AGREEMENT AND PLAN OF MERGER
EXHIBIT
2.1
This
Agreement and Plan of Merger (this “Agreement”),
dated
as of November 14, 2008, is by and among INTERNET AMERICA, INC., a Texas
corporation (“Internet
America”),
IA
ACQUISITION, INC., a Delaware corporation wholly owned by Internet America
(“AcquisitionSub”),
and
KEYON COMMUNICATIONS HOLDINGS, INC., a Delaware corporation (“KeyOn”).
WHEREAS,
the
boards of directors of each of KeyOn, Internet America and AcquisitionSub have
determined that it
is
advisable and in the best interests of their respective stockholders for
AcquisitionSub to merge with and into KeyOn (the
“Merger”),
with
KeyOn continuing as the surviving corporation wholly owned by Internet America,
upon
the
terms and subject to the conditions set forth herein;
WHEREAS,
the
boards of directors of each of KeyOn, Internet America and AcquisitionSub have
approved this Agreement and the Merger, upon the terms and subject to the
conditions of this Agreement and the Delaware General Corporation Law, as
amended (the “DGCL”);
WHEREAS,
concurrent with the execution of this Agreement and as a condition to and
inducement of Internet America’s and AcquisitionSub’s willingness to enter into
this Agreement, each of the stockholders of KeyOn set forth on Schedule A
is
entering into a voting agreement (the “Voting
Agreement”)
in the
form attached hereto as Exhibit
A;
WHEREAS,
it is
expected that promptly following the execution and delivery of this Agreement
by
the parties hereto, the holders of shares of KeyOn Common Stock sufficient
to
adopt and approve this Agreement and the Merger as required under the DGCL
will
execute and deliver an action by written consent adopting this Agreement (the
“KeyOn
Consent”);
WHEREAS,
for
federal income Tax purposes, it is intended that the Merger qualify as a
“reorganization” within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the “Code”);
and
NOW,
THEREFORE,
for and
in consideration of the foregoing and the representations, warranties, covenants
and agreements set forth in this Agreement, the parties to this Agreement (each
a “Party,”
and
collectively, the “Parties”)
agree
as follows:
ARTICLE 1
THE
MERGER
Section 1.1 The
Merger.
Upon
the
terms and subject to the conditions set forth in this Agreement, AcquisitionSub
shall be merged with and into KeyOn at the Effective Time. Following the
Effective Time, the separate corporate existence of AcquisitionSub shall cease
and KeyOn shall continue as the surviving corporation (the “Surviving
Corporation”)
and
shall succeed to and assume all the rights and obligations of
AcquisitionSub.
Section
1.2 Closing.
The
closing of the Merger will take place at 10:00 a.m. (Houston, Texas time) on
a
date to be mutually agreed upon by Internet America and KeyOn, which shall
be no
later than the second Business Day after satisfaction or waiver of the
conditions set forth in Article
6
(the
“Closing
Date”),
at
the offices of Xxxxx & Ketchand, Nine Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxx 00000, unless another date, time or place is agreed to in writing by
the
parties hereto.
Section
1.3
Effective Time.
Subject
to the provisions of this Agreement, as soon as practicable on or after the
Closing Date, the parties shall file a Certificate of Merger (the “Certificate
of Merger”) executed in accordance with the relevant provisions of the DGCL and
shall make all other filings or recordings required under the DGCL. The Merger
shall become effective at such time as the Certificate of Merger is duly filed
with the Delaware Secretary of State, or at such other time as AcquisitionSub
and KeyOn shall agree should be specified in the Certificate of Merger (the
time
the Merger becomes effective being hereinafter referred to as the “Effective
Time”).
1
Section
1.4
Effects
of the Merger.
From
and after the Effective Time, the Surviving Corporation shall possess all the
rights, assets, powers, privileges, and franchises and be subject to all of
the
obligations, liabilities, restrictions, and disabilities of KeyOn and
AcquisitionSub, all as provided under the DGCL, and the Merger shall have the
effects set forth in Section 259 of the DGCL.
Section
1.5
Certificate
of Incorporation and Bylaws. The
Certificate of Incorporation of KeyOn
as
in effect immediately prior to the Effective Time shall be the certificate
of
incorporation of the Surviving Corporation, until thereafter changed or amended,
as provided therein or by Applicable Law. The Bylaws of KeyOn as in effect
immediately prior to the Effective Time shall be the Bylaws of the Surviving
Corporation, until thereafter changed or amended, as provided therein or by
Applicable Law.
(a) Surviving
Corporation.
The
directors of AcquisitionSub immediately prior to the Effective Time shall be
the
directors of the Surviving Corporation, until the earlier of their resignation
or removal or their respective successors are duly elected and qualified, as
the
case may be.
(b) Internet
America.
At
the
Effective Time, the size of the board of directors of Internet America shall
be
increased to seven members, and the five current members of the Internet America
Board shall appoint two persons designated by KeyOn to fill the vacancies
created. The KeyOn director designees shall be subject to approval by the
Internet America Board in its sole discretion. One of the directors designated
by KeyOn shall be named as a Class I director whose term shall expire in 2009
and the other director designated by KeyOn shall be named as a Class II director
whose term shall expire in 2010, each to serve as a director until his successor
shall be elected and qualified or upon his earlier death, resignation or removal
in accordance with Applicable Law.
(a) Surviving
Corporation.
The
officers of KeyOn immediately prior to the Effective Time shall be the officers
of the Surviving Corporation, until the earlier of their resignation or removal
or their respective successors are duly elected and qualified, as the case
may
be.
(b) Internet
America. At
the
Effective Time, the individuals listed on Schedule 1.7
hereto
shall have the executive officer positions with Internet America set forth
opposite their respective names, and each such executive officer shall serve
until such executive officer’s successor shall be elected and qualified or such
executive officer’s earlier death, resignation, retirement, disqualification or
removal. If, at or before the Effective Time, any such Person is unable or
unwilling to serve as an executive officer of the Surviving Corporation in
the
capacity set forth on Schedule 1.7,
then a
substitute executive officer shall be selected by the Internet America Board
after the Effective Time.
ARTICLE 2
EFFECT
OF
MERGER ON CAPITAL STOCK
Section
2.1
Effect
on Capital Stock.
As of
the Effective Time, by virtue of the Merger and without any action on the part
of the holder of any shares of capital stock of KeyOn or
AcquisitionSub:
(a) Capital
Stock of AcquisitionSub.
Each
issued and outstanding share of capital stock of AcquisitionSub shall be
converted into and become one fully paid and nonassessable share of common stock
of the Surviving Corporation.
(b) Cancellation
of Treasury and Internet America Owned Stock.
Each
share of KeyOn Common Stock (i) issued and held in KeyOn’s treasury or (ii)
owned by Internet America, AcquisitionSub or any other wholly owned Subsidiary
of Internet America or KeyOn shall, at the Effective Time and by virtue of
the
Merger, cease to be outstanding and shall be canceled and retired without
payment of any consideration therefor, and no consideration shall be delivered
in exchange therefor.
2
(c) Conversion
of KeyOn Common Stock.
Subject
to Section
2.1(d),
all
issued and outstanding shares (including any dissenting shares) of KeyOn Common
Stock at the Effective Time shall be converted into 16,155,906 validly
issued, fully paid and nonassessable shares of Internet America Common Stock
(the “Merger
Consideration”).
The
ratio between 16,155,906
shares
of Internet America Common Stock and the number of shares of KeyOn Common Stock
outstanding at the Effective Time is hereinafter referred to as the “Exchange
Ratio”.
Each
holder of a share of KeyOn Common Stock shall be entitled to receive that number
of shares of Internet America common stock equal to the product of the number
of
shares of KeyOn common stock held by such stockholder and the Exchange Ratio,
rounded to the nearest whole share. No fractional shares of Internet America
Common Stock will be issued. As of the Effective Time, all KeyOn Common Stock
shall no longer be outstanding and shall be automatically canceled and retired
and shall cease to exist, and each holder of a certificate representing any
shares of KeyOn Common Stock shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration, without
interest.
(d) Shares
of Dissenting Stockholders.
Notwithstanding anything in this Agreement to the contrary, any issued and
outstanding shares of KeyOn Common Stock held by a Person (a “Dissenting
Stockholder”)
who
objects to the Merger and complies with all the provisions of the DGCL
concerning the rights of shareholders to dissent from the Merger and require
appraisal of their shares shall not be converted as described in Section
2.1(c),
but
shall be converted into the right to receive such consideration as may be
determined to be due to such Dissenting Stockholder pursuant to the DGCL. If,
after the Effective Time, such Dissenting Stockholder withdraws its demand
for
appraisal or fails to perfect or otherwise loses its right to appraisal, in
any
case pursuant to the DGCL, such Dissenting Stockholder’s shares of KeyOn Common
Stock shall be deemed to be converted as of the Effective Time into the right
to
receive the Merger Consideration. KeyOn shall give Internet America prompt
notice of any demands received by KeyOn for appraisal of shares of KeyOn Common
Stock and the opportunity to participate in and direct all negotiations and
proceedings with respect to any such demands. KeyOn shall not, without the
prior
written consent of Internet America, make any payment with respect to, or
settle, offer to settle or otherwise negotiate, any such demands.
(e) Adjustment
of Exchange
Ratio. If,
between the date of this Agreement and the Effective Time (and in each case,
as
otherwise permitted by this Agreement), the outstanding shares of KeyOn Common
Stock or the outstanding shares of Internet America Common Stock shall have
been
increased, decreased, changed into or exchanged for a different number of shares
or different class, in each case, by reason of any reclassification,
recapitalization, stock split, split-up, combination or exchange of shares
or a
stock dividend or dividend payable in other securities shall be declared with
a
record date within such period, or any similar event shall have occurred, the
Exchange Ratio shall be appropriately adjusted to provide to the holders of
KeyOn Common Stock or Internet America Common Stock, as the case may be, the
same economic effect as contemplated by this Agreement prior to such event.
(a) Paying
Agent.
Prior
to the Effective Time, Internet America shall designate its transfer agent
or
another trust company to act as agent for the holders of the shares of KeyOn
Common Stock in connection with the Merger (the “Paying
Agent”)
to
receive in trust the Merger Consideration to which holders of the shares of
KeyOn Common Stock shall become entitled pursuant to Section
2.1(c).
From
time to time, Internet America shall make available, or cause the Surviving
Corporation to make available, to the Paying Agent certificates
(or evidence of Internet America Book-Entry shares of KeyOn Common Stock)
representing the aggregate number of shares of Internet America Common Stock
to
be issued as Merger Consideration in exchange for outstanding shares of KeyOn
Common Stock, in
amounts and at times necessary for the prompt payment of the Merger
Consideration upon surrender of Certificates representing shares of KeyOn Common
Stock as provided herein.
3
(b) Exchange
Procedure.
As soon
as reasonably practicable after the Effective Time, the Paying Agent shall
mail
to each holder of record of a certificate or certificates that immediately
prior
to the Effective Time represented shares of KeyOn Common Stock (the
“Certificates”),
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Paying Agent and shall be in a form as
Internet America may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent or to such other agent or agents as may be appointed by Internet America,
together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Paying Agent, the holder of
such
Certificate shall be entitled to receive in exchange therefor the number of
shares of Internet America Common Stock into which the shares of KeyOn Common
Stock theretofore represented by such Certificate shall have been converted,
pursuant to Section
2.1(c)
and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of shares of KeyOn Common Stock that is not registered
in
the transfer records of KeyOn, payment may be made to a Person other than the
Person in whose name the Certificate so surrendered is registered, if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the requesting such payment shall pay any transfer or other taxes
required by reason of the payment to a Person other than the registered holder
of such Certificate or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until surrendered
as contemplated by this Section
2.2,
each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration, without
interest, which the shares of KeyOn Common Stock theretofore represented by
such
Certificate shall have been entitled to receive pursuant to Section
2.1.
(c) No
Further Ownership Rights; Transfer Books.
The
Merger Consideration paid upon the surrender of Certificates in accordance
with
the terms of this Article
2
shall be
deemed to have been paid in full satisfaction of all rights pertaining to the
shares of KeyOn Common Stock theretofore represented by such Certificates.
At
the Effective Time, the stock transfer books of KeyOn shall be closed, and
there
shall be no further transfers of the shares of KeyOn Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to Internet America or KeyOn, the presented
Certificates shall be canceled and exchanged for shares of Internet America
Common Stock or other consideration payable in respect thereof pursuant to
this
Agreement in accordance with the procedures set forth herein.
(d) Termination
of Fund; No Liability.
At any
time following six months after the Effective Time, Internet America shall
be
entitled to require the Paying Agent to deliver to it any funds (including
any
interest received with respect thereto) and certificates for shares of Internet
America Common Stock which had been made available to the Paying Agent and
which
have not been disbursed to holders of Certificates, and thereafter such holders
shall be entitled to look to Internet America (subject to abandoned property,
escheat or other similar laws) only as general creditors thereof with respect
to
the Merger Consideration payable upon due surrender of their Certificates,
without any interest thereon. Notwithstanding the foregoing, none of Internet
America, KeyOn or any other Person shall be liable to any former holder of
shares of KeyOn Common Stock for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
If
any Certificates shall not have been surrendered immediately prior to such
date
on which any payment pursuant to this Article 2
would
otherwise escheat to or become the property of any Governmental Authority,
the
payment in respect of such Certificate shall, to the extent permitted by
Applicable Law, become the property of Internet America, free and clear of
all
claims or interests of any Person previously entitled thereto.
(e) Lost,
Stolen or Destroyed Certificates.
In the
event any Certificates evidencing shares of KeyOn Common Stock shall have been
lost, stolen or destroyed, the Paying Agent shall pay to such holder the Merger
Consideration required pursuant to Section
2.1(c),
in
exchange for such lost, stolen or destroyed Certificates, upon the making of
an
affidavit of that fact by the holder thereof with such assurances as the Paying
Agent, in its discretion and as a condition precedent to the payment of the
Merger Consideration, may reasonably require of the holder of such lost, stolen
or destroyed Certificates.
(f) Withholding
Taxes.
Internet America shall be entitled to deduct and withhold, or cause the Paying
Agent to deduct and withhold, from the consideration otherwise payable to a
holder of shares of KeyOn Common Stock pursuant to the Merger any stock transfer
taxes and such amounts as are required under the Code, or any applicable
provisions of state, local or foreign tax law. To the extent that amounts are
so
withheld, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of KeyOn Common Stock
in respect of which such deduction and withholding were made.
4
(a)
Assumption
and Adjustment.
KeyOn
shall, effective as of the Effective Time, cause each option to purchase
shares of KeyOn Common Stock identified
in Section 4.3(c)
of the
KeyOn Disclosure Letter (the
“KeyOn
Stock Options”)
granted under the 2007 Incentive Stock and Awards Plan of KeyOn (the
“KeyOn
Stock Plan”)
that
is then outstanding to
be
assumed and adjusted by Internet America as required to reflect the Merger,
including the substitution of Internet America Common Stock for KeyOn Common
Stock thereunder, so that (i) each such KeyOn
Stock
Option shall be exercisable only for that whole number of shares of Internet
America Common Stock equal to the product (rounded to the nearest whole share,
which shall be rounded down to the extent necessary to comply with
Section 424 of the Code) of the number of shares of KeyOn Common Stock
subject to such KeyOn
Stock
Option immediately prior to the Effective Time multiplied by the Exchange Ratio,
and (ii) the exercise price per share of Internet America Common Stock
shall be an amount equal to the exercise price per share of KeyOn Common Stock
subject to such Stock Option in effect immediately prior to the Effective Time
divided by the Exchange Ratio (the price per share, as so determined, being
rounded up to the nearest whole cent); provided,
however,
that in
no event shall the exercise price be less than the par value of Internet America
Common Stock. The vesting period, expiration and exercisability of outstanding
KeyOn
Stock
Options shall be unchanged by such assumption and adjustment. The adjustments
provided in this paragraph with respect to any KeyOn Stock Options shall be
and
are intended to be effected in a manner which is consistent with
Sections 424(a) and 409A of the Code.
(b)
Termination
of Plan.
Except
as may be otherwise agreed to by Internet America and KeyOn, as of the Effective
Time (i) KeyOn’s Stock Plan shall terminate, (ii) the provisions in
any other plan, program or arrangement providing for the issuance or grant
of
any other interest in respect of the capital stock of KeyOn or any of its
Subsidiaries shall be deleted and (iii) no holder of Stock Options or any
participant in the Stock Plan or any other plans, programs or arrangements
shall
have any rights thereunder to acquire any equity securities of KeyOn or any
Subsidiary thereof.
(c)
No
Acceleration.
From
and after the date of this Agreement, KeyOn and the KeyOn Subsidiaries shall
take no action to provide for the acceleration of the exercisability of any
KeyOn Stock Options in connection with the Merger except to the extent such
acceleration is required under the terms of such KeyOn Stock Options or change
in control agreements in existence on the date of this Agreement. To the extent
such acceleration or exercisability is required under the terms of such KeyOn
Stock Options or other awards made under the KeyOn Stock Plan upon the
occurrence of a change of control (as such term or similar term is defined
in
the KeyOn Stock Plan or change in control agreement), KeyOn shall, prior to
the
Effective Time, take all actions as may be required to cause such acceleration
or exercisability to occur no less than ten (10) days prior to the Effective
Time.
(d)
Notice
to Optionees.
As soon
as practicable following the Effective Time, Internet America shall deliver
to
the holders of Stock Options to be assumed pursuant to this Section 2.3
appropriate notices setting forth such holders’ rights pursuant to the Internet
America Stock Plan and the agreements evidencing the grants of such Stock
Options and stating that such Stock Options and such agreements shall be assumed
by Internet America and shall continue in effect on the same terms and
conditions (subject to the adjustments required by this Section 2.3).
Section
2.4
Warrants.
(a)
At the Effective Time, all outstanding warrants to purchase shares of KeyOn
Common Stock will either terminate by their terms or be canceled, except for
those warrants to purchase an aggregate of 281,875 shares of KeyOn Common Stock
identified
in Schedule
2.4
(the
“Assumed
Warrants”),
which
shall be assumed
and adjusted by Internet America to substitute Internet America Common Stock
for
KeyOn Common Stock thereunder as required to reflect the Merger. As a result
of
such assignment and adjustment: (i) each Assumed Warrant shall be
convertible only for that whole number of shares of Internet America Common
Stock equal to the product (rounded to the nearest whole share, which shall
be
rounded down to the extent necessary to comply with Section 424 of the
Code) of the number of shares of KeyOn Common Stock subject to such Assumed
Warrant immediately prior to the Effective Time multiplied by the Exchange
Ratio, and (ii) the conversion price per share of Internet America Common
Stock shall be an amount equal to the conversion price per share of KeyOn Common
Stock subject to such Assumed Warrant in effect immediately prior to the
Effective Time divided by the Exchange Ratio (the price per share, as so
determined, being rounded up to the nearest whole cent); provided,
however,
that in
no event shall the conversion price be less than the par value of Internet
America Common Stock. The vesting period, term and exercisability of outstanding
Assumed Warrants shall be unchanged by such assumption and adjustment. The
adjustments provided in this paragraph with respect to any Assumed Warrants
shall be and are intended to be effected in a manner that is consistent with
Sections 424(a) and 409A of the Code.
5
(b)
Notice
to Warrantholders.
As soon
as practicable following the Effective Time, Internet America shall deliver
to
the holders of the Assumed Warrants substitute warrants to purchase Internet
America Common Stock, containing the adjustments required by this Section 2.4.
Section
2.5
Convertible
Notes.
Prior
to or at the Effective Time, KeyOn shall cause all principal and interest due
and owing under the KeyOn Convertible Notes then outstanding to be repaid in
shares of KeyOn Common Stock at a price per share determined in the manner
provided in the Convertible Notes, and shall cause the Convertible Notes to
be
cancelled as paid in full, as of the Effective Time. The shares of KeyOn Common
Stock issued in conversion of the Convertible Notes shall be included within
the
KeyOn Common Stock eligible for exchange in accordance with Section
2.1(c)
hereof.
ARTICLE 3
REPRESENTATIONS
AND WARRANTIES OF
INTERNET
AMERICA AND ACQUISITIONSUB
As
an
inducement for KeyOn to enter into this Agreement, Internet America and
AcquisitionSub hereby jointly and severally make the following representations
and warranties to KeyOn; provided,
however, that
such
representations and warranties shall be subject to and qualified by:
(a) the disclosure letter delivered by Internet America to KeyOn as of the
date hereof (each section of which qualifies the correspondingly numbered
representation and warranty or covenant to the extent specified therein) (the
“Internet
America Disclosure Letter”)
(it
being understood that (i) the disclosure of any fact or item in any section
of the Internet America Disclosure Letter shall, should the existence of such
fact or item be relevant to any other section, be deemed to be disclosed with
respect to that other section to the extent that such disclosure is made in
a
manner that makes its relevance to the other section reasonably apparent and
(ii) the disclosure of any matter or item in the Internet America
Disclosure Letter shall not be deemed to constitute an acknowledgement that
such
matter or item is required to be disclosed therein or is material to a
representation or warranty set forth in this Agreement and shall not be used
as
a basis for interpreting the terms “material,” “materially,” “materiality,” “Internet
America Material Adverse Effect”
or any
word or phrase of similar import and does not mean that such matter or item,
alone or together with any other matter or item, would constitute an Internet
America Material Adverse Effect); and (b) information contained in the
Internet America Reports (excluding any exhibits thereto and excluding
disclosures under “Risk
Factors”
and
other forward-looking or predictive statements) filed with the SEC prior to
the
date hereof (but only to the extent that such disclosure on its face appears
to
constitute information that would reasonably be deemed a qualification or
exception to the following representations and warranties).
Section 3.1 Corporate
Existence; Good Standing; Corporate Authority. Internet
America is a corporation duly incorporated, validly existing and in good
standing under the Applicable Laws of the State of Texas. AcquisitionSub is
a
corporation duly incorporated, validly existing and in good standing under
the
laws of the State of Delaware. Internet America is duly qualified to conduct
business and is in good standing (to the extent such concept exists in the
relevant jurisdiction) in each jurisdiction in which the ownership, operation
or
lease of its property or the nature of Internet America’s business requires such
qualification, except for jurisdictions in which any failures to be so qualified
or to be in good standing, individually or in the aggregate, have not had or
caused and would not reasonably be expected to have or cause an Internet America
Material Adverse Effect. Internet America and AcquisitionSub each have all
requisite corporate power and authority to own or lease and operate their
respective properties and assets and to carry on their businesses as they are
currently being conducted. Each of the Amended and Restated Articles of
Incorporation (including any and all Certificates of Designations) and Bylaws
of
Internet America (the “Internet
America Charter Documents”)
is in
full force and effect, has not been amended or modified and has not been
terminated, superseded or revoked. Internet America is not in violation of
the
Internet America Charter Documents.
6
Section 3.2 Authorization,
Validity and Effect of Agreement.
(a) Authority.
Each of
Internet America and AcquisitionSub has the requisite corporate power and
authority to execute and deliver this Agreement and all other agreements,
instruments, certificates and documents contemplated hereunder (collectively,
the “Related
Documents”)
to
which it is, or will become, a party, to perform its obligations hereunder
and
thereunder and to consummate the Merger, and all other transactions contemplated
hereunder and thereunder. The execution, delivery and performance of this
Agreement and the Related Documents and the consummation of the Merger and
the
other transactions contemplated hereunder and thereunder have been duly
authorized by all requisite corporate action on behalf of Internet America
and
AcquisitionSub, and no other corporate proceedings by Internet America or
AcquisitionSub are necessary to authorize the execution and delivery of this
Agreement or the Related Documents or to consummate the Merger and the other
transactions contemplated hereunder or under the Related Documents, except
for
the filing of the Certificate of Merger pursuant to the DGCL.
(b) Binding
Obligations.
This
Agreement and each of the Related Documents to which each of Internet America
and AcquisitionSub is a party have been or will be duly executed by each of
Internet America and AcquisitionSub and, assuming the due authorization,
execution and delivery hereof and thereof by KeyOn to the extent a party hereof
and thereof, constitute the valid and legally binding obligations of Internet
America and AcquisitionSub, enforceable against each of Internet America and
AcquisitionSub in accordance with their terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other Applicable Laws relating to
or
affecting the rights and remedies of creditors generally and to general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).
Section 3.3
Capitalization.
The
authorized capital stock of Internet America consists of 40,000,000 shares
of Internet America Common Stock and 5,000,000 shares of Internet America
Preferred Stock, 4,000,000 shares of which have been designated as Series A
Preferred Stock (the “Internet
America Preferred Stock”).
As of
the close of business on the date immediately preceding the date of this
Agreement, there were 16,857,031
issued
and outstanding shares of Internet America Common Stock, no shares of
Internet America Common Stock held by Internet America in its treasury, and
2,889,076
issued
and outstanding shares of Internet America Preferred Stock. Section 3.3
of the
Internet America Disclosure Letter sets forth a true, correct and complete
list
of all outstanding shares of Internet America Common Stock subject to
outstanding options, warrants or similar rights, held in escrow, or reserved
for
future issuance. Except as set forth therein, there are no outstanding or
authorized stock appreciation, phantom stock, profit participation or other
similar rights with respect to Internet America Common Stock. All shares of
Internet America Common Stock are, and all shares of Internet America Common
Stock which may be issued and outstanding immediately prior to the Effective
Time as permitted under this Agreement shall be when issued, duly authorized,
validly issued, fully paid and nonassessable shares of Internet America Common
Stock and not subject to any preemptive rights. Except under terms of the
Internet America Preferred Stock and the terms and provisions of the Rights
Agreement between Internet America and American Stock Transfer and Trust dated
August 9, 2004, as amended (the “Internet
America Rights Agreement”),
there
are no outstanding or authorized contractual or other obligations of
Internet America or any of the Internet America Subsidiaries to repurchase,
redeem or otherwise acquire any equity securities of Internet America or any
of
the Internet America Subsidiaries. Pursuant to the Internet America Rights
Agreement, each outstanding share of Internet America Common Stock is
accompanied by one Common Share purchase right (the “Internet
America Rights”)
entitling the holder thereof to purchase, subject to the terms and conditions
thereof, Internet America Common Stock.
