1
EXHIBIT 10.2
SHARE ACQUISITION AGREEMENT
THIS SHARE ACQUISITION AGREEMENT (this "Agreement"), dated as of June
30, 2000, by and between High Speed Net Solutions, Inc., a Florida corporation
("HSNS"), and Xxxxxxx May, an individual (hereinafter referred to as the
"Shareholder").
W I T N E S S E T H:
WHEREAS, the Shareholder owns all of the issued and outstanding shares
of Common Stock, par value $.01 per share (the "May Shares"), of Xxxxxxx May &
Co., Inc., a Texas corporation ("May");
WHEREAS, May carries on the business of advertising design, brand
development and interface consulting, including the development of corporate
Websites (the "Business"); and
WHEREAS, the Shareholder desires to sell to HSNS, and HSNS desires to
acquire from the Shareholder, all of the issued and outstanding shares of May in
exchange for shares of Common Stock, par value $0.01 per share, of HSNS (the
"HSNS Shares").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth and other good and valuable consideration had
and received, the parties hereto, on the basis of, and in reliance upon, the
representations, warranties, covenants, obligations and agreements set forth in
this Agreement, and upon the terms and subject to the conditions contained
herein, hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
-1-
2
Section 1.1 PURCHASE AND SALE OF SHARES. On the terms and subject
to the conditions of this Agreement, the Shareholder shall sell, transfer and
deliver to HSNS, and HSNS shall purchase and acquire from the Shareholder, at
the Closing (as defined in Section 2.1 hereof) and for the consideration
hereinafter set forth, all of the May Shares, free from any restrictions, liens,
encumbrances, claims, options, calls, pledges, trusts and other commitments,
agreements or arrangements (collectively, "Claims"). The Shareholder shall pay
any and all state and federal transfer taxes and governmental charges assessable
against the Shareholder regarding the transfer of the May Shares to HSNS.
Section 1.2 PURCHASE PRICE. In full consideration for the May
Shares, HSNS shall transfer and deliver to the Shareholder at the Closing the
following:
(a) 50,000 HSNS Shares, subject to the adjustment
provided for in Section 1.3;
(b) That number of HSNS Shares that when multiplied by
the Closing Price (as hereinafter defined) of one HSNS Share shall be
equal to Five Hundred Seventy-Six Thousand Dollars ($576,000). The
Closing Price of one HSNS Share shall be the average of the daily last
sales prices of HSNS Shares on the OTC Bulletin Board (as reported on
Xxxxxxxxx.xxx or, if not reported thereby, any other authoritative
source selected by HSNS) for the ten consecutive full trading days in
which HSNS Shares are traded on the OTC Bulletin Board ending at the
close of trading on the second business day prior to the Closing Date;
and
(c) That number of HSNS Shares that when multiplied by
the Closing Price shall be equal to $300,000, which represents the
balance of May's accounts receivable, meaning all amounts owed to May
by its customers and others and equaling $453,539 at the close of
-2-
3
business on the second business day prior to the Closing Date, less a
reserve of $3,900 (the "Accounts Receivable"), less $73,294, which is
twenty percent (20%) of May's gross xxxxxxxx to SAPI since January 1,
2000, and less $76,345, exchanged for HSNS Shares pursuant to Section
1.2 (b). The Accounts Receivable further does not include the sum of
$69,637 owed by X-Stream Technologies, Inc. for the work done,
reflected on invoice numbers 2901 through 2908, dated October 29, 1999
(the "X-Stream Invoices"), which was assigned to Shareholder prior to
closing.
Section 1.3 ADJUSTMENT TO PURCHASE PRICE. If the market value of
one HSNS Share is less than $10.00 on the first anniversary of the Closing Date,
then HSNS shall deliver to the Shareholder such number of additional HSNS Shares
so that the product of (a) the sum of the HSNS Shares delivered to the
Shareholder pursuant to Section 1.2(a) at the Closing (as adjusted to account
for any stock splits, reverse stock splits, stock dividends, combinations or
reclassifications), plus (ii) the additional shares to be delivered pursuant to
this Section 1.3, and (b) the market value of one HSNS Share on the first
anniversary of the Closing Date, shall be equal to Five Hundred Thousand Dollars
($500,000). The market value of one HSNS Share on the first anniversary of the
Closing Date shall be the last sale price of HSNS Shares on the OTC Bulletin
Board as reported on Xxxxxxxxx.xxx or, if not reported thereby, any other
authoritative source selected by agreement between Shareholder and HSNS, on the
first anniversary of the Closing Date or, if no HSNS Share shall have traded on
such date, on the last trading day preceding the first anniversary of the
Closing Date.
ARTICLE II
CLOSING
Section 2.1 CLOSING DEFINED. The closing (the "Closing") of the
purchase and sale of the
-3-
4
May Shares shall be held at the offices of Xxxxxx Xxxx Xxxxxx Xxxx & Xxxxxxxxxx
P.L.L.C., 000 Xxxxx Xxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxxx Xxxxxxxx on June
30, 2000 at 10:00 a.m., local time, or at such other place and time as the
parties hereto shall mutually agree.
Section 2.2 CLOSING DELIVERIES OF THE SHAREHOLDER. At the
Closing, the Shareholder shall deliver to HSNS: (a) stock certificates
representing the May Shares, duly endorsed in blank or accompanied by
appropriate stock powers duly endorsed in blank and (b) all closing certificates
and other documents required to be delivered by the Shareholder or May to HSNS
at the Closing under the provisions of this Agreement.
Section 2.3 CLOSING DELIVERIES OF HSNS. At the Closing, HSNS
shall deliver to the Shareholder: (a) certificates representing the HSNS Shares
as provided for in Section 1.2; (b) the May License Agreement (as defined and
described in Section 3.2 (i)), duly executed by May and HSNS; (c) the Accounts
Receivable Escrow Agreement (as defined and described in Section 4.8(c)), duly
executed by May, HSNS, and the Escrow Agent, and (d) the joint prosecution
agreement, described in Section 4.10, executed by May, HSNS and Shareholder.
Section 2.4 DOCUMENTS DELIVERED BY THE SHAREHOLDER AND HSNS. At
the Closing, the Shareholder and HSNS shall execute and deliver the Employment
Agreement between the Shareholder and HSNS in the form attached hereto as
Exhibit A.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER.
The Shareholder hereby represents and warrants to HSNS that:
(a) ORGANIZATION AND STANDING. May is a corporation duly
organized, validly
-4-
5
existing and in good standing under the laws of the State of Texas, and
has all requisite power and authority to operate its business, to own
or lease its properties and assets, and to carry on its business as now
being conducted. May has no subsidiary corporations, and owns no
interest, directly or indirectly, in any other business enterprise,
firm or corporation. May is qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the
property owned, leased or operated by it, or the nature of the business
conducted by it, requires such qualification under applicable law.
(b) AUTHORIZED CAPITAL. May has an authorized capital
consisting solely of 1,000,000 shares of common stock, par value $.01
per share, 5,000 of which are issued and outstanding (the "Outstanding
Shares"), and none of which are held as treasury shares. All of the
Outstanding Shares are duly authorized, validly issued, fully paid and
nonassessable, and there are no other securities of May of any class
issued, reserved for issuance or outstanding. There are no options,
offers, warrants, conversion rights, subscriptions, or agreements or
rights of any kind to subscribe for or to purchase, or commitments to
issue (either formal or informal, firm or contingent), shares of
capital stock or other securities of May (whether debt, equity or a
combination thereof) or obligating May to grant, extend or enter into
any such agreement or commitment.
