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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (earliest event reported): June 5, 1998
Rocky Mountain Internet, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 001-12063 84-1322326
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1099 Eighteenth Street, 30th Floor, Denver, Colorado 80202
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 672-0700
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(Former name or former address, if changed since last report.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
(a) On June 5, 1998, Rocky Mountain Internet, Inc. (the "Company")
acquired all of the outstanding common stock of Infohiway, Inc., a Colorado
corporation headquartered in Aurora, Colorado ("Infohiway") pursuant to the
terms of the Merger Agreement dated June 5, 1998 (the "Infohiway Merger
Agreement") by and among the Company, RMI Subsidiary, Inc., Infohiway, and
Kenneth Covell, John-Michael Keyes, and Jeremy J. Black, the shareholders (the
"Shareholders") of Infohiway. The acquisition was effectuated by way of a
merger (the "Infohiway Merger") of RMI Subsidiary, Inc., a wholly-owned
subsidiary of the Company, with and into Infohiway. As a result of the Merger,
Infohiway became a wholly-owned subsidiary of the Company. Pursuant to the
Infohiway Merger Agreement, the Shareholders received an aggregate of 150,000
shares of common stock of the Company. On June 4, 1998, the closing price of
the Company's common stock was $8.19 per share. The number of shares of the
Company's common stock issued to the Shareholders was determined through
arm's-length negotiation. There was no material relationship between the
parties prior to the Merger. A copy of the Infohiway Merger Agreement and a
copy of the press release dated June 5, 1998 announcing the Infohiway Merger are
attached hereto as Exhibits 2.1 and 99.1, respectively.
ITEM 5. OTHER EVENTS.
On June 5, 1998, the Company executed a definitive Agreement and Plan of
Merger (the "ICC Merger Agreement") with Internet Communications Corporation, a
Colorado corporation headquartered in Greenwood Village, Colorado ("ICC") and
Internet Acquisitions Corporation, a Colorado corporation wholly-owned by the
Company, providing for the merger (the "ICC Merger") of Internet Acquisitions
Corporation with and into ICC. Upon consummation of the ICC Merger, ICC wold
become a wholly-owned subsidiary of the Company, and the shareholders of ICC
would receive cash in the amount of between $6.65 and $6.80 per share of common
stock of ICC, for a total consideration of approximately $38 million. A copy
of the ICC Merger Agreement and a copy of the press release dated June 8, 1998
announcing the ICC Merger are attached hereto as Exhibits 2.2 and 99.2,
respectively.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
The following financial statements are filed as a part of this Report:
(a) Financial statements of business acquired.
Financial statements of Infohiway and ICC are not included herewith,
as it is impracticable to include such financial statements with this Current
Report. Such financial statements will be included in an amendment to this
Current Report not later than 60 days after the date that this Current Report
is required to be filed with respect to each of the Infohiway Merger and the
ICC Merger.
(b) Pro forma financial information.
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Pro forma financial information giving effect to the Infohiway Merger
and the ICC Merger is not included herewith, as it is impracticable to include
such pro forma financial information with this Current Report. Such pro forma
financial information will be included in an amendment to this Current Report
not later than 60 days after the date that this Current Report is required to
be filed with respect to each of the Infohiway Merger and the ICC Merger.
(c) Exhibits.
2.1 Merger Agreement among Rocky Mountain Internet, Inc., RMI Subsidiary,
Inc., Infohiway, Inc., and Jeremy J. Black, Kenneth Covell, and John-Michael
Keyes.
2.2 Agreement and Plan of Merger among Rocky Mountain Internet, Inc.,
Internet Acquisition Corporation, and Internet Communications Corporation.
99.1 News Release dated June 5, 1998 announcing the Infohiway Merger.
99.2 News Release dated June 8, 1998 announcing the ICC Merger.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed by its behalf by the
undersigned hereunto duly authorized.
Rocky Mountain Internet, Inc.
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(Registrant)
Date: June 10, 1998 By: /s/ Peter J. Kushar
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Peter J. Kushar, Secretary, Treasurer, and
Chief Financial Officer
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MERGER AGREEMENT
AMONG
ROCKY MOUNTAIN INTERNET, INC.,
A DELAWARE CORPORATION,
RMI SUBSIDIARY, INC.,
A COLORADO CORPORATION,
INFOHIWAY, INC.,
A COLORADO CORPORATION,
AND
JEREMY J. BLACK,
KENNETH COVELL
AND
JOHN-MICHAEL KEYES,
SHAREHOLDERS
JUNE 5, 1998
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
1. Definitions
2. Basic Transaction
(a) The Merger
(b) The Closing
(c) Actions at the Closing
(d) Effect of Merger
(e) Conversion of Securities
(f) Merger Consideration
(g) Closing of Transfer Records
3. Representations and Warranties Concerning Shareholders
(a) Authorization of Transaction
(b) Infohiway Shares
(c) Receipt of Disclosure Documents
(d) Risk of Loss
(e) Ability to Evaluate Risks and Merits
(f) Suitability of Investment
(g) No Need for Liquidity
(h) Access to Information
(i) Potential Lack of Liquidity
(j) Lack of Transferability
(k) Shareholders Not Subject to Backup Withholding
(l) Restrictive Legend
(m) Investment Intent
(n) No Intention To Transfer Securities
(o) Legal, Accounting and Other Fees and Expenses
(p) Disclosure
4. Representations and Warranties Concerning Infohiway
(a) Organization, Qualification and Corporate Power
(b) Capitalization
(c) Noncontravention
(d) Authorization of Transaction
(e) Title to Assets
(f) Subsidiaries
(g) Financial Statements
(h) Events Subsequent to March 31, 1998
(i) Undisclosed Liabilities
(j) Legal Compliance
(k) Tax Matters
(l) Real Property
(m) Intellectual Property
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(n) Tangible Assets
(o) Inventory
(p) Contracts
(q) Notes and Accounts Receivable
(r) Powers of Attorney
(s) Insurance
(t) Litigation
(u) Product Warranty
(v) Product Liability
(w) Employees
(x) Employee Benefits
(y) Guaranties
(z) Environmental, Health and Safety Matters
(aa) Certain Business Relationships with Infohiway
(bb) Brokers' Fees
(cc) Disclosure
5. Representations and Warranties of RMI and Subsidiary
(a) Organization
(b) Authorization of Transaction
(c) Noncontravention
(d) Brokers' Fees
(e) Expenses
6. Pre-Closing Covenants
(a) General
(b) Notices and Consents
(c) Accountant Letter
(d) Operation of Business
(e) Preservation of Business
(f) Full Access
(g) Notice of Developments
(h) Exclusivity
(i) Title Insurance
(j) Surveys
(k) No Transfer
(l) Repayment
(m) Financial Statements
7. Post-Closing Covenants
(a) General
(b) Litigation Support
(c) Transition
(d) Confidentiality
(e) Covenant Not to Compete
8. Conditions to Obligation to Close
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(a) Conditions to Obligation of RMI and Subsidiary
(b) Conditions of Obligation of Shareholders and Infohiway
9. Remedies for Breaches of This Agreement
(a) Survival of Representations and Warranties
(b) Indemnification Provisions for Benefit of RMI and Subsidiary
(c) Indemnification Provisions for Benefit of Shareholders
(d) Matters Involving Third Parties
(e) Remedies
(f) Limitations on Indemnification
(g) Other Indemnification Provisions
10. Tax Matters
(a) Tax Periods Ending on or Before the Closing Date
(b) Cooperation on Tax Matters
(c) Certain Taxes
11. Termination
(a) Termination of Agreement
(b) Effect of Termination
12. Defined Terms
13. Miscellaneous
(a) Press Releases and Public Announcements
(b) No Third-Party Beneficiaries
(c) Entire Agreement
(d) Succession and Assignment
(e) Counterparts
(f) Headings
(g) Notices
(h) Governing Law
(i) Amendments and Waivers
(j) Severability
(k) Construction
(l) Incorporation of Exhibits and Schedules
(m) Submission to Jurisdiction
</TABLE>
Exhibit A - Articles and Plan of Merger
Exhibit B - Infohiway and Shareholders Closing Certificate
Exhibit C - Employment, Confidentiality and Non Compete Agreement for Jeremy J.
Black
Exhibit D - Employment, Confidentiality and Non Compete Agreement for Kenneth
Covell
Exhibit E - Registration Agreement
Exhibit F - RMI and Subsidiary Closing Certificate
Disclosure Schedule - Exceptions to Representations and Warranties
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MERGER AGREEMENT
This Merger Agreement ("Agreement") is entered into on June 5, 1998, by and
among Rocky Mountain Internet, Inc., a Delaware corporation ("RMI"), RMI
Subsidiary, Inc., a Colorado corporation and a wholly-owned subsidiary of RMI
(the "SUBSIDIARY"), Infohiway, Inc., a Colorado corporation ("Infohiway") and
Jeremy J. Black, Kenneth Covell and John-Michael Keyes, the Shareholders of
Infohiway (collectively, the "SHAREHOLDERS"). RMI, Subsidiary, Infohiway and
Shareholders are referred each individually as a "Party" and to collectively
herein as the "PARTIES".
This Agreement contemplates a transaction in which RMI thorough Subsidiary
will acquire all of the outstanding capital stock of Infohiway for common stock
of RMI delivered to Shareholders through a reverse subsidiary merger of
Subsidiary with and into Infohiway.
Now, therefore, in consideration of the premises and the mutual promises
herein made, 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 or in Section 12 below.
2. BASIC TRANSACTION.
(a) THE MERGER. On and subject to the terms and conditions of this
Agreement, Subsidiary will merge with and into Infohiway (the "MERGER") at the
Effective Time. Infohiway shall be the corporation surviving the Merger (the
"SURVIVING CORPORATION").
(b) THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "CLOSING") shall take place at the offices of RMI's counsel,
Minor & Brown, P.C., 650 South Cherry Street, Suite 1100, Denver, Colorado
commencing at 2:00 p.m. local time on June 5, 1998, or such other date as the
Parties may mutually determine (the "CLOSING DATE").
(c) ACTIONS AT THE CLOSING. At the Closing, (i) Infohiway will deliver to
RMI and Subsidiary the various certificates, instruments, and documents referred
to in Section 8(a) below, (ii) RMI and Subsidiary will deliver to Infohiway the
various certificates, instruments, and documents referred to in Section 8(b)
below, and (iii) Infohiway and Subsidiary will file with the Secretary of State
of the State of Colorado Articles of Merger in the form attached hereto as
EXHIBIT A (the "ARTICLES OF MERGER").
(d) EFFECT OF MERGER.
(i) GENERAL. The Merger shall become effective at the time (the
"EFFECTIVE TIME") Infohiway and Subsidiary file the Articles of Merger with
the Secretary of State of the State of Colorado. The Merger shall have the
effect set forth in the Colorado Business Corporation Act. The Surviving
Corporation may, at any time after the Effective Time,
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take any action (including executing and delivering any document) in the
name and on behalf of either Infohiway or Subsidiary in order to carry out
and effectuate the transactions contemplated by this Agreement.
(ii) ARTICLES OF INCORPORATION. The Articles of Incorporation of the
Surviving Corporation shall be amended and restated at and as of the
Effective Time to read as did the Articles of Incorporation of Subsidiary
immediately prior to the Effective Time (except that the name of the
Surviving Corporation will remain unchanged).
(iii) BYLAWS. The Bylaws of the Surviving Corporation shall be amended
and restated at and as of the Effective Time to read as did the Bylaws of
Subsidiary immediately prior to the Effective Time (except that the name of
the Surviving Corporation will remain unchanged).
(iv) DIRECTORS AND OFFICERS. The directors and officers of Subsidiary
shall become the directors and officers of the Surviving Corporation at and
as of the Effective Time (retaining their respective positions and terms of
office).
(e) CONVERSION OF SECURITIES. At the Effective Time, by virtue of the
Merger and without any further action on the part of RMI, Subsidiary, Infohiway
or Shareholders, the shares of capital stock of Subsidiary and Infohiway 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
and shall be converted into ten thousand (10,000) shares of validly issued,
fully paid and non-assessable Common Stock of the Surviving Corporation.
Each stock certificate of Subsidiary evidencing ownership of any such
shares shall continue to evidence ownership of such shares of capital stock
of the Surviving Corporation.
(ii) CANCELLATION OF CERTAIN SHARES OF CAPITAL STOCK OF INFOHIWAY.
All Infohiway Shares that are owned directly or indirectly by Infohiway
shall be cancelled and no stock of RMI or other consideration shall be
delivered in exchange thereof.
(iii) CONVERSION OF INFOHIWAY SHARES. The Infohiway Shares (other that
the shares cancelled pursuant to Section 2(e)(ii) above) that are issued
and outstanding immediately prior to the Effective Time shall automatically
be converted into the right to receive a pro rata portion of the Merger
Consideration based on the percentage of stock ownership of Infohiway
immediately prior to the Effective Time and then cancelled and retired,
without any action on the part of the holders thereof, and each holder of a
certificate representing such Infohiway Shares shall cease to have any
rights with respect thereto, except the right to receive such portion of
the Merger Consideration to be paid or issued in consideration therefor
upon the surrender of such certificates representing Infohiway Shares.
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(f) MERGER CONSIDERATION. The Shareholders shall receive as consideration
for the Merger ("Merger Consideration") the following:
(i) RMI SHARES AT CLOSING. Subject to the terms and conditions of
this Section, at Closing RMI agrees to deliver to Shareholders, One-hundred
fifty thousand (150,000) unregistered restricted shares of RMI common stock (the
"Purchase Price"). One-half of the shares of RMI common stock received as
Purchase Price (75,000 shares) shall not be registered and shall have no rights
to registration and shall be "restricted" as that term is defined in Rule 144 of
the Securities Act ("RMI RESTRICTED SHARES"). The remaining one-half of the
shares of RMI common stock received as Purchase Price (75,000 shares) shall be
subject to registration pursuant to the terms and conditions of the Registration
Agreement substantially in the form attached hereto as Exhibit E ("RMI
REGISTERABLE SHARES"). One-half of the RMI Registrable Shares (37,500 shares)
shall be subject to a six (6) month lock-up period and thereafter have certain
limitations placed on the number of shares that can be traded in any single
calendar week period. The Purchase Price may be adjusted as negotiated between
the parties following RMI's satisfactory completion of its due diligence in its
sole discretion.
(ii) ALLOCATION OF RMI SHARES. At Closing the RMI shares of common
stock issued as the Purchase Price shall be allocated pro rata among the
Shareholders, based on their ownership of the stock of Infohiway immediately
prior to the Effective Time and thus among the Shareholders as follows:
Jeremy J. Black 45,000 shares of RMI Restricted Shares; and
45,000 shares of RMI Registrable Shares, one-half
of which shall be subject to the lock-up.
Kenneth Covell 15,000 shares of RMI Restricted Shares; and
15,000 shares of RMI Registrable Shares, one-half
of which shall be subject to the lock-up.
John-Michael Keyes 15,000 shares of RMI Restricted Shares; and
15,000 shares of RMI Registrable Shares, one-half
of which shall be subject to the lock-up.
(g) CLOSING OF TRANSFER RECORDS. After the close of business on the Closing
Date, transfers of Infohiway 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
and Subsidiary to enter into this Agreement and consummate this transaction,
each of the Shareholders, jointly and severally, represents and warrants to RMI
and Subsidiary that the
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statements contained in this Section 3 are true, correct and complete as of the
date of this Agreement and will be true, correct and complete as of the Closing
Date (as though made then and as though the Closing Date were substituted for
the date of this Agreement throughout this Section 3, except as set forth in the
Disclosure Schedule delivered by Shareholders to RMI and Subsidiary on the date
hereof and initialed by the Parties (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
Section 3.