Section 3.4 Subsidiaries.
(a) Organization
and Qualification.
Each
Internet America Subsidiary is a corporation or other legal entity duly
organized or constituted and validly existing under the Applicable Laws of
its
jurisdiction of incorporation, organization or formation. Each Internet America
Subsidiary has all requisite corporate, limited liability company, partnership
or other business power and authority to own or lease and operate its properties
and assets and to carry on its business as currently conducted, except as would
have an immaterial effect on the Internet America Companies, taken as a whole.
Each Internet America Subsidiary is duly qualified to conduct business and
is in
good standing in each jurisdiction in which the ownership or lease and operation
of its property or the nature of its business requires such qualification,
except for jurisdictions in which any failures to be so qualified or to be
in
good standing, individually or in the aggregate, have not had or caused and
would not reasonably be expected to have or cause an Internet America Material
Adverse Effect. All of the outstanding shares of capital stock of, or other
Equity Interests in, each Internet America Subsidiary are duly authorized,
validly issued, fully paid and nonassessable and are owned, directly or
indirectly, by Internet America, free and clear of all Liens, except for
Permitted Liens.
(b) List
of Subsidiaries.
Section 3.4(b)
of the
Internet America Disclosure Letter sets forth all Internet America Subsidiaries
(other than AcquisitionSub) and the ownership interest of such Internet America
Subsidiary held, directly or indirectly, by Internet America. Internet America’s
Subsidiaries are not in violation of their respective organizational
documents.
7
(c) Acquisition
Sub.
AcquisitionSub has been formed solely for the purpose of engaging in the
transactions contemplated hereby and, as of the Effective Time, will not have
engaged in any activities other than in connection with the transactions
contemplated by this Agreement. Internet America is, and will be at the
Effective Time, the owner of all the outstanding shares of capital stock of
Acquisition Sub. The shares of capital stock of AcquisitionSub to be issued
in
connection with the Merger, when issued in accordance with this Agreement,
will
be validly issued, fully paid, nonassessable and free of preemptive rights.
Section 3.5 Compliance
with Laws; Permits. Except
for such matters that, individually or in the aggregate, have not had or caused
and would not reasonably be expected to have or cause an Internet America
Material Adverse Effect, and except for (x) matters relating to Taxes,
which are treated exclusively in Section 3.10,
(y) matters relating to Internet America Benefit Plans, which are treated
exclusively under Section 3.11
and
(z) matters arising under Environmental, Health and Safety Laws, which are
treated exclusively in Section 3.13:
(a) Neither
Internet America nor any Internet America Subsidiary is in violation of any
Applicable Law relating to the ownership or operation of any of its assets,
and
no Claim is pending or, to the Knowledge of Internet America, threatened with
respect to any such matters;
(b) Internet
America and each Internet America Subsidiary hold all permits, licenses,
certifications, variations, exemptions, Orders, franchises, registrations,
filings, approvals, authorizations or other required grant of operating
authority required by any Governmental Authority necessary for the conduct
of
their respective businesses (the “Internet
America Permits”).
All
Internet America Permits are in full force and effect and there exists no
default thereunder or breach thereof, and Internet America has no notice or
Knowledge that such Internet America Permits will not be renewed in the ordinary
course after the Effective Time. No Governmental Authority has given, or to
the
Knowledge of Internet America, threatened to give, notice of any action to
terminate, cancel or reform any Internet America Permits; and
(c) Internet
America and each Internet America Subsidiary possesses all Internet America
Permits required for the present ownership or lease, as the case may be, of
its
business and operation of its property, and there exists no default or breach
with respect to, and no Person, including any Governmental Authority, has taken
or, to the Knowledge of Internet America, threatened to take, any action to
terminate, cancel or reform any such Internet America Permit.
Section 3.6 No
Conflict; Consents.
(a) No
Conflict.
The
execution and delivery by each of Internet America and AcquisitionSub of this
Agreement and the Related Documents, the performance of the obligations of
Internet America and AcquisitionSub hereunder and thereunder and the
consummation by Internet America and AcquisitionSub of the Merger and the other
transactions contemplated hereby and thereby in accordance with the terms hereof
and thereof will not (i) conflict with or result in a breach of any
provisions of their respective organizational documents, (ii) violate, conflict
with, result in a breach of any provision of, constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
impair Internet America’s rights under, alter the rights or obligations of third
parties under, result in the termination of or in a right of termination or
cancellation of, give rise to a right of purchase under, or accelerate the
performance required by, any Internet America Material Contract or other
Contract, (iii) cause the Internet America Rights to become exercisable under
the Internet America Rights Agreement, (iv) result in the creation of any Lien
(other than Permitted Liens) upon any of the properties or assets of Internet
America or the Internet America Subsidiaries under any Internet America Material
Contract or by which Internet America or the Internet America Subsidiaries
or
any of their properties is bound or affected, (v) result in any Internet
America Material Contract being declared void, voidable, or without further
binding effect, or (vi) (assuming that the consents and approvals referred
to in
Section 3.6(b)
are duly
and timely made or obtained), contravene, conflict with or constitute a
violation of any provision of any Applicable Law binding upon or applicable
to
Internet America or any of the Internet America Subsidiaries, other than any
such violations, conflicts, breaches, defaults, impairments, alterations,
terminations, cancellations, purchase rights, accelerations or Liens that,
individually or in the aggregate, have not had or caused and would not
reasonably be expected to have or cause an Internet America Material Adverse
Effect.
8
(b) Required
Consents.
Neither
the execution and delivery by Internet America or AcquisitionSub of this
Agreement or any Related Document nor the consummation by Internet America
or
AcquisitionSub of the Merger and the other transactions contemplated hereby
or
thereby in accordance with the terms hereof or thereof will require any consent,
approval or authorization of, notice to or filing or registration with any
Governmental Authority, other than (i) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware, and appropriate
documents required to be filed as a result of the Merger with the relevant
Governmental Authorities in the states and foreign jurisdictions in which
Internet America is qualified to conduct business, and (ii) the filing
and effectiveness of the Information/Registration Statement with the SEC in
accordance with the Exchange Act and the dissemination of the Information
Statement to all KeyOn Stockholders, except for any failures to obtain any
such
consent, approval or authorization or to make any such filing, notification
or
registration that, individually or in the aggregate, have not had or caused
and
would not reasonably be expected to have or cause an Internet America Material
Adverse Effect.
Section 3.7 SEC
Documents.
Internet America has filed with the SEC all documents required to be so filed
by
it since June 30, 2007 pursuant to Sections 13(a), 14(a) and 15(d) of the
Exchange Act (collectively, the “Internet
America Reports”).
As of
its respective date or, if amended by a subsequent filing prior to the date
hereof, on the date of such filing, each Internet America Report complied in
all
material respects with the applicable requirements of the Exchange Act, SOX
and
the rules and regulations thereunder and did not contain any untrue statement
of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. Specifically, the
number of Active Subscribers of Internet America contained in the Internet
America Reports is accurate as of the date of each report. Each of the
consolidated balance sheets included in or incorporated by reference into the
Internet America Reports (including the related notes and schedules) fairly
presents in all material respects the consolidated financial position of
Internet America and the Internet America Subsidiaries as of its date, and
each
of the consolidated statements of operations, cash flows and changes in
shareholders’ equity included in or incorporated by reference into the Internet
America Reports (including any related notes and schedules) fairly presents
in
all material respects the results of operations, cash flows or changes in
shareholders’ equity, as the case may be, of Internet America and the Internet
America Subsidiaries for the periods set forth therein (such consolidated
balance sheets and consolidated statements of operations, cash flows and changes
in shareholders’ equity, each including the notes and schedules thereto, the
“Internet
America Financial Statements”).
The
Internet America Financial Statements (i) complied as to form in all
material respects with the published rules and regulations of the SEC and
(ii) were prepared in accordance with GAAP consistently applied during the
periods involved, except as may be noted in the Internet America Financial
Statements or as permitted by Form 10-KSB, 10-QSB, 10-Q or Form 8-K.
Section 3.8 Litigation. Except
(a) matters relating to Tax matters, which are treated exclusively under
Section 3.10,
(b) matters relating to Internet America Benefit Plans, which are treated
exclusively under Section 3.11
and
(c) matters arising under Environmental, Health and Safety Laws, which are
treated exclusively under Section 3.13,
there
is no litigation, arbitration, mediation, action, suit, Claim, proceeding or
investigation, whether legal or administrative, pending against Internet America
or any of the Internet America Subsidiaries or, to Internet America’s Knowledge,
threatened against Internet America or any of the Internet America Subsidiaries
or any of their respective assets, properties or operations, at Applicable
Law
or in equity, before or by any Governmental Authority or any Order of any
Governmental Authority that, individually or in the aggregate, and taking into
consideration the aggregate amounts reserved for any such matters in Internet
America’s consolidated balance sheet at June 30, 2007, has had or caused or
would reasonably be expected to have or cause an Internet America Material
Adverse Effect.
Section 3.9
Absence
of Certain Changes. From
June 30, 2008 to the date of this Agreement, except as described in the Internet
America Reports, there has not been (a) any event or occurrence that has
had or caused or would reasonably be expected to have or cause an Internet
America Material Adverse Effect, (b) any material change by Internet
America or any of the Internet America Subsidiaries, when taken as a whole,
in
any of its accounting methods, principles or practices or any of its Tax
methods, practices or elections, (c) any declaration, setting aside or
payment of any dividend or distribution in respect of any capital stock of
Internet America or any redemption, purchase or other acquisition of any of
its
capital stock or (d) except in the ordinary course of business consistent
with past practices, any increase in or establishment of any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing, stock
option, stock purchase or other employee benefit plan.
9
Section 3.10 Taxes.
(a) Except
for such matters that, individually or in the aggregate, have not had or caused
and would not reasonably be expected to have or cause an Internet America
Material Adverse Effect:
(i) The
Internet America Companies have timely filed, or have caused to be timely filed
on their behalf, all Tax Returns required to be filed by or on behalf of the
Internet America Companies in the manner prescribed by Applicable Law. All
such
Tax Returns are complete and correct. The Internet America Companies have timely
paid all Taxes due and owing, and, in accordance with GAAP, the most recent
Internet America Financial Statements contained in the Internet America Reports
reflect a reserve (excluding any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) for all Taxes payable
by
the Internet America Companies for all Taxable periods and portions thereof
through the date of such Internet America Financial Statements;
(ii) No
Tax
Return of the Internet America Companies is under audit or examination by any
Tax Authority, and no written or, to the Knowledge of Internet America,
unwritten notice of such an audit or examination has been received by the
Internet America Companies. There is no assessed deficiency, refund litigation,
proposed adjustment or matter in controversy with respect to any Taxes due
and
owing by the Internet America Companies;
(iii) Since
June 30, 2008, the Internet America Companies have not made or rescinded any
election relating to Taxes or settled or compromised any Claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or controversy
relating to any Taxes, or, except as may be required by Applicable Law, made
any
change to any of their methods of reporting income or deductions for federal
income Tax purposes from those employed in the preparation of their most
recently filed federal Tax Returns;
(iv) There
is
no agreement or other document extending, or having the effect of extending,
the
period of assessment or collection of any material Taxes and no power of
attorney with respect to any such Taxes has been executed or filed with any
Tax
Authority by or on behalf of the Internet America Companies;
(v) Except
for statutory Liens for Taxes not yet due, no Liens for Taxes exist with respect
to any assets or properties of the Internet America Companies;
(vi) Except
for any agreements or arrangements (A) with customers, vendors, lessors or
similar Persons entered into in the ordinary course of business or
(B) among the Internet America Companies, none of the Internet America
Companies is a party to or bound by any Tax sharing agreement, Tax indemnity
obligation or agreement or arrangement with respect to Taxes (including any
advance pricing agreement, closing agreement or other agreement relating to
Taxes with any Tax Authority);
(vii) The
Internet America Companies have complied with all Applicable Law relating to
the
payment and withholding of Taxes (including withholding of Taxes pursuant to
Sections 1441, 1442 and 3402 of the Code or similar provisions of any other
Tax Law) and have, within the time and the manner prescribed by applicable
Tax
Law, withheld from and paid over to the proper Tax Authorities all amounts
required to be so withheld and paid over under applicable Tax Law;
10
(viii) None
of
the Internet America Companies shall be required to include in a Taxable period
ending after the Closing Date any item of income that accrued in a prior Taxable
period but was not recognized in any prior Taxable period as a result of the
installment method of accounting, the long-term contract method of accounting,
the cash method of accounting or Section 481 of the Code or comparable
provisions of any other Tax Law; and
(ix) None
of
the Internet America Companies has participated in any “reportable transaction”
as defined in Treasury Regulation Section 1.6011-4.
(b) None
of
the Internet America Companies knows of any fact, agreement, plan, or other
circumstance, or has taken or failed to take any action, that would reasonably
be expected to prevent the Merger from qualifying as a reorganization within
the
meaning of Section 368(a) of the Code.
Section 3.11 Employee
Benefit Plans.
(a) Section 3.11(a)
of the
Internet America Disclosure Letter contains a list of all Internet America
Benefit Plans. To the extent applicable, the Internet America Benefit Plans
comply in all material respects with the requirements of ERISA and the Code
or
with the Applicable Laws and regulations of any applicable jurisdiction; the
Internet America Benefit Plans have been maintained and operated in compliance
in all material respects with their terms; to Internet America’s Knowledge,
there are no breaches of fiduciary duty in connection with the Internet America
Benefit Plans for which Internet America could be liable; there are no pending
or, to Internet America’s Knowledge, threatened Claims against or otherwise
involving any Internet America Benefit Plan that, individually or in the
aggregate, have had or caused or would reasonably be expected to have or cause
an Internet America Material Adverse Effect, and no suit, action or other
litigation (excluding claims for benefits incurred in the ordinary course of
the
Internet America Benefit Plan activities) has been brought against or with
respect to any such Internet America Benefit Plan for which Internet America
could be liable that, individually or in the aggregate, have had or caused
or
would reasonably be expected to have or cause an Internet America Material
Adverse Effect. All material contributions required to be made as of the date
hereof to Internet America Benefit Plans have been made or have been properly
accrued and are reflected in the Internet America Financial Statements as of
the
date thereof;
(b) Neither
Internet America nor any of the Internet America Subsidiaries contributes to,
or
has an obligation to contribute to, and has not within six years prior to the
Effective Time contributed to, or had an obligation to contribute to or has
any
material liability, contingent or otherwise, with respect to, (i) a
“multiemployer plan” within the meaning of Section 3(37) of ERISA,
(ii) any plan that is covered by Title IV of ERISA, (iii) any
plan subject to Section 412 of the Code or (iv) any plan funded by a
“voluntary employees’ benefits association” within the meaning of
Section 501(c)(9) of the Code;
(c) No
Internet America Benefit Plan maintained by the Internet America Companies
provides medical, surgical, hospitalization, death or similar benefits
(regardless of whether insured) for employees or former employees of Internet
America or any Internet America Subsidiary for periods extending beyond their
retirement or other termination of service other than coverage mandated by
Applicable Law;
(d) All
accrued material obligations of the Internet America Companies, whether arising
by operation of Applicable Law, Contract, or past custom, for compensation
and
benefits, including, but not limited to, bonuses and accrued vacation, and
benefits under Internet America Benefit Plans, have been paid or adequate
accruals for such obligations are reflected on the Internet America Financial
Statements as of the date thereof;
(e) Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (either alone or in conjunction with
any
other event, such as termination of employment), result in, cause the
accelerated vesting, funding or delivery of, or increase the amount or value
of,
any payment or benefit to any employee, officer or director of Internet America
or any of the Internet America Subsidiaries;
(f) Each
Internet America Benefit Plan which is or reasonably could be determined to
be
an arrangement subject to Section 409A of the Code has been operated in
good faith compliance with Section 409A of the Code since January 1,
2005 and has been, or may be, timely amended with the consent of the
participant, if necessary, to comply in good faith with Section 409A of the
Code and any applicable guidance, whether proposed or final, issued by the
IRS
with respect thereto;
(g) No
Internet America Benefit Plan is a multiple employer plan within the meaning
of
Section 413(c) of the Code; and
11
(h) No
Internet America Benefit Plan that is not subject to ERISA has any material
liabilities thereunder which are not otherwise fully funded, if applicable,
or
properly accrued and reflected under the Internet America Financial Statements
as of the date thereof.
Section 3.12 Labor
Matters.
(a) Collective
Bargaining.
As of
the date of this Agreement, (i) neither Internet America nor any of the
Internet America Subsidiaries is a party to, or bound by, any collective
bargaining agreement or similar Contract, agreement or understanding with a
labor union or similar labor organization and (ii) to Internet America’s
Knowledge, there are no organizational efforts with respect to the formation
of
a collective bargaining unit presently being made or threatened.
(b) Unfair
Labor Practices.
Except
for such matters that, individually or in the aggregate, have not had or caused
and would not reasonably be expected to have or cause an Internet America
Material Adverse Effect, (i) neither Internet America nor any Internet
America Subsidiary has received any written complaint of any unfair labor
practice or other unlawful employment practice or any written notice of any
material violation of any federal, state or local statutes, Applicable Laws,
ordinances, rules, regulations, Orders or directives with respect to the
employment of individuals by, or the employment practices of, Internet America
or any Internet America Subsidiary, or the work conditions, terms and conditions
of employment, wages or hours of their respective businesses, (ii) there
are no unfair labor practice charges or other employee related complaints
against Internet America or any Internet America Subsidiary pending or, to
the
Knowledge of Internet America threatened, before any Governmental Authority
by
or concerning the employees working in their respective businesses, and
(iii) there is no labor dispute, strike, slowdown or work stoppage against
Internet America or any of the Internet America Subsidiaries or, to the
Knowledge of Internet America, pending or threatened against Internet America
or
any of the Internet America Subsidiaries.
Section 3.13 Environmental
Matters. Except
for such matters that, individually or in the aggregate, have not had or caused
and would not reasonably be expected to have or cause an Internet America
Material Adverse Effect:
(a) Internet
America and each Internet America Subsidiary has been and is in compliance
with
all applicable Environmental, Health and Safety Laws and possesses and is in
compliance with any permits or licenses required under Environmental, Health
and
Safety Laws. To the Knowledge of Internet America, there are no past or present
facts, conditions or circumstances that interfere with or preclude, or could
interfere with or preclude if known to a Governmental Authority, the conduct
of
any of their respective businesses as now conducted or which interfere with
continued compliance with applicable Environmental, Health and Safety Laws;
(b) No
proceedings or investigations of any Governmental Authority are pending or,
to
the Knowledge of Internet America, threatened against Internet America or the
Internet America Subsidiaries that allege the violation of or seek to impose
liability pursuant to any Environmental, Health and Safety Laws, and, to the
Knowledge of Internet America, there are no past or present facts, conditions
or
circumstances at, on or arising out of, or otherwise associated with, any
current (or, to the Knowledge of any of the Internet America Companies, former)
businesses, assets or properties of Internet America or any Internet America
Subsidiary, which constitute a material violation of Environmental, Health
and
Safety Laws or are reasonably likely to give rise to (i) costs, expenses,
liabilities or obligations for any cleanup, remediation, disposal or corrective
action under any Environmental, Health and Safety Laws, (ii) Claims arising
for personal injury, property damage or damage to natural resources, or
(iii) fines, penalties or injunctive relief; and
(c) Neither
Internet America nor any of the Internet America Subsidiaries has
(i) received any written notice of noncompliance with, violation of, or
liability or potential liability under any Environmental, Health and Safety
Laws
or (ii) entered into or become subject to any consent decree, Order or
agreement with any Governmental Authority or other Persons pursuant to any
Environmental, Health and Safety Laws or relating to the cleanup of any
Hazardous Materials.
12
Section 3.14 Intellectual
Property. Except
for such matters that, individually or in the aggregate, have not had or caused
and would not reasonably be expected to have or cause an Internet America
Material Adverse Effect, (a) the products, services and operations of the
Internet America Companies do not infringe upon, violate or misappropriate
the
Intellectual Property of any Third Party, (b) the Internet America
Companies own or possess valid licenses or other valid rights to use the
Intellectual Property that they use, exercise or exploit in, or that may be
necessary or desirable for, their businesses as currently being conducted,
free
and clear of all Liens (other than Permitted Liens), and (c) to the
Knowledge of Internet America, there is no infringement of any Intellectual
Property owned by or licensed by or to any of the Internet America Companies.
To
Internet America’s Knowledge, there is no unauthorized use, disclosure,
infringement or misappropriation of any Intellectual Property of any Internet
America Company by any Person, including, without limitation, any employee
or
independent contractor (present or former) of Internet America or any Internet
America Subsidiary, that, individually or in the aggregate, has had or caused
or
could reasonably be expected to have or cause an Internet America Material
Adverse Effect.
Section 3.15 Insurance. Except
for such matters that, individually or in the aggregate, have not had or caused
and would not reasonably be expected to have or cause an Internet America
Material Adverse Effect:
(a) The
Internet America Companies maintain and will maintain through the Closing Date
insurance
adequate in character and amount with financially sound and reputable
insurers.
There
is no material default with respect to any provision contained in any insurance
policy or binder, and none of the Internet America Companies has failed to
give
any notice or present any claim under any such policy or binder in a timely
fashion; and
(b) To
the
Knowledge of Internet America, no event relating specifically to any of the
Internet America Companies has occurred that is reasonably likely, after the
date of this Agreement, to result in an upward adjustment in premiums under
any
insurance policies they maintain. Neither of the Internet America Companies
has
received notice from any insurer or agent of such insurer that substantial
capital improvements or other expenditures will have to be made in order to
continue such insurance policies. Excluding insurance policies that have expired
and been replaced in the ordinary course of business, no excess liability or
protection and indemnity insurance policy has been cancelled by the insurer
within one year prior to the date hereof, and to Internet America’s Knowledge,
no threat in writing has been made to cancel (excluding cancellation upon
expiration or failure to renew) any current insurance policy of Internet America
or any Internet America Subsidiary.
Section 3.16 Ownership
and Condition of Assets.
As of
the date hereof, Internet America or an Internet America Subsidiary has good
and
valid title to the assets of the Internet America Companies, other than defects
or irregularities of title that do not materially impair the ownership or
operation of such assets and in each case free and clear of all Liens, except
for Permitted Liens or Liens that have not had or caused and would not
reasonably be expected to have or cause an Internet America Material Adverse
Effect. The assets of the Internet America Companies are in good operating
condition, normal wear and tear excepted.
Section 3.17 Undisclosed
Liabilities. Neither
Internet America nor any of the Internet America Subsidiaries has any
liabilities or obligations of any nature, regardless of whether fixed, accrued,
contingent or otherwise, except liabilities and obligations that (a) are
fully reflected or reserved against in the Internet America Financial Statements
included in the Internet America Reports or described in the Internet America
Reports filed prior to the date hereof, (b) liabilities and obligations
arising under this Agreement and the transaction contemplated by this Agreement,
(c) liabilities or obligations incurred in the ordinary course of business
consistent with past practices since June 30, 2008 and (d) liabilities and
obligations that, individually or in the aggregate, have not had or caused
and
would not reasonably be expected to have or cause an Internet America Material
Adverse Effect.
Section 3.18 Material
Contracts.
All
material contracts, commitments and similar agreements to which any of the
Internet America Companies is a party or by which they or any of their property
is bound as
of the
date of this Agreement (other than this Agreement or any Related Document)
(the
“Internet
America Material Contracts”) are
filed as
an exhibit to the Internet America Reports filed prior to the date of this
Agreement. As of the date of this Agreement, each of the Internet America
Material Contracts is, to the Knowledge of Internet America, in full force
and
effect. Except for such matters that, individually or in the aggregate, have
not
had or caused and would not reasonably be expected to have or cause an Internet
America Material Adverse Effect, none of the Internet America Companies knows
of, or has received written notice of, any breach or violation of, or default
under (nor, to the Knowledge of any of the Internet America Companies, does
there exist any condition which with the passage of time or the giving of notice
or both would result in such a violation or default under), any Internet America
Material Contract, or has received written notice of the desire of the other
party or parties to any such Internet America Material Contract to exercise
any
rights such party has to cancel, terminate or repudiate such Contract or
exercise remedies thereunder.
13
Section
3.19
Tax
Representations.
Neither
Internet America nor, to Internet America’s Knowledge, any of its Affiliates has
taken, has agreed or failed to take, or intends to take any action or has any
Knowledge of any fact or circumstance that would prevent the Merger from
qualifying as a reorganization within the meaning of Section 368 of the
Code.
Section 3.20 No
Brokers; Investment Advisor. None
of the Internet America Companies has entered into any Contract with any Person
that may result in the obligation of Internet America, KeyOn or any of their
respective Subsidiaries to pay any finder’s fees, brokerage or other like
payments in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby. Internet America has
retained Xxxxxx Financial and Economic Advisory Service as its financial
advisor, the fee and expense reimbursement arrangements with which have been
disclosed in writing to KeyOn prior to the date hereof.