(c) SHAREHOLDER; TITLE TO SHARES. The Shareholder is the
sole holder of record and beneficial owner of all of the Outstanding
Shares. The Shareholder holds good, valid and marketable title to the
Outstanding Shares, free and clear of all Claims. The certificates and
other documents representing the Outstanding Shares delivered to HSNS
at the Closing, and
-5-
6
the signatures and endorsements thereof or stock powers or powers of
attorney delivered therewith, will be valid and genuine and will
deliver to HSNS sole and absolute ownership of the Outstanding Shares,
free and clear of all Claims.
(d) CAPACITY OF SHAREHOLDER; CONSENTS; EXECUTION OF
AGREEMENT; GOOD TITLE TO HSNS. The Shareholder has all requisite power,
authority and capacity to enter into and perform this Agreement and all
other agreements and instruments entered into by the Shareholder in
connection herewith, and to perform the obligations required to be
performed by him hereunder and thereunder. All consents or approvals
from any persons, courts, Governmental Authorities (as hereinafter
defined) and other entities, required to be obtained by the Shareholder
so as to sell his May Shares to HSNS pursuant to the terms of this
Agreement have been obtained. This Agreement and all other agreements
and instruments entered into by the Shareholder in connection herewith
have been duly executed and delivered by, and constitute the valid and
legally binding obligations of, the Shareholder, enforceable against
the Shareholder in accordance with their respective terms. Upon
delivery of the May Shares to HSNS as herein contemplated, HSNS shall
acquire the entire legal and beneficial ownership of, and shall have
good, valid and marketable title to, all of the issued and outstanding
shares of capital stock of May, free and clear of all Claims.
(e) ARTICLES AND BYLAWS. The Shareholder has delivered to
HSNS copies of the articles of incorporation and bylaws of May, and
such documents are true, correct and complete, and have not been
amended or modified in any respect.
(f) CONFLICTS; DEFAULTS. Neither the execution and
delivery of this Agreement and the other agreements and instruments
executed and delivered in connection herewith by the
-6-
7
Shareholder, nor the performance of the transactions contemplated
hereby or thereby by the Shareholder, will (i) violate, conflict with,
or constitute a default under, any of the terms of May's articles of
incorporation or bylaws, or any provisions of, or result in the
acceleration of any obligation under, any contract, indenture, deed of
trust, lease, agreement or other instrument, including, without
limitation, the Contracts (as hereinafter defined), or order, judgment
or decree, relating to May, the Business or the May Shares, or by which
May, the assets of May or the May Shares may be bound, (ii) result in
the creation or imposition of any Liens (as hereinafter defined) or
Claims in favor of any third person or entity upon any assets of May or
the May Shares, (iii) violate any law, statute, judgment, decree,
order, rule or regulation of any foreign, United States, state or local
governmental entity or municipality or subdivision thereof or any
authority, department, commission, board, bureau, agency, court or
instrumentality (collectively, "Governmental Authorities"), or (iv)
constitute an event which, after notice or lapse of time or both, would
result in such violation, conflict, default, acceleration, or creation
or imposition of such Liens or Claims. May is not in violation of its
articles of incorporation or bylaws, or in default under any of the
terms or provision of any contract, indenture, deed of trust, lease,
agreement or other instrument (including, without limitation, the
Contracts) or any order, judgment or decree, to which May is a party or
by which May is bound, and there exists no condition or event which,
after notice or lapse of time or both, would result in such violation
or default.
(g) FINANCIAL STATEMENTS. The Shareholder has heretofore
delivered to HSNS the following financial statements (collectively, the
"Financial Statements"): (i) the unaudited balance sheets of May as of
December 31, 1999, 1998, 1997 and 1996 and the related
-7-
8
statements of income and retained earnings for the years then ended, as
compiled by Xxxxx X. Xxxxxxx, certified public accountant, and (ii) the
unaudited balance sheet of May as of June 30, 2000 and the related
statement of income for the year-to-date period then ended. Each of the
Financial Statements is true and correct in all material respects, was
prepared from the books and records kept by May for the Business, and
fairly presents the financial position of May as of such dates or the
results of May's operations for the periods then ended in accordance
with generally accepted accounting principles consistently applied.
Since December 31, 1999, there has been no material adverse change in
the financial condition, results of operations, business or prospects
of May, nor has there been any event or condition of any character that
has affected, or that is likely to materially and adversely affect, the
financial condition, results of operations, business or prospects of
May. The June 30, 2000 Balance Sheet reflects all properties and
assets, real, personal or mixed, that are currently used by May in the
Business, except for (i) the properties and assets listed on the
Schedule entitled "Shareholder Properties" attached hereto, and (ii)
properties and assets not in excess of $10,000 (in the aggregate)
purchased or sold since June 30, 2000 in the ordinary and normal course
of business and working capital acquired since June 30, 2000 in the
ordinary and normal course of business.
(h) LIABILITIES. May has no liabilities or obligations of
any nature whatsoever, whether absolute, accrued, contingent or
otherwise, except for those (i) reflected or reserved on the June 30,
2000 Balance Sheet, and (ii) listed on the Schedule entitled
"Liabilities" attached hereto. There exists no event or circumstance
which, after notice or lapse of time or both, might create any other
obligations or liabilities of May.
-8-
9
(i) CHANGES IN CIRCUMSTANCES. Since December 31, 1999,
May has not (i) sold, transferred or otherwise disposed of any of its
properties or assets outside the ordinary and normal course of business
or for less than fair market value; (ii) mortgaged, pledged, or
subjected to any Lien, any of its properties or assets; (iii) acquired
any properties or assets outside the ordinary and normal course of
business or for more than fair market value; (iv) sustained any damage,
loss or destruction of or to its assets, properties or business
(whether or not covered by insurance); (v) entered into any transaction
or otherwise conducted the Business other than in the ordinary and
normal course; (vi) effected any change in its articles of
incorporation or bylaws; (vii) granted any salary increase or bonus or
permitted any advance to any officer or director or to the Shareholder,
instituted or granted any general salary increase to the employees of
May, or entered into any new, or altered or amended any existing
Employee Plan (as hereinafter defined) or any employment or consulting
agreement, except as authorized under Section 4.1(e), or as set forth
on the Schedule styled "Employees" attached pursuant to Section 3.1(x);
(viii) made any borrowing, whether or not in the ordinary and normal
course of business, issued any commercial paper or refinanced any
existing borrowings; (ix) paid any obligation or liability (fixed or
contingent), other than in the ordinary and normal course of business,
discharged or satisfied any Lien, or settled any claim, liability or
suit pending or threatened against May or any of May's properties or
assets; (x) entered into any licenses or leases; (xi) made any loans or
gifts; (xii) modified, amended, cancelled or terminated any existing
contracts or commitments under circumstances that would materially and
adversely affect its financial condition, results of operations,
business or prospects; (xiii) purchased, redeemed, retired or otherwise
acquired
-9-
10
(directly or indirectly) any of its capital stock; (xiv) declared or
paid, or become obligated to declare or pay, any dividend or
distribution, or any other payment or distribution in respect of shares
of its capital stock, except as authorized under Section 4.1(e); (xv)
disbursed, or became obligated to disburse, cash, except in the
ordinary course of carrying on the Business, except as authorized under
Section 4.1(e); (xvi) willfully taken or omitted to take any action
that would cause to be breached, or might result in a breach of, any of
the representations, warranties, covenants, obligations and agreements
of the Shareholder contained herein if the same were made anew
immediately after such act or omission; (xvii) suffered any change in
the condition (financial or otherwise) in its properties, assets,
liabilities or business, except for usual and normal changes in the
ordinary course of business that have not, individually or in the
aggregate, had a materially adverse affect on May; or (xviii) agreed
to, or obligated itself to, do anything identified in (i) through
(xvii) above.
