder of the Corporation.
(e) Any and all documents, instruments and other writings not
listed in any other schedule hereto which are material to the business
operations of SkyLynx.
Except as set forth in Exhibit 4.20(f), all of such contracts,
agreements, leases, licenses, plans, arrangements and commitments and all
other such items set forth above are valid, binding and in full force and
effect in accordance with their terms and conditions, except as the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
fraudulent transfer, reorganization or other similar laws affecting the
enforcement of contracts generally, and there is no existing material default
thereunder or breach thereof by the Corporation, or to SkyLynx's knowledge by
any party to such contracts, or any conditions which, with the passage of time
or the giving of notice or both, might constitute such a default by the
Corporation or by any other party to the contracts.
4.21 Labor Matters. There are no strikes, slowdowns, stoppages,
organizational efforts, discrimination charges or other labor disputes pending
or, to the knowledge of SkyLynx or any of its agent or employees, threatened
against SkyLynx.
4.22 Insurance. SkyLynx maintains in full force and effect insurance
coverage on its assets and business in such amounts and against such risks and
losses as set forth in Exhibit 4.22.
4.23 Environmental. Except as disclosed on Exhibit 4.23, SkyLynx has
never owned or operated any real property except for leased office space:
(a) to the Best Knowledge of SkyLynx, no real property (or the
subsurface soil and the ground water thereunder) now or previously leased by
SkyLynx (the "Leased Premises") either contains any Hazardous Substance (as
hereinafter defined) or has underneath it any underground fuel or liquid
storage tanks;
(b) to the Best Knowledge of SkyLynx, there has been no generation,
transportation, storage, treatment or disposal of any Hazardous Substance on
or beneath the Leased Premises, now or in the past;
(c) SkyLynx is not aware of any pending or threatened litigation or
proceedings before any court or administrative agency in which any person
alleges, or threatens to allege, the presence, release, threat of release,
placement on or in the Leased Premises, or the generation, transportation,
storage, treatment or disposal at the Leased Premises, of any Hazardous
Substance;
(d) SkyLynx has not received any notice and has no knowledge that
any Governmental Authority or any employee or agent thereof has determined or
alleged, or is investigating the possibility, that there is or has been any
presence, release, threat of release, placement on or in the Leased Premises,
or any generation, transportation, storage, treatment or disposal at the
Leased Premises, of any Hazardous Substance;
(e) To SkyLynx's Best Knowledge, there have been no communications
or agreements with any Governmental Authority or agency (federal, state, or
local) or any private person or entity (including, without limitation, any
prior owner of the Leased Premises and any present or former occupant or
tenant of the Leased Premises) relating in any way to the presence, release,
threat of release, placement on or in the Leased Premises, or any generation,
transportation, storage, treatment or disposal at the Leased Premises, of any
Hazardous Substance. SkyLynx further agrees and covenants that SkyLynx will
not store or deposit on, otherwise release or bring onto or beneath, the
Leased Premises any Hazardous Substance prior to the Closing Date; and
(f) there is no litigation, proceeding, citizen's suit or
governmental or other investigation pending, or, to SkyLynx's Best Knowledge,
threatened, against SkyLynx, and SkyLynx knows of no facts or circumstances
which might give rise to any future litigation, proceeding, citizen's suit or
governmental or other investigation, which relate to SkyLynx's compliance with
environmental laws, regulations, rules, guidelines and ordinances.
For purposes of this Section 4.23, "Hazardous Substance" shall mean and
include (1) a hazardous substance as defined in 42 U.S.C. Section 9601(14),
the Regulations at 40 C.F.R. Part 302, (2) any substance regulated under the
Emergency Planning and Community Right to Know Act (including without
limitation any extremely hazardous substances listed at 40 C.F.R. Part 355 and
any toxic chemical listed at 40 C.F.R. Part 372), (3) hazardous wastes and
hazardous substances as specified under any California state or local
Governmental Requirement governing water pollution, groundwater protection,
air pollution, solid wastes, hazardous wastes, spills and other releases of
toxic or hazardous substances, transportation of hazardous substances,
materials and wastes and occupational or employee health and safety, and (4)
any other material, gas or substance known or suspected to be toxic or
hazardous (including, without limitation, any radioactive substance, methane
gas, volatile hydrocarbon, industrial solvent, and asbestos) or which could
cause a material detriment to, or materially impair the beneficial use of, the
Leased Premises, or constitute a material health, safety or environmental risk
to any person exposed thereto or in contact therewith. For purposes of this
Section 4.23, "Hazardous Substance" shall not mean and shall not include the
following, to the extent used normally and required for everyday uses or
normal housekeeping or maintenance: (A) fuel oil and natural gas for heating,
(B) lubricating, cleaning, coolant and other compounds customarily used in
building maintenance, (C) materials routinely used in the day-to-day
operations of an office, such as copier toner, (D) consumer products, (E)
material reasonably necessary and customarily used in construction and repair
of an office project, and (F) fertilizers, pesticides and herbicides commonly
used for routine office landscaping.
4.24 Disclosure of Information. The Corporation represents and warrants
that all statements, data and other written information provided by it to any
party hereto as well as their respective consultants and representatives have
been accurate copies or true originals. The Corporation represents and
warrants that, to its Best Knowledge, (i) there exists no material information
concerning the Corporation which has been requested but not been disclosed to
or made available to the other parties and their representatives or
consultants and which would be material to a decision to consummate the
transactions provided for in this Agreement and (ii) in the aggregate, such
information does not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements made in
them, in light of the circumstances under which they are made, not misleading.
SECTION 5: COVENANTS OF SKYLYNX
5.1 Preservation of Business. Until Closing, SkyLynx shall use its best
efforts to :
(a) preserve intact the present business organization of SkyLynx;
(b) maintain its property and assets in its present state of
repair, order and condition, reasonable wear and tear excepted;
(c) preserve and protect the goodwill and advantageous
relationships of SkyLynx with its customers and all other persons having
business dealings with SkyLynx;
(d) preserve and maintain in force all licenses, permits,
registrations, franchises, patents, trademarks, tradenames, trade
secrets, service marks, copyrights, bonds and other similar rights of
SkyLynx; and
(e) comply with all laws applicable to the conduct of its business
5.2 Ordinary Course. Until Closing, SkyLynx shall conduct its business
only in the usual, regular and ordinary course, in substantially the same
manner as previously, and shall not make any substantial change to its methods
of management or operation in respect of such business or property. Without
limiting the foregoing, SkyLynx shall not, with respect to SkyLynx:
(a) sell, mortgage, pledge or encumber or agree to sell, mortgage,
pledge or encumber, any of its property or assets, other than in the ordinary
course of business;
(b) incur any obligation (contingent or otherwise) or purchase,
acquire, transfer, or convey, any material assets or property or enter into
any contract or commitment, except in the ordinary course of business.