Section 3.21 Improper
Payments. Except
for such matters that, individually or in the aggregate, have not had or caused
and would not reasonably be expected to have or cause an Internet America
Material Adverse Effect: (a) no funds, assets or properties of Internet
America or its Affiliates have been used or offered for illegal purposes;
(b) no accumulation or use of any funds, assets or properties of Internet
America or its Affiliates has been made without being properly accounted for
in
the financial books and records of Internet America or its Affiliates;
(c) all payments by or on behalf of Internet America or its Affiliates have
been duly and properly recorded and accounted for in their financial books
and
records and such books and records accurately and fairly reflect all
transactions and dispositions of the assets of Internet America and its
Affiliates; (d) Internet America has devised and maintained systems that
provide reasonable assurances that transactions are and have been executed
in
accordance with management’s general or specific authorization; (e) neither
Internet America nor any of its Affiliates, nor any director, officer, agent,
employee or other Person associated with or acting on behalf of Internet America
or its Affiliates, has (i) used any corporate funds for any unlawful
contribution, gift, entertainment or payment of anything of value relating
to
political activity, (ii) made any direct or indirect unlawful payment to
any employee, agent, officer, director, representative or stockholder of a
Governmental Authority or political party, or official or candidate thereof,
or
any immediate family member of the foregoing or (iii) made any bribe,
unlawful rebate, payoff, influence payment, kickback or other unlawful payment
in connection with the conduct of Internet America’s or its Affiliates’
businesses; (f) none of Internet America, any of its Affiliates or any
agent of any of them has received any bribes, kickbacks or other improper
payments from vendors, suppliers or other Persons; and (g) Internet America
has no Knowledge that any payment made to a Person would be or has thereafter
been offered, given or provided to any foreign official, political party or
official thereof, or to any candidate for public office.
Section 3.22 No
Ownership of KeyOn Stock.
Internet America does not own any shares of KeyOn Common Stock or any other
securities convertible into or otherwise exercisable to acquire shares of KeyOn
Common Stock.
Section
3.23
No
Other Representations or Warranties. Except
for the representations and warranties contained in this Article 3,
neither
Internet America nor any other Person makes any other express or implied
representation or warranty on behalf of Internet America or any of its
Affiliates in connection with this Agreement or the transactions contemplated
hereby.
ARTICLE 4
REPRESENTATIONS
AND WARRANTIES OF KEYON
As
an
inducement for Internet America and AcquisitionSub to enter into this Agreement,
KeyOn hereby makes the following representations and warranties to Internet
America and AcquisitionSub; provided,
however, that
such
representations and warranties shall be subject to and qualified by:
(a) the disclosure letter delivered by KeyOn to Internet America as of the
date hereof (each section of which qualifies the correspondingly numbered
representation and warranty or covenant to the extent specified therein) (the
“KeyOn
Disclosure Letter”)
(it
being understood that (i) the disclosure of any fact or item in any section
of the KeyOn Disclosure Letter shall, should the existence of such fact or
item
be relevant to any other section, be deemed to be disclosed with respect to
that
other section to the extent that such disclosure is made in a manner that makes
its relevance to the other section reasonably apparent and (ii) the
disclosure of any matter or item in the KeyOn Disclosure Letter shall not be
deemed to constitute an acknowledgement that such matter or item is required
to
be disclosed therein or is material to a representation or warranty set forth
in
this Agreement and shall not be used as a basis for interpreting the terms
“material,” “materially,” “materiality,” “KeyOn
Material Adverse Effect”
or any
word or phrase of similar import and does not mean that such matter or item,
alone or together with any other matter or item, would constitute a KeyOn
Material Adverse Effect); and (b) information contained in the KeyOn
Reports (excluding any exhibits thereto and excluding disclosures under
“Risk
Factors”
and
other forward-looking or predictive statements) filed with the SEC prior to
the
date hereof (but only to the extent that such disclosure on its face appears
to
constitute information that would reasonably be deemed a qualification or
exception to the following representations and warranties).
14
Section 4.1 Corporate
Existence; Good Standing; Corporate Authority. KeyOn
is a corporation duly incorporated, validly existing and in good standing under
the Applicable Laws of the State of Delaware. KeyOn is duly qualified to conduct
business and is in good standing (to the extent such concept exists in the
relevant jurisdiction) in each jurisdiction in which the ownership, operation
or
lease of its property or the nature of KeyOn’s business requires such
qualification, except for jurisdictions in which any failures to be so qualified
or to be in good standing, individually or in the aggregate, have not had or
caused and would not reasonably be expected to have or cause a KeyOn Material
Adverse Effect. KeyOn has all requisite corporate power and authority to own
or
lease and operate its properties and assets and to carry on its business as
it
is currently being conducted. Each of the Amended and Restated Articles of
Incorporation (including any and all Certificates of Designations) and Bylaws
of
KeyOn (the “KeyOn
Charter Documents”),
is in
full force and effect, has not been amended or modified and has not been
terminated, superseded or revoked. KeyOn is not in violation of the KeyOn
Charter Documents.
Section 4.2 Authorization,
Validity and Effect of Agreements.
(a) Authority.
KeyOn
has the requisite corporate power and authority to execute and deliver this
Agreement and all other agreements, instruments, certificates and documents
contemplated hereunder (collectively, the “Related
Documents”)
to
which it is, or will become, a party, to perform its obligations hereunder
and
thereunder and to consummate the Merger, and all other transactions contemplated
hereunder and thereunder, except for the KeyOn Consent, which consent shall
be
obtained as a condition to closing. The execution, delivery and performance
of
this Agreement and the Related Documents and the consummation of the Merger
and
the other transactions contemplated hereunder and thereunder have been duly
authorized by all requisite corporate action on behalf of KeyOn, and no other
corporate proceedings by KeyOn are necessary to authorize the execution and
delivery of this Agreement or the Related Documents or to consummate the Merger
and the other transactions contemplated hereunder or under the Related
Documents, except for the approval of the Merger by KeyOn’s stockholders and the
filing of the Certificate of Merger pursuant to the DGCL.
(b) Binding
Obligations.
This
Agreement and each of the Related Documents to which each of KeyOn is a party
have been or will be duly executed by each of KeyOn and, assuming the due
authorization, execution and delivery hereof and thereof by Internet America
and
AcquisitionSub to the extent a party hereof and thereof, constitute the valid
and legally binding obligations of KeyOn, enforceable against each of KeyOn
in
accordance with their terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other Applicable Laws relating to or affecting
the
rights and remedies of creditors generally and to general principles of equity
(regardless of whether considered in a proceeding in equity or at law). KeyOn
has taken all action necessary to render Section 203 of the DGCL
inapplicable to this Agreement and the transactions contemplated
hereby.
Section 4.3 Capitalization.
(a) Authorized
and Outstanding Shares.
The
authorized capital stock of KeyOn consists of 95,000,000 shares of KeyOn
Common Stock and 5,000,000 shares of Series A Preferred Stock (the
“KeyOn
Preferred Stock”).
As of
the close of business on the date immediately preceding the date of this
Agreement, there were 8,714,845
issued and
outstanding shares of KeyOn Common Stock (including 80,000 restricted shares),
no shares of KeyOn Common Stock held by KeyOn in its treasury, and
no
issued
and outstanding shares of KeyOn Preferred Stock. The restrictions applicable
to
the 80,000 restricted shares of KeyOn Common Stock outstanding will lapse upon
the Effective Time. Section 4.3(a)
of the
KeyOn Disclosure Letter sets forth a true, correct and complete list of all
outstanding shares of KeyOn Common Stock subject to outstanding options,
warrants, conversion or similar rights (collectively, the “KeyOn
Equity Rights”),
or
reserved for future issuance. Except as set forth therein, there are no
outstanding or authorized stock appreciation, phantom stock, profit
participation or other similar rights with respect to KeyOn. All shares of
KeyOn
Common Stock are, and all shares of KeyOn Common Stock which may be issued
and
outstanding immediately prior to the Effective Time as permitted under this
Agreement shall be when issued, duly authorized, validly issued, fully paid
and
nonassessable shares of KeyOn Common Stock and not subject to any preemptive
rights.
15
(b) Other
Equity Interests.
Except
as otherwise provided in Section
4.3(a),
KeyOn
has no outstanding bonds, debentures, promissory notes or other Indebtedness
the
holders of which have the right to vote with the stockholders of KeyOn on
any matter or convertible or exercisable for Equity Interests having the right
to vote. As of the date of this Agreement, KeyOn and the KeyOn Subsidiaries
have
not issued, sold, granted or delivered, are not obligated to issue, sell, grant
or deliver (or to cause to be issued, sold, granted or delivered), and are
not a
party to any Contract or other obligation to issue, sell, grant or deliver,
any
Equity Interest (including, without limitation, any securities, options,
warrants, calls, rights, commitments, agreements, arrangements or undertakings
of any kind pursuant to which a Person is entitled to acquire an Equity
Interest) of any nature or any additional shares of capital stock or any other
Equity Interest in KeyOn or any KeyOn Subsidiary.
(c) KeyOn
Equity Rights.
Section 4.3(c)
of the
KeyOn Disclosure Letter sets forth a true, correct and complete list of all
outstanding KeyOn Equity Rights as of the date of this Agreement, including
grantee name, exercise price (if any), vesting schedule and other vesting
conditions to the extent not fully vested and expiration date. Since July 28,
2008, KeyOn has not (i) granted, conferred or awarded any KeyOn Equity Rights
that will not be exercised, converted or terminated by their terms by the
Effective Time, (ii) granted or issued any restricted stock or securities,
except as specifically contemplated by this Agreement, or (iii) amended or
otherwise modified any KeyOn Equity Rights. There are no outstanding or
authorized (i) contractual or other obligations of KeyOn or any of the
KeyOn Subsidiaries to repurchase, redeem or otherwise acquire any Equity
Interest of KeyOn or any of the KeyOn Subsidiaries or any such securities or
agreements referred to in the first sentence or (ii) voting trusts or
similar agreements to which KeyOn or any of the KeyOn Subsidiaries is a party
with respect to the voting of the capital stock of KeyOn or any of the KeyOn
Subsidiaries, except repurchases, redemptions or acquisitions that would have
an
immaterial effect on KeyOn and the KeyOn Subsidiaries, taken as a whole. At
the
Effective Time, all KeyOn Equity Rights will be assumed, converted or otherwise
terminated and of no further force or effect.
Section 4.4 Subsidiaries.
(a) Organization
and Qualification.
Each
KeyOn Subsidiary is a corporation or other legal entity duly organized or
constituted and validly existing under the Applicable Laws of its jurisdiction
of incorporation, organization or formation. Each KeyOn Subsidiary has all
requisite corporate, limited liability company, partnership or other business
power and authority to own or lease and operate its properties and assets and
to
carry on its business as currently conducted, except as would have an immaterial
effect on the KeyOn Companies, taken as a whole. Each KeyOn Subsidiary is duly
qualified to conduct business and is in good standing (to the extent such
concept exists in the relevant jurisdiction) in each jurisdiction in which
the
ownership or lease and operation of its property or the nature of its business
requires such qualification, except for jurisdictions in which any failures
to
be so qualified or to be in good standing, individually or in the aggregate,
have not had or caused and would not reasonably be expected to have or cause
a
KeyOn Material Adverse Effect. All of the outstanding shares of capital stock
of, or other Equity Interests in, each KeyOn Subsidiary are duly authorized,
validly issued, fully paid and nonassessable and are owned, directly or
indirectly, by KeyOn, free and clear of all Liens, except for Permitted Liens.
(b) List
of Subsidiaries.
Section 4.4(b)
of the
KeyOn Disclosure Letter sets forth all KeyOn Subsidiaries and the ownership
interest of such KeyOn Subsidiary held, directly or indirectly, by KeyOn.
KeyOn’s Subsidiaries are not in violation of their respective organizational
documents.
16
Section 4.5 Compliance
with Laws; Permits. Except
for such matters that, individually or in the aggregate, have not had or caused
and would not reasonably be expected to have or cause a KeyOn Material Adverse
Effect, and except for (x) matters relating to Taxes, which are treated
exclusively in Section 4.10,
(y) matters relating to KeyOn Benefit Plans, which are treated exclusively
under Section 4.11
and
(z) matters arising under Environmental, Health and Safety Laws, which are
treated exclusively in Section 4.13:
(a) Neither
KeyOn nor any KeyOn Subsidiary is in violation of any Applicable Law relating
to
the ownership or operation of any of its assets, and no Claim is pending or,
to
the Knowledge of KeyOn, threatened with respect to any such matters;
(b) KeyOn
and
each KeyOn Subsidiary hold all permits, licenses, certifications, variations,
exemptions, Orders, franchises, registrations, filings, approvals,
authorizations or other required grant of operating authority required by any
Governmental Authority necessary for the conduct of their respective businesses
(the “KeyOn
Permits”).
All
KeyOn Permits are in full force and effect and there exists no default
thereunder or breach thereof, and KeyOn has no notice or Knowledge that such
KeyOn Permits will not be renewed in the ordinary course after the Effective
Time. No Governmental Authority has given, or to the Knowledge of KeyOn,
threatened to give, notice of any action to terminate, cancel or reform any
KeyOn Permits; and
(c) KeyOn
and
each KeyOn Subsidiary possesses all KeyOn Permits required for the present
ownership or lease, as the case may be, of its business and operation of its
property, and there exists no default or breach with respect to, and no Person,
including any Governmental Authority, has taken or, to the Knowledge of KeyOn,
threatened to take, any action to terminate, cancel or reform any such KeyOn
Permit.
Section 4.6 No
Conflict; Consents.
(a) No
Conflict.
The
execution and delivery by each of KeyOn of this Agreement and the Related
Documents, the performance of the obligations of KeyOn hereunder and thereunder
and the consummation by KeyOn of the Merger and the other transactions
contemplated hereby and thereby in accordance with the terms hereof and thereof
will not (i) conflict with or result in a breach of any provisions of its
organizational documents, (ii) violate, conflict with, result in a breach of
any
provision of, constitute a default (or an event which, with notice or lapse
of
time or both, would constitute a default) under, impair KeyOn’s rights under,
alter the rights or obligations of third parties under, result in the
termination of or in a right of termination or cancellation of, give rise to
a
right of purchase under, or accelerate the performance required by, any KeyOn
Material Contract or other Contract except for the Assumed Warrants, (iii)
result in the creation of any Lien (other than Permitted Liens) upon any of
the
properties or assets of KeyOn or the KeyOn Subsidiaries under any KeyOn Material
Contract or by which KeyOn or the KeyOn Subsidiaries or any of their properties
is bound or affected, (iv) result in any KeyOn Material Contract being
declared void, voidable, or without further binding effect, or (v) (assuming
that the consents and approvals referred to in Section 4.6(b)
are duly
and timely made or obtained and that the KeyOn Consent is obtained), contravene,
conflict with or constitute a violation of any provision of any Applicable
Law
binding upon or applicable to KeyOn or any of the KeyOn Subsidiaries, other
than
any such violations, conflicts, breaches, defaults, impairments, alterations,
terminations, cancellations, purchase rights, accelerations or Liens that,
individually or in the aggregate, have not had or caused and would not
reasonably be expected to have or cause a KeyOn Material Adverse Effect.
(b) Required
Consents.
Neither
the execution and delivery by KeyOn of this Agreement or any Related Document
nor the consummation by KeyOn of the Merger and the other transactions
contemplated hereby or thereby in accordance with the terms hereof or thereof
will require any consent, approval or authorization of, notice to or filing
or
registration with any Governmental Authority, other than (i) the filing of
the
Certificate of Merger with the Secretary of State of the State of Delaware,
and
appropriate documents required to be filed as a result of the Merger with the
relevant Governmental Authorities in the states and foreign jurisdictions in
which KeyOn is qualified to conduct business, and (ii) the filing and
effectiveness of the Information/Registration Statement with the SEC in
accordance with the Exchange Act and the dissemination of the Information
Statement to all KeyOn Stockholders, except for any failures to obtain any
such
consent, approval or authorization or to make any such filing, notification
or
registration that, individually or in the aggregate, have not had or caused
and
would not reasonably be expected to have or cause a KeyOn Material Adverse
Effect.
17
Section 4.7 SEC
Documents.
KeyOn
has filed with the SEC all documents required to be so filed by it since August
9, 2007 pursuant to Sections 13(a), 14(a) and 15(d) of the Exchange Act
(collectively, the “KeyOn
Reports”).
As of
its respective date or, if amended by a subsequent filing prior to the date
hereof, on the date of such filing, each KeyOn Report complied in all material
respects with the applicable requirements of the Exchange Act, SOX and the
rules
and regulations thereunder and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or
necessary to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. Specifically, the number of Active
Subscribers of KeyOn contained in the KeyOn Reports is accurate as of the date
of each report and the number of Active Subscribers of KeyOn at September 30,
2008 is 15,520. Each of the consolidated balance sheets included in or
incorporated by reference into the KeyOn Reports (including the related notes
and schedules) fairly presents in all material respects the consolidated
financial position of KeyOn and the KeyOn Subsidiaries as of its date, and
each
of the consolidated statements of operations, cash flows and changes in
stockholders’ equity included in or incorporated by reference into the KeyOn
Reports (including any related notes and schedules) fairly presents in all
material respects the results of operations, cash flows or changes in
stockholders’ equity, as the case may be, of KeyOn and the KeyOn Subsidiaries
for the periods set forth therein (such consolidated balance sheets and
consolidated statements of operations, cash flows and changes in stockholders’
equity, each including the notes and schedules thereto, the “KeyOn
Financial Statements”).
The
KeyOn Financial Statements (i) complied as to form in all material respects
with the published rules and regulations of the SEC and (ii) were prepared
in accordance with GAAP consistently applied during the periods involved, except
as may be noted in the KeyOn Financial Statements or as permitted by
Form 10-Q or Form 8-K.
Section 4.8 Litigation. Except
(a) matters relating to Tax matters, which are treated exclusively under
Section 4.10,
(b) matters relating to KeyOn Benefit Plans, which are treated exclusively
under Section 4.11
and
(c) matters arising under Environmental, Health and Safety Laws, which are
treated exclusively under Section 4.13,
there
is no litigation, arbitration, mediation, action, suit, Claim, proceeding or
investigation, whether legal or administrative, pending against KeyOn or any
of
the KeyOn Subsidiaries or, to KeyOn’s Knowledge, threatened against KeyOn or any
of the KeyOn Subsidiaries or any of their respective assets, properties or
operations, at Applicable Law or in equity, before or by any Governmental
Authority or any Order of any Governmental Authority that, individually or
in
the aggregate, and taking into consideration the aggregate amounts reserved
for
any such matters in KeyOn’s consolidated balance sheet at December 31, 2007, has
had or caused or would reasonably be expected to have or cause a KeyOn Material
Adverse Effect.
Section 4.9 Absence
of Certain Changes. From
December 31, 2007 to the date of this Agreement, except as described in the
KeyOn Reports, there has not been (a) any event or occurrence that has had
or caused or would reasonably be expected to have or cause a KeyOn Material
Adverse Effect, (b) any material change by KeyOn or any of the KeyOn
Subsidiaries, when taken as a whole, in any of its accounting methods,
principles or practices or any of its Tax methods, practices or elections,
(c) any declaration, setting aside or payment of any dividend or
distribution in respect of any capital stock of KeyOn or any redemption,
purchase or other acquisition of any of its capital stock or (d) except in
the ordinary course of business consistent with past practices, any increase
in
or establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option, stock purchase or other
employee benefit plan.
Section 4.10 Taxes.
(a) Except
for such matters that, individually or in the aggregate, have not had or caused
and would not reasonably be expected to have or cause a KeyOn Material Adverse
Effect:
(i) The
KeyOn
Companies have timely filed, or have caused to be timely filed on their behalf,
all Tax Returns required to be filed by or on behalf of the KeyOn Companies
in
the manner prescribed by Applicable Law. All such Tax Returns are complete
and
correct. The KeyOn Companies have timely paid all Taxes due and owing, and,
in
accordance with GAAP, the most recent KeyOn Financial Statements contained
in
the KeyOn Reports reflect a reserve (excluding any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) for
all
Taxes payable by the KeyOn Companies for all Taxable periods and portions
thereof through the date of such KeyOn Financial Statements;
(ii) No
Tax
Return of the KeyOn Companies is under audit or examination by any Tax
Authority, and no written or, to the Knowledge of KeyOn, unwritten notice of
such an audit or examination has been received by the KeyOn Companies. There
is
no assessed deficiency, refund litigation, proposed adjustment or matter in
controversy with respect to any Taxes due and owing by the KeyOn Companies;
18
(iii) Since
December 31, 2007, the KeyOn Companies have not made or rescinded any election
relating to Taxes or settled or compromised any Claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to any
Taxes, or, except as may be required by Applicable Law, made any change to
any
of their methods of reporting income or deductions for federal income Tax
purposes from those employed in the preparation of their most recently filed
federal Tax Returns;
(iv) There
is
no agreement or other document extending, or having the effect of extending,
the
period of assessment or collection of any material Taxes and no power of
attorney with respect to any such Taxes has been executed or filed with any
Tax
Authority by or on behalf of the KeyOn Companies;
(v) Except
for statutory Liens for Taxes not yet due, no Liens for Taxes exist with respect
to any assets or properties of the KeyOn Companies;
(vi) Except
for any agreements or arrangements (A) with customers, vendors, lessors or
similar Persons entered into in the ordinary course of business or
(B) among the KeyOn Companies, none of the KeyOn Companies is a party to or
bound by any Tax sharing agreement, Tax indemnity obligation or agreement or
arrangement with respect to Taxes (including any advance pricing agreement,
closing agreement or other agreement relating to Taxes with any Tax Authority);
(vii) The
KeyOn
Companies have complied with all Applicable Law relating to the payment and
withholding of Taxes (including withholding of Taxes pursuant to
Sections 1441, 1442 and 3402 of the Code or similar provisions of any other
Tax Law) and have, within the time and the manner prescribed by applicable
Tax
Law, withheld from and paid over to the proper Tax Authorities all amounts
required to be so withheld and paid over under applicable Tax Law;
(viii) None
of
the KeyOn Companies shall be required to include in a Taxable period ending
after the Closing Date any item of income that accrued in a prior Taxable period
but was not recognized in any prior Taxable period as a result of the
installment method of accounting, the long-term contract method of accounting,
the cash method of accounting or Section 481 of the Code or comparable
provisions of any other Tax Law; and
(ix) None
of
the KeyOn Companies has participated in any “reportable transaction” as defined
in Treasury Regulation Section 1.6011-4.
(b) None
of
the KeyOn Companies knows of any fact, agreement, plan, or other circumstance,
or has taken or failed to take any action, that would reasonably be expected
to
prevent the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
Section 4.11 Employee
Benefit Plans.
(a) Section 4.11(a)
of the
KeyOn Disclosure Letter contains a list of all KeyOn Benefit Plans. To the
extent applicable, the KeyOn Benefit Plans comply in all material respects
with
the requirements of ERISA and the Code or with the Applicable Laws and
regulations of any applicable jurisdiction; the KeyOn Benefit Plans have been
maintained and operated in compliance in all material respects with their terms;
to KeyOn’s Knowledge, there are no breaches of fiduciary duty in connection with
the KeyOn Benefit Plans for which KeyOn could be liable; there are no pending
or, to KeyOn’s Knowledge, threatened Claims against or otherwise involving any
KeyOn Benefit Plan that, individually or in the aggregate, have had or caused
or
would reasonably be expected to have or cause a KeyOn Material Adverse Effect,
and no suit, action or other litigation (excluding claims for benefits incurred
in the ordinary course of the KeyOn Benefit Plan activities) has been brought
against or with respect to any such KeyOn Benefit Plan for which KeyOn could
be
liable that, individually or in the aggregate, have had or caused or would
reasonably be expected to have or cause an KeyOn Material Adverse Effect. All
material contributions required to be made as of the date hereof to KeyOn
Benefit Plans have been made or have been properly accrued and are reflected
in
the KeyOn Financial Statements as of the date thereof.
19
(b) Neither
KeyOn nor any of the KeyOn Subsidiaries contributes to, or has an obligation
to
contribute to, and has not within six years prior to the Effective Time
contributed to, or had an obligation to contribute to or has any material
liability, contingent or otherwise, with respect to, (i) a “multiemployer
plan” within the meaning of Section 3(37) of ERISA, (ii) any plan that
is covered by Title IV of ERISA, (iii) any plan subject to
Section 412 of the Code or (iv) any plan funded by a “voluntary
employees’ benefits association” within the meaning of Section 501(c)(9) of
the Code.
(c) No
KeyOn
Benefit Plan maintained by the KeyOn Companies provides medical, surgical,
hospitalization, death or similar benefits (regardless of whether insured)
for
employees or former employees of KeyOn or any KeyOn Subsidiary for periods
extending beyond their retirement or other termination of service other than
coverage mandated by Applicable Law.
(d) All
accrued material obligations of the KeyOn Companies, whether arising by
operation of Applicable Law, Contract, or past custom, for compensation and
benefits, including, but not limited to, bonuses and accrued vacation, and
benefits under KeyOn Benefit Plans, have been paid or adequate accruals for
such
obligations are reflected on the KeyOn Financial Statements as of the date
thereof.
(e) Section 4.11(e)
of the
KeyOn Disclosure Letter sets forth an accurate and complete list of each KeyOn
Benefit Plan (and the particular circumstances described in this Section 4.11(e)
relating
to such KeyOn Benefit Plan) under which the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby could
(either alone or in conjunction with any other event, such as termination of
employment), result in, cause the accelerated vesting, funding or delivery
of,
or increase the amount or value of, any payment or benefit to any employee,
officer or director of KeyOn or any of the KeyOn Subsidiaries.
(f) Section 4.11(f)
of the
KeyOn Disclosure Letter contains a description that is accurate and correct
in
all material respects, of all amounts estimated to be paid or payable (whether
in cash, in property, or in the form of benefits, accelerated cash, property,
or
benefits, or otherwise) in connection with the transactions contemplated hereby
(solely as a result thereof) that were or will be an “excess parachute payment”
within the meaning of Section 280G of the Code.
(g) Each
KeyOn Benefit Plan which is or reasonably could be determined to be an
arrangement subject to Section 409A of the Code has been operated in good
faith compliance with Section 409A of the Code since January 1, 2005
and has been, or may be, timely amended with the consent of the participant,
if
necessary, to comply in good faith with Section 409A of the Code and any
applicable guidance, whether proposed or final, issued by the IRS with respect
thereto.