(j) ASSETS OF MAY; GOOD TITLE. The properties and assets
reflected on the June 30, 2000 Balance Sheet and the properties and
assets listed on the Schedule entitled "Shareholder Properties" are in
good operating condition and repair (subject to normal wear and tear
consistent with the age of such properties or assets), and are adequate
and sufficient for the operation of the Business as now conducted by
May. May is the only business organization through which the Business
is conducted, and all of the assets used to conduct the Business are
owned by May, other than the assets listed on the Schedule entitled
"Shareholder Properties," which assets will be conveyed to May prior to
the Closing free and clear of all Claims. May has good and marketable
title to all properties and assets reflected on the June 30, 2000
Balance Sheet (except to the extent such assets and properties have
-10-
11
been disposed of for fair market value in the ordinary course of
business since June 30, 2000, and will have good and marketable title
to the assets listed on the Schedule entitled "Shareholder Properties"
prior to the Closing. May owns all such assets and properties (or, with
respect to the assets listed on the Schedule entitled "Shareholder
Properties," will own them) free and clear of any and all security
interests, liens, encumbrances, mortgages, pledges, equities, charges,
assessments, easements, covenants, restrictions, reservations, defects
in title, encroachments and other burdens (collectively, "Liens"),
except: (i) as disclosed on the Schedule entitled "Liens" attached
hereto, or (ii) Permitted Liens (as hereinafter defined). Except as
disclosed on the June 30, 2000 Balance Sheet, or on the Schedule
entitled "Liens" attached hereto, no properties or assets of May are
subject to or are held under any lease, mortgage, security agreement,
conditional sales or other title retention agreement, equipment
obligation or lease purchase agreement, or are other than in the sole
possession and under the sole control of May or its agents. May has the
right under valid and existing leases to occupy, use or control all
material properties and assets leased by it.
(k) REAL PROPERTY. May neither owns nor leases any real
property other than pursuant to the 0000 Xxxxxxx Xxxxx Lease (as
hereafter defined).
(l) 0000 XXXXXXX XXXXX LEASE. The 0000 Xxxxxxx Xxxxx
Lease, which covers the lease of office space to May at 0000 Xxxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx and a true, correct and complete copy
of which has been delivered by the Shareholder to HSNS (the "Lease"),
has not been modified, altered, terminated or revoked, and is in full
force and effect. May, as the present tenant under the 0000 Xxxxxxx
Xxxxx Lease, is not in default under,
-11-
12
or in breach of, any of the terms of the 0000 Xxxxxxx Xxxxx Lease and
there are no existing facts or conditions that could give rise to any
such breach or default, or any claim against the Company, under the
0000 Xxxxxxx Xxxxx Lease, and May has no liabilities outstanding under
the 0000 Xxxxxxx Xxxxx Lease other than for rent not past due. Dallas
Minnesota Investments, LLC, as present lessor under the 0000 Xxxxxxx
Xxxxx Lease (the "Landlord"), is not in default thereunder, or in
breach thereof, and there are no existing facts or conditions that
could give rise to any such breach or default, or any claim against
Dallas Minnesota Investments, LLC under the 0000 Xxxxxxx Xxxxx Lease.
May has the right to quiet enjoyment of all real property subject to
the l600 Pacific Place Lease for the full term of such lease and any
renewal option related thereto. There has been no disturbance of, or
challenge to, May's quiet possession under such lease, and no leasehold
or other interest of May in such real property is subject or
subordinate to any Lien.
(m) ENVIRONMENTAL AND SAFETY COMPLIANCE. Neither (i) the
operation of the Business, nor (ii) May's processes, results or
products, violate any applicable law or regulation relating to air,
water, or noise pollution or employee health and safety or the
production, storage, labeling, transportation or disposition of waste
or hazardous or toxic substances, and May is in full compliance with
all such laws and regulations.
(n) CONTRACTS. The Schedule entitled "Contracts" attached
hereto contains a complete list or description of (i) all licenses,
contracts, agreements, commitments and undertakings (whether written or
oral) (A) relating to May or the Business, or to which May is a party
(I) that involves the purchase of inventories or the sale of products
or services, and
-12-
13
involves aggregate future payments in excess of $5,000 or that extends
for a period of more than six months, or (II) that does not involve the
purchase of inventories or the sale of products or services, and
involves aggregate future payments in excess of $5,000 or extends for a
period of more than three months, (B) between May and any distributors,
manufacturers' agents, or selling agents, or pursuant to which May
sells or distributes its products or services, including, without
limitation, any contracts, agreements or commitments between May and
any Governmental Authority, in each case described in this subsection
(B) regardless of the size or term of such licenses, contracts,
agreements, commitments and undertakings, (ii) each loan or credit
agreement, security agreement, guaranty, indenture, mortgage, pledge or
other agreement or instrument evidencing indebtedness of May or to
which May is a party, (iii) any conditional sale or other title
retention agreement, equipment obligation, or lease purchase agreement
involving amounts in excess of $5,000 (in the aggregate) relating to
May or the Business, or to which May is a party, (iv) each contract,
agreement, commitment or undertaking, whether or not fully performed,
relating to capital stock, bonds or other securities of May, (v) each
contract, agreement, commitment or undertaking presently in effect,
whether or not fully performed, by May with any current or former
officer, director, consultant, other employee (or group of employees)
or shareholder of May, and (vi) all other contracts, agreements,
commitments or undertakings of May material to the business, assets,
liabilities, financial condition or results of operations of the
Business taken as a whole (collectively, "Contracts"). Except as set
forth on such Schedule, May has performed in all material respects all
obligations required to be performed by it to date under the Contracts,
and neither May nor, to the Shareholder's
-13-
14
knowledge, any other party to any Contract, has breached or improperly
terminated any Contract, or is in default under any Contract by which
it is bound, and there exists no condition or event which, after notice
or lapse of time or both, would constitute any such breach, termination
or default. Except as set forth on such Schedule, each of the Contracts
is in full force and effect, and is a legal, binding and enforceable
obligation of or against the parties thereto.
(o) INSURANCE. The Schedule entitled "Insurance" attached
hereto contains a list of all insurance policies (specifying the
location, insured, insurer, beneficiary of the policy, amount of
coverage, type of insurance and policy number) maintained by May. May
has in full force and effect, with all premiums paid thereon, the
policies of insurance, or renewals thereof, in the amounts set forth on
such Schedule. The insurance set forth on such Schedule includes
insurance on all of the assets and operations of May of such types, in
such amounts, and against all liabilities, claims and risks against
which it is customary and prudent to insure.
