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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 (Date of earliest event reported) August 31, 1999
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RMI.NET, Inc.
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(Exact name of Registrant as specified in charter)
Delaware
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(State or other jurisdiction of incorporation)
001-12063 84-1322326
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(Commission File Number) (IRS Employee Identification No.)
999 Eighteenth Street, Suite 2201, 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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Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
The Registrant recently acquired the assets of Wolfe Internet
Access, L.L.C., a Washington limited liability company headquartered in
Seattle, Washington and doing business as WolfeNet. The Registrant agreed to
pay approximately $6,560,000, payable in the form of 811,687 shares of common
stock. The consideration that the Registrant agreed to pay was determined
through arm's length negotiation. There was no material relationship between
the Registrant and Wolfe Internet Access, L.L.C. prior to the acquisition.
The Registrant intends to use the assets acquired in the same manner that
Wolfe Internet Access, L.L.C. utilized the assets.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not required.
(b) Not required.
(c) Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
10.1 Asset Purchase Agreement by and among RMI.NET,
Inc. Wolfe Internet Access, L.L.C., Happy Man
Corporation, Irving S. Wolfe, M. Mercedes
Shereda, and Daniel M. Raybin dated as of August
31, 1999
20.1 News Release dated September 8, 1999 announcing
the acquisition of Wolfe Internet Access, L.L.C.
</TABLE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RMI.NET, Inc.
--------------------------------------
(Registrant)
Date: September 15, 1999 By: /s/ CHRISTOPHER J. MELCHER
------------------------------------
Christopher J. Melcher
Vice President, General Counsel
and Corporate Secretary
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Exhibit 10.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
RMI.NET, INC.
AND
WOLFE INTERNET ACCESS, L.L.C.,
HAPPY MAN CORPORATION,
IRVING S. WOLFE, M. MERCEDES SHEREDA,
AND DANIEL M. RAYBIN
AUGUST 31, 1999
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TABLE OF CONTENTS
<TABLE>
<S> <C>
1. Definitions ............................................................1
2. Basic Transaction ......................................................5
(a) Purchase and Sale of Acquired Assets ..............................5
(b) Purchase Price ....................................................5
(c) Adjustments to Purchase Price .....................................7
(d) The Closing .......................................................9
(e) Deliveries at the Closing .........................................9
(f) Allocation ........................................................9
(g) No Assumption of Liabilities ......................................9
3. Representations and Warranties of the Sellers and the Principals .......9
(a) Organization of the Sellers .......................................9
(b) Authorization of Transaction .....................................10
(c) Noncontravention .................................................10
(d) Brokers' Fees ....................................................10
(e) Title to Acquired Assets .........................................10
(f) Financial Statements .............................................10
(g) Events Subsequent to Most Recent Month End .......................11
(h) Undisclosed Liabilities ..........................................11
(i) Legal Compliance .................................................11
(j) Tax Matters ......................................................11
(k) Real Property ....................................................11
(l) Intellectual Property ............................................13
(m) Tangible Assets ..................................................13
(n) Contracts ........................................................13
(o) Insurance ........................................................13
(p) Litigation .......................................................13
(q) Warranties .......................................................13
(r) Guaranties .......................................................13
(s) State PUC Authorizations and FCC Authorizations ..................13
(t) Investment .......................................................14
(u) Real Property Leases .............................................14
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(v) Disclosure .......................................................15
4. Representations and Warranties of the Buyer ...........................15
(a) Organization of the Buyer ........................................15
(b) Authorization of Transaction .....................................15
(c) Noncontravention .................................................15
(d) SEC Filings ......................................................15
(e) Buyer Shares .....................................................16
(f) Brokers' Fees ....................................................16
(g) Disclosure .......................................................16
(h) Litigation .......................................................16
5. Pre-Closing Covenants .................................................16
(a) General ..........................................................16