5.3 Negative Covenants. Until Closing, except as contemplated by this
Agreement or disclosed in Exhibits to this Agreement, from the date hereof
until the Closing Date, unless and until Allied otherwise consents in writing,
SkyLynx will not (a) change or alter the physical contents or character of the
tangible and intangible assets so as to materially affect the nature of
SkyLynx's business; (b) incur any obligations or liabilities (absolute or
contingent) other than current liabilities incurred and obligations under
contracts entered into in the ordinary course of business; (c) mortgage,
pledge or voluntarily subject to lien, charge or other encumbrance any assets,
tangible or intangible, other than the lien of current property taxes not due
and payable; (d) sell, assign or transfer any of its assets or cancel any
debts or claims, other than in the ordinary course of business; (e) waive any
right of any substantial value; (f) declare or make any payment or
distribution to Shareholders or issue, purchase or redeem any shares of its
capital stock or other equity securities or issue or sell any rights to
acquire the same; (g) grant any increase in the salary or other compensation
of any of its directors, officers, or employees or make any increase in any
benefits to which such employees might be entitled; (h) institute any bonus,
benefit, profit sharing, stock option, pension, retirement plan or similar
arrangement, or make any changes in any such plans or arrangements presently
existing; or (i) enter into any material transactions or series of
transactions other than in the ordinary course of business.
5.4 Access to Books and Records, Premises, etc. From the date of this
Agreement through the Closing Date, SkyLynx will grant Allied and its
authorized representatives reasonable access to its books and records,
premises, products, employees and customers and other parties with whom it has
contractual relations during reasonable business hours and in a manner not to
disrupt or interfere with SkyLynx's business relationships for purposes of
enabling Allied to fully investigate the business of SkyLynx. SkyLynx will
also deliver copies of its monthly statements of operations and financial
condition for the period subsequent to its financial statements referred to in
Section 4.5 to Allied within a reasonable time of such statements becoming
available.
5.5 Compensation. SkyLynx shall not enter into or agree to enter into
any employment contract or agreement for consulting, professional, or other
services which will adversely and materially affect the operation of SkyLynx
prior to the Closing Date, except for any extensions of said contracts or
agreements on substantially the same terms and conditions as were previously
in effect.
5.6 No Solicitation.
(a) Except in connection with the transactions contemplated by this
Agreement, SkyLynx shall not, nor shall it permit any of its subsidiaries to,
nor shall it authorize or permit any officer, director or employee of or any
investment banker, attorney or other advisor or representative of, SkyLynx or
any of its subsidiaries to, (i) solicit, initiate or encourage the submission
of, any takeover proposal, (ii) enter into any agreement with respect to any
takeover proposal or (iii) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, or take
any other action to facilitate any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any takeover
proposal. Without limiting the foregoing, it is understood that any violation
of the restrictions set forth in the preceding sentence by any executive
officer of SkyLynx or any of its subsidiaries or any investment banker,
attorney or other advisor or representatives of SkyLynx or any of its
subsidiaries or otherwise, shall be deemed to be a breach of this Section by
SkyLynx. For purposes of this Agreement, "takeover proposal" means any
proposal for a merger, consolidation or reorganization or other business
combination involving SkyLynx or any of its subsidiaries or any proposal or
offer to acquire in any manner, directly or indirectly, an equity interest in,
any voting securities of, or options, rights, warrants or other interests
convertible or exercisable for or into such voting securities, or a
substantial or material portion of the assets or business of SkyLynx or any of
its subsidiaries, other than the transactions contemplated by this Agreement.
(b) Except upon a material breach of this Agreement by Allied or
following termination hereof, except for action permitted or contemplated by
this Agreement, including a party's right to terminate this Agreement under
certain circumstances, neither the Board of Directors of SkyLynx nor any
committee thereof shall (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Allied, the approval or recommendation by such
Board of Directors of any such committee of this Agreement or the Exchange or
(ii) approve or recommend, or propose to approve or recommend, any takeover
proposal.
(c) SkyLynx promptly shall advise Allied orally and in writing of
any takeover proposal or any inquiry with respect to or which could lead to
any takeover proposal and the identity of the person making any such takeover
proposal or inquiry. SkyLynx will keep Allied fully informed of the status
and details of any such takeover proposal or inquiry.
(d) The provisions of this Section 5.6 shall not be construed to
prevent any investment banker, attorney or other advisor or representative of
SkyLynx to engage in discussions with third parties in the ordinary course of
business with respect to transactions not involving the parties to this
Agreement.
SECTION 6: REPRESENTATIONS AND WARRANTIES OF ALLIED
As a material inducement to SkyLynx to enter into this Agreement and with
the understanding and expectations that SkyLynx will be relying thereon in
consummating the Exchange contemplated hereunder, Allied (hereinafter Allied
shall be referred to as the "Corporation" unless the context otherwise
requires for the purposes of this Section 6 only) hereby represents and
warrants as follows:
6.1 Organization and Standing. Allied is a corporation duly organized,
validly existing and in good standing under the laws of the State of Colorado,
and has all requisite corporate power and authority to own its assets and
properties and to carry on its business as it is now being conducted.
6.2 Subsidiaries, etc. Except as set forth on Exhibit 6.2 hereto, the
Corporation does not have any direct or indirect Ownership Interest in any
corporation, partnership, joint venture, association or other business
enterprise.
6.3 Qualification. Except as set forth on Exhibit 6.3 and for any
jurisdiction where the failure to be qualified to engage in business as a
foreign corporation would not have a material adverse effect on the
corporation, the Corporation is not qualified to engage in business as a
foreign corporation in any state other than Colorado, and there is no other
jurisdiction wherein the character of the properties presently owned by the
Corporation or the nature of the activities presently conducted by the
Corporation makes necessary the qualification, licensing or domestication of
the Corporation as a foreign corporation.
6.4 Corporate Authority. Except as set forth on Exhibit 6.4 hereto,
neither the execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby nor compliance by Allied with any on the
provisions hereof will
(a) conflict with or result in a breach of any provision of its
Articles of Incorporation or By-Laws or similar documents of any Subsidiary;
(b) result in a default (or give rise to any right of termination,
cancellation, or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which the Corporation is a party, or by which any
of its properties or assets may be bound except for such default (or right of
termination, cancellation, or acceleration) as to which requisite waivers or
consents shall either have been obtained by the Corporation prior to the
Closing Date or the obtaining of which shall have been waived by SkyLynx; or
(c) violate any order, writ, injunction, decree or, to the
Corporation's Best Knowledge, any statute, rule or regulation applicable to
the Corporation or any of its properties or assets. No consent or approval by
any Governmental Authority is required in connection with the execution and
delivery by the Corporation of this Agreement or the consummation by the
Corporation of the transactions contemplated hereby, except for possible
notice under plant closing laws.
6.5 Financial Statements. The following statements are attached to this
Agreement as Exhibit 6.5:
(a) Audited financial statements of the Corporation accompanied by
a report of its independent certified public accountants containing audited
balance sheets of Allied for the period beginning at inception and ending
December 31, 1996, together with statements of operations for the Corporation
from inception to and including December 31, 1996;
(b) Unaudited financial statements of the corporation containing
balance sheets and statements of operations for the Corporation covering the
period from the end of the period covered by the most recent audited financial
statements of the corporation through June 30, 1997.
To the Best Knowledge of the Corporation, such financial statements,
together with and subject to the disclosures and notes thereto, (i) are in
accordance with the books and records of the Corporation; (ii) present fairly
the financial condition of the Corporation; as of the dates of the balance
sheets; (iii) present fairly the results of operations for the periods covered
by such statements; (iv) have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis; (v) include all
adjustments (consisting of only normal recurring accruals) which are necessary
for a fair presentation of the financial condition of the Corporation, and of
the results of operations of the Corporation for the periods covered by such
statements; and (vi) fully comply with all requirements of Regulation SB and
all applicable securities laws.
