ASSET PURCHASE AGREEMENT
By and Among
SkyLynx Communications, Inc.
a Colorado corporation
and
SkyLynx Communications of California, Inc.
a Delaware corporation
and
Net Asset, LLC
a California limited liability company
and
RhinoTrax, Inc., Xxxxx X. Xxxxx, Xxxxx X. Xxxxx, Xxxxxxx X. Xxxxxxxx,
and
Xxxxxx X. Xxxx,
Members of Net Asset, LLC
and
Xxxxxx Xxxxxx
Dated as of April 23, 1999
TABLE OF CONTENTS
Page
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ARTICLE I PURCHASE OF ASSETS 2
1.1 Purchase and Sale of Assets 2
1.2 Excluded Assets 4
1.3 Assumption of Obligations and Liabilities 4
1.4 Purchase Price 5
1.5 Holdback Account 6
1.6 Additional Deposit 6
ARTICLE II CLOSING 6
2.1 Date and Time of Closing 6
2.2 Payment of Taxes and Other Charges 6
2.3 Notices of Sale 7
ARTICLE III REPRESENTATIONS AND WARRANTIES 7
3.1 Representations and Warranties of the Seller and Members 7
3.2 Representations and Warranties of Purchaser and SkyLynx 19
3.3 Survival of Representations and Warranties 20
ARTICLE IV COVENANTS 20
4.1 Covenants of the Seller, Members, and Xxxxxx 20
4.2 Covenants of Purchaser and SkyLynx 24
4.3 Governmental Filings and Consents 25
4.4 Purchaser's and SkyLynx's Right to Investigate 25
ARTICLE V CONDITIONS 26
5.1 Conditions to Obligations of Purchaser and SkyLynx 26
5.2 Conditions to Obligations of the Seller and Members 28
ARTICLE VI INDEMNIFICATION AND CLAIMS 30
6.1 Indemnification by the Seller and Members 30
6.2 Claims Against the Indemnified Party 31
6.3 Right of Offset 31
6.4 Indemnification by Purchaser and SkyLynx 31
6.5 Claims Against the Seller and Members 32
6.6 Disclosure Generally 33
6.7 Assumption of Specific Liabilities 33
ARTICLE VII TERMINATION AND REMEDIES FOR BREACH OF THIS AGREEMENT 33
7.1 Termination by Mutual Agreement 33
7.2 Termination for Failure to Close 33
7.3 Termination by Operation of Law 33
7.4 Termination for Failure to Perform Covenants or Conditions 33
7.5 Effect of Termination or Default; Remedies 34
7.6 Remedies; Specific Performance 34
ARTICLE VIII MISCELLANEOUS 34
8.1 Fees and Expenses 34
8.2 Modification, Amendments and Waiver 34
8.3 Assignment 34
8.4 Burden and Benefit 35
8.5 Brokers 35
8.6 Entire Agreement 35
8.7 Governing Law 35
8.8 Notices 35
8.9 Counterparts 37
8.10 Rights Cumulative 37
8.11 Severability of Provisions 37
8.12 Headings 37
8.13 Survival 38
8.14 Guarantee 38
8.15 Announcements 38
8.16 Further Assurances 38
ARTICLE IX DEFINED TERMS 38
9.1 Defined Terms 38
LIST OF EXHIBITS AND SCHEDULES
TO
ASSET PURCHASE AGREEMENT
EXHIBITS:
--------
Exhibit 5.1(b): Form of Opinion of Counsel to Seller
Exhibit 5.1(i): Form of Non-Competition Agreement
Exhibit 5.1(j): Form of Assignment
Exhibit 5.2(b): Forms of Opinions of Counsel to Purchaser
SCHEDULES:
---------
Schedule 1.1(a): Fixed Assets
Schedule 1.1(b): Real Property Interests
Schedule 1.1(c): Equipment Leases
Schedule 1.1(d): Customer Accounts and Related Documents
Schedule 1.1(e): Assumed Contracts
Schedule 1.1(h): Operating Rights
Schedule 1.1(p): RhinoTrax Leases
Schedule 1.1(q): Current Balance Sheet
Schedule 1.2: Excluded Assets
Schedule 1.3(a): Assumed Payables
Schedule 1.4(d): Obligations of Seller to be paid from Closing
Schedule 3.1(c): Financial Statements
Schedule 3.1(d): Title
Schedule 3.1(e): Defaults; Accounts Payable Aging
Schedule 3.1(f): Condition of Purchased Assets
Schedule 3.1(i) Certain Liabilities
Schedule 3.1(j): Certain Changes or Events
Schedule 3.1(k): Agreements
Schedule 3.1(l): Non-Contravention; Consents
Schedule 3.1(n): Insurance
Schedule 3.1(r): Employee Benefit Plans
Schedule 3.1(w): Transactions with Affiliates
Schedule 3.2(d): NST Litigation
Schedule 4.1(g) Allocation of Purchase Price
Schedule 8.8: Members
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of
this 23rd day of April, 1999, by and among SkyLynx Communications, Inc., a
Colorado corporation ("SkyLynx"), SkyLynx Communications of California, Inc.,
a Delaware corporation (the "Purchaser"), Net Asset, LLC, a California limited
liability company (the "Seller"), and RhinoTrax, Inc., a California
corporation ("RhinoTrax"), Xxxxx X. Xxxxx ("Xxxxx"), Xxxxx X. Xxxxx, Xxxxxxx
X. Xxxxxxxx, and Xxxxxx X. Xxxx (collectively, "Members"), and Xxxxxx Xxxxxx
("Xxxxxx"):
WITNESSETH:
WHEREAS, the Seller is engaged in the internet service provider business,
which shall mean the Seller's business involving the provision of internet
service by dedicated lines, web-site design and hosting, network design and
administration, internet e-mail, and billing and collection services related
thereto (collectively, the "Internet Services Business"); and
WHEREAS, the Seller desires to sell, assign, transfer and convey to the
Purchaser, pursuant to the terms and subject to the conditions set forth in
this Agreement, all of the assets, properties and rights of the Seller
relating to the Internet Services Business (as set forth more fully in Section
1.1 below, the "Purchased Assets"); and
WHEREAS, the Purchaser desires to purchase, obtain and acquire from the
Seller, pursuant to the terms and subject to the conditions set forth in this
Agreement, all of the Seller's right, title and interest in and to the
Purchased Assets; and
WHEREAS, except as otherwise expressly set forth herein, the Purchaser
shall not assume any of the liabilities of the Seller; and
WHEREAS, RhinoTrax, Xxxxx, Xxxxx X. Xxxxx, Xxxxxxx X. Xxxxxxxx, and
Xxxxxx X. Xxxx are the sole members of the Seller;
WHEREAS, Xxxxxx is the President and Chief Executive Officer of
RhinoTrax; and
WHEREAS, SkyLynx is the sole shareholder of the Purchaser;
NOW, THEREFORE, in consideration of the premises and mutual covenants,
conditions and agreements contained herein and for such other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, each intending to be legally bound hereby,
agree as follows:
ARTICLE I
PURCHASE OF ASSETS
1.1 PURCHASE AND SALE OF ASSETS. Upon the terms and subject to the
conditions set forth in this Agreement, on the Closing Date (as hereinafter
defined in Section 2.1), the Seller hereby agrees to sell, assign, transfer
and convey to the Purchaser (or cause, subject to Section 2.3, to assign to
the Purchaser in the case of the RhinoTrax Leases (as defined in
Section 1.1(p) below)) and the Purchaser hereby agrees to purchase, obtain and
acquire from the Seller (and RhinoTrax in the case of the RhinoTrax Leases),
all of the Seller's (or RhinoTrax's, in the case of the RhinoTrax Leases)
right, title and interest in and to the "Purchased Assets" (as defined below),
free and clear of any and all claims, rights, liens and/or encumbrances
(except as otherwise expressly provided in this Agreement). The Purchased
Assets shall mean all of Seller's (or RhinoTrax's in the case of RhinoTrax
Leases) right, title, and interest in and to the following assets, properties,
and contractual rights, wherever located, subject to the exceptions
hereinafter set forth:
(a) all machinery, leasehold improvements, construction in
progress, furniture and fixtures, computer equipment and monitors, routers,
servers, computer software, communications equipment, and any other fixed
assets owned by Seller and used in the operations of the Internet Services
Business, including, without limitation, the fixed assets listed on Schedule
1.1(a) attached hereto and made a part hereof (the "Equipment");
(b) all real property interests (whether owned or leased) used or
for use in the Internet Services Business (the "Real Property"), that are
specifically described on Schedule 1.1(b) attached hereto and made a part
hereof;
(c) all of the Seller's interests and rights and benefits under any
leases of machinery, vehicles, equipment, tools, furniture, fixtures or other
fixed assets relating to the Internet Services Business and listed on Schedule
1.1(c);
(d) all contractual rights of the Seller with Seller's customers
(whether oral or in writing, and including without limitation all ISP Service
Agreements and Customer Agreements to which Seller is a party, all customer
deposits, if any, accounts receivable relating to services prior to the
Closing (the "Accounts Receivable")), relating to the conduct of the Internet
Services Business and all other rights to provide services to customers of
Seller (the "Customer Accounts"), pricing and cost information, business and
marketing proposals, and all commitments, lists, leases, permits, licenses,
consents, approvals, franchises and other documents and instruments relating
to the Customer Accounts (the "Related Documents"); a complete and accurate
list of the Customer Accounts and the Related Documents is set forth on
Schedule 1.1(d), attached hereto and made a part hereof, and true and complete
copies of all Customer Accounts (or descriptions of unwritten arrangements)
and Related Documents in printed or in electronic format shall be delivered to
the Purchaser simultaneously with the Closing;
(e) the contracts and other agreements to which Seller is a party
listed on Schedule 1.1(e) (the "Assumed Contracts");
(f) all of Seller's inventory of parts, supplies and accessories of
every kind, nature and description used or for use in connection with the
Internet Services Business (the "Parts Inventory");
(g) all proprietary rights of Seller, including, without
limitation, all right, title and interest of Seller in and to all trade
secrets, slogans, processes, rights, symbols, trademarks, service marks,
copyrights, logos, domain names, ASNs, and trade names used in the Internet
Services Business;
(h) all permits, licenses, CIDR blocks of IP addresses, franchises,
consents and other approvals and operating rights relating to the Internet
Services Business that are assignable or transferable (except to the extent
expressly included in the Excluded Assets listed below), which are more
completely described and set forth on Schedule 1.1(h), attached hereto and
made a part hereof;
(i) all right, title and interest of Seller in and to all telephone
and telecopier numbers used by Seller in the conduct of the Internet Services
Business;
(j) all of Seller's right, title and interest in and to the name
"Net Asset," and any other names used in connection with the Internet Services
Business and the rights to use such names (the "Business Names");
(k) all manual and automated routing and billing information and
components thereof, including, without limitation, all routing and billing
computer software and programs containing any customer information;
(l) all operating data and records of Seller, including, without
limitation, all of Seller's existing documents, files and other material
related to all current or past customers of the Internet Services Business,
financial, accounting and credit records, correspondence, budgets and other
similar documents and records;
(m) all of the good will of the Internet Service Business;
(n) [INTENTIONALLY OMITTED];
(o) all patents, trademarks, service marks, copyrights, inventions,
discoveries, know-how, trade secrets, confidential information, technical
information, data, process technology, plans, drawings and blueprints owned,
used or licensed by Seller relating to the Internet Services Business;
(p) all of the Seller's right, title, and interest in and to
certain equipment leased by RhinoTrax (the "RhinoTrax Leases") as more
specifically described in Schedule 1.1(p) and the rights of RhinoTrax pursuant
to and under the RhinoTrax Leases; and
(q) all other (except to the extent expressly included in the
Excluded Assets as defined in Section 1.2 below) tangible and intangible
assets used in the Internet Services Business, including those set forth on
Seller's balance sheet dated as of March 31, 1999 (the "Current Balance
Sheet"), a copy of which is attached as Schedule 1.1(q) hereto.
1.2 EXCLUDED ASSETS. The Purchaser will not purchase, take an
assignment of or assume any of the following ("Excluded Assets"):
(a) The corporate charter, qualifications to conduct business as a
foreign limited liability company, arrangements with registered agents
relating to foreign limited liability companies, taxpayer and other
identification numbers, seals, minute books, stock transfer books and other
documentation relating to the organization, maintenance and existence of the
Seller as a limited liability company and Seller's business interests other
than the Internet Services Business;
(b) All insurance policies of Seller;
(c) All employee benefit plans of Seller;
(d) All employment agreements, express or implied, between Seller
and its employees; and
(e) All assets listed on Schedule 1.2.
1.3 ASSUMPTION OF OBLIGATIONS AND LIABILITIES. The Purchaser shall
assume the following obligations and liabilities of the Seller:
(a) all accounts payable (up to an aggregate of Seventy-Five
Thousand Dollars ($75,000)) that are associated with the conduct and
operations of the Internet Services Business and that are 30 days or less past
the applicable due date as of the date hereof (the "Assumed Payables")
including but not limited to the payables listed on Schedule 1.3(a) which
payables the Purchaser shall pay at Closing; and
(b) obligations to provide service to customers listed on Schedule
1.1(d) after Closing and any other parties becoming customers of Seller from
April 23, 1999 through Closing; and
(c) all other obligations and liabilities incurred or arising after
the Closing (namely, relating to the period after the Closing) pursuant to
those agreements, contracts, and leases that are expressly assumed by
Purchaser under Section 1.1 above.
The obligations and liabilities assumed by the Purchaser pursuant to the
foregoing are hereinafter referred to as the "Assumed Liabilities." Except
for the Assumed Liabilities, the Purchaser does not assume, agree to perform
or discharge, or indemnify the Seller against or otherwise have any
responsibility for any other liabilities or obligations of the Seller
whatsoever, fixed or contingent, whether arising prior to, on or after the
Closing Date. All other liabilities and obligations of the Seller which are
not assumed by the Purchaser hereunder are hereinafter referred to
collectively as the "Excluded Liabilities."