(b) Notices and Consents .............................................16
(c) Operation of the Acquired Assets .................................17
(d) Preservation of Business .........................................17
(e) Full Access ......................................................17
(f) Notice of Developments ...........................................17
(g) Exclusivity ......................................................17
(h) Legend ...........................................................17
(i) Registration Rights Agreement ....................................18
(j) Assignment or Sublease ...........................................18
(k) Employment Agreements ............................................18
6. Conditions to Obligation to Close .....................................18
(a) Conditions to Obligation of the Buyer ............................18
(b) Conditions to Obligation of the Sellers ..........................20
7. Termination ...........................................................21
(a) Termination of Agreement .........................................21
(b) Effect of Termination ............................................22
8. Post-Closing Covenants ................................................23
(a) General ..........................................................23
(b) Litigation Support ...............................................23
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(c) Transition .......................................................23
(d) Confidentiality ..................................................23
(e) Covenant Not to Compete ..........................................24
(f) Survival of Representations and Warranties .......................25
(g) Third Party Consents .............................................25
(h) Indemnification Provisions for Benefit of the Buyer ..............25
(i) Indemnification Provisions for Benefit of the Sellers ............26
(j) Matters Involving Third Parties ..................................27
(k) Limitations on Indemnification Obligations .......................28
9. Additional Agreements .................................................28
(a) Escrow Agreement .................................................28
10. Miscellaneous ........................................................29
(a) Press Releases and Public Announcements ..........................29
(b) No Third-Party Beneficiaries .....................................29
(c) Entire Agreement .................................................29
(d) Succession and Assignment ........................................29
(e) Counterparts .....................................................30
(f) Headings .........................................................30
(g) Notices ..........................................................30
(h) Governing Law ....................................................31
(i) Arbitration ......................................................31
(j) Amendments and Waivers ...........................................32
(k) Severability .....................................................32
(l) Expenses .........................................................32
(m) Construction .....................................................32
(n) Incorporation of Exhibits and Schedules ..........................33
(o) Specific Performance .............................................33
</TABLE>
Exhibit A - Acquired Assets
Exhibit A-1 - Customer Contracts
Exhibit A-2 - Supplier Contracts
Exhibit A-3 - Tangible Assets
Exhibit A-4 - Inventory
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Exhibit A-5 - Other Obligations
Exhibit A-6 - Interim Sublease Agreement
Exhibit B - Excluded Assets
Exhibit C - Lockup Agreement
Exhibit D - Bill of Sale
Exhibit E - Assignment and Assumption Agreements
Exhibit E-1 - Assignment and Assumption of Customer Contracts
Exhibit E-2 - Assignment and Assumption of Supplier Contracts
Exhibit F - Financial Statements
Exhibit G - PUC and FCC Authorizations
Exhibit H - Registration Rights Agreement
Exhibit I - Opinion of Counsel to Seller
Exhibit J - Opinion of Counsel to Buyer
Exhibit K - Escrow Agreement
Exhibit L -Prospective RMR
Disclosure Schedules
iv
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") entered into as of
this 31st day of August, 1999, by and between RMI. NET, INC., a Delaware
corporation (the "Buyer"), WOLFE INTERNET ACCESS, L.L.C., a Washington
limited liability company ("Wolfe L.L.C."), Happy Man Corporation, a
Washington corporation ("Happy Man") (Wolfe L.L.C. and Happy Man are
sometimes referred to collectively herein as the "Sellers"), and Irving S.
Wolfe, M. Mercedes Shereda and Daniel M. Raybin (collectively, the
"Principals"). The Buyer, the Sellers and the Principals are sometimes
referred to collectively herein as the "Parties".
This Agreement contemplates a transaction in which the Buyer will
purchase certain of the assets of the Sellers in return for the consideration
hereinafter set forth.
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.
"ACQUIRED ASSETS" means all right, title, and interest in and to the
assets of the Sellers set forth on Exhibit A hereto.
"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, and fees, including court costs and reasonable attorney's fees and
expenses.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
"ASSIGNMENT AND ASSUMPTION OF CUSTOMER CONTRACTS" has the meaning
set forth in Section 2(e) below.
"ASSIGNMENT AND ASSUMPTION OF SUPPLIER CONTRACTS" has the meaning
set forth in Section 2(e) below.
"BUYER" has the meaning set forth in the preface above.