(a) AUTHORIZATION OF TRANSACTION. Shareholders have 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 each of the Shareholders, enforceable in
accordance with its terms and conditions. Shareholders 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) INFOHIWAY SHARES. Each individual Shareholder holds of record and owns
beneficially all of the Infohiway Shares set forth next to his name in Section
3(b) of the Disclosure Schedule, free and clear of any restrictions on transfer
(other than any restrictions under the Securities Act and state securities
laws), Taxes, security interests, options, warrants, purchase rights, contracts,
commitments, equities, claims, and demands. Shareholders, and each individual
Shareholder, are not individually or collectively a party to any option,
warrant, purchase right, or other contract or commitment that could require
Infohiway or Shareholders to sell, transfer, or otherwise dispose of any capital
stock of Infohiway (other than this Agreement). Shareholders, and each
individual Shareholder, are not individually or collectively a party to any
voting trust, proxy, or other agreement or understanding with respect to the
voting of any capital stock of Infohiway.
(c) RECEIPT OF DISCLOSURE DOCUMENTS. The Shareholders have received and
carefully reviewed, and understand the information contained in, the documents
identified bellow, filed by RMI, and all other documents the Shareholders have
requested from RMI (collectively, the "Disclosure Documents"). In evaluating
the suitability of the Merger and the resulting acquisition of the Registrable
Shares and all other RMI Shares and rights, whether contingent or fixed, to
receive RMI Shares (collectively the "Securities") (the Merger and resulting
acquisition of the Securities hereinafter referred to as the "investment in the
Securities"), the Shareholders have not relied upon any representations or other
information (whether oral or written) from RMI, its officers, directors, or
employees or from any other person other than as set forth in the Disclosure
Documents and except in connection with such inquiries as are contemplated in
subsection (h).
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Disclosure Documents shall include, but not be limited to, the following:
(i) RMI's Annual Report on Form 10-KSB for the fiscal year ended December 31,
1996 and the consolidated financial statements and schedules of RMI included
therein, audited by Baird, Kurtz & Dobson, Certified Public Accountants, and
McGladrey & Pullen, LLP, Certified Public Accountants, as set forth in their
reports with respect thereto, as amended by Form 10-KSB/Amendment No. 1, filed
April 18, 1997 and Form 10-KSB/A-2, filed April 30, 1997; (ii) RMI's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1997; (iii) RMI's
Quarterly Report on Form 10-QSB for the quarter ended March 31, 1997; (iv) RMI's
Quarterly Report on Form 10-QSB for the quarter ended June 30, 1997; (v) RMI's
Quarterly Report on Form 10-QSB for the quarter ended September 30, 1997; (vi)
RMI's Quarterly Report on Form 10-QSB for the quarter ended March 31, 1998;
(vii) RMI's Current Report on Form 8-K filed January 28, 1997 (date of event
reported: January 21, 1997); (viii) RMI's Current Report on Form 8-K filed March
24, 1997 (date of event reported: March 21, 1997); (ix) RMI's Current Report on
Form 8-K filed August 21, 1997 (date of event reported: August 15, 1997); (x)
RMI's Current Report on Form 8-K filed October 1, 1997 (date of event reported:
September 17, 1997) (xi) RMI's Current Report on Form 8-K filed October 6, 1997
(date of event reported: October 1, 1997); and (xii) definitive Proxy Statement
dated February 13, 1998; (xiii) RMI's Form S-1 Registration Statement filed May
15, 1998.
The Shareholders understand and acknowledge that the Proxy Statement
referred to above includes financial statements as of, and for the periods
ended, December 31, 1996, March 31, 1997, June 30, 1997, and September 30, 1997,
which financial statements restated results of operations and balance sheets
previously contained in RMI's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1996, Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1997, Quarterly Report on Form 10-QSB for the quarter ended June 30,
1997, and Quarterly Report on Form 10-QSB for the quarter ended September 30,
1997.
(d) RISK OF LOSS. Each of the Shareholders is in a financial position to
hold the Securities for an indefinite period of time and is able to bear the
economic risk and withstand a complete loss of the Shareholders' investment in
the Securities.
(e) ABILITY TO EVALUATE RISKS AND MERITS. The Shareholders, either alone
or with the assistance of the Shareholders' own professional advisors, have such
knowledge and experience in financial and business matters that the Shareholders
are capable of evaluating the merits and risks of an investment in the
Securities and have the capacity to protect the Shareholders' own individual
interests in connection with an investment in the Securities and has the net
worth to undertake such risks;
(f) SUITABILITY OF INVESTMENT. The Shareholders have obtained, to the
extent the Shareholders deem necessary, each individual Shareholder's own
personal professional advice with respect to the risks inherent in the
investment in the Securities and the suitability of an
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investment in the Securities in light of the individual Shareholders' financial
condition and investment needs;
(g) NO NEED FOR LIQUIDITY. The Shareholders collectively believe that an
investment in the Securities is suitable for the Shareholders based upon each
individual Shareholder's investment objectives and financial needs, and each
individual Shareholder has adequate means for providing for the individual
Shareholder's current financial needs and personal contingencies and has no need
for liquidity of investment with respect to the Securities;
(h) ACCESS TO INFORMATION. The Shareholders have been given access to full
and complete information regarding RMI and has utilized such access to the
Shareholders' satisfaction, for the purposes of asking questions and receiving
answers concerning the terms and conditions of the Merger (including the
offering of the Securities in connection with the Merger) or verifying the
information included in the Disclosure Documents and obtaining any of the
documents described in the Disclosure Documents. Each of the Shareholders have
been given the opportunity to ask questions of, and to receive answers from,
representatives of RMI to obtain information concerning the Merger and to
receive any additional information, to the extent reasonably available,
necessary to verify the accuracy of information provided in the Disclosure
Documents;
(i) POTENTIAL LACK OF LIQUIDITY. The Shareholders recognize that RMI has
not been profitable since its inception and that an investment in the Securities
involves a high degree of risk, including, but not limited to, the risk of loss
of 100% of the Shareholders' investment in the Securities; and the Shareholders
further recognize that trading in RMI's Common Stock has been inactive until
only recently. There can be no assurance that an active market can or will be
maintained for the trading of the Securities. The Shareholders may, therefore,
find it difficult to dispose of the Securities;
(j) LACK OF TRANSFERABILITY. The Shareholders realize that (i) the
investment in the Securities is a long-term investment; (ii) the purchaser of
the Securities must bear the economic risk of investment for an indefinite
period of time because the Securities have not been and, other than the
Registrable Shares, will not be registered under the Securities Act of 1933, as
amended, or under the securities laws of any state and, therefore, such
Securities cannot be resold unless they are subsequently registered under said
laws or exemptions from such registrations are available; (iii) the
transferability of such Securities is restricted and requires conformity with
the restrictions contained in subsection (m) below; and (iv) legends will be
placed on the certificate(s) representing the Securities referring to the
applicable restrictions on transferability;
(k) SHAREHOLDERS NOT SUBJECT TO BACKUP WITHHOLDING. The Shareholders
certify, under penalty of perjury, that none of the Shareholders is subject to
the backup withholding provisions of Section 3406 of the Internal Revenue Code;
and
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(l) RESTRICTIVE LEGEND. The Shareholders acknowledge and understand that a
legend will be placed on any certificate representing the Securities (including
any Registrable Shares prior to the time that Registrable Shares are registered)
substantially to the following effect:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF A CURRENT AND EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT WITH RESPECT TO SUCH SECURITIES, OR AN
OPINION OF THE ISSUER'S COUNSEL TO THE EFFECT THAT REGISTRATION IS NOT
REQUIRED UNDER THE ACT.
(m) INVESTMENT INTENT. The Shareholders have been advised that the
Securities have not been and, other than the Registrable Shares, will not be
registered under the Securities Act of 1933, as amended, or applicable state
securities laws, that the Securities are being offered and sold pursuant to and
in reliance on exemptions from the registration requirements of such laws, and
RMI's reliance upon such exemptions is predicated in part on the Shareholders'
representations as contained herein. The Shareholders represent and warrant
that, other than the Registrable Shares, the Securities are being purchased for
the Shareholders' individual accounts, for investment purposes only, and without
the intention of reselling or redistributing the same; the Shareholders have
made no agreement with others regarding any of the Securities; and the
Shareholders' financial condition is such that it is not likely that it will be
necessary to dispose of any of such Securities in the foreseeable future. The
Shareholders are aware that, in the view of the SEC, a purchase of such
Securities with an intent to resell by reason of any foreseeable specific
contingency or anticipated change in market value, or any change in the
condition of RMI, or in connection with a contemplated liquidation settlement of
any loan obtained for the acquisition of such Securities and for which such
Securities were pledged, would represent an intent inconsistent with the
representations set forth above. The Shareholders further represent and agree
that if, contrary to the foregoing intentions, the Shareholders should later
desire to dispose of or transfer any of the Securities, other than the
Registrable Shares to be registered, in any manner, during the two (2) year
period following the Closing, the Shareholders shall not do so without first
obtaining (i) the opinion of counsel satisfactory to RMI, which RMI shall use
its best reasonable efforts to ensure timely issuance, that such proposed
disposition or transfer may be lawfully made without the registration of such
Securities pursuant to the Securities Act, as then amended, and applicable state
securities laws, or (ii) such registration (it being understood that, RMI shall
not have any obligation to register the Securities for such purpose, except as
set forth in the Registration Agreement attached hereto as Exhibit E).
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(n) NO INTENTION TO TRANSFER SECURITIES. The Shareholders represent and
warrant that the Securities are being purchased by the Shareholders in the
individual Shareholder's name solely for the individual Shareholder's own
beneficial interest and not as nominee for, or on behalf of, or for the
beneficial interest of, or with the intention to transfer to, any other person,
trust, or organization.
(o) LEGAL, ACCOUNTING AND OTHER FEES AND EXPENSES. Shareholders
acknowledge that all of Infohiway's legal, accounting and other fees, costs and
expenses associated with this transaction may be paid by Infohiway up to an
amount equal to $15,000 (the "Capped Amount") without reducing or affecting the
consideration described above; however, any amount above the Capped Amount shall
be paid by the individual Shareholders of Infohiway. Infohiway hereby
acknowledge that neither party has incurred any brokerage or finders' fees as a
result of this proposed transaction. This representation is made without regard
to the limitations on indemnification set forth in Section 9(f) of this
Agreement.
(p) 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 INFOHIWAY. To induce RMI and
Subsidiary to enter into this Agreement and consummate this transaction, each of
the Shareholders, jointly and severally, represent and warrant to RMI and
Subsidiary 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 the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 4), except as
set forth in the Disclosure Schedule delivered by Shareholders to RMI and
Subsidiary on the date hereof and initialed by the Parties (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 Section 4.
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. Infohiway is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. Infohiway is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required other than where the failure to be duly
qualified would not have a material adverse effect. Infohiway 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
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have such would not have a material adverse effect. Section 4(a) of the
Disclosure Schedule lists the directors and officers of Infohiway. Shareholders
have delivered to RMI and Subsidiary true, correct and complete copies of
Infohiway's Articles of Incorporation, 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 Infohiway. Infohiway is not in default under or in
violation of any provision of its Articles of Incorporation or bylaws.
Infohiway has no predecessors.
(b) CAPITALIZATION. The entire authorized capital stock of Infohiway
consists of 100,000 Infohiway Shares, of which 22,750 Infohiway Shares are
issued and outstanding. All of the issued and outstanding Infohiway 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 Infohiway to issue, purchase,
acquire, sell, or cause to become outstanding any of its capital stock. There
are no outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to Infohiway. There are no voting
trusts, proxies, or other agreements or understandings with respect to the
capital stock of Infohiway.
(c) NONCONTRAVENTION. Except as set forth on Schedule 4(c) of the
Disclosure Schedule, 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 Infohiway is subject or any provision of the Articles
of Incorporation or bylaws of Infohiway 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 Infohiway 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). Infohiway need not give any notice to, make
any filing with, or obtain any authorization, consent or approval of any
governmental agency in order for the Parties to consummate the transaction
contemplated by this Agreement.
(d) AUTHORIZATION OF TRANSACTION. Infohiway 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 Infohiway, enforceable in accordance with its terms and conditions. Except as
set forth on Schedule 4(d) of the Disclosure Schedule, Infohiway 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.
(e) TITLE TO ASSETS. Except as set forth on Schedule 4(e) of the
Disclosure Schedule, Infohiway has good and marketable title to, or a valid
leasehold interest in, the properties and
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assets used by it, located on its premises, or shown on the March 31, 1998
Balance Sheet or acquired after the date thereof, free and clear of all security
interests, except for properties and assets disposed of in the Ordinary Course
of Business since the March 31, 1998 Balance Sheet.
(f) SUBSIDIARIES. There are not now nor have there ever been any
subsidiaries of Infohiway.
(g) FINANCIAL STATEMENTS. Infohiway and Shareholders have provided or shall
provide prior to Closing copies of the following financial statements
(collectively the "FINANCIAL STATEMENTS"): (i) Compiled Statements of Assets,
Liabilities & Equity-Cash Basis and Revenues and Expenses-Cash Basis as of and
for the year ended December 31, 1997, (ii) an internally prepared profit and
loss statement for the year ended December 31, 1996 and (iii) Compiled
Statements of Assets, Liabilities & Equity-Cash Basis and Revenues and
Expenses-Cash Basis as of and for the quarter ended March 31, 1998 and for the
months ended April 30, 1998 and May 31, 1998 and (iv) accounts payables and
accounts receivables current within two (2) business days of Closing. The
Financial Statements have been prepared on the cash basis of accounting which is
a comprehensive basis of accounting other than generally accounting principles
throughout the period covered thereby.
(h) EVENTS SUBSEQUENT TO MARCH 31, 1998. Except as set forth on Schedule
4(h) of the Disclosure Schedule, since March 31, 1998, there has not been any
material adverse change in the business, financial condition, operations,
results of operations, or future prospects of Infohiway. Without limiting the
generality of the foregoing since that date:
(i) Infohiway 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) Infohiway has not entered into any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and licenses)
involving more than $10,000 or outside the Ordinary Course of Business;
(iii) Infohiway has not accelerated, terminated, modified, or
cancelled any agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) involving more than $10,000 to
which Infohiway is a party or by which it is bound;
(iv) Infohiway has not imposed any security interest upon any of its
assets, tangible or intangible;
(v) Infohiway has not made any capital expenditure (or series of
related capital expenditures) either involving more than $10,000 or outside
the Ordinary Course of Business;
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(vi) Infohiway 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);
(vii) Infohiway 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 $10,000 or
outside the Ordinary Course of Business;
(viii) Infohiway has not delayed or postponed the payment of accounts
payable and other Liabilities outside the Ordinary Course of Business;
(ix) Infohiway has not cancelled, compromised, waived, or released any
right or claim (or series of related rights and claims);
(x) Infohiway 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 Infohiway;
(xii) Infohiway 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;
(xiii) Infohiway 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) Infohiway has not experienced any damage, destruction, or loss
(whether or not covered by insurance) to its property;
(xv) Infohiway 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;
(xvi) Infohiway 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;
(xvii) Infohiway has not granted any increase in the base compensation
of any of its directors, officers, and employees outside the Ordinary
Course of Business;
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(xviii) Infohiway 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) Infohiway has not made any other change in employment terms for
any of its directors, officers, and employees outside the Ordinary Course
of Business;
(xx) Infohiway has not made or pledged to make any charitable or other
capital contribution;
(xxi) there has not been any other material occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary
Course of Business involving Infohiway; and
(xxii) Infohiway has not committed to any of the foregoing.
(i) UNDISCLOSED LIABILITIES. Except as set forth on Schedule 4(i) of the
Disclosure Schedule, Infohiway has no Liability (and there is no Basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against Infohiway giving or that could give rise to
any Liability), except for (i) Liabilities set forth on the face of the March
31, 1998 Balance Sheet (rather than in any notes thereto) and (ii) Liabilities
which have arisen after the March 31, 1998 Balance Sheet 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. Infohiway, its predecessors and 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 against Infohiway alleging any failure so to
comply other than where the failure to comply would not have a material adverse
effect.
