MERGER AGREEMENT
AMONG
ROCKY MOUNTAIN INTERNET, INC.,
a Delaware corporation,
RMI-INI, INC.,
a Colorado corporation,
AND
INTERNET NOW
an Nevada corporation,
AND
▇▇▇▇▇▇▇▇▇▇ PERSONS,
▇▇▇▇▇▇ ▇▇▇▇▇,
TAUFIK ISLAM,
▇▇▇▇▇ ▇▇▇▇▇▇,
AND
▇▇▇▇ ▇▇▇,
Shareholders
November 20, 1998
MERGER AGREEMENT
THIS MERGER AGREEMENT (this "Agreement") is entered into on November
20, 1998, by and among Rocky Mountain Internet, Inc., a Delaware corporation
("RMI"), RMI-INI, Inc., a Colorado corporation and wholly-owned subsidiary of
RMI ("Subsidiary"), Internet Now, an Nevada corporation ("Internet Now") and
▇▇▇▇▇▇▇▇▇▇ Persons, ▇▇▇▇▇▇ ▇▇▇▇▇, Taufik Islam, ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇, the
shareholders of Internet Now (individually "Shareholder" and collectively
"Shareholders"). RMI, Subsidiary, Internet Now and Shareholders are
collectively referred to herein as the "Parties".
This Agreement contemplates a transaction in which RMI through
Subsidiary will acquire all of the outstanding capital stock of Internet Now for
cash and registered common stock of RMI delivered to Shareholders in a forward
subsidiary merger whereby Internet Now will be merged with and into Subsidiary.
Now, therefore, in consideration of the ▇▇▇▇▇▇▇ Money Deposit paid by
RMI to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, P.C., as escrow agent, delivered in accordance with
that certain Agreement by and between RMI and Internet Now dated October 21,
1998, the mutual promises made herein, and in consideration of the
representations, warranties, and covenants herein contained, the Parties agree
as follows:
1. DEFINITIONS. Capitalized terms used in this Agreement have the
meaning provided in the above preface and in Section 12 below.
2. BASIC TRANSACTION.
(a) THE MERGER. On and subject to the terms and conditions of this
Agreement, Internet Now will merge with and into Subsidiary (the "MERGER") at
the Closing in exchange for the Merger Consideration (defined below).
Subsidiary shall be the corporation surviving the Merger ("SURVIVING
CORPORATION").
(b) ▇▇▇▇▇▇▇ MONEY DEPOSIT. RMI has delivered to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
P.C., as escrow agent, for the benefit of the Shareholders and RMI, an ▇▇▇▇▇▇▇
money deposit in the amount of Twenty Thousand Dollars ($20,000) ("▇▇▇▇▇▇▇ Money
Deposit"), in accordance with that certain agreement by and between RMI and
Internet Now dated October 21, 1998, which shall be released by ▇▇. ▇▇▇▇▇▇▇
pursuant to such agreement.
(c) MERGER CONSIDERATION. Shareholders shall receive as consideration at
Closing the purchase price as follows (collectively the "Purchase Price"): (i)
▇▇▇▇▇▇▇ Money Deposit plus One Hundred Thirty Thousand and No/Dollars
($130,000.00) payable by wire transfer or delivery of immediately available
funds to the Shareholders as set forth below and (ii)one hundred seventy
one thousand two hundred fifty (171,250) shares of RMI common stock registered
in accordance with RMI Registration Statement on Form S-1 (File No. 333-52731)
("RMI Shares") to be distributed to the Shareholders as set forth below:
SHAREHOLDER (i) ▇▇▇▇▇▇▇ MONEY DEPOSIT (ii) RMI SHARES
----------- ------------------------- ---------------
PLUS CASH
---------
▇▇▇▇▇▇▇▇▇▇ Persons $ 85,285.50 98,866 RMI Shares
▇▇▇▇▇▇ ▇▇▇▇▇ $ 56,872.50 65,931 RMI Shares
Taufik Islam $ 4,889.00 4,023 RMI Shares
▇▇▇▇▇ ▇▇▇▇▇▇ $ 1,500.50 1,235 RMI Shares
▇▇▇▇ ▇▇▇ $ 1,452.50 1,195 RMI Shares
(d) THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place by facsimile and telephone commencing
at 9:00 a.m. Denver and Phoenix time on or before November 30, 1998, or such
other date as the Parties mutually agree (the "Closing Date").
(e) ACTIONS AT THE CLOSING. At the Closing: (i) Shareholders will
deliver to RMI the various certificates, instruments, and documents referred to
in Section 8 below; (ii) RMI will deliver to Shareholders the Purchase Price;
and (iii) RMI and Internet Now will each file or caused to be filed with each of
the respective Secretaries of States of the State of Colorado and Nevada
Articles of Merger in substantially the form attached hereto as EXHIBIT A and
such other forms as required by the respective Secretaries of States (
collectively the "Articles of Merger").
(f) EFFECT OF MERGER.
(i) IN GENERAL. The Merger shall become effective at the time
(the "EFFECTIVE TIME") RMI and Internet Now file or cause to be filed
the Articles of Merger with each of the Secretaries of the State of the
States of Colorado and Nevada. The Merger shall have the effect set
forth in the Colorado Business Corporation Act and the Nevada Revised
Statutes. The Subsidiary, as the Surviving Corporation, may, at any
time after the Effective Time, take any action (including executing and
delivering any document) in the name and on behalf of either Internet
Now or Subsidiary in order to carry out and effectuate the transactions
contemplated by this Agreement.
(ii) ARTICLES OF INCORPORATION. The Articles of Incorporation of
Subsidiary in effect at and as of the Effective Time shall remain the
Articles of Incorporation of Surviving Corporation without modification
or amendment.
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(iii) BYLAWS. The Bylaws of Subsidiary in effect at and as of the
Effective Time shall remain the Bylaws of Surviving Corporation without
modification or amendment.
(iv) DIRECTORS AND OFFICERS. The directors and officers of
Subsidiary in office at and as of the Effective Time shall remain the
directors and officers of the Surviving Corporation (retaining their
respective positions and terms of office).
(g) CONVERSION OF SECURITIES. At the Effective Time, by virtue of the
Merger and without any further action on the part of RMI, Subsidiary, Internet
Now or Shareholders, the shares of capital stock of Subsidiary and Internet Now
shall be cancelled or converted as follows:
(i) CAPITAL STOCK OF SUBSIDIARY. Each issued and outstanding
share of capital stock of Subsidiary shall continue to be issued and
outstanding.
(ii) CANCELLATION OF CERTAIN SHARES OF CAPITAL STOCK OF INTERNET
NOW. All Internet Now Shares that are owned directly or indirectly by
Internet Now shall be cancelled and no stock of RMI or other
consideration shall be delivered in exchange therefor.
(iii) CONVERSION OF INTERNET NOW SHARES. The Internet Now Shares
issued and outstanding (except the shares cancelled pursuant to Section
2(g)(ii) above) immediately prior to the Effective Time shall
automatically be converted into the right to receive the Merger
Consideration and then such Internet Now Shares shall be cancelled and
retired, without any action on the part of the holders thereof, and each
holder of a certificate representing such Internet Now Shares shall
cease to have any rights with respect thereto, except as provided in
this Section 2(g)(iii) upon the surrender of such certificates
representing Internet Now Shares.
(h) CLOSING OF TRANSFER RECORDS. After the Closing transfers of Internet
Now Shares outstanding prior to the Effective Time shall not be made on the
stock transfer books of the Surviving Corporation. If any certificates
representing such shares are so presented to the Surviving Corporation, they
shall be cancelled and the only right of the holder of such certificate shall be
to share in the Merger Consideration.
3. REPRESENTATIONS AND WARRANTIES CONCERNING SHAREHOLDERS. To induce RMI
to enter into this Agreement and consummate this transaction, each of the
Shareholders, in his or her individual capacity and not on behalf of any other
Shareholder, represents and warrants, except as otherwise specifically provided
in this Section 3, to RMI that the statements contained in this Section 3 are
true, correct and complete as of the date of this Agreement and will be true,
correct,
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complete as of Closing (as though made then and as though the Closing Date were
substituted for the date of this Agreement).
(a) AUTHORIZATION OF TRANSACTION. Shareholder has the legal capacity and
the full power and authority to execute and deliver this Agreement and to
perform the obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of such Shareholder, enforceable in accordance with
its terms and conditions. Shareholder need not give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any government
or governmental agency in order to consummate the transactions contemplated by
this Agreement.
(b) INTERNET NOW SHARES. Shareholder holds of record and owns
beneficially all of the Internet Now Shares set forth next to his or her name in
Section 4(b) of the Disclosure Schedule, free and clear of any restrictions on
transfer (other than any restrictions under any federal and state securities
laws), Taxes, security interests (other than security interests that will be
released at or prior to Closing), options, warrants, purchase rights, contracts,
commitments, equities, claims, and demands. Shareholder is not a party to any
option, warrant, purchase right, or other contract or commitment that could
require Internet Now or such Shareholder to sell, transfer, or otherwise dispose
of any capital stock of Internet Now (other than this Agreement). Shareholder is
not a party to any voting trust, proxy, or other agreement or understanding with
respect to the voting of any capital stock of Internet Now.
(c) RMI PROSPECTUS. Each Shareholder hereby acknowledges that each has
received and reviewed a copy of that certain Prospectus of RMI dated November
19, 1998 including all supplements and amendments thereto (as supplemented, the
"RMI Prospectus") contained in RMI's shelf registration statement on Form S-1
(File No. 333-52731) as filed with the SEC.
