FORM 10-KSB
EXHIBIT 10.7
ASSET PURCHASE OF ON-LINE NETWORK ENTERPRISES
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made as of the 22nd day of
January, 1997, by and between Rocky Mountain Internet, Inc. a Delaware
corporation ("Buyer") and VR-1, Inc., a Delaware corporation ("Seller").
RECITALS
Seller is engaged in the business of providing Internet connectivity
services to subscribers under the service ▇▇▇▇ "O.N.E." (the "Business").
Buyer desires to purchase and Seller desires to sell certain of the assets of
Seller used or useful in connection with the Business.
AGREEMENT
In consideration of the above recitals and the mutual agreements stated
in this Agreement, the parties agree as follows:
SECTION 1. DEFINITIONS.
In addition to terms defined elsewhere in this Agreement, the following
capitalized terms, when used in this Agreement, will have the meanings set
forth below:
1.1 AFFILIATE. With respect to any Person, any other Person
controlling, controlled by or under common control with such Person, with
"control" for such purpose meaning the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities or voting
interests, by contract or otherwise.
1.2 ASSETS. All properties, privileges, rights, interests and claims,
real and personal, tangible and intangible, of every type and description
that are described on the attached Schedule 1.2, including Intangibles,
Seller Contracts, and Equipment specified on such schedule, but excluding any
Excluded Assets.
1.3 BUSINESS. The Internet connectivity business conducted by Seller on
the date of this Agreement (but specifically excluding Seller's web site
development and services business and Seller's software development
business).
1.4 BUSINESS DAY. Any day other than Saturday, Sunday or a day on which
banking institutions in Denver, Colorado are required or authorized to be
closed.
1.5 CLOSING. The consummation of the transactions contemplated by this
Agreement, as described in Section 8, the date of which is referred to as the
Closing Date.
1.6 ENCUMBRANCE. Any mortgage, lien, security interest, security
agreement, conditional sale or other title retention agreement, limitation,
pledge, option, charge, assessment,
restrictive agreement, restriction, encumbrance, adverse interest,
restriction on transfer or any exception to or defect in title or other
ownership interest (including reservations, rights of way, possibilities of
reverter, encroachments, easements, rights of entry, restrictive covenants,
leases and licenses).
1.7 ENVIRONMENTAL LAW. Any Legal Requirement relating to pollution or
protection of public health, safety or welfare or the environment, including
those relating to emissions, discharges, releases or threatened releases of
Hazardous Substances into the environment (including ambient air, surface
water, ground water or land), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Substances.
1.8 EQUIPMENT. All free standing kiosks, servers, modems, electronic
devices, test equipment, and other tangible personal property owned or leased
by Seller for use in the Business and listed on Schedule 1.2.
1.9 GAAP. Generally accepted accounting principles as in effect from
time to time in the United States of America.
1.10 GOVERNMENTAL AUTHORITY. (i) The United States of America, (ii) any
state, commonwealth, territory or possession of the United States of America
and any political subdivision thereof (including counties, municipalities and
the like), (iii) any agency, authority or instrumentality of any of the
foregoing, including any court, tribunal, department, bureau, commission or
board.
1.11 GOVERNMENTAL PERMITS. All franchises, approvals, authorizations,
permits, licenses, easements, registrations, qualifications, leases,
variances and similar rights obtained from any Governmental Authority.
1.12 INTANGIBLES. All intangible assets listed on Schedule 1.2 including
subscriber lists, rights to kiosk and dispenser placement and design,
accounts receivable, claims (excluding any claims relating to Excluded
Assets), Intellectual Property, and goodwill, if any, owned or leased by
Seller for use in the Business.
1.13 INTELLECTUAL PROPERTY. All of Seller's rights in and to the
trademarks, copyrights, inventions (whether or not patented or patentable)
and trade secrets listed on Schedule 1.2.
1.14 LEGAL REQUIREMENT. Any statute, ordinance, code, law, rule,
regulation, order or other requirement, standard or procedure enacted, adopted
or, to the knowledge of Seller, applied by any Governmental Authority,
including judicial decisions to which Seller is a party or to the knowledge
of Seller applying common law or interpreting any other Legal Requirement.
1.15 PERSON. Any natural person, corporation, partnership, trust,
unincorporated organization, association, limited liability company,
Governmental Authority or other entity.
1.16 STOCK CONSIDERATION. A number of shares of Common Stock equal to a
quotient, the numerator of which is 250,000 and the denominator of which is
the numerical average of the closing bid price of the Common Stock on the
Nasdaq Smallcap market on each Friday between the date of the Company' s
initial public offering and the Closing.
1.17 SUBSCRIBER. Any subscriber to the Internet access service offered
by the Business, except for any subscriber who (i) is more than 60 days'
delinquent in the payment of any amount in excess of $10 (in the case of
Dial-up Subscribers) or $350 (in the case of Dedicated Subscribers), or (ii)
was solicited during the 90 day period preceding the Closing by extraordinary
promotions or offers of discounts. A "Dial-up Subscriber" is a Subscriber
who receives dial-up Internet access from the Business and a "Dedicated
Subscriber" is a Subscriber who receives a Internet access from the Company
offering higher data transmission rates than available from dial-up access.
1.18 OTHER DEFINITIONS. The following terms are defined in the Sections
indicated:
TERM SECTION
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Action 11.4
Adjustments Report 3.3.1
Assumed Liabilities 4.1
Buyer Damages 11.5
Excluded Assets 4.2
Indemnified Party 11.4
Indemnifying Party 11.4
Noncompetition Payment 3.1
Seller Contracts 5.8
Seller Damages 11.6
Survival Period 11.1
Taking 7.6.2
SECTION 2. SALE OF ASSETS.
2.1 PURCHASE AND SALE OF ASSETS. Subject to the terms and conditions
set forth in this Agreement, at the Closing, Seller will sell to Buyer, and
Buyer will purchase from Seller, all of Seller's rights, titles and interests
in, to and under the Assets specified on SCHEDULE 1.2.
SECTION 3. CONSIDERATION.
3.1.1 CASH CONSIDERATION. Buyer will pay to Seller at the
Closing in immediately available funds total cash consideration of $150,000
(subject to adjustment as provided below). The cash portion of the
consideration will be allocated as follows:
(i) $1,000 (the "Noncompetition Payment") will be paid on the
Closing Date in consideration of Seller's covenants under the Noncompetition
Agreement referred to in Section 7.9; and
(ii) $149,000 (the "Base Cash Consideration") will be paid on
the Closing Date in consideration of the sale of the Assets to Buyer.
3.1.2 STOCK CONSIDERATION. At Closing Buyer shall issue to
Seller a number of shares of the Common Stock of Buyer equal to the Stock
Consideration.
3.1.3 SERVICES AGREEMENT. At Closing, Buyer and Seller shall
enter into the Services Agreement in the form attached hereto as EXHIBIT A.
3.2 ADJUSTMENTS TO BASE CASH CONSIDERATION The Base Cash Consideration
will be adjusted as follows:
3.2.1 Adjustments on a pro rata basis as of the Closing Date
will be made for all prepaid expenses (to the extent such prepayments may
accrue to Buyer's benefit), accrued expenses (including, but not limited to,
personal property taxes), and prepaid income, all as determined in accordance
with GAAP consistently applied, and to reflect the principle that all
expenses and income attributable to the Business for the period prior to the
Closing Date are for the account of Seller, and all expenses and income
attributable to the Business for the period on and after the Closing Date are
for the account of Buyer.
3.2.2 All advance payments to, or funds of third parties on
deposit with, Seller as of the Closing Date, relating to the Business,
including advance payments and deposits by subscribers served by the Business
will be retained by Seller and credited to the account of Buyer.
3.2.3 All deposits relating to the Business that are held by
third parties as of the Closing Date for the account of Seller or as security
for Seller's performance of its obligations (other than with respect to
Excluded Assets and any other deposits the full benefit of which will not be
available to Buyer following the Closing Date), including deposits on leases
and deposits for utilities, will be credited to the account of Seller in
their full amounts and will become the property of Buyer.
3.2.4 There shall be no assignment of or adjustments for
accounts receivable as of the Closing Date. Seller shall continue to collect
accounts receivable for up to 60 days following the Closing and shall retain
payments made for services provided prior to the Closing Date and shall
deliver to Buyer payments made for services provided after the Closing Date.
Any partial payments made by a Subscriber shall be applied pro rata to the
pre-Closing and post-Closing outstanding balances for such Subscriber in
proportion to the relative amounts of such balances. Seller shall not make
any collection efforts other than the sending of invoices in the ordinary
course without the consent of Buyer, which will not be unreasonably withheld.
3.3 DETERMINATION OF ADJUSTMENTS. Adjustments to the Base Purchase
Price will be determined as follows:
3.3.1 At least one day before Closing, Seller will deliver to
Buyer a report (the "Adjustments Report"), showing in detail the
determination of the adjustments referred to in Section 3.2, which are
calculated as of the Closing Date (or as of any other date agreed by the
parties) and any documents substantiating the adjustments proposed in the
Adjustments Report. The Adjustments Report will include a complete list of
Subscribers and a schedule setting forth advance payments and deposits made
to or by Seller, as well as accounts receivable information relating to the
Business (showing sums due and their respective aging as of the Closing
Date). Seller also will furnish to Buyer its billing report for the most
current period as of the Closing Date.
3.4 ALLOCATION OF CONSIDERATION. The consideration payable by Buyer
under this Agreement, excluding the Noncompetition Payment, will be allocated
among the Assets as set forth in a schedule furnished by Buyer to Seller not
later than 180 days after the Closing Date (or April 1 of the year following
the Closing Date if earlier). Buyer and Seller agree to be bound by the
allocation and will not take any position inconsistent with such allocations
and will file all returns and reports with respect to the transactions
contemplated by this Agreement, including all federal, state and local tax
returns, on the basis of such allocations.
SECTION 4. ASSUMED LIABILITIES AND EXCLUDED ASSETS.
4.1 ASSIGNMENT AND ASSUMPTION. Seller will assign, and Buyer will
assume and perform, the Assumed Liabilities, which are defined as: (a)
Seller's obligations to Subscribers for (i) Subscriber deposits held by
Seller as of the Closing Date and which are refundable, in the amount for
which Buyer received credit under Section 3.2, (ii) Subscriber advance
payments held by Seller as of the Closing Date for services to be rendered in
connection with the Business after the Closing Date, in the amount for which
Buyer received credit under Section 3.2 and (iii) the delivery of Internet
connectivity service to Subscribers after the Closing Date; and (b)
obligations accruing and relating to periods after the Closing Date under
Seller Contracts included as part of the Assets. Buyer will not assume or
have any responsibility for any liabilities or obligations of Seller other
than the Assumed Liabilities. In no event will Buyer assume or have any
responsibility for any liabilities or obligations associated with the
Excluded Assets.
4.2 EXCLUDED ASSETS. The Excluded Assets, which will be retained by
Seller, will consist of all assets of Seller except the Assets described on
SCHEDULE 1.2. Without limiting the generality of the foregoing, Excluded
Assets shall include, without limitation, the following: (a) insurance
policies and rights and claims thereunder (except as otherwise provided in
Section 7.6.1); (c) bonds, letters of credit, surety instruments and other
similar items; (d) cash and cash equivalents; (e) Seller's rights under any
agreement governing or evidencing an obligation of Seller for borrowed money;
and (f) Seller's rights under any contract, license, authorization, agreement
or commitment other than those creating or evidencing Assumed Liabilities.
SECTION 5. SELLER'S REPRESENTATIONS AND WARRANTIES.
To induce Buyer to enter into this Agreement, Seller represents and
warrants to Buyer, as of the date of this Agreement and as of the Closing, as
follows:
5.1 ORGANIZATION AND QUALIFICATION. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to own, lease
and use the Assets as they are currently owned, leased and used and to
conduct the Business as it is currently conducted. Seller is duly qualified
or licensed to do business and is in good standing under the laws of each
jurisdiction in which the character of the properties owned, leased or
operated by it or the nature of the activities conducted by it makes such
qualification necessary, except any such jurisdiction where the failure to be
so qualified or licensed and in good standing would not have a material
adverse effect on Seller or on the validity, binding effect or enforceability
of this Agreement.
5.2 AUTHORITY AND VALIDITY. Seller has all requisite corporate power
and authority to execute and deliver, to perform its obligations under, and
to consummate the transactions contemplated by, this Agreement. The
execution and delivery by Seller of, the performance by Seller of its
obligations under, and the consummation by Seller of the transactions
contemplated by, this Agreement have been duly authorized by all requisite
corporate action of Seller. This Agreement has been duly executed and
delivered by Seller and is the valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, except insofar as
enforceability may be affected by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect
affecting creditors' rights generally or by principles governing the
availability of equitable remedies.
5.3 NO BREACH OR VIOLATION. The execution, delivery and performance of
this Agreement by Seller will not: (a) violate any provision of the charter
or bylaws of Seller; (b) violate any Legal Requirement; (c) require any
consent, approval or authorization of, or any filing with or notice to, any
Person; or (d) (i) violate, conflict with or constitute a breach of or
default under, (ii) permit or result in the termination, suspension or
modification of, (iii) result in the acceleration of (or give any Person the
right to accelerate) the performance of Seller under, or (iv) result in the
creation or imposition of any Encumbrance under, any Seller Contract or any
other instrument evidencing any of the Assets or any instrument or other
agreement to which Seller is a party or by which Seller or any of its assets
is bound or affected, except for purposes of this clause (d) such violations,
conflicts, breaches, defaults, terminations, suspensions, modifications, and
accelerations as would not, individually or in the aggregate, have a material
adverse effect on any of the Assets, the Business or Seller.
5.4 ASSETS. Seller has good and marketable title to (or, in the case of
Assets that are leased, valid leasehold interests in) the Assets . The
Assets are free and clear of all Encumbrances of any kind or nature, except
Encumbrances disclosed on SCHEDULE 1.2 which will be removed and released at
or prior to the Closing. Except as set forth on SCHEDULE 1.2, none of the
Equipment is leased by Seller from any other Person. All the Equipment is in
good operating condition and repair, ordinary wear and tear excepted and is
suitable and adequate for continued use in the manner in which it is
presently used.
5.5 COMPLIANCE WITH LAW. The ownership, leasing and use of the Assets
as they are currently owned, leased and used and the conduct of the Business
as it is currently conducted do not violate any Legal Requirement, which
violation, individually or in the
aggregate, would have a material adverse effect on the Business or Seller.