(k) TAX MATTERS. Except as set forth on Schedule 4(k) of the Disclosure
Schedule:
(i) Infohiway has filed all Tax Returns that it was required to file.
All such Tax Returns were true, correct and complete in all respects. All
Taxes owed by Infohiway (whether or not shown on any Tax Return) have been
paid. Infohiway currently is not the beneficiary of any extension of time
within which to file any Tax Return. No claim has ever been made by an
authority in a jurisdiction where Infohiway does not file Tax Returns that
it is or may be subject to taxation by that jurisdiction. There are no
security
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interests on any of the assets of Infohiway that arose in connection with
any failure (or alleged failure) to pay any Tax.
(ii) Infohiway 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 Shareholders nor any director or officer (or employee
responsible for Tax matters) of Infohiway 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 Infohiway
either (A) claimed or raised by any authority in writing or (B) as to which
the Shareholders, directors and officers (and employees responsible for Tax
matters) of Infohiway has Knowledge based upon personal contact with any
agent of such authority. Section 4(k) of the Disclosure Schedule lists all
federal, state, and local income Tax Returns filed with respect to
Infohiway 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 income Tax
Returns, examination reports, and statements of deficiencies assessed
against or agreed to by Infohiway since December 31, 1995.
(iv) Infohiway 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.
(v) Infohiway 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. Infohiway 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. Infohiway is not a party to any Tax allocation or sharing
agreement. Infohiway (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.
(vi) Section 4(k) of the Disclosure Schedule sets forth the following
information with respect to Infohiway as of the most recent practicable
date: (A) the basis of Infohiway's assets; (B) the amount of any net
operating loss, net capital loss, unused investment or other credit, unused
foreign tax, or excess charitable contribution allocable to Infohiway; and
(C) the amount of any deferred gain or loss allocable to Infohiway.
(vii) The unpaid Taxes of Infohiway (A) did not, as of the March 31,
1998 Balance Sheet, exceed the reserve for Tax Liability (rather than any
reserve for deferred
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Taxes established to reflect timing differences between book and Tax
income) set forth on the face of the March 31, 1998 Balance Sheet (rather
than in any notes thereto) and (B) do not exceed that reserve as adjusted
for the passage of time through the Closing Date in accordance with the
past custom and practice of Infohiway in filing its Tax Return.
(l) REAL PROPERTY. Infohiway does not own or lease any real property used
in connection with the business of Infohiway.
(m) INTELLECTUAL PROPERTY.
(i) Infohiway owns or has the rights to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property necessary
for the operation of the business of Infohiway as presently conducted. Each
item of Intellectual Property owned or used by Infohiway immediately prior
to the Closing hereunder, as set forth on Schedule 4(m) of the Disclosure
Schedule, will be owned or available for use by RMI on identical terms and
conditions immediately subsequent to the Closing hereunder. Infohiway has
taken all necessary actions to maintain and protect each item of
Intellectual Property that it owns or uses.
(ii) Infohiway has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of third parties, and Shareholders, directors and officers
(and employees with responsibility for Intellectual Property matters) of
Infohiway have not received any charge, complaint, claim, demand, or notice
alleging any such interference, infringement, misappropriation, or
violation (including any claim that Infohiway must license or refrain from
using any Intellectual Property rights of any third party). To the
Knowledge of the Shareholders, directors and officers (and employees with
responsibility for Intellectual Property matters) of Infohiway, no third
party has interfered with, infringed upon, misappropriated, or otherwise
come into conflict with any Intellectual Property rights of Infohiway.
(iii) Section 4(m)(iii) of the Disclosure Schedule identifies each
patent or registration which has been issued to Infohiway with respect to
any of its Intellectual Property, identifies each pending patent
application or application for registration which Infohiway has made with
respect to any of its Intellectual Property, and identifies each license,
agreement, or other permission which Infohiway has granted to any third
party with respect to any of its Intellectual Property (together with any
exceptions). Shareholder has delivered to RMI true, correct and complete
copies of all such patents, registrations, applications, licenses,
agreements, and permissions (as amended to date) and have made available to
RMI true, correct and complete copies of all other written documentation
evidencing ownership and prosecution (if applicable) of each such item.
Section 4(m)(iii) of the Disclosure Schedule also identifies each trade
name or unregistered trademark used by Infohiway in connection with any of
its business. With respect to each item of
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Intellectual Property required to be identified in Section 4(m)(iii) of the
Disclosure Schedule:
(A) Infohiway possesses 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;
(C) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or, to the Knowledge of the
Shareholder, directors and officers (and employees with responsibility
for Intellectual Property matters) of Infohiway, is threatened which
challenges the legality, validity, enforceability, use, or ownership
of the item; and
(D) Infohiway has not agreed to indemnify any Person for or
against any interference, infringement, misappropriation, or other
conflict with respect to the item.
(iv) Section 4(m)(iv) of the Disclosure Schedule identifies each item
of Intellectual Property that any third party owns and that Infohiway uses
pursuant to license, sublicense, agreement, or permission. Shareholder has
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)(iv) of the Disclosure Schedule:
(A) the license, sublicense, agreement, or permission covering
the item is legal, valid, binding, enforceable, and in full force and
effect;
(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) no party to the license, sublicense, agreement, or permission
has repudiated any provision thereof;
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(E) with respect to each sublicense, the representations and
warranties set forth in subsections (A) through (D) above are true and
correct with respect to the underlying license;
(F) the underlying item of Intellectual Property is not subject
to any outstanding injunction, judgment, order, decree, ruling, or
charge;
(G) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or, to the Knowledge of the
Shareholders, directors and officers (and employees with
responsibility for Intellectual Property matters) of Infohiway, is
threatened which challenges the legality, validity, or enforceability
of the underlying item of Intellectual Property; and
(H) Infohiway has not granted any sublicense or similar right
with respect to the license, sublicense, agreement, or permission.
(v) Infohiway has no patents or registrations which have been issued
to or applied for by Infohiway with respect to any of its Intellectual
Property. Infohiway has not granted any licenses, agreements, or permission
to any third party with respect to any of its Intellectual Property.
Section 4(m)(iii) of the Disclosure Schedule identifies each trade name or
unregistered trademark used by Infohiway in connection with any of its
business.
(vi) Infohiway will not interfere with, infringe upon, misappropriate,
or otherwise come into conflict with, any Intellectual Property rights of
third parties as a result of the continued operation of its businesses as
presently conducted.
(vii) None of the Shareholders, directors and officers (and employees
with responsibility for Intellectual Property matters) of Infohiway has any
Knowledge of any new products, inventions, procedures, or methods of
manufacturing or processing that any competitors or other third parties
have developed which reasonably could be expected to supersede or make
obsolete any product or process of Infohiway.
(n) TANGIBLE ASSETS. Except as set forth on Schedule 4(n) of the Disclosure
Schedule, Infohiway 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 Schedule 4(n) of the Disclosure Schedule, each
such tangible asset is free from defects (patent and latent), has been
maintained in 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. Except as set forth on Schedule 4(o) of the Disclosure
Schedule, the inventory of Infohiway consists of supplies, manufactured and
purchased parts, and finished
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goods, all of which are merchantable and fit for the purpose for which it was
procured or manufactured, and none of which is slow-moving, obsolete, damaged,
or defective.
(p) CONTRACTS. Section 4(p) of the Disclosure Schedule lists the following
contracts and other agreements to which Infohiway is a party:
(i) any agreement (or group of related agreements) for the lease of
personal property to or from any Person providing for lease payments in
excess of $10,000 per annum;
(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 will extend over a period of more than one year,
result in a loss to Infohiway, or involve consideration in excess of
$10,000;
(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, in excess of $10,000 or under
which it has imposed a security interest on any of its assets, tangible or
intangible;
(v) any agreement concerning confidentiality or noncompetition;
(vi) any agreement with Shareholders or Affiliates (other than
Infohiway);
(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, 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 outside the Ordinary Course
of Business;
(xi) any agreement under which the consequences of a default or
termination could have an adverse effect on the business, financial
condition, operations, results of operations, or future prospects of
Infohiway; or
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(xii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $10,000.
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. 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. Except as set forth Schedule 4(q) of the
Disclosure Schedule, all notes and accounts receivable of Infohiway 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 Schedule 4(r) of the
Disclosure Schedule, there are no outstanding powers of attorney executed on
behalf of Infohiway.
(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 Infohiway 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;
(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; and
(v) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
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With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect; (B) the policy will continue
to be legal, valid, enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated hereby; (C) neither
Infohiway nor any other party to the policy is in breach or default (including
with respect to the payment of premiums or the giving of notices), and no event
has occurred which, with notice or the lapse of time, would constitute such a
breach or default, or permit termination, modification, or acceleration, under
the policy; and (D) no party to the policy has repudiated any provision thereof.
Infohiway 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. Section 4(s) of the Disclosure Schedule describes any
self-insurance arrangements affecting Infohiway.
(t) LITIGATION. Section 4(t) of the Disclosure Schedule sets forth each
instance in which Infohiway (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party or, to the
Knowledge of Shareholders, directors and officers (and employees with
responsibility for litigation matters) of Infohiway, 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
Schedule 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
Infohiway. None of the Shareholders, directors and officers (and employees with
responsibility for litigation matters) of Infohiway has any reason to believe
that any such action, suit, proceeding, hearing, or investigation may be brought
or threatened against Infohiway.
(u) PRODUCT WARRANTY. To the Knowledge of Shareholders and the directors,
officers and management personnel of Infohiway, each product manufactured, sold,
leased, or delivered by Infohiway has been in conformity with all applicable
contractual commitments and all express and implied warranties, and Infohiway
has no Liability (and there is no Basis for any present or to the Knowledge of
Shareholders and the directors, officers and management, future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
Infohiway giving rise to any Liability) for replacement or repair thereof or
other damages in connection therewith. Except as set forth on Schedule 4(u) of
the Disclosure Schedule, no product manufactured, sold, leased, or delivered by
Infohiway is subject to any guaranty, warranty, or other indemnity beyond the
applicable standard terms and conditions of sale or lease. Section 4(u) of the
Disclosure Schedule includes copies of the standard terms and conditions of sale
or lease for Infohiway (containing applicable guaranty, warranty, and indemnity
provisions).
(v) PRODUCT LIABILITY. To the Knowledge of Shareholders and the directors,
officers and management personnel of Infohiway, Infohiway has no Liability (and
there is no Basis for any present or to the Knowledge of Shareholders, its
directors, officers and management future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against
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Infohiway 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 Infohiway.
(w) EMPLOYEES. To the Knowledge of the Shareholders, directors and officers
(and employees with responsibility for employment matters) of Infohiway, no
executive, key employee, or group of employees has any plans to terminate
employment with Infohiway. Infohiway is not a party to or bound by any
collective bargaining agreement, nor has Infohiway experienced any strikes,
grievances, claims of unfair labor practices, or other collective bargaining
disputes. Infohiway has not committed any unfair labor practice. None of the
Shareholders, directors and officers (and employees with responsibility for
employment matters) of Infohiway has any Knowledge of any organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of Infohiway.
(x) EMPLOYEE BENEFITS.
(i) Section 4(x) of the Disclosure Schedule lists each Employee
Benefit Plan that Infohiway maintains or to which Infohiway contributes.
(A) Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in operation in all
material respects with the applicable requirements of ERISA, the Code,
and other applicable laws.
(B) All required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports, PBGC-1's, and Summary Plan
Descriptions) have been filed or distributed appropriately with
respect to each such Employee Benefit Plan. The requirements of Part 6
of Subtitle B of Title I of ERISA and of Code Section 4980B have been
met with respect to each such Employee Benefit Plan which is an
Employee Welfare Benefit Plan.
(C) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been paid
to each such Employee Benefit Plan which is an Employee Pension
Benefit Plan and all contributions for any period ending on or before
the Closing Date which are not yet due have been paid to each such
Employee Pension Benefit Plan or accrued in accordance with the past
custom and practice of Infohiway. All premiums or other payments for
all periods ending on or before the Closing Date have been paid with
respect to each such Employee Benefit Plan which is an Employee
Welfare Benefit Plan.
(D) Each such Employee Benefit Plan which is an Employee Pension
Benefit Plan meets the requirements of a "qualified plan" under Code
Section 401(a) and Infohiway has received, within the last two (2)
years, a favorable
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determination letter from the Internal Revenue Service, and since such
date no terms or provisions of such Employee Benefit Plans have been
modified, revoked or terminated in a manner that is inconsistent with
the qualified plan status of such Plan. To the Knowledge of
Shareholders, directors and officers and employees responsible for
Employee Benefit Plans are not aware of any facts that would result in
disqualification of any Employee Benefit Plan.
(E) Infohiway has no Employee Benefit Plan which is a defined
benefit Employee Pension Benefit Plan.
(F) Shareholders have delivered to RMI correct and complete
copies of the plan documents and summary plan descriptions, the most
recent determination letter received from the Internal Revenue
Service, the most recent Form 5500 Annual Report, and all related
trust agreements, insurance contracts, and other funding agreements
which implement each such Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan that Infohiway
maintains or ever has maintained or to which any of them contributes, ever
has contributed, or ever has been required to contribute there have been no
Prohibited Transactions with respect to any such Employee Benefit Plan. To
the Knowledge of Shareholders, its directors, officers and employees
responsible for employee benefits, no Fiduciary has any Liability for
breach of fiduciary duty or any other failure to act or comply in
connection with the administration or investment of the assets of any such
Employee Benefit Plan. No action, suit, proceeding, hearing, or
investigation with respect to the administration or the investment of the
assets of any such Employee Benefit Plan (other than routine claims for
benefits) is pending or, to the Knowledge of Shareholders, directors and
officers (and employees with responsibility for employee benefits matters)
of Infohiway, threatened. None of the Shareholders, directors and officers
(and employees with responsibility for employee benefits matters) of
Infohiway has any Knowledge of any Basis for any such action, suit,
proceeding, hearing, or investigation.
(iii) Infohiway contributes to, ever has contributed to, or ever has
been required to contribute to any Multiemployer Plan or has any Liability
(including withdrawal Liability) under any Multiemployer Plan.
(iv) Infohiway does not maintain or has never maintained or
contributes, ever has contributed, or ever has been required to contribute
to any 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. Infohiway is not a guarantor or otherwise is liable for any
Liability or obligation (including indebtedness) of any other Person.
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(z) ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS. Except as set forth on
Schedule 4(z) of the Disclosure Schedule:
(i) Infohiway and Affiliates have complied and are in compliance with
all Environmental, Health, and Safety Requirements.
(ii) Without limiting the generality of the foregoing, Infohiway and
its Affiliates have obtained and complied with, and are in compliance with,
all permits, licenses and other authorizations that are required pursuant
to Environmental, Health, and Safety Requirements for the occupation of its
facilities and the operation of its business Section 4(z)(ii) of the
Disclosure Schedule list all such permits, licenses and other
authorizations.
(iii) Neither Infohiway nor its Affiliates have received any written
or oral notice, report or other information regarding any actual or alleged
violation of Environmental, Health, and Safety Requirements, or any
liabilities or potential liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise), including any investigatory,
remedial or corrective obligations, relating to any of them or its
facilities arising under Environmental, Health, and Safety Requirements.
(iv) None of the following exists at any property or facility owned or
operated by Infohiway: (1) underground storage tanks, (2) asbestos-
containing material in any form or condition, (3) materials or equipment
containing polychlorinated biphenyls, or (4) landfills, surface
impoundments, or disposal areas.
(v) None of Infohiway or its Affiliates have treated, stored, disposed
of, arranged for or permitted the disposal of, transported, handled, or
released any substance, including without limitation any hazardous
substance, or owned or operated any property or facility (and no such
property or facility is contaminated by any such substance) in a manner
that has given or would give rise to liabilities, including any liability
for response costs, corrective action costs, personal injury, property
damage, natural resources damages or attorney fees, pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), the Solid Waste Disposal Act, as amended
("SWDA") or any other Environmental, Health, and Safety Requirements.