1.4 PURCHASE PRICE. In consideration of and in exchange for the
Seller's sale, assignment, transfer and conveyance of all of the Purchased
Assets, the Purchaser hereby agrees to pay the Seller at the Closing the sum
of One Million One Hundred Seventy Five Thousand Dollars ($1,175,000) as
follows:
(a) application to the Purchase Price of the Thirty Five Thousand
Dollars ($35,000) previously deposited by Purchaser with the Seller pursuant
to that certain Letter of Intent (the "LOI") dated February 11, 1999 (the
"Initial Deposit");
(b) application to the Purchase Price of the Additional Deposit (as
defined in Section 1.6);
(c) wire transfer to an account identified by the Seller the sum of
Eight Hundred Twenty-One Thousand One Hundred Forty-Nine Dollars and Seven
Cents ($821,149.07);
(d) make payments on behalf of the Seller, in the aggregate amount
of Eighty-Eight Thousand Eight Hundred Fifty Dollars and Ninety-Three Cents
($88,850.93) to the vendors of Seller listed in Schedule 1.4, in satisfaction
of certain obligations that the Seller has to such vendors;
(e) retention by the Purchaser of the sum of Fifty Thousand Dollars
($50,000) (the "Goodnet Retention Amount") to satisfy the obligations of
Seller to Goodnet pursuant to Section 6.1. The Goodnet Retention Amount shall
be retained by Purchaser in a separate interest bearing sub-account (the
"Goodnet Retention Account") and shall be released with interest accrued
thereon immediately to Seller upon receipt by Purchaser of documentation
evidencing full and complete satisfaction by Seller of a claim by Goodnet in
the approximate amount of Seventy-Five Thousand Dollars ($75,000), including,
a written release of said claim by Goodnet, or, if earlier, a date which is
twelve (12) months after the Closing Date; provided, however, that no claim
has been made by Goodnet against Purchaser or SkyLynx; and
(f) retention by the Purchaser of the sum of One Hundred Fifty
Thousand Dollars ($150,000) (the "Holdback Amount"). The Holdback Amount
shall be retained by Purchaser in a separate interest bearing sub-account (the
"Holdback Account"), to release in accordance with Section 1.5 below.
1.5 HOLDBACK ACCOUNT. In order to secure the Purchaser's rights
pursuant to Section 6.1, the funds deposited in the Holdback Account shall be
available to satisfy any obligations of the Seller pursuant to such Section,
until a date twelve (12) months after the date of Closing (the "Holdback
Termination Date"); provided, however, that the Purchaser shall release one-
fourth (1/4) of the total Holdback Amount every quarter (such date, a "Release
Date") less, on any given Release Date, the amount of any indemnity claims
that are outstanding on such Release Date and which have not previously been
applied to delay the release of or as an offset against an amount scheduled to
be released on a prior Release Date. On the Holdback Termination Date,
Purchaser shall release all funds remaining in the Holdback Account to Seller,
less the amount of any finally adjudicated claim or any pending claim for
indemnification made by Purchaser pursuant and subject to Section 6.1. The
procedures for the release of funds from the Holdback Account in satisfaction
of indemnification claims made by Purchaser and from the Goodnet Retention
Account in satisfaction of claims made by Purchaser in respect of Goodnet, are
set forth in Section 6.1(f).
1.6 ADDITIONAL DEPOSIT. Since the Closing did not occur and the
transaction was not terminated on or before March 31, 1999, SkyLynx deposited
on April 6, 1999, with Seller for the purposes of this pending transaction an
additional sum of Thirty Thousand Dollars ($30,000) (the "Additional Deposit")
pursuant to the LOI. Upon Closing, the Initial Deposit and the Additional
Deposit shall be applied to the Purchase Price in the manner described in
Section 1.4 above. If the contemplated transaction does not close on or
before June 30, 1999, these deposits shall convert into a one year note due
June 30, 2000 with a stated interest rate of twelve percent (12%) and shall be
secured by the assets of Seller.
ARTICLE II
CLOSING
2.1 DATE AND TIME OF CLOSING. Subject to satisfaction of the conditions
to Closing set forth in this Agreement, the closing of the transactions
contemplated by this Agreement (the "Closing") shall take place as soon as
practicable, but in no event later than April 30, 1999 at 10:00 a.m. at the
offices of XxXxxxxxx, Will & Xxxxx, 0000 Xxxx Xxxx Xxxx, Xxxxx Xxxx,
Xxxxxxxxxx 00000 or at such other place and time thereafter as shall be
mutually agreeable to the parties hereto (the "Closing Date").
2.2 PAYMENT OF TAXES AND OTHER CHARGES. Seller will be responsible for
any application or transfer tax or fees and costs incurred in this
transaction. At or prior to the Closing, the Seller shall pay all transfer
taxes, stamp taxes, and recording taxes, if any, in connection with the
transactions contemplated hereby. The parties will jointly prepare and file
any filings evidencing any such taxes, fees, charges, or transfers. Each
party hereto represents, warrants and covenants to every other party that it
will cooperate with every other party to timely prepare and file such returns
and filings. The Purchaser shall be responsible for any sales tax arising out
of or in any way related to the transfer by the Seller of the Purchased Assets
pursuant hereto. The Seller and Members, as appropriate, shall be responsible
for any income taxes or gains taxes arising out of or in any way related to
the transfer by the Seller of the Purchased Assets pursuant hereto.
2.3 NOTICES OF SALE. The Seller shall prepare and mail, with copies to
the Purchaser, at or prior to the Closing, such notices to and requests for
the consent (where required for the assignment of leases or contracts) of the
other party under each of the Assumed Contracts as are necessary or may be
reasonably required by the Purchaser, advising such other party that such
agreements have been assigned to the Purchaser and directing such other party
to send to the Purchaser all future notices and correspondence relating to
such Assumed Contracts. The parties will cooperate with one another to try to
effect assignment of the agreements to be assigned without the lessor or other
third-party requiring an acceleration or buy-out of the remaining payments.
Notwithstanding the foregoing, if any such agreement has been designated an
Assumed Contract, SkyLynx assumes the risk that acceleration or buyout may be
required and will make the accelerated or buy-out payments.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE SELLER AND MEMBERS. The
Seller and Members, jointly and severally, and Xxxxxx represent and warrant to
the Purchaser and SkyLynx as follows (it being agreed and understood that
Xxxxxx shall have no personal liability whatsoever in connection with such
representations and warranties, except in his capacity as guarantor of
obligations of RhinoTrax, pursuant to Section 6.1(e)):
(a) Authorization. The execution, delivery and performance of this
Agreement and consummation of the transactions contemplated hereby have been
duly authorized by the Seller. The Seller has taken all necessary limited
liability company ("LLC") actions and has all the necessary LLC power to enter
into this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by the
managers of the Seller on its behalf, and by the Members and Xxxxxx, and
assuming that this Agreement is the valid and binding obligation of the
Purchaser and SkyLynx is the valid and binding obligation of the Seller, the
Members and Xxxxxx, respectively, enforceable against them in accordance with
its terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect, or by legal or equitable principles, relating to or limiting
creditors' rights generally and except that the remedy of specific performance
and injunctive and other forms of equitable relief are subject to certain
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought;
(b) Organization. Seller is a limited liability company duly
formed, validly existing and in good standing under the laws of the State of
California. The Seller has the requisite LLC power and authority to own and
lease its assets and to carry on its businesses as it is now being conducted
and is duly qualified to do business as a foreign entity in each jurisdiction
where it conducts business, except where the failure to be so qualified would
not have a material adverse effect on the business, operations, earnings,
prospects, assets or condition (financial or otherwise) of the Seller. The
Seller does not own any shares of capital stock or other interest in any other
corporation, partnership, association or other entity;
(c) Financial Statements. Schedule 3.1(c) hereto includes (i) the
unaudited balance sheets as at December 31, 1998 and January 31, 1999 (the
"Balance Sheets"), and (ii) statements of income (loss) for the fiscal year
ended December 31, 1998 and the month ended January 31, 1999, for the Internet
Services Business (all of the foregoing, including the notes thereto, may
collectively be referred to hereinafter as the "Financial Statements"). The
Financial Statements present fairly, in all material respects, the financial
position of the Internet Services Business as of the respective dates
indicated and the revenues and expenses of the Internet Services Business for
the respective periods indicated, in conformity with generally accepted
accounting principles applied on a consistent basis;
(d) Title. Except as set forth on Schedule 3.1(d) hereof, the
Seller has good and marketable title to all of the Purchased Assets, including
without limitation the assets reflected on the Balance Sheets or purchased by
the Seller after the date thereof, except supplies consumed or assets or
properties sold in the ordinary course of business subsequent to the date
thereof. The Purchased Assets, including without limitation certain of the
assets reflected on the Balance Sheets or purchased by the Seller after the
date thereof, are owned free and clear of all adverse claims, liens,
mortgages, charges, security interests, encumbrances and other restrictions or
limitations of any kind whatsoever, except: (i) as specifically stated in the
Financial Statements (including the notes thereto); (ii) for liens for taxes
or assessments not yet due and payable or which are being contested by the
Seller in good faith; (iii) for minor liens (which are not, individually or in
the aggregate, material, in that they cover less than Ten Thousand Dollars
($10,000) in the aggregate of the Purchased Assets) imposed by law for sums
not yet due or which are being contested by the Seller in good faith; and
(iv) for imperfections of title, adverse claims, charges, restrictions,
limitations, encumbrances, liens or security interests that are minor and
which do not detract in any material respect from the value of any of the
Purchased Assets or which do not impair the Internet Services Business in any
material respect or affect the present use or utility of the Purchased Assets
in any material respect, all of which have been identified, to the extent
known to Seller, on Schedule 3.1(d) hereof;
(e) Validity; Enforceability; No Conflict. All documents and
agreements pursuant to which the Seller has obtained the right to use any
Purchased Assets, and all of the documents, instruments and other materials
delivered or executed pursuant to Section 2.2 of this Agreement, are valid and
enforceable in all respects against the parties thereto in accordance with
their respective terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect, or by legal or equitable principles, relating
to or limiting creditors' rights generally and except that the remedy of
specific performance and injunctive and other forms of equitable relief are
subject to certain equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought. All permits related to
the location or operation of the Internet Services Business are in good
standing and are valid and enforceable in all respects against the Seller in
accordance with their respective terms. Other than late or overdue payments
owed and reflected on Schedule 3.1(e) as of the date set forth thereupon,
there is not, under any of the foregoing instruments, documents or agreements,
any existing default, nor is there any event which, with notice or lapse of
time or both, would constitute a default arising through the Seller or, to the
best knowledge of Seller, arising through any third party which could:
(i) have a material adverse effect on the Internet Services Business or the
Purchased Assets; or the operations, earnings, or condition (financial or
otherwise) of the Seller; or (ii) materially adversely affect its title to the
Purchased Assets. The Seller is not in violation of and has complied with all
applicable zoning, building or other codes, statutes, regulations, ordinances,
notices and orders of any governmental authority with respect to the
occupancy, use, maintenance, condition, operation and improvement of the
Purchased Assets, except where the failure to comply would not have a material
adverse effect on the Internet Services Business or the Purchased Assets, or
the operations, earnings, or condition (financial or otherwise) of the Seller.
The Seller's use of any improvements for the purposes for which any of the
Purchased Assets are being used as of the date hereof does not violate in any
material respect any such code, statute, regulation, ordinance, notice or
order;
(f) Condition of Purchased Assets. Except as set forth on Schedule
3.1(f), all of the Purchased Assets (whether owned or leased by the Seller)
are in good operating condition and repair, subject to normal wear and use,
and each such item is usable in a manner consistent with current use by the
Seller;
(g) Intellectual Property. Seller has not interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
intellectual property rights of third parties, and Seller has not received any
charge, complaint, claim, demand, or notice alleging any such interference,
infringement, misappropriation or violation. To the best knowledge of Seller,
no third party is currently interfering with, infringing upon,
misappropriating, or otherwise coming into conflict with any intellectual
property rights of Seller;
(h) Inventory. The Seller maintains inventory only on a transitory
basis in connection with equipment sales to customers;
(i) Absence of Undisclosed Liabilities. Other than as set forth on
the Balance Sheets or Schedule 3.1(i), the Seller has not had nor does it have
any indebtedness, loss or liability (other than those incurred in the ordinary
course of business), whether accrued, absolute, contingent or otherwise and
whether due or become due, which is material to the Purchased Assets or the
Internet Services Business, or the operations, prospects, earnings or
condition (financial or otherwise) of the Seller;
(j) Absence of Certain Changes or Events. Except as set forth on
Schedule 3.1(j) and except as expressly set forth in this Agreement, the
Seller has not, since December 31, 1998:
(i) amended its articles of organization (the "Articles of
Organization") or limited liability company agreement;
(ii) made any capital expenditures or commitments for the
acquisition or construction of any property, plant or equipment relating to
the Internet Services Business other than in the ordinary course of business
of the Seller;
(iii) entered into any material transaction relating to the
Internet Services Business inconsistent with the past practices of the
Internet Services Business or conducted the Internet Services Business
inconsistent with its past practices;
(iv) incurred any damage, destruction or any other loss to any
of the Purchased Assets in an aggregate amount exceeding Five Thousand Dollars
($5,000) whether or not covered by insurance;
(v) suffered any loss relating to the Internet Services
Business or the Purchased Assets and the Seller has not become aware of any
intention on the part of any customer, responsible for more than Two Hundred
Fifty Dollars ($250) per month recurring revenue, dealer, vendor or supplier
to discontinue its current relationship with the Seller, the loss or
discontinuance of which, alone or in the aggregate, could have a material
adverse effect on the Internet Services Business or the Purchased Assets, or
the operations, earnings, or condition (financial or otherwise) of the Seller;
(vi) modified, amended or altered any contractual arrangement
with any customer, dealer or supplier; the modification, amendment or
alteration of which, alone or in the aggregate, could have a material adverse
effect on the Internet Services Business or the Purchased Assets, or the
operations, earnings, or condition (financial or otherwise) of the Seller;
(vii) incurred any material liability or obligation
(absolute or contingent) or made any material expenditure other than in the
ordinary course of business of the Seller;
(viii) experienced any material adverse change in the
Internet Services Business or the Purchased Assets, or the operations,
earnings, or condition (financial or otherwise) of the Seller or experienced
or have knowledge of any event which could have a material adverse effect on
the Internet Services Business or the Purchased Assets, or the operations,
earnings, or condition (financial or otherwise) of the Seller;
(ix) granted, conveyed, transferred, assigned, pledged,
hypothecated or made any sale of accounts receivable or any accrual of
liabilities outside the ordinary course of the Internet Services Business of
the Seller;
(x) except in the ordinary course of business of the Seller,
purchased, disposed of or contracted to purchase or dispose of, or granted or
received an option or any other right to purchase or sell, any of the
Purchased Assets, or any equity security of the Seller;
(xi) increased the rate of compensation payable or to become
payable to the employees of the Seller's Internet Services Business, or
increased the amounts paid or payable to such employees under any bonus,
insurance or other compensation plan, or made any arrangements therefor with
or for any of said employees except for increases consistent with the ordinary
course of business or increases resulting from the application of existing
formulas under existing agreements or policies relating to employee
compensation;
(xii) changed any accounting principle, procedure or
practice followed by the Seller or changed the method of applying such
principle, procedure or practice; or
(xiii) settled any pending litigation for an aggregate
amount exceeding Five Thousand Dollars ($5,000).