(h) No
KeyOn
Benefit Plan is a multiple employer plan within the meaning of
Section 413(c) of the Code.
(i) No
KeyOn
Benefit Plan that is not subject to ERISA has any material liabilities
thereunder which are not otherwise fully funded, if applicable, or properly
accrued and reflected under the KeyOn Financial Statements as of the date
thereof.
Section 4.12 Labor
Matters.
(a) As
of the
date of this Agreement, (i) neither KeyOn nor any of the KeyOn Subsidiaries
is a party to, or bound by, any collective bargaining agreement or similar
Contract, agreement or understanding with a labor union or similar labor
organization and (ii) to KeyOn’s Knowledge, there are no organizational
efforts with respect to the formation of a collective bargaining unit presently
being made or threatened.
(b) Except
for such matters that, individually or in the aggregate, have not had or caused
and would not reasonably be expected to have or cause a KeyOn Material Adverse
Effect, (i) neither KeyOn nor any KeyOn Subsidiary has received any written
complaint of any unfair labor practice or other unlawful employment practice
or
any written notice of any material violation of any federal, state or local
statutes, Applicable Laws, ordinances, rules, regulations, Orders or directives
with respect to the employment of individuals by, or the employment practices
of, KeyOn or any KeyOn Subsidiary, or the work conditions, terms and conditions
of employment, wages or hours of their respective businesses, (ii) there
are no unfair labor practice charges or other employee related complaints
against KeyOn or any KeyOn Subsidiary pending or, to the Knowledge of KeyOn
threatened, before any Governmental Authority by or concerning the employees
working in their respective businesses, and (iii) there is no labor
dispute, strike, slowdown or work stoppage against KeyOn or any of the KeyOn
Subsidiaries or, to the Knowledge of KeyOn, pending or threatened against KeyOn
or any of the KeyOn Subsidiaries.
20
Section 4.13 Environmental
Matters. Except
for such matters that, individually or in the aggregate, have not had or caused
and would not reasonably be expected to have or cause a KeyOn Material Adverse
Effect:
(a) KeyOn
and
each KeyOn Subsidiary has been and is in compliance with all applicable
Environmental, Health and Safety Laws and possesses and is in compliance with
any permits or licenses required under Environmental, Health and Safety Laws.
To
the Knowledge of KeyOn, there are no past or present facts, conditions or
circumstances that interfere with or preclude, or could interfere with or
preclude if known to a Governmental Authority, the conduct of any of their
respective businesses as now conducted or which interfere with continued
compliance with applicable Environmental, Health and Safety Laws;
(b) No
proceedings or investigations of any Governmental Authority are pending or,
to
the Knowledge of KeyOn, threatened against KeyOn or the KeyOn Subsidiaries
that
allege the violation of or seek to impose liability pursuant to any
Environmental, Health and Safety Laws, and, to the Knowledge of KeyOn, there
are
no past or present facts, conditions or circumstances at, on or arising out
of,
or otherwise associated with, any current (or, to the Knowledge of any of the
KeyOn Companies, former) businesses, assets or properties of KeyOn or any KeyOn
Subsidiary, which constitute a material violation of Environmental, Health
and
Safety Laws or are reasonably likely to give rise to (i) costs, expenses,
liabilities or obligations for any cleanup, remediation, disposal or corrective
action under any Environmental, Health and Safety Laws, (ii) Claims arising
for personal injury, property damage or damage to natural resources, or
(iii) fines, penalties or injunctive relief; and
(c) Neither
KeyOn nor any of the KeyOn Subsidiaries has (i) received any written notice
of noncompliance with, violation of, or liability or potential liability under
any Environmental, Health and Safety Laws or (ii) entered into or become
subject to any consent decree, Order or agreement with any Governmental
Authority or other Persons pursuant to any Environmental, Health and Safety
Laws
or relating to the cleanup of any Hazardous Materials.
Section 4.14 Intellectual
Property. Except
for such matters that, individually or in the aggregate, have not had or caused
and would not reasonably be expected to have or cause a KeyOn Material Adverse
Effect, (a) the products, services and operations of the KeyOn Companies do
not infringe upon, violate or misappropriate the Intellectual Property of any
Third Party, (b) the KeyOn Companies own or possess valid licenses or other
valid rights to use the Intellectual Property that they use, exercise or exploit
in, or that may be necessary or desirable for, their businesses as currently
being conducted, free and clear of all Liens (other than Permitted Liens),
and
(c) to the Knowledge of KeyOn, there is no infringement of any Intellectual
Property owned by or licensed by or to any of the KeyOn Companies. To KeyOn’s
Knowledge, there is no unauthorized use, disclosure, infringement or
misappropriation of any Intellectual Property of any KeyOn Company by any
Person, including, without limitation, any employee or independent contractor
(present or former) of KeyOn or any KeyOn Subsidiary, that, individually or
in
the aggregate, has had or caused or could reasonably be expected to have or
cause an KeyOn Material Adverse Effect.
Section 4.15 Insurance. Except
for such matters that, individually or in the aggregate, have not had or caused
and would not reasonably be expected to have or cause a KeyOn Material Adverse
Effect:
(a) The
KeyOn
Companies maintain and will maintain through the Closing Date insurance
adequate in character and amount with financially sound and reputable
insurers.
There
is no material default with respect to any provision contained in any insurance
policy or binder, and none of the KeyOn Companies has failed to give any notice
or present any claim under any such policy or binder in a timely fashion.
(b) To
the
Knowledge of KeyOn, no event relating specifically to any of the KeyOn Companies
has occurred that is reasonably likely, after the date of this Agreement, to
result in an upward adjustment in premiums under any insurance policies they
maintain. Neither of the KeyOn Companies has received notice from any insurer
or
agent of such insurer that substantial capital improvements or other
expenditures will have to be made in order to continue such insurance policies.
Excluding insurance policies that have expired and been replaced in the ordinary
course of business, no excess liability or protection and indemnity insurance
policy has been cancelled by the insurer within one year prior to the date
hereof, and to KeyOn’s Knowledge, no threat in writing has been made to cancel
(excluding cancellation upon expiration or failure to renew) any current
insurance policy of KeyOn or any KeyOn Subsidiary.
21
Section 4.16 Ownership
and Condition of Assets.
As of
the date hereof, KeyOn or a KeyOn Subsidiary has good and valid title to the
assets of the KeyOn Companies, other than defects or irregularities of title
that do not materially impair the ownership or operation of such assets and
in
each case free and clear of all Liens, except for Permitted Liens or Liens
that
have not had or caused and would not reasonably be expected to have or cause
a
KeyOn Material Adverse Effect. The assets of the KeyOn Companies are in good
operating condition, normal wear and tear excepted.
Section 4.17 Undisclosed
Liabilities. Neither
KeyOn nor any of the KeyOn Subsidiaries has any liabilities or obligations
of
any nature, regardless of whether fixed, accrued, contingent or otherwise,
except liabilities and obligations that (a) are fully reflected or reserved
against in the KeyOn Financial Statements included in the KeyOn Reports or
described in the KeyOn Reports filed prior to the date hereof,
(b) liabilities and obligations arising under this Agreement and the
transaction contemplated by this Agreement, (c) liabilities or obligations
incurred in the ordinary course of business consistent with past practices
since
December 31, 2007 and (d) liabilities and obligations that, individually or
in the aggregate, have not had or caused and would not reasonably be expected
to
have or cause a KeyOn Material Adverse Effect.
Section 4.18 Material
Contracts. All
material contracts, commitments and similar agreements to which any of the
KeyOn
Companies is a party or by which they or any of their property is bound
as
of the
date of this Agreement (other than this Agreement or any Related Document)
(the
“KeyOn
Material Contracts”) are
filed as
an exhibit to the KeyOn Reports filed prior to the date of this Agreement to
which KeyOn or any KeyOn Subsidiary is a party or by which any of them is bound.
As of the date of this Agreement, each of the KeyOn Material Contracts is,
to
the Knowledge of KeyOn, in full force and effect. Except for such matters that,
individually or in the aggregate, have not had or caused and would not
reasonably be expected to have or cause a KeyOn Material Adverse Effect, none
of
the KeyOn Companies knows of, or has received written notice of, any breach
or
violation of, or default under (nor, to the Knowledge of any of the KeyOn
Companies, does there exist any condition which with the passage of time or
the
giving of notice or both would result in such a violation or default under),
any
KeyOn Material Contract, or has received written notice of the desire of the
other party or parties to any such KeyOn Material Contract to exercise any
rights such party has to cancel, terminate or repudiate such Contract or
exercise remedies thereunder.
Section
4.19
Tax
Representations.
Neither
KeyOn nor, to KeyOn’s Knowledge, any of its Affiliates has taken, has agreed or
failed to take, or intends to take any action or has any Knowledge of any fact
or circumstance that would prevent the Merger from qualifying as a
reorganization within the meaning of Section 368 of the Code.
Section 4.20 No
Brokers; Investment Advisor. None
of the KeyOn Companies has entered into any Contract with any Person that may
result in the obligation of KeyOn, KeyOn or any of their respective Subsidiaries
to pay any finder’s fees, brokerage or other like payments in connection with
the negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby. The KeyOn Board has received the opinion
of
Source Capital Group Inc. to the effect that, as of the date of such opinion
and
subject to the assumptions, qualifications and limitations set forth therein,
the Merger Consideration is fair, from a financial point of view, to the holders
of KeyOn Common Stock. KeyOn will promptly deliver a copy of such written
opinions to Internet America solely for informational purposes after receipt
thereof by KeyOn.
22
Section 4.21 Improper
Payments. Except
for such matters that, individually or in the aggregate, have not had or caused
and would not reasonably be expected to have or cause a KeyOn Material Adverse
Effect: (a) no funds, assets or properties of KeyOn or its Affiliates have
been used or offered for illegal purposes; (b) no accumulation or use of
any funds, assets or properties of KeyOn or its Affiliates has been made without
being properly accounted for in the financial books and records of KeyOn or
its
Affiliates; (c) all payments by or on behalf of KeyOn or its Affiliates
have been duly and properly recorded and accounted for in their financial books
and records and such books and records accurately and fairly reflect all
transactions and dispositions of the assets of KeyOn and its Affiliates;
(d) KeyOn has devised and maintained systems that provide reasonable
assurances that transactions are and have been executed in accordance with
management’s general or specific authorization; (e) neither KeyOn nor any
of its Affiliates, nor any director, officer, agent, employee or other Person
associated with or acting on behalf of KeyOn or its Affiliates, has
(i) used any corporate funds for any unlawful contribution, gift,
entertainment or payment of anything of value relating to political activity,
(ii) made any direct or indirect unlawful payment to any employee, agent,
officer, director, representative or stockholder of a Governmental Authority
or
political party, or official or candidate thereof, or any immediate family
member of the foregoing or (iii) made any bribe, unlawful rebate, payoff,
influence payment, kickback or other unlawful payment in connection with the
conduct of KeyOn’s or its Affiliates’ businesses; (f) none of KeyOn, any of
its Affiliates or any agent of any of them has received any bribes, kickbacks
or
other improper payments from vendors, suppliers or other Persons; and
(g) KeyOn has no Knowledge that any payment made to a Person would be or
has thereafter been offered, given or provided to any foreign official,
political party or official thereof, or to any candidate for public office.
Section 4.22
Board of Director Approval; Consent.
As of or prior to the date of this Agreement, the KeyOn Board has, by
resolutions duly adopted at a meeting of all directors on the KeyOn Board,
which
meeting was duly called and held, (a) determined that the Merger is
advisable and in the best interests of KeyOn and KeyOn’s stockholders,
(b) approved the Merger and this Agreement, (c) recommended that the
stockholders of KeyOn approve this Agreement and the Merger and (d) approved
the
submission to the stockholders of KeyOn owning beneficially a majority of the
outstanding shares of KeyOn Common Stock of a written consent approving this
Agreement and the Merger and, upon receipt of the KeyOn Consent, the filing
with
the SEC of the KeyOn Information/Registration Statement.
Section 4.23
State Takeover Statutes. Assuming
the accuracy of the representation of Internet America in Section 3.22, KeyOn
has, or will have prior to the Effective Time, taken all necessary action so
that, assuming compliance by KeyOn with its obligations hereunder and the
accuracy of the representations and warranties made by KeyOn herein, no
“business combination,” “moratorium,” “fair price,” “control share acquisition,”
or other state antitakeover statute or regulation, nor any takeover-related
provision in the KeyOn Charter Documents or the AcquisitionSub Charter
Documents, would apply to this Agreement, any Related Documents or the Merger.
Section 4.24 No
Other Representations or Warranties. Except
for the representations and warranties contained in this Article 4,
neither
KeyOn nor any other Person makes any other express or implied representation
or
warranty on behalf of KeyOn or any of its Affiliates in connection with this
Agreement or the transactions contemplated hereby.
ARTICLE 5
COVENANTS
Section 5.1 Business
in Ordinary Course. Except
as permitted or contemplated by the terms of this Agreement, and except as
provided in Section 5.1
of the
Internet America Disclosure Letter or the KeyOn Disclosure Letter (as the case
may be), unless with the prior written consent of the other Party hereto (which
consent shall not be unreasonably withheld, delayed or conditioned), during
the
period from the date hereof and continuing until the earlier of the termination
of this Agreement pursuant to its terms or the Effective Time, each of KeyOn
and
Internet America shall, and shall cause each of their respective Subsidiaries,
to carry on its business in all material respects in the usual, regular and
ordinary course, in substantially the same manner as heretofore conducted,
and
use their respective commercially reasonable best efforts consistent with past
practices and policies to (a) preserve intact their respective present
business organizations and goodwill, (b) keep available the services of
their respective present executive officers, directors and key employees and
(c) preserve their relationships with customers, suppliers, agents and
creditors.
23
Section 5.2 Conduct
of Business Pending Closing. Without
limiting the generality of Section 5.1,
except
as permitted or contemplated by the terms of this Agreement, and except as
provided in Section 5.2
of the
Internet America Disclosure Letter or the KeyOn Disclosure Letter (as the case
may be) or as required by Applicable Law or Governmental Authority, during
the
period from the date hereof and continuing until the earlier of the termination
of this Agreement pursuant to its terms or the Effective Time, neither Internet
America nor KeyOn shall, and neither Internet America nor KeyOn shall permit
any
of the KeyOn Subsidiaries or Internet America Subsidiaries (as applicable)
to do
any of the following without the prior written consent of the other Party
hereto, which consent must be given or withheld within three calendar days
of
the request therefor:
(a) amend
or
propose to amend its certificate or articles of incorporation, bylaws,
certificate of formation, certificate of organization, certificate of limited
partnership, limited liability company agreement, operating agreement,
partnership agreement, or other governing or organizational documents;
(b) adjust,
split, combine, reclassify or dispose of any of its outstanding Equity Interests
(other than dispositions by or among direct or indirect wholly owned
Subsidiaries and cancellations of stock options or restricted stock grants
forfeited in accordance with the terms of a Benefit Plan in existence on the
date of this Agreement or related stock option or restricted stock grant
agreements);
(c) declare,
set aside or pay any dividends or other distributions (whether payable in cash,
property or Equity Interests) with respect to its Equity Interests (other than
by or among direct or indirect wholly owned Subsidiaries);
(d) (i)
issue
any Equity Interests, effect any stock split or otherwise change its
capitalization as it existed on the date of this Agreement, except pursuant
to
(A) the exercise of options disclosed in this Agreement or the Internet
America Disclosure Letter or the KeyOn Disclosure Letter, (B) the conversion
of
the Convertible Notes or the grant or exercise of awards granted after the
date
of this Agreement and expressly permitted under this Agreement, (C) the
Internet America Rights Agreement in accordance with the terms thereof, or
(D)
the issuance of shares of KeyOn Common Stock as expressly required or permitted
by this Agreement, (ii) grant, confer or award any option, warrant,
conversion right or other right to acquire or otherwise with respect to any
shares of its capital stock or other equity securities, or grant or issue any
restricted stock or securities, (iii) amend or otherwise modify any option,
warrant, conversion right or other right to acquire any shares of its capital
stock existing at July 28, 2008, except as expressly required or permitted
by
this Agreement, (iv) with respect to any of its former, present or future
officers, directors or employees, increase any compensation or benefits, award
or pay any bonuses, establish any bonus plan or arrangement or enter into,
amend
or extend (or permit the extension of) any employment or consulting agreement,
(v) adopt any new employee benefit plan or agreement (including any stock
option, stock benefit or stock purchase plan) or amend any existing employee
benefit plan in any material respect, except in each case as expressly required
or permitted under this Agreement or as disclosed in the KeyOn Disclosure Letter
or the Internet America Disclosure Letter, or (vi) permit any holder of an
option or other award pertaining to shares of Internet America Common Stock
or
KeyOn Common Stock to have shares withheld upon exercise, vesting or payment
for
tax purposes, in excess of the number of shares needed to satisfy the minimum
statutory withholding requirements for federal and state tax withholding;
(e) purchase,
redeem or otherwise acquire any of its outstanding Equity Interests, except
(i) by or among direct or indirect wholly-owned Subsidiaries, or
(ii) Equity Interests purchased or withheld to satisfy Tax withholding
obligation in connection with the vesting, lapse of forfeiture restrictions
or
exercise (as applicable) of stock options, restricted stocks and similar awards
by the grantees thereof;
(f) sell,
lease, license, or otherwise dispose of, or enter into a contract to sell,
lease, license or otherwise dispose of, any of its assets (including capital
stock of Subsidiaries) which are, individually or in the aggregate, material
to
it and its Subsidiaries, taken as a whole, except for (i) sales of surplus
or obsolete equipment, (ii) sales of other assets in the ordinary course of
business or sales of assets pursuant to contractual rights existing as of the
date of this Agreement that were entered into the ordinary course of business
consistent with past practices, (iii) sales, leases or other transfers
between such Party and its wholly owned Subsidiaries or between those
Subsidiaries, (iv) sales, dispositions or divestitures as may be required
by or in conformance with Applicable Laws in order to permit or facilitate
the
consummation of the transactions contemplated by this Agreement, or
(v) arm’s-length sales or other transfers not described in clauses (i)
through (iv) above for aggregate consideration not exceeding $50,000 for
each of KeyOn and Internet America;
(g) liquidate,
wind-up, dissolve or adopt any plan to liquidate, wind-up or dissolve (or suffer
any liquidation or dissolution) (other than direct or indirect wholly owned
Subsidiaries);
24
(h) acquire
or agree to acquire by merger, consolidation or otherwise (including by purchase
of Equity Interests or all or substantially all of the assets) the business
of
any Person or a division thereof;
(i) make
any
loans, advances or capital contributions to, or investments in, any Person
(other than (i) loans, advances or capital contributions to a wholly owned
Subsidiary or loans or advances from such a Subsidiary, (ii) customer loans
and advances to employees consistent with past practices or
(iii) short-term investments of cash in the ordinary course of business in
accordance with the cash management procedures of Internet America, KeyOn or
their respective Subsidiaries (as the case may be));
(j) terminate
or amend any Internet America Material Contract or KeyOn Material Contract
(as
the case may be) or waive or assign any of its rights under any Internet America
Material Contract or KeyOn Material Contract (as the case may be), in each
case
in a manner that would be materially adverse to Internet America or KeyOn (as
the case may be), or enter into any Internet America Material Contract or KeyOn
Material Contract (as the case may be) other than customer Contracts entered
into in the ordinary course of business;
(k) incur
any
Indebtedness in excess of $25,000, in the aggregate, or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights to
acquire any of its debt securities or any of its Subsidiaries or guarantee
any
debt securities of others, other than (A) borrowings from that Party’s or
its Subsidiary’s credit facility (the Convertible Notes in the case of KeyOn) in
the ordinary course of business in an amount not in excess of $50,000,
(B) borrowings the proceeds of which are used to repay or repurchase other
indebtedness of that Party or its Subsidiaries, or (C) borrowings in
respect of intercompany debt, or (ii) enter into any material lease
(whether such lease is an operating or capital lease) or create any material
Liens (other than Permitted Liens) on its property including any Equity
Interests in its Subsidiaries except in the ordinary course of business or
with or between its Subsidiaries; provided,
however,
that
for purposes of this Section 5.2(k),
neither
the incurrence of Indebtedness to finance, directly or indirectly, acquisitions
of the business, assets or Equity Interests of another Person nor the incurrence
of Indebtedness for capital expenditures shall be considered to be “in the
ordinary course of business”;
(l) make
or
rescind any material election relating to Taxes, including any election for
any
and all joint ventures, partnerships, limited liability companies or other
investments; settle or compromise any material Claim, action, litigation,
proceeding, arbitration or investigation relating to Taxes; or change in any
material respect any of its methods of reporting any items for Tax purposes
from
those employed in the preparation of its Tax Returns for the most recent Taxable
year for which a Tax Return has been filed;
(m) make
or
commit to make capital expenditures that in the aggregate exceed $25,000 except
for those commitments or capital expenditures incurred in the ordinary course
of
business pursuant to Permitted Liens;
(n) enter
into any new line of business material to it and its Subsidiaries taken as
a
whole;
(o) enter
into any Contract that subjects or will subject the Surviving Corporation or
its
Subsidiaries to any material non-compete or similar restriction on any KeyOn
Company or Internet America Company business following the Effective Time;
(p) except
as
may be required as a result of a change in GAAP, change any of the material
accounting principles, estimates, or practices used by the Internet America
Companies or KeyOn Companies;
(q) compromise,
settle or grant any waiver or release related to any litigation or proceeding,
other than settlements or compromises of such litigation or proceedings where
the full amount to be paid is covered by insurance or where the amount to be
paid does not exceed $10,000 in the aggregate;
(r) engage
in
any transaction (other than pursuant to agreements in effect as of the date
of
this Agreement and that are disclosed in Internet America Disclosure Letter
or
KeyOn Disclosure Letter (as the case may be) and transactions between or among
Internet America or KeyOn and their respective Subsidiaries in the ordinary
course of business consistent with past practices) or enter into any agreement
with any Affiliate (provided
that
for
the purpose of this clause (r) only, the term “Affiliate”
shall
not include any employee of Internet America, KeyOn or their respective
Subsidiaries (as the case may be) other than directors and executive officers
thereof and any employees who share the same household as any such directors
and
executive officers);
25
(s) willfully
or intentionally breach any representation or warranty set forth in this
Agreement or take any action that is reasonably likely to materially delay
or
impair the ability of the Parties hereto to consummate the transactions
contemplated by this Agreement; or
(t) enter
into any Contract or obligation to take any actions prohibited above.
Section 5.3 Access
to Assets, Personnel and Information.
(a) Upon
reasonable notice and subject to Applicable Law relating to the exchange of
information, from the date hereof until the Effective Time, KeyOn shall:
(i) afford to Internet America and Internet America Representatives
reasonable access during normal business hours to any and all of the assets,
books and records, files, data, correspondence, Contracts, permits, audits
and
all other information relating to the KeyOn Companies’ financial position,
business, employees, representatives, agents, facilities and assets, whether
written or computerized that are within the possession or control of any of
the
KeyOn Companies (the “KeyOn
Information”);
and
(ii) upon request during normal business hours, furnish promptly to
Internet America (at Internet America’s expense) a copy of any KeyOn
Information. Internet America agrees to conduct such investigation in a manner
that does not interfere unreasonably with the KeyOn Companies’ operations and
with the prompt and discharge by such KeyOn Companies’ employees of their
duties.
(b) Upon
reasonable notice and subject to Applicable Law relating to the exchange of
information, from the date hereof until the Effective Time, Internet America
shall: (i) afford to KeyOn and the KeyOn Representatives reasonable access
during normal business hours to any and all of the assets, books and records,
files, data, correspondence, Contracts, permits, audits and all other
information relating to the Internet America Companies’ financial position,
business, employees, representatives, agents, facilities and assets, whether
written or computerized, that are within the possession or control of any of
the
Internet America Companies (the “Internet
America Information”);
and
(ii) upon request during normal business hours, furnish promptly to KeyOn
(at KeyOn’s expense) a copy of any Internet America Information. KeyOn agrees to
conduct such investigation in a manner that does not interfere unreasonably
with
the Internet America Companies’ operations and with the prompt and discharge by
such the Internet America Companies’ employees of their duties.
(c) From
the
date hereof until the Effective Time, each of KeyOn and Internet America shall:
(i) furnish to the other, promptly upon receipt or filing (as the case may
be), a copy of each communication between such Party and the SEC after the
date
hereof relating to the Merger or the Information/Registration Statement and
each
report, schedule, registration statement or other document filed by such Party
with the SEC after the date hereof relating to the Merger or the
Information/Registration Statement, unless such communication, report, schedule,
registration statement or other document is otherwise readily available through
the SEC’s XXXXX system, in which case KeyOn or Internet America (as the case may
be) shall provide notice to the other of such availability; and
(ii) promptly advise the other of the substance of any oral communications
between such Party and the SEC relating to the Merger or the
Information/Registration Statement.
(d) Internet
America will not (and will cause Internet America Subsidiaries and Internet
America Representatives not to), and KeyOn will not (and will cause the KeyOn
Subsidiaries and the KeyOn Representatives not to), use any information obtained
pursuant to this Section 5.3
for any
purpose unrelated to the consummation of the transactions contemplated by this
Agreement. Any information obtained by the Internet America Companies or the
KeyOn Companies or their respective Representatives under this Section 5.3
shall be
subject to the confidentiality and use restrictions set forth in the
Nondisclosure Agreement.