(p) BANK ACCOUNTS. The Schedule entitled "Bank Accounts"
attached hereto contains a list of all banks and other financial
institutions in which May has accounts (specifying the locations and
identifying numbers) and the names of all persons authorized to draw
thereon. May has no safe deposit boxes.
(q) LITIGATION. Except as set forth on the Schedule
entitled "Litigation" attached hereto: (i) May is not subject to any
order of, or written agreement or memorandum or understanding with, any
Governmental Authority, (ii) there exists no litigation, action, suit,
or proceeding pending, or, to the Shareholder's knowledge, any
litigation, action, suit,
-14-
15
investigation, claim or proceeding threatened, against or adversely
affecting May, the Business or the Company Plans (as hereinafter
defined), including, without limitation, claims for product warranty,
product liability or other liability or obligation relating to products
or services sold or fabricated by the Company, or that would adversely
affect the transactions contemplated by this Agreement, and (iii) no
one has asserted and, to the Shareholder's knowledge, no one has
grounds to assert, any claims against May that would affect the
transactions contemplated by this Agreement.
(r) CUSTOMERS. May is not involved in any claim or
controversy with any of its customers. The Schedule entitled
"Customers" attached hereto contains a list of May's twenty largest
customers.
(s) REGULATORY COMPLIANCE. Except as set forth on the
Schedule entitled "Litigation," May has complied with all laws,
regulations, and orders (including, without limitation, zoning
ordinances, building codes, and environmental, civil rights, and
occupational health and safety laws and regulations) applicable to it
and to the conduct of the Business, and no material expenditures are or
will be required by May to comply with any laws, regulations or orders
of any Governmental Authorities. Except as set forth in such Schedule,
May is not in default under, and no event has occurred which, with the
lapse of time or action by a third party, could result in default
under, the terms of any rule or regulations of any Governmental
Authority or of any judgment, decree, order or writ of any Governmental
Authority, whether at law or in equity, issued or entered against May.
(t) BROKER, FINDERS AND AGENTS; TRANSACTION COSTS.
Neither May nor the Shareholder is directly or indirectly obligated to
anyone acting as a broker, finder or in any
-15-
16
other similar capacity in connection with this Agreement or the
transactions contemplated hereby. Except as specifically set forth on
the Schedule entitled "Transaction Costs," May has no liability or
obligation for any accounting, consulting, brokers' or finders' fees,
investment banking or legal fees, or other fees, expenses or charges
incurred in connection with the negotiation, preparation, execution or
performance of this Agreement or the transactions contemplated hereby.
(u) INTELLECTUAL PROPERTY. The Schedule entitled
"Intellectual Property" attached hereto sets forth a complete and
correct list (with an indication of the record owner and identifying
number) of all patents, trademarks, service marks, trade names and
copyrights (and all applications for, or extensions or reissuances of,
any of the foregoing) that are or have been used in the conduct of, or
that relate to, the Business or that are owned by May. True, correct
and complete copies of the patents, trademarks, service marks, trade
names and copyrights (and all applications for, or extensions or
reissuances of, any of the foregoing) identified on such Schedule have
been delivered to HSNS. Except as set forth in such Schedule, May
solely owns or has the exclusive right to use, free and clear of any
payment, restriction or encumbrance the Intellectual Property. Except
as set forth in such Schedule, there is no claim or demand of any
person pertaining to, or any proceedings pending or, to the
Shareholder's knowledge, threatened, that challenge (i) the exclusive
rights of May in respect of the Intellectual Property (or applications
for, or extensions or reissuances of, any of the foregoing) or (ii) the
rights of May in respect of any processes, formulas, confidential
information, trade secrets, know-how, technology or other intellectual
property that are or have been used in the conduct of, or that relate
to, the Business or that are owned by May,
-16-
17
save and except for the dispute pertaining to the work reflected on the
X-Stream Invoices. The Intellectual Property is not subject to any
outstanding order, ruling, decree, judgment or stipulation by or with
any Governmental Authority or any contract, agreement, commitment or
undertaking with any person, or infringes or is being infringed by
others or is used by others (whether or not such use constitutes
infringement). To the best of Shareholder's knowledge and belief, the
Business does not involve employment of any person in a manner that
violates any noncompetition or nondisclosure agreement, which such
person entered into in connection with any former employment.
(v) PERMITS. May has, and is in compliance with, all
permits, licenses, variances, waivers or consents that are necessary or
required for the operation of the Business as it is currently being
operated, all of which permits, licenses, approvals, variances, waivers
or consents are in full force and effect.
(w) EMPLOYEE RELATIONS; COLLECTIVE BARGAINING AGREEMENTS.
There are no controversies pending, or to the Shareholder's knowledge,
threatened between May and any representative of its employees. Except
as set forth on the Schedule entitled "Employees," May is complying
with all laws relating to the employment of labor, including, without
limitation, any provision thereof relating to wages, hours, collective
bargaining, employee safety and welfare, and the payment of social
security and similar taxes. May is not a party to any collective
bargaining or union contract and, to the Shareholder's knowledge, there
exists no current union organizational effort with respect to May's
employees.
(x) EMPLOYEES AND EMPLOYEE PLANS. The Schedule entitled
"Employees" attached
-17-
18
hereto sets forth a list of all individuals employed by the Company who
earn an annual base salary of $30,000 or more, with the amounts and a
description of such employees' compensation (including bonuses,
deferred compensation, and compensation pursuant to plans and pensions
separately described in tabular or other identifiable form) paid during
the twelve months ended December 31, 1999. Except for the plans
disclosed on the Schedule entitled "Employees" attached hereto (the
"Company Plans"), May neither maintains nor contributes to any employee
pension, benefit or welfare plan, as defined in the Employee Retirement
Income Security Act of 1974 ("ERISA"), or any other severance, bonus,
stock option, stock appreciation, stock purchase, retirement,
insurance, pensions, profit-sharing or deferred compensation plan,
agreements or arrangements (collectively, "Employee Plans"), nor has
May, the Shareholder or any of May's officers or directors, taken any
action directly or indirectly to obligate May to institute any such
Employee Plan. May neither maintains nor contributes to any plan of any
type that constitutes a "qualified" plan within the meaning of Section
401(a) of the Internal Revenue Code of 1986, as amended. May has
complied with all terms and conditions of, and has no liabilities or
obligations with respect to, the Company Plans. All the Company Plans
have been maintained in full compliance with all laws, regulations and
orders, including, without limitation, ERISA, of all Governmental
Authorities, and all notices, reports and other filings required to be
delivered or filed under applicable law with respect to the Company
Plans have been duly and timely delivered or filed. HSNS has heretofore
been provided with true, correct and complete copies of each of the
employee benefit arrangements set forth in the Schedule entitled
"Employees," including copies of the Company Plans and any trust
agreements relating to the Company Plans.