"BUYER SHARE" means any share of the common stock, $0.001 par value
per share, of the Buyer.
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"CASH" means cash and cash equivalents (including marketable
securities and short term investments) calculated in accordance with GAAP
applied on a basis consistent with the preparation of the Financial
Statements.
"CLOSING" has the meaning set forth in Section 2(d) below.
"CLOSING DATE" has the meaning set forth in Section 2(d) below.
"CLOSING PRICE" has the meaning set forth in Section 2(d)(i) below.
"CONFIDENTIAL INFORMATION" means any information concerning the
businesses and affairs of the Parties that is not already generally available
to the public.
"CURRENT ASSETS" means and includes (i) cash, (ii) accounts
receivable for customer accounts with balances incurred in the Ordinary
Course of Business and which balances are due and outstanding for 45 days or
less past the due date, and (iii) prepaid expenses and other current assets
(which have value to business being purchased by the Buyer hereunder after
the Closing Date) reflected on the balance sheet of Wolfe L.L.C. dated as of
the month end immediately preceding the Closing Date and prepared in
accordance with GAAP.
"CURRENT LIABILITIES" means and includes (i) accounts payable and
accrued expenses, (ii) all accrued but unpaid taxes, (iii) all revenues
received by Wolfe L.L.C. which related to prepaid goods and services for
which customers have provided payment in advance of receipt of the goods and
services, (iv) all deferred revenues, and (v) any other current liability
(except the current portion of any bank debt or line of credit) reflected on
the monthly balance sheet of Wolfe L.L.C. dated as of the Closing Date and
prepared in accordance with GAAP.
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 3 below.
"DISTRIBUTEES" has the meaning set forth in Section 2(b)(ii) below.
"ESCROW AGENT" has the meaning set forth in Section 2(b)(iv) below.
"ESCROW AGREEMENT" has the meaning set forth in Section 9(a) below.
"ESCROW FUND" has the meaning set forth in Section 9(a) below.
"ESCROW PERIOD" has the meaning set forth in Section 2(b)(iv) below.
"ESCROW SHARES" has the meaning set forth in Section 2(b)(iv) below.
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"EXCLUDED ASSETS" means the assets of the Sellers not purchased by
the Buyer hereunder, as more specifically set forth on Exhibit B attached
hereto.
"FCC AUTHORIZATIONS" means all approvals, consents, permits,
licenses, certificates, and authorizations given by the Federal
Communications Commission or similar federal governmental agency to provide
the telecommunications services currently provided by the Sellers and to
conduct its business as it is currently conducted.
"FINANCIAL STATEMENTS" has the meaning set forth in Section 3(f)
below.
"GAAP" means United States generally accepted accounting principles
as in effect from time to time.
"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 reasonable 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.
"LOCKUP AGREEMENT" has the meaning set forth in Section 2(b)(v)
below.
"LOCKUP PERIODS" has the meaning set forth in Section 2(b)(v) below.
"LOCKUP SHARES" has the meaning set forth in Section 2(b)(v) below.
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"LONG-TERM LIABILITIES" has the meaning set forth in Section
2(c)(iii) below.
"MOST RECENT FINANCIAL STATEMENTS" has the meaning set forth in
Section 3(f) below.
"MOST RECENT FISCAL MONTH END" has the meaning set forth in Section
3(f) below.
"MOST RECENT FISCAL YEAR END" has the meaning set forth in Section
3(f) below.
"NET WORKING CAPITAL" shall mean the difference between Wolfe
L.L.C.'s Current Assets and its Current Liabilities.
"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).
"PRINCIPALS" has the meaning set forth in the preface above.
"PURCHASE PRICE" has the meaning set forth in Section 2(c) below.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and
applicable state securities laws.
"RECURRING REVENUE RATE" has the meaning set forth in Section 2(c)
below.
"REFERRAL FEE AGREEMENT" has the meaning set forth in Section 8(c)
below.
"REGISTERED SHARES" has the meaning set forth in Section 2(b)(iii)
below.
"SEC" means the United States Securities and Exchange Commission.