Seller has received no notice claiming a violation by Seller or the Business
of any Legal Requirement applicable to Seller or the Business as it is
currently conducted and to Seller's best knowledge, there is no basis for any
claim that such a violation exists.
5.6 LEGAL PROCEEDINGS. Except as set forth on SCHEDULE 5.6, there is
no judgment or order outstanding, or any action, suit, complaint, proceeding
or investigation by or before any Governmental Authority or any arbitrator
pending, or to Seller's best knowledge, threatened, involving or affecting
all or any part of the Assets.
5.7 CUSTOMERS AND SUPPLIERS. Seller's relations with its customers and
suppliers are good and there are no pending or threatened claims or
controversies with any customer or supplier that is material to the Assets or
the Business except as set forth on SCHEDULE 5.7.
5.8 SELLER CONTRACTS. SCHEDULE 5.8 contains a true and complete list
of all contracts, agreements, arrangements or understandings (the "Seller
Contracts") to which Seller is a party or by which Seller is bound or to
which any of the Assets are subject, other than any which are entered into
with unaffiliated third parties in the ordinary course of business which are
(i) not material to the conduct of the Business, (ii) which are terminable
without payment of premium or penalty at will or upon not more than 30 days'
notice, which impose monetary obligations not in excess of $5,000 and which
impose no material non-monetary obligations. Except as set forth on SCHEDULE
5.8, none of the Seller Contracts listed or described on SCHEDULE 5.8 has
been amended nor has Seller waived any right thereunder. Seller has provided
Buyer with true, complete and correct copies of each of the Seller Contracts
described on SCHEDULE 5.8 that are written and true, complete and correct
written summaries of the Seller Contracts listed or described on SCHEDULE
5.8 that are oral. Except as set forth on SCHEDULE 5.8, (A) Seller has
performed all obligations required to be performed by it to date under the
Seller Contracts, (B) neither Seller nor, to the best of Seller's knowledge,
any other party to any Seller Contract has improperly terminated or is in
breach or default under such Seller Contract, (C) there exists no condition
or event which , after the giving of notice or lapse of time or both, would
constitute any such breach, termination or default, (D) each of the Seller
Contracts is in full force and effect and is a legal, binding and enforceable
obligation of Seller and, to the best of Seller's knowledge, each of the
other parties to the Seller Contracts, and (E) none of the Seller Contracts
is presently being renegotiated, either in whole or in part.
5.9 SUBSCRIBERS. As of the Closing Date, the Business will have no
fewer than 763 Dial-up Subscribers and no fewer than 35 Dedicated Subscribers.
5.10 FINDERS AND BROKERS. Seller has not employed any financial
advisor, broker or finder or incurred any liability for any financial
advisory, brokerage, finder's or similar fee or commission in connection with
the transactions contemplated by this Agreement for which Buyer could be
liable.
5.11 DISCLOSURE. No representation or warranty by Seller in this
Agreement or
in any Schedule or Exhibit to this Agreement, or any statement, list or
certificate furnished or to be furnished by Seller pursuant to this
Agreement, contains or will contain any untrue statement of material fact, or
omits or will omit to state a material fact required to be stated therein or
necessary to make the statements contained therein not misleading in light of
the circumstances in which made.
5.12 SECURITIES ACT. Seller is acquiring the Stock Consideration
for investment only with no view to a distribution thereof. Seller has had
an opportunity to ask questions of senior management of Buyer and has been
provided copies of Buyer's Prospectus dated September 5, 1996, and its
quarterly report on Form 10Q for the period ended September 30, 1996. Buyer
is an accredited investor as that term is defined in Regulation D under the
Securities Act of 1933, as amended (the "1933 Act"). Buyer acknowledges that
the Stock consideration may not be sold or transferred without registration
under the 1933 Act and applicable state law unless an exemption therefrom is
available, and agrees that certificates representing the Stock Consideration
may bear a legend to the foregoing effect.
SECTION 6. BUYER'S REPRESENTATIONS AND WARRANTIES.
To induce Seller to enter into this Agreement, Buyer represents and
warrants to Seller, as of the date of this Agreement and as of the Closing,
as follows:
6.1 ORGANIZATION AND QUALIFICATION. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of Delaware
and has all requisite corporate power and authority to carry on its business
as currently conducted and to own, lease, use and operate its assets. Buyer
is duly qualified or licensed to do business and is in good standing under
the laws of each jurisdiction in which the character of the properties owned,
leased or operated by it or the nature of the activities conducted by it
makes such qualification necessary, except any such jurisdiction where the
failure to be so qualified or licensed and in good standing would not have a
material adverse effect on Buyer or on the validity, binding effect or
enforceability of this Agreement.
6.2 AUTHORITY AND VALIDITY. Buyer has all requisite corporate power and
authority to execute and deliver, to perform its obligations under, and to
consummate the transactions contemplated by, this Agreement. The execution
and delivery by Buyer of, the performance by Buyer of its obligations under,
and the consummation by Buyer of the transactions contemplated by, this
Agreement have been duly authorized by all requisite corporate action of
Buyer, and this Agreement constitutes the valid and binding obligation of
Buyer, enforceable in accordance with its terms, except insofar as
enforceability may be limited or affected by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect affecting creditors' rights generally or by principles governing the
availability of equitable remedies.
6.3 NO BREACH OR VIOLATION. The execution, delivery and performance of
this Agreement by Buyer will not: (a) violate any provision of the charter or
bylaws of Buyer;
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(b) violate any Legal Requirement; (c) require any consent, approval or
authorization of, or any filing with or notice to, any Person; or (d) (i)
violate, conflict with or constitute a breach of or default under (without
regard to requirements of notice, passage of time or elections of any
Person), (ii) permit or result in the termination, suspension, modification
of, (iii) result in the acceleration of (or give any Person the right to
accelerate) the performance of Buyer under, or (iv) result in the creation or
imposition of any Encumbrance under, any instrument or other agreement to
which Buyer is a party or by which Buyer or any of its assets is bound or
affected, except for purposes of this clause (d) such violations, conflicts,
breaches, defaults, terminations, suspensions, modifications and
accelerations as would not, individually or in the aggregate, have a material
adverse effect on Buyer or on the validity, binding effect or enforceability
of this Agreement.
6.4 FINDERS AND BROKERS. Buyer has not employed any financial advisor,
broker or finder or incurred any liability for any financial advisory,
brokerage, finder's or similar fee or commission in connection with the
transactions contemplated by this Agreement for which Seller could be liable.
SECTION 7. ADDITIONAL COVENANTS.
7.1 ACCESS TO PREMISES AND RECORDS. Between the date of execution and
delivery of this Agreement and the Closing Date, Seller will give Buyer and
its representatives full access at reasonable times to all the premises and
books and records of the Business and to all the Assets and will furnish to
Buyer and its representatives all information regarding the Business and the
Assets as Buyer may from time to time reasonably request. Notwithstanding
any investigation that Buyer may conduct of the Business and the Assets,
Buyer may fully rely on Seller's representations, warranties, covenants and
indemnities, which will not be waived or affected by or as a result of such
investigation; provided that Buyer shall promptly notify Seller of any breach
or potential breach of Seller's representations, warranties, covenants or
indemnities of which Buyer has actual knowledge.
7.2 CONTINUITY AND MAINTENANCE OF OPERATIONS; FINANCIAL STATEMENTS.
Except as Buyer may otherwise agree in writing, until the Closing:
7.2.1 Seller will continue to operate the Business in the
ordinary course consistent with past practices and will use commercially
reasonable efforts to preserve any beneficial business relationships with
customers, suppliers and others having business dealings with Seller relating
to the Business. Without limiting the generality of the foregoing, Seller
will maintain the Assets in good condition and repair, will maintain adequate
inventories of spare Equipment consistent with past practice, will maintain
insurance as in effect on the date of this Agreement and will keep all of its
business books, records and files in the ordinary course of business in
accordance with past practices. Seller will not itself, and will not permit
any of its officers, directors, shareholders, agents or employees to, pay any
of Seller's subscriber accounts receivable (other than for their own
residences) prior to the Closing Date. Seller will continue to implement its
procedures for disconnection and discontinuance of service to subscribers
whose
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accounts are delinquent in accordance with those in effect on the date of
this Agreement.
7.2.2 Seller will not, without the prior written consent of
Buyer: (a) change the rate charged for Internet connectivity services; (b)
sell, transfer or assign any of the Assets or permit the creation of any
Encumbrance on any Asset; (c) permit the amendment or cancellation of any of
the Governmental Permits, Seller Contracts or any other contract or agreement
(other than those constituting Excluded Assets) which affects or is
applicable to the Business; (d) enter into any contract or commitment or
incur any indebtedness or other liability or obligation of any kind relating
to the Business involving an expenditure in excess of $1,000; or (e) take or
omit to take any action that would cause Seller to be in breach of any of its
representations or warranties in this Agreement.
7.3 LEASED EQUIPMENT. Except as specified on SCHEDULE 7.3, Seller will
pay the remaining balances on any leases for Equipment and deliver title to
such Equipment free and clear of all Encumbrances (other than Permitted
Encumbrances) to Buyer at the Closing.
7.4 NO SHOPPING. None of Seller, its shareholders or any agent or
representative of any of them will, during the period commencing on the date
of this Agreement and ending with the earlier to occur of the Closing or the
termination of this Agreement, directly or indirectly (a) solicit or initiate
the submission of proposals or offers from any Person for, (b) participate in
any discussions pertaining to or (c) furnish any information to any Person
other than Buyer relating to, any direct or indirect acquisition or purchase
of all or any portion of the Assets.
7.5 NOTIFICATION OF CERTAIN MATTERS. Seller will promptly notify Buyer
of any fact, event, circumstance or action (a) which, if known on the date of
this Agreement, would have been required to be disclosed to Buyer pursuant to
this Agreement or (b) the existence or occurrence of which would cause any of
Seller's representations or warranties under this Agreement not to be correct
and complete.
7.6 RISK OF LOSS; CONDEMNATION.
7.6.1 Seller will bear the risk of any loss or damage to the
Assets resulting from fire, theft or other casualty (except reasonable wear
and tear) at all times prior to the Closing. If any such loss or damage
involves any material portion of the Business, Seller will immediately notify
Buyer of that fact and Buyer, at any time within 10 days after receipt of
such notice, may elect by written notice to Seller either (i) to waive such
defect and proceed toward consummation of the acquisition of the Assets in
accordance with terms of this Agreement or (ii) terminate this Agreement. If
Buyer elects so to terminate this Agreement, Buyer and Seller will be
discharged of any and all obligations hereunder. If Buyer elects to
consummate the transactions contemplated by this Agreement notwithstanding
such loss or damage and does so, there will be no adjustment in the
consideration payable to Seller on account of such loss or damage but all
insurance proceeds payable as a result of the occurrence of the event
resulting in such loss or damage will be delivered by Seller to Buyer, or the
rights to such proceeds will be
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assigned by Seller to Buyer if not yet paid over to Seller, and Seller will
pay to Buyer (or Buyer may withhold from the Base Purchase Price) an amount
equal to the difference between the amount of such insurance proceeds and the
full replacement cost of the damaged or lost Assets.
7.6.2 If, prior to the Closing, any part of or interest in the
Assets is taken or condemned as a result of the exercise of the power of
eminent domain, or if a Governmental Authority having such power informs
Seller or Buyer that it intends to condemn all or any part of the Assets
(such event being called, in either case, a "Taking"), then Buyer may
terminate this Agreement. If Buyer does not elect to terminate this
Agreement, then (a) Buyer will have the sole right, in the name of Seller, if
Buyer so elects, to negotiate for, claim, contest and receive all damages
with respect to the Taking, (b) Seller will be relieved of its obligation to
convey to Buyer the Assets or interests that are the subject of the Taking,
(c) at the Closing Seller will assign to Buyer all of Seller's rights to all
damages payable with respect to such Taking and will pay to Buyer all damages
previously paid to Seller with respect to the Taking and (d) following the
Closing, Seller will give Buyer such further assurances of such rights and
assignment with respect to the taking as Buyer may from time to time
reasonably request.
7.7 TRANSFER TAXES. Seller will be responsible for the payment of any
state or local sales, use, transfer, excise, documentary or license taxes or
fees or any other charge (including filing fees) imposed by any Governmental
Authority with respect to the transfer of any of the Assets pursuant to this
Agreement.
7.8 ADDITIONAL AGREEMENTS. At the Closing, the parties will execute
and deliver:
a) a Services Agreement in the form of EXHIBIT A;
b) a Noncompetition Agreement in the form of EXHIBIT B;
c) a Registration Rights Agreement in the form of EXHIBIT C;
d) a License Agreement in the form of EXHIBIT D;
e) a Domain Name Assignment in the form of EXHIBIT E;
f) an Assignment and Assumption of Contracts in the form of EXHIBIT F;
and
g) a ▇▇▇▇ of Sale in the form of EXHIBIT G.
On the day of the Closing, Seller will deliver to each Subscriber by
first class U.S. mail a letter in the form EXHIBIT H.
7.9 SATISFACTION OF CONDITIONS. Each party will use its best efforts to
satisfy, or to cause to be satisfied, the conditions to the obligations of
the other party to consummate the transactions contemplated by this
Agreement, as set forth in Section 9, provided that Buyer will not be
required to agree to any increase in the amount payable with respect to, or
any modification that makes more burdensome in any material respect, any of
the Assumed Liabilities.
7.10 SECURITIES LAWS. Buyer covenants that it will file the reports
required to be filed by it under all applicable state and federal securities
laws and the rules and regulations adopted thereunder and, at all times will
take such further action as Buyer may reasonably
12
request, all to the extent required from time to time to enable Seller to
sell the shares issued to Seller as Stock Consideration without registration
under the 1933 Act within the limitation of the exemptions provided by (a)
Rule 144 of the 1933 Act, as such rule may be amended from time to time or
(b) any similar rule or regulation hereafter adopted by the SEC. Upon the
request of Seller, Buyer will deliver to Seller a written statement as to
whether it has complied with such information and requirements.
7.11 CONFIDENTIALITY. Neither party will issue any press release or make
any other public announcement regarding this Agreement or the transactions
contemplated hereby without the consent of the other party. Each party will
hold, and will cause its employees, consultants, advisors and agents to hold,
in confidence, the terms of this Agreement and any non-public information
concerning the other party obtained pursuant to this Agreement.