(k) Agreements. Set forth on Schedule 3.1(k) hereto is a true,
correct and complete list of all material contracts, agreements and other
instruments relating to the Internet Services Business, including without
limitation, the Assumed Contracts and any others by which any of the Purchased
Assets are bound. Copies of all such agreements have heretofore been
delivered or made available by the Seller to the Purchaser. Other than as set
forth on Schedule 3.1(k), there is no material contract or agreement to which
the Seller is a party or which affects the Purchased Assets, or the Assumed
Liabilities, or otherwise relating to the Internet Services Business. Except
as otherwise previously disclosed to the Purchaser or set forth on the
schedules hereto, the Seller is not a party to or bound by, nor are any of the
Purchased Assets subject to, any material written or oral agreement relating
to the Internet Services Business, including without limitation the following:
(i) any agreement which has not been entered into or received
by the Seller in the ordinary course of business or which is not consistent
with the prior practice of the Seller;
(ii) any agreement which involves the purchase or sale of goods
or payment by or to the Seller for services rendered with a value in excess of
Five Thousand Dollars ($5,000) which is not cancelable within thirty (30) days
of the Closing Date by the Seller upon notice given on or prior to the Closing
Date;
(iii) any agreement for the employment of any partner or
employee or former partner or employee (other than, with respect to any
employee, agreements which are terminable without liability upon notice of
thirty (30) days or less and do not provide for any further payments following
such termination) pursuant to which payments may be required to be made at any
time following the Closing Date;
(iv) any mortgage, deed of trust or security agreement or other
documentation relating to or establishing a security interest to secure
indebtedness for borrowed money;
(v) any debentures, indentures, notes, installment
obligations, or other instruments for or relating to any unsecured borrowing
of money by the Seller;
(vi) any guaranty of any obligation of any person or party for
borrowings or otherwise, excluding endorsements made for collection in the
ordinary course of business;
(vii) any agreement or arrangement for the sale or lease of
any of the Purchased Assets (other than that which is sold in the ordinary
course of business) having a book value in excess of Five Thousand Dollars
($5,000) in the aggregate;
(viii) any agreement or agreements pursuant to which the
Seller is or may be obligated to make any payments, contingent or otherwise,
in excess of Five Thousand Dollars ($5,000) in the aggregate, resulting from
or arising out of the prior acquisition of any business, or of all or
substantially all of the assets of any company or any division thereof;
(ix) any agreement with any labor union;
(x) any agreement with any partner or employee of the Seller,
the immediate family of any partner or employee of the Seller, or any
affiliate of any of the foregoing;
(xi) any unexpired and enforceable agreements for the
disposition of the Purchased Assets; or
(xii) any other agreement, contract, document or instrument
not entered into in the ordinary course of business which is material to the
Internet Services Business and not excluded by reason of operation of this or
any other provision of this Agreement.
Except as set forth on Schedule 3.1(k), with respect to the Internet
Services Business, the Seller is not, nor to the best knowledge of the Seller,
is any third party, in default and no event has occurred which, with notice or
lapse of time or both, could cause or become a default by the Seller or, to
the best knowledge of the Seller, by any third party, under any contract,
agreement, document or instrument to which the Seller is a party which is
material to the Internet Services Business. Each contract, agreement,
document or instrument to which the Seller is a party which is material to the
Internet Services Business is enforceable, in accordance with its terms,
against all other parties thereto, except as such enforcement may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect, or by legal or equitable principles,
relating to or limiting creditors' rights generally and except that the remedy
of specific performance and injunctive and other forms of equitable relief are
subject to certain equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(l) Non-Contravention; Consents. Except as set forth on Schedule
3.1(l), neither the execution and delivery of this Agreement by the Seller or
Members or Xxxxxx, nor consummation of the transactions contemplated hereby,
does or will: (i) violate or conflict with any provision of the Articles of
Organization or limited liability company agreement of the Seller; (ii)
violate or, with the passage of time, result in the violation of any provision
of, or result in the acceleration of or entitle any party to accelerate any
obligation under, or result in the creation or imposition of any lien, charge,
pledge, security interest or other encumbrance upon any of the Purchased
Assets, pursuant to any provision of any mortgage, lien, lease, agreement,
permit, indenture, license, instrument, law, order, arbitration award,
judgment or decree to which the Seller is a party or by which it or any of the
Purchased Assets are bound, the effect of which violation, acceleration,
creation or imposition could result, in the aggregate, in liability of the
Seller in excess of Five Thousand Dollars ($5,000) in connection with its
Internet Services Business; (iii) violate or conflict with any other
restriction of any kind whatsoever to which the Seller or Members are subject,
or by which any of the Assets may be bound, the effect of any of which
violation or conflict could result, in the aggregate, in liability of the
Seller in excess of Five Thousand Dollars ($5,000) in connection with its
Internet Services Business; or (iv) subject to Section 2.3, constitute an
event permitting termination by a third party of any agreement to which the
Seller is a party or the Purchased Assets are subject including, without
limitation, the Assumed Contracts. No consent, authorization, order or
approval of, or filing or registration with, any governmental commission,
board or other regulatory body is required by Seller or Members in connection
with the execution, delivery and performance of the terms of this Agreement
and consummation of the transactions contemplated hereby by the Seller or
Members;
(m) Labor Relations. There are no agreements with or pending
petitions for recognition of any labor union or association as the exclusive
bargaining agent for any or all of the employees of the Seller and no such
petition has been pending at any time during the two years prior to the date
hereof. There has not been any organizing effort by any union or other group
seeking to represent any employees of the Seller as their exclusive bargaining
agent at any time since inception of the Seller. There are no labor strikes,
work stoppages or other labor disputes now pending or threatened against the
Seller, nor has there been any such labor strike, work stoppage or other labor
dispute or grievance at any time since inception of the Seller;
(n) Insurance. Set forth on Schedule 3.1(n) hereto is a true,
correct and complete list of all insurance policies or binders of insurance or
programs of self-insurance which relate to the Internet Services Business,
copies of which have been previously provided or made available to the
Purchaser. The coverage under each such policy and binder is in full force
and effect. The Seller has no knowledge of nor has it received any notice of
cancellation, termination, nonrenewal or disallowance of any claim made by
Seller or Members thereunder or with respect thereto. Except as specifically
recited on Schedule 3.1(n), each such policy, binder or program providing
coverage for the Purchased Assets or the Internet Services Business shall be
terminated effective as of the close of business on the Closing Date, unless
agreed otherwise by the parties hereto;
(o) Tax Matters. The Seller is not a member of an affiliated
group, within the meaning of Section 1504 of the Internal Revenue Code of
1986, as amended (an "Affiliated Group"). Neither the Seller nor the
Purchaser will incur any tax liability in connection with the transactions
contemplated hereby as a result of the Seller being a member of an Affiliated
Group and consummation by the Seller of such transactions does not give rise
to the imposition upon any party hereto of any taxes, payments or penalties of
any nature whatsoever. The Seller has filed when due and will file if and
when due prior to the Closing Date (after giving effect to any extensions
granted by the requisite legal or regulatory authority) all returns, reports,
elections, estimates, declarations, schedules, forms and other documents ("Tax
Returns") relating to taxes required to be filed by the Internal Revenue Code
of 1986 or by any applicable federal, state, county, municipal, local, foreign
or other laws, including, without limitation, consolidated, combined or
unitary returns, for any taxable period ending prior to or on the Closing Date
(the "Pre-Closing Tax Period"). The taxable year of the Seller for federal
and state income and business tax purposes ends on December 31 of each year.
All taxes shown on any Tax Return required to be filed with respect to the
Seller for any Pre-Closing Tax Period have been, or will have been, paid or
accrued prior to the Closing. The Seller has fully accrued on its books all
taxes not yet due. No tax liens have been filed, and no material claims have
been or are being asserted or proposed, against the Seller with respect to any
taxes. No deficiencies or claims have been proposed, assessed or claimed
(including interest and penalties) against the Seller which have not been paid
or accrued, and the Seller has not waived or extended any statute of
limitations with respect to the assessment of any taxes, which waiver or
extension has not yet expired by its terms. There are no suits, actions,
proceedings, claims or investigations now pending against the Seller with
respect to any taxes. The Seller has withheld or collected from each payment
made to each of its employees, consultants, contractors and other payees the
amount of all taxes (including, but not limited to, federal income taxes,
state and local income and wage taxes, payroll taxes, workers' compensation
and unemployment taxes) required to be withheld or collected therefrom for all
Pre-Closing Tax Periods and the Seller have timely paid or accrued and
reported the same in respect of its employees, consultants, contractors and
other payees to the proper tax receiving offices. The Seller does not have
any liability for any taxes of any nature whatsoever other than as shown on
the Balance Sheets (except for liabilities for taxes accruing after the date
of the Balance Sheets in the ordinary course of business) and there is no
basis for any additional liabilities for taxes for any Pre-Closing Tax Period.
The reserve for accrued but unpaid taxes for the period ending December 31,
1998 includes adequate provision for all taxes which have been assessed or
which will be due and payable by the Seller for all Pre-Closing Tax Periods.