(d) SECURITIES REPRESENTATIONS. Each Warranting Shareholder fully
understands the nature, scope and duration of the limitations on transfer
contained herein and under applicable laws, including but not limited to SEC
Rule 145.
(e) AFFILIATES. The Warranting Shareholders are the only persons who
are affiliates of Internet Now within the meaning of Rule 145 promulgated under
the Securities Act.
(f) SHAREHOLDERS NOT SUBJECT TO BACKUP WITHHOLDING. Each Shareholder
hereby individually certifies under penalty of perjury, that each such
Shareholder individually is not subject to the backup withholding provisions of
Section 3406 of the Code.
(g) RESTRICTIVE LEGEND. The Warranting Shareholders acknowledge and
understand that a legend will be placed on all stock certificates representing
the RMI Shares received by Warranting Shareholders as the Purchase Price
substantially to the following effect:
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THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION PURSUANT TO RULE 145 UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND THEY MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR
PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF.
(h) LEGAL, ACCOUNTING AND OTHER FEES AND EXPENSES. Each Shareholder
acknowledges and agrees that all legal, accounting and other fees, costs and
expenses associated with this transaction incurred by such Shareholder and
Internet Now shall be the sole obligation of and shall be paid by such
Shareholder, and shall not be the obligation of Internet Now or RMI.
(i) DISCLOSURE. The representations and warranties contained in this
Section 3 do not contain any untrue statement of a fact or omit to state any
fact necessary in order to make the statements and information contained in this
Section 3 not misleading.
4. REPRESENTATIONS AND WARRANTIES CONCERNING INTERNET NOW. To induce RMI
to enter into this Agreement and consummate this transaction, each of the
Warranting Shareholders, jointly and severally, represents and warrants to RMI
that the statements contained in this Section 4 are true, correct and complete
as of the date of this Agreement and will be true, correct and complete as of
Closing (as though made then and as though the Closing Date were substituted for
the date of this Agreement), except as set forth in the Disclosure Schedule
delivered by Shareholders to RMI on the date hereof and updated as of the
Closing Date and initialed by each of the Warranting Shareholders (the
"DISCLOSURE SCHEDULE"). Nothing in the Disclosure Schedule shall be deemed
adequate to disclose an exception to a representation or warranty made herein,
however, unless the Disclosure Schedule identifies the exception with
particularity and describes the relevant facts in detail. Without limiting the
generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item shall not be deemed adequate to disclose an exception to
a representation or warranty made herein (unless the representation or warranty
has to do with the existence of the document or other item itself). The
Disclosure Schedule will be arranged in Sections corresponding to the lettered
and numbered paragraphs and subparagraphs contained in this Agreement.
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. Internet Now is a
corporation duly organized, validly existing, and in good standing under the
laws of Nevada. Internet Now is duly authorized to conduct business and is in
good standing under the laws of the States of Arizona and Nevada. Internet Now
has no offices or personnel outside the State of Arizona. To the Warranting
Shareholders' Knowledge, Internet Now has full power and authority and all
licenses, permits, and authorizations necessary to carry on the businesses in
which it is engaged and to own and use the properties owned and used by it other
than where the failure to have such would not have a material adverse effect.
Notwithstanding the forgoing, the Parties acknowledge that
5
Internet Now is not qualified to do business in any state other than Arizona and
Nevada. Section 4(a) of the Disclosure Schedule lists the directors and
officers of Internet Now. Shareholders have delivered to RMI true, correct and
complete copies of Internet Now's Articles of Incorporation (Certified by the
Secretaries of State of the States of Nevada, dated within 45 days of the
Closing), Certificate of Good Standing from the Secretary of States of the
States of Arizona and Nevada, bylaws (as amended to date), minute books
(containing the records of meetings of the Shareholders, the board of directors,
and any committees of the board of directors), stock certificate books, and
stock record books of Internet Now. Internet Now is not in default under or in
violation of any provision of its Articles of Incorporation or bylaws.
(b) CAPITALIZATION. The entire authorized capital stock of Internet Now
consists of 25,000 common stock shares, of which 3,099 shares are issued and
outstanding. All of the issued and outstanding Internet Now Shares have been
duly authorized, are validly issued, fully paid, and nonassessable, and are held
of record by Shareholders as set forth in Section 4(b) of the Disclosure
Schedule. There are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, or other
contracts or commitments that could require Internet Now or any Shareholder to
issue, purchase, acquire, sell, transfer, otherwise dispose of or cause to
become outstanding any capital stock of Internet Now, other than pursuant to
this Agreement or that certain Employment Agreement by and between Internet Now
and ▇▇▇▇▇▇ ▇. ▇▇▇▇, Ph.D. dated April 3,1998 (which shall be terminated by
Internet Now at or prior to Closing, in a form approved by RMI). There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to Internet Now. There are no
voting trusts, proxies, or other agreements or understandings with respect to
the capital stock of Internet Now. The Internet Now Shares represent all of the
issued and outstanding capital stock of Internet Now.
(c) NONCONTRAVENTION. Except as set forth on Section 4(c) of the
Disclosure Schedule, to the Warranting Shareholders' Knowledge, neither the
execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which Internet
Now is subject or any provision of the Articles of Incorporation or bylaws of
Internet Now or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
Internet Now is a party or by which it is bound or to which any of its assets is
subject (or result in the imposition of any security interest upon any of its
assets) which would have a material adverse effect on Internet Now.
(d) AUTHORIZATION OF TRANSACTION. Internet Now has the full power and
authority to execute and deliver this Agreement and to perform the obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of Internet Now, enforceable in accordance
6
with its terms and conditions. To the Warranting Shareholders' Knowledge,
Internet Now need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any Person or governmental agency in
order to consummate the transactions contemplated by this Agreement.
(e) TITLE TO ASSETS. Section 4(e) of the Disclosure Schedule sets forth
a true, correct and complete list of the properties and assets owned or leased
by Internet Now indicating such as either owned or leased. Except as set forth
on Section 4(e) of the Disclosure Schedule, Internet Now has good and marketable
title to, or a valid leasehold interest in, the properties and assets used by
it, located on its premises, or shown on Internet Now's October 31, 1997 balance
sheet or acquired after the date thereof, free and clear of all liens,
encumbrances or security interests, except for properties and assets disposed of
in the Ordinary Course of Business for adequate consideration since the October
31, 1997 balance sheet.
(f) SUBSIDIARIES, PREDECESSORS AND OTHER OWNERSHIP INTERESTS. There are
not now nor have there ever been any subsidiaries of Internet Now. There are no
predecessors to Internet Now. Internet Now is not a party to any joint
ventures, partnerships of other types of associations. Internet Now has no
ownership interest in any other entities.
(g) FINANCIAL STATEMENTS. Section 4(g) of the Disclosure Schedule sets
forth, as of Closing, copies of the following financial statements of Internet
Now (collectively the "FINANCIAL STATEMENTS"): (i) audited balance sheets and
statements of income, changes in stockholders' equity, and cash flow as of and
for the fiscal year ended October 31, 1997 ("Audited Financial Statements");
(ii) unaudited balance sheets and statements of income, changes in stockholders'
equity, and cash flow as of and for the fiscal year ended October 31, 1996;
(iii) unaudited balance sheets and statements of income, changes in
stockholders' equity and cash flow as of and for each full month since the
Audited Financial Statements and through each full month ended prior to Closing
Date; (iv) accounts payables, accounts receivables, cash balances and loan and
line of credit balances current to within two (2) business days of the Closing
Date; and (v) all advances from and to and notes, receivables and payables owing
between Internet Now and Shareholders or any of their Affiliates. To the
Warranting Shareholders' Knowledge, the Financial Statements (including the
notes thereto), present fairly the financial condition of Internet Now as of
such dates and the results of operations of Internet Now for such periods, are
true, correct and complete, and are consistent with the books and records of
Internet Now (which books and records are true, correct and complete). The
Parties acknowledge that RMI's certified public accountants prepared the Audited
Financial Statements based upon information provided by Shareholders and
Internet Now. The Warranting Shareholders have had sufficient opportunity to
review the Audited Financial Statements to make the representations and
warranties set forth in this Section 4(g). All information provided by
Shareholders and Internet Now to RMI and RMI's certified public accountants in
conjunction with the preparation of Audited Financial Statements
7
was at the time provided and is as of the Closing Date, without the necessity of
updating, to the Warranting Shareholders' Knowledge, true, correct and complete.