Notwithstanding the preceding, a party may disclose such information to the
extent required by any Legal Requirement (including disclosure requirements
under federal and state securities laws), but the party proposing to disclose
such information will first notify and consult with the other party
concerning the proposed disclosure, to the extent reasonably feasible. Each
party also may disclose such information to employees, consultants, advisors,
agents and actual or potential lenders whose knowledge is necessary to
facilitate the consummation of the transactions contemplated by this
Agreement. Each party's obligation to hold information in confidence will be
satisfied if it exercises the same care with respect to such information as
it would exercise to preserve the confidentiality of its own similar
information, but not less than reasonable care.
7.12 POST-CLOSING TRANSITIONAL MATTERS. Following the Closing, Seller
will provide, without additional cost to Buyer, except as provided below,
such assistance as is reasonably requested by Buyer in order to effect an
orderly transition in the ownership and operation of the Assets. Such
assistance will include commercially reasonable efforts to provide or do the
following:
a) SELLER SERVICES
For up to 60 days following Closing:
i) Seller shall continue to provide its billing services for the
Subscribers;
ii) Seller shall remit to Buyer amounts collected from the
previous billing cycle for access services provided after
Closing, less any pro rata amounts due Seller as provided in
Section 3.2.4;
iii) Seller shall use commercially reasonable efforts to
cooperate with Buyer in attempting to obtain roof access rights
from Seller's landlord in order to install Buyer's antenna;
iv) Seller shall use reasonable efforts to cooperate with Buyer
in attempting to establish point of presence for wireless and
direct
13
connect Subscribers;
v) CIRCUIT SERVICE. Attached hereto as Schedule 7.12 is a list
of all the telephone circuit service contracts used by Seller in
connection with the business (the "Circuits"). Seller shall not
assign the Circuits to Buyer at Closing but shall, for a period
not exceeding 60 days after Closing, act as Buyer's agent with
respect to maintaining the Circuits for Buyer's use. Seller's
obligation to act as agent for Buyer with respect to the Circuits
shall be conditioned on Buyer's prompt reimbursement to Seller of
all costs and expenses of Seller associated therewith and upon a
default by Buyer to promptly reimburse Seller for such costs and
expenses, Seller shall have the right to terminate the Circuits
if Buyer fails to cure such default within five days after Seller
has provided written notice thereof. Buyer shall give Seller
written notice of its intent to terminate the Circuits and shall
thereafter pay Seller for all costs and expense of the Circuits
from January 15, 1997 until termination of the Circuits.
For up to 30 days following Closing:
vi) Seller shall accompany Buyer as reasonably requested by Buyer
to introduce Buyer personnel to Dedicated Subscribers and
participate in on-site visits to Dedicated Subscribers in order
to, inter alia, address issues related to transition of service
and co-located Subscriber equipment. Such services in this
subsection (vi) shall be limited to a total of 40 hours within
such 30 day period. Additional assistance may be provided upon
payment to Seller and mutual agreement of the parties;
vii) Seller shall provide point of presence for the Business. If
Buyer requires additional point of presence services from Seller,
Seller shall provide such services for up to an additional 30
days at the rate of $3,000 per month, pro rated for actual days
elapsed;
viii) Seller shall assist Buyer with troubleshooting access
issues during Seller's normal business hours and at Seller's
principal place of business;
For the time periods specified below:
ix) Seller shall, for the first two days following Closing,
continue to staff Subscriber telephone support lines from 8am to
6pm; for the next eight Business Days, Seller shall staff
Subscriber telephone
14
support lines from 8am to 5pm. Upon the expiration of such
period, Seller's Subscriber telephone support number shall be
permanently forwarded to Buyer and Seller shall provide one of
its employees at Buyer's Colorado Springs support facility for
the next five Business Days from 8am to 5pm.
b) WEB SITE COOPERATION. Buyer and Seller will cooperate to
modify and effect the orderly transition of Seller's Web Site found at
▇▇▇.▇▇▇▇▇▇.▇▇▇ (the "ONE Web Site"). The front page of the Web Site will be
modified to inform users regarding changes in access services and will
provide links to Buyer's home page. Seller will maintain the ONE Web Site
and the links that refer to Seller's web services. Once Seller has
established a new name for its web services business, Seller will move web
services content from the ONE Web Site to a new site and the ONE Web Site
will be maintained for 60 days and will have links to Buyer for access
services and links to Seller for web services.
c) NO EMPLOYEE SOLICITATION. For a period of one year after
Closing, without the prior written consent of Seller, Buyer shall not solicit
or attempt to solicit any employee of Seller to terminate his or her
employment.
SECTION 8. CLOSING.
The Closing will be held on a date acceptable to both Buyer and Seller
that is within 15 days after all conditions to the Closing contained in this
Agreement (other than those based on acts to be performed at the Closing)
have been satisfied or waived.
SECTION 9. CONDITIONS TO CLOSING.
9.1 CONDITIONS TO THE OBLIGATIONS OF BUYER AND SELLER. The obligations
of each party to consummate the transactions contemplated by this Agreement
to take place at the Closing are subject to the satisfaction or waiver, to
the extent permitted by applicable Legal Requirements, at or prior to the
Closing Date of each of the following conditions:
9.1.1 No action, suit or proceeding is pending or threatened by
or before any Governmental Authority and no Legal Requirement has been
enacted, promulgated or issued or deemed applicable to any of the
transactions contemplated by this Agreement by any Governmental Authority,
which would (a) prohibit Buyer's ownership or operation of all or a material
portion of the Business or the Assets, (b) compel Buyer to dispose of or
separate all or a material portion of the Business or the Assets as a result
of any of the transactions contemplated by this Agreement or (c) prevent or
make illegal the consummation of any transactions contemplated by this
Agreement.
9.2 CONDITIONS TO THE OBLIGATIONS OF BUYER. The obligations of Buyer to
consummate the transactions contemplated by this Agreement to take place at the
Closing are subject to the satisfaction or waiver, to the extent permitted by
applicable Legal Requirements, at
15
or prior to the Closing Date, of each of the following conditions:
9.2.1 All representations and warranties of Seller contained in
this Agreement are, if specifically qualified by materiality, true in all
respects and, if not so qualified, are true in all material respects, in each
case on and as of the Closing Date with the same effect as if made on and as
of the Closing Date.
9.2.2 Seller in all material respects has performed and complied
with each obligation, agreement, covenant and condition required by this
Agreement to be performed or complied with by Seller at or prior to the
Closing.
9.2.3 Seller has executed (or caused to be executed) and
delivered to Buyer each of the documents required by SECTION 7.8;
9.2.4 No action, proceeding or investigation has been instituted
or threatened prior to Closing which would, if determined adversely to
Buyer's interest, materially impair the ability of Buyer to realize the
benefits of the transactions contemplated by this Agreement;
9.2.5 Seller has delivered releases, in form satisfactory to
Buyer, of all Encumbrances affecting any of the Assets;
9.2.6 Seller has delivered an Adjustment Report which is
reasonably satisfactory to Buyer; and
9.2.7 Seller has delivered to Buyer: (a) a certificate, dated
the Closing Date, signed by Seller's chief executive officer, stating that to
his knowledge, the conditions set forth in Sections 9.2.1 and 9.2.2 are
satisfied; and (b) such other documents as Buyer may reasonably request in
connection with the transactions contemplated by this Agreement.
9.3 CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of Seller to
consummate the transactions contemplated by this Agreement to take place at
the Closing are subject to the satisfaction or waiver by Seller, to the
extent permitted by applicable law, at or prior to the Closing Date, of each
of the following conditions:
9.3.1 All representations and warranties of Buyer contained in
this Agreement are, if not specifically qualified by materiality, true and
correct in all respects and, if so qualified, are true and correct in all
material respects, in each case on and as of the Closing Date with the same
effect as if made on and as of the Closing Date, except for changes permitted
or contemplated by this Agreement.
9.3.2 Buyer in all material respects has performed and complied
with each obligation, agreement, covenant and condition required by this
Agreement to be performed or complied with by Buyer at or prior to the
Closing.
16
9.3.3 Buyer has executed and delivered to Seller each of the
documents required by Section 7.8.
9.3.4 Buyer has delivered to Seller the following: (a) a
certificate, dated the Closing Date, signed by an executive officer of Buyer,
stating that to his or her knowledge, the conditions set forth in Sections
9.3.1 and 9.3.2, are satisfied; and (b) such other documents as Seller may
reasonably request in connection with the transactions contemplated by this
Agreement.
9.4 WAIVER OF CONDITIONS. Any party may waive in writing any or all of
the conditions to its obligations under this Agreement.
SECTION 10. TERMINATION.
10.1 EVENTS OF TERMINATION. This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned at any time
prior to the Closing:
(a) by the mutual written consent of Buyer and Seller;
(b) by either party, if the transactions contemplated by this
Agreement to take place at the Closing have not been consummated by
_________, 199__, for any reason other than (i) a breach or default by such
party in the performance of any of its obligations under this Agreement or
(ii) the failure of any representation or warranty of such party to be
accurate;
(c) by either party in the event of a material breach or default by
the other party under this Agreement;
(d) by either party if any court or governmental authority of
competent jurisdiction shall have issued an order or judgment or taken any
other action restraining, enjoining, or otherwise prohibiting the
transactions contemplated by this Agreement.
10.2 LIABILITIES IN EVENT OF TERMINATION. The termination of this
Agreement will in no way limit any obligation or liability of any party based
on or arising from a breach or default by such party prior to the date of
termination with respect to any of its representations, warranties, covenants
or agreements contained in this Agreement.
10.3 PROCEDURE UPON TERMINATION. In the event of the termination of this
Agreement by Buyer or Seller pursuant to this Section 10, notice of such
termination will promptly be given by the terminating party to the other.
SECTION 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION.
11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION. The
representations and warranties and indemnification of Seller in this Agreement
and in the
17
documents and instruments to be delivered by Seller pursuant to this
Agreement will survive until the first anniversary of the Closing Date,
except that (a) all such representations and warranties and indemnities with
respect to any federal, state or local taxes will survive until the
expiration of the applicable statute of limitations (including any
extensions) for such federal, state or local taxes, respectively. The
representations and warranties and indemnities of Buyer in this Agreement and
in the documents and instruments to be delivered by Buyer pursuant to this
Agreement will survive until the first anniversary of the Closing Date. The
periods of survival of the representations and warranties prescribed by this
Section 11.1 are referred to as the "Survival Period." The liabilities of
the parties under their respective representations and warranties will expire
as of the expiration of the applicable Survival Period; provided, however,
that such expiration will not include, extend or apply to any representation
or warranty, the breach of which has been asserted by a party in a written
notice to the other party before such expiration or about which a party has
given the other party written notice before such expiration indicating that
facts or conditions exist that, with the passage of time or otherwise, can
reasonably be expected to result in a breach (and describing such potential
breach in reasonable detail). The Survival Period for a party's
indemnification obligations hereunder shall not apply to the extent a claim
for indemnification arises out of the other party's fraudulent or intentional
acts or its gross negligence. The covenants and agreements of the parties in
this Agreement and in the other documents and instruments to be delivered by
Seller or Buyer pursuant to this Agreement will survive the Closing and will
continue in full force and effect without limitation.
11.2 INDEMNIFICATION BY SELLER. Seller will indemnify, defend and hold
harmless Buyer and its shareholders and its and their respective Affiliates,
and the shareholders, directors, officers, employees, agents, successors and
assigns of any of such Persons, from and against:
(a) all losses, damages, liabilities, deficiencies or obligations
of or to Buyer or any such other indemnified Person resulting from or arising
out of (i) any breach of any representation or warranty made by Seller in
this Agreement, (ii) any breach of any covenant, agreement or obligation of
Seller contained in this Agreement, (iii) any act or omission of Seller with
respect to, or any event or circumstance related to, the ownership or
operation of the Assets or the conduct of the Business, which act, omission,
event or circumstance occurred or existed prior to or at the Closing Date,
without regard to whether a claim with respect such matter is asserted before
or after the Closing Date, and (iv) any claim that the transactions
contemplated by this Agreement violate any bulk transfer or fraudulent
conveyance laws of any applicable jurisdiction; and
(b) all claims, actions, suits, proceedings, demands, judgments,
assessments, fines, interest, penalties, costs and expenses (including
settlement costs and reasonable legal, accounting, experts' and other fees,
costs and expenses) incident or relating to or resulting from any of the
foregoing.
11.3 INDEMNIFICATION BY BUYER. Buyer will indemnify, defend and hold
harmless Seller and Seller's shareholders, directors, officers, employees,
agents, successors and assigns,
18
from and against:
(a) all losses, damages, liabilities, deficiencies or obligations
of or to Seller or any such other indemnified Person resulting from or
arising out of (i) any breach of any representation or warranty made by Buyer
in this Agreement, (ii) the breach of any covenant, agreement or obligation
of Buyer contained in this Agreement (iii) any act or omission of Buyer with
respect to, or any event or circumstance related to, the ownership or
operation of the Assets or the conduct of the Business, which act, omission,
event or circumstance occurred or existed (other than as a result of Seller's
actions) subsequent to the Closing Date, or (iv) the failure by Buyer to
perform any of its obligations in respect of the Assumed Liabilities; and
(b) all claims, actions, suits, proceedings, demands, judgments,
assessments, fines, interest, penalties, costs and expenses (including,
without limitation, settlement costs and reasonable legal, accounting,
experts' and other fees, costs and expenses) incident or relating to or
resulting from any of the foregoing.
