Exhibit 10.21
ASSET PURCHASE AGREEMENT
By and Among
ROCKY MOUNTAIN INTERNET, INC.,
a Delaware corporation,
STONEHENGE BUSINESS SYSTEMS CORPORATION
a Colorado corporation,
XXXX XXXXXX,
an individual,
and
XXXXXXX XXXXXX,
an individual
November 30, 1998
TABLE OF CONTENTS
ARTICLE I SALE AND PURCHASE OF SELLER'S ASSETS . . . . . . . . . . . . . . .1
1.1 Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . .1
(a) Receivables . . . . . . . . . . . . . . . . . . . . . . . . .2
(b) Inventories . . . . . . . . . . . . . . . . . . . . . . . . .2
(c) Tangible Personal Property. . . . . . . . . . . . . . . . . .2
(d) Real Property . . . . . . . . . . . . . . . . . . . . . . . .2
(e) Contracts and Other Agreements Relating to the Business . . .2
(f) Books, Records, Lists and Other Data. . . . . . . . . . . . .2
(g) Licenses, Permits . . . . . . . . . . . . . . . . . . . . . .3
(h) Proprietary Rights. . . . . . . . . . . . . . . . . . . . . .3
(i) General Intangibles . . . . . . . . . . . . . . . . . . . . .3
(j) Other Assets. . . . . . . . . . . . . . . . . . . . . . . . .3
1.2 Assumed Liabilities; No Assumption of Other Liabilities. . . . . .3
1.3 Title to the Purchased Assets; Documents of Conveyance . . . . . .4
1.4 Purchase Price; Adjustment . . . . . . . . . . . . . . . . . . . .4
1.5 Payment of Purchase Price. . . . . . . . . . . . . . . . . . . . .5
1.6 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.7 Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
1.8 Proration of Revenues and Expenses . . . . . . . . . . . . . . . .7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS. . . . . . . . . .8
2.1 Authorization of Transaction . . . . . . . . . . . . . . . . . . .8
2.2 Legal, Accounting and Other Fees and Expenses. . . . . . . . . . .8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . .8
3.1 Organization, Qualification, and Corporate Power . . . . . . . . .9
3.2 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . .9
3.3 Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . .9
3.4 Authorization of Transaction . . . . . . . . . . . . . . . . . . 10
3.5 Title to Assets. . . . . . . . . . . . . . . . . . . . . . . . . 10
3.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 10
3.7 Events Subsequent to July 31, 1998.. . . . . . . . . . . . . . . 10
3.8 Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . 13
3.9 Legal Compliance . . . . . . . . . . . . . . . . . . . . . . . . 13
3.10 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.11 Real Property and Personal Property. . . . . . . . . . . . . . . 15
3.12 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . 15
3.13 Tangible Assets. . . . . . . . . . . . . . . . . . . . . . . . . 18
3.14 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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3.15 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.16 Notes and Accounts Receivable. . . . . . . . . . . . . . . . . . 20
3.17 Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . 20
3.18 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.19 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.20 Product Warranty . . . . . . . . . . . . . . . . . . . . . . . . 21
3.21 Product Liability. . . . . . . . . . . . . . . . . . . . . . . . 21
3.22 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.23 Employee Benefits. . . . . . . . . . . . . . . . . . . . . . . . 22
3.24 Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.25 Environmental, Health, and Safety Matters. . . . . . . . . . . . 24
3.26 Certain Business Relationships with Seller . . . . . . . . . . . 26
3.27 Relationships with Suppliers and Carriers. . . . . . . . . . . . 26
3.28 Customers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.29 Legal, Accounting and Other Fees and Expenses. . . . . . . . . . 26
3.30 Receipt of Disclosure Documents. . . . . . . . . . . . . . . . . 26
3.31 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . . . . . 27
4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.2 Authorization of Transaction . . . . . . . . . . . . . . . . . . 27
4.3 Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . 28
4.4 Brokers' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.5 Purchaser Common Stock . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE V COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.1 Pre-Closing Covenants. . . . . . . . . . . . . . . . . . . . . . 28
(a) General . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(b) Notices and Consents. . . . . . . . . . . . . . . . . . . . 28
(c) Operation of Business . . . . . . . . . . . . . . . . . . . 29
(d) Preservation of Business. . . . . . . . . . . . . . . . . . 30
(e) Full Access . . . . . . . . . . . . . . . . . . . . . . . . 30
(f) Notice of Developments. . . . . . . . . . . . . . . . . . . 30
(g) Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . 30
(h) Repayment . . . . . . . . . . . . . . . . . . . . . . . . . 30
(i) Financial Statements. . . . . . . . . . . . . . . . . . . . 31
(j) Insurance Policies. . . . . . . . . . . . . . . . . . . . . 31
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5.2 Post-Closing Covenants . . . . . . . . . . . . . . . . . . . . . 31
(a) General . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(b) Litigation Support. . . . . . . . . . . . . . . . . . . . . 31
(c) Transition. . . . . . . . . . . . . . . . . . . . . . . . . 32
(d) Confidentiality . . . . . . . . . . . . . . . . . . . . . . 32
(e) Non-Solicitation. . . . . . . . . . . . . . . . . . . . . . 33
(f) Covenant Not to Compete . . . . . . . . . . . . . . . . . . 34
(g) Release of Liens. . . . . . . . . . . . . . . . . . . . . . 34
(h) Public Information Requirement. . . . . . . . . . . . . . . 34
ARTICLE VI CONDITIONS TO OBLIGATION OF PARTIES TO CONSUMMATE CLOSING . . . 35
6.1 Conditions to Obligation of Purchaser. . . . . . . . . . . . . . 35
6.2 Conditions to Obligation of Shareholders and Seller. . . . . . . 37
ARTICLE VII REMEDIES FOR BREACH. . . . . . . . . . . . . . . . . . . . . . 37
7.1 Survival of Representations and Warranties . . . . . . . . . . . 37
7.2 Indemnification Provisions for Benefit of Purchaser. . . . . . . 38
7.3 Indemnification Provisions for Benefit of Seller and
Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.4 Matters Involving Third Parties. . . . . . . . . . . . . . . . . 39
7.5 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.6 Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE VIII TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.1 Termination of Agreement. . . . . . . . . . . . . . . . . . . . 41
8.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE IX MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.1 Press Releases and Public Announcements. . . . . . . . . . . . . 41
9.2 No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . 42
9.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 42
9.4 Succession and Assignment. . . . . . . . . . . . . . . . . . . . 42
9.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.8 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.9 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . 43
9.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.11 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.12 Incorporation of Exhibits and Schedules. . . . . . . . . . . . . 44
9.13 Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . 44
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9.14 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.15 Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 45
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EXHIBITS
Exhibit A - Xxxx of Sale and Assignment Agreement
Exhibit B - Seller and Shareholders Closing Certificate
Exhibit C - Employment Agreement for Xxxx Xxxxxx
Exhibit D - Employment Agreement for Xxxxxxx Xxxxxx
Exhibit E - Form of Opinion of Seller's and Shareholders' Counsel
SCHEDULES
Schedule 1.1 - Excluded Assets
Schedule 1.1(g) - Licenses and Permits
Schedule 1.2 - Assumed Liabilities
Schedule 1.3 - Permitted Encumbrances
Schedule 1.7 - Allocation Schedule
Schedule 3.1 - Seller Articles of Incorporation; Bylaws; Officers and
Directors
Schedule 3.3 - Required Notices and Consents
Schedule 3.10 - Tax Matters
Schedule 3.11 - Real and Personal Property
Schedule 3.12 - Intellectual Property
Schedule 3.15 - Contracts
Schedule 3.18 - Insurance
Schedule 3.19 - Litigation
Schedule 3.20 - Product Warranties
Schedule 3.23 - Employee Benefits
Schedule 3.24 - Guaranties
Schedule 3.25 - Environmental Health and Safety Matters
Schedule 3.26 - Certain Business Relationships
Schedule 3.27 - Supplier and Carrier Relationships
Schedule 3.28 - Customers
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement") is entered into as of
November 30, 1998, by and among ROCKY MOUNTAIN INTERNET, INC., a Delaware
corporation (the "Purchaser"), STONEHENGE BUSINESS SYSTEMS CORPORATION, a
Colorado corporation (the "Seller"), and XXXX XXXXXX, an individual and a
shareholder of Seller, XXXXXXX XXXXXX, an individual and a shareholder of Seller
(collectively, the "Shareholders"), on behalf of themselves and the other
shareholders of Seller. Purchaser, Seller and Shareholders are each
individually referred to as a "Party" and collectively referred to as the
"Parties."
RECITALS
A. Seller is engaged in the business of providing Internet and networking
services (such business of Seller referred to herein as the "Business").
B. Seller owns and leases certain assets and properties, real and
personal, tangible and intangible, which are used by Seller in the conduct of
the Business.
C. Subject to the terms and conditions contained in this Agreement,
Purchaser desires to acquire from Seller, and Seller desires to transfer to
Purchaser, substantially all of Seller's assets used in the operation of the
Business (the "Acquisition").
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, the representations, warranties, and covenants herein contained,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Parties agree as follows.
ARTICLE I
SALE AND PURCHASE OF SELLER'S ASSETS
1.1 PURCHASED ASSETS. On the terms and subject to the conditions
contained herein, Purchaser shall acquire from Seller at the Closing (as defined
in Section 1.6 below) all of Seller's right, title and interest in and to all
assets used by Seller in the Business existing as of the Effective Date (as
defined in Section 1.6 below), except for the assets described on SCHEDULE 1.1
attached hereto (the "Excluded Assets"), free and clear of all liens, claims,
security interests,
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encumbrances or rights of others, except for the Permitted Encumbrances (as
defined in Section 1.3 below). Without limiting the generality of the
foregoing, the assets to be purchased by Purchaser (collectively, the
"Purchased Assets") shall include the following:
(a) RECEIVABLES. All accounts receivable, notes receivable and
similar receivables accruing from the Business and existing as of the Effective
Date or accruing after the Effective Date.
(b) INVENTORIES. All inventory items held by Seller and reflected on
Seller's unaudited consolidated balance sheet as of the end of the month
immediately preceding the Effective Date (the "Ending Balance Sheet"), plus any
inventory items acquired by Seller in the ordinary course of business after the
date of the Ending Balance Sheet but prior to Closing and minus any inventory
items sold by Seller in the ordinary course of business after the date of the
Ending Balance Sheet but prior to Closing. Inventory items shall include,
without limitation, finished goods, work in progress, raw materials and
supplies, but shall not include inventory items that are not saleable, are
obsolete or are damaged.