As of Closing, except as set forth in Exhibit 6.5(b) hereto, the
Corporation will not have any liabilities or payables (absolute or contingent,
known or unknown), except as reflected in the financial statements, or
described in its reports filed under Section 13(a) of the Exchange Act (copies
of which shall have been provided to SkyLynx and its counsel) or set forth in
Exhibits to this Agreement, except as disclosed to SkyLynx prior to the
Closing Date.
6.6 Capitalization of the Corporation.
(a) The authorized capital stock of Allied consists entirely of
150,000,000 shares of Common Stock having a par value of $.001 per share, and
50,000,000 shares of Preferred Stock having a par value of $.01 per share. As
of the date of this Agreement, 12,500,000 shares of Common Stock are issued
and outstanding. As of the Closing Date, giving effect to the issuance of the
Conversion Shares, Consultation Shares and Private Offering Shares, no more
than 25,000,000 shares of Common Stock and no shares of Preferred Stock will
be issued and outstanding. All outstanding shares of Allied's capital stock
have been validly issued, are fully paid and non-assessable, and are not
subject to pre-emptive rights. The shares of Common Stock to be issued to the
Shareholders on the Closing Date in accordance with Sections 2.1 hereof have
been duly approved by the Directors of Allied and will, upon their issuance,
have been validly issued and will be fully paid and non-assessable. As of the
Closing Date, there will be no other equity securities of Allied authorized,
issued or outstanding, and there are no authorized, issued or outstanding
subscriptions, options, warrants, contracts, calls, commitments or other
purchase rights of any nature or character relating to any of Allied's capital
stock, equity securities, debt or other securities convertible into stock or
equity securities of Allied. As of the date of this Agreement, there are no
outstanding contractual obligations of Allied to repurchase, redeem or
otherwise acquire any shares of capital stock of Allied.
6.7 Taxes. Except as set forth in Exhibit 6.7, the Corporation has
filed (or has obtained extensions for filing) all income, excise, sales,
corporate franchise, property, payroll and other tax returns or reports
required to be filed by it, as of the date hereof by the United States of
America, any state or other political subdivision thereof or any foreign
country and has paid all Taxes or assessments shown to be due on such returns
or reports. The amounts set up as provisions for Taxes in the Latest
Financial Statements are sufficient for the payment of all unpaid federal,
foreign, state or local Taxes of the Corporation accrued for or applicable to
all periods ended on or prior to the date of this Agreement, or which may
subsequently be determined to be owing by the Corporation with respect to all
periods ending on or prior to the Closing Date, subject to normal year-end
adjustments, which will not be material. There are no present disputes as to
Taxes of any nature payable by the Corporation. There will be no Taxes which
will be owing by Allied or any Subsidiary with respect to periods ending on or
prior to the Closing Date, except for Taxes for which Allied has made
sufficient reserves of cash or cash equivalents to pay such Taxes.
6.8 No Actions, Proceedings, etc. Except as listed on the attached
Exhibit 6.8, there is no action or proceeding (whether or not purportedly on
behalf of the Corporation) pending or to its knowledge threatened by or
against the Corporation, which might result in any material adverse change in
the condition, financial or otherwise, of the Corporation's business or
assets. No order, writ or injunction or decree has been issued by, or
requested of any court or Governmental Agency which does nor may result in any
material adverse change in the Corporation's assets or properties or in the
financial condition or the business of the Corporation. The Corporation is not
liable for damages to any employee or former employee as a result of any
violation of any state, federal or foreign laws directly or indirectly
relating to such employee or former employee.
6.9 Post Balance Sheet Changes. Except as set forth on Exhibit 6.9 and
as contemplated by this Agreement, since the date of the latest financial
statements, the Corporation has not (a) issued, bought, redeemed or entered
into any agreements, commitments or obligations to sell, buy or redeem any
shares of its capital stock; (b) incurred any obligation or liability
(absolute or contingent), other than current liabilities incurred, and
obligations under contracts entered into, in the ordinary course of business;
(c) discharged or satisfied any lien or encumbrance or paid any obligation or
liability (absolute or contingent), other than current liabilities incurred in
the ordinary course of business; (d) mortgaged, pledged or subjected to lien
charges, or other encumbrance any of its assets, other than the lien of
current or real property taxes not yet due and payable; (e) waived any rights
of substantial value, whether or not in the ordinary course of business; (f)
suffered any damage, destruction or loss, whether or not covered by insurance,
materially and adversely affecting its assets or its business; (g) made or
suffered any amendment or termination of any material contract or any
agreement which adversely affects its business; (h) received notice or had
knowledge of any labor trouble other than routine grievance matters, none of
which is material; (i) increased the salaries or other compensation of any of
its directors, officers or employees or made any increase in other benefits to
which employees may be entitled, other than employee salary increases made in
the ordinary course of business and reflected on an Exhibit hereto; (j) sold,
transferred or otherwise disposed of any of its assets, other than in the
ordinary course of business; (k) declared or made any distribution or payments
to any of its shareholders, officers or employees, other than wages and
salaries made to employees in the ordinary course of business; (l) revalued
any of its assets; or (m) entered into any transactions not in the ordinary
course of business.
6.10 No Breaches. Except as set forth on Exhibit 6.10, the Corporation
is not in violation of, and the consummation of the transactions contemplated
hereby do not and will not result in any material breach of, any of the terms
or conditions of any mortgage, bond, indenture, agreement, contract, license
or other instrument or obligation to which the Corporation is a party or by
which its assets are bound; nor will the consummation of the transactions
contemplated hereby cause Allied or any Subsidiary to violate any statute,
regulation, judgment, writ, injunction or decree of any court, threatened or
entered in a proceeding or action in which the Corporation is, was or may be
bound or to which any of the Corporation's assets are subject.
6.11 Condition of the Corporation's Assets. Except as set forth on
Exhibit 6.11, the Corporation's assets are currently in good and usable
condition and there are no defects or other conditions which, in the
aggregate, materially and adversely affect the operation or values of such
assets. Except as disclosed on Exhibit 6.11, no person other than the
Corporation (including any officer or employee of the Corporation) has any
proprietary interest in any know-how or other intangible assets used by the
Corporation in the conduct of its business. All product which is currently
being marketed by the Corporation is operable for its intended purposes in
accordance with its written specifications and trade representations.
6.12 Inventory. As of the date of this Agreement and as of the Closing
Date, the Corporation will have no inventory held for resale in the ordinary
course of business.
6.13 Accounts Receivable. As of the date of this Agreement and as of the
Closing Date, the Corporation will have no accounts receivable generated from
the sale of goods or services in the ordinary course of business.
6.14 Corporate Acts and Proceedings. This Agreement has been duly
authorized by all necessary corporate action on behalf of Allied, has been
duly executed and delivered by authorized officers of Allied, and is a valid
and binding Agreement on the part of Allied that is enforceable against Allied
in accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, fraudulent transfers,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and to judicial limitations on the enforcement of the remedy
of specific performance and other equitable remedies. All corporate action
necessary to issue and deliver to the SkyLynx Shareholders the Exchange Shares
and Exchange Rights (each as described in Sections 2.1, 2.1 and 2.3) has been
taken by Allied.
6.15 Registered Rights and Proprietary Information.
(a) Exhibit 6.15 hereto contains a true and complete list of all
patents, letters patent and patent applications, service marks, trademark and
service xxxx registrations and applications, copyright, copyright
registrations and applications, grants of licenses and rights to the
Corporation with respect to the foregoing, both domestic and foreign, claimed
by the Corporation or used or proposed to be used by the Corporation in the
conduct of its business (collectively herein, "Allied Registered Rights").