-18-
19
(y) TAXES. May has prepared in good faith and duly and
timely filed, or caused to be duly and timely filed, or has an approved
extension to file, all tax returns and reports required to be filed by
it with the appropriate Governmental Authority. Except as set forth on
the Schedule entitled "Taxes" attached hereto, May has paid, or has
made adequate provision or set up an adequate accrual or reserve for
the payment of, all taxes required to be paid by May in respect of the
periods covered by such returns and reports. Except as disclosed on the
Schedule, entitled "Taxes" attached hereto, neither May nor the
Shareholder on behalf of May, are subject to any agreement, waivers or
other arrangements extending the period for assessment or collection of
any taxes. May is not a party to any action or proceeding, nor, to the
Shareholder's knowledge, is any such action or proceeding threatened,
for the assessment or collection of any taxes, and no deficiency
notices or reports have been received by May in respect of any tax,
assessment or governmental charges. The Shareholder is not party to any
action or proceeding, nor, to the Shareholder's knowledge, is any such
action or proceeding threatened for the assessment or collection of
taxes attributable to the business or operations of May, and no
deficiency notices or reports have been received by the Shareholder in
respect of any of such taxes or assessments. Since December 31, 1999,
May has not incurred, nor are there accruable against May, any
liabilities or obligations (whether absolute, accrued, contingent or
otherwise) on account of taxes, assessments or governmental charges,
other than: (i) employee payroll taxes for the period December 31, 1999
through the date of this Agreement, and (ii) other taxes attributable
to the conduct of the Business between December 31, 1999 and the date
of this Agreement in the ordinary and normal course of business and
consistent with the representations and warranties set forth in
-19-
20
this Agreement (which taxes shall not exceed $5,000 in the aggregate),
and there are no facts or circumstances that could give rise to any
claim for any such liabilities or obligations.
(z) APPROVALS. All consents, approvals, filings,
authority and other requirements prescribed by any law, rule or
regulation, or any contract, agreement, commitment or undertaking, and
which must be obtained or satisfied by the Shareholder, or by May, and
that are necessary for the consummation of the transactions
contemplated by this Agreement, have been obtained and satisfied.
(aa) ABSENCE OF CERTAIN COMMERCIAL PRACTICES. Neither May,
the Shareholder nor any officer, director, employee or agent of the
Shareholder or May (or any person acting on behalf of any of the
foregoing) has given or agreed to give any gift or similar benefit of
more than nominal value to any customer, supplier, governmental
employee or official or any other person who is or may be in a position
to help, hinder, or assist May or the person giving such gift or
benefit in connection with any actual or proposed transaction relating
to the Business, which gifts or similar benefits would individually or
in the aggregate subject May or any officer, director, employee or
agent of May to any fine, penalty, cost or expense or to any criminal
sanctions. No such gift or benefit is required in connection with the
operation of May or the Business to avoid any fine, penalty, costs,
expense or material adverse change in May's financial condition,
results of operations, business or prospects.
(bb) BOOKS AND RECORDS. The books and records of May
maintained in connection with the Business (including, without
limitation, (i) books and records relating to the purchase of materials
and supplies, sales of products or services, dealings with customers,
invoices, customer lists, inventories, supplier lists, personnel
records and taxes of May, (ii)
-20-
21
the stock books, stock ledgers and minute books of May, and (iii)
computer software and data in computer readable and human readable form
used to maintain such books and records together with the media on
which such software and data are stored and all documentation relating
thereto) accurately record all transactions of May in all material
respects, and have in all material respects been maintained consistent
with good business practice.
(cc) ACCOUNTS RECEIVABLE. The Accounts Receivable arose
only in the ordinary course of business, are not subject to any
discounts, allowances or set-offs, and are collectible in the ordinary
course of business.
(dd) INVESTMENT. The Shareholder (i) understands that the
HSNS Shares to be issued pursuant to this Agreement have not been, and,
except as otherwise provided in Section 4.8(b), will not be, registered
under the Securities Act of 1933, as amended (the "Securities Act"), or
under any state securities laws, and are being offered and sold in
reliance upon federal and state exemptions for transactions not
involving any public offering, (ii) is acquiring the HSNS Shares solely
for his own account for investment purposes, and not with a view to the
distribution thereof, (iii) is a sophisticated investor with knowledge
and experience in business and financial matters and is able to
evaluate the risks and benefits of the investment in HSNS Shares, (iv)
has received certain information concerning HSNS and has had the
opportunity to obtain additional information as desired to evaluate the
merits and risks inherent in holding HSNS Shares, (v) is able to bear
the economic risk inherent in holding the HSNS Shares, and (vi) is an
accredited investor, as defined in Rule 501(a) of Regulation D
promulgated under the Securities Act.
(ee) COPIES OF DOCUMENTS. May has delivered or made
available to HSNS true,
-21-
22
correct and complete copies of all contracts, agreements and other
documents listed in the Schedules to, or referenced in, this Agreement,
and all modifications and amendments thereto.
(ff) DISCLOSURE. No representation or warranty made by the
Shareholder contained in this Agreement or in any other writing
furnished pursuant hereto contains an untrue statement of a material
fact or omits to state a material fact necessary to make the statements
and facts contained herein or therein, in light of the circumstances in
which they were or are made, not false or misleading.
Section 3.2 REPRESENTATIONS AND WARRANTIES OF HSNS. HSNS
represents and warrants to the Shareholder that:
(a) ORGANIZATION; CORPORATE POWER AND AUTHORITY. HSNS is
a corporation duly organized and validly existing under the laws of the
State of Florida, and has full corporate power and authority to make
and perform this Agreement and all other agreements and instruments
entered into by HSNS in connection herewith, and to perform the
obligations required to be performed by HSNS hereunder and thereunder.
This Agreement and all other agreements and instruments entered into by
HSNS in connection herewith have been duly executed and delivered by
HSNS. This Agreement and all other agreements and instruments entered
into by HSNS in connection herewith have been duly approved by the
Directors of HSNS, and constitute the valid, binding and enforceable
obligations of HSNS.
(b) CONFLICTS; DEFAULTS. Neither the execution and
delivery of this Agreement by HSNS, nor the performance of its
obligations hereunder, will conflict with or constitute a
-22-
23
default under any of the terms of HSNS's Article of Incorporation or
Bylaws.
(c) HSNS SHARES. The HSNS Shares to be issued to the
Shareholder pursuant to this Agreement, when issued as described
herein, will be duly authorized, validly issued, fully paid and
nonassessable.
(d) BROKERS, FINDERS AND AGENTS. HSNS is not directly or
indirectly obligated to anyone as a broker, finder or in any other
similar capacity in connection with this Agreement or the transactions
contemplated hereby.
(e) DISCLOSURE. No representation or warranty made by
HSNS contained in this Agreement or in any other writing furnished
pursuant hereto contains an untrue statement of a material fact or
omits to state a material fact necessary to make the statements and
facts contained herein or therein, in light of the circumstances in
which they were or are made, not false or misleading.
(f) LEASE GUARANTEE. In the event that HSNS has been
unable to cause the Landlord to release Shareholder from his personal
guarantee of the Lease, on or before the expiration of the initial
termination period provided May under the Lease, HSNS agrees that May
will exercise its right to terminate the Lease and rent other business
premises.