(c) TANGIBLE PERSONAL PROPERTY. All tangible personal property, such
as equipment, machinery, tools, manufactured and purchased parts, supplies,
furniture, fixtures, leasehold improvements, non-inventoried stores and
supplies, trucks, vans, automobiles, forklifts, and other vehicles, computers
and peripherals, any related documentation or manuals and Seller's rights under
related warranties, and all maintenance and other operating supplies (whether
inventoried or not) and other miscellaneous tangible personal property of Seller
used in the Business, whether or not located at Seller's principal place of
business at the Closing Date (as defined in Section 1.6 below) and whether or
not reflected on the Ending Balance Sheet, a list of which is set forth on
SCHEDULE 3.11 (collectively, the "Personal Property").
(d) REAL PROPERTY. All real property and interests in real property,
such as leaseholds, subleaseholds, options or rights therein, and all plant,
warehouse, office facilities, buildings, easements, rights of way and
appurtenances thereon and thereto and other improvements and fixtures attached
to such real property owned by Seller (collectively, the "Real Property"). All
Real Property is identified as owned or leased and described on SCHEDULE 3.11
attached hereto.
(e) CONTRACTS AND OTHER AGREEMENTS RELATING TO THE BUSINESS. All
contracts (written or oral), licenses, leases, subleases, instruments, security
interests and other agreements or arrangements of Seller that relate to the
Business, including all agreements with customers, as set forth on SCHEDULE 3.15
attached hereto, and all insurance policies relating to the Purchased Assets, as
set forth on SCHEDULE 3.18 attached hereto.
(f) BOOKS, RECORDS, LISTS AND OTHER DATA. All files, books, records,
invoices, accounts, surveys, customer lists and records, supplier lists,
catalogs, price lists, marketing and
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advertising information, purchasing histories, profiles and materials,
technical bulletins, books and records of account and other financial,
customer and credit data, and all computer programs, software, source code,
hardware, firmware, tapes and other materials used to store, record or
produce such data, owned, leased or licensed by Seller and used in or useful
to the Business; PROVIDED, HOWEVER, that the Purchased Assets shall not
include the corporate charter or minute books of Seller.
(g) LICENSES, PERMITS. All applicable governmental licenses,
permits, approvals and authorizations that relate to the operation of the
Business (to the extent transferable, a complete list of which is set forth on
SCHEDULE 1.1(g).
(h) PROPRIETARY RIGHTS. All technology, mechanical processes,
computer software used in the Business (including all inventories of computer
program code for such software, all third-party software licensed by Seller, any
related documentation or manuals and Seller's rights under all related
warranties), source code, data and documentation (including electronic media),
trade secrets (technical and non-technical), know-how, customer lists, pricing
and cost information, business and marketing plans and proposals and other
confidential business information and proprietary rights, including, without
limitation, inventions, patents, patent disclosures, copyrights, copyrightable
works, trademarks, service marks, trade dress, logos, domain names, trade names,
IP addresses, corporate names and licenses or other agreements to or with third
parties regarding the foregoing, which are used in or useful to the Business
(including applications and registrations and the goodwill associated with any
such patent, copyright, trademark, service xxxx, trade dress, logo, domain name,
trade name or corporate name and including the name "Stonehenge"), all other
proprietary rights and all copies and tangible embodiments thereof (in whatever
form or medium), along with all licenses and sublicenses granted and obtained
with respect to such proprietary rights, remedies against infringements thereof
and rights to protection of interests therein under the laws of all
jurisdictions. SCHEDULE 3.12 sets forth a complete list of such proprietary
rights.
(i) GENERAL INTANGIBLES. All general intangibles used by or useful
to the Business including, without limitation, all goodwill as a going concern
and any and all causes of action or claims of Seller against any third party
that arose or will arise in connection with the Business prior to the Effective
Date.
(j) OTHER ASSETS. All other assets of Seller used in the conduct of
the Business, whether or not reflected in the Ending Balance Sheet or on the
books or records of Seller or the Business.
1.2 ASSUMED LIABILITIES; NO ASSUMPTION OF OTHER LIABILITIES.
(a) Notwithstanding anything to the contrary contained in this
Agreement, except for the liabilities of Seller expressly set forth on SCHEDULE
1.2 (the "Assumed Liabilities"),
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which Purchaser shall assume effective as of the Effective Date, Purchaser
shall not assume or be liable for any of Seller's debts, liabilities and
obligations of any nature whatsoever, whether accrued, absolute or
contingent, whether known or unknown, whether due or to become due and
whether related to the Purchased Assets or otherwise, including but not
limited to, all income and capital gains taxes incurred as a result of the
transactions contemplated hereby, and costs, expenses and liabilities of the
Business incurred on or prior to the Effective Date notwithstanding when any
billing statement therefor is received (collectively, the "Liabilities"); and
Seller shall retain and remain responsible for all such Liabilities.
(b) Seller shall perform and discharge all obligations in respect of
all its employees for its own account through the Closing Date including,
without limitation, discharging all wages and salaries of the employees and all
other costs and expenses related to their employment (including, without
limitation, any taxes, accrued holiday pay, accrued bonus, and contributions to
retirement benefit plans or other sums payable in respect of service prior to
such date). The aggregate amount of any such obligations which arise on or
after the Effective Date shall be included in the Seller's Reimbursement Amount
(as defined in Section 1.8 below).
1.3 TITLE TO THE PURCHASED ASSETS; DOCUMENTS OF CONVEYANCE. At the
Closing, Seller shall convey all of its right, title and interest in and to the
Purchased Assets to Purchaser, free and clear of all liabilities, obligations,
liens, encumbrances and rights of others, excepting only the liens, claims,
encumbrances or rights of others set forth on SCHEDULE 1.3 attached hereto (the
"Permitted Encumbrances"). Title to the Purchased Assets shall be conveyed by
Seller to the Purchaser pursuant to a Xxxx of Sale and Assignment Agreement, in
the form of EXHIBIT A attached hereto, and by such other documents as are
reasonably acceptable to counsel for Purchaser in accordance with the terms
hereof. Each of the parties hereto agrees to use its best efforts to take or
cause to be taken all action, and to do, or cause to be done, all things
reasonably necessary, proper or advisable, whether before or after Closing, to
ensure that the transfer of title to the Purchased Assets to Purchaser occurs as
contemplated hereunder.
1.4 PURCHASE PRICE; ADJUSTMENT.
(a) The purchase price for the Purchased Assets shall be $450,000,
subject to adjustment as set forth in Section 1.4(b) below (the "Purchase
Price").
(b) By January 31, 1999, the Purchase Price shall be adjusted as
follows: if, as of the Measurement Date (as defined below), the Business does
not have at least 2,000 non-dedicated accounts and 13 dedicated access accounts
delivering monthly revenues (including those generated by any new accounts
established in the Yuma, Colorado and Sterling, Colorado markets after the
Effective Date) of at least $45,200, with recurring monthly revenues of at least
$41,200 (the "Recurring Revenue Target") and non-recurring monthly
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revenues of at least $4,000 (the "Non-Recurring Revenue Target") (with any
recurring monthly revenues in excess of the Recurring Revenue Target to be
counted toward the Non-Recurring Revenue Target), the Purchase Price shall be
decreased by the amount equal to the sum of (i) the product of 9.15 times the
amount by which the aggregate recurring monthly revenues are less than the
Recurring Revenue Target (or zero, if the aggregate recurring monthly
revenues meet or exceed the Recurring Revenue Target) and (ii) the amount by
which the aggregate non-recurring monthly revenues are less than the
Non-Recurring Revenue Target (or zero, if the aggregate non-recurring monthly
revenues meet or exceed the Non-Recurring Revenue Target). The "Measurement
Date" shall be the date on which the Business' customers are billed for
services to be provided in the month of December 1998.
If the Parties, acting in good faith, are unable to agree upon the actual
amounts of any adjustment to the Purchase Price pursuant to this Section 1.4(b)
within thirty (30) days of the Measurement Date, then Seller and Purchaser shall
each select an accounting firm and the two accounting firms selected shall
select a third accounting firm (such third accounting firm referred to herein as
the "Auditors") to conduct a review audit and determine such amounts in
accordance with this Section 1.4(b). The decision of the Auditors shall be
binding upon the Parties and the fees and expenses of the Auditors shall be
borne equally by Seller and Purchaser.
1.5 PAYMENT OF PURCHASE PRICE.
(a) The Purchase Price shall be paid in the form of shares (the
"Purchaser Shares") of Purchaser's common stock, par value $.001 per share (the
"Purchaser Common Stock"), which shares shall be valued at the average of the
closing trading prices of Purchaser's Common Stock on the Nasdaq SmallCap
National Market for the ten (10) trading days immediately prior to the Effective
Date. The Purchaser Shares issued shall be registered when issued under the
Securities Act of 1933, as amended (the "Securities Act").
(b) The Purchase Price shall be paid as follows:
(i) 80% of the Purchaser Shares shall be issued at Closing; and
(ii) 20% of the Purchaser Shares shall be deposited (the "Escrow
Deposit") with a mutually acceptable escrow agent (the "Escrow Agent")
pursuant to the terms of an escrow agreement (the "Escrow
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Agreement") by and among Purchaser, Seller, the Shareholders and the
Escrow Agent. The Escrow Deposit shall be distributed as follows:
(A) upon receipt of written notice from the Purchaser that
all liens set forth as liens to be released in connection with
the Acquisition on SCHEDULE 1.3 attached hereto have been
released, the Escrow Agent shall distribute 50% of the Escrow
Deposit to Seller;
(B) upon receipt of written notice executed by Purchaser
and Seller setting forth the determination of the
Purchase Price adjustment pursuant to Section 1.4(b) above, the
Escrow Agent shall distribute to Purchaser the number of shares
the value of which equals any downward adjustment of the Purchase
Price (with such shares being valued in the same manner as set
forth in Section 1.5(a) above; and
(C) within five (5) business days after the date which is
eighteen (18) months after the Closing Date, Purchaser shall
instruct the Escrow Agent to disburse to the Seller from the
Escrow Deposit that number of Purchaser Shares remaining after
reducing such number of shares by the number of shares the value
of which equals the aggregate amount of any and all damages
awarded to Purchaser as of such date pursuant to the provisions
of this Agreement as a result of any breach of the Seller's
and/or Shareholders' representations and warranties contained in
this Agreement, provided, that Purchaser shall give prompt notice
of any such breach to Seller and allow Seller and Shareholders
ten (10) days from the date of such notice to cure such breach,
so long as the ten-day cure period does not detrimentally affect
Purchaser. Such shares shall be valued in the same manner as set
forth in Section 1.5(a) above.
1.6 CLOSING. The consummation of the transactions contemplated hereby
(the "Closing") shall occur as soon as reasonably practicable after the date
hereof, as determined by the Parties, at the offices of Purchaser's counsel, or
by facsimile should the Parties so agree, to be effective as of November 1, 1998
(the "Effective Date"). The actual date of Closing is referred to herein as the
"Closing Date."