Exhibit 6.15 hereto also contains a true and complete list of all and every
trade secret, know-how, process, formula, discovery, development, research,
design, technique, customer and supplier list, contracts, product development
plans, product development concepts, author contracts, marketing and
purchasing strategy, invention, and any other matter required for, incident
to, or related to the conduct of its business (hereafter collectively the
"Allied Proprietary Information"). Except as described in Exhibit 6.15
hereto, the Corporation is not obligated or under any liability whatever to
make any payments by way of royalties, fees or otherwise to any owner or
licensor of, or other claimant to, any Allied Registered Right or Allied
Proprietary Information with respect to the use thereof in the conduct of its
business or otherwise.
(b) Except as described in Exhibit 6.15 hereto, to the
Corporation's Best Knowledge, the Corporation owns and has the unrestricted
right to use the Allied Registered Rights and Allied Proprietary Information
required for or incident to the design, development, manufacture, operation,
sale and use of all products and services sold or rendered or proposed to be
sold or rendered by the Corporation or relating to the conduct or proposed
conduct of its business free and clear of any right, title, interest, equity
or claim of others. As soon as practicable following the execution of this
Agreement and except as described in Exhibit 6.15 hereto, the Corporation
agrees to take all necessary steps (including without limitation entering into
appropriate confidentiality, assignment of rights and non-competition
agreements with all officers, directors, employees and consultants of the
Corporation and others with access to or knowledge of the Allied Proprietary
Information) to safeguard and maintain the secrecy and confidentiality of, and
its proprietary rights in, the Allied Proprietary Information and all related
documentation and intellectual property rights therein necessary for the
conduct or proposed conduct of its business.
(c) Except as described in Exhibit 6.15 hereto, the Corporation has
not sold, transferred, assigned, licensed or subjected to any right, lien,
encumbrance or claim of others, any Allied Proprietary Information, including
without limitation any Allied Registered Right, or any interest therein,
related to or required for the design, development, manufacture, operation,
sale or use of any product or service currently under development or
manufactured, or proposed to be developed, sold or manufactured, by it.
Exhibit 6.15 contains a true and complete list and description of all licenses
of Allied Proprietary Information granted to the Corporation by others or to
others by the Corporation. Except as described in Exhibit 6.15 hereto, there
are no claims or demands of any person pertaining to, or any proceedings that
are pending or threatened, which challenge the rights of the Corporation in
respect of any Allied Proprietary Information used in the conduct of its
business.
(d) Except as described in Exhibit 6.15 hereto, the Corporation
owns and on the Closing Date shall own, has and shall have, holds and shall
hold, exclusively all right, title and interest in the Allied Registered
Rights, free and clear of all liens, encumbrances, restrictions, claims and
equities of any kind whatsoever, has and shall have the exclusive right to
use, sell, license or dispose of, and has and shall have the exclusive right
to bring action for the infringement of the Allied Registered Rights and the
Allied Proprietary Information. To the Best Knowledge of Corporation, the
marketing, promotion, distribution or sale by the Corporation of any products
or interests subject to the Allied Registered Rights or making use of Allied
Proprietary Information shall not constitute an infringement of any patent,
copyright, trademark, service xxxx or misappropriation or violation of any
other party's proprietary rights or a violation of any license or agreement by
the Corporation. Except as described in Exhibit 6.15 hereto, to the knowledge
of the Corporation after due inquiry no facts or circumstances exist that
could result in the invalidation of any of the Allied Registered Rights.
6.16 Changes in Suppliers and Customers. Except as disclosed on Exhibit
6.16, the Corporation is not aware of any fact which indicates that any of the
suppliers supplying products, components or materials to the Corporation
intends to cease selling such products to the Corporation nor is the
Corporation aware of any fact which indicates that any major customer of the
Corporation intends to terminate its business relations with the Corporation.
6.17 No Liens or Encumbrances. The Corporation has good and marketable
title to all of the property and assets, tangible and intangible, employed in
the operations of its business, free of any material mortgages, security
interests, pledges, easements or encumbrances of any kind whatsoever except as
set forth on the attached Exhibit 6.17 and except for such property and assets
as may be leased by the Corporation, and except for any property which is the
subject of Sections 6.12, 6.13 or 6.15.
6.18 Employee Matters. As of the Closing Date, the Corporation shall
have no employees and shall not be a party to or bound by any employment
agreements or commitments. Except as specifically described on Exhibit 6.18,
the Corporation has no employee benefit plans (including, but not limited to,
pension plans and health or welfare plans), arrangements or understandings,
whether formal or informal. The Corporation does not now and has never
contributed to a "multi-employer plan" as defined in Section 400(a)(3) of the
ERISA. The Corporation has complied with all applicable provisions of ERISA
and all rules and regulations promulgated thereunder, and neither the
Corporation nor any trustee, administrator, fiduciary, agent or employee
thereof has at any time been involved in a transaction that would constitute a
"prohibited transaction" within the meaning of Section 406 of ERISA as to any
covered plan of the Corporation. The Corporation is not a party to any
collective bargaining or other union agreement. The Corporation has not,
within the past five (5) years had, or been threatened with, any union
activities, work stoppages or other labor trouble with respect to its
employees which has a material adverse effect on the Corporation, its business
or assets.
6.19 Legal Proceedings and Compliance with Law. Except as set forth in
Exhibit 6.19, the Corporation has not received notice of any legal,
administrative, arbitration or other proceeding or governmental investigation
pending or threatened (including those relating to the health, safety,
employment of labor, or protection of the environment) pertaining to the
Corporation which might result in the aggregate in money damages payable by
the Corporation in excess of insurance coverage or which might result in a
permanent injunction against the Corporation. Except as set forth in such
Exhibit, the Corporation has substantially complied with, and is not in
default in any respect under any laws, ordinances, requirements, regulations,
or orders applicable to the business of the Corporation, the violation of
which might materially and adversely affect it. Except as set forth in such
Exhibit, the Corporation is not a party to any agreement or instrument, nor is
it subject to any charter or other corporate restriction or any judgment,
order, writ, injunction, decree, rule, regulation, code or ordinance which
materially and adversely affects, or might reasonably be expected materially
and adversely to affect the businesses, operations, prospects, property,
assets or condition, financial or otherwise, of the Corporation.
6.20 Contracts. Attached as Exhibits 6.20(a) to 6.20(e) hereto are an
accurate list and summary description of the following:
(a) All contracts, leases, agreements, covenants, licenses,
instruments or commitments of the Corporation pertaining to the business of
the Corporation calling for the payment of $5,000 or more or which is
otherwise material to the business of the Corporation, including, without
limitation, the following:
(i) Executory contracts for the sale of products and services;
(ii) Executory contracts for the purchase, sale or lease of any
assets;
(iii) Management or consulting contracts;
(iv) Patent, trademark and copyright applications,
registrations or licenses, and know-how, intellectual
property and trade secret agreements or other licenses;
(v) Note agreements, loan agreements, indentures and the like,
other than those entered into and executed in the ordinary
course of business;
(vi) All sales, agency, distributorship or franchise
agreements; and
(vii) Any other contracts not in the ordinary course of
business.
(b) All labor contracts, employment agreements and collective
bargaining agreements to which Allied or any Subsidiary is a party.
(c) All instruments evidencing any liens or security interest
securing any indebtedness of Allied or any Subsidiary covering any asset of
Allied or any Subsidiary.