(g) LINE OF CREDIT GUARANTEE. HSNS shall cause
Shareholder's personal guarantee of May's line of credit facility with
Bank of America to be released prior to utilizing the facility.
(h) CHANGE OF CORPORATE NAME. As soon as practical after
Closing, HSNS shall
-23-
24
cause May to change its corporate name to one that does not include,
and is not confusingly similar to "Xxxxxxx May".
(i) LICENSE TO USE MAY INTELLECTUAL PROPERTY. At Closing,
HSNS shall execute and deliver to Shareholder a perpetual,
non-exclusive, royalty-free, license to use the intellectual property
of May, including, but not limited to, all prior designs, work, client
records, art work, portfolios, and awards, but excluding any
intellectual property using HSNS technology licensed from Summus,Ltd.,
or developed by HSNS.
(j) MAY EMPLOYEE STOCK OPTION PLAN. After Closing, HSNS
shall allocate at least 45,000 of its shares as part of its Qualified
Stock Plan to awarded to employees of May, as part of their employment
benefits to be awarded upon the recommendation by Shareholder, or his
successor as President of May, with approval of the Board of Directors
of HSNS.
(h) COMPLIANCE WITH NORTH CAROLINA SECURITIES LAWS. The
transactions contemplated by this Agreement are exempt from
registration under the securities laws of the State of North Carolina,
and no North Carolina state transfer taxes or other charges are
assessable against the Shareholder arising from regarding the sale and
transfer of the May Shares to HSNS.
Section 3.3 GENERAL. The representations and warranties of the
parties hereto made in this Agreement, subject to the exceptions thereto, shall
not be affected by any information furnished to, or any investigation conducted
by and of them or their representatives in connection with the subject matter of
this Agreement.
-24-
25
ARTICLE IV
COVENANTS AND AGREEMENTS
Section 4.1 CONDUCT OF THE BUSINESS. From the date hereof to the
Closing, the Shareholder shall cause May to:
(a) conduct and operate its business only in the ordinary
course and in a manner consistent with prior and current business
practices and operations;
(b) use its best efforts to preserve intact its present
business organization, keep available the services of its present
officers and employees, and preserve its relationship with its
customers, suppliers, creditors and others having business dealings
with its business;
(c) maintain its books and records in a manner consistent
with May's past practices;
(d) use its best efforts to comply in all material
respects with all laws applicable to it and to the conduct of its
business; and
(e) not pay any dividends, or make any distributions, in
respect of its capital stock, or pay any additional compensation,
except for (i) a cash dividend or dividends, or compensation, of no
more than $75,000 in the aggregate (including all dividends paid since
January 1, 2000); (ii) an in-kind dividend, or compensation, of the
note receivable reflected on the May 31, 2000 Balance Sheet but only to
the extent the principal balance of such note does not exceed $51,500;
and the assignment of the X-Stream Invoices, and all claims and causes
of action pertaining to the proposed transaction with X-Stream, and
work done for extreme, to Shareholder.
(f) HSNS agrees that May may make SEP contributions not
to exceed 10% of
-25-
26
compensation on behalf of all eligible employees for calendar year
1999, and short year ending June 30, 2000, and to extend funding of
such payments as long as permitted by tax law.
Section 4.2 CONFIDENTIALITY. The Shareholder and HSNS shall keep
confidential all information furnished to it by the other in connection with
this Agreement or the transactions contemplated hereby and shall use such
information only in connection with this Agreement and the transactions
contemplated hereby. In the event this Agreement is terminated, the Shareholder
and HSNS shall promptly cause all copies of all documents and materials in
whatever form or extracts thereof containing information as to the other party
to be returned to such party and shall maintain the confidentiality of all
information furnished to it by such other party.
Section 4.3 EXPENSES. Whether or not the transactions
contemplated hereby are consummated, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses.
Section 4.4 BEST EFFORTS. From the date hereof to the Closing,
each of HSNS and the Shareholder shall use its best efforts to cause its
representations and warranties to remain true and correct in all material
respects as of the Closing Date and to fulfill the conditions to the other
party's obligations hereunder.
Section 4.5 FURTHER ASSURANCES. From time to time after the
Closing, upon request of HSNS and without further consideration, the Shareholder
shall execute, acknowledge and deliver all such other instruments of sale,
assignment, conveyance and transfer and shall take all such other action as may
be required for the consummation of the transactions contemplated hereby, and to
more effectively transfer to and vest in HSNS, and to put HSNS in possession of,
the Business and
-26-
27
the May Shares, free and clear of any and all Claims. The Shareholder shall use
his best efforts to secure, or to assist HSNS in securing, any consent or waiver
from any person, entity or Governmental Authority that may be required for the
consummation of the transactions contemplated hereby.
Section 4.6 COOPERATION IN THE DEFENSE OF CLAIMS. In the event
that a claim is asserted against HSNS, any of its direct or indirect
subsidiaries or affiliates, or May with respect to events or conditions
occurring or existing in connection with, or arising out of, the operation of
Business prior to the Closing, or the ownership, possession, use or sale of
May's assets prior to the Closing, the Shareholder shall cooperate with HSNS and
May in the defense of any such claim.
Section 4.7 CONSENTS TO ASSIGNMENT. The Shareholder shall use his
best efforts to obtain the consents or approvals (or effective waivers thereof)
of assignment from those persons or entities whose consents or approvals are
required for the sale of the May Shares contemplated by this Agreement.
Section 4.8 TRANSFER RESTRICTIONS; REGISTRATION RIGHTS.
(a) The HSNS Shares to be delivered to the Shareholder
pursuant to this Agreement have not been registered under the
Securities Act or under the securities laws of any state. The
Shareholder shall not sell, transfer, pledge or hypothecate such HSNS
Shares in the absence of an effective registration statement under the
Securities Act and such registration or qualification as may be
required under state securities laws, or an exemption from registration
or qualification thereunder. The certificate or certificates evidencing
HSNS Shares delivered to the Shareholder pursuant to this Agreement
shall bear substantially the following legend:
-27-
28
The shares evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended, or
under the securities laws of any state. The shares may not be
sold, transferred, pledged or hypothecated in the absence of
an effective registration statement under the Securities Act
of 1933, as amended, and such registration or qualification as
may be necessary under the securities laws of any state, or an
opinion of counsel satisfactory to High Speed Net Solutions,
Inc. that such registration or qualification is not required.
(b) HSNS shall file a registration statement, which will
include the HSNS Shares delivered to the Shareholder pursuant to
Sections 1.2(b) and 1.2(c) (the "S-1 HSNS Shares"), on Form S-1
promulgated by the United States Securities and Exchange Commission
(the "SEC"), or other similar format required or prescribed by State,
federal, or exchange executive or regulatory agencies with jurisdiction
over such registration, to allow the S-1 HSNS Shares to trade on the
OTC-Bulletin Board or any recognized Stock Exchange, without
restriction (the "Registration Statement"), within 14 days after
Closing. HSNS shall use its best efforts to cause the S-1 HSNS Shares
to trade on the OTC-Bulletin Board, or any recognized Stock Exchange,
without restriction, and diligently pursue such registration after
Closing.