The Seller has not been, and will not on the Closing Date be, liable for any
taxes for which it has not made adequate provision;
The term "taxes" or "tax" as used in this section or referred to
elsewhere in this Agreement shall mean all taxes, charges, fees, levies,
penalties, or other assessments, including, without limitation, income,
capital gain, profit, gross receipts, ad valorem, excise, property, payroll,
withholding, employment, severance, social security, workers' compensation,
occupation, premium, customs duties, windfall profits, sales, use, and
franchise taxes, imposed by the United States, or any state, county, local or
foreign government or any subdivision or agency thereof, and including any
interest, penalties, or additions attributable thereto;
(p) Compliance with Applicable Law. The Seller has been and is
substantially in compliance with all federal, state, local and foreign laws,
statutes, ordinances, rules and regulations, except where the failure to
comply with the same would not adversely affect the Internet Services Business
or the Purchased Assets, or the operations, earnings, or condition (financial
or otherwise) of the Seller or would subject any owner of the Seller to civil
or criminal penalties or imprisonment. The Seller has complied with the rules
and regulations of all governmental agencies having authority over the
Internet Services Business, except where the failure to comply would not have
an adverse effect on the Internet Services Business or the Purchased Assets,
or the operations, earnings, prospects, assets or condition (financial or
otherwise) of the Seller. Neither the Seller nor any Shareholder has
knowledge of or has received any notice of violation of any such rule or
regulation which could result in any material liability of the Seller for
penalties or damages or which could subject the Seller to any injunction or
government writ, order or decree. Copies of any notices in violation of any
such rule or regulation which have been received by Seller, even if no such
material liability or injunction, writ, order, or decree could result
therefrom, have been provided to Purchaser. There are no facts, events or
conditions known to Seller that could interfere with, prevent continued
compliance with or give rise to any liability under any foreign, federal,
state or local governmental laws, statutes, ordinances or regulations
applicable to the Internet Services Business or the Purchased Assets, or the
operations, earnings or condition (financial or otherwise) of the Seller,
except where the failure to do so would not have a material adverse effect on
the Internet Services Business or the Purchased Assets, or the operations,
earnings, prospects, assets or condition (financial or otherwise) of the
Seller;
(q) Litigation. There is no action, suit, proceeding or
investigation pending against or related to the Seller or Members or Xxxxxx,
nor to the best knowledge of the Seller or Members, threatened, which could
restrict the Seller's or Members' or Xxxxxx'x ability to perform their
respective obligations hereunder or could have a material adverse effect on
the Internet Services Business or the Purchased Assets, or the operations,
earnings, or condition (financial or otherwise) of the Seller. To the best
knowledge of Seller, Members, and Xxxxxx, there are no grounds for, or facts,
events or circumstances which could form the basis of, any such action that
could cause or result in any such action, suit, proceeding or investigation or
which is probable of assertion. Neither the Seller nor any Member nor Xxxxxx
is in default in respect of any judgment, order, writ, injunction or decree of
any court or any federal, state, local or other governmental agency,
authority, body, board, bureau, commission, department or instrumentality
which could have a material adverse effect on the Internet Services Business
or the Purchased Assets, or the operations, earnings, or condition (financial
or otherwise) of the Seller;
(r) Employee Benefit Plans. Schedule 3.1(r) sets forth a true,
correct and complete list of all "employee benefit plans" as such term is
defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") (the "Benefit Plans") covering the employees of the
Seller (the "Employees"). Each Benefit Plan is in compliance in all material
respects with all applicable provisions of law, including ERISA and the
Internal Revenue Code of 1986, as amended (the "Code"). There are no pending
or, to the knowledge of the Seller, any Member, or Xxxxxx, threatened claims
against any Benefit Plan (except for claims for benefits payable in the normal
operation of the Benefit Plans) that could give rise to any material liability
to the Seller. All material reports, notices and returns required to be filed
with any governmental agency or provided to any person or entity with respect
to the Benefit Plans have been timely filed. Each Benefit Plan that is an
employee pension plan (as defined in Section 3(2) of ERISA) (a "Retirement
Plan") and the related trusts have received a determination from the Internal
Revenue Service that the Plan is qualified and exempt from federal income tax
under Sections 401(a) and 501(a), respectively, of the Code. No person has
engaged in a "prohibited transaction" with respect to any Retirement Plan (as
that term is defined in Section 4975 of the Code and Section 406 of ERISA),
which could subject the Seller to a penalty tax imposed by Section 4975 of the
Code. All contributions required to be made to each Retirement Plan have been
timely made and no plan has an "accumulated funding deficiency" within the
meaning of Section 412 of the Code. No Retirement Plan subject to Title IV of
ERISA has incurred any material liability to the Pension Benefit Guaranty
Corporation ("PBGC") other than for the payment of premiums, all of which have
been paid when due. Other than as contemplated herein, no Retirement Plan
subject to Title IV of ERISA has been terminated nor has there been any
"reportable event" (as that term is defined in Section 4043 of ERISA and the
regulations thereunder) that could present a material risk of termination of a
Retirement Plan which termination could have a material adverse effect on the
Seller. The Seller does not contribute to any multi-employer pension or
multi-employer welfare benefit plan (within the meaning of Section 3(37) of
ERISA). None of the Employees is now or will become entitled to receive any
vacation time, vacation pay, severance pay or other employee benefit for which
Purchaser would be obligated;
(s) Permits. The Seller holds all permits, licenses, orders and
approvals (collectively the "Permits") of all federal, state or local
governmental or regulatory authorities, agencies or bodies required for the
conduct and operation of the Internet Services Business as currently
conducted, and operation and maintenance of the Purchased Assets in accordance
with their intended use, except where the failure to do so could not have a
material adverse effect on the Internet Services Business or the Purchased
Assets, or the operations, earnings, assets or condition (financial or
otherwise) of the Seller. All such permits, licenses, orders, and approvals
are in full force and effect and no suspension, termination, amendment, or
revocation of any of the foregoing is threatened. None of such permits,
licenses, orders or approvals will be adversely affected by consummation of
the transactions contemplated by this Agreement. To the best knowledge of the
Seller, the Seller has complied with the rules and regulations of all
governmental or other regulatory agencies, authorities, bodies, boards,
bureaus, commissions, departments or instrumentalities which regulate,
supervise or are in any manner concerned with import and export licenses,
occupational safety, environmental protection and employment practices
relating to the Internet Services Business, except where the failure to do so
could not have a material adverse effect on the Internet Services Business or
the Purchased Assets, or the operations, earnings, assets or condition
(financial or otherwise) of the Seller. The Seller has no knowledge of nor
has Seller received any notice of violation of any of such rules or
regulations which would result in any liability of the Seller for penalties or
damages or which would subject the Seller to any injunction or governmental
writ, order or decree;
(t) Restrictive Covenants. Neither the Seller nor any Member nor
Xxxxxx is a party to any agreement, contract or covenant limiting the freedom
of the Seller to compete in any line of business or with any person or other
entity in any geographic region within or outside of the United States of
America;
(u) Unlawful Payments. Neither the Seller, any Member, Xxxxxx, nor
to the best knowledge of Seller, Members, and Xxxxxx, any agent or
representative of the Seller has made, directly or indirectly, any bribe or
kickback, illegal political contribution, payment from corporate funds which
was incorrectly recorded on the books and records of the Seller, unlawful
payment from corporate funds to governmental or municipal officials in their
individual capacities for the purpose of affecting their action or the actions
of the jurisdiction which they represent to obtain favorable treatment in
securing business or licenses or to obtain special concessions of any kind
whatsoever, or illegal payment from corporate funds to obtain or retain any
business;
(v) Warranties. Except as required by federal or state law, the
Seller has not made, extended or otherwise represented that it would provide
any express warranty with respect to the products or services sold,
distributed or leased to its clients or customers;
(w) Transactions with Affiliates. Except as set forth on Schedule
3.1(w), there are no loans outstanding pursuant to which the Seller is owed or
owes money which involve any stockholder, officer, director, employee or
consultant of the Seller. Except as disclosed on Schedule 3.1(w), the Seller
is not a party to any other instrument, license, lease or other agreement
affecting the Purchased Assets, written or oral, with any stockholder,
officer, director, employee or consultant of the Seller;
(x) Books and Records.
(i) The books of account and other financial records of the
Internet Services Business and of the Seller are complete and correct and
fully and fairly reflect all of their transactions, properties, assets, and
liabilities; and
(ii) The Seller will provide the Purchaser prior to the Closing
Date access to all books and records referred to above, and all books and
records relating to the Internet Services Business shall be delivered to the
Purchaser simultaneous with the Closing.
(y) Assets Necessary to the Internet Services Business. The
Purchased Assets, including the contracts assumed hereunder, constitute all of
the assets and agreements necessary to the conduct and operation of the
Internet Services Business as currently being conducted;
(z) Year 2000 Impact. Seller is unaware of any material Y2K
problems with respect to its equipment;
(aa) Subsidiaries. Seller does not presently own of record or
beneficially, or control, directly or indirectly, any capital stock,
securities convertible into capital stock, or any other equity interest in any
corporation, association or business entity, nor is Seller, directly or
indirectly, a participant in any joint venture, partnership or other non-
corporate entity;
(bb) Environmental Matters. To the best of each of the Seller's
knowledge, Seller has not received any notice (nor would there be any basis
for such a notice) from any local, state or federal agency having jurisdiction
over the Internet Services Business, Seller's operations, properties, or
assets or responsibility for the enforcement of local, state, or federal
environmental, health, and safety laws of any violation of any environmental,
health and safety laws by Seller, in connection with the assets;
(cc) Accounts Receivable. All of the Accounts Receivable of Seller
are valid and legally binding, represent bona fide transactions, and arose in
the ordinary course of business of Seller. To the best of Seller's knowledge,
all of such Accounts Receivable posted on or after December 31, 1998, are good
and collectible receivables and are collectable in accordance with the terms
of such Accounts Receivable, without set-off or counterclaims; provided,
however, that to the extent that the Accounts Receivable are not collectable,
the allowance for doubtful accounts contained in the Current Balance Sheet is
adequate based on Seller's historical experience;
(dd) Predecessor Status, Etc. There have been no predecessor
corporations or LLCs of Seller for the past five (5) years other than
RhinoTrax. Seller has not been a subsidiary or division of another
corporation;
(ee) Spin-Off by Seller. Within the preceding two (2) years, there
has not been any sale, spin-off or split-up of material assets of Seller or
any other person or entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with, Seller;
(ff) Records of Seller. All material LLC actions taken by Seller
have been duly authorized or ratified. The accounts, books, ledgers and
official and other records of Seller contain no material inaccuracies or
discrepancies; and
(gg) Accuracy of Information Furnished by Seller, the Members and
Xxxxxx. No statement or information contained in this Agreement and the
various Schedules attached hereto or in any certificate furnished to Purchaser
pursuant hereto, contains any untrue statement of a material fact or omits any
material fact necessary to make the information contained therein not
misleading. The Seller, Members, and Xxxxxx have provided Purchaser with
true, accurate and complete copies of all documents listed or described in the
various Schedules attached hereto. If the Seller, Members, and Xxxxxx become
aware of any fact or circumstance which changes a representation or warranty
of Seller, Members, and Xxxxxx in this Agreement, the party with such
knowledge shall promptly give notice of such fact or circumstance to
Purchaser. However, such notification shall not relieve the Seller, Members,
and Xxxxxx of their obligation hereunder with respect to the accuracy of such
representation or warranty when made.
3.2 REPRESENTATIONS AND WARRANTIES OF PURCHASER AND SKYLYNX. The
Purchaser and SkyLynx, jointly and severally, represent and warrant to the
Seller and Members and Xxxxxx as follows:
(a) Authorization. The execution, delivery and performance of this
Agreement and consummation of the transactions contemplated hereby have been
duly authorized, adopted and approved by the boards of directors of the
Purchaser and SkyLynx. The Purchaser and SkyLynx each have taken all
necessary corporate action and has all the necessary corporate power to enter
into this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by the
officers of the Purchaser on its behalf, and by the officers of SkyLynx on its
behalf, and assuming that this Agreement is the valid and binding obligation
of the Seller and Members, is the valid and binding obligation of the
Purchaser and SkyLynx, enforceable against the Purchaser and SkyLynx,
respectively, in accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect, or by legal or equitable
principles, relating to or limiting creditors' rights generally and except
that the remedy of specific performance and injunctive and other forms of
equitable relief are subject to certain equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
(b) Organization. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State
of California. SkyLynx is a corporation duly organized, validly existing and
in good standing under the laws of Colorado. The Purchaser and SkyLynx each
have the corporate power and authority to own and lease their properties and
assets and to carry on their businesses as they are now being conducted and
each is duly qualified to do business as a foreign corporation in each
jurisdiction where it owns or leases real property or conducts business,
except where the failure to be so qualified would not have a material adverse
effect on the business, operations, earnings, assets or condition (financial
or otherwise) of the Purchaser or SkyLynx.
(c) Non-Contravention; Consents. Neither the execution and
delivery of this Agreement by the Purchaser or SkyLynx, nor consummation of
the transactions contemplated hereby, does or will: (i) violate or conflict
with any provision of the certificate of incorporation or bylaws of the
Purchaser or SkyLynx; (ii) violate or conflict with any laws, statute,
ordinance, code, regulation, decree, writ, judgment, or order of any
governmental authority; or (iii) materially violate or conflict with any
agreement to which the Purchaser or SkyLynx is a party or to which it is
subject. No consent, authorization, order or approval of, or filing or
registration with, any governmental commission, board or other regulatory body
is required in connection with the execution, delivery and performance of the
terms of this Agreement by the Purchaser or SkyLynx and consummation by the
Purchaser or SkyLynx of any of the transactions contemplated hereby.
(d) Litigation. There is no action, suit, proceeding or
investigation pending against or related to the Purchaser or SkyLynx
(including shareholder's suits), to the best of the Purchaser's or SkyLynx's
knowledge, nor has the Purchaser or SkyLynx been threatened with any such
action, suit, proceeding or investigation, which would restrict the
Purchaser's or SkyLynx's ability to perform their respective obligations
hereunder or which would have a material adverse effect on the business,
assets, operations, earnings, or condition (financial or otherwise) of the
Purchaser or SkyLynx. To the best knowledge of the Purchaser or SkyLynx, there
are no grounds for or facts, events or circumstances which would form the
basis of any such action that would cause or result in any such action, suit,
proceeding or investigation or which is probable of assertion. The case in
which SkyLynx is suing its affiliate, Network System Technology, Inc., is
described in detail in Schedule 3.2(d). Neither the Purchaser nor SkyLynx is
in default in respect of any judgment, order, writ, injunction or decree of
any court or any federal, state, local or other governmental agency,
authority, body, board, bureau, commission, department or instrumentality
which could have a material adverse effect on the business, assets,
operations, earnings, or condition (financial or otherwise) of the Purchaser
or SkyLynx.
(e) Unlawful Payments. Neither the Purchaser, SkyLynx, nor any
officer, director, employee, agent, owner or representative of the Purchaser
or SkyLynx has made, directly or indirectly, any bribe or kickback, illegal
political contribution, payment from corporate funds which was incorrectly
recorded on the books and records of the Purchaser or SkyLynx, unlawful
payment from corporate funds to governmental or municipal officials in their
individual capacities for the purpose of affecting their action or the actions
of the jurisdiction which they represent to obtain favorable treatment in
securing business or licenses or to obtain special concessions of any kind
whatsoever, or illegal payment from corporate funds to obtain or retain any
business.
3.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth in Sections 3.1 and 3.2 hereof shall survive until the
close of business one year after the Closing Date, provided that notice or
demand with respect to any alleged breach thereof which has occurred prior to
the first anniversary of the Closing Date shall be given in writing by the
nonbreaching party or parties to the breaching party or parties not later than
the close of business on the day following the first anniversary of the
Closing Date; and further provided that, with respect to claims for damages
arising out of any misrepresentation or breach of warranty made by the Seller
or Members or Xxxxxx or the Purchaser or SkyLynx relating to taxes, notice
shall have been given on or before the close of business on the sixtieth
(60th) day following the later to occur of: (i) the expiration date of the
statute of limitations applicable to any indemnified federal, state or local
tax liability; and (ii) the final determination of any such tax liability,
including the final administrative and/or judicial determination thereof.
ARTICLE IV
COVENANTS
4.1 COVENANTS OF THE SELLER, MEMBERS, AND XXXXXX.
(a) Notification. The Seller, Members and Xxxxxx shall give prompt
notice to the Purchaser and SkyLynx of: (i) any notice or other communication
received by the Seller prior to the Closing Date, relating to a default or an
event which, with notice or lapse of time or both would become a default under
this Agreement or become a material default under any other material contract,
agreement or instrument to which the Seller is a party, by which it or any of
the Purchased Assets are bound or to which it or any of the Purchased Assets
are subject; (ii) any event which, with notice or lapse of time or both, would
cause any warranty, representation, or covenant of the Seller, any of the
Member, or Xxxxxx under this Agreement to be inaccurate, untrue, incomplete,
misleading or violated in any respect; (iii) any notice or other communication
from any third party alleging that the consent of such third party was, is or
may be required in connection with the transactions contemplated by this
Agreement; and (iv) any material adverse change in the Internet Services
Business or the Purchased Assets, or the operations, earnings, or condition
(financial or otherwise) of the Seller.