(d) All profit sharing, pension, stock option, severance pay,
retirement, bonus, deferred compensation, group life and health insurance or
other employee benefit plans, agreements, arrangements or commitments of any
nature whatsoever, whether or not legally binding, and all agreements with any
present or former officer, director or shareholder of the Corporation.
(e) Any and all documents, instruments and other writings not
listed in any other schedule hereto which are material to the business
operations of Allied or any Subsidiary.
Except as set forth in Exhibit 6.20(f), all of such contracts,
agreements, leases, licenses, plans, arrangements and commitments and all
other such items set forth above are valid, binding and in full force and
effect in accordance with their terms and conditions, except as the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
fraudulent transfer, reorganization or other similar laws affecting the
enforcement of contracts generally, and there is no existing material default
thereunder or breach thereof by the Corporation, or to the Corporation's
knowledge by any party to such contracts, or any conditions which, with the
passage of time or the giving of notice or both, might constitute such a
default by the Corporation or by any other party to the contracts.
6.21 Labor Matters. There are no strikes, slowdowns, stoppages,
organizational efforts, discrimination charges or other labor disputes pending
or, to the knowledge of the Corporation or any of its agent or employees,
threatened against the Corporation.
6.22 Insurance. Allied maintains in full force and effect insurance
coverage on the assets and business of the Corporation in such amounts and
against such risks and losses as set forth in Exhibit 6.22.
6.23 Environmental. Except as disclosed on Exhibit 6.23:
(a) to the Best Knowledge of the Corporation, no real property (or
the subsurface soil and the ground water thereunder) now or previously owned
by the Corporation (the "Real Property") either contains any Hazardous
Substance (as hereinafter defined) or has underneath it any underground fuel
or liquid storage tanks;
(b) to the Best Knowledge of the Corporation, there has been no
generation, transportation, storage, treatment or disposal of any Hazardous
Substance on or beneath the Real Property, now or in the past;
(c) the Corporation is not aware of any pending or threatened
litigation or proceedings before any court or administrative agency in which
any person alleges, or threatens to allege, the presence, release, threat of
release, placement on or in the Real Property, or the generation,
transportation, storage, treatment or disposal at the Real Property, of any
Hazardous Substance;
(d) the Corporation has not received any notice and has no
knowledge that any Governmental Authority or any employee or agent thereof has
determined or alleged, or is investigating the possibility, that there is or
has been any presence, release, threat of release, placement on or in the Real
Property, or any generation, transportation, storage, treatment or disposal at
the Real Property, of any Hazardous Substance;
(e) to the Corporation's Best Knowledge, there have been no
communications or agreements with any Governmental Authority or agency
(federal, state, or local) or any private person or entity (including, without
limitation, any prior owner of the Real Property and any present or former
occupant or tenant of the Real Property) relating in any way to the presence,
release, threat of release, placement on or in the Real Property, or any
generation, transportation, storage, treatment or disposal at the Real
Property, of any Hazardous Substance. The Corporation further agrees and
covenants that the Corporation will not store or deposit on, otherwise release
or bring onto or beneath, the Real Property any Hazardous Substance prior to
the Closing Date; and
(f) there is no litigation, proceeding, citizen's suit or
governmental or other investigation pending, or, to the Corporation's Best
Knowledge, threatened, against the Corporation, and the Corporation knows of
no facts or circumstances which might give rise to any future litigation,
proceeding, citizen's suit or governmental or other investigation, which
relate to the Corporation's compliance with environmental laws, regulations,
rules, guidelines and ordinances.
For purposes of this Section 6.23, "Hazardous Substance" shall mean and
include (1) a hazardous substance as defined in 42 U.S.C. Section 9601(14),
the Regulations at 40 C.F.R. Part 302, (2) any substance regulated under the
Emergency Planning and Community Right to Know Act (including without
limitation any extremely hazardous substances listed at 40 C.F.R. Part 355 and
any toxic chemical listed at 40 C.F.R. Part 372), (3) hazardous wastes and
hazardous substances as specified under any Colorado state or local
Governmental Requirement governing water pollution, groundwater protection,
air pollution, solid wastes, hazardous wastes, spills and other releases of
toxic or hazardous substances, transportation of hazardous substances,
materials and wastes and occupational or employee health and safety, and (4)
any other material, gas or substance known or suspected to be toxic or
hazardous (including, without limitation, any radioactive substance, methane
gas, volatile hydrocarbon, industrial solvent, and asbestos) or which could
cause a material detriment to, or materially impair the beneficial use of, the
Real Property, or constitute a material health, safety or environmental risk
to any person exposed thereto or in contact therewith. For purposes of this
Section 6.23, "Hazardous Substance" shall not mean and shall not include the
following, to the extent used normally and required for everyday uses or
normal housekeeping or maintenance: (A) fuel oil and natural gas for heating,
(B) lubricating, cleaning, coolant and other compounds customarily used in
building maintenance, (C) materials routinely used in the day-to-day
operations of an office, such as copier toner, (D) consumer products, (E)
material reasonably necessary and customarily used in construction and repair
of an office project, and (F) fertilizers, pesticides and herbicides commonly
used for routine office landscaping.
6.24 Disclosure of Information. The Corporation represents and warrants
that all statements, data and other written information provided by it to any
party hereto as well as their respective consultants and representatives have
been accurate copies or true originals and have been provided with the
knowledge of the Corporation that the receiving party will rely upon same in
connection with that parties' decision to consummate the transactions provided
for in this Agreement. The Corporation represents and warrants that, to its
Best Knowledge, (i) there exists no material information concerning the
Corporation which has been requested but not been disclosed to or made
available to the other parties and their representatives or consultants and
which would be material to a decision to consummate the transactions provided
for in this Agreement and (ii) in the aggregate, such information does not
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made in them, in light of the
circumstances under which they are made, not misleading.
SECTION 7: COVENANTS OF ALLIED
7.1 Preservation of Business. Until Closing, Allied shall use its best
efforts to:
(a) preserve intact the present business organization of the
Corporation;
(b) maintain its property and assets in its present state of
repair, order and condition, reasonable wear and tear excepted;
(c) preserve and protect the goodwill and advantageous
relationships of the Corporation with its customers and all other persons
having business dealings with the Corporation;
(d) preserve and maintain in force all licenses, permits,
registrations, franchises, patents, trademarks, tradenames, trade secrets,
service marks, copyrights, bonds and other similar rights of the Corporation;
and
(e) comply with all laws applicable to the conduct of its business.
7.2 Ordinary Course. Until Closing, Allied shall not, without the prior
written consent of SkyLynx:
(a) sell, mortgage, pledge or encumber or agree to sell, mortgage,
pledge or encumber, any of the property or assets of Allied or the
Subsidiaries;
(b) incur any obligation (contingent or otherwise) or purchase,
acquire, transfer, or convey, any material assets or property or enter into
any contract or commitment;
7.3 Negative Covenants. Until Closing, except as contemplated by this
Agreement or as disclosed in Exhibits to this Agreement, from the date hereof
until the Closing Date, unless and until SkyLynx otherwise consents in
writing, Allied and the Subsidiaries will not (a) change or alter the physical
contents or character of the inventories of its business, so as to materially
affect the nature of the Corporation's business or materially and adversely
change the total dollar valuation of such inventories from that reflected on
the financial statements referred to in Section 4.5 other than in the ordinary
course of business; (b) incur any obligations or liabilities (absolute or
contingent) other than current liabilities incurred and obligations under
contracts entered into in the ordinary course of business; (c) mortgage,
pledge or voluntarily subject to lien, charge or other encumbrance any assets,
tangible or intangible, other than the lien of current property taxes not due
and payable; (d) sell, assign or transfer any of its assets or cancel any
debts or claims, other than in the ordinary course of business; (e) waive any
right of any substantial value; (f) declare or make any payment or
distribution to Shareholders or issue, purchase or redeem any shares of its
capital stock or other equity securities or issue or sell any rights to
acquire the same; (g) grant any increase in the salary or other compensation
of any of its directors, officers, or employees or make any increase in any
benefits to which such employees might be entitled; (h) institute any bonus,
benefit, profit sharing, stock option, pension, retirement plan or similar
arrangement, or make any changes in any such plans or arrangements presently
existing; or (i) enter into any transactions or series of transactions other
than in the ordinary course of business.