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1.7 ALLOCATION. The Purchase Price shall be allocated among the Purchased
Assets for all purposes (including financial accounting and tax purposes) in
accordance with the allocation schedule set forth on SCHEDULE 1.7 attached
hereto.
1.8 PRORATION OF REVENUES AND EXPENSES.
(a) Seller shall be entitled to all revenues from, and responsible
for all expenses incurred in connection with, the Purchased Assets prior to the
Effective Date. Beginning the Effective Date, Purchaser shall be entitled to
all revenues from, and responsible for all expenses incurred in connection with,
the Purchased Assets.
(b) Seller shall be entitled to reimbursement from Purchaser (i) for
all expenses paid for by Seller on or after the Effective Date in connection
with the Purchased Assets and (ii) for all expenses of the Business paid for by
Seller prior to the Effective Date for periods on or after the Effective Date,
including the pro rata post-October 31, 1998 portion of any expenses which
properly apply to periods commencing prior to and ending on or after the
Effective Date (such amounts collectively referred to herein as the "Seller's
Reimbursement Amount").
(c) Purchaser shall be entitled to receive from Seller all amounts
received by Seller as prepayment for services provided to the customers of the
Business subsequent to the Effective Date (the "Purchaser's Prepayment Share").
(d) Within thirty (30) days after Closing, Seller shall provide
Purchaser, for Purchaser's review and approval, a detailed accounting of all
revenues and expenses of the Business, based upon which Seller and Purchaser
shall calculate the Seller's Reimbursement Amount and the Purchaser's Prepayment
Share. If the Seller's Reimbursement Amount is greater than the Purchaser's
Prepayment Share, Purchaser, within ten (10) business days after such
accounting, shall pay Seller in cash the amount by which the Seller's
Reimbursement Amount exceeds the Purchaser's Prepayment Share. If the
Purchaser's Prepayment Share is greater than the Seller's Reimbursement Amount,
Seller, within ten (10) business days after such accounting, shall pay Purchaser
in cash the amount by which the Purchaser's Prepayment Share exceeds the
Seller's Reimbursement Amount.
7
(e) In the event Seller and Purchaser are unable to agree on the
calculations of the Seller's Reimbursement Amount and the Purchaser's
Prepayment Share within the thirty-day period after Closing, they shall
appoint the Auditors, selected according to the procedure set forth in
Section 1.4(b) above, to conduct a review audit and determine such amounts in
accordance with this Section 1.8. The decision of the Auditors shall be
binding upon Seller and Purchaser and the fees and expenses of the Auditors
shall be borne equally by Seller and Purchaser.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
To induce Purchaser to enter into this Agreement and consummate this
transaction, each of the Shareholders, jointly and severally, represents and
warrants to Purchaser that the statements contained in this Article II are
true, correct and complete as of the date of this Agreement and will be true,
correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Article II).
2.1 AUTHORIZATION OF TRANSACTION. Shareholders have the legal capacity
and the full power and authority to execute and deliver this Agreement and to
perform the obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of each of the Shareholders, enforceable in
accordance with its terms and conditions. Shareholders need not give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order to consummate the
transactions contemplated by this Agreement.
2.2 LEGAL, ACCOUNTING AND OTHER FEES AND EXPENSES. All of
Shareholders' legal, accounting and other fees, costs and expenses associated
with this transaction shall be borne by them; provided, however, Purchaser
and Seller shall share equally the costs associated with the Escrow
Agreement. None of the Shareholders has any liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
To induce Purchaser to enter into this Agreement and consummate this
transaction, Seller and each of the Shareholders, jointly and severally,
8
represent and warrant to Purchaser that the statements contained in this
Article III are true, correct and complete as of the date of this Agreement
and will be true, correct and complete as of the Closing Date (as though made
then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article III).
3.1 ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. The Seller is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. Seller is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required other than where the failure to be duly
qualified would not have a material adverse effect. Seller has full power
and authority and all licenses, permits, and authorizations necessary to
carry on the businesses in which it is engaged and to own and use the
properties owned and used by it other than where the failure to have such
would not have a material adverse effect. SCHEDULE 3.1 has attached thereto
(i) true and correct copies of the Seller's Articles of Incorporation and all
amendments thereto; (ii) true and correct copies of the Seller's bylaws and
all amendments thereto; and (iii) a list of the current directors and
officers of Seller. Seller is not in default under or in violation of any
provision of its Articles of Incorporation or bylaws. Seller has no
predecessors.
3.2 SUBSIDIARIES. Seller has no direct or indirect interest in any
corporation, partnership, limited liability company, joint venture or other
entity. The Business is conducted by Seller and not through any other party
or entity.
3.3 NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which Seller is subject or any
provision of the Articles of Incorporation or bylaws of Seller or (ii)
conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract,
lease, license, instrument, or other arrangement to which Seller is a party
or by which it is bound or to which any of its assets is subject (or result
in the imposition of any security interest upon any of its assets). Except
as set forth on SCHEDULE 3.3, Seller need not give any notice to, make any
filing with, or obtain any authorization, consent or approval of any
governmental agency or third party in order for the Parties to
9
consummate the transactions contemplated by this Agreement, including without
limitation the assignment of the contracts and other agreements set forth on
SCHEDULE 3.15.
3.4 AUTHORIZATION OF TRANSACTION. Seller has the full power and
authority to execute and deliver this Agreement and to perform the
obligations hereunder. This Agreement constitutes the valid and legally
binding obligation of Seller, enforceable in accordance with its terms and
conditions. Seller need not give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions contemplated by
this Agreement. This Agreement has been approved by the Board of Directors
and the shareholders of Seller, and no other corporate proceedings are
necessary to authorize Seller's execution and delivery of this Agreement or
Seller's consummation of the transactions contemplated hereby. Seller has
delivered, or prior to the shareholders' vote to approve the transactions
contemplated hereby will deliver, to its shareholders copies of the
Prospectus (as defined in Section 3.30 below), and Seller believes it has
provided adequate information to its shareholders, with which its
shareholders can make an informed decision regarding the approval of the
transactions contemplated hereby.
3.5 TITLE TO ASSETS. Seller has good and marketable title to, or a
valid leasehold interest in, the properties and assets used by it, located
on its premises, or shown on the Ending Balance Sheet or acquired after the
date thereof, free and clear of all liens, claims, security interests,
encumbrances or rights of others, except for the Permitted Encumbrances.
3.6 FINANCIAL STATEMENTS. Seller and Shareholders have provided or
shall provide prior to Closing copies of the following financial statements
(collectively, the "Financial Statements"): (i) unaudited financial
statements for the fiscal years ended December 31, 1996 and 1997 and for the
ten (10) months ended October 31, 1998; (ii) accounts payable and accounts
receivable current within two (2) business days of Closing; and (iii) the
Ending Balance Sheet. The Financial Statements have been prepared using the
accrual method of accounting and accurately reflect the financial condition
and operating results of Seller throughout the periods covered thereby.
3.7 EVENTS SUBSEQUENT TO JULY 31, 1998. Since July 31, 1998, there has
not been any material adverse change in the business, financial condition,
operations, results of operations, or future prospects of Seller. Without
limiting the generality of the foregoing since that date:
10
(a) Seller has not sold, leased, transferred, or assigned any of
its assets, tangible or intangible, other than for a fair consideration in
the ordinary course of business;
(b) Seller has not entered into any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and licenses)
involving more than $10,000 or outside the ordinary course of business;
(c) Seller has not accelerated, terminated, modified, or canceled
any agreement, contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) involving more than $10,000 to which Seller
is a party or by which it is bound;
(d) Seller has not imposed any security interest upon any of its
assets, tangible or intangible;
(e) Seller has not made any capital expenditure (or series of
related capital expenditures) having either an individual cost in excess of
$2,500, or an aggregate cost in excess of $10,000 or outside the ordinary
course of business;
(f) Seller has not made any capital investment in, any loan to, or
any acquisition of the securities or assets of, any other person (or series
of related capital investments, loans, and acquisitions);
(g) Seller has not issued any note, bond, or other debt security
or created, incurred, assumed, or guaranteed any indebtedness for borrowed
money or capitalized lease obligation either involving more than $10,000 or
outside the ordinary course of business;
(h) Seller has not delayed or postponed the payment of accounts
payable and other liabilities outside the ordinary course of business;
(i) Seller has not canceled, compromised, waived, or released any
right or claim (or series of related rights and claims);
(j) Seller has not granted any license or sublicense of any rights
under or with respect to any intellectual property;
11
(k) there has been no change made or authorized in the Articles of
Incorporation or bylaws of Seller;
(l) Seller has not issued, sold, or otherwise disposed of any of
its capital stock, or granted any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise) any of
its capital stock;
(m) Seller has not declared, set aside, or paid any dividend or
made any distribution with respect to its capital stock (whether in cash or
in kind) or redeemed, purchased, or otherwise acquired any of its capital
stock;
(n) Seller has not experienced any damage, destruction, or loss
(whether or not covered by insurance) to its property;
(o) Seller has not made any loan to, or entered into any other
transaction with, any of its directors, officers, and employees outside the
ordinary course of business;
(p) Seller has not entered into any employment contract or
collective bargaining agreement, written or oral, or modified the terms of
any existing such contract or agreement;
(q) Seller has not granted any increase in the base compensation
of any of its directors, officers, and employees outside the ordinary course
of business;
(r) Seller has not adopted, amended, modified, or terminated any
bonus, profit-sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its directors, officers, and employees
(or taken any such action with respect to any (i) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan (as such term is defined in the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") Section 3(2)), (ii) qualified
defined contribution retirement plan or arrangement which is an Employee
Pension Benefit Plan, (iii) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan (as such term is defined in ERISA Section 3(37)), or (iii)
Employee Welfare Benefit Plan (as such term is defined in ERISA Section 3(l))
or material fringe benefit plan or program (each an "Employee Benefit Plan");
12
(s) Seller has not made any other change in employment terms for
any of its directors, officers, and employees outside the ordinary course of
business;
(t) Seller has not made or pledged to make any charitable or other
capital contribution;
(u) there has not been any other material occurrence, event,
incident, action, failure to act, or transaction outside the ordinary course
of business involving Seller; and
(v) Seller has not committed to any of the foregoing.
3.8 UNDISCLOSED LIABILITIES. Seller has no liability (and there is no
basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against Seller giving or
that could give rise to any liability), except for (i) liabilities set forth
on the face of the July 31, 1998 balance sheet (rather than in any notes
thereto) and (ii) liabilities which have arisen after the July 31, 1998
balance sheet in the ordinary course of business (none of which results from,
arises out of, relates to, is in the nature of, or was caused by any breach
of contract, breach of warranty, tort, infringement, or violation of law).