(e) Notwithstanding
anything in this Section 5.3
to the
contrary: (i) Internet America shall not be obligated under the terms of
this Section 5.3
to
disclose to KeyOn or the KeyOn Representatives, or xxxxx XxxXx or the KeyOn
Representatives access to, information that is within the possession or control
of any of the Internet America Companies but subject to a valid and binding
confidentiality and nondisclosure agreement with a Third Party without first
obtaining the consent of such Third Party, and Internet America, to the extent
requested by KeyOn, will use its reasonable commercial efforts to obtain any
such consent; and (ii) KeyOn shall not be obligated under the terms of this
Section 5.3
to
disclose to Internet America or Internet America Representatives, or grant
Internet America or Internet America Representatives access to, information
that
is within the possession or control of any of the KeyOn Companies but subject
to
a valid and binding confidentiality and nondisclosure agreement with a Third
Party without first obtaining the consent of such Third Party, and KeyOn, to
the
extent requested by Internet America, will use reasonable commercial efforts
to
obtain any such consent.
26
(f) No
investigation by KeyOn or Internet America or their respective Representatives
shall affect the representations, warranties, covenants or agreements of the
other set forth in this Agreement, and no Party shall be deemed to have made
any
representation or warranty to the other Party except as expressly set forth
in
this Agreement.
Section 5.4 No
Solicitation by KeyOn.
(a) From
the
date of this Agreement until the first to occur of the Effective Time and the
termination of this Agreement in accordance with Article 7, except as
specifically permitted in Section 5.4(c), (d) or (e), KeyOn agrees that
neither it nor any of the KeyOn Subsidiaries or Representatives will, directly
or indirectly: (i) solicit, initiate, encourage or facilitate (including by
way of furnishing or disclosing non-public information) any inquiries, offers
or
proposals that constitute, or are reasonably likely to lead to, a KeyOn
Acquisition Proposal, and upon becoming aware of any violation of this
Section 5.4(a)(i), KeyOn shall, and shall cause the KeyOn Subsidiaries and
Representatives to, stop soliciting, initiating, encouraging, facilitating
(including by way of furnishing or disclosing non-public information) or taking
any action designed to facilitate, directly or indirectly, any inquiry, offer
or
proposal that constitutes, or is reasonably likely to lead to, a KeyOn
Acquisition Proposal; (ii) engage in discussions or negotiations with,
furnish or disclose any non-public information or data relating to the KeyOn
Companies to, or in response to a request therefor, give access to the
properties, assets or books and records of the KeyOn Companies to, any Person
who has made or may be considering making a KeyOn Acquisition Proposal or take
any action which may otherwise lead to a KeyOn Acquisition Proposal;
(iii) approve, endorse or recommend any KeyOn Acquisition Proposal; or
(iv) enter into any agreement in principle, letter of intent, arrangement,
understanding or other Contract relating to any KeyOn Acquisition Proposal.
(b) Except
as
specifically permitted in Section 5.4(c) and (d), KeyOn shall, and shall
cause each of the KeyOn Subsidiaries and Representatives to, immediately cease
and terminate any existing solicitations, discussions, negotiations or other
activity with any Person with respect to any KeyOn Acquisition Proposal or
which
could reasonably be expected to lead to a KeyOn Acquisition Proposal, and shall
inform the KeyOn Subsidiaries and Representatives which may be engaged in any
such solicitations, discussions, negotiations or other activity of KeyOn’s
obligations under this Section 5.4. KeyOn shall promptly inform its
Representatives who have been involved with or otherwise providing assistance
in
connection with the negotiation of this Agreement and the transactions
contemplated by this Agreement of KeyOn’s obligations under this
Section 5.4.
(c) Notwithstanding
anything in this Agreement to the contrary, prior to obtaining the KeyOn
Consent, nothing in this Agreement shall prevent KeyOn or the KeyOn Board from:
(i) after
the
date of this Agreement, engaging in discussions or negotiations with, furnishing
or disclosing any information or data relating to the KeyOn Companies to, or
in
response to a request therefor, giving access to the properties, assets or
books
and records of the KeyOn Companies to, any Person who has made an unsolicited,
bona fide, written KeyOn Acquisition Proposal after the date hereof that did
not
result from a violation by the KeyOn Companies of this Section 5.4;
provided,
however,
that
prior to engaging in discussions or negotiations with, furnishing or disclosing
any information or data relating to the KeyOn Companies to, or giving access
to
the properties, assets or books and records of the KeyOn Companies to, such
Person, (A) the KeyOn Board, acting in good faith, has determined
(I) after consultation with its outside legal counsel and financial
advisors and based on such other matters as it deems relevant, that such KeyOn
Acquisition Proposal is reasonably likely to result in a KeyOn Superior
Proposal, and (II) that such Person has the financial and legal capacity to
consummate such KeyOn Acquisition Proposal and (B) KeyOn (I) enters
into a confidentiality and nondisclosure agreement with such Person with use
and
disclosure limitations and other material terms that are no more favorable
to
such Person than those contained in the Nondisclosure Agreement; and
(II) has complied with Section 5.4(d); and
27
(ii) subject
to compliance by KeyOn with Section 5.4(e), (A) withdrawing (or
amending or modifying in a manner adverse to Internet America), or publicly
proposing to withdraw (or to amend or modify in a manner adverse to Internet
America), the approval, recommendation or declaration of advisability by the
KeyOn Board of this Agreement, the Merger or the transactions contemplated
hereby (the actions referred to in this clause (A) being collectively
referred to herein as an “KeyOn
Adverse Recommendation Change”),
(B) recommending, adopting or approving, or proposing publicly to
recommend, adopt or approve, any KeyOn Acquisition Proposal (the actions
referred to in this clause (B) being collectively referred to as an
“KeyOn
Acquisition Proposal Recommendation”),
or
(C) entering into any agreement, including any agreement in principle,
letter of intent or understanding, acquisition or Merger Agreement, option
agreement, joint venture agreement, partnership agreement or similar agreement,
arrangement or understanding which constitutes, relates to, is intended to
lead
to or could reasonably be expected to lead to a KeyOn Acquisition Proposal
(other than a confidentiality and nondisclosure agreement contemplated by
Section 5.4(c)(i)(B)(I)) (each a “KeyOn
Acquisition Agreement”);
provided,
however,
that
(X) in the case of a KeyOn Adverse Recommendation Change not involving a
KeyOn Acquisition Proposal, the KeyOn Board, acting in good faith, has
previously determined, after consultation with its outside legal counsel, that
the failure to take such action is reasonably likely to be inconsistent with
its
fiduciary obligations to the stockholders of KeyOn under Applicable Law
(Y) in the case of a KeyOn Adverse Recommendation Change involving a KeyOn
Acquisition Proposal, a KeyOn Acquisition Proposal Recommendation or an
entry into a KeyOn Acquisition Agreement, the KeyOn Board, acting in good faith,
has previously determined, after consultation with its outside legal counsel
and
financial advisors and based on such other matters as it deems relevant, that
such KeyOn Acquisition Proposal or KeyOn Acquisition Agreement constitutes
a
KeyOn Superior Proposal and (Z) in the case of entry into a KeyOn
Acquisition Agreement, KeyOn concurrently terminates this Agreement pursuant
to
and after complying with the provisions of Section 7.1(c)(v) and
Section 5.4(e)(ii). KeyOn acknowledges and agrees that the taking of any
action inconsistent with any of the restrictions set forth in this
Section 5.4 by any of the KeyOn Companies or their Representatives shall be
deemed a breach of this Section 5.4 by KeyOn. For the avoidance of doubt,
the Parties acknowledge and agree that a KeyOn Adverse Recommendation Change
may
or may not involve a KeyOn Acquisition Proposal.
(d) If
KeyOn
or any KeyOn Representative receives a request for information from a Person
who
has made an unsolicited, bona fide, written KeyOn Acquisition Proposal, and
KeyOn is permitted to provide such Person with information pursuant to this
Section 5.4, KeyOn will provide to Internet America a copy of the
confidentiality and nondisclosure agreement with such Person promptly upon
its
execution and provide to Internet America a list of, and copies of, all
information provided to such Person as promptly as practicable after its
delivery to such Person and promptly provide Internet America with access to
all
information to which such Person was provided access, in each case only to
the
extent not previously provided to Internet America. KeyOn shall promptly provide
notice to Internet America, in writing, of the receipt of any KeyOn Acquisition
Proposal or any inquiry with respect to or that is likely to lead to a KeyOn
Acquisition Proposal (but in no event more than twenty-four hours after the
receipt thereof), which notice shall include the identity of the Person or
group
requesting such information or making such inquiry or KeyOn Acquisition Proposal
and the material terms and conditions of any such KeyOn Acquisition Proposal.
KeyOn shall promptly provide Internet America with copies of any written changes
to any KeyOn Acquisition Proposal and shall promptly provide Internet America
written notice of any changes (whether oral or in writing) in the price or
form
of consideration or other material changes in the status or terms of such KeyOn
Acquisition Proposal.
(e) Notwithstanding
anything herein to the contrary, the KeyOn Board shall not (i) make a KeyOn
Adverse Recommendation Change, (ii) make a KeyOn Acquisition Proposal
Recommendation or (iii) enter into any KeyOn Acquisition Agreement relating
to a KeyOn Acquisition Proposal, unless:
(i) KeyOn
complies with the terms of Section 5.4(c)(ii) and (d); and
28
(ii) In
the
case of a KeyOn Acquisition Proposal, promptly upon a determination by the
KeyOn
Board that a KeyOn Acquisition Proposal constitutes a KeyOn Superior Proposal,
KeyOn immediately notifies, in writing, Internet America of such determination
and describes in reasonable detail the material terms and conditions of such
KeyOn Superior Proposal and the identity of the Person making such KeyOn
Superior Proposal. Internet America shall have five Business Days after delivery
of such written notice to submit an offer to engage in an alternative
transaction or to modify the terms and conditions of this Agreement such that
KeyOn may proceed with this Agreement (an “Internet
America Revised Offer”).
During
such five Business Day period, KeyOn and its financial and legal advisors shall
negotiate in good faith with Internet America to enable Internet America to
submit an Internet America Revised Offer. Any amendment to the price or any
other material term of a KeyOn Superior Proposal shall require a new notice
from
KeyOn and an additional three Business Day period within which Internet America
may negotiate an Internet America Revised Offer.
(f) Nothing
contained in this Section 5.4 shall prohibit KeyOn or the KeyOn Board from
taking and disclosing to the stockholders of KeyOn a position with respect
to a
KeyOn Acquisition Proposal pursuant to Rule 14d-9 and 14e-2(a) promulgated
under the Exchange Act or from making any similar disclosure, in either case
to
the extent required by Applicable Law.
(g) All
notices to be given by the Parties under this Section 5.4 shall be given by
facsimile in accordance with Section 9.3 (which notice shall be considered
delivered effective as of the day of transmission if transmitted on or before
5:00 p.m. U.S. Central Standard Time on the date of transmission,
otherwise the next day after transmission).
Section 5.5 No
Solicitation by Internet America.
(a) From
the
date of this Agreement until the first to occur of the Effective Time and the
termination of this Agreement in accordance with Article 7, except as
specifically permitted in Section 5.5(c), (d) or (e), Internet America
agrees that neither it nor any of the Internet America Subsidiaries or
Representatives will, directly or indirectly: (i) solicit, initiate,
encourage or facilitate (including by way of furnishing or disclosing non-public
information) any inquiries, offers or proposals that constitute, or are
reasonably likely to lead to, an Internet America Acquisition Proposal, and
upon
becoming aware of any violation of this Section 5.5(a)(i), Internet America
shall, and shall cause the Internet America Subsidiaries and Representatives
to,
stop soliciting, initiating, encouraging, facilitating (including by way of
furnishing or disclosing non-public information) or taking any action designed
to facilitate, directly or indirectly, any inquiry, offer or proposal that
constitutes, or is reasonably likely to lead to, an Internet America Acquisition
Proposal; (ii) engage in discussions or negotiations with, furnish or
disclose any non-public information or data relating to the Internet America
Companies to, or in response to a request therefor, give access to the
properties, assets or books and records of the Internet America Companies to,
any Person who has made or may be considering making an Internet America
Acquisition Proposal or take any action which may otherwise lead to an Internet
America Acquisition Proposal; (iii) approve, endorse or recommend any
Internet America Acquisition Proposal; or (iv) enter into any agreement in
principle, letter of intent, arrangement, understanding or other Contract
relating to any Internet America Acquisition Proposal.
(b) Except
as
specifically permitted in Section 5.5(c) and (d), Internet America shall,
and shall cause each of the Internet America Subsidiaries and Representatives
to, immediately cease and terminate any existing solicitations, discussions,
negotiations or other activity with any Person with respect to any Internet
America Acquisition Proposal or which could reasonably be expected to lead
to an
Internet America Acquisition Proposal, and shall inform the Internet America
Subsidiaries and Representatives which are engaged in any such solicitations,
discussions, negotiations or other activity of Internet America’s obligations
under this Section 5.5. Internet America shall promptly inform its
Representatives who have been involved with or otherwise providing assistance
in
connection with the negotiation of this Agreement and the transactions
contemplated by this Agreement of Internet America’s obligations under this
Section 5.5.
(c) Notwithstanding
anything in this Agreement to the contrary, nothing in this Agreement shall
prevent Internet America or the Internet America Board from:
(i) after
the
date of this Agreement, engaging in discussions or negotiations with, furnishing
or disclosing any information or data relating to the Internet America Companies
to, or in response to a request therefor, giving access to the properties,
assets or books and records of the Internet America Companies to, any Person
who
has made an unsolicited, bona fide, written Internet America Acquisition
Proposal after the date hereof that did not result from a violation by the
Internet America Companies of this Section 5.5; provided,
however,
that
prior to engaging in discussions or negotiations with, furnishing or disclosing
any information or data relating to the Internet America Companies to, or giving
access to the properties, assets or books and records of the Internet America
Companies to, such Person, (A) the Internet America Board, acting in good
faith, has determined (I) after consultation with its outside legal counsel
and financial advisors and based on such other matters as it deems relevant,
that such Internet America Acquisition Proposal is reasonably likely to result
in an Internet America Superior Proposal and (II) that such Person has the
financial and legal capacity to consummate such Internet America Acquisition
Proposal and (B) Internet America (I) enters into a confidentiality
and nondisclosure agreement with such Person with use and disclosure limitations
and other material terms that are no more favorable to such Person than those
contained in the Nondisclosure Agreement and (II) has complied with
Section 5.5(d); and
29
(ii) subject
to compliance by Internet America with Section 5.5(e), (A) withdrawing
(or amending or modifying in a manner adverse to KeyOn), or publicly proposing
to withdraw (or to amend or modify in a manner adverse to KeyOn), the approval,
recommendation or declaration of advisability by the Internet America Board
or
any committee thereof (as the case may be) of this Agreement, the Merger or
the
transactions contemplated hereby (the actions referred to in this
clause (A) being collectively referred to herein as a “Internet
America Adverse Recommendation Change”),
(B) recommending, adopting or approving, or proposing publicly to
recommend, adopt or approve, any Internet America Acquisition Proposal (the
actions referred to in this clause (B) being collectively referred to as a
“Internet
America Acquisition Proposal Recommendation”),
or
(C) entering into any agreement, including any agreement in principle,
letter of intent or understanding, acquisition or Merger Agreement, option
agreement, joint venture agreement, partnership agreement or similar agreement,
arrangement or understanding which constitutes, relates to, is intended to
lead
to or could reasonably be expected to lead to an Internet America Acquisition
Proposal (other than a confidentiality and nondisclosure agreement contemplated
by Section 5.5(c)(i)(B)(I)) (each a “Internet
America Acquisition Agreement”);
provided,
however, that
(X) in the case of an Internet America Adverse Recommendation Change not
involving an Internet America Acquisition Proposal, the Internet America Board,
acting in good faith, has previously determined, after consultation with its
outside legal counsel, that the failure to take such action is reasonably likely
to be inconsistent with its fiduciary obligations to the stockholders of
Internet America under Applicable Law, (Y) in the case of an Internet
America Adverse Recommendation Change involving an Internet America Acquisition
Proposal, an Internet America Acquisition Proposal Recommendation or an
entry into an Internet America Acquisition Agreement, the Internet America
Board, acting in good faith, has previously determined, after consultation
with
its outside legal counsel and financial advisors and based on such other matters
as it deems relevant, that such Internet America Acquisition Proposal or
Internet America Acquisition Agreement constitutes an Internet America Superior
Proposal and (Z) in the case of entry into an Internet America Acquisition
Agreement, Internet America concurrently terminates this Agreement pursuant
to
and after complying with the provisions of Section 7.1(d)(viii) and
Section 5.5(e)(ii). Internet America acknowledges and agrees that the
taking of any action inconsistent with any of the restrictions set forth in
this
Section 5.5 by any of the Internet America Companies or their
Representatives shall be deemed a breach of this Section 5.5 by Internet
America. For the avoidance of doubt, the Parties acknowledge and agree that
an
Internet America Adverse Recommendation Change may or may not involve an
Internet America Acquisition Proposal.
(d) If
Internet America or any Internet America Representative receives a request
for
information from a Person who has made an unsolicited, bona fide, written
Internet America Acquisition Proposal, and Internet America is permitted to
provide such Person with information pursuant to this Section 5.5, Internet
America will provide to KeyOn a copy of the confidentiality and nondisclosure
agreement with such Person promptly upon its execution and provide to KeyOn
a
list of, and copies of, all information provided to such Person as promptly
as
practicable after its delivery to such Person and promptly provide KeyOn with
access to all information to which such Person was provided access, in each
case
only to the extent not previously provided to KeyOn. Internet America shall
promptly provide notice to KeyOn, in writing, of the receipt of any Internet
America Acquisition Proposal or any inquiry with respect to or that is likely
to
lead to an Internet America Acquisition Proposal (but in no event more than
24
hours after the receipt thereof), which notice shall include the identity of
the
Person or group requesting such information or making such inquiry or Internet
America Acquisition Proposal and the material terms and conditions of any such
Internet America Acquisition Proposal. Internet America shall promptly provide
KeyOn with copies of any written changes to any Internet America Acquisition
Proposal and shall promptly provide KeyOn written notice of any changes (whether
oral or in writing) in the price or form of consideration or other material
changes in the status or terms of such Internet America Acquisition Proposal.
30
(e) Notwithstanding
anything herein to the contrary, the Internet America Board shall not
(i) make an Internet America Adverse Recommendation Change, (ii) make
an Internet America Acquisition Proposal Recommendation or (iii) enter
into any Internet America Acquisition Agreement relating to an Internet America
Acquisition Proposal, unless:
(i) Internet
America complies with the terms of Section 5.5(c)(ii) and (d); and
(ii) In
the
case of an Internet America Acquisition Proposal, promptly upon a determination
by the Internet America Board that an Internet America Acquisition Proposal
constitutes an Internet America Superior Proposal, Internet America immediately
notifies, in writing, KeyOn of such determination and describes in reasonable
detail the material terms and conditions of such Internet America Superior
Proposal and the identity of the Person making such Internet America Superior
Proposal. KeyOn shall have five Business Days after delivery of such written
notice to submit an offer to engage in an alternative transaction or to modify
the terms and conditions of this Agreement such that Internet America may
proceed with this Agreement (a “KeyOn
Revised Offer”).
During
such five Business Day period, Internet America and its financial and legal
advisors shall negotiate in good faith exclusively with KeyOn to enable KeyOn
to
submit a KeyOn Revised Offer. Any amendment to the price or any other material
term of an Internet America Superior Proposal shall require a new notice from
Internet America and an additional three Business Day period within which KeyOn
may negotiate a KeyOn Revised Offer.
(f) Nothing
contained in this Section 5.5 shall prohibit Internet America or the
Internet America Board from taking and disclosing to the stockholders of
Internet America a position with respect to an Internet America Acquisition
Proposal pursuant to Rule 14d-9 and 14e-2(a) promulgated under the Exchange
Act or from making any similar disclosure, in either case to the extent required
by Applicable Law.
(g) All
notices to be given by the Parties under this Section 5.5 shall be given by
facsimile transmission in accordance with Section 9.3 (which notice shall
be considered delivered effective as of the day of transmission if transmitted
on or before 5:00 p.m. U.S. Central Standard Time on the date of
transmission, otherwise the next day after transmission).
Section 5.6 KeyOn Consent. Promptly
following the execution and delivery of this Agreement by the parties hereto
and
the
receipt by KeyOn of the opinion of its Financial Advisor,
KeyOn
shall use its commercially reasonable best efforts in accordance with Applicable
Law and the KeyOn Charter Documents to obtain the KeyOn Consent to the
Merger.
Section 5.7 Information/Registration
Statement.
(a) Internet
America and KeyOn shall cooperate and promptly prepare and file with the SEC
the
Information/Registration Statement as soon as practicable after the date hereof,
and KeyOn and Internet America shall cooperate to promptly respond to any
comments made by the SEC and otherwise use their respective commercially
reasonable best efforts to cause the Information/Registration Statement to
be
declared effective under the Securities Act as promptly as practicable after
filing. If at any time prior to the Effective Time any event occurs which is
required to be set forth in an amendment or supplement to the
Information/Registration Statement, KeyOn or Internet America, as applicable,
will promptly inform the other of such occurrence, cooperate in filing such
amendment or supplement with the SEC, and use their respective commercially
reasonable best efforts to cause such amendment to become effective as promptly
as possible. As promptly as practicable after the Information /Registration
Statement is declared effective by the SEC, KeyOn shall cause the Information
/Registration Statement to be disseminated to its stockholders.
(b) Internet
America will cause the Information/Registration Statement, at the time it
becomes effective and
disseminated to the KeyOn Stockholders, in each case as and to the extent
required by applicable federal securities laws
under
the Securities Act, to comply as to form in all material respects with the
applicable provisions of the Securities Act, the Exchange Act and the rules
and
regulations of the SEC thereunder. Internet America hereby covenants and agrees
with KeyOn that the Information/Registration Statement (at the time it
becomes effective under the Securities Act and until the Effective Time) will
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except
that no representation or warranty is made by Internet America with respect
to
information supplied by KeyOn specifically for inclusion in the
Information/Registration Statement.
KeyOn
hereby covenants and agrees with Internet America that the
Information/Registration Statement (at the time it becomes effective under
the
Securities Act and until the Effective Time) will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except
that no representation or warranty is made by KeyOn with respect to information
supplied by Internet America specifically for inclusion in the
Information/Registration Statement.
31
(c) Neither
the Information/Registration Statement nor any amendment or supplement thereto
will be filed or disseminated to the stockholders of KeyOn without the approval
of both KeyOn and Internet America, such approval not to be unreasonably
withheld, conditioned or delayed. Each Party shall advise the other Parties
promptly after it receives notice thereof, of the time when the
Information/Registration Statement has become effective under the Securities
Act, the issuance of any stop order with respect to the Information/Registration
Statement, the suspension of the qualification of the Internet America Common
Stock issuable in connection with the Merger for offering or sale in any
jurisdiction, or any comments or requests for additional information by the
SEC
with respect to the Information/Registration Statement.
Section 5.8 Taking
of Necessary Action; Further Action. Subject
to the terms and conditions of this Agreement, each of the Parties shall use
its
commercially reasonable best efforts to take all actions as may be necessary
or
appropriate in order to effectuate the Merger under the DGCL as promptly as
commercially practicable. In addition, the Parties agree to execute and deliver
any additional instruments necessary to consummate the transactions contemplated
by this Agreement.
Section 5.9 Public
Announcements. On
the date this Agreement is executed (or if executed after the close of business,
no later than the first to occur of the beginning of trading on the OTCBB on
the
next day), KeyOn and Internet America shall issue a joint press release with
respect to the execution hereof and the transactions contemplated hereby. Except
in respect of a public announcement as may be required by Applicable Law or
any
rule of any regulatory body, KeyOn and Internet America shall consult with
each
other before issuing any press release, making any other public statement or
scheduling any press conference or conference call with investors or analysts
with respect to this Agreement or the transactions contemplated by this
Agreement.
Section 5.10 Notification
of Certain Matters. Each
Party shall give prompt notice to the others of any of the following for which
it becomes aware: (i) any representation or warranty made by it becoming
untrue or inaccurate if such untruth or inaccuracy would reasonably be expected
to cause any condition set forth in Article 6
not to
be satisfied, (ii) the occurrence of any event or development that would
cause (or would reasonably be expected to cause) any representation or warranty
by it herein to be untrue or inaccurate if such untruth or inaccuracy would
reasonably be expected to cause any condition set forth in Article 6
not to
be satisfied, or (iii) any failure by it to comply with or satisfy in all
material respects any covenant, condition, or agreement to be complied with
or
satisfied by it hereunder; provided,
however,
that no
such notification shall affect the representations, warranties, covenants or
agreements of any Party hereto.
Section 5.11 Payment
of Expenses. Whether
or not the Merger is consummated, each Party shall pay its own expenses incident
to preparing for, entering into and carrying out this Agreement and the
consummation of the transactions contemplated hereby, except that in the event
the Merger Agreement is terminated pursuant to Section 7.1(a) or 7.1(b), KeyOn
and Internet America shall equally share all fees and expenses, other than
attorneys’, accountants’, financial advisers’ and consultants’ fees and expenses
(which shall be paid by the Party incurring same), incurred in relation to
the
filing with the SEC and printing of the Information/Registration Statement,
including financial statements and exhibits and any amendments and supplements
thereto.
32
Section 5.12 Indemnification
and Insurance.
(a) From
and
for a period of six years after the Effective Time, Internet America shall
indemnify, defend, hold harmless and advance expenses to each Person who is
now,
has been at any time prior to the date of this Agreement, or becomes prior
to
the Effective Time, an officer, director, employee, controlling stockholder
or
agent of any of the KeyOn Companies (collectively, the “Indemnified
Parties”)
against
such losses, expenses (including reasonable outside attorneys’ fees), claims,
damages, fines, costs, liabilities or amounts that are paid in settlement with
the approval of Internet America (which approval shall not be unreasonably
withheld) resulting from, or otherwise arising in connection with, any
threatened or actual claim, action, suit, proceeding or investigation (a
“Claim”),
based
in whole or in part on, or arising in whole or in part out of, the fact that
the
Indemnified Party (or the Person controlled by the Indemnified Party) is or
was
a director, officer, employee of any of the KeyOn Companies and pertaining
to
any matter existing, or arising out of actions or omissions or alleged actions
or omissions occurring, at or prior to the Effective Time (including any Claim
arising out of this Agreement or any of the transactions contemplated hereby),
whether asserted or claimed prior to, at or after the Effective Time, but in
each case only to the extent of the coverage provided for under Internet
America’s directors’ and officers’ tail liability insurance policy covering
those Persons, which policy has been disclosed in writing to KeyOn prior to
the
date hereof, and described in Section
5.12(b).