(h) EVENTS SUBSEQUENT TO OCTOBER 31, 1997. Except as set forth on
Section 4(h) of the Disclosure Schedule, to the Warranting Shareholders'
Knowledge, since October 31, 1997, there has not been any material adverse
change in the business, financial condition, operations, results of operations,
or future prospects of Internet Now. Without limiting the generality of the
foregoing, to the Warranting Shareholders' Knowledge, since that date:
(i) Internet Now has not sold, leased, transferred, or assigned
any of its assets, tangible or intangible, other than for a fair
consideration in the Ordinary Course of Business;
(ii) Internet Now has not entered into any agreement, contract,
lease, or license (or series of related agreements, contracts, leases,
and licenses) involving more than $5,000 or outside the Ordinary Course
of Business;
(iii) Internet Now has not accelerated, terminated, modified, or
cancelled any agreement, contract, lease, or license (or series of
related agreements, contracts, leases, and licenses) to which Internet
Now is a party or by which it is bound involving more than $5,000 or
outside the Ordinary Course of Business;
(iv) Internet Now has not imposed any security interest upon any
of its assets, tangible or intangible;
(v) Internet Now has not made any capital expenditure (or series
of related capital expenditures) either involving more than $5,000 or
outside the Ordinary Course of Business;
(vi) Internet Now has not made any capital investment in, any
loan to, or any acquisition of the securities or assets of, any other
Person (or series of related capital investments, loans, and
acquisitions) other than loans to the Warranting Shareholders in a total
amount of less than one hundred twenty thousand dollars ($120,000);
(vii) Internet Now has not issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any indebtedness
for borrowed money or capitalized lease obligation either involving more
than $5,000 or outside the Ordinary Course of Business;
(viii) Internet Now has not delayed or postponed the payment of
accounts payable and other Liabilities outside the Ordinary Course of
Business;
8
(ix) Internet Now has not cancelled, compromised, waived, or
released any right or claim (or series of related rights and claims)
involving more than $5,000 or outside the Ordinary Course of Business;
(x) Internet Now has not granted any license or sublicense of any
rights under or with respect to any Intellectual Property;
(xi) there has been no change made or authorized in the Articles
of Incorporation or bylaws of Internet Now;
(xii) Internet Now has not issued, sold, or otherwise disposed of
any of its capital stock, or granted any options, warrants, or other
rights to purchase or obtain (including upon conversion, exchange, or
exercise) any of its capital stock other than pursuant to that certain
Employment Agreement by and between Internet Now and ▇▇▇▇▇▇ ▇. ▇▇▇▇,
Ph.D. dated April 3, 1998 (which shall be terminated by Internet Now at
or prior to Closing, in a manner approved by RMI);
(xiii) Internet Now has not declared, set aside, or paid any
dividend or made any distribution with respect to its capital stock
(whether in cash or in kind) or redeemed, purchased, or otherwise
acquired any of its capital stock;
(xiv) Internet Now has not experienced any damage, destruction,
or loss (whether or not covered by insurance) to its property involving
more than $5,000 dollars;
(xv) Internet Now has not made any loan to, or entered into any
other transaction with, any of its directors, officers, and employees
outside the Ordinary Course of Business other than loans to the
Warranting Shareholders in a total amount of less than one hundred
twenty thousand dollars ($120,000);
(xvi) Internet Now has not entered into any employment contract
or collective bargaining agreement, written or oral, or modified the
terms of any existing such contract or agreement other than that certain
Employment Agreement by and between Internet Now and ▇▇▇▇▇▇ ▇. ▇▇▇▇,
Ph.D. dated April 3, 1998 (which shall be terminated by Internet Now at
or prior to Closing, in a manner approved by RMI);
(xvii) Internet Now has not granted any increase in the base
compensation of any of its directors, officers, and employees outside
the Ordinary Course of Business other than increases to the Warranting
Shareholders as set forth in the Disclosure Schedule;
9
(xviii) Internet Now has not adopted, amended, modified, or
terminated any bonus, profit-sharing, incentive, severance, or other
plan, contract, or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect to any
other Employee Benefit Plan);
(xix) Internet Now has not made any other change in employment
terms for any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xx) Internet Now has not made or pledged to make any charitable
or other capital contribution;
(xxi) there has not been any other occurrence, event, incident,
action, failure to act, or transaction outside the Ordinary Course of
Business involving Internet Now; and
(xxii) Internet Now has not made any commitments or agreements
of any kind or nature with respect to any of the foregoing.
(i) UNDISCLOSED LIABILITIES. Except as set forth on Section 4(i) of the
Disclosure Schedule, as of the Closing Date, Internet Now has no Liability (and
to the Warranting Shareholders' Knowledge, there is no Basis) for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against Internet Now giving or that could give rise to any
Liability, except for (i) Liabilities set forth on the face of the Audited
Financial Statements (rather than in any notes thereto) and (ii) Liabilities
which have arisen after the Audited Financial Statements in the Ordinary Course
of Business (none of which results from, arises out of, relates to, is in the
nature of, or was caused by any breach of contract, breach of warranty, tort,
infringement, or violation of law).
(j) LEGAL COMPLIANCE. To the Warranting Shareholders' Knowledge,
Internet Now and its Affiliates have complied with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state or local governments
(and all agencies thereof), and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced or is pending or to the Knowledge of the Warranting Shareholders
threatened against Internet Now alleging any failure so to comply other than
where the failure to comply would not have a material adverse effect.
Notwithstanding the forgoing, the Parties acknowledge that Internet Now has not
qualified or registered to do business in any state other than the States of
Arizona and Nevada.
(k) TAX MATTERS. Except as set forth on Section 4(k) of the Disclosure
Schedule:
(i) Internet Now has timely filed all federal and State of
Arizona Tax Returns that it was required to file. All such Tax Returns
were true, correct and complete in all
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respects. All Taxes owed by Internet Now (whether or not shown on any
Tax Return) have been paid. Internet Now currently is not the
beneficiary of any extension of time within which to file any Tax
Return. Internet Now has not filed Tax Returns in any state other than
Arizona, but to the Warranting Shareholders' Knowledge, no claim has
ever been made by an authority in a jurisdiction where Internet Now does
not file Tax Returns that it is or may be subject to taxation by that
jurisdiction. There are no security interests on any of the assets of
Internet Now that arose in connection with any failure (or alleged
failure) to pay any Tax.
(ii) Internet Now has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to
any employee, independent contractor, creditor, stockholder, or other
third party.
(iii) Neither Warranting Shareholder expects any authority to
assess any additional Taxes for any period for which Tax Returns have
been filed. There is no dispute or claim concerning any Tax Liability of
Internet Now either (A) claimed or raised by any authority in writing or
(B) as to which the Warranting Shareholders has Knowledge based upon
contact with any agent of such authority.
(iv) Section 4(k) of the Disclosure Schedule lists all federal,
state, and local Tax Returns filed with respect to Internet Now for
taxable periods ended on or after December 31, 1995, indicates those Tax
Returns that have been audited, and indicates those Tax Returns that
currently are the subject of audit. Shareholders have delivered to RMI
correct and complete copies of all federal and state income Tax Returns,
examination reports, and statements of deficiencies assessed against or
agreed to by Internet Now since December 31, 1995.
(v) Internet Now has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a
Tax assessment or deficiency.
(vi) Internet Now has not made any payments, is not obligated to
make any payments, or is not a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be
deductible under Code Section 280G. Internet Now has disclosed on its
federal income Tax Returns all positions taken therein that could give
rise to a substantial understatement of federal income Tax within the
meaning of Code Section 6662. Internet Now is not a party to any Tax
allocation or sharing agreement. Internet Now (A) has not been a member
of an Affiliated Group filing a consolidated federal income Tax Return
or (B) has no Liability for the Taxes of any Person under Reg. Section
1.1502-6 (or any similar provision of state or local law), as a
transferee or successor, by contract, or otherwise.
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(l) REAL PROPERTY.
(i) Internet Now does not own and has never owned any real
property.
(ii) Section 4(l) of the Disclosure Schedule lists and describes
briefly all real property leased or subleased to Internet Now. Attached
to Section 4(l) of the Disclosure Schedule, as of the Closing Date, is
an estoppel certificate, in a form satisfactory to RMI, executed by each
landlord or sublandlord. Warranting Shareholders have delivered to RMI
true, correct and complete copies of the leases and subleases listed in
Section 4(l) of the Disclosure Schedule (as amended through the Closing
Date). Except as set forth on Section 4(l) of the Disclosure Schedule
and to the Warranting Shareholders' Knowledge, with respect to each
lease and sublease listed in Section 4(l) of the Disclosure Schedule:
(A) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(B) the lease or sublease will continue to be legal,
valid, binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions
contemplated hereby;
(C) no party to the lease or sublease is in breach or
default, and no event has occurred which, with notice or lapse of
time, would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(D) no party to the lease or sublease has repudiated any
provision thereof;
(E) there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;
(F) Internet Now has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold;
(G) all facilities leased or subleased thereunder have
received all approvals of governmental authorities (including
licenses and permits) required in connection with the operation
thereof and have been operated and maintained in accordance with
applicable laws, rules, and regulations;
(H) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the
operation of said facilities; and
12
(I) the owner of the facility leased or subleased has
good and marketable title to the parcel of real property, free
and clear of any security interest, easement, covenant, or other
restriction, except for installments of special easements not yet
delinquent and recorded easements, covenants, and other
restrictions which do not impair the current use, occupancy, or
value, or the marketability of title, of the property subject
thereto.
(m) INTELLECTUAL PROPERTY. To the Knowledge of Warranting Shareholders:
(i) Internet Now owns or has the right to use pursuant to
license, sublicense, agreement, or permission all Intellectual Property
necessary for the operation of the business of Internet Now as presently
conducted. Each item of Intellectual Property owned or used by Internet
Now immediately prior to the Closing hereunder will be owned or
available for use by RMI on identical terms and conditions immediately
subsequent to the Closing hereunder. Internet Now has taken all
reasonable and necessary actions to maintain and protect each item of
Intellectual Property that it owns or uses.
(ii) Internet Now has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of third parties, and Internet Now has not received any
charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including
any claim that Internet Now must license or refrain from using any
Intellectual Property rights of any third party).No third party has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of Internet Now.
(iii) Internet Now has no patents or registrations with respect
to any of its Intellectual Property. Internet Now has not granted any
licenses, agreements, or other permission to any third party with
respect to any of its Intellectual Property.