"SEC FILINGS" has the meaning set forth in set forth in Section 4(d)
below.
"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, OTHER THAN (a) mechanic's, materialmen's,
and similar liens, (b) liens for Taxes not yet due and, (c) purchase money
liens and liens securing rental
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payments under capital lease arrangements, and (d) other liens arising in the
Ordinary Course of Business and not incurred in connection with the borrowing of
money.
"SELLERS" has the meaning set forth in the preface above.
"STATE PUC AUTHORIZATIONS" means all approvals, consents, permits,
licenses, certificates, and authorizations given by any state or local
regulatory authority to provide the telecommunications services currently
provided by the Sellers and to conduct its business as it is currently
conducted.
"TANGIBLE ASSETS" has the meaning set forth in Section 3(m) below.
"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.
2. BASIC TRANSACTION.
(a) PURCHASE AND SALE OF ACQUIRED ASSETS. On and subject to the
terms and conditions of this Agreement, the Buyer agrees to purchase
from the Sellers, and the Sellers agree to sell, transfer, convey, and
deliver to the Buyer, all of the Acquired Assets at the Closing, for
the consideration specified below in this Section 2, free and clear of
any and all Liabilities and other debts, obligations, claims,
limitations, liens, and/or any other encumbrances whatsoever on the
Acquired Assets delivered; provided, however, that the Buyer agrees to
assume all obligations disclosed in Exhibit A.
(b) PURCHASE PRICE. The Buyer agrees to pay to the Sellers at the
Closing:
i. In exchange for the Acquired Assets, the Buyer will issue to
the Sellers or the Distributees, as defined below, that number of the
Buyer Shares equal to $7,500,000 (the "Purchase Price") divided by the
average closing price per share of the Buyer Shares for the five (5)
day trading period ending on the day prior to the Closing Date (the
"Closing Price"). The Purchase Price set forth herein is subject to
adjustments in accordance with Section 2(c) below.
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ii. The number of shares of Buyer Shares to be issued pursuant to
Section 2(b)(i) above may be allocated among and distributed by the
Sellers to themselves and their shareholders, officers, directors,
members, or managers, nominees or designees, as the case may be (the
"Distributees"), as determined by the Sellers in their sole and
absolute discretion, and the Sellers will provide instructions to the
Buyer for issuing the Buyer Shares.
iii. At the Closing Date, fifty percent (50%) of the Buyer's
Shares issued pursuant to Section 2(b)(i) above will be registered
under the Securities Act and applicable state securities laws (the
"Registered Shares"). The Distributees shall be allowed to sell, trade
and otherwise transfer the Registered Shares; PROVIDED, HOWEVER, that
the Distributees may not sell, trade, or otherwise transfer more than
the greater of either (i) 10,000 of such Registered Shares in any one
trading day, or (ii) an amount of such Registered Shares equal to ten
percent (10%) of the average daily trading volume of Buyer Shares for
the previous five (5) day trading period.
iv. At and as of the Closing Date, to secure the obligations
contained in the representations and warranties contained in this
Agreement, under Section 8(h)(i)-(iii) below, and as more fully
described in Section 9 below, the Sellers shall deposit with an escrow
agent (the "Escrow Agent") that number of the Buyer Shares equal to ten
percent (10%) of the Buyer Shares issued pursuant to Section 2(b)(i)
above (the "Escrow Shares"), which Escrow Shares shall be held by the
Escrow Agent for twelve (12) months following the Closing Date (the
"Escrow Period"). The Escrow Shares shall be registered under the
Securities Act and applicable state securities laws prior to the
expiration of the Escrow Period, and the Buyer shall begin such
registration process not fewer than ninety (90) days before the end of
the Escrow Period. Upon the termination of the Escrow Period, should
the average closing price per share of the Buyer Shares for the five
(5) day trading period ending on the day prior to the termination of
the Escrow Period (the "Escrow Termination Price") be below the Closing
Price determined pursuant to Section 2(b)(i) above, the Buyer will, at
its sole discretion, either (A) issue to the Distributees an additional
number of registered Buyer Shares such that the total value of such
additional Buyer Shares and of the remaining Escrow Shares at the
Escrow Termination Price equals the total value of the remaining Escrow
Shares at the Closing Price, or (B) purchase back from the Sellers the
remaining Escrow Shares with cash, but not cash equivalents, in an
amount equal to the total value of the remaining Escrow Shares at the
Closing Price.