11.4 THIRD PARTY CLAIMS. Promptly after the receipt by any party of
notice of any claim, action, suit or proceeding by any Person who is not a
party to this Agreement (collectively, an "Action"), which Action is subject
to indemnification under this Agreement, such party (the "Indemnified Party")
will give reasonable written notice to the party from whom indemnification is
claimed (the "Indemnifying Party"). The Indemnified Party will be entitled,
at the sole expense and liability of the Indemnifying Party, to exercise full
control of the defense, compromise or settlement of any such Action unless
the Indemnifying Party, within a reasonable time after the giving of such
notice by the Indemnified Party, (a) admits in writing to the Indemnified
Party the Indemnifying Party's liability to the Indemnified Party for such
Action under the terms of this Section 11, (b) notifies the Indemnified Party
in writing of the Indemnifying Party's intention to assume such defense, (c)
provides evidence reasonably satisfactory to the Indemnified Party of the
Indemnifying Party's ability to pay the amount, if any, for which the
Indemnified Party may be liable as a result of such Action and (d) retains
legal counsel reasonably satisfactory to the Indemnified Party to conduct the
defense of such Action. The other party will cooperate with the party
assuming the defense, compromise or settlement of any such Action in
accordance with this Agreement in any manner that such party reasonably may
request. If the Indemnifying Party so assumes the defense of any such
Action, the Indemnified Party will have the right to employ separate counsel
and to participate in (but not control) the defense, compromise or settlement
of the Action, but the fees and expenses of such counsel will be at the
expense of the Indemnified Party unless (i) the Indemnifying Party has agreed
to pay such fees and expenses, (ii) any relief other than the payment of
money damages is sought against the Indemnified Party or (iii) the
Indemnified Party will have been advised by its counsel that there may be one
or more defenses available to it which are different from or additional to
those available to the Indemnifying Party, and in any such case that portion
of the fees and expenses of such separate counsel that are reasonably related
to matters covered by the indemnity provided in this Section 11 will be paid
by the Indemnifying Party. No Indemnified Party will settle or compromise
any such Action for which it is entitled to indemnification under this
Agreement without the prior written consent of the Indemnifying Party, unless
the Indemnifying Party has
19
failed, after reasonable notice, to undertake control of such Action in the
manner provided in this Section 11.4. No Indemnifying Party will settle or
compromise any such Action (A) in which any relief other than the payment of
money damages is sought against any Indemnified Party or (B) in the case of
any Action relating to the Indemnified Party's liability for any tax, if the
effect of such settlement would be an increase in the liability of the
Indemnified Party for the payment of any tax for any period beginning after
the Closing Date, unless the Indemnified Party consents in writing to such
compromise or settlement.
11.5 LIMITATIONS ON INDEMNIFICATION - SELLER.
(a) Seller will not be liable for indemnification arising solely
under Section 11.2 for (a) any losses, damages, liabilities, deficiencies or
obligations of or to Buyer or any other person entitled to indemnification from
Seller or (b) any claims, actions, suits, proceedings, demands, judgments,
assessments, fines, interest, penalties, costs and expenses (including
settlement costs and reasonable legal, accounting, experts' and other fees,
costs and expenses) incident or relating to or resulting from any of the
foregoing (the items described in clauses (a) and (b) collectively being
referred to for purposes of this Section 11.5 as "Buyer Damages") unless the
amount of Buyer Damages for which Seller would, but for the provisions of this
Section 11.5, be liable exceeds, on an aggregate basis, $5,000, in which case
Seller will be liable for all such Buyer Damages, which will be due and payable
within 15 days after Seller's receipt of a statement therefor.
(b) Except for any Buyer Damages arising out of Seller's fraudulent
or intentional acts or gross negligence, Seller's liability for Buyer Damages
under this Agreement shall be limited to a maximum of $400,000. For any
Buyer's Damages in excess of $150,000, Seller shall have the option to pay
such excess by transfer to Buyer of shares of Common Stock that were issued
to Seller as Stock Consideration hereunder. Seller shall receive a credit
for such shares equal to the closing bid price of Buyer's Common Stock on the
Nasdaq Smallcap market on the last Business Day immediately preceding the
date of payment by transfer of such shares, but in no event will Seller
receive a credit for such shares of less than the price per share established
at Closing to calculate the Stock Consideration. Seller may elect to pay
excess Buyer Damages in cash rather than stock.
11.6 LIMITATIONS ON INDEMNIFICATION - BUYER. Buyer will not be liable
for indemnification arising solely under Section 11.3(a)(i) for (a) any
losses, damages, liabilities, deficiencies or obligations of or to Seller or
any other person entitled to indemnification from Buyer or (b) any claims,
actions, suits, proceedings, demands, judgments, assessments, fines,
interest, penalties, costs and expenses (including settlement costs and
reasonable legal, accounting, experts' and other fees, costs and expenses)
incident or relating to or resulting from any of the foregoing (the items
described in clauses (a) and (b) collectively being referred to for purposes
of this Section 11.6 as "Seller Damages") unless the amount of Seller Damages
for which Buyer would, but for the provisions of this Section 11.6, be liable
exceeds, on an aggregate basis, $5,000, in which case Buyer will be liable
for all such Seller Damages, which will be due and payable within 15 days
after Buyer's receipt of a statement therefor.
20
SECTION 12. MISCELLANEOUS.
12.1 PARTIES OBLIGATED AND BENEFITED. Subject to the limitations set
forth below, this Agreement will be binding upon the parties and their
respective assigns and successors in interest and will inure solely to the
benefit of the parties and their respective assigns and successors in
interest, and no other Person will be entitled to any of the benefits
conferred by this Agreement. Without the prior written consent of the other
parties, no party will assign any of its rights under this Agreement or
delegate any of its duties under this Agreement, provided that Buyer may,
without the consent of any other party, assign or delegate its rights and
obligations under this Agreement to any of its Affiliates, and such assignee
will be substituted for Buyer under this Agreement as though it were the
original party to this Agreement; provided that Buyer shall not be released
from its obligations under this Agreement upon any such assignment.
12.2 NOTICES. Any notice, request, demand, waiver or other communication
required or permitted to be given under this Agreement will be in writing and
will be deemed to have been duly given only if delivered in person or by
first class, prepaid, registered or certified mail, or sent by courier or, if
receipt is confirmed, by telecopier:
To Buyer at:
Rocky Mountain Internet, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ Loud
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (303) 298--940
To Seller at:
VR-1, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Vice President
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
Holme ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
21
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change the address to which notices are required to be sent by
giving notice of such change in the manner provided in this Section 12.2.
All notices will be deemed to have been received on the date of delivery or
on the third Business Day after mailing in accordance with this Section,
except that any notice of a change of address will be effective only upon
actual receipt.
12.3 ATTORNEYS' FEES. Subject to applicable limitations in Sections
11.1, 11.5 and 11.6, in the event of any action or suit based upon or arising
out of any alleged breach by any party of any representation, warranty,
covenant or agreement contained in this Agreement, the prevailing party will
be entitled to recover reasonable attorneys' fees and other costs of such
action or suit from the other party.
12.4 RIGHT TO SPECIFIC PERFORMANCE. Seller acknowledges that the unique
nature of the Assets to be purchased by Buyer pursuant to this Agreement
renders money damages an inadequate remedy for the breach by Seller of its
obligations under this Agreement, and Seller agrees that in the event of such
breach, Buyer will upon proper action instituted by it and relief awarded to
it by a court of competent jurisdiction, be entitled to a decree of specific
performance of this Agreement.
12.5 WAIVER. This Agreement or any of its provisions may not be waived
except in writing. The failure of any party to enforce any right arising
under this Agreement on one or more occasions will not operate as a waiver of
that or any other right on that or any other occasion.
12.6 CAPTIONS. The article and section captions of this Agreement are
for convenience only and do not constitute a part of this Agreement.
12.7 CHOICE OF LAW. THIS AGREEMENT AND THE RIGHTS OF THE PARTIES UNDER
IT WILL BE GOVERNED BY AND CONSTRUED IN ALL RESPECTS IN ACCORDANCE WITH THE
LAWS OF THE STATE OF COLORADO, WITHOUT REGARD TO THE CONFLICTS OF LAWS RULES
OF COLORADO.
12.8 TERMS. Terms used with initial capital letters will have the
meanings specified, applicable to both singular and plural forms, for all
purposes of this Agreement. The word "include" and derivatives of that word
are used in this Agreement in an illustrative sense rather than limiting
sense.
12.9 RIGHTS CUMULATIVE. All rights and remedies of each of the parties
under this Agreement will be cumulative, and the exercise of one or more
rights or remedies will not preclude the exercise of any other right or
remedy available under this Agreement or applicable law, subject to the
limitations under Sections 11.1, 11.5 and 11.6.
22
12.10 FURTHER ACTIONS. Seller and Buyer will execute and deliver to
the other, from time to time at or after the Closing, for no additional
consideration and at no additional cost to the requesting party, such further
assignments, certificates, instruments, records, or other documents,
assurances or things as may be reasonably necessary to give full effect to
this Agreement and to allow each party fully to enjoy and exercise the rights
accorded and acquired by it under this Agreement.
12.11 TIME. Time is of the essence under this Agreement. If the
last day permitted for the giving of any notice or the performance of any act
required or permitted under this Agreement falls on a day which is not a
Business Day, the time for the giving of such notice or the performance of
such act will be extended to the next succeeding Business Day.
12.12 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original.
12.13 ENTIRE AGREEMENT. This Agreement (including the Schedules and
Exhibits referred to in this Agreement, which are incorporated in and
constitute a part of this Agreement) contains the entire agreement of the
parties and supersedes all prior oral or written agreements and
understandings with respect to the subject matter. This Agreement may not be
amended or modified except by a writing signed by the parties.
12.14 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable will be ineffective to the extent of such invalidity
or unenforceability without rendering invalid or unenforceable the remaining
rights of the Person intended to be benefitted by such provision or any other
provisions of this Agreement.
12.15 CONSTRUCTION. This Agreement has been negotiated by Buyer and
Seller and their respective legal counsel, and legal or equitable principles
that might require the construction of this Agreement or any provision of
this Agreement against the party drafting this Agreement will not apply in
any construction or interpretation of this Agreement.
12.16 EXPENSES. Except as otherwise expressly provided in this
Agreement, each party will pay all of its expenses, including attorneys' and
accountants' fees, in connection with the negotiation of this Agreement, the
performance of its obligations and the consummation of the transactions
contemplated by this Agreement.
The parties have executed this Agreement as of the day and year first
above written.
Seller:
VR-1, INC.
23
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: CEO
Buyer:
ROCKY MOUNTAIN INTERNET, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇
Title: CEO
24
Exhibits
Exhibit A Services Agreement Section 3.1.3
Exhibit B Noncompetition Agreement Section 7.8
Exhibit C Registration Rights Agreement Section 7.8
Exhibit D License Agreement Section 7.8
Exhibit E Domain Name Assignment Section 7.8
Exhibit F Assignment and Assumption
of Contracts Section 7.8
Exhibit G ▇▇▇▇ of Sale Section 7.8
Exhibit H Subscriber Letter Section 7.8
25
EXHIBIT A
26
EXHIBIT A
SERVICES AGREEMENT
This Services Agreement ("Agreement") is made as of January 22, 1997, by
and between VR-1, Inc., a Delaware corporation ("VR-1"), and Rocky Mountain
Internet, Inc., a Delaware corporation ("RMI").
RECITALS
A. Pursuant to an agreement between VR-1 and RMI of even date herewith,
(the "Asset Purchase Agreement"), RMI has agreed to purchase certain assets
of VR-1.
B. As partial consideration for the Asset Purchase Agreement, RMI has
agreed to provide certain services to VR-1.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of which
are acknowledged, the parties, intending to be legally bound, agree as
follows:
1. SERVICES TO BE PERFORMED. To the extent that VR-1 may reasonably
request, RMI will provide to VR-1 its standard Internet access services,
including dial-up accounts, dedicated accounts, software solutions and
World-Wide Web services, along with such custom or special Web design
services as VR-1 may reasonably request. RMI shall value its services
provided to VR-1 under this Agreement at not more than the lowest prices paid
for similar services by other customers.
2. RECORDS. RMI will maintain reasonably complete accounting records
with respect to its provision of services pursuant to this Agreement. RMI
will provide VR-1 a statement of account at least monthly. Amounts properly
invoiced will, subject to paragraph 3, be due and payable thirty days after
the invoice date, and will accrue interest on amounts not paid within 30 days
at the rate of 14% per annum.
3. PAYMENT FOR SERVICES. VR-1 may pay RMI for services by transferring
to RMI shares of RMI's Common Stock that were issued to VR-1 as Stock
Consideration under the Asset Purchase Agreement (a "Stock Payment"). VR-1
shall receive a credit for such shares equal to the closing bid price of
RMI's Common Stock on the Nasdaq Smallcap market on the last Business Day
immediately preceding the date of payment by transfer of such shares, but in
no event shall VR-1 receive a credit for such shares of less than the price
per share established at Closing of the Asset Purchase Agreement to calculate
the Stock Consideration. VR-1 may, at its election, pay cash for the
services at any time. VR-1 may make Stock Payments no more frequently than
once per month and in increments of no less than 5,000 shares (if the value
of shares tendered in any Stock Payment exceeds the amount then due under
this Agreement, such
27
excess will be creditied against future payments). No Stock Payments will be
made in any fraction of a share. The aggregate value of all Stock Payments
made hereunder may not exceed $175,000 (with each Stock Payment valued for
such purposes at its valuation when made in accordance with the preceding
provisions of this paragraph).
4. TERM; CONVERSION. The term of this Agreement will begin on the date
of this Agreement and will continue until 5 years elapse from the date of
this Agreement or until earlier terminated by written notice from VR-1 to
RMI.
5. WARRANTY; LIMITATIONS. RMI REPRESENTS AND WARRANTS THAT IT WILL USE
REASONABLE CARE IN THE PROVISION OF INTERNET ACCESS, EQUIPMENT, SYSTEMS OR
SERVICES TO VR-1, BUT MAKES NO OTHER WARRANTY, EXPRESS OR IMPLIED (INCLUDING
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE), WITH
RESPECT TO THERETO. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, RMI
WILL NOT BE LIABLE FOR ANY FAILURE TO FUNCTION OF ANY INTERNET ACCESS,
EQUIPMENT, SYSTEMS OR SERVICES PROVIDED TO VR-1 IF SUCH FAILURE IS NOT
ATTRIBUTABLE TO A LACK OF REASONABLE CARE ON THE PART OF RMI. IT IS
EXPRESSLY AGREED THAT NEITHER VR-1 NOR RMI WILL UNDER ANY CIRCUMSTANCES BE
LIABLE HEREUNDER FOR INCIDENTAL, CONSEQUENTIAL OR SPECIAL DAMAGES OR FOR ANY
CLAIM FOR LOSS OF BUSINESS PROFITS OR GOODWILL.