7.4 Access to Books and Records, Premises, etc. From the date of this
Agreement through the Closing Date, Allied will grant SkyLynx and its
authorized representatives reasonable access to its and the Subsidiaries'
books and records, premises, products, employees and customers and other
parties with whom it has contractual relations during reasonable business
hours for purposes of enabling SkyLynx to fully investigate the business of
Allied and the Subsidiaries. Allied will also deliver copies of the monthly
statements of operations and financial condition for the period subsequent to
the latest financial statements to SkyLynx within a reasonable time of such
statements becoming available.
7.5 Compensation. Until Closing, Allied and the Subsidiaries shall not
enter into or agree to enter into any employment contract or agreement for
consulting, professional, or other services which will adversely and
materially affect the operation of Allied or the Subsidiaries prior to the
Closing Date, except for any extensions of said contracts or agreements on
substantially the same terms and conditions as were previously in effect.
7.6 Post-Closing Financing. A material inducement for NST and SkyLynx
to enter into this Agreement, and a condition to the Closing, is the
representation and undertaking of Allied that it will raise in the Private
Offering a minimum of $750,000 and a maximum of $1,000,000. A further
material inducement for NST and SkyLynx to enter into this Agreement has been
the undertaking by certain affiliates and principals of Allied to assist
Allied following the Closing in its efforts to raise at least an additional
$9,000,000. As the consummation of the transactions provided for and
contemplated by this Agreement will result in those affiliates of Allied
resigning as officers and directors of Allied on the Closing Date and Allied
succeeding to all the rights, privileges, properties, assets and franchises of
SkyLynx (including changing its name to SkyLynx), such affiliates and
principals of Allied agree that following the Closing they shall use their
best efforts to assist Allied (SkyLynx) in its efforts to obtain after the
Closing the financing described herein.
7.7 No Solicitation.
(a) Except in connection with the transactions contemplated by this
Agreement, Allied shall not, nor shall it permit any of its Subsidiaries to,
nor shall it authorize or permit any officer, director or employee of or any
investment banker, attorney or other advisor or representative of, Allied or
any of its Subsidiaries to, (i) solicit, initiate or encourage the submission
of, any takeover proposal, (ii) enter into any agreement with respect to any
takeover proposal or (iii) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, or take
any other action to facilitate any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any takeover
proposal. Without limiting the foregoing, it is understood that any violation
of the restrictions set forth in the proceeding sentence by any executive
officer of Allied or any of its Subsidiaries or any investment banker,
attorney or other advisor or representatives of Allied or any of its
Subsidiaries or otherwise, shall be deemed to be a breach of this Section by
Allied. For purposes of this Agreement, "takeover proposal" means any
proposal for a merger, consolidation or reorganization or other business
combination involving Allied or any of its Subsidiaries or any proposal or
offer to acquire in any manner, directly or indirectly, an equity interest in,
any voting securities of, or options, rights, warrants or other interests
convertible or exercisable for or into such voting securities, or a
substantial or material portion of the assets or any business of Allied or any
of its Subsidiaries, other than the transactions contemplated by this
Agreement.
(b) Except upon material breach of this Agreement by SkyLynx or
following termination hereof, except for action permitted or contemplated by
this Agreement, including a party's right to terminate this Agreement under
certain circumstances, neither the Board of Directors of Allied nor any
committee thereof shall (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to SkyLynx, the approval or recommendation by such
Board of Directors of any such committee of this Agreement or the Exchange or
(ii) approve or recommend, or propose to approve or recommend, any takeover
proposal.
(c) Allied promptly shall advise SkyLynx orally and in writing of
any takeover proposal or any inquiry with respect to or which could lead to
any takeover proposal and the identity of the person making any such takeover
proposal or inquiry. Allied will keep SkyLynx fully informed of the status
and details of any such takeover proposal or inquiry.
(d) The provisions of this Section 7.7 shall not be construed to
prevent any investment banker, attorney or other advisor or representative of
Allied or any Subsidiary to engage in discussions with third parties in the
ordinary course of business with respect to transactions not involving the
parties to this Agreement.
7.8 Audited Financial Statements and Bring-Downs.
(a) Allied shall deliver as promptly as possible after the date
hereof but in no event later than prior to the Closing Date (i) the audited
consolidated balance sheet of Allied as of June 30, 1997, and the related
audited consolidated statements of income, stockholders' equity and cash flows
for the fiscal year ended June 30, 1997, accompanied by the unqualified report
of its independent financial accountant, in form and substance satisfactory to
SkyLynx, its counsel and auditor.
(b) Allied shall deliver as promptly as possible (i) the unaudited
consolidated balance sheet of Allied as of the last day of each month after
the date hereof and through the Closing Date, and the related unaudited
consolidated statements of income, stockholders' equity and cash flows for the
period from July 1, 1997 through the date of such financial statements, in
each case, accompanied by the unqualified bring-down certification of the
Chief Executive Officer and Chief Financial Officer of Allied with respect to
the financial position of Allied as of such date and as to results for the
period from July 1, 1997 to such date, in form and substance satisfactory to
SkyLynx, its counsel and auditors.
(c) The foregoing financial statements shall be subject to the
representations and warranties contained in Section 6.5 hereof to the same
extent as if such financial statements were expressly referred to therein.
7.9 Delivery of Additional Filings. Following the execution of this
Agreement and until the Closing Date, Allied shall provide SkyLynx with copies
of any and all reports, filings, notices or other information which Allied may
prepare and file with or receive from the Commission, NASDAQ or any other
regulatory authority, (and shall give SkyLynx an opportunity to review and
comment on any such filings) as well as copies of any pleadings, notices or
other filings made in connection with any pending litigation, arbitration,
investigation or proceeding in which Allied or any Subsidiary is party or
otherwise involved.
SECTION 8: TERMINATION
8.1 Termination. This Agreement may be terminated and abandoned solely
as follows:
(a) At any time until the Closing Date by the mutual agreement of
Allied and SkyLynx.
(b) By any party hereto, if for any reason the parties have failed
to close this Agreement on or before ninety (90) days from the date of this
Agreement, provided that the party requesting termination is not then in
default thereunder.
(c) By any party hereof, if the other party shall have breached any
representation, warranty or covenant contained in this Agreement and shall
have failed to cure such breach within ten (10) days following written notice
thereof by the party seeking termination.
(d) By any party hereof prior to August 31, 1997 if the results of
the due diligence investigation of the other shall not be satisfactory to such
party in its sole discretion.
In the event of any termination pursuant to this Section 8.1(b) or
(c), written notice setting forth the reasons therefor shall forthwith be
given by the terminating party to all of the other parties hereto.