(vi) Neither this Agreement nor the consummation of the transaction
that is the subject of this Agreement will result in any obligations for
site investigation or cleanup, or notification to or consent of government
agencies or third parties, pursuant to any of the so-called
"transaction-triggered" or "responsible property transfer" Environmental,
Health, and Safety Requirements.
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(vii) Neither Infohiway nor its Affiliates have, either expressly or
by operation of law, assumed or undertaken any liability, including without
limitation any obligation for corrective or remedial action, of any other
Person relating to Environmental, Health, and Safety Requirements.
(viii) No facts, events or conditions relating to the past or present
facilities, properties or operations of Infohiway or Affiliates will
prevent, hinder or limit continued compliance with Environmental, Health,
and Safety Requirements, give rise to any investigatory, remedial or
corrective obligations pursuant to Environmental, Health, and Safety
Requirements, or give rise to any other liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise) pursuant to Environmental,
Health, and Safety Requirements, including without limitation any relating
to onsite or offsite releases or threatened releases of hazardous
materials, substances or wastes, personal injury, property damage or
natural resources damage.
(aa) CERTAIN BUSINESS RELATIONSHIPS WITH INFOHIWAY. Except as set forth on
Schedule 4(aa) of the Disclosure Schedule, Shareholders and his Affiliates have
not been involved in any business arrangement or relationship with Infohiway
within the past 12 months, and Shareholders and his Affiliates do not own any
asset, tangible or intangible, which is used in the business of Infohiway.
(bb) BROKERS' FEES. Infohiway 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.
(cc) 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 AND SUBSIDIARY. Each of RMI and
Subsidiary represents and warrants to Infohiway 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 correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this Section 5).
(a) ORGANIZATION. Each of RMI and Subsidiary is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. Prior to the Merger, RMI will be in control
of the Subsidiary within the meaning of Section 368(c) of the Code.
(b) AUTHORIZATION OF TRANSACTION. Each of RMI and Subsidiary has full
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder.
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This Agreement constitutes the valid and legally binding obligation of each of
RMI and Subsidiary, enforceable in accordance with its terms and conditions.
(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 or Subsidiary is subject or any
provision of the respective charters or bylaws.
(d) BROKERS' FEES. Neither RMI nor Subsidiary has any liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which
Shareholders could become liable or obligated.
(e) EXPENSES. Each of RMI and Subsidiary acknowledges that all costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby are the sole responsibility
of each such entity and each of RMI and Subsidiary will pay their respective
costs and expenses. This representation is made without regard to the
limitations on indemnification set forth in Section 9(f) of this Agreement.
6. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing.
(a) GENERAL. Each of the Parties will use his or its reasonable best
efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions set
forth in Section 8 below).
(b) NOTICES AND CONSENTS. Shareholders will cause Infohiway to give any
notices to third parties, and will cause Infohiway to use its best efforts to
obtain any third party consents, that are required or that RMI may request in
connection with this transaction. Each of the Parties will (and Shareholders
will cause Infohiway 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.
(c) ACCOUNTANT LETTER. Infohiway will deliver to RMI and Subsidiary on or
before the Closing Date an Accountants' Compilation Report from Fred H. Anzman &
Associates, P.C . stating that with respect to the compiled financial statements
for the calendar year 1997, the financial statements have been compiled in
accordance with Statements on Standards for Accounting and Review Services
issued by the American Institute of Certified Public Accountants. The financial
Statements have been prepared on the cash basis of accounting, which is a
comprehensive basis of accounting other than generally accepted accounting
principles. The Infohiway Inc. accountant's compilation report shall be
satisfactory to RMI and Subsidiary in form and substance.
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(d) OPERATION OF BUSINESS. After the date hereof, Infohiway will not engage
in any practice, take any action, or enter into any transaction outside the
Ordinary Course of Business without prior written consent from RMI. Without
limiting the generality of the foregoing:
(i) Infohiway will not authorize or effect any change in its Articles
of Incorporation or bylaws;
(ii) Infohiway will not grant any options, warrants, or other rights
to purchase or obtain any of its capital stock or issue, sell, or otherwise
dispose of any of its capital stock;
(iii) Infohiway will not declare, set aside, or pay any dividend or
distribution with respect to its capital stock (whether in cash or in
kind), or redeem, repurchase, or otherwise acquire any of its capital
stock;
(iv) Infohiway will not issue any note, bond, or other debt security
or create, incur, assume, or guarantee any indebtedness for borrowed money
or capitalized lease obligation or create or suffer the creation of any
other Liability of Infohiway other than liabilities arising in the Ordinary
Course of Business;
(v) Infohiway will not sell, dispose or otherwise transfer any of its
assets, including without limitation waive any material rights or claims,
or impose any security interest upon any of its assets;
(vi) Infohiway will not make any capital investment in, make any loan
to, or acquire the securities or assets of any other Person;
(vii) Infohiway will not make any change in employment terms for any
of its directors, officers, and employees;
(viii) Infohiway will not commit to any of the foregoing; and
(ix) otherwise engage in any practice, take any action, or enter into
any transaction of the sort described above or that would cause any
condition, representation or warranty to be breached or to become untrue,
including without limitation Section 4(h) above.
(e) PRESERVATION OF BUSINESS. Shareholders will cause Infohiway 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.
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(f) FULL ACCESS. Shareholders will permit, and Shareholders will cause
Infohiway to permit, representatives of RMI to have full access (including
providing introductions, where necessary to) all premises, properties,
personnel, Customers, lessors, licensors, vendors, supplies, creditors, books,
records (including Tax records), contracts, and documents of or pertaining to
Infohiway. Infohiway will cause its independent accountants to make available
their work papers with respect to Infohiway and to otherwise provide such
assistance as is reasonably requested by RMI.
(g) NOTICE OF DEVELOPMENTS. Shareholders will give prompt written notice to
RMI of any adverse development causing a breach or a potential breach of any of
the representations and warranties in Sections 3 and 4 above. No disclosure by
Shareholders or Infohiway or discovery by RMI shall be deemed to amend or
supplement the Disclosure Schedule or to prevent or cure any misrepresentation,
breach of warranty, or breach of covenant.
(h) EXCLUSIVITY. Shareholders will not cause or permit Infohiway to (i)
solicit, initiate, or encourage the submission of any proposal or offer from any
Person relating to the acquisition of any capital stock or other voting
securities, or any substantial portion of the assets, of Infohiway (including
any acquisition structured as a merger, consolidation, or share exchange) or
(ii) participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek any of the
foregoing. Shareholders will not vote their Infohiway Shares in favor of any
such acquisition structured as a merger, consolidation, or share exchange other
than for this transaction. Shareholders will notify RMI immediately if any
Person makes any proposal, offer, inquiry, or contact with respect to any of the
foregoing.
(i) NO TRANSFER. Shareholders will not sell, pledge, encumber or otherwise
transfer any Infohiway Share.
(j) REPAYMENT. At or before Closing, Shareholders and any of their
Affiliates shall repay all advances from and notes and receivables owing to
Infohiway.
(k) FINANCIAL STATEMENTS. At Closing, Shareholders shall deliver Financial
Statements certified by each of the Shareholders as true, correct and complete,
and consistent with the books and records of Infohiway (which books and records
are true, correct and complete).
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).
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Shareholders and Infohiway acknowledge and agree that from and after Closing RMI
or Subsidiary will be entitled to possession of all documents, books, records
(including Tax records), agreements, and financial data of any sort relating to
Infohiway.
(b) 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 Infohiway, each of the other Parties will cooperate with
him and his 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).
(c) TRANSITION. 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, or other business associate of Infohiway
from maintaining the same business relationships with Infohiway after Closing as
it maintained with Infohiway prior to the Closing. Shareholders will refer all
customer inquiries relating to the businesses of Infohiway to RMI or Subsidiary
from and after the Closing.
(d) CONFIDENTIALITY. Each of the Shareholders and Infohiway will treat and
hold as such all of the Confidential Information, refrain from using any of the
Confidential Information except in connection with this Agreement, and deliver
promptly to RMI or destroy, at the request and option of RMI, all tangible
embodiments (and all copies) of the Confidential Information which are in his 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(d). 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 best efforts to obtain, at the request of
RMI, 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.
Each of the Shareholders acknowledge and understand that confidential
information, including the existence of this Agreement, may include "material,
non-public information," as the term is understood and interpreted under federal
and state securities laws and rules. Each of
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the Shareholders further acknowledge and understand that purchasing or selling
securities while in possession of material non-public information may subject
the purchaser, seller and/or person(s) who have provided such information to
liability under such laws, including potential criminal liability. Each of the
Shareholders hereby agree that all confidential information, whether furnished
before or after the date of this Memorandum, shall be treated confidentially.
(e) NON-SOLICITATION. Shareholder agrees that for a period of one (1) year
after termination of this Agreement, Shareholder agrees that he will not, in any
manner whether with or without cause, directly or indirectly, either as owner,
officer, employer, employee, independent contractor, stockholder, agent,
principal, manager, employee, consultant, partner or otherwise (i) induce any
employee, agent or contractor of Infohiway, RMI or an affiliate company thereof
to terminate his, her or its employment, agency or contractor relationship with
Infohiway, RMI or an affiliate company thereof, or (ii) hire or attempt to hire
any employee, agent or contractor of Infohiway, RMI or an affiliate company
thereof.
Shareholder agrees that for a period of one (1) year after termination of
this Agreement, he will not, in any manner, whether with or without cause,
directly or indirectly, either as owner, officer, employer, employee,
independent contractor, stockholder, agent, principal, manager, consultant,
partner or otherwise, have any business or employment relationship with any
customer of Infohiway and/or RMI without the prior written consent of Infohiway
and/or RMI, which consent shall not be unreasonably withheld, following written
notice by Shareholder to Infohiway and RMI detailing the name of the customer
and the nature of the proposed relationship. It shall not be unreasonable for
Infohiway and/or RMI to withhold consent if such relationship could cause or
result in any adverse or detrimental impact to Infohiway and/or RMI. The term
"customer" includes, but is not limited to, persons or entities located within
the Geographical Market (as defined below) who were customers of Infohiway
and/or RMI during Employee's term of employment with Infohiway or who became
customers within six (6) months of his termination of employment.
SHAREHOLDER AGREES THAT THE COVENANTS HE HAS MADE IN THIS PARAGRAPH 13 ARE
REASONABLE WITH RESPECT TO THEIR DURATION AND PROSCRIPTION. Shareholder further
agrees that the covenants he has made in this Paragraph 13 shall be construed as
an agreement independent of any other provision of this Agreement. Hence, the
covenants made in this Paragraph 13 shall survive the termination of this
Agreement. Moreover, the existence of any claim or cause of action of Employee
against Infohiway and/or RMI, whether or not predicated upon the terms of this
Agreement, shall not constitute a defense to the enforcement by Infohiway or RMI
of these covenants.
(f) COVENANT NOT TO COMPETE. Shareholder agrees that for a period of two
(2) years following the termination of this Agreement, without regard to an
early termination pursuant to Section 14 hereof and within the Geographical
Market (defined below), he will not, directly or indirectly, in any manner own,
manage, operate, control, be employed by, participate in, or be connected in any
manner with the ownership, management, operation, or control of any business
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substantially similar to the type of business conducted by Infohiway, RMI or any
affiliate thereof at any time during the term of this Covenant Not to Compete.
Notwithstanding the foregoing, Shareholder shall be entitled to own stock in
publicly traded companies so long as said ownership does not exceed two percent
(2%) of any said publicly traded company.
For purposes of this Agreement "Geographical Market" shall mean the United
States, Mexico and Canada. Shareholder hereby acknowledges that RMI is a full
service, national communications company providing Internet access, local
telephone service and IP telephone long distance service, Web development and
hosting, network management, system integration and co-location services to
clients and customers throughout the United States. Shareholder further
acknowledges that RMI plans expansions into the international market, including
Mexico and Canada, and continued growth both within and outside the United
States. Shareholder further acknowledges that RMI's acquisition of Infohiway as
contemplated by the Merger Agreement evidences RMI's intent to integrate
Infohiway and its operations as an integral part of RMI's plans for growth and
expansion.
SHAREHOLDER AGREES THAT THE COVENANTS HE HAS MADE IN THIS PARAGRAPH 14 ARE
REASONABLE WITH RESPECT TO THEIR DURATION, GEOGRAPHICAL AREA AND PROSCRIPTION.
Shareholder further agrees that the covenants he has made in this Paragraph 14
shall be construed as an agreement independent of any other provision of this
Agreement. Hence, the covenants made in this Paragraph 14 shall survive the
termination of this Agreement. Moreover, the existence of any claim or cause of
action of Shareholder against Infohiway and/or RMI, whether or not predicated
upon the terms of this Agreement, shall not constitute a defense to the
enforcement by Infohiway and/or RMI of these covenants.
8. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO OBLIGATION OF RMI AND SUBSIDIARY. The obligation of each
of RMI and Subsidiary to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions:
(i) this Agreement and the Merger shall have received the Requisite
Shareholders Approval;
(ii) Infohiway shall have procured all third party consents as set
forth on Schedule 4(c) of the Disclosure Schedule;
(iii) Infohiway shall have procured all necessary government consents;
(iv) all of the representations and warranties set forth in Sections 3
and 4 above (considered collectively and each of said representations and
warranties considered individually) shall be true and correct in all
material respects at and as of the Closing Date. Notwithstanding the
foregoing, each of the representations and warranties in
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Sections 3, 4(b), 4(g) and 4(h) shall be true and correct in all respects
at and as of the Closing Date;
(v) Shareholders and Infohiway shall have delivered to RMI and
Subsidiary an updated Disclosure Schedule as of Closing. Such updated
Disclosure Schedule shall contain such modification as acceptable to RMI,
in its sole discretion.
(vi) Shareholders and Infohiway shall have performed and complied with
all of its covenants hereunder in all material respects through the
Closing;
(vii) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, or local jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would
(A) prevent consummation of any of the transactions contemplated by this
Agreement, (B) cause any of the transactions contemplated by this Agreement
to be rescinded following consummation, (C) affect adversely the right of
RMI to own the capital stock of the Surviving Corporation and to control
the Surviving Corporation, (D) affect adversely the right of the Surviving
Corporation to own its assets and to operate its businesses (and no such
injunction, judgment, order, decree, ruling, or charge shall be in effect);
or (E) adversely affect the right of Shareholders to own the RMI Shares
delivered to Shareholders at Closing as part of the Merger Consideration;
(viii) Shareholders shall cause Infohiway to deliver to RMI and
Subsidiary Certificates of the Secretary of Infohiway dated as of Closing
certifying that the following are true, correct and complete copies and the
originals thereof: Articles of Incorporation of Infohiway, as amended, and
certified by the Colorado Secretary of State after May 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, and stock record books of Infohiway.
(ix) Shareholders shall cause Infohiway to deliver to RMI and
Subsidiary a Certificate of Shareholders dated as of Closing certifying
that the following are true, correct and complete copies: the Financial
Statements, Accounts Payable Aging Report, Accounts Receivables Aging
Report and an Accrued Employee Benefits Report.