6. MISCELLANEOUS.
6.1 ASSIGNMENT AND DELEGATION. No party may assign this Agreement or
any right accruing hereunder, or delegate its performance hereunder in whole
or in part, without the prior consent of the other, which shall not be
unreasonably withheld. Notwithstanding the foregoing, (i) either party may
assign this Agreement to its Affiliate or make a collateral assignment of
this Agreement without the prior written consent of the other party and (ii)
either party may assign this Agreement to any successor or any person that
acquires all or substantially all of the assets of such party, provided that
such assignment shall not relieve the assigning party of liability for any
failure by the assignee to perform its obligations hereunder.
6.2 AMENDMENT. This Agreement may be amended at any time by a written
instrument executed by all parties.
6.3 GOVERNING LAW. This Agreement will be governed by the laws of the
State of Colorado without regard to such jurisdiction's rules regarding
conflicts of laws.
6.4 ATTORNEYS' FEES. If any party commences an action because of the
breach of or to enforce any of the terms of this Agreement, the prevailing
party will be entitled to all costs and expenses associated with such action,
including reasonable attorneys' fees.
6.5 BINDING EFFECT. Except as otherwise provided in this Agreement,
this Agreement will be binding upon, and will inure to the benefit of, the
parties and their respective successors and permitted assignees.
28
6.6 WAIVER. No consent or waiver, express or implied, by a party of any
breach or default by the other party in the performance of its obligations
under this Agreement will be deemed to be a consent to or waiver of any
further or other breach or default by such other party.
6.7 NOTICES. Any notice, request, demand, waiver or other communication
required or permitted to be given under this Agreement will be in writing and
will be deemed to have been duly given only if delivered in person or by
first class, prepaid, registered or certified mail, or sent by courier or, if
receipt is confirmed, by telecopier:
To RMI at:
Rocky Mountain Internet, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ Loud
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (303) 298--940
To VR-1 at:
VR-1, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Vice President
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
Holme ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change the address to which notices are required to be sent by
giving notice of such change in the manner provided in this Section 6.7. All
notices will be deemed to have been
29
received on the date of delivery or on the third Business Day after mailing
in accordance with this Section, except that any notice of a change of
address will be effective only upon actual receipt.
6.8 ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
and understanding of the parties in respect of the transactions contemplated
hereby and supersedes all prior agreements, arrangements and understandings
relating to its subject matter.
6.9 SEVERABILITY. Each provision of this Agreement will be considered
severable. If for any reason any provision of this Agreement is determined
to be invalid, such invalidity will not impair the operation or affect the
other provisions of the Agreement, and the remainder of this Agreement will
continue in effect.
6.10 COUNTERPARTS. This Agreement may be executed in two or more
identical counterparts, and all of such counterparts, when taken together,
will be deemed to constitute the original of this Agreement.
6.11 HEADINGS. The section and other headings contained in this
Agreement are inserted only as a matter of convenience and in no way affect
the scope or meaning of this Agreement.
6.12 NO THIRD-PARTY BENEFICIARIES. This Agreement is not intended to,
and will not be construed to, create any right enforceable by any Person not
a party to this Agreement, including any creditor or employee of a party,
except as specifically referenced.
This Agreement is signed by the parties as of the date first written above.
VR-1, INC. ROCKY MOUNTAIN INTERNET, INC.
a Delaware corporation a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ Loud
-------------------------- -----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇ Loud
Title: CEO Title: Vice President
30
EXHIBIT B
31
EXHIBIT B
NON-COMPETITION AGREEMENT
This Non-Competition Agreement (this "Agreement") dated January 22, 1997,
is between Rocky Mountain Internet, Inc. a Delaware corporation ("Buyer") and
VR-1, Inc., a Delaware corporation ("Seller").
RECITALS
A. Seller and Buyer are parties to an Asset Purchase Agreement dated as
of January 22, 1997 (the "Asset Purchase Agreement"), pursuant to which Buyer
is purchasing, contemporaneously with the execution and delivery of this
Agreement, certain assets owned or leased by Seller in connection with the
Internet services business operated by Seller. The Asset Purchase Agreement
requires the execution and delivery of this Agreement in connection with the
closing of the transactions contemplated by the Asset Purchase Agreement.
AGREEMENT
In consideration of the foregoing recitals and to induce Buyer to enter
into the Asset Purchase Agreement, Buyer and Seller agree as follows:
1. DEFINITIONS. In addition to the terms defined elsewhere in this
Agreement, whenever used in this Agreement the following terms shall have the
meanings set forth below:
(a) "AFFILIATE" means, with respect to any person, (i) any other
person controlling, controlled by or under common control with such person,
and (ii) any director or executive officer of such person. For purposes of
this Agreement, "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities or voting
interests, by contract or otherwise.
(b) "BUSINESS" means the Internet connectivity business conducted by
Seller on the date of this Agreement (but specifically excluding Seller's web
site development and services business and Seller's software development
business).
(c) "BUSINESS AREA" means the State of Colorado.
(d) "PERSON" means any natural person, corporation, trust,
partnership, limited liability company, joint venture, unincorporated
organization, government (including any governmental department, body or
agency) or other legal entity.
Capitalized terms not defined in this Agreement shall have the
meaning ascribed to them in the Asset Purchase Agreement.
32
2. REPRESENTATIONS. Seller represents that it is not subject to any
agreement, restriction, lien, encumbrance, or assignment of any right, title
or interest to any person, limiting in any way the scope of this Agreement or
in any way inconsistent with this Agreement, and will not after the date of
this Agreement enter into or grant to any person any of the same.
3. RESTRICTIONS. Seller acknowledges that upon the consummation of the
transactions contemplated by the Asset Purchase Agreement, Buyer intends to
conduct the Business and shall own the Assets, both tangible and intangible
(including goodwill), used in and incident to the conduct of the Business.
Accordingly, and in consideration of the execution, delivery and performance
of the Asset Purchase Agreement by Buyer, Seller agrees that:
(a) For a period of five years after the date of this Agreement,
neither Seller nor its Affiliates will, within any part of the Business Area,
engage, directly or indirectly, as partner, proprietor, stockholder or other
owner of a voting, equity or profits interest (including without limitation
any option or right to acquire such voting, equity or profits interest),
director, officer, employee, consultant, agent or in any other representative
or individual capacity, or as the owner of indebtedness, in any business that
is competitive with the Business; provided however that nothing in this
Agreement shall prohibit the Seller or its Affiliates from "beneficially
owning" (within the meaning of Rule 13d-3 under the Securities Exchange Act
of 1934 (the "1934 Act")) equity securities or interests of or in another
corporation, partnership, joint venture, business trust or other business
organization or association engaged in an activity that, if engaged in by the
Seller or its Affiliates, would be prohibited by the first clause of this
sentence, so long as the equity securities or interests so owned in the
aggregate by Seller and its Affiliates do not represent, in the aggregate,
more than 15% of the aggregate voting power of all outstanding equity
securities or interests of the issuer thereof.
(b) So long as any of the restrictions set forth in Section 3(a)
apply, without the prior written consent of Buyer, Seller will not solicit or
attempt to solicit any employee of Buyer or any Affiliate of Buyer to
terminate his or her employment.
(c) For a period of twelve months following the date of this
Agreement, Seller shall not communicate with any Subscriber (as defined in
the Asset Purchase Agreement) regarding the transactions contemplated by the
Asset Purchase Agreement, nor will Seller directly solicit any Subscriber to
purchase web services from Seller without Buyer's prior written consent. The
foregoing restrictions (i) shall not prohibit Seller from providing web
services to any Subscriber if such transaction is solicited by the Subscriber
and (ii) shall not apply to any current web service customers of Seller.
During such 12 month period, Buyer shall not directly solicit any of Seller's
web service customers, as identified on Exhibit A attached hereto, to use or
change to Buyer's web services, however, Buyer shall be permitted to provide
web services to any current web service customer of Seller if such services
are solicited solely by the customer. Notwithstanding this Section 3(c),
Seller shall be permitted to contact Dedicated Subscribers by letter to
inform them of the new name of Seller's web service business. The form and
content of such letter shall be subject to the prior approval of Buyer, which
approval shall not be unreasonably withheld or delayed.
33
(d) The parties agree that the restrictions on the Seller's
activities imposed under Section 3 of this Agreement are reasonable with
respect to their duration and geographical area and with respect to the
nature and scope of the activities so restricted.
4. SUCCESSOR AND ASSIGNS; THIRD-PARTY BENEFICIARIES. This Agreement
will inure to the benefit of and will be binding upon the parties and their
respective successors and assigns. Any Affiliate of Buyer will be a
third-party beneficiary of all of the covenants and agreements made by Seller
in this Agreement. The obligations of Seller under this Agreement will be
personal and not assignable or delegable. Buyer retains the unrestricted
right to assign all or any portion of its rights under this Agreement to any
Affiliate of Buyer or any other person who has or may hereafter acquire the
Business.
5. REMEDIES. The parties acknowledge and agree that the subject matter
of this Agreement is unique and that any party (or any third-party
beneficiary referred to in Section 4) will have, in addition to all other
remedies, the right to enforce specific performance of the provisions of this
Agreement by a suit in equity or otherwise and to seek and obtain temporary,
preliminary or permanent injunctive relief, with respect to which no bond or
other security will be required. All rights and remedies of each of the
parties under this Agreement will be cumulative, and the exercise of one or
more rights or remedies will not preclude the exercise of any other right or
remedy available under this Agreement or applicable law. Seller expressly
and knowingly waives any claim or defense that any adequate remedy at law
might exist for any breach by Seller of any term or provision of this
Agreement.
6. CHOICE OF LAW; JURISDICTION. This Agreement and the rights and
obligations created by this Agreement will be governed by and interpreted in
accordance with the internal law of Colorado, without regard to the conflicts
of laws rules thereof. Seller submits to the jurisdiction of any state or
federal court sitting in Denver, Colorado in any action or proceeding arising
out of or relating to this Agreement, agrees that all claims in respect of
the action or proceeding may be heard and determined in any such court and
agrees not to bring any action or proceeding arising out of or relating to
this Agreement in any other court. The parties agree that a final judgment
in any action or proceeding so brought will be conclusive and may be enforced
by suit on the judgment or in any other manner provided by law.
7. SEVERABILITY; INTERPRETATION. If any provision of this Agreement is
held to be invalid, illegal or unenforceable under applicable law in any
jurisdiction, such provision will be ineffective only to the extent of such
invalidity, illegality or unenforceability without invalidating the remainder
of such provision or the other provisions of this Agreement; provided
however, that if a court having jurisdiction shall find that any of the
covenants and agreements contained in Section 3 of this Agreement are not
reasonable, such court will have the power to modify the duration of such
covenant or agreement or the geographical area or the nature or scope of the
activities within or to which such covenant or agreement applies, so as to
make such covenant or agreement valid, legal and enforceable to the maximum
extent permitted by law. This Agreement constitutes a fully negotiated
agreement between commercially sophisticated parties, each assisted
34
by legal counsel, and will be construed and interpreted without regard to
which party was the drafter of this Agreement.
8. INTEGRATION; AMENDMENT AND WAIVER. This Agreement constitutes the
entire agreement and understanding between Buyer and Seller and supersedes
all prior oral or written agreements and understandings relating to the
subject matter of this Agreement. No modification, amendment or waiver of
any of the terms of this Agreement will be binding upon the parties unless
made in writing after the date of this Agreement and duly executed by the
party or parties intended to be bound or affected thereby.
9. FAILURE TO ACT NOT A WAIVER. The failure to enforce any right
arising under this Agreement on one or more occasions shall not operate as a
waiver of that or any other right on the same occasion or any other occasion.
10. EXTENSION OF NON-COMPETITION PERIOD. The five-year period of time
set forth in Section 3(a) will be extended by the length of time during which
any party is in breach of the terms of this Agreement as determined by a
court of competent jurisdiction.
11. CAPTIONS. The titles and captions of this Agreement are for
convenience of reference only and do not constitute a part of this Agreement.
12. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which will be deemed an original.
13. ATTORNEYS' FEES. In the event of any action or suit based upon or
arising out of any alleged breach by any party of any representation,
warranty, covenant or agreement contained in this Agreement, the prevailing
party will be entitled to recover reasonable attorneys' fees and other costs
and expenses of such action or suit from the other party.
14. NOTICES. All notices and other communications given under this
Agreement must be in writing and will be deemed to have been duly given when
delivered in person or by first class prepaid, registered or certified mail,
by prepaid courier or by facsimile transmission addressed to the parties as
follows:
If to Buyer:
Rocky Mountain Internet, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ Loud
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Seller:
35
VR-1, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
or to such other address as either of them by written notice may from time to
time designate.
VR-1, Inc.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: CEO
Rocky Mountain Internet, Inc.
By: /s/ ▇▇▇ ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇
Title: CEO
36
EXHIBIT A TO NON-COMPETE
37
EXHIBIT A TO NON-COMPETE
Adcast
Advergence
Astarte Fiber Networks, Inc.
Augusta Software Design
Benefits Communication Corp.
Benefit Secure
Bidcast
Bujin Design
CareerTrack
Case Logic, Inc.
Cosmosnet Information Internet Services
▇▇▇▇▇▇▇ Mortgage
Data Storage Marketing, Inc.
DDx
Decisioneering, Inc.
Digital Camera Network
Dot Systems
Euphonics
▇▇▇▇▇▇ Imaging Corp.
Globalkey
Great American Cigar Club
Holme ▇▇▇▇▇▇▇ & ▇▇▇▇▇
Honda ▇▇▇▇▇
Infinite Pictures
International Titanium Association
Jason's Publishing Ltd.
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ Ltd.
LCM, Ltd. LLC
Leopard Communications
▇▇▇ ▇▇▇▇▇▇▇▇▇ & Associates
▇▇▇▇
Macedon Mediatures
Mathemaesthetics, Inc.
McBabies, Inc.
▇▇▇▇▇▇▇▇ Hardware
Micro Solutions Tech, inc.
Mountain Solutions
National Career Search
Net Dining
Optimum Soft
Parascript
Pentax Technologies Corp.
Performance Enhancements, Inc.
Premier Concepts, Inc.
Rocky Mountain Trad (RMTAAC)
SkyConnect
Specialty Products Company
Sun Mountain Villas
The Protector Corp.
38
The Troubleshooter (▇▇▇ ▇▇▇▇▇▇▇)
Turquoise Reef Group
Votelink
Voyager Company
Wildwasser
39
EXHIBIT C
40
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of January 22, 1997 (this
"Agreement"), by and between Rocky Mountain Internet, Inc., a Delaware
corporation ("RMI"), /fsand VR-1, Inc., a Delaware corporation ("Investor").