(b) Conduct of Internet Services Business; Certain Covenants.
Prior to and through the Closing Date, the Seller shall conduct and operate
the Internet Services Business and will not, without prior written consent of
the Purchaser and SkyLynx, which consent shall not be unreasonably withheld,
take any action other than in accordance with the ordinary and usual course of
business. The Seller will use commercially reasonable efforts to preserve
intact the Internet Services Business, the Purchased Assets and the operation,
organization and relationships with its employees, independent contractors,
agents, suppliers, customers and others having business dealings with it.
Prior to and through the Closing Date, without the prior written consent of
the Purchaser, which consent shall not be unreasonably withheld, the Seller
shall not in any matter affecting the Internet Services Business:
(i) amend the Articles of Organization or limited liability
company agreement;
(ii) issue or otherwise grant or enter into any agreement
relating to the issuance or grant of any interests or rights calling for or
permitting the issuance, transfer, sale or delivery of any rights to the
Purchased Assets or the Internet Services Business;
(iii) issue, transfer, sell or deliver any interest in the
Seller;
(iv) incur any indebtedness for borrowed money, except in the
ordinary course of business or pursuant to existing agreements which the
Seller has previously disclosed or made available to the Purchaser or SkyLynx;
(v) other than with respect to late payment of accounts
payable, permit the occurrence or continuance of any material default under
any agreement to which the Seller is a party;
(vi) make any acquisition of the capital stock or all or
substantially all of the assets of any entity;
(vii) enter into any business combination with any other
entity or enter into any joint venture arrangement with any third party;
(viii) enter into any employment or similar contract with or
increase the compensation payable to any employee of the Seller, except in the
ordinary course of business of the Seller and in a manner consistent with the
Seller's past practices;
(ix) other than with respect to late payment of accounts
payable, alter, amend or otherwise modify any material term or provision of
any contract or agreement with any of its clients, customers, subscribers,
suppliers or vendors;
(x) adopt, amend or modify in any respect or terminate any
severance plan or collective bargaining agreement or make distributions under
any severance plan, except in a manner consistent with the Seller's past
practices or as otherwise contemplated herein;
(xi) sell, enter into any contract to sell or grant any option
to purchase, any of the Purchased Assets, other than in the ordinary course of
business;
(xii) create, assume or permit to exist any lien, pledge,
security interest, encumbrance or mortgage of any kind whatsoever on any of
the Purchased Assets other than:
(A) liens existing on the date hereof which are otherwise
permitted hereby and described in a schedule hereto;
(B) any mortgage, pledge, lien or other security interest
in or upon any property or asset hereafter acquired by the Seller in the
ordinary course of business, which mortgage, pledge, lien or other security
interest is entered into contemporaneously with such acquisition to secure or
provide for the payment of any part of the purchase price therefor, or the
assumption by the Seller of any mortgage, pledge, lien or other security
interest in or upon any property or asset hereafter acquired by the Seller
which mortgage, pledge, lien or other security interest existed at the time of
such acquisition; provided that, each such mortgage, pledge, lien or other
security interest shall not extend to or cover any property or asset of the
Seller other than such property or asset hereafter acquired;
(C) any mortgage, pledge, lien or other security interest
created for the sole purpose of renewing or refunding any mortgage, pledge,
lien or other security interest allowed under clause (B) above; provided that,
the principal amount of indebtedness secured thereby shall not exceed the
principal amount of indebtedness so secured at the time of such renewal or
refunding and that such renewed or refunded mortgage, pledge, lien or other
security interest shall not extend the mortgage, pledge, lien or other
security interest renewed or refunded to any additional property or asset;
(D) the pledge by the Seller of any of the Purchased
Assets as security required by law or governmental regulation as a condition
to the transaction of any business or the exercise of any privilege, license
or right;
(E) a banker's lien or right of offset on funds of the
Seller deposited with a lender or holder in the ordinary course of business in
favor of any lender of funds or holder of the Seller's commercial paper in the
ordinary course of business;
(F) liens for taxes, assessments and governmental charges
or levies imposed upon the Seller or upon their income or profit, or upon any
of their property or assets if the same shall not at the time be due or are
being contested in good faith in appropriate proceedings; and
(G) liens imposed by law, such as those of carriers,
warehousemen and mechanics, for sums not yet due or are being contested in
good faith in appropriate proceedings.
(xiii) except in the ordinary course of business, enter into
any contract, including but not limited to assignments, licenses, transfers of
exclusive rights, "work for hire" agreements, special commissions, employment
contracts, purchase orders, sales orders, mortgages and security agreements;
(xiv) except in the ordinary course of business or arising
out of or relating to this Agreement, initiate any legal proceedings involving
the Seller, the Internet Services Business or the Purchased Assets, including
suits and administrative proceedings in the United States or any foreign
country; or
(xv) take any action that would cause any representation,
warranty or covenant contained herein to be inaccurate, untrue, incomplete,
misleading or violated.
(d) Proposals; Other Offers. Through and including the earlier of
April 30, 1999 or Closing, the Seller shall not offer, either directly or
through an agent, or discuss or negotiate, either directly or through an
agent, with any other firm or individual, the sale of the Purchased Assets, or
any other transaction resulting in the transfer, conveyance, hypothecation or
other disposition of the Purchased Assets other than in the ordinary course of
business.
(e) Best Efforts and Cooperation; Further Assurances. Prior to the
Closing Date, with the cooperation of Purchaser and SkyLynx where appropriate,
the Seller, the Members, and Xxxxxx shall:
(i) promptly comply with all filing requirements which
federal, state or local law may impose on the Seller with respect to the
transactions contemplated by this Agreement; and
(ii) use all diligent efforts to take all actions reasonably
necessary to be taken, make any filing and obtain any consent, authorization
or approval of or exemption by any governmental authority, regulatory agency
or any other third party (including, without limitation, any landlord or
lessor of the Seller and any party to whom notification is required to be
delivered or from whom any form of consent is required, but subject to Section
2.3) which is required to be filed or obtained by the Seller in connection
with the transactions contemplated by this Agreement.
(f) Access to Additional Agreements and Information. Prior to the
Closing Date, the Seller shall make available to the Purchaser any and all
agreements, contracts, documents and other instruments material to the
Internet Services Business, including without limitation, those to which the
Seller is a party and those by which the Internet Services Business or any of
the Purchased Assets are bound.
(g) Tax Accounting. Seller, the Members, and Xxxxxx agree to
follow tax accounting treatment and allocations in respect of the sale of the
Purchased Assets with the treatment and allocations described in Schedule
4.1(g).
(h) Termination of Employees. Seller will terminate all employees
effective as of the Closing, and Seller will remain responsible for all
salary, benefits (including accrued vacations), and tax matters pertaining to
such individuals' former employment with Seller.
(i) Consulting Services. Xxxxxx and Xxxxx (together
"Consultants") agree to be available to Purchaser and SkyLynx for a period of
sixty (60) days following the Closing Date for consulting purposes in
connection with the Internet Services Business. Xxxxxx agrees to be available
up to five (5) hours in any given week and up to twenty (20) hours in any
given thirty (30)-day period. The first thirty (30) hours shall be free, and
Xxxxxx shall be paid One Hundred Dollars ($100) per hour for any hour beyond
that. Xxxxx agrees to be available up to twenty (20) hours in any given
thirty (30)-day period. The first thirty (30) hours shall be free, and Xxxxx
shall be paid One Hundred Dollars ($100) per hour for any hour beyond that.
Xxxxx shall also be reimbursed for mileage costs at the maximum rate allowed
by the Internal Revenue Service.
4.2 COVENANTS OF PURCHASER AND SKYLYNX.
(a) Notice of Defaults. The Purchaser and SkyLynx shall give
prompt notice to the Seller of: (i) any notice or other communication
relating to a default hereunder or event which, with notice or lapse of time
or both, would become a default hereunder, received by the Purchaser or
SkyLynx prior to the Closing Date, or under any material contract, agreement
or instrument to which the Purchaser or SkyLynx is a party, by which it or any
of its properties or assets are bound or to which it or any of its properties
or assets are subject which would prevent the consummation of the transactions
contemplated hereby; (ii) any event which, with notice or lapse of time or
both, would cause any representation or warranty of the Purchaser or SkyLynx
under this Agreement to be inaccurate or misleading in any respect; (iii) any
notice or other communication by any third party alleging that the consent of
such third party is or may be required in connection with the transactions
contemplated by this Agreement; and (iv) any material adverse change in the
business, assets, operations, earnings, or conditions (financial or otherwise)
of the Purchaser or SkyLynx.
(b) Third Party Consents. The Purchaser and SkyLynx each shall use
commercially reasonable efforts to obtain any consent, authorization or
approval of, or exemption by, any governmental authority or agency or other
third party required to be obtained or made by it in connection with this
Agreement or the consummation of the transactions contemplated hereby,
provided, however, that the Seller has advised the Purchaser that the
transferability of certain contract rights of the Seller may require third
party consents which may or may not be obtainable, and which may effect the
acceleration of obligations owed to third parties, and provided, further, that
the Purchaser has agreed to assume such risks in accordance with Section 2.3.
(c) Best Efforts and Cooperation; Further Assurances. Prior to the
Closing Date, with the cooperation of the Seller and Members and Xxxxxx, where
appropriate, each of the Purchaser and SkyLynx shall:
(i) promptly comply with all filing requirements which
federal, state or local law may impose on the Purchaser or SkyLynx with
respect to the transactions contemplated by this Agreement; and
(ii) use its diligent efforts to take all actions necessary to
be taken, make any filing and obtain any consent, authorization or approval of
or exemption by any governmental authority, regulatory agency or any other
third party which is required to be filed or obtained by the Purchaser or
SkyLynx in connection with the transactions contemplated by this Agreement.
(d) Former Employees of Seller. Purchaser contemplates hiring all
current employees of Seller (except for Xxxxxx and Xxxxx) identified to it by
Seller, with such employees to be paid at least the same salary rates as they
have been earning at Seller, as previously identified in writing by Seller to
Purchaser. Former employees of Seller who are hired by Purchaser within a
thirty day period following the Closing Date shall, for purposes of any bonus
or benefit plans offered by Purchaser to its employees now or in the future,
receive credit for time of their service as employees of Seller, unless
prohibited by law, to the fullest extent permitted by its bonus and benefit
plans.
4.3 GOVERNMENTAL FILINGS AND CONSENTS. The Seller and the Purchaser or
SkyLynx shall cooperate with one another in filing any necessary applications,
reports or other documents with any federal or state agencies, authorities or
bodies having jurisdiction with respect to the Internet Services Business or
the transactions contemplated by this Agreement and in seeking any necessary
approval, consultation or prompt favorable action of, with or by any of such
agencies, authorities or bodies, it being understood that it is the primary
responsibility of the Seller to obtain any required consents to the transfers
of Permits.
4.4 PURCHASER'S AND SKYLYNX'S RIGHT TO INVESTIGATE.
(a) Obligation of the Seller and Members. The Seller and Members
shall afford to the officers and authorized representatives and agents of the
Purchaser and SkyLynx, during regular business hours and upon reasonable prior
notice, free and full access to any office, warehouse, plant, property,
inventory, accounts, books and records of the Seller such as to afford the
Purchaser and SkyLynx the full opportunity to make such investigations as it
shall desire or deem appropriate with respect to the affairs of the Internet
Services Business of Seller, except as prohibited by law. The Seller shall
each furnish the Purchaser and SkyLynx with such additional financial and
operating data and other information relating to the Internet Services
Business and the Purchased Assets, and the operations, earnings, or condition
(financial or otherwise) of the Seller as the Purchaser or SkyLynx shall from
time to time request. Nothing contained in this subsection shall be construed
as imposing an obligation on the part of the Seller to compile or produce
records in a form other than currently in existence. Prior to the Closing
Date, or at all times hereafter in the event that the transactions
contemplated hereby are not consummated or this Agreement is otherwise
terminated, the Purchaser and SkyLynx shall, except as may be otherwise
required by applicable law, hold confidential all information obtained
pursuant to this subsection or otherwise in connection with consummation of
the transactions contemplated by this Agreement with respect to the Seller.
In the event that this Agreement is terminated, the Purchaser or SkyLynx shall
return to the Seller all of such information as shall be in documentary form.
(b) Effectiveness of Representations. In the event that a party
hereto becomes aware or knows prior to the Closing of the occurrence or non-
occurrence of any event which would likely cause a representation or warranty
made herein to be untrue or inaccurate as of the Closing, or on any covenant,
condition, or agreement contained herein not to be complied with or satisfied,
such party shall provide written notice promptly to the other parties.