8.2 Effect of Termination. If the Exchange is terminated and abandoned
as provided for in this Section 8, this Agreement shall forthwith become
wholly void and of no effect without liability to any party to this Agreement;
provided, however, that no such termination shall terminate or limit the
rights of any such terminating party to enforce any remedy otherwise available
for any breach hereof.
SECTION 9: REMEDIES FOR BREACH
9.1 Remedies for Breach. In the event of any breach of any of the
provisions of this Agreement, including but not limited to any breach of any
covenant, warranty or representation made by any party hereto, the breaching
or defaulting party shall be liable to the other for any damages proximately
resulting therefrom. In the event of any material breach by any party of any
provision under this Agreement, either party may file suit. Nothing contained
in this Agreement shall be deemed to preclude a party to xxx for or seek
specific performance of the provisions of this Agreement in the appropriate
circumstance. The provisions of this Section 9 shall survive any termination
hereof.
SECTION 10: NONDISCLOSURE OF CONFIDENTIAL INFORMATION
10.1 Nondisclosure of Confidential Information. Each of the parties
hereto recognizes and acknowledges that it has and will have access to certain
nonpublic information of the others which shall be deemed the confidential
information of the other Companies (including, but not limited to, business
plans, costs, trade secrets, licenses, research projects, profits, markets,
sales, customer lists, strategies, plans for future development, financial
information and any other information of a similar nature) that after the
consummation of the transactions contemplated hereby will be valuable, special
and unique property of the Companies. Information received by the other party
or its representatives shall not be deemed Confidential Information and
afforded the protections of this Section 10 if, on the Closing Date, such
information has been (i) developed by the receiving party independently of the
disclosing party, (ii) rightfully obtained without restriction by the
receiving party from a third party, provided that the third party had full
legal authority to possess and disclose such information, (iii) publicly
available other than through the fault or negligence of the receiving party,
(iv) released without restriction by the disclosing party to anyone, including
the United States government, or (v) properly and lawfully known to the
receiving party at the time of its disclosure, as evidenced by written
documentation conclusively established to have been in the possession of the
receiving party on the date of such disclosure. Each of the parties hereto
agrees that it shall not disclose, and that it shall use its best efforts to
prevent disclosure by any other Person of, any such confidential information
to any Person for any purpose or reason whatsoever, except to authorized
representatives of the Companies who agree to be bound by this confidentiality
agreement. Notwithstanding, a party may use and disclose any such
confidential information to the extent that a party may become compelled by
Legal Requirements to disclose any such information; provided, however, that
such party shall use all reasonable efforts and shall have afforded the other
Companies the opportunity to obtain an appropriate protective order or other
satisfactory assurance of confidential treatment for any such information
compelled to be disclosed. In the event of termination of this Agreement,
each party shall use all reasonable efforts to cause to be delivered to the
other parties, and to retain no copies of, any documents, work papers and
other materials obtained by such party or on such party's behalf during the
conduct of the matters provided for in this Agreement, whether so obtained
before or after the execution hereof. Each of the Companies recognizes and
agrees that violation of any of the agreements contained in this Section 10
will cause irreparable damage or injury to the Companies, the exact amount of
which may be impossible to ascertain, and that, for such reason, among others,
the Companies shall be entitled to an injunction, without the necessity of
posting bond therefor, restraining any further violation of such agreements.
Such rights to any injunction shall be in addition to, and not in limitation
of, any other rights and remedies the Companies may have against each other.
The provisions of this Section 10.1 shall survive any termination of this
Agreement.
10.2 No Publicity. Until the Closing or the termination of this
Agreement in accordance with its terms, neither Allied nor SkyLynx shall,
directly or indirectly, issue any press release, or make any public statement,
concerning the transactions contemplated by this Agreement without the prior
written consent of Allied (in the case of such a release or statement by
SkyLynx) or of SkyLynx (in the case of such a release or statement by Allied).
This Section 10.2 shall not, however, preclude any party from making any
disclosure required by applicable law, and in the event any party, or any
officer, director, employee, agent or representative of a party, believes that
any press release, public statement or other disclosure is so required, such
party will notify and consult with the other parties with respect thereto as
promptly as is practicable under the circumstances.
SECTION 11: EXPENSES
Each of the parties will pay all costs and expenses of its performance
and compliance with this Agreement. Notwithstanding the foregoing, if the
Agreement is not consummated by reason of a default of one of the Companies
provided for in Section 8.1(c), then the expenses of each of the Companies in
connection with the transaction contemplated herein shall be paid by such
defaulting Company. In no event will any party to this Agreement be liable to
any other party for incidental damages, lost profits, income tax consequences,
lost savings or any other consequential damages, even if such party has been
advised of the possibility of such damages, or for punitive damages, resulting
from the breach of any obligation under this Agreement. The provisions of
this Section 11 shall survive any termination hereof.
SECTION 12: MISCELLANEOUS
12.1 Attorney's Fees. In any action at law or in equity or in any
arbitration proceeding, for declaratory relief or to enforce any of the
provisions or rights or obligations under this Agreement, the unsuccessful
party to such proceeding, shall pay the successful party or parties all
statutorily recoverable costs, expenses and reasonable attorneys' fees
incurred by the successful party or parties including without limitation
costs, expenses, and fees on any appeals and the enforcement of any award,
judgment or settlement obtained, such costs, expenses and attorneys' fees
shall be included as part of the judgment. The successful party shall be that
party who obtained substantially the relief or remedy sought, whether by
judgment, compromise, settlement or otherwise.
12.2 No Brokers. Allied represents and warrants to SkyLynx and SkyLynx
represents and warrants to Allied, that except as disclosed on Exhibit 12.2,
neither it nor any party acting on its behalf has incurred any liability,
either express or implied, to any "broker," "finder," financial advisor,
employee or similar person in respect of any of the transactions contemplated
hereby. Allied agrees to indemnify SkyLynx against, and hold it harmless
from, and SkyLynx agrees to indemnify Allied against, and hold it harmless
from, any liability, cost or expense (including, but not limited to, fees and
disbursements of counsel) resulting from any agreement, arrangement or
understanding made by such party with any third party, including employees of
SkyLynx, for brokerage, finders' or financial advisory fees or other
commissions in connection with this Agreement or the transactions contemplated
hereby. The provisions of this Section shall survive any termination of this
Agreement.
12.3 Survival and Incorporation of Representations. The representations,
warranties, covenants and agreements made herein or in any certificates or
documents executed in connection herewith shall survive the execution and
delivery thereof, and all statements contained in any certificate or other
document delivered by any party hereunder or in connection herewith shall be
deemed to constitute representations and warranties made by that party to this
Agreement.
12.4 Incorporation by Reference. All Exhibits to this Agreement and all
documents delivered pursuant to or referred to in this Agreement are herein
incorporated by reference and made a part hereof.
12.5 Parties in Interest. Nothing in this Agreement, whether express or
implied, is intended to, or shall, confer any rights or remedies under, or by
reason of, this Agreement, on any person other than the parties hereto and
their respective and proper successors and assigns and indemnitees pursuant to
Section 9. Nothing in this Agreement shall act to relieve or discharge the
obligation or liability of any third persons to any party to this Agreement.
12.6 Amendments and Waivers. This Agreement may not be amended, nor may
compliance with any term, covenant, agreement, condition or provision set
forth herein be waived (either generally or in a particular instance and
either retroactively or prospectively) unless such amendment or waiver is
agreed to in writing by all parties hereto.