(iv) Internet Now has registered the service ▇▇▇▇ "doitnow" with
the Country of Tunisia, and the domain names "▇▇▇▇▇▇▇.▇▇▇",
"▇▇▇▇▇▇▇.▇▇▇", "▇▇▇▇▇▇▇▇.▇▇▇" and "▇▇▇▇▇▇▇▇▇.▇▇▇" with Internic Domain
Registration Service. Internet Now has no other trade names or
unregistered trademarks used in connection with its business. With
respect to each name above:
(A) Internet Now possess all right, title, and interest
in and to the item, free and clear of any Security Interest,
license, or other restriction;
(B) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
13
(C) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or is threatened
which challenges the legality, validity, enforceability, use, or
ownership of the item; and
(D) Internet Now has not agreed to indemnify any Person
for or against any interference, infringement, misappropriation,
or other conflict with respect to the item.
(v) Section 4(m) of the Disclosure Schedule identifies each item
of Intellectual Property that any third party owns and that Internet Now
uses pursuant to license, sublicense, agreement, permission or
otherwise. Shareholders have delivered to RMI true, correct and
complete copies of all such licenses, sublicenses, agreements, and
permissions (as amended to date). With respect to each item of
Intellectual Property required to be identified in Section 4(m) of the
Disclosure Schedules:
(A) the license, sublicense, agreement, or permission
covering the item is legal, valid, binding, enforceable, and in full
force and effect and no party thereto has repudiated any provision
thereof;
(B) the license, sublicense, agreement, or permission
will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby;
(C) no party to the license, sublicense, agreement, or
permission is in breach or default, and no event has occurred which with
notice or lapse of time would constitute a breach or default or permit
termination, modification, or acceleration thereunder;
(D) Internet Now has not granted any sublicense or
similar right with respect to such license, sublicense, agreement, or
permission.
(vi) Internet Now has not granted any licenses, agreements, or
permission to any third party with respect to any of its Intellectual
Property.
(n) TANGIBLE ASSETS. Section 4(n) of the Disclosure Schedule list all
of the tangible assets of Internet Now, indicating those assets leased by
Internet Now. Except as set forth on Section 4(n) of the Disclosure Schedule,
Internet Now owns or leases all buildings, machinery, equipment, and other
tangible assets necessary for the conduct of its businesses as presently
conducted. Except as set forth on Section 4(n) of the Disclosure Schedule, to
the Knowledge of the Warranting Shareholders, each such tangible asset is free
from defects, has been maintained in
14
accordance with normal industry practice, is in good operating condition and
repair, and is suitable for the purposes for which it presently is used, all
subject to normal wear and tear.
(o) INVENTORY. Internet Now has no inventory.
(p) CONTRACTS. Section 4(p) of the Disclosure Schedule lists the
following contracts and other agreements to which Internet Now is a party as of
the Closing Date:
(i) any agreement (or group of related agreements) for the lease
of personal property to or from any Person;
(ii) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or
other personal property, or for the furnishing or receipt of services,
the performance of which involves consideration in excess of $1,000.00,
other than to customers of Internet Now in the Ordinary Course of
Business;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under which
it has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation;
(v) any agreement concerning confidentiality or noncompetition;
(vi) any agreement with Shareholders or Affiliates (other than
Internet Now);
(vii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors,
officers, and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on a
full-time, part-time, consulting, independent contractor or other basis
providing annual compensation in excess of $40,000 or providing
severance benefits;
(x) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, and employees or any
affiliates thereof outside the Ordinary Course of Business;
15
(xi) any agreement under which a Shareholder provided a personal
guarantee;
(xii) any agreement under which the consequences of a default or
termination could have a material adverse effect on the business,
financial condition, operations, results of operations, or future
prospects of Internet Now; or
(xiii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $5,000.
Shareholders have delivered to RMI a true, correct and complete copy of each
written agreement listed in Section 4(p) of the Disclosure Schedule (as amended
to date) and a written summary setting forth the terms and conditions of each
oral agreement referred to in Section 4(p) of the Disclosure Schedule. To the
Warranting Shareholders' Knowledge, with respect to each such agreement: (A) the
agreement is legal, valid, binding, enforceable, and in full force and effect;
(B) the agreement will continue to be legal, valid, binding, enforceable, and in
full force and effect in identical terms following the consummation of the
transaction contemplated hereby; (C) no party is in breach or default, and no
event has occurred which with notice or lapse of time would constitute a breach
or default, or permit termination, modification, or acceleration, under the
agreement; and (D) no party has repudiated any provision of the agreement.
(q) NOTES AND ACCOUNTS RECEIVABLE. As of the Closing Date Section 4(q)
of the Disclosure Schedule will set forth a true, correct and complete list of
all notes and accounts receivables. Except as set forth Section 4(q) of the
Disclosure Schedule, all notes and accounts receivable of Internet Now are
reflected properly on the books and records, are valid receivables subject to no
setoffs or counterclaims, are current and collectible, and will be collected in
accordance with their terms at their recorded amounts.
(r) POWERS OF ATTORNEY. Except as set forth on Section 4(r) of the
Disclosure Schedule, there are no outstanding powers of attorney executed on
behalf of Internet Now.
(s) INSURANCE. Section 4(s) of the Disclosure Schedule sets forth the
following information with respect to each insurance policy (including policies
providing property, casualty, liability, and workers' compensation coverage and
bond and surety arrangements) to which Internet Now has been a party, a named
insured, or otherwise the beneficiary of coverage at any time within the past
two (2) years:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder, and
the name of each covered insured;
16
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the coverage
was on a claims made, occurrence, or other basis) and amount (including
a description of how deductibles and ceilings are calculated and
operate) of coverage;
(v) a description of any retroactive premium adjustments or other
loss-sharing arrangements; and
(vi) claims reports and loss runs.
To the Warranting Shareholders Knowledge, with respect to each such insurance
policy, prior to and as of the Closing Date, each policy is legal, valid,
binding, enforceable, and in full force and effect. Internet Now has been
covered since its incorporation by insurance in scope and amount customary and
reasonable for the businesses in which it has engaged during such period.
Internet Now has no self-insurance arrangements.
(t) LITIGATION. Section 4(t) of the Disclosure Schedule sets forth each
instance in which, to the Warranting Shareholders' Knowledge, Internet Now (i)
is subject to any outstanding injunction, judgment, order, decree, ruling, or
charge or (ii) is a party or, to the Knowledge of Warranting Shareholders, is
threatened to be made a party to any action, suit, proceeding, hearing, or
investigation of, in, or before any court or quasi-judicial or administrative
agency of any federal, state or local jurisdiction or before any arbitrator.
Except as set forth of Section 4(t) of the Disclosure Schedule, none of the
actions, suits, proceedings, hearings, and investigations set forth in Section
4(t) of the Disclosure Schedule could result in a material adverse change in the
business, financial condition, operations, results of operations, or future
prospects of Internet Now. None of the Warranting Shareholders has any reason to
believe that any such action, suit, proceeding, hearing, or investigation may be
brought or threatened against Internet Now.
(u) PRODUCT WARRANTY. Internet Now does not provide any warranties or
guaranties for any product manufactured, sold, leased, or delivered by Internet
Now.
(v) PRODUCT LIABILITY. To the Knowledge of Warranting Shareholders,
Internet Now has no Liability (and there is no Basis for any present or, future
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against Internet Now giving rise to any Liability) arising out of any
injury to individuals or property as a result of the ownership, possession, or
use of any product manufactured, sold, leased, or delivered by Internet Now.
(w) EMPLOYEES. All employees providing services to Internet Now (other
than the Warranting Shareholders) are leased to Internet Now by AmeriCare
Employers Group, Inc. Section 4(w) of the Disclosure Schedules lists all such
employees and contractors along with their
17
respective job titles, current salary and other benefits offered by Internet
Now. To the Knowledge of the Warranting Shareholders, no key employee or
contractors or group of employees or contractors has any plans to terminate
employment with Internet Now. To the Knowledge of the Warranting Shareholders,
Internet Now has not committed any unfair labor practice. Section 4(w) of the
Disclosure Schedule has attached to it true, correct and complete copies of all
contracts, agreements and a written summary setting forth the terms and
conditions of each oral agreement with respect to such employee or contractor,
including but not limited to that contract by and between Internet Now and
AmeriCare Employers Group, Inc., as amended as of the Closing Date.
(x) EMPLOYEE BENEFITS. Internet Now does not maintain or contribute and
has never maintained or contributed, or to the Knowledge of the Warranting
Shareholders, ever been required to maintain or contribute to any Employee
Benefit Plan, Employee Pension Benefit Plan, Multiemployer Plan or Employee
Welfare Benefit Plan providing medical, health, or life insurance or other
welfare-type benefits for current or future retired or terminated employees,
their spouses, or their dependents (other than in accordance with Code Section
4980B).
(y) GUARANTIES. Internet Now is not a guarantor or otherwise liable
for any Liability or obligation (including indebtedness) of any other Person.
(z) ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS. Except as set forth
on Section 4(z) of the Disclosure Schedule and to the Warranting Shareholders'
Knowledge, Internet Now and Affiliates have complied and are in compliance with
all Environmental, Health, and Safety Requirements.
(aa) CERTAIN BUSINESS RELATIONSHIPS WITH INTERNET NOW. Except as set
forth on Section 4(aa) of the Disclosure Schedule, Shareholders and any
Affiliates have not been involved in any business arrangement or relationship
with Internet Now, other than as employees, within the past twelve (12) months,
and Shareholders and any Affiliates do not own any asset, tangible or
intangible, which is used in the business of Internet Now.