Without limiting the foregoing, in the event any such Claim is brought against
any Indemnified Party (whether arising before or after the Effective Time):
(i) Internet America shall have the right to control the defense of such
matter with its regularly engaged legal counsel or other counsel selected by
Internet America and reasonably satisfactory to the Indemnified Party, and
Internet America shall pay all reasonable fees and expenses of such counsel;
and
(ii) the Indemnified Party will cooperate with Internet America, at
Internet America’s expense, in the defense of any such matter. Internet America
shall not settle, compromise or consent to the entry of any judgment in any
Claim for which indemnification could be sought by any Indemnified Party
hereunder unless such settlement, compromise or consent includes an
unconditional release of such Indemnified Party from all liability arising
out
of such Claim and does not include any finding of fact admission or stipulation
with respect to fault, intent or culpability of the Indemnified Party, or such
Indemnified Party otherwise consents. In the event of any Claim, any Indemnified
Party wishing to claim indemnification shall promptly notify Internet America
thereof (provided
that
failure to so notify Internet America will not affect the obligations of
Internet America except to the extent that Internet America shall have been
materially prejudiced as a result of such failure) and shall deliver to Internet
America any undertaking required by Applicable Law, but without any requirement
for the posting of a bond. Without limiting the foregoing, in the event any
Claim is brought against any of the Indemnified Parties, Internet America shall
be required to retain only one counsel (plus one local counsel, if necessary)
to
represent all such Indemnified Parties with respect to each such matter unless
the use of one counsel to represent the Indemnified Parties would present such
counsel with a conflict of interest, or the representation of all of the
Indemnified Parties by the same counsel would be inappropriate due to actual
or
apparent differing interests between them, in which case such additional counsel
as may be required (as shall be reasonably determined by the Indemnified Parties
and Internet America) may be retained by the Indemnified Parties at the cost
and
expense of Internet America and Internet America shall pay all reasonable fees
and expenses of such counsel for such Indemnified Parties. Notwithstanding
the
foregoing, nothing contained in this Section 5.12
shall be
deemed to grant any right to any Indemnified Party which is not permitted to
be
granted to an officer, director, employee or agent of KeyOn or Internet America
under a non-waivable provision of Applicable Law.
(b) From
and
for not less than six years after the Effective Time, Internet America shall
use
its reasonable best efforts to maintain in effect a directors’ and officers’
liability insurance policy covering those Persons who are covered by KeyOn’s
directors’ and officers’ liability insurance policy as of the Effective Time,
which policy shall be, or shall be substantially similar to, the proposal of
insurance dated October 30, 2008 issued by Xxxxxxx Insurance Company, Inc.
which
has been disclosed in writing to Internet America prior to the date hereof;
provided,
however,
that Internet America shall not be required to pay a premium in excess of
$50,000.00 for the six year coverage period. In the event that the annual
premium for such insurance exceeds such maximum amount, Internet America shall
purchase as much coverage per policy year as reasonably obtainable for such
maximum amount.
(c) The
provisions of this Section
5.12
are
intended to be in addition to the rights otherwise available to the current
officers and directors of KeyOn by law, charter, statute, by-law or
agreement.
Section 5.13
Employee Matters.
(a) With
respect to each Continuing Employee, Internet America shall credit, or cause
its
Subsidiaries to credit, the period of employment and service recognized by
the
applicable employer (including its affiliates and their predecessors if so
recognized by the employer) for such Continuing Employee immediately prior
to
the Effective Time for purposes of Internet America’s corresponding benefit
plans, programs, policies or similar employment-related arrangements to have
been employment and service with Internet America or its Subsidiaries for
purposes of determining the Continuing Employee’s eligibility to join (subject
to satisfaction of all non-service related eligibility criteria), vesting and
benefit accrual (but not benefit accrual for any purpose other than vacation
pay, and sick leave, and vesting in employer contributions under a
401(k)) under all employee benefit plans, programs, policies or similar
employment-related arrangements of Internet America and its Subsidiaries in
which the Continuing Employee is eligible to participate. No such period of
employment and service credit shall be provided to the extent that it will
result in a duplication of credit or employment benefits.
33
(b) To
the
extent required by Applicable Law, if the health insurance carrier covering
certain Continuing Employees is no longer engaged, Internet America will use
reasonable efforts to provide creditable coverage which will reduce any
restrictions and limitations for medical conditions existing as of the Effective
Time of each Continuing Employee and the Continuing Employee’s dependents.
Additionally, Internet America shall use reasonable efforts to effect a change
of carriers, if applicable, so that Continuing Employees can plan for any loss
of credit with respect to deductibles, co-insurance and maximum out of pocket
requirements. In accordance with Applicable Law, any terminated employee shall
be offered the opportunity to continue coverage reasonably comparable to that
coverage such employee had at the time of termination of employment. If such
coverage cannot been continued with respect to a Continuing Employee, in
accordance with Applicable Law, the employee shall be offered the opportunity
to
continue such coverage as is currently available.
(c) Nothing
in this Agreement shall be considered a contract between KeyOn, Internet America
or any of their respective Subsidiaries and any Continuing Employee or
consideration for, or inducement with respect to, any such Continuing Employees’
continued employment with Internet America and, without limitation, all such
Continuing Employees are and will continue to be considered employees at will
pursuant to the applicable employment at will laws or doctrine, subject to
any
express written agreement to the contrary with such Continuing Employee. For
the
avoidance of doubt and without limiting the generality of Section 9.6,
nothing
in this Section 5.13
is
intended to make any Person a third-party beneficiary of the agreements
contained in this Section 5.13,
and
nothing in this Section 5.13
shall
constitute an amendment of any Internet America Benefit Plan.
Section 5.14 Control
of Other Party’s Business. Nothing
contained in this Agreement shall give Internet America, directly or indirectly,
the right to control or direct KeyOn’s operations or give KeyOn, directly or
indirectly, the right to control or direct Internet America’s operations prior
to the Effective Time. Prior to the Effective Time, each of KeyOn and Internet
America shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision over its respective operations.
Section 5.15 Amendment
to Voting Agreement. Internet
America will not enter into an amendment to the Voting Agreement without the
prior written consent of KeyOn, which consent shall not be unreasonably
withheld, conditioned or delayed.
Section
5.16
Amendment
to Rights Agreement. The
Internet America Rights Agreement shall be amended in contemplation of the
Merger in a form substantially similar to Amendment No. 1 to the Internet
America Rights Agreement entered into on December 10, 2007 to exempt the
issuance of the Merger Consideration from triggering the issuance of Internet
America Rights thereunder, and a copy of such amendment shall be furnished
to
KeyOn prior to its effectiveness.
Section
5.17
Indemnification
of Guarantors.
Upon
the effectiveness of Amendment No. 1 to the Sun West Indebtedness, Internet
America shall indemnify and hold harmless the current guarantors of the Sun
West
Indebtedness for any amounts they may incur in payment of the principal and
interest owed by KeyOn in their capacity as guarantors of the Sun West
Indebtedness.
Section
5.18 Accounts
Payable Reduction/Additional Equity.
KeyOn shall no later than the Effective Time effect (i) a reduction of its
accounts payable and accrued expenses either through the forgiveness of such
accounts payable and accrued expenses or the issuance of shares of KeyOn Common
Stock in lieu therefor (collectively, the “Forgiveness”)
and
(ii) the sale of additional equity through either the issuance of additional
Convertible Notes or the sale of shares of KeyOn Common Stock (collectively,
the
“Additional
Equity”)
such
that the total amount of Forgiveness as reflected on Schedule
5.18
and
Additional Equity shall be greater than or equal to one-million nine hundred
thousand dollars ($1,900,000), provided that the amount of Additional Equity
shall not be less than one-million three hundred and fifty thousand dollars
($1,350,000). KeyOn shall provide to Internet America no later than three
business days prior to the Effective Time the calculation of the reduction
in
accounts payable and accrued expenses reflected on Schedule
5.18
and the
agreements evidencing the Forgiveness, and executed copies of the securities
sale agreements for the Additional Equity. All of the shares of KeyOn
Common Stock issued as Forgiveness and as Additional Equity shall be included
within the KeyOn Common Stock to be converted into the Merger Consideration
pursuant to Section
2.1(c).
34
Section
5.19
Amendment
to Sun West Indebtedness.
KeyOn
and Internet America shall have entered into an amendment to that certain
Business Loan Agreement, Commercial Security Agreement and Promissory Note
between KeyOn and Sun West Bank dated as of February 4, 2008 (the “Sun West
Indebtedness”), to provide, among other matters, for (i) ten year amortization
of the principal amount of the debt; (ii) maturity five years from the Effective
Time; (iii) payments of principal and interest beginning on the fifteenth day
of
the month following the Effective Time; (iv) the addition of Internet America
as
a joint and several obligor of the Sun West Indebtedness without the addition
of
any Internet America collateral as security therefor or the filing of any UCC
filings naming Internet America as the debtor in connection therewith; and
(v) a
fixed interest rate of 7-1/4% per annum, such amendment to be effective upon
the
Effective Time and conditioned only upon the consummation of the Merger
(“Amendment
No. 1 to the Sun West Indebtedness”).
All
payments of principal and interest due and payable as of the Effective Time
under the Sun West Indebtedness, and all fees and costs for renewal of the
loan
and entering into Amendment No. 1 to the Sun West Indebtedness, shall be paid
by
KeyOn out of its available cash at Closing and shall be excluded from the
calculation of Additional Equity under Section
5.18
above.
ARTICLE 6
CONDITIONS
Section 6.1 Conditions
to Each Party’s Obligation to Effect the Merger. The
respective obligations of each Party to effect the Merger shall be subject
to
the satisfaction, at or prior to the Closing Date, of each of the following
conditions, any or all of which may be waived in writing in whole or in part
only by both KeyOn and Internet America (to the extent permitted by Applicable
Law):
(a) Stockholder
Approval. The
KeyOn
Consent shall have been duly and validly obtained and the
Information/Registration Statement shall have been disseminated to all KeyOn
Stockholders at least twenty Business Days prior to the Effective Time, unless
a
shorter period of time is allowed under Applicable Law.
(b) Other
Approvals. All
filings required to be made by the Parties prior to the Effective Time with,
and
all consents, approvals, permits and authorizations required to be obtained
by
the Parties prior to the Effective Time from, any Governmental Authority in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby shall have been made or
obtained (as the case may be), except for any failures to make such filings
or
obtain such consents, approvals, permits and authorizations that, individually
or in the aggregate, would not reasonably be expected to have or cause a
Material Adverse Effect (assuming the Merger has taken place).
(c) Securities
Law Matters. The
Information/Registration Statement shall have been declared effective by the
SEC
under the Securities Act and shall be effective at the Effective Time, and
no
stop order suspending such effectiveness shall have been issued, no action,
suit, proceeding or investigation by the SEC to suspend such effectiveness
shall
have been initiated and be continuing, and any and all necessary approvals
under
state securities laws relating to the issuance or trading of the Internet
America Common Stock to be issued in the Merger shall have been received.
(d) No
Injunctions or Restraints. No
Governmental Authority of competent jurisdiction shall have issued, promulgated,
enforced or entered any Order, decree, temporary restraining order, preliminary
or permanent injunction, or other legal restraint or prohibition that is
continuing and which prevents the consummation of the Merger. There shall not
be
any pending suit, action or proceeding asserted by any Governmental Authority
challenging or seeking to restrain or prohibit the consummation of the Merger
or
the transactions contemplated hereunder.
35
Section 6.2 Conditions
to Obligations of KeyOn. The
obligations of KeyOn to effect the Merger are subject to the satisfaction of
each of the following conditions, any or all of which may be waived in writing
in whole or in part by KeyOn:
(a) Representations
and Warranties. The
representations and warranties of Internet America and AcquisitionSub set forth
in Article 3
shall be
true, accurate and complete as of the date of this Agreement and (except to
the
extent such representation or warranty speaks as of an earlier date, in which
case the representation or warranty shall be true and correct as of such date)
as of the Closing Date as though made on and as of that time, except in each
case for any failures of such representations and warranties to be so true,
accurate and complete that, individually or in the aggregate, do not have or
cause and would not reasonably be expected to have or cause an Internet America
Material Adverse Effect, and KeyOn shall have received a certificate signed
by a
Responsible Officer of Internet America to such effect.
(b) Performance
of Covenants and Agreements by Internet America. Internet
America shall have performed in all material respects all covenants and
agreements required to be performed by it under this Agreement at or prior
to
the Closing Date, and KeyOn shall have received a certificate signed by a
Responsible Officer of Internet America to such effect.
(c) No
Material Adverse Change. From
the date of this Agreement through the Closing, there shall not have occurred
any event, occurrence or development that has had or caused or would reasonably
be expected to have or cause an Internet America Material Adverse Effect.
Section 6.3 Conditions
to Obligation of Internet America. The
obligation of Internet America to effect the Merger is subject to the
satisfaction of each of the following conditions, any or all of which may be
waived in writing in whole or in part by Internet America:
(a) Representations
and Warranties. The
representations and warranties of KeyOn and AcquisitionSub set forth in
Article 4
shall be
true, accurate and complete as of the date of this Agreement and (except to
the
extent such representation or warranty speaks as of an earlier date, in which
case the representation or warranty shall be true and correct as of such date)
as of the Closing Date as though made on and as of that time, except in each
case for any failures of such representations and warranties to be so true,
accurate and complete that, individually or in the aggregate, do not have or
cause and would not reasonably be expected to have or cause a KeyOn Material
Adverse Effect, and Internet America shall have received a certificate signed
by
a Responsible Officer of KeyOn to such effect.
(b) Performance
of Covenants and Agreements by KeyOn. KeyOn
shall have performed in all material respects all covenants and agreements
required to be performed by it under this Agreement at or prior to the Closing
Date, and Internet America shall have received a certificate signed by a
Responsible Officer of KeyOn to such effect.
(c) No
Material Adverse Change. From
the date of this Agreement through the Closing, there shall not have occurred
any event, occurrence or development that has had or caused or would reasonably
be expected to have or cause a KeyOn Material Adverse Effect.
(d) Sun
West Indebtedness.
There
shall not have occurred any default in the Sun West Indebtedness Except as
contemplated by Amendment No. 1 to the Sun West Indebtedness, there shall have
been no amendment to the Sun West Indebtedness. Amendment No. 1 to the Sun
West
Indebtedness containing the terms stated in Section
5.19
shall be
in full force and effect upon consummation of the Merger.
36
ARTICLE 7
TERMINATION
Section 7.1 Termination
Rights. This
Agreement may be terminated and the Merger may be abandoned at any time prior
to
the Effective Time, whether before or after obtaining the KeyOn Consent (except
as provided below), by action taken by the board of directors of the terminating
Party or Parties upon the occurrence of any of the following:
(a) By
mutual
written consent duly authorized by the KeyOn Board and the Internet America
Board.
(b) By
either
Internet America or KeyOn if:
(i) the
Merger has not been consummated by February 28, 2009 (the “Termination
Date”)
(provided,
however,
that
the right to terminate this Agreement pursuant to this clause (i) shall not
be available to any Party whose breach of any representation or warranty or
failure to perform or satisfy any covenant or agreement under this Agreement
has
been the principal cause of or resulted in the failure of the Merger to occur
on
or before such date); or
(ii) any
Governmental Authority shall have issued an Order, decree or ruling or taken
any
other action permanently restraining, enjoining or otherwise prohibiting the
consummation of the Merger or making consummation of the Merger illegal, and
such Order, decree, ruling or other action shall have become final and
nonappealable (provided,
however,
that
the right to terminate this Agreement pursuant to this clause (ii) shall
not be available to any Party whose failure to fulfill any material obligation
under this Agreement has been the principal cause of or resulted in such Order,
decree, ruling or other action).
(c) By
KeyOn
if:
(i) there
has
been a material breach of the representations and warranties made by Internet
America in Article 3
of this
Agreement, which breach (A) would cause a failure of the condition
described in Section 6.2(a)
and
(B) is incapable of being cured by Internet America within 60 days
following receipt of written notice from KeyOn of such breach (but not later
than the Termination Date);
(ii) Internet
America has failed to comply in any material respect with any of its covenants
or agreements contained in this Agreement, which failure to comply
(A) would cause a failure of the condition described in Section 6.2(b)
and
(B) is incapable of being cured by Internet America within 60 days
following written notice from KeyOn of such failure (but not later than the
Termination Date);
(iii) Internet
America shall
have service and installation revenues from wireless subscribers in an amount
less than $310,000 as of the end of any calendar month beginning in November
2008 and continuing through the Effective Time;
(iv) Internet
America
shall
have cash overdrafts, payables and accrued expenses aggregating greater than
$2,200,000 as of the end of any calendar month beginning in November 2008 and
continuing through the Effective Time;
(v) prior
to
obtaining the KeyOn Consent, KeyOn elects to enter into a KeyOn Acquisition
Agreement as permitted by (and not in violation of) Section 5.4;
provided,
however,
that
KeyOn may not terminate this Agreement pursuant to this Section 7.1(c)(v)
unless KeyOn shall have complied with the provisions of Section 5.4(e)(ii)
and shall not have otherwise breached any other term of Section 5.4 in any
material respect. No termination pursuant to this Section 7.1(c)(v) shall
be effective unless KeyOn simultaneously pays in full the payment required
by
Section 7.3(a) and provides Internet America with a written acknowledgment
from each other party to the KeyOn Acquisition Agreement that such party is
aware of the amounts due to Internet America under Section 7.3 and that
such party irrevocably waives any right it may have to litigate, xxx or bring
any Claim to contest such amounts; or
(vi) (A)
Internet America shall have breached in any material respect any of its
obligations under Section 5.5, (B) the Internet America Board shall
have made an Internet America Adverse Recommendation Change or an Internet
America Acquisition Proposal Recommendation, (C) any Internet America
Company shall have entered into an Internet America Acquisition Agreement or
(D) Internet America or the Internet America Board publicly shall have
announced its intention to do any of the foregoing.
37
(d) By
Internet America if:
(i) there
has
been a material breach of the representations and warranties made by KeyOn
in
Article 4
of this
Agreement, which breach (A) would cause a failure of the condition
described in Section 6.3(a),
and
(B) is incapable of being cured by KeyOn within 60 days following
receipt of written notice from Internet America of such breach (but not later
than the Termination Date);
(ii) KeyOn
has
failed to comply in any material respect with any of its covenants or agreements
contained in this Agreement (other than a covenant described in Section
5.18),
which
failure to comply (A) would cause a failure of the condition described in
Section 6.3(b)
and
(B) is incapable of being cured by KeyOn within 60 days following
receipt of written notice from Internet America of such failure (but not later
than the Termination Date);
(iii) The
KeyOn
Consent
shall not have been obtained by the date that is four weeks after the date
of
this Agreement;
(iv) The
Sun
West Indebtedness shall have been amended (other than as contemplated by
Amendment No. 1 to the Sun West Indebtedness), there shall have occurred a
default thereunder that shall not have been cured or waived, or Amendment No.
1
to the Sun West Indebtedness containing the terms stated in Section
5.19
shall
have been amended, revoked or for any other reason will not be effective on
the
Closing Date;
(v) The
agreements necessary to effect the covenants contained in Section 5.18 shall
not
have been entered into and furnished
to Internet America by
the
date that is four weeks after the date of this Agreement;
(vi) KeyOn
shall have service and installation revenues from wireless subscribers in an
amount less than $565,000 as of the end of any calendar month beginning in
November 2008 and continuing through the Effective Time;
(vii) KeyOn
shall have cash overdrafts, payables and accrued expenses aggregating greater
than $2,200,000 as of the end of any calendar month beginning in November 2008
and continuing through the Effective Time;
(viii) Internet
America elects to enter into an Internet America Acquisition Agreement as
permitted by (and not in violation of) Section 5.5; provided,
however,
that
Internet America may not terminate this Agreement pursuant to this
Section 7.1(d)(viii) unless Internet America shall have complied with the
provisions of Section 5.5(e)(ii) and shall not have otherwise breached any
other term of Section 5.5 in any material respect. No termination pursuant
to this Section 7.1(d)(viii) shall be effective unless Internet America
simultaneously pays in full the payment required by Section 7.3(b) and
provides KeyOn with a written acknowledgment from each other party to the
Internet America Acquisition Agreement that such party is aware of the amounts
due KeyOn under Section 7.3 and that such party irrevocably waives any
right it may have to litigate, xxx or bring any Claim to contest such amounts;
and
(ix)
(A)
KeyOn shall have breached in any material respect any of its obligations under
Section 5.4, (B) the KeyOn Board shall have made a KeyOn Adverse
Recommendation Change or a KeyOn Acquisition Proposal Recommendation,
(C) any KeyOn Company shall have entered into a KeyOn Acquisition
Agreement, or (D) KeyOn or the KeyOn Board shall have publicly announced
its intention to do any of the foregoing.
KeyOn
shall provide to Internet America the information necessary to determine
compliance by KeyOn with Section 7.1(d)(vi) and (vii) no later than fifteen
(15)
days after the end of each calendar month beginning in November 2008 and
continuing through the Effective Time.
38
Section 7.2 Effect
of Termination. If
this Agreement is terminated by either Internet America or KeyOn pursuant to
the
provisions of Section 7.1,
this
Agreement shall forthwith become void, and there shall be no further obligation
on the part of any Party or its Affiliates, directors, officers or stockholders
except pursuant to the provisions of Section 5.3(d),
Section 5.9,
Section 5.11,
this
Section 7.2,
Section
7.3,
Article 8
and the
Nondisclosure Agreement (which shall continue pursuant to their terms);
provided,
however,
that a
termination of this Agreement shall not relieve any Party from any liability
for
damages incurred as a result of a willful or intentional breach by such Party
of
its representations, warranties, covenants, agreements or other obligations
hereunder occurring prior to such termination.
Section
7.3
Fees
and Expenses.
Notwithstanding the provisions of Section 5.11:
(a) KeyOn
will, immediately upon termination of this Agreement pursuant to Section 7.1(c)(v)
or
7.1(d)(i),
(ii), (iii) or (ix),
pay, or
cause to be paid, to Internet America by wire transfer of immediately available
funds to an account designated by Internet America the Termination Fee as
defined in Section
7.3(c).
Immediately upon termination of this Agreement pursuant to Section
7.1(d)(iv),
KeyOn
will pay, or cause to be paid, to Internet America by wire transfer of
immediately available funds to an account designated by Internet America the
fees and expenses incurred for out-of-pocket costs described in Section
7.3(c)(ii)
only.
(b) Internet
America will, immediately upon termination of this Agreement pursuant to
Sections 7.1(c)(i),
(ii) or (vi),
or
7.1(d)(viii),
pay, or
cause to be paid, to KeyOn by wire transfer of immediately available funds
to an
account designated by KeyOn the Termination Fee.
(c) “Termination
Fee”
shall
mean a fee equal to the sum of (i) $200,000
and (ii) an amount equal to the fees and expenses incurred by the Party to
whom
the Termination Fee is owed for all out-of-pocket costs incurred by it in
connection with this Agreement and the consummation of the transactions
contemplated hereby, including but not limited to all attorneys’,
accountants’, financial advisers’ and consultants’ fees and expenses and all
costs incurred in connection with the filing with the SEC and printing of the
Information/Registration Statement, including financial statements and exhibits
and any amendments and supplements thereto.
(d) The
Parties acknowledge that the agreements contained in this Section 7.3
are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, neither KeyOn nor Internet America would have entered
into this Agreement. Accordingly, if a Party fails to pay promptly any amounts
due by it pursuant to this Section 7.3,
such
Party shall pay to the Party to whom the Termination Fee is owed its costs
and
expenses (including attorneys’ fees and expenses) in connection with collecting
these amounts, together with interest on the amounts so owed, at the rate of
interest per annum specified as the Prime Rate in the Wall Street Journal as
of
the date of termination plus 2.0%, from the date of termination of this
Agreement until the date all such amounts are paid.
ARTICLE 8
DEFINITIONS
AND USAGE
Section
8.1
Defined
Terms in Agreement.
For the
purposes of this Agreement, capitalized terms used but not defined in this
Agreement shall have the meanings set forth below:
“Acquisition
Proposal” means
for
any Person any Contract, proposal, offer or other inquiry or indication of
interest (regardless of whether in writing and regardless of whether delivered
to the stockholders) relating to any of the following (other than the
transactions contemplated by this Agreement or the Mergers): (a) any
merger, reorganization, share exchange, take-over bid, tender offer,
recapitalization, consolidation, liquidation, dissolution or other business
combination, purchase or similar transaction or series of transactions, directly
or indirectly, involving 20% or more of the assets, net revenues or net income
of such Person and its Subsidiaries taken as a whole; (b) the sale, lease,
exchange, transfer or other disposition, directly or indirectly, of any business
or assets that generate 20% or more of the consolidated net revenues or net
income, or of assets representing 20% or more of the book value of the
consolidated assets, of such Person and its Subsidiaries, taken as a whole,
or
any license, lease, exchange, mortgage, pledge or other agreement or arrangement
having a similar economic effect, in each case in a single transaction or a
series of related transactions or (c) any direct or indirect acquisition of
beneficial ownership (as defined in Section 13(d) of the Exchange Act) or
any direct or indirect acquisition of the right to acquire beneficial ownership
(as defined in Section 13(d) of the Exchange Act) by any Person or any
“group” (as defined in the Exchange Act) of 20% or more of the shares of any
class of the issued and outstanding Equity Interests of such Person, whether
in
a single transaction or a series of related transactions.