3.9 LEGAL COMPLIANCE. Seller, its predecessors and affiliates, have
complied with all applicable laws (including rules, regulations, codes,
plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state or local governments (and all agencies
thereto), and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced against
Seller alleging any failure so to comply other than where the failure to
comply would not have a material adverse effect.
3.10 TAX MATTERS. Except as set forth on SCHEDULE 3.10 :
(a) Seller has filed all tax returns that it was required to file.
All such tax returns were true, correct and complete in all respects. All
taxes owed by Seller (whether or not shown on any tax return) have been paid.
Seller currently is not the beneficiary of any extension of time within
which to file any tax return. No claim has ever been made by an authority in
a jurisdiction where Seller does not file tax returns that it is or may be
subject to taxation by
13
that jurisdiction. There are no security interests on any of the assets of
Seller that arose in connection with any failure (or alleged failure) to pay
any tax.
(b) Seller has withheld and paid all taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party.
(c) Neither Shareholders nor any director or officer (or employee
responsible for tax matters) of Seller expects any authority to assess any
additional taxes for any period for which tax returns have been filed. There
is no dispute or claim concerning any tax liability of Seller either (i)
claimed or raised by any authority in writing or (ii) as to which the
Shareholders, directors and officers (and employees responsible for tax
matters) of Seller has knowledge based upon personal contact with any agent
of such authority. SCHEDULE 3.10 lists all federal, state, and local income
tax returns filed with respect to Seller for taxable periods ended on or
after December 31, 1995, indicates those tax returns that have been audited,
and indicates those tax returns that currently are the subject of audit.
Shareholders have delivered to Purchaser correct and complete copies of all
federal and state income tax returns, examination reports, and statements of
deficiencies assessed against or agreed to by Seller since December 31, 1995.
(d) Seller has not waived any statute of limitations in respect of
taxes or agreed to any extension of time with respect to a tax assessment or
deficiency.
(e) Seller has not made any payments, is not obligated to make any
payments, or is not a party to any agreement that under certain circumstances
could obligate it to make any payments that will not be deductible under Code
Section 280G. Seller has disclosed on its federal income tax returns all
positions taken therein that could give rise to a substantial understatement
of federal income tax within the meaning of Code Section 6662. Seller is not
a party to any tax allocation or sharing agreement. Seller (i) has not been
a member of an affiliated group filing a consolidated federal income tax
return or (ii) has no liability for the taxes of any person under Reg.
Section 1.1502-6 (or any similar provision of state or local law), as a
transferee or successor, by contract, or otherwise.
(f) The unpaid taxes of Seller (i) did not, as of the Ending Balance
Sheet, exceed the reserve for tax liability (rather than any reserve for
deferred taxes established to reflect timing differences between book and tax
14
income) set forth on the face of the Ending Balance Sheet (rather than in any
notes thereto) and (ii) do not exceed that reserve as adjusted for the
passage of time through the Closing Date in accordance with the past custom
and practice of Seller in filing its tax return.
3.11 REAL PROPERTY AND PERSONAL PROPERTY. SCHEDULE 3.11 sets forth a
list containing a description of all interests in Real Property (including,
without limitation, leasehold interests) and Personal Property owned or
leased by Seller and utilized in the conduct of the Business. Seller has good
and marketable title to (or leasehold interests in) and rightful possession
of all of its Real and Personal Property, tangible and intangible, including
those reflected in the Ending Balance Sheet and all assets acquired by Seller
since the date of the Ending Balance Sheet. Such Real and Personal Property
are owned by Seller free and clear of any liens, encumbrances, security
interests, claims or rights of another (including any rights of a subsidiary
or other affiliate). Seller's systems are fully operational; and outdated or
defunct equipment constitute an immaterial part of the Purchased Assets. The
Purchased Assets reflected in the Ending Balance Sheet, and any
fully-depreciated assets, acquired since the date of the Ending Balance
Sheet, constitute all the assets of Seller and constitute all the assets and
properties that are necessary to permit Purchaser to continue to conduct the
Business after the Closing in the same manner in which the Business is
presently being conducted. No covenants, easements, rights-of-way, or
regulations of record impair the uses of the respective properties of Seller
for the purposes for which they are now operated. The leases identified on
SCHEDULE 3.11 are in full force and effect and have not been breached or
terminated, modified, amended or superseded by any agreement, contract or
commitment not identified therein.
3.12 INTELLECTUAL PROPERTY.
(a) Seller owns or has the rights to use pursuant to license,
sublicense, agreement, or permission all intellectual property necessary for
the operation of the Business of Seller as presently conducted. Each item of
intellectual property owned or used by Seller immediately prior to the
Closing hereunder, as set forth on SCHEDULE 3.12, except for certain assets
expressly excluded from this representation on SCHEDULE 3.12, will be owned
or available for use by Purchaser on identical terms and conditions
immediately subsequent to the Closing hereunder. Seller has taken all
necessary actions to maintain and protect each item of intellectual property
that it owns or uses.
(b) Seller has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any intellectual
property rights of third parties, and Shareholders, directors and officers
(and employees with responsibility for intellectual property matters) of
Seller have not received any charge, complaint, claim, demand, or notice
alleging any such interference,
15
infringement, misappropriation, or violation (including any claim that Seller
must license or refrain from using any intellectual property rights of any
third party). To the knowledge of the Shareholders, directors and officers
(and employees with responsibility for intellectual property matters) of
Seller, no third party has interfered with, infringed upon, misappropriated,
or otherwise come into conflict with any intellectual property rights of
Seller.
(c) SCHEDULE 3.12 identifies each patent or registration which has
been issued to Seller with respect to any of its intellectual property,
identifies each pending patent application or application for registration
which Seller has made with respect to any of its intellectual property, and
identifies each license, agreement, or other permission which Seller has
granted to any third party with respect to any of its intellectual property
(together with any exceptions). Seller and Shareholders have delivered to
Purchaser true, correct and complete copies of all such patents,
registrations, applications, licenses, agreements, and permissions (as
amended to date) and have made available to Purchaser true, correct and
complete copies of all other written documentation evidencing ownership and
prosecution (if applicable) of each such item. SCHEDULE 3.12 also identifies
each trade name or unregistered trademark used by Seller in connection with
its Business. With respect to each item of intellectual property required to
be identified on SCHEDULE 3.12:
(i) Seller possesses all right, title, and interest in and
to the item, free and clear of any security interest, license, or other
restriction;
(ii) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(iii) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the knowledge of the
Shareholders, directors and officers (and employees with responsibility for
intellectual property matters) of Seller, is threatened which challenges the
legality, validity, enforceability, use, or ownership of the item; and
(iv) Seller has not agreed to indemnify any person for or
against any interference, infringement, misappropriation, or other conflict
with respect to the item.
16
(d) SCHEDULE 3.12 identifies each item of intellectual property
that any third party owns and that Seller uses pursuant to license,
sublicense, agreement, or permission. The Seller and Shareholders have
delivered to Purchaser true, correct and complete copies of all such
licenses, sublicenses, agreements, and permissions (as amended to date).
With respect to each item of intellectual property required to be identified
on SCHEDULE 3.12, except for certain assets expressly excluded from this
representation on SCHEDULE 3.12:
(i) the license, sublicense, agreement, or permission
covering the item is legal, valid, binding, enforceable, and in full force
and effect;
(ii) the license, sublicense, agreement, or permission will
continue to be legal, valid, binding, enforceable, and in full force and
effect on identical terms following the consummation of the transactions
contemplated hereby;
(iii) no party to the license, sublicense, agreement, or
permission is in breach or default, and no event has occurred which with
notice or lapse of time would constitute a breach or default or permit
termination, modification, or acceleration thereunder;
(iv) no party to the license, sublicense, agreement, or
permission has repudiated any provision thereof;
(v) with respect to each sublicense, the representations and
warranties set forth in subsections (i) through (iv) above are true and
correct with respect to the underlying license;
(vi) the underlying item of intellectual property is not
subject to any outstanding injunction, judgment, order, decree, ruling, or
charge;
(vii) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the knowledge of the
Shareholders, directors and officers (and employees with responsibility for
intellectual property matters) of Seller, is threatened which challenges the
legality, validity, or enforceability of the underlying item of intellectual
property; and
17
(viii) Seller has not granted any sublicense or similar right
with respect to the license, sublicense, agreement, or permission.
(e) Except as set forth on SCHEDULE 3.12, Seller has no patents or
registrations which have been issued to or applied for by Seller with respect
to any of its intellectual property. Seller has not granted any licenses,
agreements, or permission to any third party with respect to any of its
intellectual property. SCHEDULE 3.12 identifies each domain name, IP
address, trade name or unregistered trademark used by Seller in connection
with any of its Business.
(f) Seller will not interfere with, infringe upon, misappropriate,
or otherwise come into conflict with, any intellectual property rights of
third parties as a result of the continued operation of its Business as
presently conducted.
3.13 TANGIBLE ASSETS. Seller owns or leases all buildings, machinery,
equipment, and other tangible assets necessary for the conduct of its
Business as presently conducted. To the best knowledge of Seller and
Shareholders, except for certain immaterial assets, each such tangible asset
is free from defects (patent and latent), has been maintained in accordance
with normal industry practice, is in good operating condition and repair, and
is suitable for the purposes for which it presently is used, all subject to
normal wear and tear.
3.14 INVENTORY. The inventory of Seller consists of supplies,
manufactured and purchased parts, and finished goods, all of which are
merchantable and fit for the purpose for which it was procured or
manufactured.
3.15 CONTRACTS. SCHEDULE 3.15 lists the following contracts and all
other material agreements related to the Business to which Seller is a party:
(a) any agreement (or group of related agreements) for the lease
of personal property to or from any person providing for lease payments in
excess of $10,000 per annum;
(b) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or other
personal property, or for the furnishing or receipt of services, the
performance of which will extend over a period of more than one year, result
in a loss to Seller, or involve consideration in excess of $10,000;
18
(c) any agreement concerning a partnership or joint venture;
(d) any agreement (or group of related agreements) under which it has
created, incurred, assumed, or guaranteed any indebtedness for borrowed money,
or any capitalized lease obligation, in excess of $10,000 or under which it has
imposed a security interest on any of its assets, tangible or intangible;
(e) any agreement concerning confidentiality or noncompetition;
(f) any agreement with Shareholders or their affiliates (other than
Seller);
(g) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or arrangement for
the benefit of Seller's current or former directors, officers, and employees;
(h) any collective bargaining agreement;
(i) any agreement under which it has advanced or loaned any amount to
any of Seller's directors, officers, and employees outside the ordinary course
of business;
(j) any agreement under which the consequences of a default or
termination could have an adverse effect on the business, financial condition,
operations, results of operations, or future prospects of Seller; or
(k) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $10,000.