(bb) AVERAGE MONTHLY REVENUES. On the date of Closing, Internet Now has
or will have at least 5,700 "Internet Service Customers" (defined below).
Internet Now's average monthly gross revenues from its Internet Service
Customers for internet access under their subscription agreement (described
below) for the months of August, September and October, 1998 (determined in
accordance with GAAP) is $110,000. For purposes of this Section 4(bb),
"Internet Service Customers" shall mean all customers of Internet Now: (i) whose
subscription for internet access is in effect, (ii) whose payment for such
access is not more than twenty-nine days past due, and (iii) with respect to
whom Internet Now has not received notice of termination of such subscription
for internet access.
18
(cc) Specific Liabilities. On the date of Closing, Internet Now has or
will have specific liabilities in the following categories of not more than:
(A) $65,000 of future obligations from the date of Closing
through May 31, 2000 under that certain Sublease dated
May 30, 1996 between Goodnet Incorporated, as sublessor,
and Internet Now, as sublessee, for the property located
at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇;
(B) $165,000 of future obligations from the date of Closing
in capital equipment leases; and
(C) $250,000 of Deferred Revenue Liabilities. For purposes
of this subsection, "Deferred Revenue Liabilities" shall
mean amounts prepaid to Internet Now by it's Customers
for Internet services, such service which have not yet
been delivered to said Customers at the time of Closing.
These Amounts shall be calculated as follows: The amount
paid by the Customer for prepaid service shall be divided
by the number of full Customer Months of service
remaining for such Customer at the Closing. For purposes
of this subsection, a "Customer Month" shall be
determined based on a particular Customer's next
scheduled rebilling date. A "Customer" is as defined in
Section 4 (bb). Thus, if a Customer is scheduled to be
re-billed on the 3rd of a given month, the Customer
Month, for this example Customer, shall be from the 3rd
of a given month to the 2nd of the following month. For
example, if on November 3, 1999 a Customer is scheduled
to be re-billed $204 for one year's service and the
merger Closing Date is November 20, 1998, the prepaid
revenue liability for this example Customer shall be $187
(11/12 of $204 = $17, $17 x 11 full Customer Months
remaining = $187).
(dd) BROKERS' FEES. Internet Now has no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement. The Parties acknowledge and agree
that any brokerage or other fees due to Rampart Associates, Inc. as a result of
this transaction shall be paid by RMI.
(ee) LEGAL, ACCOUNTING AND OTHER FEES AND EXPENSES. Warranting
Shareholders, jointly and severally, acknowledge and agree that all of Internet
Now's legal, accounting and other fees, costs and expenses associated with this
transaction shall be the sole obligation of and shall be paid by the
Shareholders, and shall not be the obligation of Internet Now. Notwithstanding
the forgoing, the Parties acknowledge and agree that RMI shall be solely
responsible for the costs of its certified public accountants to complete the
Audited Financial Statements and any audits requested by RMI for the stub period
from October 31, 1997 through the Closing Date.
19
(ff) DISCLOSURE. The representations and warranties contained in this
Section 4 do not contain any untrue statement of a fact or omit to state any
fact necessary in order to make the statements and information contained in this
Section 4 not misleading.
5. REPRESENTATIONS AND WARRANTIES OF RMI. RMI represents and warrants
to Internet Now and Shareholders that the statements contained in this Section 5
are true, correct and complete as of the date of this Agreement and will be
true, correct and complete as of Closing (as though made then and as though the
Closing Date were substitutes for the date of this Agreement).
(a) ORGANIZATION. RMI is a corporation duly organized, validly existing,
and in good standing under the laws of the jurisdiction of its incorporation.
RMI has the requisite corporate power and authority to own, lease and operate
its properties and is duly authorized and licensed to carry on its business as
such business is currently being conducted, except where such would not have a
material adverse effect.
(b) AUTHORIZATION OF TRANSACTION. RMI has the full corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of RMI, enforceable in accordance with its terms and conditions. The execution,
delivery and performance of this agreement by RMI has been duly authorized by
all requisite corporate action on the part of RMI.
(c) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which RMI is subject or any provision of its
charter or bylaws.
(d) RMI PROSPECTUS. At the Closing, the RMI Prospectus will not contain
any untrue statements of material fact or omit to state any material fact
necessary to make the statements contained therein not materially misleading, or
omit to state any material fact which would have a material adverse effect on
the business of RMI, its future prospects, or the value or marketability of the
RMI Stock. Notwithstanding the foregoing, however, RMI makes no representation
or warranty as to the future performance or business of RMI, its future
prospects, or the value or marketability of the RMI stock.
6. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
(a) NOTICES AND CONSENTS. Shareholders will assist RMI and its counsel
to give any notices to third parties, and will assist RMI to obtain any third
party consents, that are required or that
20
RMI deems necessary in connection with this transaction. Each of the Parties
will (and Shareholder will cause Internet Now to) give any notices to, make any
filings with, and use its best efforts to obtain any authorizations, consents,
and approvals of governments and governmental agencies.
(b) TERMINATION OF ▇▇▇▇▇▇ ▇. ▇▇▇▇'▇ EMPLOYMENT AGREEMENT. At or prior
to Closing, Internet Now will terminate that certain Employment Agreement by and
between Internet Now and ▇▇▇▇▇▇ ▇. ▇▇▇▇, Ph.D. dated April 3, 1998 in a form
acceptable to RMI and its counsel.
(c) LOANS TO WARRANTING SHAREHOLDERS. Internet Now will in a form
satisfactory to RMI, its counsel and certified public accountants pay a bonus to
the Warranting Shareholders as an entry on the books and records of Internet Now
effective October 31, 1998 to offset the loans made by Internet Now to the
Warranting Shareholders in an amount not to exceed one hundred fifty thousand
and no/Dollars ($150,000) in such a manner that Internet Now shall only be
responsible for one half and Warranting Shareholders shall be responsible for
one half of any local, state or federal withholding, employment, income or any
other Taxes in connection with the fees paid to Warranting Shareholders. Each
Warranting Shareholder agrees to hold Internet Now and RMI and its respective
officers, directors and agents harmless with respect to any loss, liability,
cost or expenses pertaining to any of these taxes related to the compensation
payable to the Warranting Shareholders, including any and all interest and
penalties associated therewith.
(d) PRESERVATION OF BUSINESS. Warranting Shareholders will cause
Internet Now to keep its business, properties and goodwill substantially intact,
including its present operations, physical facilities, working conditions, and
relationships with lessors, licensors, suppliers, customers, and employees.
(e) FULL ACCESS. Shareholders will permit, and Shareholders will cause
Internet Now to permit, representatives of RMI to have full access (including
providing introductions, where necessary), to all premises, properties,
personnel, customers, lessors, licensors, licensees, vendors, supplies,
creditors, debtors, books, records (including Tax records), contracts, and
documents of or pertaining to Internet Now. Notwithstanding the forgoing, RMI
shall contact ▇▇▇▇▇▇▇▇▇▇ Persons prior to contacting or interviewing any
customer, employee or subcontracted staff member of Internet Now. Mr. Persons
shall have the right to be present at all interviews of said customers,
employees or subcontracted staff members. In addition, Shareholders will
provide to RMI's legal counsel copies of or description of all personnel,
customers, lessors, licensors, licensees, vendors, suppliers, creditors,
debtors, books, records (including Tax records), contracts, and documents of or
pertaining to Internet Now. Internet Now will cause its independent accountants
to make available their work papers with respect to Internet Now and to
otherwise provide such assistance as is reasonably requested by RMI. No
discovery by RMI shall
21
be deemed to amend or supplement the Disclosure Schedule or to prevent or cure
any misrepresentation, breach of warranty, or breach of covenant.
7. POST-CLOSING COVENANTS. The Parties agree as follows with respect to
the period following the Closing.
(a) GENERAL. In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Section 9 below).
Shareholders and Internet Now acknowledge and agree that from and after Closing
RMI will be entitled to possession of all documents, books, records (including
Tax records), agreements, and financial data of any sort relating to Internet
Now.
(b) WITHHOLDING TAXES ON LOAN TO WARRANTY SHAREHOLDERS. Warranty
Shareholders shall be individually responsible for one half of any local, state
or federal withholding, employment income or any other Taxes in connection with
the bonus paid to Warranting Shareholders pursuant to Section 6(c) above. In
addition, Warranting Shareholders shall be solely responsible for any and all
interest and penalties assessed against the Warranting Shareholders and Internet
Now in connection therewith, if any.
(c) COOPERATION IN THE ISSUANCE OF THE AUDITED FINANCIAL STATEMENTS.
The Warranting Shareholders shall cooperate with RMI and KPMG Peat Marwick in
the issuance of the Audited Financial Statements, including but not limited to
the execution of all documents reasonably requested by RMI or KPMG Peat Marwick
to finalize the Audited Financial Statements.
(d) LITIGATION SUPPORT. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction accruing on
or prior to the Closing Date involving Internet Now, each of the other Parties
will cooperate with the contesting party and its counsel in the contest or
defense, make available their personnel, and provide such testimony and access
to their books and records as shall be necessary in connection with the contest
or defense, all at the sole cost and expense of the contesting or defending
Party (unless the contesting or defending Party is entitled to indemnification
therefor under Section 9 below).