39
“Actions”
means any actions, suits, arbitrations, inquiries, proceedings or investigations
by or before any Governmental Authority.
“Active
Subscribers”
are customers who are active and current within 60 days of their payments and
include complementary accounts and service trade-out customers.
“Affiliate”
means, with respect to any Person, any other Person directly or indirectly
controlling, controlled by, or under common control with such
Person.
“Applicable
Law” means with respect to any Person, any international, federal, state, local
or foreign statute, code, ordinance, rule, regulation, consent, approval,
judgment, Order, writ, decree, injunction or other authorization, treaty,
convention, or governmental requirement of any Governmental Authority that
is
binding upon, or applicable to, such Person.
“Benefit
Plan” means any qualified or non-qualified employee benefit plan, program,
policy, practice, agreement, Contract or other arrangement, regardless of
whether written, regardless of whether U.S.-based, including any “employee
welfare benefit plan” within the meaning of Section 3(1) of ERISA
(including post-retirement medical and life insurance), any “employee pension
benefit plan” within the meaning of Section 3(2) of ERISA (regardless of
whether such plan is subject to ERISA), including any multiemployer plan (as
defined in Section 3(37) of ERISA) or multiple employer plan (within the
meaning of Section 413(c) of the Code), any employment or severance
agreement or other arrangement, and any employee benefit, bonus, incentive,
deferred compensation, profit sharing, vacation, stock, stock purchase, stock
option, severance, change of control, fringe benefit or other plan, program,
policy, practice, agreement, Contract, or other arrangement, regardless of
whether subject to ERISA and regardless of whether funded.
“Business
Day” means any day other than a Saturday, Sunday or any day on which banks in
the State of New York are authorized or required by federal law to be closed
in
New York, New York.
“Continuing
Employee” means any
employee who was employed by KeyOn or any of its Subsidiaries as of the day
immediately prior to the Effective Time and who is employed by Internet America
or any of its Subsidiaries on and after the Effective Time.
“Contract”
means any agreement, arrangement, commitment or instrument, written or oral,
including, without limitation, any loan or credit agreement or other agreement
evidencing Indebtedness, promissory note, bond, mortgage, indenture, guarantee,
permit, lease, sublease, license, agreement to render services, or other
agreement, arrangement, commitment or instrument evidencing rights or
obligations of any kind or nature, including all amendments, modifications,
supplements and options relating thereto.
“Convertible
Notes” means those certain convertible secured promissory notes issued by KeyOn
on August 27, 2008 in the aggregate principal amount of up to $1,000,000 and
described in the Form 8-K Report of KeyOn filed with the SEC on September 3,
2008.
“Environmental,
Health and Safety Laws” means any present or future Applicable Laws relating to
(a) emissions, discharges, releases or threatened releases of Hazardous
Materials into the environment, including into ambient air, soil, sediments,
land surface or subsurface, buildings or facilities, surface water, groundwater,
publicly-owned treatment works, or septic systems, (b) the generation,
treatment, storage, disposal, use, handling, manufacturing, recycling,
transportation or shipment of Hazardous Materials, (c) occupational health
and safety, or (d) the pollution of the environment, solid waste handling,
treatment or disposal, reclamation or remediation activities, or protection
of
environmentally sensitive areas.
“Equity
Interests” means (a) with respect to a corporation, any and all shares,
interests, participation, phantom stock plans or arrangements or other
equivalents (however designated) of corporate stock, including all common stock,
preferred stock and other equity and voting interests, and warrants, options,
calls, subscriptions or other convertible securities or other rights to acquire
any of the foregoing, and (b) with respect to a partnership, limited
liability company or similar Person, any and all units, membership or other
interests, including rights to purchase, warrants, options, calls, subscriptions
or other equivalents of, or other interests convertible into, any beneficial
or
legal ownership interest in such Person.
40
“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended, and
any
regulations promulgated pursuant thereto.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended.
“GAAP”
means generally accepted accounting principles, as recognized by the
U.S. Financial Accounting Standards Board (or any generally recognized
successor).
“Governmental
Authority” shall mean (a) the United States of America, (b) any state, county,
municipality, or other governmental subdivision within the U.S., and (c) any
court or any governmental department, commission, board, bureau, agency, or
other instrumentality of the U.S. or of any state, county, municipality, water
rights, taxing, or zoning authority, or other governmental subdivision within
the U.S.
“Hazardous
Material” means any chemical, pollutant, contaminant, material, waste or
substance regulated by any Governmental Authority under Environmental, Health
and Safety Law, including, but not limited to, any hazardous waste, hazardous
substance, toxic substance, radioactive material (including any naturally
occurring radioactive material), asbestos-containing materials in any form
or
condition, polychlorinated biphenyls in any form or condition, or petroleum,
petroleum hydrocarbons, petroleum products or any fraction or byproducts
thereof.
“Indebtedness”
of any Person means and includes any obligations consisting of (a) the
outstanding principal amount of and accrued and unpaid interest on, and other
payment obligations for, borrowed money, or payment obligations issued or
incurred in substitution or exchange for payment obligations for borrowed money,
(b) amounts owing as deferred purchase price for property or services,
including “earn out” payments, (c) payment obligations evidenced by any
promissory note, bond, debenture, mortgage or other debt instrument or debt
security, (d) commitments or obligations by which such Person assures a
creditor against loss, including contingent reimbursement obligations with
respect to letters of credit, (e) payment obligations secured by a Lien,
other than a Permitted Lien, on assets or properties of such Person,
(f) obligations to repay deposits or other amounts advanced by and owing to
third parties, (g) obligations under capitalized leases,
(h) obligations under any interest rate, currency or other hedging
agreement or derivatives transaction, (i) guarantees or other contingent
liabilities with respect to any amounts of a type described in clauses (a)
through (h) above, and (j) any change of control payments or
prepayment premiums, penalties, charges or equivalents thereof with respect
to
any indebtedness, obligation or liability of a type described in
clauses (a) through (i) above that are required to be paid at the time
of, or the payment of which would become due and payable solely as a result
of,
the execution of this Agreement or the consummation of the transactions
contemplated by this Agreement at such time, in each case determined in
accordance with GAAP; provided, however, that Indebtedness shall not include
accounts payable to trade creditors and accrued expenses arising in the ordinary
course of business consistent with past practices and shall not include the
endorsement of negotiable instruments for collection in the ordinary course
of
business.
“Information/Registration
Statement” means the combined filing of the Information Statement prepared in
accordance with Schedule 14C of the Exchange Act in definitive form informing
the KeyOn Shareholders of the action taken by the KeyOn Consent, and the
Registration Statement on Form S-4 under the Securities Act registering the
sale of the shares of Internet America Common Stock issuable in the
Merger.
“Intellectual
Property” means all U.S. and foreign (a) patents and patent applications
and all reissues, renewals, divisions, extensions, provisionals, continuations
and continuations in part thereof, (b) inventions (regardless of whether
patentable), invention disclosures, trade secrets, proprietary information,
industrial designs and registrations and applications, mask works and
applications and registrations therefor, (c) copyrights and copyright
applications and corresponding rights, (d) trade dress, trade names, logos,
URLs, common law trademarks and service marks, registered trademarks and
trademark applications, registered service marks and service xxxx applications,
(e) domain name rights and registrations, (f) databases, customer
lists, data collections and rights therein, and (g) confidentiality rights
or other intellectual property rights of any nature, in each case throughout
the
world.
41
“Internet
America Board” means the board of directors of Internet America.
“Internet
America Common Stock” shall mean all outstanding shares of common stock, $.01
par value per share, of Internet America.
“Internet
America Companies” means Internet America and each of the Internet America
Subsidiaries.
“Internet
America Stock Plan” means the Internet America 2007 Stock Option
Plan.
“Internet
America Subsidiary” means (a) any
corporation of which Internet America owns, either directly or through its
Subsidiaries, more than 50% of the total combined voting power of all classes
of
voting securities of such corporation, or (b) any partnership, association,
joint venture, limited liability company or other business organization,
regardless of whether such constitutes a legal entity, in which Internet America
directly or indirectly owns more than 50% of the total Equity Interests, and
which has active operations.
“KeyOn
Board” means the board of directors of KeyOn.
“KeyOn
Common Stock” shall mean all outstanding shares of common stock, $.001 par value
per share, of KeyOn.
“KeyOn
Companies” means KeyOn and each of the KeyOn Subsidiaries.
“KeyOn
Consent” means the written consent of the holders of a majority of the
outstanding voting stock of KeyOn, pursuant to which the proposal to adopt
this
Agreement and the Merger is approved.
“KeyOn
Stockholders” shall mean the owners of all the outstanding shares of KeyOn
Common Stock.
“KeyOn
Stock Plan” means the KeyOn 2007 Stock and Awards Plan.
“KeyOn
Subsidiaries” (a) any corporation of which KeyOn owns, either directly or
through its Subsidiaries, more than 50% of the total combined voting power
of
all classes of voting securities of such corporation, or (b) any
partnership, association, joint venture, limited liability company or other
business organization, regardless of whether such constitutes a legal entity,
in
which KeyOn directly or indirectly owns more than 50% of the total Equity
Interests.
“Knowledge”
when used in relation to any Person shall mean the actual (but not constructive)
knowledge of such Person or such Person’s officers after reasonable
inquiry.
“Lien”
means any lien, mortgage, security interest, indenture, deed of trust, pledge,
deposit, restriction, burden, lien, license, lease, sublease, right of first
refusal, right of first offer, charge, privilege, easement, right of way,
reservation, option, preferential purchase right, right of a vendor under any
title retention or conditional sale agreement, or other arrangement
substantially equivalent thereto, in each case regardless of whether relating
to
the extension of credit or the borrowing of money.
42
“Material
Adverse Effect” means, with respect to any Person, a material adverse effect on
the business, results of operations, or condition (financial or otherwise)
of
such Person and its Subsidiaries, taken as a whole, except to the extent any
such effect results from: (a) changes in the industry in which such Person
or its Subsidiaries operate or in the economy or the financial, securities
or
credit markets in the U.S. or elsewhere in the world, including any
regulatory or political conditions or developments, or any outbreak or
escalation of hostilities or declared or undeclared acts of war, terrorism,
insurrection or natural disasters, that do not disproportionately affect the
business, results of operations or condition (financial or otherwise) of such
Person and its Subsidiaries, taken as a whole, relative to other industry
participants, in any material respect (b) the execution or public
disclosure of this Agreement or the consummation or the pendency of the
transactions contemplated hereby, (c) fluctuations in the price or trading
volume of shares of any trading stock of such Person (provided, however, that
the exception in this clause (c) shall not prevent or otherwise affect a
determination that any fact, circumstance, event, change, effect or occurrence
underlying such fluctuation has resulted in, or contributed to, a Material
Adverse Effect), (d) changes in Applicable Law or in GAAP (or the
interpretation thereof) after the date hereof that do not disproportionately
affect the business, results of operations or condition (financial or otherwise)
of such Person and its Subsidiaries, taken as a whole, relative to other
industry participants, in any material respect, (e) any legal proceedings
made or brought by any of the current or former stockholders of such Person
(or
on their behalf or on behalf of such Persons) arising out of or related to
this
Agreement or any of the transactions contemplated hereby, or (f) any
failure by such Person to meet any published analyst estimates or expectations
regarding such Person’s revenue, earnings or other financial performance or
results of operations for any period or any failure by such Person to meet
its
internal budgets, plans or forecasts regarding its revenues, earnings or other
financial performance or results of operations (provided, however, that the
exception in this clause (f) shall not prevent or otherwise affect a
determination that any fact, circumstance, event, change, effect or occurrence
underlying such failure has resulted in, or contributed to, a Material Adverse
Effect with respect to such Person).
“Nondisclosure
Agreement” means the Nondisclosure Agreement, dated as of October 10, 2007,
between KeyOn and Internet America.
“Order”
means any order, writ, fine, injunction, decree, judgment, award or enforceable
determination of any Governmental Authority.
“Permitted
Liens” means (a) Liens for Taxes, assessments or other governmental charges
or levies that are not yet due and payable or that are being contested in good
faith by appropriate proceedings and for which adequate reserves in accordance
with GAAP have been established and described in the applicable Disclosure
Letter, (b) Liens in connection with workmen’s compensation, unemployment
insurance or other social security, old age pension or public liability
obligations not yet due or which are being contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with
GAAP
have been established and described in the applicable Disclosure Letter,
(c) operators’, vendors’, suppliers’, carriers’, warehousemen’s,
repairmen’s, mechanics’, workmen’s, materialmen’s, or construction Liens (during
repair or upgrade periods) or other like Liens arising by operation of
Applicable Law in the ordinary course of business or statutory landlord’s Liens,
each of which is in respect of obligations that have not been outstanding more
than 90 days (so long as no action has been taken to file or enforce such
Liens within said 90-day period) or which are being contested in good faith,
or
(d) any other Lien, encumbrance or other imperfection of title that does
not materially affect the value or use of the property subject thereto or has
been incurred in the ordinary course of business.
“Person”
means any natural person, corporation, company, limited or general partnership,
joint stock company, joint venture, association, limited liability company,
trust, bank, trust company, land trust, business trust or other entity or
organization.
“Representative”
means any director, officer, employee, agent, advisor (including legal,
accounting and financial advisors) or other representative.
“Responsible
Officers” means (a) for KeyOn, each of the Chief Executive Officer and
Executive Vice President of KeyOn, and (b) for Internet America, each of
the Chief Executive Officer and Chief Financial Officer of Internet America.
“SEC”
means the U.S. Securities and Exchange Commission.
“Securities
Act” means the Securities Act of 1933, as amended.
“SOX”
means the Xxxxxxxx-Xxxxx Act of 2002, as amended, and the rules and regulations
promulgated thereunder.
“Subsidiary”
means for any Person at any time (a) any corporation of which such Person
owns, either directly or through its Subsidiaries, more than 50% of the total
combined voting power of all classes of voting securities of such corporation,
or (b) any partnership, association, joint venture, limited liability
company or other business organization, regardless of whether such constitutes
a
legal entity, in which such Person directly or indirectly owns more than 50%
of
the total Equity Interests.
43
“Superior
Proposal” means a bona fide written Acquisition Proposal (with all percentages
used in the definition of Acquisition Proposal increased to 50% for purposes
of
this definition) made by a Third Party after the date of this Agreement through
the Effective Time (or such earlier date that this Agreement is terminated
in
accordance with the terms set forth herein), if the Internet America Board
or
the KeyOn Board, as the case may be, determines in good faith and after
consultation with a financial advisor, and taking into account all legal,
financial, regulatory and other aspects of the Acquisition Proposal, that such
Acquisition Proposal (a) would, if consummated in accordance with its
terms, be more favorable, from a financial point of view, to the holders of
the
common stock of Internet America or KeyOn, as the case may be, than the
transactions contemplated by this Agreement (taking into account any amounts
payable pursuant to Section 7.3
and any
Internet America Revised Offer made under Section 5.4(e)
or any
KeyOn Revised Offer made under Section 5.5(e),
as the
case may be), (b) contains conditions which are all reasonably capable of
being satisfied in a timely manner, and (c) is not subject to any financing
contingency or, to the extent financing for such proposal is required, that
such
financing is then committed in writing by financially sound financial
institutions of national reputation.
“Tax”
or
“Taxes” (including with correlative meaning, “Taxable”) means (a) any
federal, foreign, state or local tax, including any income, gross income, gross
receipts, ad valorem, excise, sales, use, value added, admissions, business,
occupation, license, franchise, margin, capital, net worth, customs, premium,
real property, personal property, intangibles, capital stock, transfer, profits,
windfall profits, environmental, severance, fuel, utility, payroll, social
security, employment, withholding, disability, stamp, rent, recording,
registration, alternative minimum, add-on minimum, or other tax, assessment,
duty, fee, levy or other governmental charge of any kind whatsoever imposed
by a
Governmental Authority (a “Tax Authority”), together with and including, without
limitation, any and all interest, fines, penalties, assessments and additions
to
tax resulting from, relating to, or incurred in connection with any such tax
or
any contest or dispute thereof, (b) any liability for the payment of any
amount of the type described in the immediately preceding clause (a) as a
result of being a member of a consolidated, affiliated, unitary or combined
group with any other corporation or entity at any time prior to and through
the
Closing Date, and (c) any liability for the payment of any amount of the
type described in the preceding clauses (a) or (b) as a result of a
contractual obligation to any other Person or of transferee, successor or
secondary liability.
“Tax
Return” means any report, return, document, declaration or other information
(including any attached schedules and any amendments to such report, return,
document, declaration or other information) required to be supplied to or filed
with any Tax Authority with respect to any Tax, including an information return
and any document with respect to or accompanying payments, deposits or estimated
Taxes, or with respect to or accompanying requests for the extension of time
in
which to file any such report, return, document, declaration or other
information.
“Third
Party” means a Person other than any of the Internet America Companies or any of
the KeyOn Companies.
“Treasury
Regulations” means the regulations promulgated by the U.S. Treasury Department
under the Code.
Section 8.2 References
and Titles.
(a) All
references in this Agreement to Exhibits, Schedules, Articles, Sections,
subsections and other subdivisions refer to the corresponding Exhibits,
Schedules, Articles, Sections, subsections and other subdivisions of or to
this
Agreement, unless expressly provided otherwise. Titles appearing at the
beginning of any Articles, Sections, subsections or other subdivisions of this
Agreement are for convenience only, do not constitute any part of this
Agreement, and shall be disregarded in construing the language hereof. The
words
“this Agreement,” “herein,” “hereby,” “hereunder” and “hereof,” and words of
similar import, refer to this Agreement as a whole and not to any particular
Article, Section, subsection or subdivision unless expressly so limited. The
words “this Article” and “this Section,” and words of similar import, refer only
to the Article, Section or subsection hereof in which such words occur.
44
(b) The
word
“or” is not exclusive, and the word “including” (in its various forms) means
including without limitation. Pronouns in masculine, feminine or neuter genders
shall be construed to state and include any other gender, and words, terms
and
titles (including terms defined herein) in the singular form shall be construed
to include the plural and vice versa, unless the context otherwise requires.
(c) The
Parties have participated jointly in negotiating and drafting this Agreement.
In
the event an ambiguity or a 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 provision(s) of this Agreement.
(d) A
reference
in this Agreement to any statute shall be to such statute as amended from time
to time, and the rules and regulations promulgated thereunder.
ARTICLE
9
MISCELLANEOUS
Section 9.1 Nonsurvival
of Representations and Warranties. Except
as
otherwise provided in this Agreement and except for the agreements contained
in
Section 1.6, Section 1.7, Article II, Section 5.7, Section 5.11, Section 5.12,
Section 9.10 and Section 9.13, none
of
the representations or warranties contained in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the consummation
of the Merger and only the covenants that by their terms survive the Effective
Time shall survive the Effective Time.
Section 9.2 Amendment. This
Agreement may be amended by the Parties at any time before
or
after obtaining the KeyOn Consent; provided,
however,
that,
after any such consent is obtained, no amendment shall be made that by
Applicable Law requires further approval by such stockholders without such
further approval. This Agreement may not be amended except by
a
written instrument signed by an authorized representative of each of the
Parties.
This
Agreement may be amended by the Parties at any time only by a written instrument
signed by an authorized representative of each of the Parties.
Section 9.3 Notices. Any
notice or other communication required or permitted hereunder shall be in
writing and, unless delivery instructions are otherwise expressly set forth
above herein, either delivered personally (effective upon delivery), by
facsimile transmission (effective on the next day after transmission), by
recognized overnight delivery service (effective on the next day after delivery
to the service), or by registered or certified mail, postage prepaid and return
receipt requested (effective on the third Business Day after the date of
mailing), at the following addresses or facsimile transmission numbers (or
at
such other address(es) or facsimile transmission number(s) for a Party as shall
be specified by like notice):
|
|
|
|
|
T
KeyOn:
|
|
KeyOn
Communications Internet America, Inc.
00000
Xxxxxxxxx Xxxxxx
Xxxxx,
Xxxxxxxx 00000
Attention:
Chief Executive Officer
Facsimile:
(000) 000-0000
|
|
|
|
|
|
with
a copy
(which
shall not constitute notice) to:
|
|
Xxxxxxx
Xxxx Xxxxxxx & Xxxxx LLP
00
Xxxx Xxxxxx- 00xx
Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxxx X. Xxxxxx, Esq.
Facsimile:
(000) 000-0000
|
|
|
|
|
|
To
Internet America or AcquisitionSub:
|
|
Internet
America, Inc.
00000
Xxxx Xxx Xxxxxxx Xxxx., X.,
Xxxxx
000
Xxxxxxx,
Xxxxx 00000
Attention:
Chief Executive Officer
Facsimile:
(000) 000-0000
|
|
|
|
|
|
with
a copy
(which
shall not constitute notice) to:
|
|
Xxxxx
& Ketchand
Nine
Greenway Plaza, Suite 3100
Xxxxxxx,
Xxxxx 00000
Attention:
Xxxx X. Leader
Facsimile:
(000) 000-0000
|
45
Section 9.4 Counterparts. This
Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same agreement, and shall become effective when one
or
more counterparts have been signed by each of the Parties and delivered to
the
other Parties, it being understood that all Parties need not sign the same
counterpart.
Section 9.5 Severability. Any
term or provision of this Agreement that is invalid or unenforceable in any
jurisdiction shall, as to such jurisdiction, be deemed modified to the minimum
extent necessary to make such term or provision valid and enforceable,
provided
that
if
such term or provision is incapable of being so modified, then such term or
provision shall be deemed ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability
of
any of the terms or provisions of this Agreement in any other jurisdiction.
If
any provision of this Agreement is so broad as to be unenforceable, such
provision shall be interpreted to be only so broad as is enforceable.
Section 9.6 Entire
Agreement; No Third Party Beneficiaries. This
Agreement (together with the Nondisclosure Agreement and the documents and
instruments delivered by the Parties in connection with this Agreement)
constitutes the entire agreement and supersedes all other prior agreements
and
understandings, both written and oral, among the Parties with respect to the
subject matter hereof and is solely for the benefit of the Parties and their
respective successors, legal representatives and assigns and does not confer
on
any Person other than the Parties any rights or remedies hereunder. The
representations and warranties in this Agreement are the product of negotiations
among the Parties and are for the sole benefit of the Parties. Any inaccuracies
in such representations and warranties are subject to waiver by the Party for
whose benefit such representation and warranty was made in accordance with
Section 9.11
without
notice of liability to any other Person. In some instances, the representations
and warranties in this Agreement may represent an allocation among the Parties
of risks associated with particular matters regardless of Knowledge of any
of
the Parties. Consequently, Persons other than the Parties may not rely upon
the
representations and warranties in this Agreement as characterizations of actual
facts or circumstances as of the date of this Agreement or as of any other
date.
Section 9.7 Applicable
Law. THIS
AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING VALIDITY, INTERPRETATION
AND EFFECT, BY THE LAWS OF THE STATE OF TEXAS (INCLUDING THE LAWS OF TEXAS
WITH
RESPECT TO STATUTES OF LIMITATION AND STATUTES OF REPOSE) WITHOUT REGARD TO
THE
CONFLICTS OF LAWS PROVISIONS THEREOF THAT WOULD CAUSE THE LAWS OF ANY OTHER
JURISDICTION TO APPLY.
Section 9.8 Jurisdiction. The
Parties agree that any suit, action or proceeding seeking to enforce any
provision of, or based on any matter arising out of or in connection with,
this
Agreement or the transactions contemplated hereby shall be exclusively brought
in any federal court located in the State of Texas or any Texas state court,
and
each of the parties hereby irrevocably consents to the jurisdiction of such
courts (and of the appropriate appellate courts therefrom) in any such suit,
action or proceeding and irrevocably waives, to the fullest extent permitted
by
law, any objection that it may now or hereafter have to the laying of the venue
of any such suit, action or proceeding in any such court or that any such suit,
action or proceeding brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any Party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each Party agrees that
service of process on such Party as provided in Section 9.3
shall be
deemed effective service of process on such Party.
46
Section 9.9 No
Remedy in Certain Circumstances. Each
Party agrees that should any Governmental Authority hold any provision of this
Agreement or part hereof to be null, void or unenforceable, or order any Party
to take any action inconsistent herewith or not to take an action consistent
herewith or required hereby, the validity, legality and enforceability of the
remaining provisions and obligations contained or set forth herein shall not
in
any way be affected or impaired thereby, unless the foregoing inconsistent
action or the failure to take any action constitutes a material breach of this
Agreement or makes this Agreement impossible to perform, in which case this
Agreement shall terminate pursuant to Article 7.
Except
as otherwise contemplated by this Agreement, to the extent that a Party took
an
action inconsistent herewith or failed to take action consistent herewith or
required hereby pursuant to an Order or judgment of a court or other competent
Governmental Authority, such Party shall not incur any liability or obligation
unless such Party did not in good faith seek to resist or object to the
imposition or entering of such Order or judgment.
Section 9.10 Assignment. Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the Parties (whether by operation of Applicable Law or
otherwise) without the prior written consent of the other Parties, and any
such
attempted assignment without such consent shall be immediately null and void.
Subject to the preceding sentence, this Agreement will be binding upon, inure
to
the benefit of and be enforceable by the Parties and their respective successors
and assigns.
Section 9.11 Waivers. At
any time prior to the Effective Time, to the extent legally allowed:
(a) any Party may extend the time for the performance of any of the
obligations or other acts of the other Parties, (b) any Party for whose
benefit a representation or warranty was made may waive any inaccuracies in
the
representations and warranties of the other Parties contained herein or in
any
document delivered pursuant hereto, and (c) any Party may waive performance
of any of the covenants or agreements of the other Parties, or satisfaction
of
any of the conditions to its obligations to effect the Merger, contained herein.