(x) Shareholders and Infohiway shall have delivered to RMI and
Subsidiary a certificate to the effect that each of the conditions
specified above in Section 8(a)(i)-(vi) is satisfied in all respects, in
the form attached hereto as EXHIBIT B;
(xi) Jeremy J. Black shall have delivered to RMI and Subsidiary a
Employment, Confidentiality and NonCompete Agreement by and between him and
Subsidiary, substantially in the form attached hereto as EXHIBIT C;
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(xii) Kenneth Covell shall have delivered to RMI and Subsidiary a
Employment, Confidentiality and NonCompete Agreement by and between him and
Subsidiary, substantially in the form attached hereto as EXHIBIT D;
(xiii) Shareholders shall have delivered to RMI and Subsidiary a
Registration Agreement by and between RMI and each of the Shareholders in
the form attached hereto as EXHIBIT E;
(xiv) RMI and Subsidiary shall have received from counsel to Infohiway
an opinion in form and substance satisfactory to counsel for RMI, addressed
to RMI and Subsidiary, and dated as of the Closing Date in a form
acceptable to RMI and RMI's counsel;
(xv) RMI and Subsidiary shall have received the resignations,
effective as of the Closing, of each director and officer of Infohiway;
(xvi) RMI and Subsidiary shall have completed its due diligence with
respect to Infohiway, to its sole satisfaction;
(xvii) RMI shall have procured the approval of its Board of Directors
of the Merger as contemplated by this Merger Agreement;
(xviii) all actions to be taken by Shareholders and Infohiway in
connection with consummation of the transactions contemplated hereby and
all certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be satisfactory in form
and substance to RMI and Subsidiary.
RMI and Subsidiary may waive any condition specified in this Section 8(a) only
if they execute a writing so stating at or prior to the Closing. RMI and
Subsidiary's knowledge of a breach of a representation, warranty or covenant
shall not be considered as a waiver of any of the above conditions.
(b) CONDITIONS TO OBLIGATION OF SHAREHOLDERS AND INFOHIWAY. The obligation
of Shareholders and Infohiway to consummate the transactions to be performed by
them in connection with the Closing is subject to satisfaction of the following
conditions:
(i) each of the representations and warranties set forth in Section 5
above shall be true and correct in all material respects at and as of the
Closing Date;
(ii) RMI shall have performed and complied with all of its covenants
hereunder in all material respects through the Closing;
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(iii) no action, suit, or proceeding shall be pending before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement, (B)
cause any of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect) or (C) adversely affect the
right of Shareholders to own the RMI Shares deliver to Shareholders at
Closing as part of the Merger Consideration;
(iv) RMI shall have delivered Shareholders a certificate to the effect
that each of the conditions specified above in Section 8(b)(i)-(iii) is
satisfied in all respects, in the form attached hereto as EXHIBIT F;
(v) RMI shall have delivered to Shareholders a Registration Agreement
by and between RMI and Shareholders in the form attached hereto as EXHIBIT
E;
(vi) RMI shall have procured the approval of its Board of Directors of
the Merger as contemplated by this Merger Agreement; and
(vii) all actions to be taken by RMI and Subsidiary in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to Shareholders.
Shareholders may waive any condition specified in this Section 8(b) if they
execute a writing so stating at or prior to the Closing.
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 three (3) years from the date of
Closing, except the representations and warranties set forth in Sections 3(b),
4(e), 4(k), 4(l)(i), 4(x) and 4(z) hereof shall survive Closing forever.
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF RMI AND SUBSIDIARY.
Shareholders agrees to indemnify RMI and Subsidiary from and against the
entirety of any Adverse Consequences RMI or Subsidiary may suffer (including any
Adverse Consequences suffered after the making of any claim for indemnification
or after the end of any applicable survival period) resulting from, arising out
of, relating to, in the nature of, or caused by any of the following:
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(i) Shareholders' or Infohiway'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 determining whether there has been any such
misrepresentation or breach of any of the representations, warranties or
covenants and for calculating the amount of any Adverse Consequences,
qualifications such as "Knowledge," "material," "materiality" or any other
similar qualification, shall be disregarded;
(ii) any Liability or obligation of any nature, accruing prior to the
Effective Time, except to the extent they are reflected in the Closing
Balance Sheet or the Disclosure Schedule to this Agreement; notwithstanding
the foregoing exception, Shareholders agree that the following items shall
be fully indemnified against without exception or regard to any disclosure
made to RMI and Subsidiary on Schedule 4(c), 4(i), 4(m)(iv) and 4(s).
(iii) any Liability of Infohiway (x) for any Taxes of Infohiway 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 Infohiway) 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
(iv) 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.
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF SHAREHOLDERS. In the event
RMI or Subsidiary breaches (or in the event any third party alleges facts that,
if true, would mean either 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).
(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
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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 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 in any manner it
reasonably may deem appropriate (and the Indemnified Party need not consult
with, or obtain any consent from, any Indemnifying Party in connection
therewith), (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
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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 Infohiway,
or the transactions contemplated by this Agreement. Without limiting the
generality of the foregoing, RMI and Subsidiary shall be entitled, but not
required, to setoff any amounts due either pursuant to this Section 9 against
any and all amounts payable to Shareholders under this Agreement or otherwise.
(f) LIMITATIONS ON INDEMNIFICATION. Except as otherwise provided in this
Agreement, no party to this Agreement shall be required to indemnify the other
party unless and until the total amount of the indemnification claim is equal to
or exceeds Fifteen Thousand and No/100 Dollars ($15,000) ("Indemnification
Threshold") in the aggregate. If such Indemnification Threshold is reached, all
indemnification liability shall be assessed irrespective of such Indemnification
Threshold. The aggregate amount of Shareholders' liability under this Section
9(f) shall not exceed the Merger Consideration, as reported by RMI to
Shareholders and the Internal Revenue Service ("Indemnification Cap"), except
that there shall be no Indemnification Cap for Adverse Consequences as a result
of a breach of the representations and warranties set forth in Sections 3(b),
4(c), 4(e), 4(g), 4(h), 4(i), 4(k), 4(o), 4(p),4(q) and 4(t). For purposes of
determining whether there has been any such misrepresentation or breach of any
such representations or warranties, qualification such as "Knowledge,"
"material," "materiality" or similar qualification, shall be disregarded;
(g) OTHER INDEMNIFICATION PROVISIONS. Each of the Shareholders hereby
agrees that they will not make any claim for indemnification against Infohiway
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. Shareholders shall
cause Infohiway to prepare or cause to be prepared and file or cause to be filed
all Tax Returns for Infohiway for all periods ending on or prior to the Closing
Date, including but not limited to the short year return from January 1, 1998
through the Closing Date, which are filed after the Closing Date. Shareholders
shall be individually responsible for the costs of preparation of such
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tax returns and any and all taxes due and owing for such tax returns.
Shareholders shall permit RMI to review and comment on each such Tax Return
described in the preceding sentence prior to filing.
(b) COOPERATION ON TAX MATTERS.
(i) RMI, Infohiway and Shareholders shall cooperate fully, as and to
the extent reasonably requested by the other party, 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 the
retention and (upon the other party's request) the 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. Infohiway and Shareholders shall provide to RMI who
agrees to retain all books and records with respect to Tax matters
pertinent to Infohiway 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, Subsidiary 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, Subsidiary 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 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.
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(a) TERMINATION OF AGREEMENT. Any of the Parties may terminate this
Agreement with the prior authorization of its board of directors (whether before
or after Shareholders approval) as provided below:
(i) the Parties may terminate this Agreement by mutual written consent
at any time prior to the Effective Time;
(ii) RMI and Subsidiary may terminate this Agreement by giving written
notice to Infohiway at any time prior to the Effective Time (A) in the
event Infohiway or Shareholders has breached any representation, warranty,
or covenant contained in this Agreement in any material respect, RMI or
Subsidiary has notified Infohiway and Shareholders of the breach, and the
breach has continued without cure for a period of ten (10) days after the
notice of breach, (B) in the event that RMI or Subsidiary are not fully
satisfied with its due diligence of Infohiway or the Shareholders, in its
sole and absolute discretion or (C) if the Closing shall not have occurred
on or before June 15, 1998, by reason of the failure of any condition
precedent under Section 8(a) hereof (unless the failure results primarily
from RMI or Subsidiary breaching any representation, warranty, or covenant
contained in this Agreement). RMI or Subsidiary's knowledge of the
existence of a condition that would entitle RMI and Subsidiary to so
terminate this Agreement shall not be construed as a waiver of its rights
to so terminate at any later date prior to the Effective Time.
(b) EFFECT OF TERMINATION. If any 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), except that the provisions
contained in Section 7(d) above shall survive termination.
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 Rule 12b-2 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.
"ARTICLES OF MERGER" has the meaning set forth in Section 2(c).
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"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(c).
"CLOSING DATE" has the meaning set forth in Section 2(c).
"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 Infohiway that is not already generally available to the public.
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 3.
"EFFECTIVE TIME" has the meaning set forth in Section 2(d)(i).
"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 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).
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"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).
"INFOHIWAY" has the meaning set forth in the preface above.
"INFOHIWAY ACCOUNTANT'S LETTER" has the meaning set forth in Section 6(c).
"INFOHIWAY SHARE" means any share of the Common Stock, no par value per
share, of Infohiway.
"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, 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.
"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.
"MERGER" has the meaning set forth in Section 2(a).
"MERGER CONSIDERATION" has the meaning set forth in Section 2(f).
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"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).
"PROHIBITED TRANSACTION" has the meaning set forth in ERISA Section 406 and
Code Section 4975.
"REQUISITE SHAREHOLDERS APPROVAL" means the affirmative vote of the holders
of Infohiway Shares in favor of this Agreement and the Merger.
"RMI" has the meaning set forth in the preface above.
"RMI SHARES" means the shares of Common Stock, $0.001 par value per share,
of RMI.
"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.
"SURVIVING CORPORATION" has the meaning set forth in Section 2(a).
"SURVEY" has the meaning set forth in Section 6(i).
"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.
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"THIRD PARTY CLAIM" has the meaning set forth in Section 9(d).
13. MISCELLANEOUS.
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. Infohiway 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 both before and after
Closing.
(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 Infohiway.
(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.
(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 .
or RMI Subsidiary: Douglas H. Hanson, President, CEO and Chairman
1099 18th Street, 30th floor
Denver, Colorado 80202
COPY TO: Minor & Brown, P.C.
Lisa A. D'Ambrosia
650 South Cherry Street, Suite 1100
Denver, Colorado 80246
Facsimile: (303) 320-6330
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IF TO SHAREHOLDERS: Jeremy J. Black John-Michael Keyes
Infohiway, Inc. 17852 E. Florida Ave.
17022 East Fremont Avenue Aurora, Colorado 80017
Foxfield, Colorado 80016
Kenneth Covell
2557 Ash Street
Denver, Colorado 80207
COPY TO: Jeffrey H. Katz
7400 E. Caley., #300
Englewood, Colorado 80111-6718
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
Infohiway. 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 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
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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.
(m) SUBMISSION TO JURISDICTION. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Denver, Colorado in any
action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each Party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
of the Parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other Party with respect thereto. Any
Party may make service on any other Party by sending or delivering a copy of the
process to the Party to be served at the address and in the manner provided for
the giving of notices in Section 12(g) above. Nothing in this Section 12(n),
however, shall affect the right of any Party to serve legal process in any other
manner permitted by law or at equity. Each Party agrees that a final judgment in
any action or proceeding so brought shall be conclusive and may be enforced by
suit on the judgment or in any other manner provided by law or at equity.
43
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on as
of the date first above written.
Rocky Mountain Internet, Inc.,
a Delaware corporation
By: /s/ Douglas H. Hanson
-----------------------------
Douglas H. Hanson, CEO, President,
and Chairman of the Board
RMI Subsidiary, Inc.
a Colorado corporation
By: /s/ Douglas H. Hanson
-----------------------------
Douglas H. Hanson, CEO, President,
and Chairman of the Board
Infohiway Corporation,
a Colorado corporation
By: /s/ Jeremy J. Black
-----------------------------
Jeremy J. Black, President
/s/ Jeremy J. Black
- -----------------------------
Jeremy J. Black, Shareholders
/s/ Kenneth Covell
- -----------------------------
Kenneth Covell, Shareholders
/s/ John-Michael Keyes
- -----------------------------
John-Michael Keyes, Shareholders
44
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of June 5, 1998 (this
"Agreement") by and among ROCKY MOUNTAIN INTERNET, INC., a Delaware corporation
("Purchaser"), INTERNET ACQUISITION CORPORATION, a Colorado corporation and
wholly-owned subsidiary of Purchaser ("Acquisition"), and INTERNET
COMMUNICATIONS CORPORATION, a Colorado corporation (the "Company").
(Acquisition and the Company are hereinafter collectively referred to as the
"Constituent Corporations.")
WHEREAS, the Board of Directors of each Constituent Corporation
believes that the merger of Acquisition with and into the Company (the "Merger")
is in the best interests of such Constituent Corporation and its shareholders;
and
WHEREAS, Purchaser and the Boards of Directors of the Constituent
Corporations (a) desire to enter into this Agreement and (b) have approved the
Merger, all upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the conditions
hereof, on the Effective Date, Acquisition shall be merged with and into the
Company, which shall be the surviving corporation (the Company in such capacity
being hereinafter sometimes called the "Surviving Corporation"). From and after
the Effective Date, the status, rights and liabilities of, and the effect of the
Merger on, each of the Constituent Corporations in the Merger and the Surviving
Corporation shall be as provided in Section 7-111-106 of the Colorado Business
Corporation Act ("CBCA").
Section 1.2 CONSUMMATION OF THE MERGER. As soon as practicable (but
in any event within five business days) after the receipt of approval by the
Company's shareholders and satisfaction of the other conditions hereinafter set
forth, the parties hereto shall cause the Merger to be consummated by the
approval and filing with the Secretary of the State of Colorado of articles of
merger in such form as required by and executed in accordance with the relevant
provisions of applicable law (the time of such filing being the "Effective
Date").
<PAGE>
ARTICLE II
ARTICLES OF INCORPORATION AND BY-LAWS
OF THE SURVIVING CORPORATION
Section 2.1 ARTICLES OF INCORPORATION. The Articles of Incorporation
of Acquisition in effect on the Effective Date shall be the Articles of
Incorporation of the Surviving Corporation, until thereafter amended as provided
by law.
Section 2.2 BY-LAWS. The By-Laws of Acquisition in effect on the
Effective Date shall be the By-Laws of the Surviving Corporation, until
thereafter amended as provided by law and the Surviving Corporation's Articles
of Incorporation.
Section 2.3 OFFICERS AND BOARD OF DIRECTORS. The directors of
Acquisition on the Effective Date shall become the directors of the Surviving
Corporation until their respective successors are duly elected and qualified.
The officers of the Company on the Effective Date shall continue as the officers
of the Surviving Corporation, to serve in accordance with the By-Laws thereof
until their respective successors are duly elected and qualified.
ARTICLE III
CONVERSION OF SHARES
Section 3.1 CONVERSION OF SHARES. As of the Effective Date, by
virtue of the Merger and without any action on the part of Purchaser,
Acquisition, the Company or the holders of any securities of the Company:
(a) All outstanding shares of the Company's common stock (the
"Shares") which are held by the Company as treasury shares, all authorized and
unissued Shares and any Shares owned by Purchaser, Acquisition or any other
direct or indirect subsidiary of Purchaser, shall be canceled.
(b) Each other outstanding Share (other than Shares held by
Dissenting Shareholders (as defined in Section 3.3)) shall be converted into the
right to receive $6.80 in cash, reduced by an amount equal to the quotient of
(i) 50% of the difference between (A) the lesser of (I) the Daniels Fee (as
defined below) and (II) $876,000 and (B) $250,000; divided by (ii) the total
number of shares of the Company outstanding or issuable upon exercise of options
or warrants on the date hereof, regardless of whether or not they are currently
vested (the "Merger Consideration").
(c) Each issued and outstanding share of capital stock of
Acquisition shall be converted into one validly issued, fully paid and
non-assessable share of common stock of the Surviving Corporation.