(e) TRANSITION. During the term of the covenant not to compete set forth
in Section 7(i), Shareholders will not take any action that is designed,
intended or could reasonably be expected to have the effect of discouraging any
lessor, licensor, customer, supplier, employee, independent
22
contractor or other business associate of Internet Now from maintaining the same
business relationships with Internet Now after Closing as it maintained with
Internet Now prior to the Closing. During the term of the covenant not to
compete set forth in Section 7(i) below, Shareholders will refer all customer
inquiries relating to the businesses of Internet Now to RMI. For no additional
consideration, each of the Shareholders active in the business of Internet Now
prior to Closing shall provide assistance to RMI, its employees, agents and
advisors in the transition of the management of Internet Now on a full time
basis as requested by RMI for a period not to exceed one (1) month following
Closing. In addition for a period not to exceed an additional two (2) months
thereafter, such Shareholders active in the business of Internet Now shall
provide assistance to RMI, its employees, agents and advisors on a paid
consulting basis, as mutually agreed to by RMI and each such Shareholder.
(f) RELEASE OF SHAREHOLDER PERSONAL GUARANTEES. RMI will use its best
efforts to obtain within 30 days of Closing the release of any obligations of
Internet Now which are personally guaranteed by a Shareholder and set forth on
Section 7(f) of the Disclosure Schedule, including but not limited to sending a
certified letter to each such lender, landlord, vendor or other Person at the
address set forth on Section 7(f) of the Disclosure Schedule, offering to
substitute the guaranty of RMI for the personal guarantee of such Shareholder.
If RMI is unable to obtain the release of any Shareholder's personal guarantee
within 30 days of Closing, RMI shall agree to be primary guarantor of such
obligation within 60 days of Closing. If RMI is not accepted as a primary
guarantor, RMI shall offer to be an additional guarantor. Section 7(f) of the
Disclosure Schedule sets forth the personal guarantees of the Shareholders by
name, address, principal contact person of each such obligee to which such
request shall be sent and the nature and amount of the personal guarantee along
with the name of the Shareholder granting the personal guarantee. Shareholders
shall have provided true, correct and complete copies of all such contracts
containing any personal guarantees. RMI shall not be obligated to request the
release of any personal guarantees not set forth on Section 7(f) of the
Disclosure Schedules. RMI agrees to indemnify and hold harmless such
Shareholder from and against any costs or liability accruing from and after
Closing with respect to any liability specifically set forth on Section 7(f) of
the Disclosure Schedule. RMI shall not be responsible and shall not indemnify
nor hold harmless such Shareholder from or against any liability accruing prior
to or as of the Closing Date.
(g) CONFIDENTIALITY. The Parties acknowledge and agree that RMI is
acquiring as part of this transaction all of the Confidential Information of
Internet Now and the Shareholders will deliver any and all tangible evidence of
Internet Now's Confidential Information to RMI prior to the Closing Date.
Notwithstanding the foregoing, each Shareholder may retain copies of any
agreements or other documents to which such Shareholder, in his or her
individual capacity and not in the capacity as a shareholder, officer, director
or agent of Internet Now is or was a party. Each of the Shareholders and
Internet Now will treat and hold as confidential all of the Confidential
Information, refrain from using any of the Confidential Information except in
connection with this Agreement, and deliver promptly to RMI as of Closing all
tangible
23
embodiments (and all copies) of the Confidential Information which are in his,
her or its possession. In the event that any Shareholder is requested or
required (by oral question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or similar
process) to disclose any Confidential Information, such Shareholder will notify
RMI promptly of the request or requirement so that RMI may seek an appropriate
protective order or waive compliance with the provisions of this Section 7(g).
If, in the absence of a protective order or the receipt of a waiver hereunder,
such Shareholder is, on the advice of counsel, compelled to disclose any
Confidential Information to any tribunal or else stand liable for contempt, such
Shareholder may disclose the Confidential Information to the tribunal; PROVIDED,
HOWEVER, that such Shareholder shall use his or her best efforts to obtain, at
the request of RMI and at RMI's expense, an order or other assurance that
confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as RMI shall designate. The foregoing
provisions shall not apply to any Confidential Information which is generally
available to the public immediately prior to the time of disclosure or such
Confidential Information and information that is currently in a Shareholders
possession on a non-confidential basis. This Section 7(g) shall survive
Closing.
(h) NON-SOLICITATION. Each Shareholder agrees that for a period of one
(1) year from and after Closing, he or she will not, in any manner, directly or
indirectly, either as owner, officer, employer, employee, independent
contractor, stockholder, agent, principal, manager, consultant, advisor, partner
or otherwise, (i) solicit any Person who is a customer of Internet Now as of the
Closing Date, (ii) induce any Person who is an employee, agent, contractor or
subcontractor of RMI, Internet Now and/or any affiliate thereof as of the
Closing Date to terminate his, her or its employment, agency, contractor or
subcontractor relationship with RMI, Internet Now or any affiliate thereof, or
(iii) hire or attempt to hire any Person who is an employee, agent, contractor
or subcontractor of RMI, Internet Now or any affiliate thereof as of the Closing
Date. In the case of any Shareholder other than the Warranting Shareholders,
the prohibition of this Section 7(h) shall only apply to the extent such
Shareholder does not personally engage or personally participate in the
prohibited conduct.
EACH SHAREHOLDER AGREES THAT THE COVENANTS MADE IN THIS SECTION ARE
REASONABLE WITH RESPECT TO THEIR DURATION AND PROSCRIPTION. Shareholder further
agrees that the covenants made in this Section 7(h) shall be construed as an
agreement independent of any other provision of this Agreement. Hence, the
covenants made in this Section 7(h) shall survive Closing. Moreover, the
existence of any claim or cause of action of Shareholders against RMI, whether
or not predicated upon the terms of this Agreement, shall not constitute a
defense to the enforcement by Internet Now or RMI of these covenants.
(i) COVENANT NOT TO COMPETE. For a period of one (1) year from and after
the Closing Date, ▇▇▇▇▇▇▇▇▇▇ Persons and ▇▇▇▇▇▇ ▇▇▇▇▇ will not directly or
indirectly own, manage, operate, control, be employed by, participate in or be
connected in any manner with the ownership,
24
management, operation or control of any business providing Internet access or
web hosting services in the State of Arizona; PROVIDED, HOWEVER, that no owner
of less than five percent (5%) of the outstanding stock of any publicly-traded
corporation shall be deemed to engage solely by reason thereof in any of its
businesses. If the final judgment of a court of competent jurisdiction declares
that any term or provision of this Section is invalid or unenforceable, the
Parties agree that the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope, duration, or area of
the term or provision, to delete specific words or phrases, or to replace any
invalid or unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed.
EACH WARRANTING SHAREHOLDER AGREES THAT THE COVENANTS MADE IN THIS
SECTION ARE REASONABLE WITH RESPECT TO THEIR DURATION, GEOGRAPHICAL AREA AND
PROSCRIPTION. Each Warranting Shareholder further agrees that the covenants
made in this Section 7(i) shall be construed as an agreement independent of any
other provision of this Agreement. Hence, the covenants made in this Section
7(i) shall survive Closing. Moreover, the existence of any claim or cause of
action of any Warranting Shareholder against Internet Now or RMI, whether or not
predicated upon the terms of this Agreement, shall not constitute a defense to
the enforcement by Internet Now or RMI of these covenants.
(j) INTERNET ACCESS. For a period not to exceed one (1) year from and
after the Closing Date, RMI shall provide to the Shareholders at no cost to them
basic dial-up national internet access service, if available and offered by RMI.
In addition, for a period not to exceed one (1) year from and after the Closing
Date, RMI shall provide to ▇▇▇▇▇▇▇▇▇▇ Persons at no cost to him (except that
▇▇▇▇▇▇▇▇▇▇ shall be solely responsible for all US WEST or other such carrier
charges) DSL internet access service in the Phoenix, Arizona area, if available
and offered by RMI. Notwithstanding the forgoing, RMI may terminate such access
in the event any Shareholder is in breach of any provision of this Agreement.
(k) SECURITIES MATTERS. RMI shall furnish to Warranting Shareholders
such reasonable number of copies of the RMI Prospectus and such other
documentation as may be necessary to facilitate the sale of the RMI Shares by
the Warranting Shareholders.
(l) PERSONAL PROPERTY. The Parties acknowledge and agree that at
Closing, Internet Now shall transfer to ▇▇▇▇▇▇▇▇▇▇ Persons ownership of the
laptop computer currently used by him in its "as is" condition.
(m) PARKING SPACE. After Closing for so long as Subsidiary, RMI or any
Affiliate thereof is a tenant and during the initial term of the lease for the
office space located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ (Hayden
Square), Subsidiary, RMI or its Affiliate shall
25
permit ▇▇▇▇▇▇▇▇▇▇ to use one (1) of the parking spaces in the Hayden Square
Garage at no cost to ▇▇▇▇▇▇▇▇▇▇ Persons, provided that, ▇▇▇▇▇▇▇▇▇▇ Persons
grants to Subsidiary, RMI or its Affiliate the use of one (1) parking space
elsewhere in the Hayden Square Garage at no cost to Subsidiary, RMI or its
Affiliate. Each of Subsidiary, RMI or its Affiliate, as the case may be, and
▇▇▇▇▇▇▇▇▇▇ Persons shall comply with all reasonable requests of the landlord of
the premises with respect to the parking space, including but not limited to
parking in such space as designated by landlord, affixing an identification
sticker(s) to the automobile, complying with all rules and regulations
established by the landlord. Neither Subsidiary, RMI, or its Affiliate, nor
▇▇▇▇▇▇▇▇▇▇ Persons shall not be responsible or liable for any loss (including
without limitation, loss of identification stickers or parking entrance cards,
if any) or the damage arising out of or related to the use or occupancy of the
parking privileges granted by the landlord.