Shareholders have delivered to Purchaser a true, correct and complete copy of
each written agreement listed on SCHEDULE 3.15 (as amended to date) and a
written summary setting forth the terms and conditions of each oral agreement
referred to on SCHEDULE 3.15. With respect to each such agreement: (i) the
agreement is legal, valid, binding, enforceable, and in full force and effect;
(ii) the agreement will continue to be legal, valid, binding, enforceable, and
in full force and effect in identical terms following the consummation of the
transaction contemplated hereby; (iii) no party is in breach or default, and no
event has occurred which with notice or lapse of time would constitute a breach
or default, or permit termination, modification, or acceleration, under
19
the agreement; and (iv) no party has repudiated any provision of the
agreement.
3.16 NOTES AND ACCOUNTS RECEIVABLE. All loans, notes and accounts
receivable of Seller are reflected properly on the books and records, are valid
receivables subject to no setoffs or counterclaims, are current and collectible,
and will be collected in accordance with their terms at their recorded amounts,
less an allowance for doubtful accounts of two percent (2%) of total accounts
receivable on an annualized basis, and, except as set forth on SCHEDULE 1.3, are
free and clear of any security interest, lien, encumbrance or other charge.
3.17 POWERS OF ATTORNEY. There are no outstanding powers of attorney
executed on behalf of Seller.
3.18 INSURANCE. SCHEDULE 3.18 sets forth the following, information with
respect to each insurance policy (including policies providing property,
casualty, liability, and workers' compensation coverage and bond and surety
arrangements) to which Seller has been a party, a named insured, or otherwise
the beneficiary of coverage at any time within the past two (2) years:
(a) the name, address, and telephone number of the agent;
(b) the name of the insurer, the name of the policyholder, and the
name of each covered insured;
(c) the policy number and the period of coverage;
(d) the scope and amount of coverage; and
(e) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
With respect to each such insurance policy: (i) the policy is legal, valid,
binding, enforceable, and in full force and effect; (ii) unless expressly
excluded on SCHEDULE 3.18, the policy will continue to be legal, valid,
enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby; (iii) neither Seller
nor any other party to the policy is in breach or default (including, with
respect to the payment of premiums or the giving of notices), and no event
has occurred which, with notice or the lapse of time, would constitute such a
breach or default, or permit termination, modification, or acceleration,
under the policy; and (iv) no party to
20
the policy has repudiated any provision thereof. SCHEDULE 3.18 describes any
self-insurance arrangements affecting Seller.
3.19 LITIGATION. SCHEDULE 3.19 sets forth each instance in which Seller
(i) is subject to any outstanding injunction, judgment, order, decree, ruling,
or charge or (ii) is a party or, to the knowledge of Shareholders, directors and
officers (and employees with responsibility for litigation matters) of Seller,
is threatened to be made a party to any action, suit, proceeding, hearing, or
investigation of, in, or before any court or quasi-judicial or administrative
agency of any federal, state or local jurisdiction or before any arbitrator.
None of the actions, suits, proceedings, hearings, and investigations set forth
on SCHEDULE 3.19 could result in a material adverse change in the business,
financial condition, operations, results of operations, or future prospects of
Seller. None of the Shareholders, directors and officers (and employees with
responsibility for litigation matters) of Seller has any reason to believe that
any such action, suit, proceeding, hearing, or investigation may be brought or
threatened against Seller.
3.20 PRODUCT WARRANTY. To the knowledge of Shareholders and the
directors, officers and management personnel of Seller, each product
manufactured, sold, leased, or delivered by Seller has been in conformity
with all applicable contractual commitments and all express and implied
warranties, and Seller has no liability (and there is no basis for any
present or to the knowledge of Shareholders and the directors, officers and
management, future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against Seller giving rise to any liability) for
replacement or repair thereof or other damages in connection therewith. No
product manufactured, sold, leased, or delivered by Seller is subject to any
guaranty, warranty, or other indemnity beyond the applicable standard terms
and conditions of sale or lease. SCHEDULE 3.20 includes copies of the
standard terms and conditions of sale or lease for Seller (containing
applicable guaranty, warranty, and indemnity provisions).
3.21 PRODUCT LIABILITY. To the knowledge of Shareholders and the
directors, officers and management personnel of Seller, Seller has no liability
(and there is no basis for any present or to the knowledge of Shareholders, its
directors, officers and management future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against Seller giving, rise
to any liability) arising out of any injury to individuals or property as a
result of the ownership, possession, or use of any product manufactured, sold,
leased, or delivered by Seller.
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3.22 EMPLOYEES. To the knowledge of the Shareholders, directors and
officers (and employees with responsibility for employment matters) of Seller,
no executive, key employee, or group of employees has any plans to terminate
employment with Seller. Seller is not a party to or bound by any collective
bargaining agreement, nor has Seller experienced any strikes, grievances, claims
of unfair labor practices, or other collective bargaining disputes. Seller has
not committed any unfair labor practice. None of the Shareholders, directors
and officers (and employees with responsibility for employment matters) of
Seller has any knowledge of any organizational effort presently being made or
threatened by or on behalf of any labor union with respect to employees of
Seller.
3.23 EMPLOYEE BENEFITS.
(a) SCHEDULE 3.23 lists each Employee Benefit Plan that Seller
maintains or to which Seller contributes.
(i) Each such Employee Benefit Plan (and each related
trust, insurance contract, or fund) complies in form and in operation
in all material respects with the applicable requirements of ERISA,
the Code, and other applicable laws.
(ii) All required reports and descriptions (including Form
5500 Annual Reports, Summary Annual Reports, PBGC-l's, and Summary
Plan Descriptions) have been filed or distributed appropriately with
respect to each such Employee Benefit Plan. The requirements of Part
6 of Subtitle B of Title I of ERISA and of Code Section 4980B have
been met with respect to each such Employee Benefit Plan which is an
Employee Welfare Benefit Plan.
(iii) All contributions (including all employer
contributions and employee salary reduction contributions) which are
due have been paid to each such Employee Benefit Plan which is an
Employee Pension Benefit Plan and all contributions for any period
ending on or before the Closing Date which are not yet due have been
paid to each such Employee Pension Benefit Plan or accrued in
accordance with the past custom and practice of Seller. All premiums
or other payments for all periods ending on or before the Closing Date
have been paid with respect to each such Employee Benefit Plan which
is an Employee Welfare Benefit Plan.
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(iv) Each such Employee Benefit Plan which is an Employee
Pension Benefit Plan meets the requirements of a "qualified plan"
under Code Section 401(a) and Seller has received, within the last two
(2) years, a favorable determination letter from the Internal Revenue
Service, and since such date no terms or provisions of such Employee
Benefit Plans have been modified, revoked or terminated in a manner
that is inconsistent with the qualified plan status of such Plan. To
the knowledge of Shareholders, directors and officers and employees
responsible for Employee Benefit Plans are not aware of any facts that
would result in disqualification of any Employee Benefit Plan.
(v) Seller has no Employee Benefit Plan which is a defined
benefit Employee Pension Benefit Plan.
(vi) Shareholders have delivered to Purchaser correct and
complete copies of the plan documents and summary plan descriptions,
the most recent determination letter received from the Internal
Revenue Service, the most recent Form 5500 Annual Report, and all
related trust agreements, insurance contracts, and other funding
agreements which implement each such Employee Benefit Plan.
(b) With respect to each Employee Benefit Plan that Seller maintains
or ever has maintained or to which it contributes, ever has contributed, or ever
has been required to contribute there have been no Prohibited Transactions (as
such term is defined in ERISA Section 406 and Code Section 4975) with respect
to any such Employee Benefit Plan. To the knowledge of Shareholders, its
directors, officers and employees responsible for employee benefits, no
Fiduciary has any liability for breach of fiduciary duty or any other failure to
act or comply in connection with the administration or investment of the assets
of any such Employee Benefit Plan. No action, suit, proceeding, hearing, or
investigation with respect to the administration or the investment of the assets
of any such Employee Benefit Plan (other than routine claims for benefits) is
pending or, to the knowledge of Shareholders, directors and officers (and
employees with responsibility for employee benefits matters) of Seller,
threatened. None of the Shareholders, directors and officers (and employees
with responsibility for employee benefits matters) of Seller has any knowledge
of any basis for any such action, suit, proceeding, hearing, or investigation.
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(c) Seller does not contribute to, never has contributed to, or never
has been required to contribute to any Multiemployer Plan or has any liability
(including withdrawal liability) under any Multiemployer Plan.
(d) Seller does not maintain or has never maintained or contributes,
ever has contributed, or ever has been required to contribute to any Employee
Welfare Benefit Plan providing medical, health, or life insurance or other
welfare-type benefits for current or future retired or terminated employees,
their spouses, or their dependents (other than in accordance with Code Section
4980B).
3.24 GUARANTIES. Except as set forth on SCHEDULE 3.24 attached hereto,
Seller is not a guarantor, nor is it otherwise liable for any liability or
obligation (including indebtedness) of any other person.
3.25 ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS. Except as set forth on
SCHEDULE 3.25:
(a) Seller and its affiliates have complied and are in compliance
with all federal, state, local and foreign statutes, regulations, ordinances and
other provisions having the force or effect of law, all judicial and
administrative orders and determinations, all contractual obligations and all
common law concerning public health and safety, worker health and safety, and
pollution or protection of the environment, including without limitation all
those relating to the presence, use, production, operation, handling,
transportation, treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control, or cleanup of any
hazardous materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise or radiation, each as
amended and as now or hereafter in effect ("Environmental, Health, and Safety
Requirements").
(b) Without limiting the generality of the foregoing, Seller and its
affiliates have obtained and complied with, and are in compliance with, all
permits, licenses and other authorizations that are required pursuant to
Environmental, Health, and Safety Requirements for the occupation of its
facilities and the operation of its Business. SCHEDULE 3.25 lists all such
permits, licenses and other authorizations.
(c) Neither Seller nor its affiliates have received any written or
oral notice, report or other information regarding any actual or alleged
violation
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of Environmental, Health, and Safety Requirements, or any liabilities or
potential liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise), including any investigatory, remedial or corrective obligations,
relating to any of them or its facilities arising under Environmental,
Health, and Safety Requirements.
(d) None of the following exists at any property or facility owned or
operated by Seller: (1) underground storage tanks, (2) asbestos-containing
material in any form or condition, (3) materials or equipment containing
polychlorinated biphenyls, or (4) landfills, surface impoundments, or disposal
areas.