<PAGE>
Section 3.2 PAYMENT FOR SHARES. The Purchaser shall authorize one or
more persons to act as paying agent in connection with the Merger (the "Paying
Agent"). At or prior to the Effective Date, the Purchaser shall deposit the
Merger Consideration with the Paying Agent, in trust for the benefit of holders
of Shares. Upon or as soon as practicable after the Effective Date, the Paying
Agent shall distribute to each former holder of Shares, upon surrender to the
Paying Agent of the certificate or certificates which immediately prior to the
Effective Date represented such outstanding Shares, for cancellation, the
aggregate amount of cash into which such holder's Shares shall have been
converted in the Merger. Until so surrendered, each certificate, which
immediately prior to the Effective Date represented outstanding Shares, shall
represent solely the right to receive, upon surrender, the aggregate amount of
cash into which the Shares represented thereby shall have been converted and
such shares shall not be entitled to any other rights with respect to the
Company. No interest shall accrue or be paid on the cash payable upon the
surrender of the certificate or certificates. The Paying Agent shall pay on the
Effective Date the amounts due in respect of the outstanding stock options
granted by the Company (the "Outstanding Options") referred to in Section 6.6.
Section 3.3 SHARES OF DISSENTING SHAREHOLDERS. Notwithstanding
anything in this Agreement to the contrary, any issued and outstanding shares of
capital stock of the Company held by a shareholder who has not voted in favor of
nor consented to the Merger and who complies with all the provisions of the CBCA
concerning the right of holders of such stock to dissent from the Merger and
require appraisal of their shares (a "Dissenting Shareholder"), shall not be
converted as described in Section 3.1 but shall become, at the Effective Date,
by virtue of the Merger and without any further action, the right to receive
such consideration as may be determined to be due to such Dissenting Shareholder
pursuant to the CBCA; PROVIDED, HOWEVER, that Shares outstanding immediately
prior to the Effective Date and held by a Dissenting Shareholder who shall,
after the Effective Date, withdraw his demand for appraisal or lose his right of
appraisal, in either case pursuant to the CBCA, shall be deemed to be converted
as of the Effective Date, into the right to receive the Merger Consideration.
The Company shall give Purchaser (a) prompt notice of any written demands for
appraisal of shares of capital stock of the Company received by the Company and
(b) the opportunity to direct all negotiations and proceedings with respect to
any such demands. The Company shall not, without the prior written consent of
Purchaser, voluntarily make any payment with respect to, or settle, offer to
settle or otherwise negotiate, any such demands.
<PAGE>
Section 3.4 CLOSING OF THE COMPANY'S TRANSFER BOOKS. Upon the
Effective Date, the stock transfer books of the Company shall be closed and no
transfer of Shares (other than shares of common stock into which the capital
stock of Acquisition is to be converted pursuant to the Merger) shall thereafter
be made.
Section 3.5 STATUS OF SHARE CERTIFICATES. From and after the
Effective Date, the holders of certificates evidencing ownership of Shares
outstanding immediately prior to the Effective Date shall cease to have any
rights with respect to such Shares except as otherwise provided for herein or by
applicable law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND ACQUISITION
Except as set forth in the disclosure schedule delivered to the
Company by the Purchaser on the date hereof (the "Purchaser Disclosure
Schedule") or in the Purchaser Reports (as defined below), the Purchaser and
Acquisition jointly and severally represent and warrant to the Company as
follows:
Section 4.1 ORGANIZATION. Each of Purchaser and its subsidiaries is
a corporation duly organized, validly existing and in good standing under the
laws of the state of its organization and has the requisite corporate power to
carry on its business as it is now being conducted. Acquisition is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Colorado and is a wholly-owned subsidiary of Purchaser.
Section 4.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Purchaser and
Acquisition have the requisite corporate power and authority to execute and
deliver this Agreement, to perform their obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by Purchaser and Acquisition and the consummation by Purchaser and
Acquisition of the transactions contemplated hereby have been duly authorized by
all necessary corporate and, to the extent necessary, shareholder action of
Purchaser and Acquisition and no other acts or corporate proceedings on the part
of Purchaser or Acquisition are necessary to authorize the Merger or this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly executed and delivered by Purchaser and Acquisition and is a valid
and binding obligation of Purchaser and Acquisition, enforceable against them in
accordance with its terms, subject to bankruptcy remedies and rights of
creditors and general principles of equity.
<PAGE>
Section 4.3 NO CONFLICTS; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Purchaser
and Acquisition does not, and the consummation of the transactions contemplated
hereby will not (i) conflict with or violate the certificate of incorporation or
bylaws of Purchaser, (ii)in any material respect, conflict with or violate any
federal, state, foreign or local law, statute, ordinance, rule, regulation,
order, judgment or decree (collectively, "Laws") applicable to Purchaser or any
of its subsidiaries or by which any of their properties is bound or subject or
(iii)result in any material breach of or constitute a material default (or an
event that with notice or lapse of time or both would become a material default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or require payment under, or result in the creation of a lien
or encumbrance on any of the properties or assets of Purchaser or any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Purchaser or any of its subsidiaries is a party or by or to which
Purchaser or any of its subsidiaries or any of their properties is bound or
subject, except for any such conflicts, violations, breaches, defaults, events,
rights of termination, amendment, acceleration or cancellation, payment
obligations or liens or encumbrances described in clauses (ii) or (iii) that
would not, in the aggregate, prevent the Purchaser and Acquisition from
performing, in any material respect, their respective obligations under this
Agreement or would not have a material adverse effect on the business or
financial condition of Purchaser and its subsidiaries, taken as a whole (a
"Purchaser Material Adverse Effect").
(b) The execution and delivery of this Agreement by Purchaser
and Acquisition does not, and consummation of the transactions contemplated
hereby will not, require either Purchaser or Acquisition to obtain any consent,
license, permit, approval, waiver, authorization or order of, or to make any
filing with or notification to, any governmental or regulatory authority,
domestic or foreign (collectively, "Governmental Entities"), except (i) for
applicable requirements, if any, of the Securities Act of 1933, as amended (the
"Securities Act"), the Exchange Act, state securities or blue sky laws ("Blue
Sky Laws"), and the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "Hart-Scott-Rodino Act"), and the filing and recordation of
appropriate merger documents as required by the CBCA, and (ii) where the failure
to obtain such consents, licenses, permits, approvals, waivers, authorizations
or orders, or to make such filings or notifications, would not, either
individually or in the aggregate, constitute a Purchaser Material Adverse
Effect.
<PAGE>
Section 4.4 INFORMATION. (a) None of the information to be supplied
by Purchaser or Acquisition for inclusion in a proxy statement in connection
with the meeting of the Company's shareholders described in Section 6.2 hereof
(the "Proxy Statement") or any amendments thereof or supplements thereto, will,
at the time of the meeting of shareholders to be held in connection with the
Merger or the mailing to shareholders, as the case may be, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
(b) Since their inception, Purchaser and its subsidiaries have
filed all forms, reports, statements and other documents required to be filed
with the Securities and Exchange Commission ("SEC"), except where the failure to
file such documents would not have a Purchaser Material Adverse Effect (all such
forms, reports, statements and other documents being referred to herein,
collectively, as the "Purchaser Reports"). The Purchaser Reports, including all
Purchaser Reports filed after the date of this Agreement and prior to the
Effective Date, (i) were or will be prepared in all material respects in
accordance with the requirements of applicable Law (except that some filings
were made late) and (ii) did not at the time they were filed, or will not at the
time they are filed, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, except where any such statement or omission would not have
a Purchaser Material Adverse Effect. Notwithstanding this Section 4.4(b),
Purchaser shall not be deemed to represent or warrant the preparation or
accuracy of any Purchaser Report, statement, document or other information
included in the Purchaser Reports that were provided to the Purchaser for
inclusion therein by a third party. Since the date of the last Purchaser Report
(x) there has occurred no Purchaser Material Adverse Effect and the Purchaser
has incurred no material liabilities outside the ordinary course of the
Purchaser's business, (y) the Purchaser has not entered into any material
contracts that would be required to be filed with the Purchaser's next Form 10-Q
and (z) the Purchaser has had no transactions with related parties that would be
required to be reported in the Purchaser's next proxy statement in accordance
with Section 404 of Regulation S-K. The list of the Purchaser's subsidiaries
set forth in the Purchaser Reports is accurate and complete as of the date
hereof, with the addition of Acquisition and Rocky Mountain Broadband, Inc.,
both Colorado corporations.
<PAGE>
Section 4.5 LITIGATION. There is no claim, action, suit, litigation,
proceeding, arbitration or, to the knowledge of Purchaser, any investigation of
any kind at law or in equity (including actions or proceedings seeking
injunctive relief), pending or, to the knowledge of Purchaser, threatened
against Purchaser or any of its subsidiaries or any properties or rights of
Purchaser or any of its subsidiaries (except for claims, actions, suits,
litigation, proceedings, arbitrations or investigations which would not
reasonably be expected to have a Purchaser Material Adverse Effect), and neither
Purchaser nor any of its subsidiaries is subject to any continuing order of,
consent decree, settlement agreement or other similar written agreement with,
any Governmental Entity, or any judgment, order, writ, injunction, decree or
award of any Governmental Entity or arbitrator, including, without limitation,
cease and desist or other orders, except for matters which would not have a
Purchaser Material Adverse Effect.
Section 4.6 FINANCING. The commitment letter dated June 5, 1998 from
ING Barings (U.S.) Capital Corporation ET AL. to Purchaser in the form delivered
to and approved by the Company for $42 million to fund the acquisition of Shares
hereunder (the "Commitment") is in full force and effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule delivered to Purchaser
by the Company on the date hereof (the "Company Disclosure Schedule") or in the
Company Reports (as defined below), the Company represents and warrants to
Purchaser and Acquisition as follows:
Section 5.1 ORGANIZATION. Each of the Company and its subsidiaries
is a corporation duly organized, validly existing and in good standing under the
laws of the state of its organization and has the requisite corporate power to
carry on its business as it is now being conducted.
Section 5.2 AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has
all requisite corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby (subject to the approval of the Merger, this
Agreement and the transactions contemplated hereby by the affirmative vote of
the holders of a majority of the outstanding shares of common stock of the
Company ("Shareholder Approval")). The Company's Board of
<PAGE>
Directors has unanimously recommended approval and adoption of this Agreement by
the Company's shareholders entitled to vote on the Merger. Subject to
Shareholder Approval, the execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate action and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly executed and delivered by the Company and is a valid and binding
obligation of the Company, enforceable against it in accordance with its terms,
subject to bankruptcy remedies and rights of creditors and general principles of
equity.
Section 5.3 NO CONFLICTS; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by the Company
does not, and the consummation of the transactions contemplated hereby will not
(i) conflict with or violate the articles of incorporation or bylaws of the
Company, (ii) in any material respect, conflict with or violate any federal,
state, foreign or local law, statute, ordinance, rule, regulation, order,
judgment or decree (collectively, "Laws") applicable to the Company or any of
its subsidiaries or by which any of their properties is bound or subject or
(iii) result in any material breach of or constitute a material default (or an
event that with notice or lapse of time or both would become a material default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or require payment under, or result in the creation of a lien
or encumbrance on any of the properties or assets of the Company or any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by or to which the
Company or any of its subsidiaries or any of their properties is bound or
subject, except for the Company's debt to Norwest Bank of Colorado, N.A., and
except for any such conflicts, violations, breaches, defaults, events, rights of
termination, amendment, acceleration or cancellation, payment obligations or
liens or encumbrances described in clauses (ii) or (iii) that would not, in the
aggregate, prevent the Company from performing, in any material respect, its
obligations under this Agreement or would not have a material adverse effect on
the business or financial condition of the Company and its subsidiaries taken as
a whole (a "Company Material Adverse Effect").
<PAGE>
(b) The execution and delivery of this Agreement by the Company
does not, and consummation of the transactions contemplated hereby will not,
require the Company to obtain any consent, license, permit, approval, waiver,
authorization or order of, or to make any filing with or notification to, any
governmental or regulatory authority, domestic or foreign (collectively,
"Governmental Entities"), except (i) for applicable requirements, if any, of the
Securities Act of 1933, as amended (the "Securities Act"), the Exchange Act,
state securities or blue sky laws ("Blue Sky Laws"), and the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "Hart-Scott-Rodino Act"),
and the filing and recordation of appropriate merger documents as required by
the CBCA, and (ii) where the failure to obtain such consents, licenses, permits,
approvals, waivers, authorizations or orders, or to make such filings or
notifications, would not, either individually or in the aggregate, constitute a
Company Material Adverse Effect.
Section 5.4 INFORMATION. (a) None of the information to be included
in the Proxy Statement or any amendments thereof or supplements thereto, will,
at the time of the meeting of shareholders to be held in connection with the
Merger or the mailing to shareholders, as the case may be, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The Proxy Statement and any amendments thereof
or supplements thereto will comply as to form in all material respects with the
provisions of the Exchange Act.
(b) Since their inception, the Company has filed all forms,
reports, statements and other documents required to be filed with the SEC,
except where the failure to file such documents would not have a Company
Material Adverse Effect (all such forms, reports, statements and other documents
being referred to herein, collectively, as the "Company Reports"). The Company
Reports, including all Company Reports filed after the date of this Agreement
and prior to the Effective Date, (i) were or will be prepared in all material
respects in accordance with the requirements of applicable Law (except that some
filings were made late) and (ii) did not at the time they were filed, or will
not at the time they are filed, contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, except where any such statement or omission
would not have a Company Material Adverse Effect.
<PAGE>
Notwithstanding this Section 5.4(b), the Company shall not be deemed to
represent or warrant the preparation or accuracy of any Company Report,
statement, document or other information included in the Company Reports that
were provided to the Company for inclusion therein by a third party. Since the
date of the last Company Report (x) there has occurred no Company Material
Adverse Effect and the Company has incurred no material liabilities outside the
ordinary course of the Company's business, (y) the Company has not entered into
any material contracts that would be required to be filed with the Company's
next Form 10-Q and (z) the Company has had no transactions with related parties
that would be required to be reported in the Company's next proxy statement in
accordance with Section 404 of Regulation S-K. The list of the Company's
subsidiaries set forth in the Company Reports is accurate and complete as of the
date hereof.
Section 5.5 LITIGATION. There is no claim, action, suit, litigation,
proceeding, arbitration or, to the knowledge of the Company or any of its
subsidiaries, any investigation of any kind at law or in equity (including
actions or proceedings seeking injunctive relief), pending or, to the knowledge
of the Company, threatened against the Company or any properties or rights of
the Company or any of its subsidiaries (except for claims, actions, suits,
litigation, proceedings, arbitrations or investigations which would not
reasonably be expected to have a Company Material Adverse Effect), and neither
the Company nor or any of its subsidiaries is subject to any continuing order
of, consent decree, settlement agreement or other similar written agreement
with, any Governmental Entity, or any judgment, order, writ, injunction, decree
or award of any Governmental Entity or arbitrator, including, without
limitation, cease and desist or other orders, except for matters which would not
have a Company Material Adverse Effect.
Section 5.6 CAPITALIZATION. (a) The authorized capital stock of the
Company consists of (A) 20,000,000 shares of Common Stock, no par value, and (B)
100,000,000 shares of preferred stock, par value $.0001 per share, of which no
shares are issued and outstanding;
(b) The numbers of shares of Common Stock as of the date hereof
(i) issued and outstanding, (ii) held in the treasury of the Company and (iii)
reserved for issuance upon exercise of outstanding stock options, warrants and
other derivative securities granted by the Company (the "Outstanding Options"),
together with the exercise prices therefor, are set forth in the Company
Disclosure Schedule. Except as set forth in the Company Disclosure Schedule,
the Company has no outstanding subscriptions, options, calls, commitments,
rights, warrants, rights plans or antitakeover plans obligating the Company to
issue capital stock. All of the Company's outstanding capital stock is validly
issued, fully paid and nonassessable and free of preemptive rights.
<PAGE>
Section 5.7 COMPLIANCE. The Company is not in conflict with, or in
default or violation of any Law applicable to the Company or by or to which any
of its material properties is bound or subject (including, without limitation,
the Worker Adjustment and Retraining Notification Act of 1988, as amended),
except for any such conflicts, defaults or violations which would not have a
Company Material Adverse Effect.