ARTICLE V
CONDITIONS
5.1 CONDITIONS TO OBLIGATIONS OF PURCHASER AND SKYLYNX. The obligation
of the Purchaser and SkyLynx to consummate the transactions contemplated by
this Agreement is subject to the fulfillment of each of the following
conditions, which may be waived in whole or in part by the Purchaser and
SkyLynx to the extent permitted by applicable law:
(a) No Material Adverse Change. Since December 31, 1998, no
material adverse change in the Internet Services Business or the Purchased
Assets, or the operations, earnings, or condition (financial or otherwise) of
the Seller, and no event which would materially and adversely affect the
Internet Services Business or the Purchased Assets, or the operations,
earnings, or condition (financial or otherwise) of the Seller shall have
occurred;
(b) Opinion of Seller's and Members' Counsel. The Seller and
Members shall have furnished to Purchaser and SkyLynx, at the Closing, with an
opinion of counsel to the Seller and Members, dated as of the Closing Date,
substantially in the form attached hereto as Exhibit 5.1(b);
(c) Accuracy of Representations and Warranties; Performance of
Covenants. Each of the representations and warranties of the Seller and
Members and Xxxxxx set forth in this Agreement was materially true, correct
and complete in all respects when made and shall also be materially true,
correct and complete in all respects at and as of the Closing Date, with the
same force and effect as if made at and as of the Closing Date. The Seller
and Members and Xxxxxx shall have performed and complied in all respects with
all agreements and covenants required by this Agreement to be performed by the
Seller and Members at or prior to the Closing Date;
(d) Delivery of Certificates. The Seller and Members shall have
delivered to the Purchaser and SkyLynx certificates, dated the Closing Date,
and signed by a manager of the Seller representing and affirming that (i) the
representations and warranties made by the Seller and Members were and are
true, correct and complete as required by Subsection 5.1(c) above, and (ii)
the conditions set forth in this Section 5.1 have been satisfied. The Seller
shall also have delivered a certificate signed by a manager of the Seller with
respect to the authority and incumbency of the managers or officers of the
Seller in executing this Agreement and any documents required to be executed
in connection herewith on behalf of the Seller;
(e) Consents and Waivers. At the Closing, any and all necessary
governmental consents, authorizations, orders or approvals and any and all
necessary consents to the assignment of permits and contracts, respectively,
subject to Section 2.3, and the effectuation of the transactions contemplated
hereby, shall have been obtained, except as the same shall have been waived by
the Purchaser or SkyLynx;
(f) Litigation. On the Closing Date, there shall be no effective
injunction, writ or preliminary restraining order or any order of any kind
whatsoever with respect to the Seller or SkyLynx or Xxxxxx issued by a court
or governmental agency (or other governmental or regulatory authority) of
competent jurisdiction restraining or prohibiting the consummation of the
transactions contemplated hereby or making consummation thereof unduly
burdensome to the Seller or Members or Xxxxxx. On the Closing Date and
immediately prior to consummation of the transactions contemplated by this
Agreement, no proceeding or lawsuit shall have been commenced, be pending or
have been threatened by any governmental or regulatory agency or authority or
any other person with respect to the transactions contemplated by this
Agreement;
(g) Delivery of Documents and Other Information. Prior to the
Closing Date, the Seller and Members shall have made available or delivered to
the Purchaser and SkyLynx all of the agreements, contracts, documents and
other instruments required to be delivered pursuant to the provisions of this
Agreement;
(h) Instruments of Transfer. The Seller shall execute and deliver
to the Purchaser such bills of sale, assignments, endorsements, and other
instruments and documents reasonably satisfactory in form and substance to the
Purchaser and its counsel as they may reasonably deem to be necessary or
appropriate to vest in the Purchaser on the Closing Date good and marketable
title to the Purchased Assets free and clear of any and all adverse claims,
mortgages, pledges, liens, charges, security interests or other rights,
interests or encumbrances, other than those which constitute Assumed
Liabilities;
(i) Non-Compete Agreement. Xxxxxx Xxxxxx ("Xxxxxx") and his
brother Xxxxxxxx X. Xxxxxx shall each enter into a non-competition agreement
with Purchaser for a period of two (2) years from the date of Closing in
substantially the same form as that attached hereto as Exhibit 5.1(i);
(j) Contract Assignments. With respect to the Assumed Contracts,
the Seller shall execute and deliver to Purchaser, and cause any appropriate
third party to execute and deliver to Purchaser, as reasonably requested by
Purchaser, assignments in substantially the same form as that attached hereto
as Exhibit 5.1(j) or as may be reasonably required by any third party to a
contract which is being assigned to Purchaser by Seller pursuant to the terms
of this Agreement (except that it is agreed and understood in the cases of all
of the equipment leases listed on Schedule 1.1(c), the lessors may not agree
to any such assignment, and that Purchaser accepts the risk that such
assignments will not be effectuated without an acceleration or buyout by the
Purchaser);
(k) Corporate Resolutions. A certified copy of the resolutions of
the Members authorizing the execution, delivery, and performance of this
Agreement, the sale of the Purchased Assets, and the consummation of the
transactions contemplated hereby by Seller, and a certificate of the Manager
of Seller, dated the Closing Date, attesting that such resolutions were duly
adopted and are in full force and effect; and
(l) Related Agreements. The Seller and the Members shall execute
and deliver any other agreements reasonably necessary to consummate the
transactions contemplated herein.
All corporate actions and consents required to be undertaken and obtained
by Sellers and Purchaser in connection with the consummation of the
transaction contemplated hereby will have been obtained and all documents to
be delivered at the time of Closing by Sellers will be reasonably satisfactory
in form and substance to Purchaser.
5.2 CONDITIONS TO OBLIGATIONS OF THE SELLER AND MEMBERS. The
obligations of the Seller and Members and Xxxxxx to consummate the
transactions contemplated by this Agreement are subject to the fulfillment of
each of the following conditions, which may be waived in whole or in part by
the Seller and Members and Xxxxxx to the extent permitted by law:
(a) Copies of Resolutions. At the Closing, the Purchaser and
SkyLynx shall have furnished the Seller and Members and Xxxxxx with certified
copies of resolutions duly adopted by the boards of directors of the Purchaser
and Members and Xxxxxx, authorizing the execution, delivery and performance of
the terms of this Agreement and all other necessary or proper corporate action
to enable the Purchaser and Members to comply with the terms of this
Agreement;
(b) Opinion of Purchaser's and SkyLynx's Counsel. The Purchaser
and Members shall have furnished the Seller and Members, at the Closing,
opinions of counsel to the Purchaser and SkyLynx, dated as of the Closing
Date, substantially in the forms attached hereto as Exhibit 5.2(b);
(c) Accuracy of Representations and Warranties; Performance of
Covenants. Each of the representations and warranties of the Purchaser and
SkyLynx was true, correct and complete in all respects when made and shall
also be true, correct and complete in all respects at and as of the Closing
Date, with the same force and effect as if made at and as of the Closing Date.
The Purchaser and SkyLynx shall have performed and complied with in all
respects all agreements and covenants required by this Agreement to be
performed by the Purchaser and SkyLynx at or prior to the Closing Date;
(d) Delivery of Officers' Certificates. The Purchaser and SkyLynx
each shall have delivered to the Seller and Members certificates, dated the
Closing Date and signed by an executive officer of the Purchaser, affirming
that: (i) the representations and warranties of the Purchaser and SkyLynx as
set forth in Section 3.2 of this Agreement were and are true, correct and
complete as required by Subsection 5.2(c) above; and (ii) the conditions set
forth in this Section have been satisfied. The Purchaser and Members shall
also have delivered a certificate signed by the Secretaries of the Purchaser
and SkyLynx with respect to the authority and incumbency of the officers of
the Purchaser and SkyLynx executing this Agreement and any documents required
to be executed or delivered in connection therewith;
(e) Consents and Waivers. On or prior to the Closing Date, any and
all necessary consents, authorizations, orders or approvals described in
Subsection 3.2(c) shall have been obtained, except as the same shall have been
waived by the Seller;
(f) Litigation. On the Closing Date, there shall be no effective
injunction, writ or preliminary restraining order or any order of any kind
whatsoever with respect to the Purchaser and SkyLynx issued by a court or
governmental agency (or other governmental or regulatory authority) of
competent jurisdiction restraining or prohibiting the consummation of the
transactions contemplated herein or making the consummation thereof unduly
burdensome to the Purchaser and SkyLynx. On the Closing Date, no proceeding
or lawsuit shall have been commenced, threatened or be pending or by any
governmental or regulatory agency or authority or any other person with
respect to the transactions contemplated by this Agreement;
(g) Delivery of Documents and Other Information. Prior to the
Closing Date, the Purchaser and SkyLynx shall have made available or delivered
to the Seller and Members and Xxxxxx all of the agreements, contracts,
documents and other instruments required to be delivered pursuant to the
provisions of this Agreement;
(h) Certain Checks with respect to Assumed Payables. The Purchaser
shall deliver at Closing to be mailed from Closing, checks of the Purchaser or
SkyLynx in the aggregate amount of up to Seventy-Five Thousand Dollars
($75,000) to pay the payables assumed pursuant to Section 1.3;
(i) Certain Checks representing Purchase Price. The Purchaser
shall deliver at Closing to be mailed from Closing other checks of the
Purchaser or SkyLynx in the amount of Eighty-Eight Thousand Eight Hundred
Fifty Dollars and Ninety-Three Cents ($88,850.93) to pay certain vendors of
the Seller in accordance with Section 1.4(d); and
(j) Related Agreements. The Purchaser shall execute and deliver
any other agreements reasonably necessary to consummate the transactions
contemplated herein.
All corporate actions and consents required to be undertaken and obtained
by Sellers and Purchaser in connection with the consummation of the
transaction contemplated hereby will have been obtained and all documents to
be delivered at the time of Closing by Purchaser will be reasonably
satisfactory in form and substance to Seller and Members.
ARTICLE VI
INDEMNIFICATION AND CLAIMS
6.1 INDEMNIFICATION BY THE SELLER AND MEMBERS.
(a) Subject to Section 3.3 hereof and Section 6.1(b), the Seller
and Members, jointly and severally, hereby agrees to indemnify and hold
harmless the Purchaser and SkyLynx (collectively the "Indemnified Party")
against and in respect of all damages, claims, losses and expenses (including,
without limitation, reasonable attorneys' fees and disbursements) reasonably
incurred by the Purchaser and SkyLynx (all amounts for which the Seller and
Members shall be liable shall hereinafter be referred to as the "Damages")
arising out of: (i) any misrepresentation or breach of any warranty made by
the Seller, Members, or Xxxxxx pursuant to the provisions of this Agreement or
in any certificate or other document furnished by the Seller and Members and
Xxxxxx pursuant to this Agreement; and (ii) the nonperformance or breach of
any covenant, agreement or obligation of the Seller, Members, or Xxxxxx
contained in this Agreement which has not been waived by the Purchaser and
SkyLynx, and (iii) any Excluded Liability.
(b) Subject to Section 3.3 hereof, the Seller and Members, jointly
and severally, shall be obligated to indemnify the Indemnified Party pursuant
to this Section 6.1 only with respect to claims for Damages as to which the
Indemnified Party shall have given written notice to the Seller and Members on
or before the close of business on the day following the first (1st)
anniversary of the Closing Date. Notwithstanding the foregoing, the Seller
and Members shall be obligated to indemnify the Indemnified Party with respect
to claims for Damages arising out of any misrepresentation or breach of
warranty respectively made by the Seller relating to taxes as to which the
Indemnified Party shall have given notice on or before the close of business
on the day following the later of: (i) the expiration date of the statute of
limitations applicable to any indemnified federal, state, foreign or local tax
liability; or (ii) the final determination of any such tax liability,
including the final administrative and/or judicial determination thereof.
(c) Notwithstanding the indemnification provided pursuant to
Subsection 6.1(a) above, no amount shall be payable by the Seller or Members
in indemnification hereunder or under any other provision of this Agreement
unless the aggregate amount of such Damages in respect of which the Seller or
Members would be liable, but for operation and application of the provisions
of this Section, exceeds Five Thousand Dollars ($5,000) for any single
incident or, on a cumulative basis, Ten Thousand Dollars ($10,000), and then
only to the extent of such excess.
(d) In any case where the Seller or any Member has indemnified the
Indemnified Party for any Damages and the Indemnified Party recovers from
third parties all or any part of the amount so indemnified by the Seller and
Members, the Indemnified Party shall promptly pay over to the Seller and
Members, as the case may be, the amount so recovered, less its associated
expenses.
(e) Xxxxxx hereby agrees to perform obligations of RhinoTrax in
connection with this Article VI, in the event that:
(i) a petition or action for relief shall be filed by or
against RhinoTrax under any other law relating to bankruptcy, insolvency,
reorganization, moratorium, creditor composition, arrangement or other relief
for debtors;
(ii) a receiver, trustee, custodian or liquidator shall be
appointed of or for any part of the assets or property of RhinoTrax;
(iii) RhinoTrax shall make a general assignment for the
benefit of creditors; or
(iv) RhinoTrax shall cease to make payments in respect of
amounts that it owes to its creditors generally.
(f) In connection with any claim by Purchaser against funds
deposited in the Holdback Account or the Goodnet Retention Account, the
Purchaser agrees to notify Seller in writing of its intent to transfer to
itself any such funds, and the basis for such intent. Seller shall then have
a period of two (2) weeks to respond in writing as to the matter, including
whether it disagrees in whole or in part with the Purchaser's analysis, and,
if so, the basis for such disagreement. Should the Purchaser and the Seller
not reach agreement on the proposed action within one (1) additional week
following the date that Seller's reply was due, the matter shall be referred
to the CEO of the Purchaser and to Xxxxxx. Should they not reach agreement
within two (2) weeks of such referral, the Purchaser may take the contemplated
action, while the Seller shall retain its right to challenge such action.
6.2 CLAIMS AGAINST THE INDEMNIFIED PARTY. With respect to claims or
demands by third parties, whenever the Indemnified Party shall have received
notice that such a claim or demand has been asserted or threatened which, if
valid, would be subject to indemnification under Section 6.1 hereof, the
Indemnified Party shall, as soon as reasonably possible, and in any event
within thirty (30) days of receipt of such notice, notify the Seller and
Members of such claim or demand and of all relevant facts within its knowledge
which relate thereto. The Seller and Members shall then have the right at
their own expense to undertake the defense of any such claims or demands
utilizing counsel selected by the Seller and Members approved by the Purchaser
and SkyLynx, which approval shall not be unreasonably withheld. In the event
that the Seller should fail to give notice of the intention to undertake the
defense of any such claim or demand within sixty (60) days after receiving
notice that it has been asserted or threatened, the Indemnified Party shall
have the right to satisfy and discharge the same by payment, compromise or
otherwise and shall give written notice of any such payment, compromise or
settlement to the Seller and Members.
6.3 RIGHT OF OFFSET.
[INTENTIONALLY OMITTED].