WHEREAS, pursuant to the terms of an Asset Purchase Agreement dated as of
January 22, 1997 (the "Purchase Agreement"), RMI has agreed to purchase assets
of Investor comprising its Internet access business. Pursuant to the Purchase
Agreement, RMI will issue to Investor shares of common stock, par value $.001
per share ("Common Stock" or "Shares"). In order to induce Investor to enter
into the Purchase Agreement, RMI has agreed to provide the registration rights
set forth herein.
Therefore, in consideration of the premises and of the mutual covenants
herein contained, the parties agree as follows:
1. INCIDENTAL REGISTRATIONS. (a) Each time that RMI proposes to register
any of its equity securities under the Securities Act of 1933, as
amended, (the "Securities Act") (other than a registration effected
solely to implement an employee benefit or stock option plan or to sell
shares obtained under any employee benefit or stock option plan or a
transaction to which Rule 145 or any other similar rule under the
Securities Act is applicable) RMI will give written notice to the
Investor of its intention to do so. The Investor and each other
Selling Stockholder (as defined below) may give RMI a written request
to register all or some of the Common Stock issued to it pursuant to
the Purchase Agreement ("Registrable Shares") in the registration
described in the written notice from RMI as set forth in the foregoing
sentence, provided that such written request is given within 20 days
after receipt of any such notice from RMI (with such request stating
(i) the amount of Registrable Shares to be disposed of and the
intended method of disposition of such Registrable Shares and (ii) any
other information reasonably requested by RMI to properly effect the
registration of such Registrable Shares). As used in this Agreement,
a "Selling Stockholder" is the Investor and any other person to whom
the Investor has transferred Registrable Shares in compliance with
applicable federal and state securities laws and who has agreed to be
bound by this Agreement by signing a counterpart hereof. Upon receipt
of such request, RMI will use its reasonable efforts to cause promptly
all such Registrable Shares intended to be disposed of to be
registered under the Securities Act so as to permit their sale or
other disposition (in accordance with the intended methods set forth
in the request for registration), unless the sale is a firmly
underwritten public offering and the managing underwriter thereof
determines reasonably and in good faith in writing that the inclusion
of such securities
41
would materially adversely affect the offering, in which case the
number of shares to be offered for the accounts of the Selling
Stockholders shall be reduced or limited (an "Underwriter Cutback")
in proportion to the number of shares owned by such Selling
Stockholders to the extent necessary to reduce the total number of
shares to be included in such offering to the amount recommended by
such managing underwriter; provided, that if securities are being
offered for the account of other persons or entities as well as RMI,
such reduction shall be made pro rata from the securities intended
to be offered by such persons and from the Selling Stockholders.
RMI's obligations under this Section 1 shall apply to a registration
to be effected for securities to be sold for the account of RMI as
well as a registration statement which includes securities to be
offered for the account of other holders of RMI equity securities.
RMI represents and warrants that the only registration rights
granted by it as of the date of this Agreement (other than those
contained in this Agreement) are as set forth on
2. Schedule 1 to this Agreement.
(b) Anything in the foregoing paragraph 1(a) to the contrary
notwithstanding, (i) any Registrable Shares included pursuant to paragraph 1(a)
in any registration of the common stock issuable upon exercise of warrants
distributed to the public by RMI in connection with its initial public offering
in September, 1996, will not be subject to any Underwriter Cutback, and (ii) to
the extent any Registrable Shares are excluded from any other registration
pursuant to any Underwriter Cutback, RMI (x) will cause a registration statement
to be filed under the Securities Act with respect to the Registrable Shares
which were excluded pursuant to such Underwriter Cutback within 180 days after
the effective date of the registration under the Securities Act as to which the
Registrable Shares were subject to such Underwriter Cutback or (y) purchase such
Registrable Shares which were excluded pursuant to such Underwriter Cutback at a
price equal to the selling price of the Registrable Shares which were sold
pursuant to such registration.
2. EXPENSES OF REGISTRATION. RMI shall pay all costs and expenses
incurred in connection with the registration of the Registrable Shares pursuant
hereto, including all registration and filing fees, printing expenses, fees and
disbursements of counsel and accountants of RMI and fees and disbursements (not
exceeding $2500) of counsel to VR-1 as the Selling Stockholder ("Investor's
Counsel"). Notwithstanding the foregoing, all fees and disbursements of the
Selling Stockholders' counsel (other than fees and disbursements of up to $2500
for Investor's Counsel) transfer taxes, brokerage commissions and underwriters'
discounts attributable to the Registrable Shares being offered and sold by such
Selling Stockholders shall be for the account of the Selling Stockholders.
3. LIMITATIONS ON REGISTRATION RIGHTS. Notwithstanding the provisions
of Section 1 hereof, RMI shall not be required to effect any registration
pursuant to Section 1 (a) after the third anniversary of the date hereof; (b)
if the request or requests for registration cover an aggregate number of
Registrable Shares having a Market Value of less than $25,000 as of the date
of the last of such requests; or (c) in the opinion of counsel for the RMI,
each Selling
42
Stockholder could sell in a single transaction under Rule 144 promulgated
under the Securities Act or any successor rule the number of Registrable
Shares such Selling Stockholder proposes to have registered pursuant to this
Agreement. "Market Value" as used in this Agreement shall mean, as to each
Registrable Share at any date, the average of the daily closing prices for
the Common Stock for the 10 consecutive trading days before the day in
question. The closing price for shares of such class for each day shall be
the last reported sale price or, in case no such reported sale takes place on
such day, the average of the reported closing bid and asked prices, on the
principal United States securities exchange registered under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), on which such shares
of such class are listed or admitted to trading, or if they are not listed or
admitted to trading on any such exchange, the closing sale price (or the
average of the quoted closing bid and asked prices if no sale is reported) as
reported by the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), or any comparable system, or if the shares of
such class are not quoted on NASDAQ, or any comparable system, the average of
the closing bid and asked prices as furnished by any market maker in the
securities of such class who is a member of the National Association of
Securities Dealers, Inc.
4. OBLIGATIONS WITH RESPECT TO REGISTRATION.
(a) If and whenever RMI is obligated by the provisions of this
Agreement to effect the registration of any Registrable Shares under the
Securities Act, RMI shall: (i) prepare and file with the Securities and
Exchange Commission (the "Commission") a registration statement and any
amendments and supplements to the registration statement in which the
Registrable Shares are included and to the prospectus used in connection
therewith (a "Registration Statement") as may be necessary to keep the
Registration Statement effective and to comply with the provisions of the
Securities Act and the rules and regulations promulgated thereunder with
respect to the disposition of all Registrable Shares covered by the
Registration Statement for the period required to effect the distribution of
such Shares, but in no event shall RMI be required to do so for a period of
more than 90 days following the effective date of the Registration Statement;
(ii) notify the Selling Stockholders and confirm such advice in writing, (A)
when a Registration Statement becomes effective, (B) when any post-effective
amendment to a Registration Statement becomes effective, and (C) of any
request by the Commission for any amendment of or supplement to a
Registration Statement or any prospectus relating thereto or for additional
information; (iii) furnish at RMI's expense to the Selling Stockholders such
number of copies of a preliminary, final, supplemental or amended prospectus,
in conformity with the requirements of the Securities Act and the rules and
regulations promulgated thereunder, as may reasonably be required in order to
facilitate the disposition of the Registrable Shares covered by a
Registration Statement, but only while RMI is required under the provisions
hereof to cause a Registration Statement to remain effective; (iv) register
or qualify the Registrable Shares covered by a Registration Statement under
the securities or blue sky laws of such jurisdictions in the United States as
the Selling Stockholders shall reasonably request, and do any and all other
acts and things which may be necessary to enable each Selling Stockholder
whose Registrable Shares are covered by such Registration Statement to
consummate the disposition in such jurisdictions of such Registrable Shares;
provided, however, that RMI shall in no event be required to qualify to
43
do business as a foreign corporation or a dealer in any jurisdiction where it
is not so qualified, to conform the composition of its assets at the time to
the securities or blue sky laws of such jurisdiction, to execute or file any
general consent to service of process under the laws of any jurisdiction, to
take any action that would subject it to service of process in suits other
than those arising out of the offer and sale of the Registrable Shares
covered by the Registration Statement, or to subject itself to taxation in
any jurisdiction where it has not theretofore done so; and (v) cause such
Registrable Shares covered by a Registration Statement to be listed on the
principal exchange or exchanges on which the Common Stock is then listed upon
the sale of such Registrable Shares pursuant to such Registration Statement.
(b) RMI's obligations under this Agreement with respect to a Selling
Stockholder shall be conditioned upon such Selling Stockholder's compliance with
the following: Such Selling Stockholder shall reasonably cooperate with RMI in
connection with the preparation of the Registration Statement, and for so long
as RMI is obligated to file and keep effective the Registration Statement, shall
provide to RMI, in writing, for use in the Registration Statement, all such
information regarding the Selling Stockholder and its plan of distribution of
the Registrable Shares as may be necessary to enable RMI to prepare the
Registration Statement and prospectus covering the Registrable Shares, to
maintain the currency and effectiveness thereof and otherwise to comply with all
applicable requirements of law in connection therewith. During such time as RMI
or such Selling Stockholder may be engaged in a distribution of the Registrable
Shares, RMI and such Selling Stockholder shall comply with Rules 10b-6 and 10b-7
promulgated under the Exchange Act and pursuant thereto it shall, among other
things: (i) not engage in any stabilization activity in connection with the
securities of RMI in contravention of such rules; (ii) distribute the
Registrable Shares solely in the manner described in the Registration Statement;
(iii) cause to be furnished to each broker through whom the Registrable Shares
may be offered, or to the offeree if an offer is not made through a broker, such
copies of the prospectus covering the Registrable Shares and any amendment or
supplement thereto and documents incorporated by reference therein as may be
required by law; and (iv) not bid for or purchase any securities of RMI or
attempt to induce any person to purchase any securities of RMI other than as
permitted under the Exchange Act.
5. INDEMNIFICATION.
(a) BY RMI. Except as set forth in the last sentence of this
Section 5(a), RMI agrees to indemnify and hold harmless each Selling
Stockholder, its officers and directors and each person who controls such
Selling Stockholder (within the meaning of the Securities Act) and any
underwriter thereof against all losses, claims, damages, liabilities and
expenses ("Losses") relating to any untrue or alleged untrue statement of a
material fact contained in any Registration Statement or any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein (in the case of a
prospectus, in the light of the circumstances under which they were made) not
misleading, except insofar as the same are caused by or contained in any
information with respect to such Selling Stockholder or underwriter, if any,
furnished in writing to RMI by such Selling Stockholder or underwriter
expressly for use therein. In connection with an underwritten offering, RMI
will indemnify the underwriters thereof, their
44
officers and directors and each person who controls such underwriters (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the holders of Registrable Shares. RMI
will promptly as incurred reimburse each such indemnified party for all legal
or other expenses reasonably incurred by such party in connection with
investigating or defending any such claims, including, subject to such
indemnified party's compliance with the provisions of the last sentence of
subsection (c) of this Section 5, any amounts paid in settlement of any
litigation, commenced or threatened. RMI shall not be obligated to indemnify
any person hereunder to the extent that any such Losses arise out of or are
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any preliminary or summary prospectus if a copy of
the final prospectus was delivered by the Company to the Selling Stockholder
(as amended or supplemented) and the Selling Stockholder failed to deliver
such final prospectus to the person alleging Losses at or prior to the
written confirmation of the sale of such Registrable Shares to such person
and the untrue statement or omission had been corrected in such final
prospectus.
(b) BY THE SELLING STOCKHOLDERS. In connection with any
registration statement in which a Selling Stockholder is participating, each
such Selling Stockholder agrees to indemnify and hold harmless RMI, the
directors and officers of RMI and each person who controls RMI (within the
meaning of the Securities Act) against any Losses relating to any untrue or
alleged untrue statement of a material fact or any omission or alleged
omission of a material fact required to be stated in the Registration
Statement or necessary to make the statements therein (in the case of a
prospectus, in the light of the circumstances under which they were made) not
misleading, to the extent, but only to the extent, that such untrue statement
or omission is contained in any information with respect to such Selling
Stockholder so furnished in writing by such Selling Stockholder expressly for
use in the registration statement, provided that the liability of such
Selling Stockholder pursuant to this Section 5(b) shall not exceed an amount
equal to the proceeds of the sale of Registrable Shares sold pursuant to such
registration statement that are received by or for the benefit of such
Selling Stockholder. RMI shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in the distribution to the same extent
as provided above with respect to information so furnished in writing by such
persons specifically for inclusion in any prospectus or registration
statement. The Selling Stockholders shall promptly as incurred reimburse
each such indemnified party for all legal or other expenses reasonably
incurred by such party in connection with investigating or defending any such
claim, including, subject to such indemnified party's compliance with the
provisions of the last sentence of subsection (c) of this Section 5, any
amounts paid in settlement of any litigation, commenced or threatened.
(c) THIRD PARTY CLAIMS. Promptly after the receipt by any party
hereto of notice of any claim, action, suit or proceeding by any person who
is not a party to this Agreement (collectively, an "Action") which is subject
to indemnification hereunder, such party (the "Indemnified Party") shall give
reasonable written notice to the party from whom indemnification is claimed
(the "Indemnifying Party"). The Indemnified Party shall be entitled, at the
sole expense and liability of the Indemnifying Party, to exercise full
control of the defense, compromise or settlement of any such Action unless
the Indemnifying Party, within a reasonable time after the
45
giving of such notice by the Indemnified Party, shall: (i) admit in writing
to the Indemnified Party, the Indemnifying Party's liability to the
Indemnified Party for such Action under the terms of this Section 5, (ii)
notify the Indemnified Party in writing of the Indemnifying Party's intention
to assume the defense thereof, and (iii) retain legal counsel reasonably
satisfactory to the Indemnified Party to conduct the defense of such Action.
The Indemnified Party and the Indemnifying Party shall cooperate with the
party assuming the defense, compromise or settlement of any such Action in
accordance herewith in any manner that such party reasonably may request. If
the Indemnifying Party so assumes the defense of any such Action, the
Indemnified Party shall have the right to employ separate counsel and to
participate in (but not control) the defense, compromise, or settlement
thereof, but the fees and expenses of such counsel shall be the expense of
the Indemnified Party unless (i) the Indemnifying Party has agreed to pay
such fees and expense, (ii) any relief other than the payment of money
damages is sought against the Indemnified Party or (iii) the Indemnified
Party shall have been advised by its counsel that there may be one or more
legal defenses available to it which are different from or additional to
those available to the Indemnifying Party, and in any such case the fees and
expenses of such separate counsel shall be borne by the Indemnifying Party.