8. DELIVERIES AT CLOSING.
(a) INTERNET NOW AND SHAREHOLDER DELIVERIES. At the Closing,
Shareholders and Internet Now shall provide or cause to be provided the
following documents:
(i) evidence satisfactory to RMI that this Agreement, the Merger
and the transaction contemplated hereby has received the Requisite
Stockholder Approval and Internet Now's Board of Director's approval;
(ii) Shareholder and Internet Now shall have delivered to RMI and
Subsidiary a Disclosure Schedule as of Closing;
(iii) Shareholder shall have delivered to RMI and Subsidiary a
Merger Agreement by and between the Surviving Corporation and Internet
Now in the form attached hereto as EXHIBIT A;
(iv) Certificates of the Secretary of Internet Now dated as of
the Closing Date certifying that the following are true, correct and
complete copies or the originals thereof: Articles of Incorporation of
Internet Now, as amended, and certified by the Nevada Secretary of State
since August 1, 1998, bylaws (as amended to date), minute books
(containing the records of meetings of the Shareholders, the board of
directors, and any committees of the board of directors), stock
certificate books, transfer ledger and stock record books of Internet
Now;
(v) Certificate of Warranting Shareholders dated as of the
Closing Date certifying that the following are true, correct and
complete copies: the Financial Statements, Accounts Payable Aging
Report, Accounts Receivables Aging Report, Accrued Employee Benefits
Report, current cash balances, loan and line of credit balances, amount
of all
26
advances from and to and notes, receivables and payables owing between
Internet Now and Shareholders or any of their Affiliates;
(vi) an opinion of counsel from ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, P.C. in form
and substance satisfactory to counsel for RMI, addressed to RMI, and
dated as of the Closing Date;
(vii) resignations, effective as of the Closing Date, of each
director and officer of Internet Now, satisfactory to RMI and its
counsel;
(viii) evidence satisfactory to RMI and its counsel of the
termination of that certain Employment Agreement by and between Internet
Now and ▇▇▇▇▇▇ ▇. ▇▇▇▇, Ph.D. dated April 3, 1998 in a form acceptable
to RMI and its counsel; and
(ix) evidence satisfactory to RMI, its counsel and certified
public accountants of the bonuses paid to the Warranting Shareholders as
an entry on the books and records of Internet Now to offset the loans
made by Internet Now to the Warranting Shareholders in such a manner
that Internet Now shall only be responsible for one half and Warranting
Shareholders shall be responsible for one half of any local, state or
federal withholding, employment, income or any other taxes in connection
with the fees paid to Warranting Shareholders. Each Warranting
Shareholder agrees to hold Internet Now and RMI and its respective
officers, directors and agents harmless with respect to any loss,
liability, cost or expenses pertaining to any of these taxes related to
the compensation payable to the Warranting Shareholders, including any
and all interest and penalties associated therewith.
(b) RMI DELIVERIES. At Closing, RMI shall provide or cause to be
provided the Merger Consideration and evidence satisfactory to Internet Now and
Shareholders that this Agreement, the Merger and the transaction contemplated
hereby has received the approval of the Board of Directors of RMI and the
Subsidiary.
9. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the Parties contained in this Agreement shall
survive the Closing hereunder (even if the damaged Party knew or had reason to
know of any misrepresentation or breach of warranty or covenant at the time of
Closing) and continue in full force and effect until March 31, 2000, except that
the representations and warranties set forth in Sections 3(b), 4(b), 4(e), 4(k)
and 4(x) hereof shall survive for the applicable statute of limitations.
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF RMI. Shareholders agree
to indemnify RMI from and against the entirety of any Adverse Consequences RMI
may suffer (including any Adverse Consequences suffered after the making of any
claim for indemnification or after the end
27
of any applicable survival period) resulting from, arising out of, relating to,
in the nature of, or caused by any of the following:
(i) Shareholders' or Internet Now's breach (or the allegation by
any third party of facts that, if true, would mean either has breached)
of any of the representations, warranties, and covenants contained in
this Agreement. For purposes of the representations and warranties set
forth in Section 3 of this Agreement, such indemnification shall be from
the Shareholder violating such representation or warranty, individually
and not jointly and severally with the remaining Shareholders. For
purposes of the representations and warranties set forth in Section 4 of
this Agreement, such indemnification of the Warranting Shareholders
shall be joint and several. For purposes of calculating the amount of
any Adverse Consequences, qualifications such as "material,"
"materiality" or similar qualification, shall be disregarded;
(ii) any Liability of Internet Now (x) for any Taxes of Internet
Now with respect to any Tax year or portion thereof ending on or before
the Closing Date (or for any Tax year beginning before and ending after
the Closing Date to the extent allocable (determined in a manner
consistent with Section 10(c)) to the portion of such period beginning
before and ending on the Closing Date), to the extent such Taxes are not
reflected in the reserve for Tax Liability (rather than any reserve for
deferred Taxes established to reflect timing differences between book
and Tax income) shown on the face of the Closing Balance Sheet, and (y)
for the unpaid Taxes of any Person (other than Internet Now) under Reg.
Section 1.1502-6 (or any similar provision of state, local, or foreign
law) or as a transferee or successor, by contract, or otherwise; or
(iii) any actions, judgements, costs and expenses (including
reasonable attorney fees and all other expenses incurred in
investigating, preparing or defending any litigation or proceeding,
commenced or threatened) incident to any of the foregoing.
RMI's knowledge of a breach of a representation, warranty or covenant shall not
be considered as a waiver of any of the above conditions.
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF SHAREHOLDERS. In the event
RMI breaches (or in the event any third party alleges facts that, if true, would
mean RMI has breached) any of its representations, warranties, and covenants
contained herein, then RMI agrees to indemnify Shareholders from and against the
entirety of any Adverse Consequences Shareholders may suffer through and after
the date of the claim for indemnification (including any Adverse Consequences
Shareholders may suffer after the end of any applicable survival period)
resulting from, arising out of, relating to, in the nature of, or caused by the
breach (or the alleged breach).
28
(d) MATTERS INVOLVING THIRD PARTIES.
(i) If any third party shall notify any Party (the "INDEMNIFIED
PARTY") with respect to any matter (a "THIRD PARTY CLAIM") which may
give rise to a claim for indemnification against any other Party (the
"INDEMNIFYING PARTY") under this Section 9, then the Indemnified Party
shall promptly notify each Indemnifying Party thereof in writing;
PROVIDED, HOWEVER, that no delay on the part of the Indemnified Party in
notifying any Indemnifying Party shall relieve the Indemnifying Party
from any obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its
choice reasonably satisfactory to the Indemnified Party so long as (A)
the Indemnifying Party notifies the Indemnified Party in writing within
fifteen (15) days after the Indemnified Party has given notice of the
Third Party Claim that the Indemnifying Party will indemnify the
Indemnified Party from and against the entirety of any Adverse
Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party
Claim, (B) the Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against
the Third Party Claim and fulfill its indemnification obligations
hereunder, (C) the Third Party Claim involves only money damages and
does not seek an injunction or other equitable relief, (D) settlement
of, or an adverse judgment with respect to, the Third Party Claim is
not, in the good faith judgment of the Indemnified Party, likely to
establish a precedential custom or practice adverse to the continuing
business interests of the Indemnified Party, and (E) the Indemnifying
Party conducts the defense of the Third Party Claim actively and
diligently. Notwithstanding anything herein to the contrary, the
Indemnifying Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without
the prior written consent of the Indemnified Party (not to be withheld
unreasonably).
(iii) So long as the Indemnifying Party is conducting the defense
of the Third Party Claim in accordance with Section 9(d)(ii) above, (A)
the Indemnified Party may retain separate co-counsel at its sole cost
and expense and participate in the defense of the Third Party Claim and
(B) the Indemnified Party will not consent to the entry of any judgment
or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnifying Party (not to be
unreasonably withheld, conditioned or delayed).
(iv) In the event any of the conditions in Section 9(d)(ii) above
is or becomes unsatisfied, however, (A) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim
29
in any manner it reasonably may deem appropriate (and the Indemnified
Party shall consult with and obtain consent from, any Indemnifying Party
in connection therewith not to be unreasonably withheld, conditioned or
delayed), (B) the Indemnifying Parties will reimburse the Indemnified
Party promptly and periodically for the costs of defending against the
Third Party Claim (including reasonable attorneys' fees and expenses),
and (C) the Indemnifying Parties will remain responsible for any Adverse
Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party
Claim to the fullest extent provided in this Section 9.
(e) REMEDIES. The foregoing indemnification provisions are in addition
to, and not in derogation of, any statutory, equitable, or common law remedy
(including without limitation any such remedy arising under Environmental,
Health, and Safety Requirements) any Party may have with respect to Internet
Now, or the transactions contemplated by this Agreement.
(f) OTHER INDEMNIFICATION PROVISIONS. Each of the Shareholders hereby
agrees that they will not make any claim for indemnification against Internet
Now by reason of the fact that he was a director, officer, employee, or agent of
any such entity or was serving at the request of any such entity as a partner,
trustee, director, officer, employee, or agent of another entity (whether such
claim is for judgments, damages, penalties, fines, costs, amounts paid in
settlement, losses, expenses, or otherwise and whether such claim is pursuant to
any statute, charter document, bylaw, agreement, or otherwise) with respect to
any action, suit, proceeding, complaint, claim, or demand brought by RMI against
such Shareholders (whether such action, suit, proceeding, complaint, claim, or
demand is pursuant to this Agreement, applicable law, or otherwise).