(e) None of Seller or its affiliates have treated, stored, disposed
of, arranged for or permitted the disposal of, transported, handled, or released
any substance, including without limitation any hazardous substance, or owned or
operated any property or facility (and no such property or facility is
contaminated by any such substance) in a manner that has given or would give
rise to liabilities, including any liability for response costs, corrective
action costs, personal injury, property drainage, natural resources damages or
attorney fees, pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), the Solid Waste
Disposal Act, as amended ("SWDA") or any other Environmental, Health, and Safety
Requirements.
(f) Neither this Agreement nor the consummation of the transaction
that is the subject of this Agreement will result in any obligations for site
investigation or cleanup, or notification to or consent of government agencies
or third parties, pursuant to any of the so-called "transaction-triggered" or
"responsible property transfer" Environmental, Health, and Safety Requirements.
(g) Neither Seller nor its affiliates have, either expressly or by
operation of law, assumed or undertaken any liability, including without
rotation any obligation for corrective or remedial action, of any other person
relating to Environmental, Health, and Safety Requirements.
(h) No facts, events or conditions relating to the past or present
facilities, properties or operations of Seller or its affiliates will prevent,
hinder or limit continued compliance with Environmental, Health, and Safety
Requirements, give rise to any investigatory, remedial or corrective obligations
pursuant to Environmental, Health, and Safety Requirements, or give rise to
25
any other liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise) pursuant to Environmental, Health, and Safety Requirements, including
without limitation any relating to onsite or offsite releases or threatened
releases of hazardous materials, substances or wastes, personal injury, property
damage or natural resources drainage.
3.26 CERTAIN BUSINESS RELATIONSHIPS WITH SELLER. Except as set forth on
SCHEDULE 3.26, Shareholders and their affiliates have not been involved in any
business arrangement or relationship with Seller within the past twelve (12)
months, and Shareholders and its affiliates do not own any asset, tangible or
intangible, which is used in the Business of Seller.
3.27 RELATIONSHIPS WITH SUPPLIERS AND CARRIERS. Except as set forth on
SCHEDULE 3.27, Seller has good relationships with its suppliers and network
carriers and is not involved in any disputes, disagreements or proceedings
involving any supplier or carrier.
3.28 CUSTOMERS. SCHEDULE 3.28 sets forth a list of customers as of the
date of the Ending Balance Sheet. Seller is not involved in any disputes,
disagreements or proceedings involving any of such customers and, to Seller's
and Shareholders' best knowledge, monthly attrition of customers will not exceed
2.1%.
3.29 LEGAL, ACCOUNTING AND OTHER FEES AND EXPENSES. All of Seller's
legal, accounting and other fees, costs and expenses associated with this
transaction shall be borne by Seller; provided, however, Purchaser and Seller
shall share equally the costs associated with the Escrow Agreement. Seller
has no liability or obligation to pay any fees or commissions to any broker,
finder or agent with respect to the transactions contemplated by this
Agreement.
3.30 RECEIPT OF DISCLOSURE DOCUMENTS. Seller has received and carefully
reviewed, and understands the information contained in, the documents identified
below (including the risk factors contained therein) and all other documents
Seller has requested from Purchaser (collectively, the "Disclosure Documents").
In evaluating the suitability of the Acquisition and the resulting acquisition
of the Purchaser Shares and all other rights, whether contingent or fixed, to
receive Purchaser Shares (collectively the "Securities") (the Acquisition and
resulting acquisition of the Securities hereinafter referred to as the
"investment in the Securities"), Seller has not relied upon any representations
or other information (whether oral or written) from Purchaser,
26
its officers, directors, or employees or from any other person other than as
set forth herein and in the Disclosure Documents.
The Disclosure Documents shall include, but not be limited to, the
following: (i) Purchaser's Annual Report on Form 10-KSB for the year ended
December 31, 1997, (ii) Purchaser's Proxy Statement for its annual meeting held
on Xxxxx 00, 0000, (xxx) Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1998 and June 30, 1998, and Amendment to the Quarterly Report on Form
10-QSB/A-1 for the quarter ended March 31, 1998, (iv) a prospectus dated
November 19, 1998 with respect to the Purchaser Shares to be issued pursuant to
the terms of this Agreement (the "Prospectus"), (v) Current Reports on Form 8-K,
dated June 5, 1998 (disclosing the acquisition of Infohiway, Inc., and the
signing of an agreement and plan of merger with Internet Communications
Corporation ("ICC")) and dated June 30, 1998 (disclosing the acquisition of
Application Methods, Inc.), and Amendments No. 1 and No. 2 to the Current Report
on Form 8-K/A dated June 5, 1998; and (vi) the press releases issued by ICC and
Purchaser on or about October 14, 1998 with respect to claims asserted by ICC.
3.31 DISCLOSURE. The representations and warranties contained in this
Article III do not contain any untrue statement of a fact or omit to state any
fact necessary in order to make the statements and information contained in this
Article III not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller and Shareholders that the
statements contained in this Article IV are true, correct and complete as of the
date of this Agreement and will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this Article IV).
4.1 ORGANIZATION. Purchaser is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation.
4.2 AUTHORIZATION OF TRANSACTION. Purchaser has full corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding
27
obligation of Purchaser, enforceable in accordance with its terms and
conditions.
4.3 NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Purchaser is subject or any provision of
its charter or bylaws.
4.4 BROKERS' FEES. Purchaser has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Seller or Shareholders
could become liable or obligated.
4.5 PURCHASER COMMON STOCK. When delivered to Seller at Closing, the
Purchaser Common Stock will be duly and validly authorized and issued, fully
paid and nonassessable, free from all stamp taxes, liens and charges and will
have been issued in compliance with applicable federal and state securities
laws.
ARTICLE V
COVENANTS
5.1 PRE-CLOSING COVENANTS. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
(a) GENERAL. Each of the Parties will use his or its reasonable best
efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions set
forth in Article VI below).
(b) NOTICES AND CONSENTS. Seller will, and Shareholders will cause
Seller to, give any notices to third parties, and Seller will, and Shareholders
will cause Seller to, use its best efforts to obtain any third party consents,
that are required or that Purchaser may request in connection with this
transaction. Each of the Parties will (and Shareholders will cause Seller to)
give any notices to, make any filings with, and use its best efforts to obtain
any authorizations, consents, and approvals of governments and governmental
agencies.
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(c) OPERATION OF BUSINESS. After the date hereof, Seller will not
engage in any practice, take any action, or enter into any transaction outside
the ordinary course of business without prior written consent from Purchaser.
Without limiting the generality of the foregoing:
(i) Seller will not authorize or effect any change in its
Articles of Incorporation or bylaws;
(ii) Seller will not grant any options, warrants, or other
rights to purchase or obtain any of its capital stock or issue, sell, or
otherwise dispose of any of its capital stock;
(iii) Seller will not declare, set aside, or pay any dividend
or distribution with respect to its capital stock (whether in cash or in
kind), or redeem, repurchase, or otherwise acquire any of its capital
stock;
(iv) Seller will not issue any note, bond, or other debt
security or create, incur, assume, or guarantee any indebtedness for
borrowed money or capitalized lease obligation or create or suffer the
creation of any other liability of Seller other than liabilities arising
in the ordinary course of business;
(v) Seller will not sell, dispose or otherwise transfer any of
its assets, including without limitation waive any material rights or
claims, or impose any security interest upon any of its assets;
(vi) Seller will not make any capital investment in, make any
loan to, or acquire the securities or assets of any other person;
(vii) Seller will not make any change in employment terms for
any of its directors, officers, and employees;
(viii) Seller will not commit to any of the foregoing; and
(ix) otherwise engage in any practice, take any action, or
enter into any transaction of the sort described above or that would cause
any condition, representation or warranty to be breached or to become
untrue.
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(d) PRESERVATION OF BUSINESS. Seller will, and Shareholders will
cause Seller to, keep its Business, properties and goodwill substantially
intact, including its present operations, physical facilities, working
conditions, and relationships with lessors, licensors, suppliers, customers, and
employees.
(e) FULL ACCESS. Seller will permit, and Shareholders will cause
Seller to permit, representatives of Purchaser to have full access (including
providing introductions, where necessary to) all premises, properties,
personnel, customers, lessors, licensors, vendors, supplies, creditors, books,
records (including tax records), contracts, and documents of or pertaining to
Seller. Seller will cause its independent accountants to make available their
work papers with respect to Seller and to otherwise provide such assistance as
is reasonably requested by Purchaser.
(f) NOTICE OF DEVELOPMENTS. Seller and Shareholders will give prompt
written notice to Purchaser of any adverse development causing a breach or a
potential breach of any of the representations and warranties in Articles II and
III above. No disclosure by Shareholders or Seller or discovery by Purchaser
shall be deemed to amend or supplement any Schedule hereto or to prevent or cure
any misrepresentation, breach of warranty, or breach of covenant.
(g) EXCLUSIVITY. Seller will not, and Shareholders will not cause or
permit Seller to (i) solicit, initiate, or encourage the submission of any
proposal or offer from any person relating to the acquisition of any capital
stock or other voting securities, or any substantial portion of the assets, of
Seller (including, any acquisition structured as a merger, consolidation, or
share exchange) or (ii) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any person to do or seek
any of the foregoing. Shareholders will not vote the shares of capital stock
they own of the Seller in favor of any such acquisition structured as a merger,
consolidation, or share exchange other than for this transaction. Seller and
Shareholders will notify Purchaser immediately if any person makes any proposal,
offer, inquiry, or contact with respect to any of the foregoing.
(h) REPAYMENT. At or before Closing, Shareholders and any of their
affiliates shall repay all advances from and notes and receivables owing to
Seller from such person.
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(i) FINANCIAL STATEMENTS. At Closing, Seller and Shareholders shall
deliver Financial Statements certified by each of the Seller and Shareholders as
true, correct and complete, and consistent with the books and records of Seller
(which books and records are true, correct and complete).
(j) INSURANCE POLICIES. At or before Closing, Seller shall have
Purchaser named as an additional insured on all insurance policies covering the
Purchased Assets.
5.2 POST-CLOSING COVENANTS. The Parties agree as follows with respect to
the period following the Closing.
(a) GENERAL. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
each of the Parties will take such further action (including, the execution and
delivery of such further instruments and documents) as any other Party
reasonably may request, all at the sole cost and expense of the requesting Party
(unless the requesting Party is entitled to indemnification therefor under
Section 13 below). Shareholders and Seller acknowledge and agree that from and
after Closing Purchaser will be entitled to possession of all documents, books,
records (including tax records), agreements, and financial data of any sort
relating to the Business, with the exception of the corporate charter and minute
books of Seller; provided, however, that all such documents, books and records
shall for a period of three (3) years after the Closing be available to Seller
and Seller's representatives, upon reasonable notice and at all reasonable
times, for inspection, audit and examination for tax and accounting purposes.