Section 5.8 PARACHUTE, CHANGE OF CONTROL PAYMENTS. The Company has
no contracts, arrangements or understandings pursuant to which any person may
receive any amount or entitlement from the Company or any of its subsidiaries
that may be characterized as an "excess parachute payment" within the meaning of
the Internal Revenue Code as a result of any of the transactions contemplated by
this Agreement, nor is any person entitled to receive any additional payment
from the Company or its subsidiaries in the event that the 20% parachute excess
tax is imposed on such person. Neither the Company nor any of its subsidiaries
has or will have any obligation to pay any person or entity any amount under any
agreement or arrangement as a result of the transactions contemplated hereby,
except for the repayment of the Anschutz Note and the Bank Note (as defined
below) and except for payments to financial, accounting and legal advisors.
ARTICLE VI
COVENANTS
Section 6.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER.
Subsequent to the date hereof and prior to the Effective Date, unless Purchaser
shall otherwise consent in writing, which consent shall not be unreasonably
withheld, and except as otherwise specifically contemplated by this Agreement:
(a) the businesses of the Company and its subsidiaries shall be
conducted only in, and neither the Company nor any of its subsidiaries shall
take any action except in, the ordinary and usual course of business.
(b) the Company shall use reasonable efforts to preserve its
business, organization and goodwill.
(c) the Company shall confer on a regular basis with the
Purchaser regarding material positive and negative developments respecting the
Company's business.
(d) the Company shall not
<PAGE>
(1) (i) increase the compensation payable to or to become
payable to any director or executive officer, except for increases in
salary or wages payable or to become payable in the ordinary course of
business and consistent with past practice; (ii) grant any severance
or termination pay (other than pursuant to the normal severance policy
of the Company or its subsidiaries as in effect on the date of this
Agreement) to, or enter into or amend any employment or severance
agreement with, any director, officer or employee; (iii) establish,
adopt or enter into any new employee benefit plan or arrangement; or
(iv) except as may be required by applicable law, amend, or take any
other actions (other than the acceleration of vesting or waiving of
performance criteria permitted pursuant to the Company's employee
benefit plans upon a change in control of the Company) with respect
to, any of the Company's employee benefit plans;
(2) declare or pay any dividend on, or make any other
distribution in respect of, outstanding shares of capital stock,
except for dividends by a subsidiary to the Company or another
subsidiary;
(3) (i) redeem, purchase or otherwise acquire any shares of its
capital stock or any securities or obligations convertible into or
exchangeable for any shares of its capital stock, or any options,
warrants or conversion or other rights to acquire any shares of its
capital stock or any such securities or obligations (except in
connection with the Outstanding Options in accordance with their
terms); (ii) effect any reorganization or recapitalization; or (iii)
split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for, shares of its capital stock;
(4) (i) issue, deliver, award, grant or sell, or authorize or
propose the issuance, delivery, award, grant or sale (including the
grant of any security interests, liens, claims, pledges, limitations
in voting rights, charges or other encumbrances) of, any shares of any
class of its capital stock (including shares held in treasury), any
securities convertible into or exercisable or exchangeable for any
such shares, or any rights, warrants or options to acquire
<PAGE>
any such shares (except as permitted for the issuance of shares upon
the exercise of Outstanding Options as of the date of this Agreement);
or (ii) amend or otherwise modify the terms of any such rights,
warrants or options the effect of which shall be to make such terms
more favorable to the holders thereof;
(5) acquire or agree to acquire, by merging or consolidating
with, by purchasing an equity interest in or a portion of the assets
of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof, or otherwise acquire or agree to acquire any assets of any
other person (other than the purchase of assets from suppliers or
vendors in the ordinary course of business) in each case which are
material, individually or in the aggregate, to the Company and its
subsidiaries, taken as a whole;
(6) sell, lease, exchange, mortgage, pledge, transfer or
otherwise dispose of, or agree to sell, lease, exchange, mortgage,
pledge, transfer or otherwise dispose of, any of its material assets
or any material assets of any of its subsidiaries, except for
dispositions in the ordinary course of business and consistent with
past practice;
(7) solicit, initiate or knowingly encourage any inquiries,
discussions or negotiations with any person (other than Purchaser or
Acquisition) concerning any Acquisition Proposal (as defined in
Section 8.1(c)) or solicit, initiate or knowingly encourage any effort
or attempt by any other person to do, make or seek an Acquisition
Proposal or, unless required in order for the Board of Directors of
the Company to comply with its fiduciary responsibilities, with a view
to pursuing an Acquisition Proposal with such person, engage in
discussions or negotiations with or disclose any nonpublic information
relating to the Company or any of its subsidiaries to such person or
authorize or permit any of the officers, directors or employees of the
Company or any of its subsidiaries or any investment banker, financial
adviser, attorney, accountant or other representative retained by the
Company or any of its subsidiaries to take any such action. The
Company shall immediately communicate to Purchaser in writing the
terms of any Acquisition Proposal which it may receive and shall not
accept any such Acquisition Proposal unless the Purchaser has had
three days notice of such Acquisition Proposal and its terms;
<PAGE>
(8) adopt or propose to adopt any amendments to its Articles of
Incorporation or By-Laws which would alter the terms of its capital
stock or would have an adverse impact on the consummation of the
transactions contemplated by this Agreement;
(9) incur any obligation for borrowed money or purchase money
indebtedness in excess of $25,000, whether or not evidenced by a note,
bond, debenture or similar instrument;
(10) enter into any arrangement, agreement or contract with any
third party (other than customers in the ordinary course of business)
in excess of $25,000 that provides for an exclusive arrangement with
that third party or is substantially more restrictive on the Company
or substantially less advantageous to the Company than arrangements,
agreements or contracts existing on the date hereof unless such
arrangement is entered into in the ordinary course of business; or
(11) agree in writing or otherwise to do any of the foregoing;
provided, however, that notwithstanding any other provision of this Agreement,
the Company's Convertible Promissory Note dated March 20, 1998 in the original
principal amount of $1,600,000 to Anschutz Company (the "Anschutz Note") may be
amended to provide that (x) if the Purchaser and its affiliates shall have
obtained debt financing at or before the Closing in the aggregate principal
amount greater than $50,000,000 in one transaction or a series of related
transactions, then such note shall be due and payable in full at the Closing and
(y) if the Purchaser and its affiliates shall have obtained debt financing in
the aggregate principal amount greater than $50,000,000 in one transaction or a
series of related transactions after the Closing but before the scheduled
maturity of such note, then such note shall be due and payable in full on the
date of the closing of such transaction or series of related transactions.
Section 6.2 SHAREHOLDERS' MEETING AND PROXY STATEMENT. Except as
provided in Section 8.1 of this Agreement, the Company shall take all action
necessary in accordance with applicable law and its Articles of Incorporation
and By-Laws to convene a meeting of the holders of the shares of Common Stock of
the Company as promptly as practicable after the date hereof to consider and
vote upon the adoption of this Agreement. In connection with any shareholders'
meeting, if required, the
<PAGE>
Company shall prepare and file the Proxy Statement with the SEC and Purchaser
shall furnish all information concerning Purchaser and Acquisition as the
Company may reasonably request in connection with the preparation of the Proxy
Statement. The Company shall in the Proxy Statement, through its Board of
Directors, recommend that the Company's shareholders adopt this Agreement, if
such vote is required, except to the extent that the Board of Directors shall
have withdrawn or modified its approval or recommendation of this Agreement as
contemplated by Section 8.1(c). The Company acknowledges that any breach of
this Section 6.2 would cause the Purchaser irreparable harm and entitle the
Purchaser to specific performance of the covenants contained in this Section
6.2.
Section 6.3 CERTAIN FILINGS AND CONSENTS. Purchaser, Acquisition and
the Company shall (a) cooperate with each other in determining whether any
filings are required to be made or consents, approvals, permits or
authorizations are required to be obtained under any federal or state law or
regulation or whether any consents, approvals or waivers are required to be
obtained from other parties to loan agreements or other contracts material to
the business of the Company and its subsidiaries taken as a whole in connection
with the consummation of the Merger and (b) actively assist each other in making
any such filings and obtaining any consents, permits, authorizations, approvals
or waivers that are required.
Section 6.4 ACCESS. Upon reasonable notice, the Company shall afford
Purchaser and Acquisition, and their respective representatives, full access
during normal business hours until the Effective Date to all of its properties,
books, contracts, commitments and records (including, but not limited to, tax
returns) and, during that period, the Company and each of its subsidiaries shall
furnish promptly to Purchaser and Acquisition, and their respective
representatives, all information concerning its business, properties, assets,
liabilities, operations, financial condition and personnel as Purchaser or
Acquisition may reasonably request; except that in the case of all written
materials for which the Company asserts an attorney client privilege, the
Company shall provide Purchaser with a list of such materials and a summary of
their contents, and the Company shall cooperate with Purchaser to provide
Purchaser with access to such materials if such access can be provided without
violation of the attorney client privilege. Purchaser and Acquisition shall,
and shall use their reasonable best efforts to cause their consultants and
advisors to, hold in confidence all such information until such time as such
information is otherwise publicly available (unless otherwise
<PAGE>
required to disclose such information by law), and if this Agreement is
terminated, Purchaser and Acquisition shall deliver to the Company all
documents, work papers and other material obtained by them from the Company
pursuant to the terms of this Agreement.
Section 6.5 EXPENSES.
(a) Except as provided in Article VIII hereof, all Expenses (as
defined in Section 6.5(b) hereof) incurred by the parties hereto shall be borne
solely and entirely by the party which has incurred such Expenses.
(b) "Expenses" as used in this Agreement shall include all
out-of-pocket expenses (including, without limitation, all fees and expenses of
counsel, accountants, investment bankers, experts and consultants to a party
hereto and its affiliates) incurred by a party or on its behalf in connection
with or related to the authorization, preparation, negotiation, execution and
performance of this Agreement, the Proxy Statement and all other matters related
to the consummation of the transactions contemplated hereby; provided, however,
that "Expenses" shall not include any fees of legal counsel or advisors of any
shareholder of any party.
Section 6.6 OUTSTANDING OPTIONS. On or before the Effective Date of
the Merger, the Company shall use its best efforts to cause all Outstanding
Options to be converted by the Merger into the right to receive for each Share
covered thereby a cash amount equal to the excess of the Merger Consideration
over the option exercise price. Such amount shall be paid by the Paying Agent
on the Effective Date.
Section 6.7 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE.
The Surviving Corporation shall cause to be maintained in effect (i) in its
articles of incorporation and by-laws for a period of six years after the
Effective Date, the current provisions regarding elimination of liability of
directors and indemnification of officers, directors and employees contained in
the articles of incorporation and by-laws of the Company and (ii) for a period
of six years, the current policies of directors' and officers' liability
insurance and fiduciary liability insurance maintained by the Company (provided
that the Surviving Corporation may substitute therefor policies of at least the
same coverage and amounts containing terms and conditions which are, in the
aggregate, no less advantageous to the insured) with respect to claims arising
from facts or events that occurred on or before the Effective Date.
<PAGE>
Section 6.8 MAINTENANCE OF COMMITMENT. Purchaser and Acquisition
shall cause the Commitment to remain in full force and effect.
Section 6.9 RESIGNATION OF DIRECTORS. The Company will obtain the
resignations of all of the Directors of the Company on the Effective Date.
Section 6.10 CONTROL OF OTHER PARTY'S BUSINESS. Nothing contained in
this Agreement shall give the Purchaser, directly or indirectly, the right to
control or direct the Company's operations prior to the Effective Date. Nothing
contained in this Agreement shall give the Company, directly or indirectly, the
right to control or direct the Purchaser's operations prior to the Effective
Date. Prior to the Effective Date, each of the Purchaser and the Company shall
exercise, consistent with the terms and conditions of this Agreement, complete
control and supervision over its respective operations.
ARTICLE VII
CONDITIONS
Section 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Date of the following
conditions:
(a) The holders of the Common Stock of the Company entitled to
vote shall have duly approved the Merger if required by applicable law.
(b) No preliminary or permanent injunction or other order by a
court of competent jurisdiction which prevents the consummation of the Merger
shall have been issued and remain in effect (each party agreeing to use its
reasonable best efforts to have any such injunction lifted).
(c) No action shall have been taken nor shall any statute, rule
or regulation have been enacted by the government of the United States or any
state thereof that makes the consummation of the Merger illegal in any material
respect.
(d) The applicable waiting period under the Hart-Scott-Rodino
Act with respect to the transactions contemplated by this Agreement shall have
expired or been terminated.
<PAGE>
Section 7.2 CONDITIONS TO OBLIGATIONS OF PURCHASER AND ACQUISITION TO
EFFECT THE MERGER. The obligations of Purchaser and Acquisition to effect the
Merger shall be subject to the fulfillment at or prior to the Effective Date of
the following additional conditions:
(a) The representations and warranties of the Company set forth
in Article V shall be true and correct in all material respects on the Effective
Date (or on such other date specified in Article V) with the same force and
effect as though made on and as of such date, except for any such untrue or
incorrect representations and warranties that would not have a Company Material
Adverse Effect, and Purchaser and Acquisition shall have received a certificate
to that effect from the Chief Executive Officer and the Treasurer of the
Company.
(b) All of the covenants and agreements of the Company to be
performed or complied with pursuant to this Agreement prior to the Effective
Date shall have been duly performed and complied with in all material respects,
except for any such failure of performance or compliance that would not have a
Company Material Adverse Effect, and Purchaser and Acquisition shall have
received a certificate to that effect from the Chief Executive Officer and the
Treasurer of the Company.
(c) Holders of no more than 10% of the outstanding Shares, in
the aggregate, shall have filed with the Company a written objection to the
Merger and made a written demand for payment of the fair value of his shares in
the manner permitted by the CBCA.
(d) All of the Directors of the Company on the Effective Date
shall have resigned.
(e) Since the date of this Agreement, there shall have been no
Company Material Adverse Effect.
(f) The Company shall have received an opinion from a reputable
investment banking firm satisfactory to the Company as to the fairness, from a
financial point of view, of the Merger Consideration to be paid to the Company's
shareholders.
Section 7.3 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Date of the following additional
conditions.
<PAGE>
(a) The representations and warranties of Purchaser and
Acquisition set forth in Article IV shall be true and correct in all material
respects on the Effective Date (or on such other date specified in Article IV)
with the same force and effect as though made on and as of such date, except for
any such untrue or incorrect representations and warranties that would not have
a Purchaser Material Adverse Effect, and the Company shall have received
certificates to that effect from the Chief Executive Officer and the Treasurer
of Purchaser and the President of Acquisition.
(b) All of the covenants and agreements of Purchaser and
Acquisition to be performed or complied with pursuant to this Agreement prior to
the Effective Date shall have been duly performed and complied with in all
material respects, except for any such failure of performance or compliance that
would not have a Purchaser Material Adverse Effect, and the Company shall have
received certificates to that effect from the Chief Executive Officer and the
Treasurer of Purchaser and the President of Acquisition.
(c) The Commitment shall remain in full force and effect and
shall be funded.
(d) Douglas H. Hanson shall have provided $7,800,000 in debt or
equity financing to the Purchaser.