10. TAX MATTERS. The following provisions shall govern the allocation of
responsibility as between RMI and Shareholders for certain tax matters following
the Closing Date:
(a) TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE. Warranting
Shareholders shall be responsible for filing all Tax Returns except the Federal
and State Income Tax Returns for the Fiscal Year ended October 31, 1998 and any
Tax Return set forth on Section 10(a) of the Disclosure Schedule. Shareholders
shall cooperate with RMI in the preparation and filing of the Federal and State
Income Tax Returns for the Fiscal Year ended October 31, 1998 and those Tax
Returns set forth on Section 10(a) of the Disclosure Schedule for Internet Now.
RMI shall obtain the consent of the Warranting Shareholders (which consent shall
not be unreasonably withheld or delayed) prior to filing of the Federal and
State Income Tax Returns for the Fiscal Year ended October 31, 1998 and any Tax
Return set forth on Section 10(a) of the Disclosure Schedule. Shareholders
shall permit RMI to review and comment on any Tax Return filed by Internet Now
after October 31, 1998.
30
(b) COOPERATION ON TAX MATTERS.
(i) RMI, Internet Now and Shareholders shall each cooperate
fully, as and to the extent reasonably requested by the other parties,
in connection with the filing of Tax Returns pursuant to this Section
and any audit, litigation or other proceeding with respect to Taxes.
Such cooperation shall include retention and, upon the other party's
request, provision of records and information which are reasonably
relevant to any such audit, litigation or other proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder.
Internet Now and Shareholders shall provide to RMI, who agrees to
retain, all books and records with respect to Tax matters pertinent to
Internet Now relating to any taxable period beginning before the Closing
Date until the expiration of the statute of limitations and, to the
extent notified by Shareholders, any extensions thereof of the
respective taxable periods, and to abide by all record retention
agreements entered into with any taxing authority.
(ii) RMI and Shareholders further agree, upon request, to use
their best efforts to obtain any certificate or other document from any
governmental authority or any other Person as may be necessary to
mitigate, reduce or eliminate any Tax that could be imposed (including,
but not limited to, with respect to the transactions contemplated
hereby).
(iii) RMI and Shareholders further agree, upon request, to
provide the other party with all information that either party may be
required to report pursuant to Section 6043 of the Code and all Treasury
Department Regulations promulgated thereunder.
(c) CERTAIN TAXES. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with the execution and consummation of the
transaction contemplated by this Agreement shall be paid by Shareholders when
due, and Shareholders will, at their own expense, file all necessary Tax Returns
and other documentation with respect to all such transfer, documentary, sales,
use, stamp, registration and other Taxes and fees, and, if required by
applicable law, RMI will, and will cause its affiliates to, join in the
execution of any such Tax Returns and other documentation.
11. TERMINATION.
(a) TERMINATION OF AGREEMENT. Either Party may terminate this Agreement
in its sole and absolute discretion by giving written notice to the other party
at any time on or before the Closing Date.
31
(b) EFFECT OF TERMINATION. If a Party terminates this Agreement pursuant
to Section 11(a) above, all rights and obligations of the Parties hereunder
shall terminate without any liability of any Party to any other Party (except
for any liability of any Party then in breach); provided however, the ▇▇▇▇▇▇▇
Money Deposit shall be distributed in accordance with that certain Agreement by
and between Internet Now and RMI dated October 21, 1998.
12. DEFINED TERMS.
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses,
interest and fees, including court costs and attorneys' fees and expenses.
"AFFILIATE" has the meaning set forth in Rules 12b-2 and 16b-1 of the
regulations promulgated under the Securities Exchange Act.
"AFFILIATED GROUP" means any affiliated group within the meaning of Code
Section 1504(a) or any similar group defined under a similar provision of
federal, state or local law.
"BASIS" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
"CLOSING" has the meaning set forth in Section 2(d).
"CLOSING DATE" has the meaning set forth in Section 2(d).
"CODE" means the Internal Revenue Code of 1986 and any regulation
thereunder, as amended from time to time.
"CONFIDENTIAL INFORMATION" means any information concerning the
businesses and affairs of Internet Now that is not already or becomes generally
known, used or available to the public other than through a breach of this
Agreement or other breach.
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 4.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred compensation
or retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit
32
Plan (including any Multiemployer Plan), or (d) Employee Welfare Benefit Plan or
material fringe benefit plan or program.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(1).
"ENVIRONMENTAL, HEALTH, AND SAFETY REQUIREMENTS" shall mean all federal,
state, local and foreign statutes, regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation, each as amended and as now or
hereafter in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"FIDUCIARY" has the meaning set forth in ERISA Section 3(21).
"FINANCIAL STATEMENT" has the meaning set forth in Section 4(g).
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"INDEMNIFIED PARTY" has the meaning set forth in Section 9(d).
"INDEMNIFYING PARTY" has the meaning set forth in Section 9(d).
"INTERNET NOW" has the meaning set forth in the preface above.
"INTERNET NOW SHARE" means any share of the Common Stock, no par value
per share, of Internet Now.
"INTELLECTUAL PROPERTY" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations,
33
and combinations thereof and including all goodwill associated therewith, and
all applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"KNOWLEDGE" means actual knowledge after due inquiry and investigation
or which should have reasonably been known.
"LIABILITY" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Section 3(37).
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"PARTY" has the meaning set forth in the preface above.
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"REQUISITE SHAREHOLDERS APPROVAL" means the affirmative vote of the
holders of all Internet Now Shares in favor of this Agreement and this
transaction required by federal or state law, corporate charters or bylaws, or
other agreement.
"RMI" has the meaning set forth in the preface above.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"SHAREHOLDERS" has the meaning set forth in the preface.
34
"TAX" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"THIRD PARTY CLAIM" has the meaning set forth in Section 9(d).
"WARRANTING SHAREHOLDERS" shall mean ▇▇▇▇▇▇▇▇▇▇ Persons and ▇▇▇▇▇▇
▇▇▇▇▇.
13. MISCELLANEOUS.
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. Internet Now and
Shareholders shall not issue any press release or make any public announcement
relating to the subject matter of this Agreement without the prior written
approval of RMI in its sole and absolute discretion before and after Closing.
Upon execution of this definitive agreement, RMI shall disclose or issue a
statement or communication to the public regarding the proposed transaction.
(b) NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(c) ENTIRE AGREEMENT. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
(d) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of his
or its rights, interests, or obligations hereunder without the prior written
approval of RMI and Internet Now.
(e) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
35
(f) HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given two business days
after it is sent by registered or certified mail, return receipt requested,
postage prepaid, and addressed to the intended recipient as set forth below:
IF TO RMI: Rocky Mountain Internet, Inc .
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President, CEO and Chairman
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
WITH A COPY TO: Minor & ▇▇▇▇▇, P.C.
▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
IF TO ANY WARRANTING
SHAREHOLDER: ▇▇▇▇▇▇▇▇▇▇ Persons
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ #▇▇-▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
WITH A COPY TO: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, P.C.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
IF TO ANY SHAREHOLDER, INDIVIDUALLY, THEN TO SUCH INDIVIDUAL SHAREHOLDERS,
RESPECTIVELY:
▇▇▇▇▇▇▇▇▇▇ Persons
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ #▇▇-▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇. #▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
36
▇▇▇▇ ▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Taufik Islam
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, #▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
WITH A COPY TO: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, P.C.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
(h) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Colorado without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Colorado or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Colorado.
(i) AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by RMI
and Internet Now. No waiver by any Party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(j) SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this
37
Agreement shall be construed as if drafted jointly by the Parties and no
presumption or burden of proof shall arise favoring or disfavoring any Party by
virtue of the authorship of any of the provisions of this Agreement. Any
reference to any federal, state, or local statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise. The word "including" shall mean including without
limitation. The Parties intend that each representation, warranty, and covenant
contained herein shall have independent significance. If any Party has breached
any representation, warranty, or covenant contained herein in any respect, the
fact that there exists another representation, warranty, or covenant relating to
the same subject matter (regardless of the relative levels of specificity) which
the Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(l) INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and Disclosure
Schedule identified in this Agreement are incorporated herein by reference and
made a part hereof.
[INTENTIONALLY LEFT BLANK]
38
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
RMI: RMI-INI:
Rocky Mountain Internet, Inc., RMI-INI, Inc., a Colorado
a Delaware corporation corporation
By:/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------- ------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, CEO, President, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
and Chairman of the Board
INTERNET NOW:
Internet Now,
a Nevada corporation
By: /s/▇▇▇▇▇▇▇▇▇▇ Persons
-------------------------
▇▇▇▇▇▇▇▇▇▇ Persons, President
SHAREHOLDERS:
/s/▇▇▇▇▇▇▇▇▇▇ Persons /s/Taufik Islam
---------------------------------- ---------------------------
▇▇▇▇▇▇▇▇▇▇ Persons, Shareholder Taufik Islam, Shareholder
/s/▇▇▇▇▇▇ ▇▇▇▇▇ /s/▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------- ---------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, Shareholder ▇▇▇▇▇ ▇▇▇▇▇▇, Shareholder
/s/▇▇▇▇ ▇▇▇
----------------------------------
▇▇▇▇ ▇▇▇, Shareholder
39