12.7 Waiver. No waiver of any breach of any one of the agreements,
terms, conditions, or covenants of this Agreement by the parties shall be
deemed to imply or constitute a waiver of any other agreement, term,
condition, or covenant of this Agreement. The failure of any party to insist
on strict performance of any agreement, term, condition, or covenant, herein
set forth, shall not constitute or be construed as a waiver of the rights of
either or the other thereafter to enforce any other default of such agreement,
term, condition, or covenant; neither shall such failure to insist upon strict
performance be deemed sufficient grounds to enable either party hereto to
forego or subvert or otherwise disregard any other agreement, term, condition,
or covenants of this Agreement.
12.8 Governing Law - Construction. This Agreement, and the rights and
obligations of the respective parties, shall be governed by and construed in
accordance with the laws of the State of California except to the extent the
corporate law of the State of Colorado is applicable, excluding conflict of
law provisions which would act to apply the laws of another state.
Notwithstanding the preceding sentence, it is acknowledged that each party
hereto is being represented by, or has waived the right to be represented by,
independent counsel. Accordingly, the parties expressly agree that no
provision of this Agreement shall be construed against any party on the ground
that the party or its counsel drafted the provision. Nor may any provision of
this Agreement be construed against any party on the grounds that party caused
the provision to be present.
12.9 Limitation of Actions. No action may be brought by any party to
this Agreement to enforce any covenant made by any party hereto or to seek
damages or equitable relief arising from any claimed breach or nonperformance
of a covenant, representation, warranty or other performance provided for
herein unless such action is commenced within eighteen (18) months of the date
of Closing. The parties hereto agree to be bound by the aforesaid limitation
of actions notwithstanding the provisions of any applicable statutory
limitation of actions to the contrary.
12.10 Representations and Warranties. The representations and
warranties contained in Sections 4 and 6 of this Agreement shall survive the
Closing Date and shall remain operative in full force and effect for the
period of time set forth in Section 12.9 above regardless of any investigation
at any time made by or on behalf of either Allied or SkyLynx and shall not be
deemed merged in any document or instrument so executed or delivered by either
Allied or SkyLynx.
12.11 Notices. Any notice, communication, offer, acceptance,
request, consent, reply, or advice (herein severally and collectively, for
convenience, called "Notice"), in this Agreement provided or permitted to be
given, served, made, or accepted by any party or person to any other party or
parties, person or persons, hereunder must be in writing, addressed to the
party to be notified at the address set forth below, or such other address as
to which one party notifies the other in writing pursuant to the terms of this
Section, and must be served by (1) telefax or other similar electronic method,
or (2) depositing the same in the United States mail, certified, return
receipt requested and postage paid to the party or parties, person or persons
to be notified or entitled to receive same, or (3) delivering the same in
person to such party.
Notice shall be deemed to have been given immediately when sent by
telefax and confirmed received or other electronic method and seventy-two
hours after being deposited in the United States mail, or when personally
delivered in the manner herein above described. Notice provided in any manner
not specified above shall be effective only if and when received by the party
or parties, person or persons to be, or provided to be notified.
All notices, requests, demands and other communications required or
permitted under this Agreement shall be addressed as set forth below:
If Allied, to: Allied Wireless, Inc.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxx, President
Fax: (303)
With copy to: Xxxxxxxx X. Xxxxxx, Esq.
Xxxxxx & Xxxxxxx, llc
0000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
If NST/SkyLynx, to: SkyLynx Express Holdings, Inc./
Network Systems Technologies, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
With copy to: Xxxxxx Xxxxxxxx, Esq.
J.R. Xxxxxxxx, Inc.
00 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxxxxxxxxx 00000-0000
Fax: (000) 000-0000
Any party receiving a facsimile transmission shall be entitled to rely upon a
facsimile transmission to the same extent as if it were an original. Any
party may alter the address to which communications or copies are to be sent
by giving notice of such change of address in conformity with the provisions
of this Section for the giving of notice.
12.12 Fax/Counterparts. This Agreement may be executed by telex,
telecopy or other facsimile transmission, and such facsimile transmission
shall be valid and binding to the same extent as if it were an original.
Further, this Agreement may be signed in one or more counterparts, all of
which when taken together shall constitute the same documents. For all
evidentiary purposes, any one complete counter set of this Agreement shall be
considered an original.
12.13 Captions. The caption and heading of various sections and
paragraphs of this Agreement are for convenience only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
12.14 Severability. Wherever there is any conflict between any
provision of this Agreement and any Governmental Requirement or judicial
precedent, the latter shall prevail, but in such event the provisions of this
Agreement thus affected shall be curtailed and limited only to the extent
necessary to bring it within the requirement of the law. In the event that
any part, section, paragraph or clause of this Agreement shall be held by a
court of proper jurisdiction to be invalid or unenforceable, the entire
Agreement shall not fail on account thereof, but the balance of the Agreement
shall continue in full force and effect unless such construction would clearly
be contrary to the intention of the parties or would result in unconscionable
injustice.
12.15 Good Faith Cooperation and Additional Documents. The parties
shall use their best good faith efforts to fulfill all of the conditions set
forth in this Agreement over which it has control or influence. Each party
covenants and agrees to cooperate in good faith and to enter into and deliver
such other documents and papers as the other party reasonably shall require in
order to consummate the transactions contemplated hereby, provided in each
instance, any such document is in form and substance approved by the parties
and their respective legal counsel.
12.16 Specific Performance. The obligations of the parties under
Section 10 are unique. If either party should default in its obligations
under said Section, the parties each acknowledge that it would be extremely
difficult and impracticable to measure the resulting damages; accordingly, the
non-defaulting party, in addition to any other available rights and remedies,
may xxx in equity for injunction (mandatory or prohibitive) or specific
performance (all without the need to post a bond or undertaking of any
nature), and the parties each expressly waive the defense that a remedy at law
in damages is adequate.
12.17 Assignment. Neither party may directly or indirectly assign or
delegate, by operation of law or otherwise, all or any portion of
its/their/his rights, obligations or liabilities under this Agreement without
the prior written consent of all other parties, which consent may be withheld
in their respective sole and absolute discretion. Any purported assignment or
delegation without such consent shall be null and void.
For purposes of this Section, the term "Agreement" shall include this
Agreement and the Exhibits and other documents attached hereto or described in
this Section 12. This Agreement, and other documents delivered pursuant to
this Agreement, contain all of the terms and conditions agreed upon by the
parties relating to the subject matter of this Agreement and supersede all
prior and contemporaneous agreements, letters of intent, representations,
warranties, disclosures, negotiations, correspondence, undertakings and
communications of the parties, oral or written, respecting that subject
matter, including, without limitation, the letter dated July 14, 1997, between
Allied and SkyLynx, as amended prior to the date hereof.
12.18 Time. Time is of the essence of this Agreement and each of its
provisions.
IN WITNESS WHEREOF, the parties have signed the Agreement the date and
year first above written.
ALLIED WIRELESS, INC.,
a Colorado corporation
By: /s/ Xxxx X. Xxx
---------------------------------------
Xxxx X. Xxx, President
SKYLYNX EXPRESS HOLDINGS, INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------
Xxxxxxx X. Xxxxx
NETWORK SYSTEM TECHNOLOGIES, INC.,
a California corporation
By: /s/: Xxxxxxx X. Xxxxx
----------------------------------------
Xxxxxxx X. Xxxxx