(e) If the Purchaser and its affiliates shall have obtained debt
financing at or before the Closing in the aggregate principal amount greater
than $50,000,000 in one transaction or a series of related transactions, then
the Anschutz Note shall have been paid in full.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 TERMINATION. This Agreement shall be subject to
termination at any time prior to the Effective Date, whether before or after
approval by the shareholders of the Company, if required, as follows:
(a) by mutual consent of Purchaser and the Board of Directors of
the Company;
(b) by Purchaser or the Company if the Merger shall not have
been consummated on or before September 15, 1998, which date may be extended by
mutual agreement of the Boards of Directors of the Company and Purchaser;
<PAGE>
(c) by the Company if, prior to the Effective Date, the Company,
its Board of Directors or its shareholders shall receive a bona fide written
proposal or offer from a third party (each an "Acquisition Proposal") relating
to:
(i) the acquisition or purchase of all or substantially all
of the assets of, or more than a 50% equity interest (including any
Shares theretofore acquired) in the Company;
(ii) a merger, consolidation or similar business combination
with the Company;
(iii) a tender or exchange offer for the Company
conditioned on ownership of more than 50% of the outstanding Shares
following such tender or exchange offer;
and the Board of Directors of the Company determines, after consultation with
the Company's legal advisors and after receiving advice of the Company's
financial advisors that the alternative transaction is more favorable than the
Merger from a financial point of view, that it has a duty in the proper
discharge of its fiduciary responsibilities under applicable law to consider
such other proposal or offer, and then such Board of Directors either (A)
accepts such proposal or offer, (B) recommends to the shareholders acceptance of
such proposal or offer, or (C) in the case of a tender or exchange offer, takes
no position with respect thereto and all conditions (other than terminating this
Agreement) of such tender or exchange offer have been satisfied, in which event
this Agreement shall be terminated without any liability to the Company or the
Company's Board of Directors as a result of such termination other than as set
forth herein.
(d) by Purchaser upon a breach of any material representation,
warranty, covenant or agreement on the part of the Company set forth in this
Agreement or if any representation or warranty of the Company shall have become
untrue and such breach or untruth shall have caused a Company Material Adverse
Effect.
(e) by the Company upon a breach of any material representation,
warranty, covenant or agreement on the part of the Purchaser set forth in this
Agreement or if any representation or warranty of the Purchaser shall have
become untrue and such breach or untruth shall have caused a Purchaser Material
Adverse Effect.
<PAGE>
Section 8.2 BREAK-UP FEE; EFFECT OF TERMINATION.
(a) If the Company shall have terminated this Agreement by
reason of the failure of any condition set forth in Sections 7.3(a), (b), (c) ,
(d) or (e), except for a failure of the condition set forth in Sections 7.3(c)
by reason of a failure of any condition set forth in Sections 7.1(c) or 7.2(a),
(b) or (d), the Purchaser shall pay to the Company $1,050,000 in cash or, at the
Purchaser's election, that number of shares of the Purchaser's common stock
equal to $1,050,000 divided by the "Fair Market Value" (as defined below) of
such stock.
(b) If the Purchaser shall have terminated this Agreement by
reason of the failure of any condition set forth in Sections 7.1(c) or 7.2(a),
(b) or (d), the Company shall pay to the Purchaser $1,050,000 in cash.
(c) The "Fair Market Value" of the Purchaser's or the Company's
common stock shall be the average closing price of the stock reported by NASDAQ
for the 15 trading days after announcement of termination pursuant to this
Section 8.2(a). If either party elects to deliver shares of stock pursuant to
Section 8.2(a) or (b), such party shall file at its expense a registration
statement with respect to any such shares under the Securities Act of 1933
within 15 days after termination by the Company of this Agreement, shall use its
best efforts to have such registration statement be declared effective and to
keep it effective for not less than two years and shall indemnify the other
party and its affiliates pursuant to an indemnity agreement typical of a
registration rights agreement.
(d) Any payment required to be made pursuant to this Section 8.2
shall be made as promptly as practicable but not later than three business days
after termination of this Agreement.
(e) In the event of termination of this Agreement by Purchaser,
Acquisition or the Company (other than pursuant to Section 8.1(c)), there shall
be no liability under this Agreement on the part of either the Company,
Purchaser or Acquisition or their respective officers or directors, except for
any breach of the provisions of Section 6.2 and the confidentiality provisions
of Section 6.4 and except as provided in Sections 8.2(a) and (b).
Section 8.3 AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken by the respective Boards of Directors of Purchaser,
Acquisition and the Company, at any time before or after approval hereof by the
shareholders of the
<PAGE>
Company, but, after any such approval, if required, no amendment shall be made
which changes the Merger Consideration without the further approval of such
shareholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
Section 8.4 WAIVER. At any time prior to the Effective Date, the
parties hereto, by action taken by the respective Boards of Directors of
Purchaser, Acquisition or the Company, may (a) extend, for a reasonable time,
the time for the performance of any of the obligations or other acts of the
other parties hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto and (c)
waive compliance with any of the agreements or conditions contained herein. Any
agreement on the part of the party hereto to any such extension or waiver shall
be valid if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 NOTICE OF BREACH. Each party shall promptly give
written notice to the other parties upon becoming aware of the occurrence, or
impending or threatened occurrence, of any event which would cause or constitute
a breach of any of its representations, warranties of covenants contained or
referred to in this Agreement and shall use its reasonable best efforts to
prevent or promptly remedy the same.
Section 9.2 COOPERATION. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its reasonable best
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the Merger and the other
transactions contemplated by this Agreement. In case at any time after the
Effective Date any further action is necessary or desirable to carry out the
purpose of this Agreement, the proper officers and/or directors of Purchaser,
Acquisition or the Company shall take, or cause to be taken, all such necessary
action. Purchaser shall cause Acquisition to comply with all of Acquisition's
obligations hereunder.
Section 9.3 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None
of the representations and warranties in this Agreement shall survive the
Effective Date of the Merger.
<PAGE>
Section 9.4 BROKERS. The Company represents and warrants that no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger, except that the Company
has agreed to pay to Daniels & Associates all amounts due to it for its efforts
in connection with the Merger (the "Daniels Fee").
Section 9.5 ENTIRE AGREEMENT. Other than the Voting Agreement of
even date herewith between the Purchaser and Interwest Group, Inc., this
Agreement contains the entire agreement among Purchaser, Acquisition and the
Company with respect to the Merger and the other transactions contemplated
hereby, and supersedes all prior agreements, understandings, representations,
and warranties with respect to the subject matter.
Section 9.6 APPLICABLE LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Colorado (without
giving effect to its choice of laws principles).
Section 9.7 HEADINGS. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 9.8 SEPARABILITY. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction, shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
Section 9.9 PUBLICITY. Except as required by law or the rules of
any exchange on which the shares of Purchaser or Company are traded, as long as
this Agreement is in effect, neither the Company nor Purchaser shall issue or
cause the publication of any press release or other announcement with respect to
the Merger or this Agreement without the prior consent of the other, which
consent shall not be unreasonably withheld.
Section 9.10 NOTICES. All notices or other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered
personally or sent by first-class mail, postage prepaid, with return receipt
requested, addressed as follows:
<PAGE>
If to Purchaser or Acquisition, to:
ROCKY MOUNTAIN INTERNET, INC.
Douglas H. Hanson, President
1099 18th Street, 30th Floor
Denver, Colorado 80202
Fax # 303-672-0711
with copies to:
Matthew Perkins
JACOBS CHASE FRICK KLEINKOPF
& KELLEY LLC
1050 17th Street, Suite 1500
Denver, Colorado 80265
Fax #303-685-4869
If to the Company, to:
INTERNET COMMUNICATIONS CORPORATION
John Couzens, President
7100 East Belleview Avenue, Suite 201
Englewood, Colorado 80111
Fax #303-770-0588
with copies to:
Nick Nimmo
HOLME ROBERTS & OWEN LLP
1700 Lincoln, Suite 4100
Denver, Colorado 80203
Fax #(303) 866-0200
and
Drake S. Tempest
O'MELVENY & MYERS LLP
153 East 53rd Street
New York, New York 10022-4611
Fax #(212) 326-2061
Section 9.11 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one agreement.
Section 9.12 NO THIRD PARTY BENEFICIARIES. No provision of this
Agreement is intended to benefit any person other than the parties hereto.
<PAGE>
Section 9.13 SCHEDULES. Inclusion of, or reference to, matters in a
schedule to this Agreement does not constitute an admission of what is material
or the materiality of such matter.
IN WITNESS WHEREOF, Purchaser, Acquisition and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized
all as of the date first written above.
INTERNET COMMUNICATIONS
CORPORATION
By:
--------------------------------
Title:
INTERNET ACQUISITION CORPORATION
By:
--------------------------------
Title:
ROCKY MOUNTAIN INTERNET, INC.
By:
--------------------------------
Title:
<PAGE>
ROCKY MOUNTAIN INTERNET
NEWS RELEASE
FOR IMMEDIATE RELEASE
Contacts:
Chad Morris or Barbara Archer
Metzger Associates
(303) 786-7000
[email protected]
[email protected]
Michael Schaefer
Rocky Mountain Internet Inc.
(303) 313-0882
[email protected]
ROCKY MOUNTAIN INTERNET ACQUIRES INFOHIWAY, INC.
NEW TOOLS, SEARCH ENGINES NOW AVAILABLE TO CUSTOMERS
DENVER, June 5, 1998 -- Rocky Mountain Internet Inc. (NASDAQ SmallCap
Market-RMII) (NASDAQ SmallCap Market-RMIIW) announced today that it has acquired
Infohiway Inc., headquartered in Aurora, Colo. Consideration for the transaction
is 150,000 shares of RMI stock. The closing price of RMI on Thursday was $8.19 a
share.
Infohiway is an online search engine with unique capabilities in its preview
buttons, fuzzy links and site-mapping utility. Each function is performed at a
rapid rate with Infohiway's search technology called DST--short for Data-Sucking
Technology. DST literally goes out over the Web and takes a site apart
delivering the abbreviated content for the viewer in real time.
The preview button enables searchers to "preview" a site's actual content by
removing all of the graphics and extraneous HTML so the searcher can quickly
view the site's contents. Once the user has chosen a particular site, a full
view can be delivered to the browser. Fuzzy links provide a handy way to search
for related but perhaps not specifically targeted content. These fuzzy links
trigger other search words and consequently link searches to other related
sites, thereby bringing you closer to finding what you want. The engine also has
a site-mapping utility that takes a site's structure and shows it graphically
with links intact so the searcher can see how to navigate the site and go
directly to it by just clicking on the link.
-more-
<PAGE>
Rocky Mountain Internet/Infohiway
Page 2
In addition, Infohiway offers two popular Web publications containing
advertising targeted to Web page developers of all types: Cut and Paste
JavaScript, which offers fresh and easy-to-use scripts every month, and the
award-winning Bandwidth Conservation Society, which provides online tips and
tutorials about reducing bandwidth consumption and making Web sites faster.
According to Douglas H. Hanson, president and CEO of Rocky Mountain Internet,
"Infohiway brings new expertise and revenues to RMI and its customers through
the synergistic marketing of its search engine technology, publications and Web
tools. The firm has rare expertise in online business management, online
advertising and Web-based distribution channel development."
Hanson further stated that two of the developers and founders, Jeremy Black and
Ken Covell, will join the RMI management team and will continue to develop and
market the products of Infohiway.
Rocky Mountain Internet (http://www.rmi.net) is a full-service, national
telecommunications company providing Internet access, Web development and
hosting, network management, system integration, co-location services, and IP
Telephony long distance to clients throughout the United States. The company's
wholly-owned subsidiary, Rocky Mountain Broadband, is poised to offer local and
long distance telephone service beginning July 1, 1998. The company's frame
relay backbone is one of the only Colorado-based Internet networks utilizing the
industry-leading Cascade switching technology, with broadband B-STDX 9000
switches strategically placed throughout Denver, Boulder and Colorado Springs to
provide full network redundancy. RMI maintains strategic partnerships with such
companies as Frontier Corporation (long distance services), PSINet (Internet
services), Vienna Systems (IP Telephony), and WinStar PacNet.
# # #
<PAGE>
ROCKY MOUNTAIN INTERNET
NEWS RELEASE
FOR IMMEDIATE RELEASE
Contacts:
Chad Morris or Barbara Archer
Metzger Associates
303-786-7000
[email protected]
[email protected]
Jennifer Boman
Rocky Mountain Internet Inc.
303-313-0743
[email protected]
Keely Hawk
Director of Investor Relations
Internet Communications Corp.
303-414-7174
ROCKY MOUNTAIN INTERNET TO ACQUIRE
INTERNET COMMUNICATIONS CORP.
FOR APPROXIMATELY $38 MILLION
ACQUISITION FURTHER POSITIONS COMPANY AS
NATIONWIDE COMMUNICATIONS SERVICES PROVIDER
DENVER, June 8, 1998 -- Rocky Mountain Internet Inc. (NASDAQ SmallCap
Market-RMII, RMIIW) announced today that it has entered into a definitive
agreement to purchase Internet Communications Corp. (NASDAQ: INCC),
headquartered in Greenwood Village, Colo. All of the outstanding shares and
options convertible into shares of Internet Communications' common stock will be
acquired for a range between $6.65 and $6.80 per share, for a total
consideration of approximately $38 million. The acquisition is subject to the
approval of Internet Communications' shareholders and other conditions.
Interwest Group Inc., an affiliate of Anschutz Company, holds a controlling
share stake in Internet Communications and has agreed to vote in favor of the
transaction.
Upon completing the transaction, RMI will begin doing business under the name
Internet Communications Corp. and will obtain control of Internet
Communications' extensive data center, 26 field offices and 180 employees. RMI
gross revenues for year-end 1997 were $6.1 million, and Internet Communications'
gross revenues for the same period were $36.1 million. The company does not
expect any significant reduction in personnel.
(more)
<PAGE>
Page 2 of 3
According to Douglas H. Hanson, president and CEO of Rocky Mountain Internet,
"Internet Communications has become a significant regional network services
provider with the ability to develop integrated network solutions in both voice
and data environments. Their technical expertise, strong customer base and
nationwide reputation will propel our company into the ranks of the nation's
most significant players offering complete communications solutions. The synergy
of the two companies will also enable us to gain significant economies of scale
as we reduce overhead as a percentage of revenue."
John Couzens, president of Internet Communications, stated, "Doug Hanson is an
established, recognizable and respected leader in the telecommunications
industry, and his vision is consistent with the direction of Internet
Communications. In addition, RMI's state-of-the-art infrastructure, introduction
of IP Telephony, and recent strategic partnerships with PSINet, PacNET and
Frontier Corp. will drive Internet Communications to the next level."
Hanson will remain chairman and CEO, and Couzens will become the president and
COO of the combined company. The consolidation of the offices and network will
begin immediately upon completion of the merger. A decision on the new location
has not been made, but will be forthcoming.
RMI has secured short-term financing commitments in the aggregate amount of $42
million for the acquisition from a lending group arranged by Furman Selz LLC, a
subsidiary of ING Barings. The acquisition is expected to close within 90 days.
This press release includes forward-looking statements relating to the future
performance of RMI and Internet Communications. There can be no assurance that
actual results will not differ from the companies' expectations, which
differences may be material. Factors which could cause materially different
results include failure to obtain approval of the merger from Internet
Communications' shareholders, the successful completion of the merger, the
successful expansion into new markets, the integration of the companies
(including achieving mutual cost savings and minimizing costs related to such
integration) and possible negative economic conditions.
Rocky Mountain Internet (http://www.rmi.net) is a full-service, national
telecommunications company providing Internet access, Web development and
hosting, network management, system integration, co-location services, and IP
Telephony long distance to clients throughout the United States. The company's
wholly owned subsidiary, Rocky Mountain Broadband, is poised to offer local and
long distance telephone service beginning July 1, 1998. The company's frame
relay backbone is one of the only
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Colorado-based Internet networks utilizing the industry-leading Cascade
switching technology, with broadband B-STDX 9000 switches strategically placed
throughout Denver, Boulder and Colorado Springs to provide full network
redundancy.
RMI maintains strategic partnerships with such companies as Frontier Corp. (long
distance services), PSINet (Internet services), Vienna Systems (IP Telephony)
and WinStar PacNet.
Internet Communications Corp (http://www.incc.net) is a leading regional
communications integration company which plans, designs, implements and
maintains customized wide-area and local-area networks for voice and data. In
addition, the company provides a broad range of enhanced network services, full
service Internet access, World Wide Web services and outsourcing capabilities.
Founded in 1986, INCC is headquartered in Greenwood Village, Colo.
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