No Indemnifying Party shall settle or compromise any such Action in which any
relief other than the payment of money damages is sought against any
Indemnified Party unless the Indemnified Party consents in writing to such
compromise or settlement. No Indemnified Party shall settle or compromise
any such Action for which it is entitled to indemnification hereunder without
the prior written consent of the Indemnifying Party, unless the Indemnifying
Party shall have failed, after reasonable notice thereof, to undertake
control of such Action in the manner provided above in this Section 5.
(d) CONTRIBUTION. If the indemnification provided for in subsections
(a) or (b) of this Section 5 is unavailable to or insufficient to hold the
indemnified party harmless under subsections (a) or (b) above in respect of any
Losses referred to therein for any reason other than as specified therein, then
the Indemnifying Party shall contribute to the amount paid or payable by the
Indemnified Party as a result of such Losses in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party on the one
hand and the Indemnified Party on the other in connection with the statements or
omissions which resulted in such Losses, as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by (or omitted to be supplied by) RMI or the Selling
Stockholder (or underwriter) and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by an Indemnified Party as a result of the Losses
referred to above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
6. MISCELLANEOUS.
46
(a) NOTICES. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally
or mailed, certified or registered mail with postage prepaid, or sent by telex,
telegram or telecopier, as follows:
if to RMI: Rocky Mountain Internet, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ Loud
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ , ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to Investor:
VR-1, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
VR-1, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person or address as any party shall specify by notice in
writing to the other party. Notice of a change of address shall be effective
only upon actual receipt thereof.
(b) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties hereto and supersedes all prior agreements and
understandings, oral and written, between the parties hereto with respect to the
subject matter hereof.
(c) BINDING EFFECT; BENEFIT. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns. Nothing in
47
this Agreement, expressed or implied, is intended to confer on any person
other than the parties hereto or their respective successors and assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, other than rights conferred upon indemnified persons under Section
6 and rights conferred upon Permitted Transferees.
(d) AMENDMENT AND MODIFICATION. This Agreement may be amended or
modified only by an instrument in writing signed by or on behalf of each party
and any other person then a Stockholder. Any term or provision of this
Agreement may be waived in writing at any time by the party which is entitled to
the benefits thereof.
(e) SECTION HEADINGS. The section headings contained in this
Agreement are inserted for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
(f) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, and all of which together shall
be deemed to be one and the same instrument.
(g) APPLICABLE LAW. This Agreement and the legal relations between
the parties hereto shall be governed by and construed in accordance with the
laws of the State of Colorado, without regard to the conflict of laws rules
thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
ROCKY MOUNTAIN INTERNET, INC.
By: /s/ ▇▇▇▇▇ LOUD
----------------------------
Its: VICE PRESIDENT
----------------------------
VR-1, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Its: CEO
----------------------------
48
SCHEDULE 1
OUTSTANDING REGISTRATION RIGHTS
ROCKY MOUNTAIN INTERNET, INC.
49
SCHEDULE 1
OUTSTANDING REGISTRATION RIGHTS
ROCKY MOUNTAIN INTERNET, INC.
As of January 22, 1997, Rocky Mountain Internet, Inc. (the "Company"), had
outstanding the following registration rights.
1. WARRANTS. The Company issued 1,365,000 warrants in its public offering in
September, 1996. The warrants become exercisable in October, 1997, at a
price of $4.375 per share (subject to adjustment). The Company is required
to register common stock issuable on exercise of the warrants.
2. UNDERWRITER'S WARRANTS. The underwriter in the Company's initial public
offering received 136,500 warrants to purchase Units (i.e. one share of
common stock and one warrant) at an exercise price of $4.20 per Unit and
$6.5625 per underlying warrant. These warrants are exercisable beginning
in September, 1997, and the underwriter has been granted registration
rights in connection with the exercise thereof.
3. CONVERTIBLE PREFERRED STOCK. Prior to its initial public offering the
Company issued 250,000 shares of convertible preferred stock which are
convertible into common stock at a 1:1 ratio (subject to adjustment). The
preferred stock is convertible at any time after May 15, 1997, and the
holders thereof have a single demand registration right in connection
therewith exercisable on or after May 15, 1997.
50
EXHIBIT D
51
Exhibit D
LICENSE AGREEMENT
This License Agreement ("License") is dated effective January 22, 1997 by
and between VR-1, Inc., a Delaware corporation ("Licensor"), and Rocky
Mountain Internet, Inc., a Delaware corporation ("Licensee").
RECITALS
Licensor and Licensee are parties to that certain Asset Purchase Agreement
dated January 22, 1997. The execution and delivery of this License is a
condition to the consummation of the transactions contemplated by the Asset
Purchase Agreement.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS.
A. SOFTWARE means the on-line client and server registration software
known as "ONE Soft-TM- Version 6.0".
B. SUPPORT MATERIALS means any human-readable program listings, flow
charts, logic diagrams, input and output forms, manuals,
specifications, instructions and other materials, and any copies of
any of the foregoing, in any medium, related to the Software and
delivered to Licensee under this License.
C. TRADEMARKS means the trademarks and/or service marks (i) ONE Soft-TM-
and (ii) ONE and Design, a copy of which is attached hereto as
Exhibit A.
2. GRANT OF RIGHTS.
A. LICENSE. Licensor grants Licensee and its Affiliates a nonexclusive,
world-wide, royalty-free right to (i) reproduce and distribute the
client portion of the Software to Licensee's subscribers and potential
subscribers, (ii) use the Software in connection with Licensee's
Internet access services, provided that Licensee shall have no right
to distribute or sublicense the server or Unix portion of the
Software, (iii) create derivative works of the Software, (iv) use the
ONE Soft ▇▇▇▇ to identify the Software and Derivative Works and (v)
use the ONE and Design ▇▇▇▇ to market, promote and identify Licensee's
Internet access services (including but not limited to in connection
with the ▇▇▇▇▇▇.▇▇▇ Internet domain name); all of the foregoing in
accordance with the terms of this Agreement.
52
B. COPIES. Licensee may make copies of the written documentation which
accompanies the Software in support of Licensee's authorized use of
the Software. Licensee may also make such copies of the Software as
are necessary for Licensee and its Affiliates to use the Software
under this License.
C. TRANSFER RESTRICTIONS. No party will, without the consent of the
other (which shall not be unreasonably withheld), assign any of its
rights or delegate any of its duties under this License, provided that
(i) either party may assign this License to its Affiliate or make a
collateral assignment of this Agreement and (ii) either party may
assign this Agreement to any successor or any person that acquires all
or substantially all of the assets of such party, provided that such
assignment shall not relieve the assigning party of liability for any
failure by the assignee to perform its obligations hereunder.
D. MODIFICATIONS BY LICENSEE. Licensee may modify any machine-readable
form of the Software for use by Licensee and merge it into other
program material to form an updated work ("Derivative Work") without
the prior written consent of Licensor. The source code for each
Derivative Work shall contain internal comments delineating the
independent program material. Licensee shall own such Derivative
Works.
E. TITLE. Title and all ownership and proprietary rights to the
Trademarks and Software shall remain in Licensor, and Licensee shall
take no action inconsistent with such title, ownership and proprietary
rights.
F. REVIEW OF QUALITY. Licensor shall have the right, but not the
obligation, to review services rendered, or goods provided, under the
Trademarks to ensure that they are of a good quality. Licensor shall
promptly notify Licensee of any defects in quality of goods or
services denoted by the Trademarks, and Licensee and Licensor shall
work together to remedy any such defects.
3. DELIVERY, INSTALLATION, TRAINING AND MAINTENANCE.
A. DELIVERY. Licensor will furnish the Software to Licensee in machine-
readable form and provide Support Materials containing detailed
specifications for operation and use of the Software. Licensor will
also provide Licensee a copy of all source code related to the
Software.
B. INSTALLATION AND TRAINING. Licensor shall provide Licensee an
aggregate total of 40 hours of the following services without
additional charge hereunder: (i) software programming; (ii) assistance
in installing and rendering operable the Software at Licensee's
designated site; and (iii), if requested by Licensee, training for
Licensee's employees in the use of the Software.
53
C. CONFIDENTIALITY. Licensee shall keep the source code for the Software
strictly confidential and shall not disclose the source code to any
third party without the prior written consent of Licensor.
4. TERM AND TERMINATION
A. TERM AND TERMINATION. This License shall become effective upon
execution by Licensor and Licensee and shall terminate (a) as to the
ONE and Design ▇▇▇▇, two years following the execution hereof at which
time Licensee shall cease all use of the ONE and Design ▇▇▇▇ and (b)
as to the Software and the ONE Soft ▇▇▇▇, by mutual written agreement
of the parties or on the tenth day following written notice by
Licensee of its desire to terminate this License.
B. EFFECT OF TERMINATION. Upon termination of this License for any
reason, Licensee's rights under this License shall cease. Licensee
shall immediately return all items bearing either of the Trademarks,
and all information relating to the Software, except the Derivative
Works, including any copies, updates, or Support Materials, however
embodied, to Licensor.
5. REPRESENTATIONS AND WARRANTY
A. WARRANTY. Licensor warrants that (1) the Software will, when
delivered and installed by Licensor, be in good working order and will
conform to the program specifications in the accompanying
documentation when used without material alteration in accordance with
the instructions set forth in the documentation; and (2) any service
rendered by Licensor will be performed in a professional manner by
qualified personnel.
B. REPRESENTATIONS. Licensor warrants and represents to Licensee that:
i. it is duly organized, validly existing and in good standing under
the laws of each jurisdiction in which its activities require such
qualification;
ii. the execution, delivery and performance of this License have been
duly authorized by all necessary corporate action and this License
constitutes the legal, valid and binding obligation of Licensor,
enforceable in accordance with its terms against Licensor except as
such enforceability may be affected by bankruptcy, reorganization,
insolvency, moratorium or laws affecting creditors' rights generally
or by general principles of equity;
iii. it has full corporate power and authority to enter into this
License and to perform its obligations hereunder;
54
iv. the Software and Support Materials are original works of
authorship;
v. it is the sole owner of the Trademarks and Software or otherwise
has authority to grant the rights hereunder to Licensee;
vi. the use of the Trademarks, Software and Support Materials by
Licensee hereunder will not violate or infringe any intellectual
property or proprietary right of any other person, including the
licensors of any licensed software contained in the Software;
vii. the execution and delivery of this License, and the
performance by Licensor of its obligations hereunder, will not
violate, breach, conflict with or cause a default under any law, rule,
regulation, order, or material agreement or instrument to which
Licensor is a party or by which it is bound, or of Licensor's
constituent documents;
viii. no consent, approval or authorization of any person is
needed in order for Licensor to perform its obligations pursuant to
this License; and
ix. there are no lawsuits, proceedings or claims pending, or to the
knowledge of Licensor, asserted with respect to the Trademarks,
Software, the Support Materials, or any portion thereof which could
materially affect Licensor's ability to perform its obligations under
this License or which could materially affect the utility to Licensee
thereof, and Licensor promptly will notify Licensee if any such suit
or proceeding is instituted or claim asserted.
6. INDEMNIFICATION.
A. Licensor shall defend or settle at its sole expense any action brought
against Licensee by third parties to the extent that such action is
based on or arises out of an allegation or adjudication that the
Licensee's permitted use of the Trademarks, or the manufacture, use,
sale, reproduction or distribution of the Software or any portion
thereof in accordance with the terms of this Agreement, constitutes an
infringement of any United States patent, trademark, copyright or
other proprietary right. Licensee shall cooperate fully in the
defense of the claim or suit, and may appear at its own expense
through counsel of its choice.
B. Licensee shall indemnify Licensor against all claims, liabilities and
costs, including reasonable attorney fees, of defending any claim or
suit, other than for infringement of intellectual property rights as
provided above, arising out of its use of the Trademarks and Software
provided under this License.
7. NOTICE. All notices, requests, demands and other communications
called for or contemplated hereunder will be in writing and will be deemed to
have been duly given if delivered
55
when deposited in the United States mail, first class postage prepaid,
addressed as follows, or to any other address of which a party gives notice
to the other:
If to Licensor to: With a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇, Vice President ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
VR-1, Inc. Holme ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Licensee to: With a copy to:
▇▇▇▇▇ Loud, Vice President ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Rocky Mountain Internet, Inc. ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
8. MISCELLANEOUS
A. MODIFICATION. This License may not be modified other than by a
written amendment executed by each of the parties hereto.
B. WAIVER. No consent or waiver, express or implied, by a party of any
breach or default by the other party in the performance of its
obligations under this License will be deemed to be a consent to or
waiver of any further or other breach or default by such other party.
C. GOVERNING LAW. This License will be construed in accordance with, and
be governed by, the internal laws of the State of Colorado without
reference to any conflict of laws principles.
D. SEVERABILITY. If any provision or part thereof in this License is
held invalid, illegal or unenforceable for any reason, the remainder
of this License will nonetheless remain in full force and effect.
E. BINDING AGREEMENT. This License will benefit and be binding upon the
parties hereto and their respective heirs, representatives, successors
and permitted assigns.
F. COUNTERPARTS. This License may be executed in two or more identical
counterparts, and all of such counterparts, when taken together, will
be deemed to constitute the original of this License.
G. HEADINGS. The headings in this License are for purpose of reference
only and shall not be construed as part of this License.
56
H. ATTORNEYS' FEES. If any party commences an action because of the
breach of or to enforce any of the terms of this License, the
prevailing party will be entitled to all
57
costs and expenses associated with such action, including reasonable
attorneys' fees.
I. ENTIRE AGREEMENT. This License constitutes the entire understanding
and agreement of the parties hereto with respect to the subject matter
covered in it and supersedes all prior agreements and understandings,
written or oral, among any of the parties with respect to such subject
matter.
The parties have executed this License as of the date first above written.