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v. The remaining forty percent (40%) of the Buyer's Shares issued
pursuant to Section 2(b)(i) above will be issued on the Closing Date
and subject to a lockup agreement (the "Lockup Shares") from the date
of issuance in the form attached hereto as Exhibit C (the "Lockup
Agreement") for the following periods of time following the Closing
Date: twenty percent (20%) of the Buyer's Shares for six (6) months;
and twenty percent (20%) of the Buyer's Shares for twelve (12) months
(the "Lockup Periods"). The Lockup Shares shall be registered under the
Securities Act on or prior to the date of the expiration of the
relevant Lockup Periods, and the Buyer shall begin such registration
process not fewer than ninety (90) days before the end of the relevant
Lockup Period. Upon the termination of each of the Lockup Periods,
should the average market price of the Buyer Shares for the five (5)
day trading period ending on the day prior to the termination of the
relevant Lockup Period (the "Lockup Termination Price") be below the
Closing Price determined pursuant to Section 2(b)(i) above, the Buyer
will, at its sole discretion, either (A) issue to the Distributees an
additional number of registered Buyer Shares such that the total value
of such additional Buyer Shares and of the relevant Lockup Shares at
the Lockup Termination Price equals the total value of the relevant
Lockup Shares at the Closing Price, or (B) purchase back from the
Sellers the relevant Lockup Shares with cash in an amount equal to the
total value of the relevant Lockup Shares at the Closing Price.
(c) ADJUSTMENTS TO PURCHASE PRICE.
i. The Purchase Price set forth in Section 2(b)(i) above is based
upon a Recurring Revenue Rate of the Sellers of $308,000 per month. In
the event that the Recurring Revenue Rate for the month ended
immediately prior to the Closing Date exceeds or is less than $308,000,
the Purchase Price shall be increased or reduced respectively,
whichever may be the case, by $24.35 for each dollar that the Recurring
Revenue Rate exceeds or is less than such amount. For purposes of this
Agreement, the Recurring Revenue Rate shall be determined through
accrual based accounting in accordance with GAAP for revenues that
recur each month on a customer specific and plan type basis, and shall
include at a minimum the current amount of recurring monthly revenue to
be received from Wolfe L.L.C.'s customers for the provision of Internet
access services and related products and services which (A) are billed
on existing accounts which are less than 45 days past due as of the
Closing Date (provided that a past due amount of less than $15 shall
not disqualify an account from being included in calculation of the
Recurring Revenue Rate), or (B) will be billed on customer agreements
that have been executed by the customers prior to the Closing Date, as
to which provision of services has not at that time been initiated, or
which are otherwise not fully reflected in
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the revenues of Wolfe L.L.C.'s Internet business, subject to
satisfactory proof of being binding and enforceable agreements for the
benefit of the Sellers; or (C) are billed on existing accounts which
are more than 45 days past due as of the Closing Date, but (i) as to
which the account debtor makes payment or receives billing credit
sufficient to pay the amount which is past due at Closing, within a
reasonable time following the Closing Date, and (ii) as to which,
prior to the Audit Date (defined below), the account debtor either
makes two monthly payments on its account (except for accounts whose
primary services are not billed monthly, as to which only one payment
shall be required), or otherwise demonstrates reasonable indicia of a
pattern of late but reasonably reliable payment. Accounts which
qualify for treatment under subparagraph (C) above (herein,
"Prospective RMR") are identified on the attached Exhibit L. The
parties shall conduct an audit on the ninetieth (90th) day following
the Closing Date (herein, the "Audit Date") to determine which of the
Prospective RMR has satisfied the criteria set forth in (C)(i) and
(ii) above. To the extent that any Prospective RMR satisfies such
criteria, the Purchase Price shall be increased by $24.35 for each
dollar of recurring monthly revenue associated with such Prospective
RMR. Buyer shall pay any such increase in the Purchase Price within
ten (10) days after the Audit Date by issuing to the Distributees that
number of registered Buyer Shares equal to the increase, divided by
the average closing price per share of the Buyer Shares for the five
(5) day trading period ending on the day prior to the date of payment,
or in cash, at Buyer's option. Buyer and Sellers shall cooperate to
collect amounts due on accounts comprising Prospective RMR, which
cooperation shall include reasonable telephonic and written requests
for payment.