(c) After Closing, May will escrow the sum of Three
Hundred Thousand Dollars ($300,000) collected from the Accounts
Receivable (the "Accounts Receivable Escrow") in an interest bearing
escrow account with American Escrow Company, 0000 Xxxxxx Xxxxxx, 00xx
Xxxxx, Xxxxxx, Xxxxx, 00000, Attention: Xx. Xxxxxxxx Xxxxxxx (the
"Escrow Agent") to be held in trust for the benefit of Shareholder
pursuant to the terms of this Section 4.8 (c), and separate escrow
instructions to be executed at Closing between and among May, HSNS, and
the Escrow Agent. In the event that the S-1 HSNS Shares do not trade on
the OTC-Bulletin Board, or any recognized Stock Exchange, on or before
the expiration of ninety (90)
-28-
29
days from Closing, the Escrow Agent shall pay the Accounts Receivable
Escrow to the Shareholder in lieu of the HSNS shares delivered to him
pursuant to Section 1.2(c), and Shareholder shall return such HSNS
shares to HSNS.
(d) In the event that the S-1 HSNS Shares do not trade on
the OTC-Bulletin Board, or any recognized Stock Exchange, on or before
January 1, 2001, HSNS shall, at the election of Shareholder repurchase
the HSNS Shares delivered to the Shareholder pursuant to Sections
1.2(b) from Shareholder for the sum of Five Hundred Seventy-Six
Thousand Dollars ($576,000), payable in one (1) installment of One
Hundred Fifty Thousand and no/100 Dollars ($150,000) on January 1,
2001, and five (5) equal monthly installments of Eighty Five Thousand
Two Hundred and no/100 Dollars ($85,200) each, the first such
installment being due and payable on February 1, 2001, and the last
installment on June 1, 2001.
(e) The HSNS Shares delivered to the Shareholder pursuant
to Sections 1.2(a) (the "Rule 144 HSNS Shares"), will become eligible
for sale under Rule 144 promulgated by the SEC under the Securities
Act. Until such shares shall become eligible for sale, HSNS shall use
its best efforts to effect a "piggy back" registration of the Rule 144
HSNS Shares, in the event that HSNS initiates a secondary offering of
its shares, other than the Registration Statement.
Section 4.9 MAY TRANSFER RESTRICTIONS; REGISTRATION RIGHTS. The
May Shares to be delivered to HSNS pursuant to this Agreement have not been
registered under the Securities Act or under the securities laws of any state.
HSNS shall not sell, transfer, pledge or hypothecate such May Shares in the
absence of an effective registration statement under the Securities Act and such
-29-
30
registration or qualification as may be required under state securities laws, or
an exemption from registration or qualification thereunder. The certificate or
certificates evidencing May Shares delivered to HSNS pursuant to this Agreement
shall bear substantially the following legend:
The shares evidenced by this certificate have not been registered under
the Securities Act of 1933, as amended, or under the securities laws of
any state. The shares may not be sold, transferred, pledged or
hypothecated in the absence of an effective registration statement
under the Securities Act of 1933, as amended, and such registration or
qualification as may be necessary under the securities laws of any
state, or an opinion of counsel satisfactory to Xxxxxxx May & Co., Inc.
that such registration or qualification is not required.
Section 4.10 JOINT PROSECUTION OF X-STREAM CAUSES OF ACTION. After
Closing, Shareholder and May will enter into a joint prosecution agreement
(hereinafter so called), which will provide that May will proceed to collect the
amounts owed for the work done reflected on the X-Stream Invoices, and
compensation and damages for the intellectual property, if any, owned by May
pertaining to such work. All attorneys' fees and costs shall be paid by May. In
the event of a recovery, the Shareholder shall receive fifty percent (50%) of
the net recovery, after payment of attorney's fees and expenses.
ARTICLE V
CONDITIONS TO CLOSING
Section 5.1 CONDITIONS TO OBLIGATIONS OF HSNS. The obligations of
HSNS to purchase the May Shares are subject to the satisfaction (or waiver by
HSNS) as of the Closing of the following conditions:
(a) PERFORMANCE OF THIS AGREEMENT. All the terms,
covenants and conditions of this Agreement to be complied with and
performed by the Shareholder on or before the
-30-
31
Closing Date shall have been fully complied with and performed in all
material respects.
(b) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Shareholder set forth in Section
3.1 shall be true and correct both on the date of this Agreement and as
of the Closing Date with the same force and effect as if such
representations and warranties were made anew at and as of the Closing
Date, except: (i) to the extent such representations and warranties are
by their express provisions made as of the date of this Agreement or
another specified date; and (ii) for the effect of any activities or
transactions that may have taken place after the date of this Agreement
and that are expressly contemplated by this Agreement.
(c) NO MATERIAL ADVERSE CHANGE. Since the date of this
Agreement, there shall have been no material adverse change in the
financial condition, results of operations or business of May.
(d) LITIGATION. No action or proceeding shall have been
instituted before any court or governmental body by any third party to
restrain or prohibit, or to obtain damages in respect of, the
consummation of the transactions contemplated by this Agreement. No
party to this Agreement shall have received written notice from any
governmental body of (i) its intention to institute any action or
proceeding to restrain or enjoin or nullify this Agreement or the
transactions contemplated hereby, or to commence any investigation into
the consummation of the transactions contemplated by this Agreement or
(ii) the actual commencement of such an investigation.
(e) OFFICERS' CERTIFICATE. May shall have furnished to
HSNS a certificate dated the Closing Date, signed by its chief
executive officer and its chief financial officer, to the
-31-
32
effect that, to the knowledge and belief of each of them, the
conditions set forth in Sections 5.1(a) through (d) have been
satisfied.
(f) OTHER DOCUMENTS. HSNS shall have received from the
Shareholder all resolutions, documents and instruments incidental to
the transactions contemplated hereby, or copies thereof, certified if
requested, as its counsel shall have reasonably requested.
(g) GOVERNMENTAL APPROVAL. All required governmental
approvals or consents shall have been obtained from the appropriate
governmental authorities in those jurisdictions in which the failure to
obtain such approvals or consents would materially adversely affect the
operations of the Business in such jurisdictions.
Section 5.2 CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDER. The
obligations of the Shareholder to sell the May Shares are subject to the
satisfaction (or waiver by the Shareholder) as of the Closing of the following
conditions:
(a) PERFORMANCE OF THIS AGREEMENT. All the terms,
covenants and conditions of this Agreement to be complied with and
performed by HSNS on or before the Closing Date shall have been fully
complied with and performed in all material respects.
(b) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of HSNS set forth in Section 3.2 shall
have been true and correct both on the date of this Agreement and as of
the Closing Date with the same force and effect as if such
representations and warranties were made anew at and as of the Closing
Date.
(c) NO MATERIAL ADVERSE CHANGE. Since the date of this
Agreement, there shall have been no material adverse change (other than
an event or condition generally applicable to businesses similarly
situated in HSNS) in the financial condition, results of operations, or
-32-
33
business of HSNS.
(d) LITIGATION. No action or proceeding shall have been
instituted before any court or governmental body by any third party to
restrain or prohibit, or to obtain damages in respect of, the
consummation of the transactions contemplated by this Agreement. No
party to this Agreement shall have received written notice from any
governmental body of (i) its intention to institute any action or
proceeding to restrain or enjoin or nullify this Agreement or the
transactions contemplated hereby, or to commence any investigation into
the consummation of the transactions contemplated by this Agreement or
(ii) the actual commencement of such an investigation.