(b) LITIGATION SUPPORT. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction accruing on
or prior to the Closing Date involving Seller, each of the other Parties will
cooperate with it and its counsel in the contest or defense, make available
their personnel, and provide such testimony and access to their books and
records as shall be necessary in connection with the contest or defense, all at
the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under
Article VII below).
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(c) TRANSITION. Seller and Shareholders will not take any action
that is designed, intended or could reasonably be expected to have the effect of
discouraging any lessor, licensor, customer, supplier, or other business
associate of Seller from maintaining the same business relationships with Seller
after Closing as it maintained with Seller prior to the Closing. Shareholders
will refer all customer inquiries relating to the Business of Seller to
Purchaser from and after the Closing.
(d) CONFIDENTIALITY. Each of the Shareholders and Seller will treat
and hold as confidential all of the confidential information of Purchaser (the
"Confidential Information"), refrain from using any of the Confidential
Information except in connection with this Agreement, and deliver promptly to
Purchaser or destroy, at the request and option of Purchaser, all tangible
embodiments (and all copies) of the Confidential Information which are in his or
its possession. In the event that Seller or any Shareholder is requested or
required (by oral question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or similar
process) to disclose any Confidential Information, Seller or such Shareholder
will notify Purchaser promptly of the request or requirement so that Purchaser
may seek an appropriate protective order or waive compliance with the provisions
of this Section 5.2(d). If, in the absence of a protective order or the receipt
of a waiver hereunder, Seller or such Shareholder is, on the advice of counsel,
compelled to disclose any Confidential Information to any tribunal or else stand
liable for contempt, Seller or such Shareholder may disclose such Confidential
Information to the tribunal; PROVIDED, HOWEVER, that Seller or such Shareholder
shall use his/its best efforts to obtain, at the request of Purchaser, an order
or other assurance that confidential treatment will be accorded to such portion
of the Confidential Information required to be disclosed as Purchaser shall
designate. The foregoing provisions shall not apply to any Confidential
Information which is generally available to the public immediately prior to the
time of disclosure.
Seller and each of the Shareholders acknowledge and understand that
Confidential Information, including the existence of this Agreement, may include
"material, non-public information," as the term is understood and interpreted
under federal and state securities laws and rules. Seller and each of the
Shareholders further acknowledge and understand that purchasing or selling
securities while in possession of material non-public information may subject
the purchaser, seller and/or person(s) who have provided such information to
liability under such laws, including potential criminal liability. Seller and
each of the Shareholders hereby agree that all Confidential
32
Information, whether furnished before or after the date of this Agreement,
shall be treated confidentially.
(e) NON-SOLICITATION. Seller and each of the Shareholders agree
that, for a period of two (2) years after the Closing, he/she/it will not, in
any manner whether with or without cause, directly or indirectly, either as
owner, officer, employer, employee, independent contractor, stockholder, agent,
principal, manager, employee, consultant, partner or otherwise (i) induce any
employee, agent or contractor of Seller, Purchaser or an affiliate company
thereof, other than the Shareholders, to terminate his, her or its employment,
agency or contractor relationship with Purchaser or an affiliate company
thereof, or (ii) hire or attempt to hire any employee, agent or contractor of
Purchaser or an affiliate company thereof, other than the Shareholders.
Seller and each of the Shareholders agree that, for a period of two (2)
years after the Closing, he/she/it will not, in any manner, whether with or
without cause, directly or indirectly, either as owner, officer, employer,
employee, independent contractor, stockholder, agent, principal, manager,
consultant, partner or otherwise, have any business or employment relationship
with any customer of Seller and/or Purchaser without the prior written consent
of Purchaser, which consent shall not be unreasonably withheld, following
written notice by Seller or Shareholder to Purchaser detailing the name of the
customer and the nature of the proposed relationship. It shall not be
unreasonable for Purchaser to withhold consent if such relationship could cause
or result in any adverse or detrimental impact to Purchaser. The term
"customer" includes, but is not limited to, persons or entities located within
the Geographical Market (as defined below) who are customers of Seller or
Purchaser, as the case may be.
For purposes of this Agreement "Geographical Market" shall mean the United
States, Mexico and Canada. Seller and each Shareholder hereby acknowledge that
Purchaser is a full service, national communications company providing Internet
access, local telephone service and IP telephone long distance service, Web
development and hosting, network management, system integration and co-location
services to clients and customers throughout the United States. Seller and each
Shareholder further acknowledge that Purchaser plans expansions into the
international market, including Mexico and Canada, and continued growth both
within and outside the United States. Seller and each Shareholder further
acknowledge that Purchaser's acquisition of the Purchased Assets as contemplated
by this
33
Agreement evidences Purchaser's intent to integrate the Business and its
operations as an integral part of Purchaser's plans for growth and expansion.
(f) COVENANT NOT TO COMPETE. Seller and each Shareholder agree that,
for a period of two (2) years following Closing, he/she/it will not, directly or
indirectly, in any manner own, manage, operate, control, be employed by,
participate in, or be connected in any manner with the ownership, management,
operation, or control of any business headquartered in the State of Colorado
that is substantially similar to the type of business conducted by Purchaser or
any affiliate thereof; PROVIDED, HOWEVER, the foregoing shall not preclude Xxxx
Xxxxxx from performing network management and/or system integration services for
a company which is not a competitor of Purchaser or any of its affiliates.
Notwithstanding the foregoing, Seller and each Shareholder shall be entitled to
own stock in publicly traded companies whose products and/or services compete
with those offered by Purchaser, so long as said ownership does not exceed two
percent (2%) of any said publicly traded company.
Seller and each Shareholder agree that the covenants he/she/it has made in
this Section 5.2 are reasonable with respect to their duration, geographical
area and proscription. Seller and each Shareholder further agree that the
covenants he/she/it has made in this Section 5.2 shall be construed as an
agreement independent of any other provision of this Agreement. Hence, the
covenants made in this Section 5.2 shall survive the termination of this
Agreement. Moreover, the existence of any claim or cause of action of Seller
and/or Shareholders against Purchaser, whether or not predicated upon the terms
of this Agreement, shall not constitute a defense to the enforcement by
Purchaser of these covenants.
(g) RELEASE OF LIENS. As soon as practicable upon Closing, Seller
and Shareholders shall obtain releases of all liens on the Purchased Assets, as
set forth on SCHEDULE 1.3 attached hereto, except for any that are Assumed
Liabilities, and shall provide Purchaser with evidence of such releases
satisfactory to Purchaser.
(h) PUBLIC INFORMATION REQUIREMENT. Purchaser shall use its best
efforts to comply with the current public information requirement of Rule 144(c)
of the General Rules and Regulations promulgated under the Securities Act for
two (2) years from the date of issuance of the Purchaser Shares.
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ARTICLE VI
CONDITIONS TO OBLIGATION OF PARTIES TO CONSUMMATE CLOSING
6.1 CONDITIONS TO OBLIGATION OF PURCHASER. The obligation of Purchaser to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(a) this Agreement and the Acquisition shall have received the
requisite approval of the shareholders of Seller;
(b) Seller shall have procured all third party consents as set forth
on SCHEDULE 3.3;
(c) Seller shall have procured all necessary governmental consents;
(d) all of the representations and warranties set forth in Articles
II and III above shall be true and correct in all respects at and as of the
Closing Date and Purchaser shall have received a certificate of Seller and the
Shareholders in the form of EXHIBIT B hereto to that effect;
(e) Shareholders and Seller shall have performed and complied with
all of its covenants hereunder in all material respects through the Closing;
(f) Purchaser shall have received a network schedule listing all
lines, carriers, rates, and all other pertinent information concerning Seller's
network as of the date of the Ending Balance Sheet;
(g) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, or local jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (i) prevent
consummation of any of the transactions contemplated by this Agreement, (ii)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation or (iii) affect adversely the right of Purchaser to own
the Purchased Assets, (and no such injunction, judgment, order, decree, ruling,
or charge shall be in effect);
(h) Seller shall deliver to Purchaser, a Certificate of the Secretary
of Seller dated as of Closing certifying that the following are true, correct
and complete copies and the originals thereof: Articles of Incorporation of
Seller, as amended, and certified by the Colorado Secretary of State, bylaws
35
(as amended to date), resolutions of the board of directors recommending
approval of the Acquisition and all transactions contemplated by this
Agreement to the Shareholders and resolutions approving the Acquisition and
all transactions contemplated by this Agreement;
(i) Shareholders and Seller shall have delivered to Purchaser a
certificate to the effect that each of the conditions specified above in this
Section 6.1 have been satisfied in all respects, in the form attached hereto as
EXHIBIT B;
(j) Xxxx Xxxxxx shall have delivered to Purchaser an Employment
Agreement by and between him and Purchaser, substantially in the form attached
hereto as EXHIBIT C;
(k) Xxxxxxx Xxxxxx shall have delivered to Purchaser an Employment
Agreement by and between her and Purchaser, substantially in the form attached
hereto as EXHIBIT D;
(l) Purchaser shall have received from counsel to Seller an opinion
in substantially the form attached hereto as EXHIBIT E addressed to Purchaser;
(m) Seller shall have terminated all of its employees;
(n) Purchaser shall have procured the approval of its Boards of
Directors of the Acquisition as contemplated by this Agreement;
(o) Seller shall have at Closing at least 1,500 non-dedicated
accounts and at least 9 dedicated access accounts delivering monthly revenues of
at least $35,250, with recurring monthly revenues of at least $32,250;
(p) Purchaser shall have received unaudited financial statements of
Seller for the periods reasonably requested by Purchaser;
(q) all actions to be taken by Shareholders and Seller in connection
with consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be satisfactory in form and substance to Purchaser; and
36
(r there shall have been no material adverse change in the business,
financial condition, operations, results of operations or future prospects of
Seller since July 31, 1998.
Purchaser may waive any condition specified in this Section 6.1 only if it
executes a writing so stating, at or prior to the Closing. Purchaser's
knowledge of a breach of a representation, warranty or covenant shall not be
considered as a waiver of any of the above conditions.
6.2 CONDITIONS TO OBLIGATION OF SHAREHOLDERS AND SELLER. The obligation
of Shareholders and Seller to consummate the transactions to be performed by
them in connection with the Closing is subject to satisfaction of the following
conditions:
(a) each of the representations and warranties set forth in Article
IV above shall be true and correct in all material respects at and as of the
Closing Date;
(b) Purchaser shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing; and
(c) no action, suit, or proceeding shall be pending before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (i) prevent consummation of any
of the transactions contemplated by this Agreement or (ii) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order, decree, ruling, or charge
shall be in effect).
Shareholders and Seller may waive any condition specified in this Section 6.2 if
they execute a writing so stating at or prior to the Closing.