LICENSOR: LICENSEE:
VR-1, INC. ROCKY MOUNTAIN INTERNET, INC.
a Delaware corporation a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ LOUD
------------------------- -------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇ LOUD
Title: CEO Title: VICE PRESIDENT
58
EXHIBIT E
59
Exhibit E
ASSIGNMENT OF DOMAIN NAME
WHEREAS, VR-1, Inc., a Delaware corporation, f/k/a On-line Network
Enterprises, having an office and principal place of business at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, is the owner of a domain name
"▇▇▇▇▇▇.▇▇▇" and the registration thereof with InterNIC; and
WHEREAS, VR-1, Inc. wishes to assign to Rocky Mountain Internet, Inc., a
Delaware corporation, having an office and principal place of business at ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, the entire right, title and interest
in and to such domain name, any registrations obtained thereon and all rights of
renewal thereof, together with the goodwill of the Internet access business
associated with and symbolized by such domain name;
NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, VR-1, Inc. sells, assigns and sets over unto Rocky Mountain
Internet, Inc., its successors and assigns, the entire right, title and interest
of VR-1, Inc., in and to such domain name, any registrations obtained thereon,
and all rights of renewal thereof together with the goodwill of the Internet
access business associated with and symbolized by such domain name.
VR-1, Inc. agrees to take all necessary actions to effect the transfer of
the domain name with InterNIC or any future registrar of the domain name
"▇▇▇▇▇▇.▇▇▇."
VR-1, INC., f/k/a On-line Network Enterprises
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, chief executive officer
STATE OF COLORADO )
) ss.
COUNTY OF BOULDER )
The foregoing instrument was acknowledged before me this ____ day of
__________, 1997, by ▇▇▇▇▇ ▇▇▇▇▇▇ as chief executive officer of VR-1, Inc.
My commission expires:
-------------------------- ---------------------------
Notary Public
[SEAL]
60
EXHIBIT F
61
EXHIBIT F
ASSIGNMENT AND ASSUMPTION AGREEMENT
For value received, the receipt and sufficiency of which are
acknowledged, VR-1, Inc., a Delaware corporation ("Seller") hereby assigns
and transfers to Rocky Mountain Internet, Inc., a Delaware corporation
("Buyer") all of Seller's right, title and interest in and to each of the
contracts ("Assumed Contracts") included on Schedule 5.8 to the Asset
Purchase Agreement dated January 22, 1997, between Seller and Buyer (the
"Asset Purchase Agreement") except for receivables due for services performed
prior to the date of the Asset Purchase Agreement. Buyer assumes and agrees
to discharge, in accordance with terms thereof, all obligations under the
Assumed Contracts arising on and after the date hereof to the extent that
such liabilities and obligations relate to periods beginning on or after the
date hereof and to be bound by such contracts as fully as if Buyer had
executed each as a party thereto.
This Agreement may be executed in one or more counterparts, all of which
taken together shall constitute the original of this Agreement.
Dated as of January 22, 1997
Rocky Mountain Internet VR-1, Inc.
By: /s/ ▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------- ----------------------------
62
EXHIBIT G
63
Exhibit G
▇▇▇▇ OF SALE
VR-1, Inc., a Delaware corporation ("Seller") for $10.00 and other valuable
consideration in hand paid by Rocky Mountain Internet, Inc., a Delaware
corporation ("Buyer"), receipt of which is acknowledged, hereby sells, grants,
transfers and conveys to Buyer all of the Seller's rights to the assets set
forth on Schedule 1.2 to the Asset Purchase Agreement dated as of January 22,
1997, between Seller and Buyer.
Dated as of January 22, 1997.
Rocky Mountain Internet, Inc. VR-1, Inc.
By: /s/ ▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------- --------------------------------
64
EXHIBIT H
65
EXHIBIT H LETTERS TO SUBSCRIBERS
Dear O.N.E. Customer,
We are pleased to announce that Online Network Enterprises has sold the dial-up
and dedicated Internet access division of our company to Rocky Mountain Internet
(RMI) effective x/x/97. This change will allow us to focus on our Web and
online game development divisions.
RMI is a Colorado based company and is a leading provider of quality Internet
services. RMI has recently invested over $2 million into its network! The
results of RMI's investment has resulted in a carrier class network including
redundant T-3 access to the Internet, a state of the art Data Center including
generator backup, and a fully redundant sonnet based DS3 network interconnecting
its switches and services.
It has been our pleasure to serve you, and hope that we have exceeded your
expectations. We are working closely with RMI to ensure a smooth and seamless
transition. At this time, you will not be required to make any changes to your
system in order to access the Internet or send and receive E-mail. In addition,
RMI will be honoring O.N.E.'s existing rate structure.
Again, thank you for the opportunity to serve you. We have enjoyed providing
your access to the Internet.
Sincerely,
▇▇▇▇ ▇▇▇▇▇▇▇▇
Vice President of Customer Service
Online Network Enterprises
Letter to dedicated customers
66
JANUARY 22, 1997
XXXXXX
XXXXX
O.N.E. AND RMII
DEAR CUSTOMER,
On January 23, 1997 Online Network Enterprises announced the sales of our
Internet access business (dial up and dedicated) to Rocky Mountain Internet Inc,
(RMII).
O.N.E.'S WEB DEVELOPMENT AND HOSTING BUSINESS REMAINS UNCHANGED - BOTH IN
OWNERSHIP AND IN OUR RESOURCES.
This letter is to briefly explain the benefits to you, our customer, regarding
this change of Internet Access to RMII, and the renewed focus of O.N.E.'s *
business as a leading edge Web Development studio.
RMII is a leading Colorado Internet Service Provider, offering economies of
scale and specialization in this industry that will guarantee that your Internet
access service is of the highest industry standards. The transition of your
access to RMII should be seamless and almost invisible.
O.N.E., as part of its parent Company VR-1, has made this change to allow us to
focus purely on high level content creation for the Web. We've renewed our
focus as a leading web development partner for your business, offering
excellence in both web design and high level database development. O.N.E. will
also continue to offer full, high quality web hosting, web site marketing and
consulting services.
*AS PART OF THIS NEW FOCUS WE ARE RE-EVALUATING OUR STUDIO NAME AND PLAN TO
LAUNCH A NEW LOGO AND IDENTITY IN THE NEXT TWO MONTHS. WE WILL BE BACK IN
TOUCH.
Meanwhile, if you have any questions over our Web Development service do not
hesitate to contact your sales representative XXX at (▇▇▇) ▇▇▇-▇▇▇▇.
Yours sincerely,
▇▇▇▇ ▇▇▇▇▇
PRESIDENT
ONLINE NETWORK ENTERPRISES/VR-1 INC.
67
VR-1, INC.
CLOSING CERTIFICATE
This certificate is delivered pursuant to Section 9.2.7 of the Asset
Purchase Agreement (the "Agreement") dated as of January 22, 1997 by and between
VR-1, Inc., a Delaware corporation (the "Company") and Rocky Mountain Internet,
Inc. a Delaware corporation ("RMI"). Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to them in the Agreement.
The undersigned does hereby certify to RMI that, to his knowledge:
1. All representations and warranties of the Company contained in the
Agreement are, if specifically qualified by materiality, true in all
respects and, if not so qualified, true and correct in all material
respects, in each case on and as of the Closing Date with the same
effect as if made on and as of the Closing Date, subject to such
disclosures and exceptions specifically described on the Schedules
attached to the Agreement.
2. The Company has performed and complied in all material respects with
each obligation, agreement, covenant and condition required by the
Agreement to be performed or complied with by the Company at or prior
to the date of Closing.
EXECUTED as of the 22nd day of January, 1997.
VR-1, INC., a Delaware corporation
By:/S/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
Chief Executive Officer
68
ROCKY MOUNTAIN INTERNET, INC.
CLOSING CERTIFICATE
-------------------
This certificate is delivered pursuant to Section 9.3.4 of the Asset
Purchase Agreement (the "Agreement") dated as of January 22, 1997 by and between
VR-1, Inc., a Delaware corporation ("VR-1") and Rocky Mountain Internet, Inc. a
Delaware corporation (the "Company"). Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to them in the Agreement.
The undersigned does hereby certify to VR-1 that, to his knowledge:
1. All representations and warranties of the Company contained in the
Agreement are, if specifically qualified by materiality, true in all
respects and, if not so qualified, true and correct in all material
respects, in each case on and as of the Closing Date with the same
effect as if made on and as of the Closing Date, subject to such
disclosures and exceptions specifically described on the Schedules
attached to the Agreement.
2. The Company has performed and complied in all material respects with
each obligation, agreement, covenant and condition required by the
Agreement to be performed or complied with by the Company at or prior
to the date of Closing.
EXECUTED as of the 22nd day of January, 1997.
ROCKY MOUNTAIN INTERNET, INC., a Delaware corporation
By:/S/ ▇▇▇▇▇ LOUD
-------------------------
▇▇▇▇▇ Loud
Vice President
69
SCHEDULE 1.2
SELLER CONTRACTS
- 823 dial up accounts
- 47 dedicated accounts
- Seller contracts listed in Schedule 5.8
EQUIPMENT
- Ascend Madx 4000 with 6 modem cards
- 3 kiosks and
- 10 dispensers (Hermans)
INTANGIBLES
- the rights to placement and design of kiosks (see Schedule 5.8 for
description).
- the rights to design of Hermans dispensers.
- ▇▇▇▇▇▇.▇▇▇ domain name
- Control of O.N.E. CIDR block ranges identified as 206.83.96.0 through
206.83.127.255 and 206.246.0.0 through 206.246.31.255 leaving the range
206.246.32.0 through 206.246.63.255 for O.N.E./VR-1 control. The customers
on the existing Sprint CIDR will be moved by O.N.E. As soon as routing
(BGP$) is established between O.N.E. and RMI, the two CIDR block ranges
will be transferred to RMI.
70
SCHEDULE 5.6 LEGAL PROCEEDINGS
None
71
SCHEDULE 5.7 CUSTOMERS AND SUPPLIERS EXCEPTIONS
See Customer lists attached to Schedule 1.2 for subscribers who are late in
paying as disclosed therein.
There are no Supplier Exceptions
72
SCHEDULE 5.8 SELLER'S CONTRACTS AND EXCEPTIONS
DEDICATED SUBSCRIBERS
---------------------
All dedicated subscribers contracts delivered at closing. See Dedicated
Customer List attachment to Schedule 1.2 for payment status
DIAL UP SUBSCRIBERS
-------------------
Attached is the text of the Seller Service Agreement
TCG SERVICE CONTRACT
--------------------
Attached service agreement between Seller and TCG dated 7/28/96 and consent of
assignment. Buyer's obligation to assume the TCG Service Contract is
conditioned upon TCG agreement to move the circuit to ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
KIOSK PLACEMENT
---------------
Three kiosks which distribute the ONEsoft software on a speculative basis have
been placed, one each, at Elek-Tek in Aurora, ▇▇▇▇▇▇▇▇ Hardware in Boulder and
Media Play in downtown Denver.
ELEK-TEK
--------
The longest placement has been Elek-Tek. The first two kiosks for Elek-Tek were
installed in late November 1995 there was a written agreement for 6 months.
That agreement has expired. The kiosk resides at Elek-Tek based on their
continued desire to have Internet access from a device on the floor.
Seller provides Elek-Tek free access over a 64k frame relay circuit (Elek-Tek
pays US West for the frame circuit) along with mailboxes and a special rate for
dialup access to their employees. VR-1 Adtran 56/64 CSU/DSU, and Cisco 1005D
Router. Elek-Tek provides the hub, computer, monitor, speakers, and keyboard
for the kiosk. All equipment owned by Seller must be replaced by RMI equipment
within 30 days of closing.
▇▇▇▇▇▇▇▇ HARDWARE
▇▇▇▇▇▇▇▇ Hardware in Boulder is the location for the second Kiosk. Seller
trades out a 56k dedicated access account for the kiosk placement. ▇▇▇▇▇▇▇▇
Hardware pays for both DSUs and the US West 56k DSS circuit. There is no
written agreement stating this trade out. One of Seller's former customer
support personnel is a key member of the ▇▇▇▇▇▇▇▇ hardware systems group. Thus
the relationship has been a strong one.
The DSS service is not used at the kiosk. Rather it uses a modem connection to
facilitate access to the Internet. All computer equipment including the CPU,
monitor, keyboard, modem, speakers, power supplies belong to Seller and must be
replaced within 30 days of closing.
73
MEDIA PLAY
Media Play was installed in October of 1996 pursuant to the attached letter from
Media Play dated September 13, 1996. Seller has paid $300 each month for months
November and December. Seller will be responsible for the fees accrued to Media
Play prior to closing and Buyer will be responsible for fees accrued to Media
Play after closing.
Internet access is facilitated through a modem connection. All computer
equipment including the CPU, monitor, keyboard, modem, speakers, power supplies
belong to Seller and must be replaced within 30 days of closing. The POTS
circuit is paid for by Seller RMI will begin paying for this circuit as of
January 15th, 1997. See circuit list.
DISCUSSION OF TRADE OUT SERVICES
--------------------------------
Seller provides free Internet access service to the following two customers.
FREEWAVE TECHNOLOGIES is the developer of the wireless modems we use for IGS,
Euyphonics and product Knowledge. We assisted with testing these modems the
summer of 95. The test proved successful so we traded Freewave Internet access
and 5 mailboxes for two of their modems. These modems are currently in use by
IGS. IGS is moving to a TCG circuit and will be returning the modems as soon as
that circuit is up and running. This gives RMI the ability to sell another
wireless access customer or use the modems as you see fit. The term of the
Freewave agreement was for one year. It should expire in the May 97 time frame.
LITTLETON COMMUNITY NETWORK (LCN) is a frame relay trade out for marketing of
the O.N.E. services at different events in Littleton. LCN is a non-profit
organization with the mission of automating the delivery of civic events and
information. The circuit is paid for by LCN. We have participated in a number
of Internet seminars held at the Littleton library. We have the ability to
place dispensers with disks at the library and at community events where LCN has
participation. A quick look at the customer list shows 32 active dial up
accounts coming from Littleton. The contract will expire the end of March 1997.
Contract is attached.
74
SCHEDULE 7.3
Ascend Max 4000 with 6 8 port cards.
The above equipment is leased through Charter Financial, Inc. and will be paid
off and a UCC Termination Statement will be provided within 30 days of closing.
75
SCHEDULE 7.12
USWEST SERVICES
---------------
TELEPORT COMMUNICATIONS GROUP (TCG) SERVICES
--------------------------------------------
LDDS WORLDCOMM
--------------
76