(e) OFFICERS' CERTIFICATE. HSNS shall have furnished to
the Shareholder a certificate dated the Closing Date, signed by its
chief executive officer and secretary, to the effect that, to the
knowledge and belief of each of them, the conditions set forth in
Section 5.2(a) through (d) have been satisfied.
(f) DIRECTORS' RESOLUTION. HSNS shall have furnished to
the Shareholder a certified copy of a resolution duly adopted by it
Board of Directors, ratifying and approving this Agreement and all
other agreements and instruments entered into by HSNS in connection
herewith.
(g) GOVERNMENTAL APPROVALS. All required governmental
approvals or consents required for the sale of the May Shares shall
have been obtained from appropriate Governmental Authorities.
(h) OTHER DOCUMENTS. The Shareholder shall have received
from HSNS all such resolutions, documents and instruments incidental to
the transactions contemplated hereby,
-33-
34
or copies thereof, certified if requested, as its counsel shall have
reasonably requested.
ARTICLE VI
TERMINATION
Section 6.1 TERMINATION. This Agreement may be terminated at any
time prior to Closing:
(a) By mutual consent of HSNS and the Shareholder;
(b) By HSNS if any of the conditions specified in Section
5.1 hereof shall not have been fulfilled by July 31, 2000, or an event
or circumstance has occurred or arisen that would render the
satisfaction of any of such conditions impossible and such condition or
conditions shall not have been waived by HSNS; or
(c) By the Shareholder if any of the conditions specified
in Section 5.2 hereof shall not have been fulfilled by July 31, 2000,
or an event or circumstance has occurred or arisen that would render
the satisfaction of any of such conditions or conditions impossible and
such condition or conditions shall not have been waived by Shareholder.
Section 6.2 NO LIABILITY. In the event of termination of this
Agreement by HSNS or the Shareholder, as provided in Section 6.1, this Agreement
shall forthwith terminate and there shall be no liability on the part of HSNS or
the Shareholder or their respective officers, directors or agents. None of the
parties shall have any obligation or liability of any nature whatsoever to the
other parties hereto, and all expenses incurred by any party hereto shall be for
its own account, except for the obligations of the parties in Section 4.2, which
shall survive the termination and except as may otherwise be specifically
provided in this Agreement; provided, however, that no party hereto shall be
deemed to have waived any rights it may have arising from the willful default of
another party hereto.
-34-
35
ARTICLE VII
INDEMNIFICATION
Section 7.1 INDEMNIFICATION BY HSNS. HSNS shall indemnify, defend
and hold the Shareholder harmless from and against any and all claims, actions,
suits, demands, assessments, judgments, losses, liabilities, damages, costs and
expenses (including, without limitation, reasonable attorneys' fees to the
extent permitted by law, and accounting fees and investigation costs)
(collectively, "Liabilities") that may be incurred by the Shareholder arising
out of or relating to any breach of any representation, warranty, covenant,
obligation or agreement of HSNS contained herein.
Section 7.2 INDEMNIFICATION BY THE SHAREHOLDER.
(a) The Shareholder shall indemnify, defend and hold HSNS
harmless from and against any and all Liabilities that may be incurred
by HSNS arising out of, or relating to, any breach of any
representation, warranty, covenant, obligation or agreement of the
Shareholder contained herein.
(b) The Shareholder shall defend and hold HSNS harmless
from and against all Liabilities relating to, based in whole or in part
on events or conditions with, or arising out of, any dispute for
services rendered or goods manufactured or provided by May prior to
Closing, including, without limitation, product warranty and product
liability claims, and claims for refunds, returns, personal injury and
property damage.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 AMENDMENTS. This Agreement may be amended only by a
writing executed by HSNS and the Shareholder.
-35-
36
Section 8.2 ENTIRE AGREEMENT. This Agreement and the other
agreements expressly provided for herein set forth the entire understanding of
the parties hereto and supersede all prior contracts, agreements, arrangements,
communications, discussions, representations and warranties, whether oral or
written, between the parties.
Section 8.3 GOVERNING LAW. This Agreement shall in all respects
be governed by and construed in accordance with the laws of the State of North
Carolina.
Section 8.4 NOTICES. Any notice, request or other communication
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given (a) upon receipt when delivered by hand or sent by courier,
facsimile transmission or telex, or (b) three calendar days after being mailed
by first class mail, postage prepaid, to the parties at their respective
addresses set forth below.
To the Shareholder: Xxxxxxx May
Xxxxxxx May & Co., Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
With a copy to: Xxxx Xxxxx
Short, How, Xxxxx & Xxxxx, P.C.
0000 Xxxxxxx Xxxxxx
Xxxxx 0000, XX X-0
Xxxxxx, Xxxxx 00000
To HSNS: High Speed Net Solutions, Inc.
Attention: Xxxxxx Xxxxxx
000 Xxxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
With a copy to: Xxxxx X. Xxxx, Esq.
Xxxxxx Xxxx Xxxxxx Xxxx & Xxxxxxxxxx P.L.L.C.
000 Xxxxx Xxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Any party by written notice to the other may change the address or the persons
to whom notices or copies
-36-
37
thereof shall be directed.
Section 8.5 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, and all
of which together will constitute one and the same instrument.
Section 8.6 ASSIGNMENT; AFFILIATES. This Agreement shall be
binding upon and inure to the benefit of the successors, heirs, representatives
and assigns of each party hereto, but no rights, obligations or liabilities
hereunder shall be assignable by any party without the prior written consent of
the other party; PROVIDED, HOWEVER, that HSNS may assign any of its rights,
obligations or liabilities hereunder to any affiliate of HSNS provided that HSNS
guarantees the performance of such affiliate. For purpose of this Agreement, the
term "affiliate" means any person, firm or corporation which directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, the person specified.
Section 8.7 WAIVERS. Any waiver by any party of any violation of,
breach of or default under any provision of this Agreement or any other
agreements provided for herein, by the other party shall not be construed as, or
constitute, a continuing waiver of such provision, or waiver of any other
violation of, breach of or default under any other provision of this Agreement
or any other agreements provided for herein.
Section 8.8 THIRD PARTIES. Nothing expressed or implied in this
Agreement is intended, or shall by construed, to confer upon or give any person
or entity other than HSNS and the Shareholder any rights or remedies under or by
reason of this Agreement.
Section 8.9 SCHEDULES AND EXHIBITS. The Schedules and Exhibits
attached to this Agreement
-37-
38
are incorporated herein and shall be part of this Agreement for all purposes.
Section 8.10 HEADINGS. The headings in this Agreement are solely
for convenience of reference and shall not be given any effect in the
construction or interpretation of this Agreement.
IN WITNESS WHEREOF, the Shareholder has executed this Agreement, and
HSNS has caused its duly authorized representative to execute this Agreement, as
of the date first above written.
HIGH SPEED NET SOLUTIONS, INC.
By: /s/ Xxxxxx Xxx
---------------------------
Name: Xxxxxx Xxx
Title: Acting President and CEO
/s/ Xxxxxxx X. May
-------------------------------
Xxxxxxx X. May
-38-