6.4 INDEMNIFICATION BY PURCHASER AND SKYLYNX.
(a) Subject to Section 3.3 hereof, the Purchaser and SkyLynx hereby
agree to indemnify and hold harmless the Seller, Members and Xxxxxx from and
against and in respect of all damages, claims, losses and expenses (including
without limitation, attorneys' fees and disbursements) reasonably incurred by
the Seller, Members or Xxxxxx with respect thereto (all such amounts may
hereinafter be referred to as "Seller Damages") arising out of: (i) any
misrepresentation or breach of any warranty made by the Purchaser or SkyLynx
pursuant to the provisions of this Agreement or in any certificate or other
document furnished by the Purchaser or SkyLynx pursuant to this Agreement;
(ii) the nonperformance or breach of any covenant, agreement or obligation of
the Purchaser or SkyLynx which has not been waived by the Seller or Members;
and (iii) any Assumed Liability.
(b) Subject to Section 3.3 hereof, the Purchaser and SkyLynx shall
be only be obligated to indemnify the Seller, Members and Xxxxxx with respect
to claims for Seller Damages arising out of Section 6.4(a)(i) as to which the
Seller, Members or Xxxxxx shall have given written notice to the Purchaser and
SkyLynx on or before the close of business on the day following the first
anniversary of the Closing Date. Such limitation shall not apply to Section
6.4(a)(ii) or (iii).
(c) Notwithstanding the indemnification provided pursuant to
Section 6.4(a) above, no amount shall be payable by the Purchaser or SkyLynx
in indemnification hereunder or under any other provision of this Agreement
unless the aggregate amount of Seller Damages in respect of which the
Purchaser or SkyLynx would be liable, but for operation and application of the
provisions of this Subsection, exceeds Five Thousand Dollars ($5,000) for any
single incident or, on a cumulative basis, Ten Thousand Dollars ($10,000), and
then only to the extent of such excess; provided, however, this clause 6.4(c)
shall not limit or reduce the obligations hereunder with respect to Section
6.4(a)(ii) or (iii).
(d) In any case where the Purchaser or SkyLynx has indemnified the
Seller, Members or Xxxxxx for any Seller Damages and the Seller, Members or
Xxxxxx recovers from third parties all or any part of the amount so
indemnified by the Purchaser or SkyLynx, the Seller, Members or Xxxxxx, as
applicable, shall promptly reimburse to the Purchaser the amount paid by the
Purchaser or SkyLynx to the Seller, Members or Xxxxxx up to the amount so
recovered, less its associated expenses.
6.5 CLAIMS AGAINST THE SELLER AND MEMBERS. With respect to claims or
demands by third parties, whenever the Seller, Members or Xxxxxx shall have
received notice that such a claim or demand has been asserted or threatened,
which, if valid, would be subject to indemnification under Section 6.4 hereof,
the Seller, Members or Xxxxxx, as applicable, shall as soon as reasonably
possible and in any event within thirty (30) days of receipt of such notice,
notify the Purchaser and SkyLynx of such claim or demand and of all relevant
facts within its knowledge which relate thereto. The Purchaser and SkyLynx
shall have the right at its expense to undertake the defense of any such claim
or demand utilizing counsel selected by the Purchaser and SkyLynx and approved
by the Seller and Members , which approval shall not be unreasonably withheld.
In the event that the Purchaser or SkyLynx should fail to give notice of its
intention to undertake the defense of any such claim or demand within sixty
(60) days after receiving notice that it has been asserted or threatened, the
Seller, Members and Xxxxxx shall have the right to satisfy and discharge the
same by payment, compromise or otherwise and shall give written notice of any
such payment, compromise or settlement to the Purchaser or SkyLynx.
6.6 DISCLOSURE GENERALLY. If and to the extent any information required
to be furnished in any schedule is contained in this Agreement or in any
schedule attached hereto, such information shall be deemed to be included in
all schedules in which the information is required to be included to the
extent that it is cross-referenced. The inclusion of any information in any
schedule attached hereto shall not be deemed to be an admission or
acknowledgment by the Seller, Members or Xxxxxx, in and of itself, that such
information is material to or outside the ordinary course of the business of
the Seller.
6.7 ASSUMPTION OF SPECIFIC LIABILITIES. Purchaser agrees to perform all
of the Sellers' contractual obligations related to the Purchased Assets and
the Internet Services Business to the extent, and only to the extent, such
obligations have been expressly assumed by Purchaser hereunder and that they
first mature and are required to be performed by Purchaser after the close of
business on the Closing Date. Nothing herein shall affect the obligations of
the Purchaser set forth in Section 2.3.
ARTICLE VII
TERMINATION AND REMEDIES FOR BREACH OF THIS AGREEMENT
7.1 TERMINATION BY MUTUAL AGREEMENT. This Agreement may be terminated
at any time by mutual consent of the parties hereto, provided that such
consent to terminate is manifested in writing and is signed by each of the
parties hereto.
7.2 TERMINATION FOR FAILURE TO CLOSE. Unless extended by mutual written
consent of the parties hereto, this Agreement may be terminated by any party
hereto if the Closing shall not have occurred by April 30, 1999, provided
that, the right to terminate this Agreement pursuant to this Section 7.2 shall
not be available to any party whose failure to fulfill any of its obligations
hereunder has been the cause of or resulted in the failure to consummate the
transactions contemplated hereby by the foregoing date.
7.3 TERMINATION BY OPERATION OF LAW. This Agreement may be terminated
by any party hereto if there shall be any statute, rule or regulation that
renders consummation of the transactions contemplated hereby illegal or
otherwise prohibited, or a court of competent jurisdiction or any government
(or governmental authority) shall have issued an order, decree or ruling, or
has taken any other action restraining, enjoining or otherwise prohibiting the
consummation of such transactions and such order, decree, ruling or other
action shall have become final and nonappealable.
7.4 TERMINATION FOR FAILURE TO PERFORM COVENANTS OR CONDITIONS. This
Agreement may be terminated prior to the Closing Date:
(a) by the Purchaser or SkyLynx if: (i) any of the representations
and warranties made in this Agreement by the Seller or Members or Xxxxxx shall
not be materially true and correct when made or at any time prior to
consummation of the transactions contemplated hereby as if made at and as of
such time; (ii) any of the conditions set forth in Section 5.1 hereof have not
been fulfilled by the Closing Date; (iii) the Seller or Members or Xxxxxx
shall have failed to observe or perform any of their material respective
obligations under this Agreement; or (iv) as otherwise set forth herein; or
(b) by the Seller if: (i) any of the representations and
warranties of the Purchaser or SkyLynx shall not be materially true and
correct when made or at any time prior to consummation of the transactions
contemplated hereby as if made at and as of such time; (ii) any of the
conditions set forth in Section 5.2 hereof have not been fulfilled by the
Closing Date; (iii) the Purchaser or SkyLynx shall have failed to observe or
perform any of their material respective obligations under this Agreement; or
(iv) as otherwise set forth herein.
7.5 EFFECT OF TERMINATION OR DEFAULT; REMEDIES. In the event of
termination of this Agreement as set forth above, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto, provided that such party is a Non-Defaulting Party (as defined in
Section 7.6 below). The foregoing shall not relieve any party from liability
for damages actually incurred as a result of such party's breach of any term
or provision of this Agreement.
7.6 REMEDIES; SPECIFIC PERFORMANCE. In the event that any party shall
fail or refuse to consummate the transactions contemplated by this Agreement
or if any default under or breach of any representation, warranty, covenant or
condition of this Agreement on the part of any party (the "Defaulting Party")
shall have occurred that results in the failure to consummate the transactions
contemplated hereby, then in addition to the other remedies provided herein,
the non-defaulting party (the "Non-Defaulting Party") shall be entitled to
seek and obtain money damages from the Defaulting Party, or may seek to obtain
an order of specific performance thereof against the Defaulting Party from a
court of competent jurisdiction, provided that the Non-Defaulting Party
seeking such protection must file its request with such court within
forty-five (45) days after it becomes aware of the Defaulting Party's failure,
refusal, default or breach. In addition, the Non-Defaulting Party shall be
entitled to obtain from the Defaulting Party court costs and reasonable
attorneys' fees incurred in connection with or in pursuit of enforcing the
rights and remedies provided hereunder.
ARTICLE VIII
MISCELLANEOUS
8.1 FEES AND EXPENSES. Except as otherwise provided in Section 2.2 or
elsewhere in this Agreement, each party hereto will bear its own legal,
accounting, and other fees and expenses incident to the transactions
contemplated herein.
8.2 MODIFICATION, AMENDMENTS AND WAIVER. The parties hereto may amend,
modify or otherwise waive any provision of this Agreement by mutual consent,
provided that such consent and any amendment, modification or waiver is in
writing and is signed by each of the parties hereto.
8.3 ASSIGNMENT. Neither the Seller, Members, Xxxxxx, the Purchaser or
SkyLynx shall have the authority to assign its respective rights or
obligations under this Agreement without the prior written consent of the
other parties hereto, except that the Purchaser or SkyLynx may assign all or
any portion of its respective rights hereunder as security, without the prior
written consent of the Seller or Members or Xxxxxx, or to any lender, bank,
financial institution or other entity providing financing to the Purchaser or
SkyLynx in connection with consummation of the transactions contemplated
hereby and the Seller shall execute such documents as are necessary in order
to effectuate such assignments.
8.4 BURDEN AND BENEFIT. This Agreement shall be binding upon and, to
the extent permitted in this Agreement, shall inure to the benefit of the
parties and their respective successors and permitted assigns. In the event
of a default by the Seller of any of its obligations hereunder, the sole and
exclusive recourse and remedy of the Purchaser shall be against the Seller and
Members and Xxxxxx and any of the Assets; under no circumstances shall any,
officer, director, stockholder or affiliate of the Seller be liable in law or
equity for any obligations of the Seller or Members. In the event of a
default by the Purchaser or SkyLynx of any of their obligations hereunder, the
sole and exclusive recourse and remedy of the Seller or Members or Xxxxxx or
shall be against the Purchaser or SkyLynx and their respective assets; under
no circumstances shall any officer, director, stockholder or affiliate of the
Purchaser be liable in law or equity for any obligations of the Purchaser or
SkyLynx hereunder.
8.5 BROKERS. The Seller and Members and Xxxxxx represent and warrant to
the Purchaser and SkyLynx that, other than the fee payable to Xxxxx Xxxxxxx
for which the Seller is solely responsible, no broker or finder is entitled to
any brokerage or finder's fee or other commission or fee based upon
arrangements made by or on behalf of the Seller and Members and Xxxxxx or any
other person in connection with this Agreement or any of the transactions
contemplated hereby. The Purchaser and SkyLynx represent and warrant to the
Seller and Members that, broker or finder is entitled to any brokerage or
finder's fee or other commission or fee based upon arrangements made by or on
behalf of the Purchaser or SkyLynx in connection with this Agreement or any of
the transactions contemplated hereby.
8.6 ENTIRE AGREEMENT. This Agreement and the exhibits, lists and other
documents referred to herein contain the entire agreement among the parties
hereto with respect to the transactions contemplated hereby and supersede all
prior agreements with respect thereto, whether written or oral.
8.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard, however,
to such jurisdiction's principles of conflicts of laws.
8.8 NOTICES. Any notice, request, instruction or other document to be
given hereunder by any party hereto shall be in writing and delivered
personally or sent by registered or certified mail (return receipt requested),
postage prepaid, with a copy simultaneously sent via facsimile, addressed as
follows:
If to the Seller: c/o RhinoTrax, Inc.
000 X. Xxxx Xxx.
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxx
Facsimile: (000) 000-0000
with a copy to (which copy shall not constitute notice):
Young, Vogl, Harlick, Wilson & Xxxxxxx LLP
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx
Facsimile: (000) 000-0000
If to other members, at the applicable address set forth on Schedule
8.8
If to Purchaser: SkyLynx Communications of California, Inc.
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: President
Facsimile: (000) 000-0000
with a copy to: Xxxxxx X. Xxxxxx, Xx., Esq.
XxXxxxxxx, Will & Xxxxx
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
If to SkyLynx: SkyLynx Communications, Inc.
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: President
Facsimile: (000) 000-0000
With a copy to: Xxxxxx X. Xxxxxx, Xx., Esq.
XxXxxxxxx, Will & Xxxxx
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
or to such other persons or addresses as may be designated in writing by the
party to receive such notice. If mailed as aforesaid, the day of mailing or
transmission shall be the date any such notice shall be deemed to have been
delivered.
8.9 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which shall
constitute but one agreement.
8.10 RIGHTS CUMULATIVE. All rights, powers and privileges conferred
hereunder upon the parties, unless otherwise provided, shall be cumulative and
shall not be restricted to those given by law. Failure to exercise any power
given any party hereunder or to insist upon strict compliance by any other
party shall not constitute a waiver of any party's right to demand exact
compliance with any of the terms or provisions hereof.
8.11 SEVERABILITY OF PROVISIONS. The provisions of this Agreement shall
be considered severable in the event that any of such provisions are held by a
court of competent jurisdiction to be invalid, void or otherwise
unenforceable. Such invalid, void or otherwise unenforceable provisions shall
be automatically replaced by other provisions which are valid and enforceable
and which are as similar as possible in term and intent to those provisions
deemed to be invalid, void or otherwise unenforceable. Notwithstanding the
foregoing, the remaining provisions hereof shall remain enforceable to the
fullest extent permitted by law.
8.12 HEADINGS. The headings set forth in the articles and sections of
this Agreement and in the exhibits and the schedules to this Agreement are
inserted for convenience of reference only and shall not be deemed to
constitute a part hereof.
8.13 SURVIVAL. The provisions of Articles VI and VII and Sections 8.1
and 8.8, shall survive termination of this Agreement for such amount of time
necessary to effect the operative provisions contained therein.
8.14 GUARANTEE. SkyLynx unconditionally assumes, confirms and guarantees
all of the obligations of Purchaser hereunder, subject to all of the defenses
of Purchaser in connection herewith.