ARTICLE VII
REMEDIES FOR BREACH
7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the Parties contained in this Agreement shall
survive the Closing hereunder (even if the damaged Party knew or had reason to
know of any misrepresentation or breach of warranty or covenant at the time of
Closing) and continue in full force and effect until three (3) years from the
date of Closing.
37
7.2 INDEMNIFICATION PROVISIONS FOR BENEFIT OF PURCHASER. Seller and
Shareholders shall indemnify, defend and hold harmless Purchaser and its
officers, directors, employees, partners, shareholders, agents and affiliates
and the officers, directors, employees, partners, shareholders and agents of
such affiliates (collectively, the "Purchaser Indemnified Parties") from and
against the entirety of any and all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, liabilities, obligations, taxes, liens, losses, expenses,
interest and fees, including court costs and attorneys' fees and expenses
("Adverse Consequences") the Purchaser Indemnified Parties may suffer (including
any Adverse Consequences suffered after the making of any claim for
indemnification or after the end of any applicable survival period) resulting
from, arising out of, relating to, in the nature of, or caused by any of the
following (i) Shareholders' or Seller's breach (or the allegation by any third
party of facts that, if true, would mean either has breached) of any of the
representations, warranties, and covenants contained in this Agreement; (ii)
except as expressly provided herein to the contrary, any liability or obligation
of any nature, accruing prior to the Closing Date; (iii) any claim by any
shareholder or Seller with respect to the transactions contemplated by this
Agreement, except for any claim arising out of a breach by Purchaser of its
representations, warranties or obligations hereunder; and (iv) any actions,
judgments, costs and expenses (including reasonable attorney fees and all other
reasonable expenses incurred in investigating, preparing or defending any
litigation or proceeding, commenced or threatened) incident to any of the
foregoing; PROVIDED, HOWEVER, that Seller and Shareholders shall not have any
obligation to indemnify the Purchaser Indemnified Parties from and against any
such Adverse Consequences until such Adverse Consequences in aggregate exceed
$1,000 (at which point Seller and Shareholders will be obligated to indemnify
the Purchaser Indemnified Parties from and against all such claims for
indemnification relating back to the first dollar). Each Purchaser Indemnified
Party will give prompt notice to Seller of any claim or condition to which the
foregoing indemnification covenant relates.
7.3 INDEMNIFICATION PROVISIONS FOR BENEFIT OF SELLER AND SHAREHOLDERS. In
the event Purchaser breaches (or in the event any third party alleges facts
that, if true, would mean either has breached) any of its representations,
warranties, and covenants contained herein, then Purchaser shall indemnify
Seller and Shareholders (collectively, the "Seller Indemnified Parties") from
and against the entirety of any Adverse Consequences the Seller Indemnified
Parties may suffer through and after the date of the claim for
38
indemnification (including any Adverse Consequences the Seller Indemnified
Parties may suffer after the end of any applicable survival period)
resulting, from, arising, out of, relating to, in the nature of, or caused by
the breach (or the alleged breach); PROVIDED; HOWEVER, that Purchaser shall
not have any obligation to indemnify the Seller Indemnified Parties from and
against any such Adverse Consequences until such Adverse Consequences in
aggregate exceed $1,000 (at which point Purchaser will be obligated to
indemnify the Seller Indemnified Parties from and against all such claims for
indemnification relating back to the first dollar). Each Seller Indemnified
Party will give prompt notice to Purchaser of any claim or condition to which
the foregoing indemnification covenant relates.
7.4 MATTERS INVOLVING THIRD PARTIES.
(a) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give rise
to a claim for indemnification against any other Party (the "Indemnifying
Party") under this Article VII, then the Indemnified Party shall promptly notify
each Indemnifying Party thereof in writing; PROVIDED, HOWEVER, that no delay on
the part of the Indemnified Party in notifying any Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is prejudiced.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the Indemnifying
Party notifies the Indemnified Party in writing within 15 days after the
Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the Third
Party Claim, (ii) the Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that the Indemnifying
Party will have the financial resources to defend against the Third Party Claim
and fulfill its indemnification obligations hereunder, (iii) the Third Party
Claim involves only money damages and does not seek an injunction or other
equitable relief, (iv) settlement of, or an adverse judgment with respect to,
the Third Party Claim is not, in the good faith judgment of the Indemnified
Party, likely to establish a precedential custom or practice adverse to the
continuing business interests of the Indemnified Party, and (v) the Indemnifying
Party conducts the defense of the Third Party Claim actively and diligently.
Notwithstanding anything herein to the contrary, the Indemnifying
39
Party will not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior written
consent of the Indemnified Party (not to be withheld unreasonably).
(c) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 7.4(b) above, (i) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party Claim and (ii) the Indemnified
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be unreasonably withheld, conditioned or delayed).
(d) In the event any of the conditions in Section 7.4(b) above is or
becomes unsatisfied, however, (i) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with respect
to, the Third Party Claim in any manner it reasonably may deem appropriate (and
the Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), (ii) the Indemnifying Parties will
reimburse the Indemnified Party promptly and periodically for the costs of
defending AGAINST the Third Party Claim (including reasonable attorneys' fees
and expenses), and (iii) the Indemnifying Parties will remain responsible for
any Adverse Consequences the Indemnified Party may suffer resulting from,
arising out of, relating to, in the nature of, or caused by the Third Party
Claim to the fullest extent provided in this Article VII.
7.5 REMEDIES. The foregoing indemnification provisions are in addition
to, and not in derogation of, any statutory, equitable, or common law remedy
(including without limitation any such remedy arising under Environmental,
Health, and Safety Requirements) any Party may have with respect to Seller, or
the transactions contemplated by this Agreement. Without limiting the
generality of the foregoing, Purchaser shall be entitled, but not required, to
setoff any amounts due either pursuant to this Article VII against any and all
amounts payable to Seller and Shareholders under this Agreement or otherwise.
7.6 ARBITRATION. If the Parties are unable to resolve any dispute arising
under this Article VII, then such dispute shall be settled by arbitration by a
panel of three (3) arbitrators, all of whom shall be persons with at least ten
(10) years' experience in significant corporate, business or accounting matters
and familiar with the purchase and sale of business concerns, in accordance with
the rules of the American Arbitration Association. The expenses of the
40
prevailing party, including attorneys' fees and arbitration expenses, shall be
paid by the losing party. If each party prevails in part, the arbitrators will
determine the appropriate allocation of expenses among the parties. Judgment
upon the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. The parties may pursue all other remedies with respect to
any claim not subject to arbitration.
ARTICLE VIII
TERMINATION
8.1 TERMINATION OF AGREEMENT. Any of the Parties may terminate this
Agreement with the prior authorization of its board of directors (whether before
or after receiving the Requisite Shareholders Approval) as provided below:
(a) the Parties may terminate this Agreement by mutual written
consent at any time prior to the Closing Date;
(b) Purchaser may terminate this Agreement by giving written notice
to Seller at any time prior to the Closing Date (i) in the event Seller or
Shareholders has breached any representation, warranty, or covenant contained in
this Agreement or (ii) if the Closing shall not have occurred on or before
December 31, 1998, by reason of the failure of any condition precedent under
Section 6.1 hereof (unless the failure results primarily from a breach by
Purchaser of any representation, warranty, or covenant contained in this
Agreement). Purchaser's knowledge of the existence of a condition that would
entitle Purchaser to so terminate this Agreement shall not be construed as a
waiver of its rights to so terminate at any later date prior to the Closing
Date.
8.2 EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to Section 8.1(a) above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
(except for any liability of any Party then in breach), except that the
provisions contained in Section 5.2 above shall survive termination.
ARTICLE IX
MISCELLANEOUS
9.1 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. Seller shall not issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of Purchaser both before and
after Closing.
41
9.2 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their respective
successors and permitted assigns.
9.3 ENTIRE AGREEMENT. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
9.4 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of his
or its rights, interests, or obligations hereunder without the prior written
approval of Purchaser and Seller.
9.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
9.6 HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.7 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be deemed duly given, if
addressed to the intended recipient as set forth below, (i) two (2) business
days after it is sent, if sent by registered or certified mail, return receipt
requested, postage prepaid, (ii) upon delivery, if personally delivered, (iii)
upon confirmation of transmission, if sent via facsimile, or (iv) one (1) day
after it is sent, if sent via overnight courier:
If to Purchaser: Rocky Mountain Internet, Inc.
0000 00xx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, President, CEO
and Chairman
Facsimile: (000) 000-0000
42
Copy to: Xxxxxx Xxxxx Xxxxx Xxxxxxxxx & Xxxxxx LLC
0000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Shareholders or Seller: Stonehenge Business Systems Corporation
0000 Xxxxx Xxxxx Xxx, Xxxx X
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxx and Xxxxxxx Xxxxxx
Facsimile: (000) 000-0000
Copy to: Xxxxxx X. Xxxxxx, Esq.
0000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
9.8 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Colorado without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Colorado or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Colorado.
9.9 AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing, and signed by
Purchaser, the Shareholders and Seller. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant
43
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
9.10 SEVERABILITY. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
9.11 CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring, any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, or local
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" shall mean including without limitation. The Parties intend that
each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
9.12 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
9.13 SUBMISSION TO JURISDICTION. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Denver, Colorado in any
action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court.
Each of the Parties waives any defense of inconvenient forum to the maintenance
of any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other Party with respect thereto. Any
Party may make service on any other Party by sending or delivering a copy of the
process to the Party to be served at the address and in
44
the manner provided for the giving of notices in Section 9.7 above. Nothing
in this Section 9.13, however, shall affect the right of any Party to serve
legal process in any other manner permitted by law or at equity. Each Party
agrees that a final judgment in any action or proceeding so brought shall be
conclusive and may be enforced by suit on the judgment or in any other manner
provided by law or at equity.
9.14 EXPENSES. Each of the Parties acknowledges that all costs and
expenses (including legal fees and expenses) incurred by such Party in
connection with this Agreement and the transactions contemplated hereby are the
sole responsibility of such Party and shall be paid by such Party.
9.15 TRANSFER TAXES. The Purchaser shall pay any state sales, use or
transfer tax incurred in connection with the sale of the Purchased Assets to the
Purchaser.
* * * * * *
45
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
ROCKY MOUNTAIN INTERNET,
INC., a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------
Xxxxxxx X. Xxxxxx,
President, CEO,
and Chairman
STONEHENGE BUSINESS
SYSTEMS CORPORATION, a
Colorado corporation
By: /s/ Xxxx Xxxxxx
-------------------------
Name: Xxxx Xxxxxx
-----------------------
Title: President
----------------------
SHAREHOLDERS
/s/ Xxxx Xxxxxx
----------------------------
Xxxx Xxxxxx
/s/ Xxxxxxx Xxxxxx
----------------------------
Xxxxxxx Xxxxxx