Any agreement on the part of a Party to any such extension or waiver shall
be
valid only if set forth in a written instrument signed by an authorized
representative of such Party. Except as provided in this Agreement, no action
taken pursuant to this Agreement, including any investigation by or on behalf
of
any Party, shall be deemed to constitute a waiver by the Party taking such
action of compliance with any representations, warranties, covenants or
agreements contained in this Agreement. The waiver by any Party of a breach
of
any provision hereof shall not operate or be construed as a waiver of any prior
or subsequent breach of the same or any other provisions hereof.
Section 9.12 Nondisclosure
Agreement. The
Nondisclosure Agreement shall remain in full force and effect following the
execution of this Agreement is hereby incorporated herein by reference, and
shall constitute a part of this Agreement for all purposes. Any and all
information received by KeyOn and Internet America pursuant to the terms and
provisions of this Agreement shall be governed by the applicable terms and
provisions of the Nondisclosure Agreement.
Section 9.13 Incorporation. Exhibits
and Schedules referred to herein are attached to and by this reference are
incorporated herein for all purposes.
47
IN
WITNESS WHEREOF,
the
Parties have caused this Agreement to be executed by their duly authorized
representatives, on the date first written above.
KEYON
COMMUNICATIONS HOLDINGS, INC., a Delaware corporation
|
By:
/s/ Xxxxxxxx Xxxxxx
|
Xxxxxxxx
Xxxxxx, Chief Executive Officer
INTERNET
AMERICA, INC. a Texas corporation
|
|
|||
|
By:
/s/ Xxxxxxx X. Xxxxx, Xx.
|
|||
|
Xxxxxxx
X. Xxxxx, Xx., Chief Executive
Officer
|
IA
ACQUISITION, INC., a Delaware corporation
|
|
|
|
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By:
/s/ Xxxxxxx X. Xxxxx, Xx.
|
|
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Xxxxxxx
X. Xxxxx, Xx., President
48
EXHIBIT
A
WRITTEN
CONSENT AND VOTING AGREEMENT
This
WRITTEN CONSENT AND VOTING AGREEMENT (this “Agreement”)
is
entered into as of November 14, 2008, by and among Internet America, Inc.,
a
Texas corporation (“Internet
America”),
IA
Acquisition, Inc., a Delaware corporation wholly owned by Internet America
(“AcquisitionSub”)
and;
the Persons whose names are set forth on the signature pages hereto under the
caption “Stockholders” (each individually a “Stockholder”
and,
collectively, the “Stockholders”).
W
I T N E S S E T H:
WHEREAS,
as of the date of this Agreement, each Stockholder owns the number of shares
of
Common Stock, par value $.001 per share (the “KeyOn
Stock”),
of
KeyOn Communications Holdings, Inc., a Delaware corporation (“KeyOn”),
set
forth beneath such Stockholder’s name on the signature page hereto(“Owned
Shares”);
WHEREAS,
concurrently herewith, Internet America, AcquisitionSub and KeyOn are entering
into an Agreement and Plan of Merger, dated as of this date (the “Merger
Agreement”),
pursuant to which AcquisitionSub will merge with and into KeyOn and KeyOn will
survive as a wholly-owned subsidiary of Internet America (the “Merger”),
and
each share of KeyOn Stock will be converted into the right to receive the Merger
Consideration, in accordance with the terms of, and subject to the conditions
set forth in, the Merger Agreement; and
WHEREAS,
as a condition to the willingness of Internet America and Acquisition-Sub to
enter into the Merger Agreement, and as an inducement and in consideration
therefor, Internet America and AcquisitionSub have required that the
Stockholders agree, and the Stockholders have agreed, to the agreements and
restrictions contained herein regarding their Owned Shares and any other shares
of KeyOn Stock, including but not limited to those shares of KeyOn Stock issued
in conversion of KeyOn Convertible Notes, acquired by a Stockholder
(“New
Shares”),
at
any time during the period from and including the date of this Agreement through
and including the earliest to occur of (i) the effectiveness of the Merger,
and (ii) the termination of the Merger Agreement in accordance with its
terms (the “Voting
Period”);
NOW,
THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements contained in this
Agreement, the parties, intending to be legally bound, hereby agree as follows:
ARTICLE
I
DEFINITIONS
For
purposes of this Agreement, capitalized terms used in this Agreement that are
defined in the Merger Agreement but not in this Agreement shall have the
respective meanings ascribed to them in the Merger Agreement.
ARTICLE
II
WRITTEN
CONSENT; VOTING AGREEMENT AND IRREVOCABLE PROXY
SECTION
2.1 Written
Consent and Agreement to Vote.
(a)
Each
Stockholder hereby agrees that, concurrently with the execution and delivery
of
this Agreement, such Stockholder will consent to the adoption of the Merger
Agreement and the Merger in accordance with Section 251(c) of the General
Corporation Law of the State of Delaware by signing and delivering to KeyOn
a
written consent in the form of Exhibit A hereto (a “Written Consent”).
A-1
(b)
Subject to Section 3.2 hereof, each Stockholder hereby agrees that, during
the Voting Period, such Stockholder shall vote or execute consents, as
applicable, with respect to the Owned Shares and any New Shares owned by such
Stockholder as of the applicable record date (or cause to be voted or a consent
to be executed with respect to the Owned Shares and any New Shares owned by
such
Stockholder as of the applicable record date) against each of the matters set
forth in clauses (i), (ii), (iii) and (iv) below at any meeting (or
any adjournment or postponement thereof) of, or in connection with any proposed
action by written consent of, the holders of KeyOn Stock at or in connection
with which any of the holders vote or execute consents with respect to any
of
the following matters:
(i)
any
merger agreement or merger (other than the Merger Agreement, the Merger or
any
business combination or transaction with Internet America or any of its
affiliates), consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding up of
or
by KeyOn or any other business combination involving KeyOn;
(ii)
any
action, proposal, transaction or agreement that would reasonably be expected
to
result in a breach in any respect of any covenant, representation or warranty
or
any other obligation or agreement of KeyOn contained in the Merger Agreement
or
of such Stockholder contained in this Agreement;
(iii)
any
action, proposal, transaction or agreement involving KeyOn or any of its
Subsidiaries that would reasonably be expected to prevent, impede, frustrate,
interfere with, delay, postpone or adversely affect the Merger and the other
transactions contemplated by the Merger Agreement, in contravention of the
terms
and conditions set forth in the Merger Agreement; and
(iv)
any
Acquisition Proposal made prior to the termination of the Merger Agreement,
other than the Merger.
(c)
Any
vote required to be cast or consent required to be executed pursuant to this
Section 2.1 shall be cast or executed in accordance with the applicable
procedures relating thereto so as to ensure that it is duly counted for purposes
of determining that a quorum is present (if applicable) and for purposes of
recording the results of that vote or consent.
SECTION
2.2 Grant
of Irrevocable Proxy.
Each
Stockholder hereby irrevocably appoints Xxxxxxx X. Xxxxx, Xx. and Xxxxxxxx
X.
XxXxxxx, and each of them individually, as such Stockholder’s proxy and
attorney-in-fact, with full power of substitution and resubstitution, with
effect immediately following the execution of the Written Consent as provided
in
Section 2.1, to vote or execute consents during the Voting Period, with
respect to the Owned Shares and any New Shares owned by such Stockholder as
of
the applicable record date, in each case solely to the extent and in the manner
specified in Section 2.1 and subject to the exceptions set forth therein.
This proxy is given to secure the performance of the duties of such Stockholder
under this Agreement. Such Stockholder shall not directly or indirectly grant
any Person any proxy (revocable or irrevocable), power of attorney or other
authorization with respect to any of his Owned Shares or New Shares that is
inconsistent with Sections 2.1 and 2.2.
SECTION
2.3 Nature
of Irrevocable Proxy. The
proxy
and power of attorney granted pursuant to Section 2.2 by each Stockholder
shall be irrevocable during the Voting Period, shall be deemed to be coupled
with an interest sufficient in law to support an irrevocable proxy and shall
revoke any and all prior proxies granted by such Stockholder with regard to
his
Owned Shares or any New Shares, and such Stockholder acknowledges that the
proxy
constitutes an inducement for Internet America and AcquisitionSub to enter
into
the Merger Agreement. The power of attorney granted by each Stockholder is
a
durable power of attorney and shall survive the bankruptcy, dissolution, death
or incapacity of such Stockholder. The proxy and power of attorney granted
hereunder shall terminate only upon the expiration of the Voting Period.
ARTICLE
III
COVENANTS
SECTION
3.1 Voting
Period Restrictions.
Each
Stockholder agrees that such Stockholder shall not, during the Voting Period,
sell, transfer, assign or otherwise dispose of (“Transfer”)
any or
all of his Owned Shares or New Shares, or any interest therein, or any voting
rights with respect thereto or enter into any contract, option or other
arrangement or understanding with respect thereto (including any voting trust
or
agreement and the granting of any proxy), other than (a) pursuant to the
Merger in accordance with the terms of the Merger Agreement, or (b) with
the prior written consent of Internet America; provided
that the
foregoing shall not prevent the Transfer of Owned Shares or New Shares upon
the death of such Stockholder pursuant to the terms of any trust or will of
such
Stockholder or by the laws of intestate succession, but only if, and any such
Transfer shall be void unless, the transferee executes and delivers to Internet
America an agreement to be bound by the terms of this Agreement to the same
extent as such Stockholder.
A-2
SECTION
3.2 General
Covenants.
Each
Stockholder agrees that such Stockholder shall not:
(a)
enter
into any agreement, commitment, letter of intent, agreement in principle, or
understanding with any Person or take any other action that violates or
conflicts with or would reasonably be expected to violate or conflict with,
or
result in or give rise to a violation of or conflict with, his covenants and
obligations under this Agreement; or
(b)
take
any action that could restrict or otherwise affect his legal power, authority
and right to comply with and perform his covenants and obligations under this
Agreement.
SECTION
3.3 Stockholders’
Capacity.
Internet America and AcquisitionSub acknowledge that no Stockholder is making
any agreement or understanding herein in his capacity as a director or officer
of KeyOn and that each Stockholder is executing this agreement solely in his
capacity as the owner of KeyOn Stock and nothing herein shall limit or affect
any actions taken by such Stockholder in his capacity as a director or officer
of KeyOn.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF THE STOCKHOLDERS
Each
Stockholder hereby represents and warrants to Internet America and
AcquisitionSub as follows:
SECTION
4.1 Authorization.
Such
Stockholder has all legal capacity to execute and deliver this Agreement and
to
perform its obligations hereunder. This Agreement has been duly executed and
delivered by such Stockholder and, assuming it has been duly and validly
authorized, executed and delivered by Internet America and AcquisitionSub,
constitutes a legal, valid and binding obligation of such Stockholder,
enforceable against such Stockholder in accordance with its terms, except to
the
extent that enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other similar
laws now or hereafter in effect relating to creditor’s rights generally, and
(ii) general principles of equity.
SECTION
4.2 Ownership
of Shares.
As of
the date hereof, the Owned Shares of such Stockholder are listed beneath such
Stockholders’ name on the signature page hereto. Except as described in the
Schedule 13D, as amended to the date hereof, of such Stockholder with respect
to
KeyOn Stock or Forms 3, 4, or 5 filed by such Stockholder with the SEC on or
prior to the date hereof, such Stockholder is the sole beneficial owner, free
and clear of all Liens and all voting agreements and commitments of every kind,
of all of the Owned Shares and has the sole power to vote (or cause to be voted
or consents to be executed) and to dispose of (or cause to be disposed of)
such
Owned Shares without restriction, and no proxies through and including the
date
hereof given in respect of any or all of such Owned Shares are irrevocable
and
any such proxies have been revoked.
SECTION
4.3 No
Conflicts.
Except
for a filing of an amendment to a Schedule 13D and a filing of a Form 4 as
required by the Exchange Act, (i) no filing with any Governmental Entity,
and no authorization, consent or approval of any other Person is necessary
for
the execution of this Agreement by such Stockholder or the performance by him
of
his obligations hereunder and (ii) none of the execution and delivery of
this Agreement by such Stockholder, or the performance by him of his obligations
hereunder shall (A) result in, give rise to or constitute a violation or
breach of or a default (or any event which with notice or lapse of time or
both
would become a violation, breach or default) under, or give to others any rights
of termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien on, any of the Owned Shares pursuant to any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise
or
other instrument or obligation to which such Stockholder is a party or by which
such Stockholder or any of his Owned Shares are bound, or (B) violate any
applicable law, rule, regulation, order, judgment, or decree applicable to
such
Stockholder, except for any of the foregoing as would not impair his ability
to
perform his obligations under this Agreement.
A-3
SECTION
4.4 Transaction
Fee.
Such
Stockholder has not employed any investment banker, broker or finder in
connection with the transactions contemplated by the Merger Agreement who might
be entitled to any fee or any commission from KeyOn in connection with or upon
consummation of the Merger.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF
INTERNET
AMERICA AND ACQUISITIONSUB
Each
of
Internet America and AcquisitionSub hereby represent and warrant to the
Stockholders as follows:
SECTION
5.1 Authorization.
Such
party has all power and authority to execute and deliver this Agreement and
to
perform its obligations hereunder. This Agreement has been duly authorized,
executed and delivered by such party and, assuming it has been duly and validly
executed and delivered by the Stockholders, constitutes a legal, valid and
binding obligation of such party, enforceable against it in accordance with
the
terms of this Agreement.
SECTION
5.2 No
Conflicts.
The
execution and delivery of this Agreement by such party does not and the
performance of this Agreement by such party will not (i) conflict with,
result in any violation of, require any consent under or constitute a default
(whether with notice or lapse of time or both) under any mortgage, bond,
indenture, agreement, instrument or obligation to which it is a party or by
which it or any of its properties is bound; (ii) violate any judgment,
order, injunction, decree or award of any court, administrative agency or other
Governmental Entity that is binding on such party or any of its properties;
or
(iii) constitute a violation by such party of any law, regulation, rule or
ordinance applicable to such party, in each case, except for any violation,
conflict or consent as would not impair the ability of such party to perform
its
obligations under this Agreement or to consummate the transactions contemplated
herein on a timely basis.
ARTICLE
VI
TERMINATION
This
Agreement and all obligations of the parties hereunder shall automatically
terminate and the Written Consent of each of the Stockholders shall be
automatically revoked upon the earliest to occur of (i) the Effective Time,
(ii) the effectiveness of any amendment, modification or supplement to, or
waiver under, the Merger Agreement which amendment, modification, supplement
or
waiver would reduce the amount of Merger Consideration payable in the Merger,
unless consented to in writing by each Stockholder, and (iii) the
termination of the Merger Agreement in accordance with its terms (unless the
Merger Agreement is terminated as a result of breach of this Agreement). Upon
the termination of this Agreement, neither Internet America, AcquisitionSub
nor
the Stockholders shall have any rights or obligations hereunder and this
Agreement shall become null and void and have no effect; provided,
that
Sections 7.1, and 7.3 through 7.11 shall survive such termination.
Notwithstanding the foregoing, termination of this Agreement shall not prevent
any party from seeking any remedies (at law or in equity) against any other
party for that party’s breach of any of the terms of this Agreement prior to the
date of termination.
ARTICLE
VII
MISCELLANEOUS
SECTION
7.1 Publication.
Each
Stockholder hereby permits Internet America, AcquisitionSub and/or KeyOn to
publish and disclose in press releases, Schedule 13D filings, and in the joint
Registration/Information Statement (including all documents and schedules filed
with the SEC) and any other disclosures or filings required by applicable law
his identity and ownership of shares of KeyOn Stock, the nature of his
commitments, arrangements and understandings pursuant to this Agreement and/or
the text of this Agreement.
SECTION
7.2 Appraisal
Rights.
Each
Stockholder hereby waives any rights of appraisal or rights to dissent from
the
Merger or the adoption of the Merger Agreement that such Stockholder may have
under applicable law and shall not permit any such rights of appraisal or rights
of dissent to be exercised with respect to his Owned Shares or any New Shares.
A-4
SECTION
7.3 Amendments,
Waivers, etc. This
Agreement may be amended by the parties at any time. This Agreement may not
be
amended except by an instrument in writing signed on behalf of each of the
parties. Except as provided in this Agreement, no action taken pursuant to
this
Agreement, including any investigation by or on behalf of any party, shall
be
deemed to constitute a waiver by the party taking the action of compliance
with
any representations, warranties, covenants or agreements contained in this
Agreement. The waiver by any party of a breach of any provision hereunder shall
not operate or be construed as a waiver of any prior or subsequent breach of
the
same or any other provision hereunder.
SECTION
7.4 Enforcement
of Agreement; Specific Performance. The
Stockholders agree and acknowledge that Internet America and AcquisitionSub
would suffer irreparable damage in the event that any of the obligations of
the
Stockholders in this Agreement were not performed in accordance with its
specific terms or if the Agreement was otherwise breached by the Stockholders.
It is accordingly agreed by the Stockholders that Internet America shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement, this
being in addition to any other remedy to which Internet America may be entitled
at law or in equity.
SECTION
7.5 Notices. Any
notice required to be given hereunder shall be sufficient if in writing, and
sent by facsimile transmission or by courier service (with proof of service),
hand delivery or certified or registered mail (return receipt requested and
first-class postage prepaid), addressed as follows:
(a)
If to
the Internet America or AcquisitionSub, addressed to it at:
Internet
America, Inc.
00000
X.
Xxx Xxxxxxx Xxxxxxx X., Xxxxx 000
Xxxxxxx,
Xxxxx 00000
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
Attn:
Chief Executive Officer
with
a
copy to:
Xxxxx
& Ketchand
0
Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxx 00000
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
Attn:
Xxxx X. Leader
(b)
If to
the Stockholders, addressed to them at:
KeyOn
Communications Holdings, Inc.
00000
Xxxxxxxxx Xxxxxx
Xxxxx,
Xxxxxxxx 00000
Facsimile:
(000) 000-0000
Attention:
General Counsel
with
a
copy to:
Xxxxxxx
Xxxx Xxxxxxx & Xxxxx, LLP
00
Xxxx
Xxxxxx- 00xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Facsimile:
(000) 000-0000
Attn:
Xxxxxxx X. Xxxxxx, Esq.
or
to
that other address as any party shall specify by written notice so given, and
notice shall be deemed to have been delivered as of the date so telecommunicated
or personally delivered.
SECTION
7.6 Headings;
Titles. Headings
and titles of the Articles and Sections of this Agreement are for the
convenience of the parties only, and shall be given no substantive or
interpretative effect whatsoever.
A-5
SECTION
7.7 Severability. Any
term
or provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
this invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or affecting the validity
or enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. Upon determination that any term or other provision is
invalid or incapable of being enforced, the parties shall negotiate in good
faith to modify this Agreement as to effect the original intent of the parties
as closely as possible in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
SECTION
7.8 Entire
Agreement. This
Agreement (together with the Merger Agreement, to the extent referred to in
this
Agreement) and any documents delivered by the parties in connection herewith
constitute the entire agreement among the parties with respect to the subject
matter of this Agreement and supersede all prior agreements and understandings
among the parties with respect thereto. No addition to or modification of any
provision of this Agreement shall be binding upon any party unless made in
writing and signed by all parties.
SECTION
7.9 Assignment;
Binding Effect; No Third Party Beneficiaries; Further Action. Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties. This Agreement shall be binding upon and
shall inure to the benefit of Internet America and AcquisitionSub and their
respective successors and assigns and shall be binding upon the Stockholders
and
their respective successors, assigns, heirs, executors and administrators.
Notwithstanding anything contained in this Agreement to the contrary, nothing
in
this Agreement, expressed or implied, is intended to confer on any Person (other
than, in the case of Internet America and Acquisition Sub, their respective
successors and assigns and, in the case of the Stockholders, the Stockholders’
successors, assigns, heirs, executors and administrators) any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
SECTION
7.10 Mutual
Drafting. Each
party has participated in the drafting of this Agreement, which each party
acknowledges is the result of extensive negotiations between the parties. This
Agreement shall not be deemed to have been prepared or drafted by any one party
or another or any party’s attorneys.
SECTION
7.11 Governing
Law and Consent to Jurisdiction.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Delaware, without regard to its rules of conflict of laws. The
Stockholders hereby irrevocably and unconditionally consent to submit to the
jurisdiction of the federal courts located in the State of Delaware or any
Delaware state courts (and, if appropriate, appellate courts therefrom) in
connection with any action or proceeding arising out of or relating to this
Agreement and the transactions contemplated hereby (and agree not to commence
any suit, action or proceeding relating thereto except in those courts), waive
any defense or objection they may have or hereafter have relating to the laying
of venue of any suit, action or proceeding in any such courts and agree not
to
plead or claim that any suit, action or proceeding brought therein has been
brought in an inconvenient forum.
SECTION
7.12 Counterparts;
Facsimiles. This
Agreement may be executed by the parties in separate counterparts, each of
which
when so executed and delivered shall be an original, but all counterparts shall
together constitute one and the same instrument. Each counterpart may consist
of
a number of copies each signed by less than all, but together signed by all
of
the parties. This Agreement or any counterpart may be executed and delivered
by
facsimile copies, each of which shall be deemed an original.
A-6
IN
WITNESS WHEREOF,
the
parties hereto have caused this Written Consent and Voting Agreement to be
duly
executed as of the day and year first above written.
|
INTERNET AMERICA, INC.
|
IA ACQUISITION, INC. | ||
| By: /s/ Xxxxxxx X. Xxxxx, Xx. | By: Xxxxxxx X. Xxxxx, Xx. | ||
|
Xxxxxxx
X. Xxxxx, Xx., Chief
Executive
Officer
|
Xxxxxxx
X. Xxxxx, Xx.,
President
|
|
STOCKHOLDERS
|
|||
| By: /s/ Xxxxxx Xxxxxx | By: /s/ Xxxxxxxx Xxxxxx | ||
|
Xxxxxx
Xxxxxx
|
Xxxxxxxx
Xxxxxx
|
||
| By: /s/ A. Xxxxxx Xxxxxxx | By: /s/ Xxxxx Xxxxx | ||
|
A.
Xxxxxx Xxxxxxx
|
Xxxxx
Xxxxx
|
||
A-7
EXHIBIT
A
WRITTEN
CONSENT OF STOCKHOLDERS OF
KEYON
COMMUNICATIONS HOLDINGS, INC.
The
undersigned, being stockholder(s) of KeyOn Communications, Inc., a Delaware
corporation (the “KeyOn”),
acting pursuant to the provisions of Section 228 of the Delaware General
Corporation Law and KeyOn’s bylaws, hereby adopts the following recitals and
resolution by written consent in lieu of a meeting:
WHEREAS,
there has been presented to the undersigned stockholder(s) of KeyOn an Agreement
and Plan of Merger (the “Merger
Agreement”)
by and
among KeyOn, Internet America, Inc., a Texas corporation (“Internet
America”),
and
IA Acquisition, Inc., a Delaware corporation wholly-owned by Internet America
(“AcquisitionSub”),
which
Merger Agreement provides for the merger of Acquisition Sub with and into KeyOn,
with KeyOn as the surviving corporation after such merger (the “Merger”);
WHEREAS,
pursuant to the terms and conditions of the Merger Agreement, the stockholders
of KeyOn (the “Stockholders”)
will
be entitled to receive the Merger Consideration (as defined in the Merger
Agreement) for each share of common stock of KeyOn held by them at the effective
time of the Merger;
WHEREAS,
the board of directors of KeyOn has approved and adopted the Merger Agreement
and the Merger, and has resolved to recommend that the stockholders of KeyOn
approve and adopt the Merger Agreement and the Merger; and
WHEREAS,
the affirmative vote in favor of the adoption of the Merger Agreement by a
majority of the votes entitled to be cast thereon by the stockholders of KeyOn
is required pursuant to Section 251 of the Delaware General Corporation Law
before KeyOn may effect the Merger.
NOW,
THEREFORE, BE IT RESOLVED, that the undersigned Stockholder(s), in their
capacity as stockholders of KeyOn, hereby adopt the Merger Agreement and approve
the transactions contemplated by the Merger Agreement, including, without
limitation, the Merger; and
FURTHER
RESOLVED, that the Merger Agreement and the Merger be, and hereby are, consented
to, approved and adopted in all respects without a meeting, without prior notice
and without a vote; and
FURTHER
RESOLVED, that this written consent may be signed in one or more counterparts,
each of which shall be deemed an original, and all of which shall constitute
one
instrument and that this written consent shall be filed with the minutes of
the
proceedings of the stockholders of KeyOn.
This
written consent is coupled with an interest and is irrevocable, except to the
extent provided in Article 6 of the Written Consent and Voting Agreement entered
into on November 14, 2008 among Internet America, AcquisitionSub and the
Stockholders.
IN
WITNESS WHEREOF,
each of
the undersigned has executed this written consent effective as of the last
date
set forth below.
DATED:
November 14, 2008
STOCKHOLDERS
| By: /s/ Xxxxxx Xxxxxx | By: /s/ Xxxxxxxx Xxxxxx | ||
|
Xxxxxx
Xxxxxx
|
Xxxxxxxx
Xxxxxx
|
||
|
Shares
955,820
|
Shares
998,461
|
||
| By: /s/ A. Xxxxxx Xxxxxxx | By: /s/ Xxxxx Xxxxx | ||
|
A.
Xxxxxx Xxxxxxx
|
Xxxxx
Xxxxx
|
||
|
Shares
349,063
|
Shares
225,572
|
A-A-1
Schedule
A - Signatories to Voting Agreement
|
Xxxxxxxx
Xxxxxx
|
|
|||
|
Xxxxxx
Xxxxxx
|
|
|||
|
A.
Xxxxxx Xxxxxxx
|
|
|||
|
Xxxxx
Xxxxx
|
|
A-A-2