8.15 ANNOUNCEMENTS. It is understood that the common shares of SkyLynx
are publicly traded. Therefore, SkyLynx will be required to make timely and
appropriate public announcements of this transaction, and the form and
substance of any such announcement shall, before dissemination, be subject to
the reasonable approval of each party (subject to the ability of SkyLynx to
satisfy its legal disclosure obligations). No other announcements except as
may be required in the opinion of legal counsel to comply with applicable
disclosure laws shall be made of the transaction by any party without the
express written approval of the other party; provided, however, that if Seller
shall withhold its consent to an announcement which in the opinion of legal
counsel to SkyLynx is required to comply with applicable securities laws,
SkyLynx may make such announcement without the consent of Seller. Seller
acknowledges that it may obtain non-public information concerning SkyLynx.
Seller and its control persons agree not to disclose such information or act
upon same, including, without limitation, effect transactions in the
securities of SkyLynx, in violation of the applicable securities laws and
regulations.
8.16 FURTHER ASSURANCES. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with
all of the terms of this Agreement and the transactions contemplated hereby
and to satisfy the conditions set forth in Articles II and V. Seller, the
Members, and Xxxxxx shall cause Seller to comply with all of the covenants of
Seller under this Agreement. The Seller, the Members, and Xxxxxx covenant and
agree to deliver to Purchaser at the Closing the certificates, opinions and
other documents required to be delivered to Purchaser pursuant to Article V,
and Purchaser and SkyLynx covenant and agree to deliver to the Seller the
certificates and other documents required to be delivered to the Seller
pursuant to Article V.
ARTICLE IX
DEFINED TERMS
9.1 DEFINED TERMS. The following terms shall have the meanings ascribed
to them in the following sections hereof, unless the context indicates
otherwise:
"Accounts Receivable" Section 1.1(d)
"Additional Deposit" Section 1.6
"Affiliated Group" Section 3.1(o)
"Agreement" Preamble
"Articles of Organization" Section 3.1(j)(i)
"Assumed Contracts" Section 1.1(e)
"Assumed Liabilities" Section 1.3(c)
"Balance Sheets" Section 3.1(c)
"Benefit Plans" Section 3.1(r)
"Business Names" Section 1.1(j)
"Closing" Section 2.1
"Closing Date" Section 2.1
"Code" Section 3.1(r)
"Consultants" Section 4.1(i)
"Customer Accounts" Section 1.1(d)
"Current Balance Sheet" Section 1.1(q)
"Damages" Section 6.1(a)
"Defaulting Party" Section 7.6
"Employee Benefit Plans" Section 3.1(r)
"Employees" Section 3.1(r)
"Equipment" Section 1.1(a)
"ERISA" Section 3.1(r)
"Excluded Assets" Section 1.2
"Excluded Liabilities" Section 1.3
"Financial Statements" Section 3.1(c)
"Goodnet Retention Amount" Section 1.4(e)
"Holdback Amount" Section 1.4(f)
"Holdback Account" Section 1.4(f)
"Holdback Termination Date" Section 1.5
"Initial Deposit" Section 1.4(a)
"Indemnified Party" Section 6.1(a)
"Internet Services Business" Preamble
"LLC" Section 3.1(a)
"LOI" Section 1.4(a)
"Members" Preamble
"Non-Defaulting Party" Section 7.6
"Parts Inventory" Section 1.1(f)
"Permits" Section 3.1(s)
"PBGC" Section 3.1(r)
"Pre-Closing Tax Period" Section 3.1(o)
"Purchase Price" Section 1.4
"Purchased Assets" Preamble. See also Section 1.1
"Purchaser" Preamble
"Real Property" Section 1.1(b)
"Related Documents" Section 1.1(d)
"Release Date" Section 1.5
"Retirement Plan" Section 3.1(r)
"RhinoTrax" Preamble
"RhinoTrax Leases" Section 1.1(p)
"Seller" Preamble
"Seller Damages" Section 6.4(a)
"SkyLynx Preamble
"tax" Section 3.1(o)
"taxes" Section 3.1(o)
"Xxxxxx" Preamble and Section 5.1(i)
"Tax Returns" Section 3.1(o)
"Xxxxx" Preamble
IN WITNESS WHEREOF, the parties hereto, by their duly authorized
officers, have caused this Agreement to be executed and delivered on the date
and year first above written.
ATTEST: SKYLYNX COMMUNICATIONS, INC.
By:
-------------------------------- --------------------------------
Xxxxx Xxxxxx, Chief Financial Officer Xxxxxxx X. Xxxxxxx, President
ATTEST: SKYLYNX COMMUNICATIONS
OF CALIFORNIA, INC.
By:
-------------------------------- --------------------------------
Xxxxx Xxxxxx, Chief Financial Officer Xxxxxxx X. Xxxxxxx, President
NET ASSET, L.L.C.
By:
--------------------------------
Xxxxxx Xxxxxx, Manager
RHINOTRAX, INC.
By:
--------------------------------
Xxxxxx Xxxxxx, President
--------------------------------------
Xxxxx X. Xxxxx
--------------------------------------
Xxxxx X. Xxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxx X. Xxxx
--------------------------------------
Xxxxxx Xxxxxx
EXHIBIT 5.1(i)
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT (this "Agreement") is entered into as of
April 23, 1999 by and between SkyLynx Communications of California, Inc., a
Delaware corporation ("Purchaser"), SkyLynx Communications, Inc., a Colorado
corporation ("SkyLynx"), RhinoTrax, Inc. ("RhinoTrax"), and Xxxxxx Xxxxxx
("Xxxxxx"). In consideration of that certain Asset Purchase Agreement by and
among Net Asset, LLC, a California limited liability company, SkyLynx,
Purchaser, and certain other parties, of even date herewith, and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. NON-COMPETITION. During the period commencing on the Closing Date
and for two (2) years thereafter (the "Non-Compete Period"):
(a) RhinoTrax and Xxxxxx shall not, without the prior written
consent of the Purchaser, directly or indirectly as an employee, officer or
director or as an investor (except for investments of less than 5% of the
securities of a corporation subject to the reporting requirements of Section
13 or Section 15(d) of the Securities Exchange Act of 1934, as amended),
compete with the Purchaser in the California counties of Fresno, Tulare, Xxxx,
Kings, or Merced (the "Territory") in any of the businesses set forth below:
(i) Internet Access. Providing Internet access to customers,
except as a commissioned agent pursuant to an agreement with Purchaser.
(ii) Web Development. The business of developing, hosting, co-
locating individual or corporate imaging and information websites, or
improving the look and feel of such websites; provided, however, nothing
herein shall prohibit the undersigned from developing, providing, installing
and supporting specialized applications which improve, enhance, add
functionality to, or work with web sites.
(b) The undersigned will not induce any employee or independent
contractor of SkyLynx or Purchaser to leave the employment or service by
SkyLynx or Purchaser or hire any such employee or independent contractor
(unless the board of directors of SkyLynx shall have authorized such
employment and SkyLynx shall have consented thereto in writing).
(c) Notwithstanding any other provision in this Agreement to the
contrary, Xxxxxx may continue to own, operate and control RhinoTrax, Inc., dba
OneWorldConnect and its affiliates in the manner and in the businesses it
currently operates (namely, as a wireless communications store, selling
pagers, PCS telephones, other wireless communications devices, and associated
services, pre-paid calling cards, and non-internet Pacific Xxxx services;
however, RhinoTrax intends to sell or transfer its rights to serve the dial-up
customers that it currently has), and to create and operate an on-line
storefront for such business, for the purpose of marketing goods such as
pagers and PCS telephones on the internet.
2. REASONABLENESS OF TERMS. The parties hereto specifically agree that
the terms of this Agreement are reasonable, fair, and appropriate, and have
been fully negotiated by the parties on an equal basis as to term and scope.
3. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard, however,
to such jurisdiction's principles of conflicts of laws.
4. RIGHTS CUMULATIVE. All rights, powers and privileges conferred
hereunder upon the parties, unless otherwise provided, shall be cumulative and
shall not be restricted to those given by law. Failure to exercise any power
given any party hereunder or to insist upon strict compliance by any other
party shall not constitute a waiver of any party's right to demand exact
compliance with any of the terms or provisions hereof.
5. SEVERABILITY OF PROVISIONS. The provisions of this Agreement shall
be considered severable in the event that any of such provisions are held by a
court of competent jurisdiction to be invalid, void or otherwise
unenforceable. Such invalid, void or otherwise unenforceable provisions shall
be automatically replaced by other provisions which are valid and enforceable
and which are as similar as possible in term and intent to those provisions
deemed to be invalid, void or otherwise unenforceable. Notwithstanding the
foregoing, the remaining provisions hereof shall remain enforceable to the
fullest extent permitted by law.
6. HEADINGS. The headings set forth in the articles and sections of
this Agreement and in the exhibits and the schedules to this Agreement are
inserted for convenience of reference only and shall not be deemed to
constitute a part hereof.
IN WITNESS WHEREOF, the parties hereto, by their duly authorized
officers, have executed this Agreement as of the date first set forth herein.
SKYLYNX COMMUNICATIONS, INC.
By:
--------------------------------
Xxxxxxx Xxxxxxx, President
SKYLYNX COMMUNICATIONS OF
CALIFORNIA, INC.
By:
--------------------------------
Xxxxxxx Xxxxxxx, President
RHINOTRAX, INC.
By:
--------------------------------
Xxxxxx Xxxxxx, President
-------------------------------------
Xxxxxx Xxxxxx
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT (this "Agreement") is entered into as of
April 23, 1999 by and between SkyLynx Communications of California, Inc., a
Delaware corporation ("Purchaser"), SkyLynx Communications, Inc., a Colorado
corporation ("SkyLynx"), RhinoTrax, Inc. ("RhinoTrax"), and Xxxxxxxx X. Xxxxxx
("Xxxxxx"). In consideration of that certain Asset Purchase Agreement by and
among Net Asset, LLC, a California limited liability company, SkyLynx,
Purchaser, and certain other parties, of even date herewith, and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. NON-COMPETITION. During the period commencing on the Closing Date
and for two (2) years thereafter (the "Non-Compete Period"):
(a) RhinoTrax and Xxxxxx shall not, without the prior written
consent of the Purchaser, directly or indirectly as an employee, officer or
director or as an investor (except for investments of less than 5% of the
securities of a corporation subject to the reporting requirements of Section
13 or Section 15(d) of the Securities Exchange Act of 1934, as amended),
compete with the Purchaser in the California counties of Fresno, Tulare, Xxxx,
Kings, or Merced (the "Territory") in any of the businesses set forth below:
(i) Internet Access. Providing Internet access to customers,
except as a commissioned agent pursuant to an agreement with Purchaser.
ii) Web Development. The business of developing, hosting, co-
locating individual or corporate imaging and information websites, or
improving the look and feel of such websites; provided, however, nothing
herein shall prohibit the undersigned from developing, providing, installing
and supporting specialized applications which improve, enhance, add
functionality to, or work with web sites.
(b) The undersigned will not induce any employee or independent
contractor of SkyLynx or Purchaser to leave the employment or service by
SkyLynx or Purchaser or hire any such employee or independent contractor
(unless the board of directors of SkyLynx shall have authorized such
employment and SkyLynx shall have consented thereto in writing).
(c) Notwithstanding any other provision in this Agreement to the
contrary, Xxxxxx may continue to own, operate and control RhinoTrax, Inc., dba
OneWorldConnect and its affiliates in the manner and in the businesses it
currently operates (namely, as a wireless communications store, selling
pagers, PCS telephones, other wireless communications devices, and associated
services, pre-paid calling cards, and non-internet Pacific Xxxx services;
however, RhinoTrax intends to sell or transfer its rights to serve the dial-up
customers that it currently has), and to create and operate an on-line
storefront for such business, for the purpose of marketing goods such as
pagers and PCS telephones on the internet.
2. REASONABLENESS OF TERMS. The parties hereto specifically agree that
the terms of this Agreement are reasonable, fair, and appropriate, and have
been fully negotiated by the parties on an equal basis as to term and scope.
3. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard, however,
to such jurisdiction's principles of conflicts of laws.
4. RIGHTS CUMULATIVE. All rights, powers and privileges conferred
hereunder upon the parties, unless otherwise provided, shall be cumulative and
shall not be restricted to those given by law. Failure to exercise any power
given any party hereunder or to insist upon strict compliance by any other
party shall not constitute a waiver of any party's right to demand exact
compliance with any of the terms or provisions hereof.
5. SEVERABILITY OF PROVISIONS. The provisions of this Agreement shall
be considered severable in the event that any of such provisions are held by a
court of competent jurisdiction to be invalid, void or otherwise
unenforceable. Such invalid, void or otherwise unenforceable provisions shall
be automatically replaced by other provisions which are valid and enforceable
and which are as similar as possible in term and intent to those provisions
deemed to be invalid, void or otherwise unenforceable. Notwithstanding the
foregoing, the remaining provisions hereof shall remain enforceable to the
fullest extent permitted by law.
6. HEADINGS. The headings set forth in the articles and sections of
this Agreement and in the exhibits and the schedules to this Agreement are
inserted for convenience of reference only and shall not be deemed to
constitute a part hereof.
IN WITNESS WHEREOF, the parties hereto, by their duly authorized
officers, have executed this Agreement as of the date first set forth herein.
SKYLYNX COMMUNICATIONS, INC.
By:
--------------------------------
Xxxxxxx Xxxxxxx, President
SKYLYNX COMMUNICATIONS OF
CALIFORNIA, INC.
By:
--------------------------------
Xxxxxxx Xxxxxxx, President
RHINOTRAX, INC.
By:
--------------------------------
Xxxxxxxx X. Xxxxxx, Director
-------------------------------------
Xxxxxxxx X. Xxxxxx
Schedule 4.1(g)
Allocation of Purchase Price
Accounts Receivable $ 70,000
Fixed Assets 830,000
Non-Compete 25,000
Goodwill 250,000
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TOTAL $1,175,000