ii. The Purchase Price shall be increased or decreased, on a
dollar-for-dollar basis, by the total amount of Wolfe L.L.C.'s Net
Working Capital as of the Closing Date. A positive Net Working Capital
would result in an increase to the Purchase Price and a negative Net
Working Capital would result in a decrease to the Purchase Price;
iii. The Purchase Price shall be decreased, on a dollar-for-dollar
basis, by the amount of the Long-term Liability accounts assumed by the
Buyer from the Closing Date. "Long-term Liabilities" shall mean any
term loans (bank debt, lines of credit or other forms of debt, and the
current portion of any debt), capital leases, operating leases not
stated on the balance sheet, and other liabilities not identified on
the balance sheet if established as valid and binding obligations to
the reasonable satisfaction of the Sellers (the Sellers shall in any
event have the right to challenge the validity of any such alleged
liabilities).
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(d) THE CLOSING. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place by telephone conference
call, or at the corporate headquarters of the Buyer, 999 18th Street,
North Tower, 22nd Floor, Denver, Colorado 80202, commencing no later
than 5:00 p.m. local time on August 31, 1999 (the "Closing Date").
(e) DELIVERIES AT THE CLOSING. At the Closing, (i) the Buyer will
deliver to the Sellers (A) the various certificates, instruments, and
documents referred to in Section 6 below, and (B) the Purchase Price
specified in Section 2(b); (ii) the Sellers will deliver to the Buyer
(A) the various certificates, instruments, and documents referred to in
Section 6 below, (B) the Bill of Sale in the form attached hereto as
Exhibit D, and (C) the Assignment and Assumption Agreements in the form
of Exhibit E; and (iii) each Party shall deliver such other instruments
of sale, transfer, conveyance, and assignment as the other Party and
its counsel reasonably may request.
(f) ALLOCATION. The Parties agree that the Buyer shall allocate
the Purchase Price (and all other capitalizable costs) among the
Acquired Assets for all purposes (including financial accounting and
tax purposes) to reflect the book value of the tangible Acquired Assets
with the remainder being allocated to goodwill, and in a manner
otherwise acceptable to the Parties.
(g) NO ASSUMPTION OF LIABILITIES. The Parties agree and
acknowledge that, except as expressly provided in this Agreement, the
Buyer is not assuming any Liability or other obligation of the Sellers
pursuant to this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE PRINCIPALS.
The Sellers and Irving S. Wolfe represent and warrant to the Buyer that the
statements contained in this Section 3 are 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 3), except as set forth in the disclosure
schedule accompanying this Agreement and initialed by the Parties (the
"Disclosure Schedule"). M. Mercedes Shereda and Daniel M. Raybin represent and
warrant to the Buyer that, to the best of their respective Knowledge, the
statements contained in this Section 3 are 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 3), except as set forth in the Disclosure
Schedule. The Disclosure Schedule will be arranged in paragraphs corresponding
to the lettered and numbered paragraphs contained in this Section 3:
(a) ORGANIZATION OF THE SELLERS. Wolfe L.L.C. is a limited
liability company duly organized, validly existing, and in good
standing under the laws of
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the State of Washington. Happy Man is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
Washington.
(b) AUTHORIZATION OF TRANSACTION. The Sellers have full power and
authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform their obligations hereunder.
Without limiting the generality of the foregoing, all individuals who
are signatories to this Agreement have been duly authorized to execute,
deliver, and cause the Sellers to perform this Agreement. This
Agreement constitutes the valid and legally binding obligation of the
Sellers, enforceable in accordance with its terms and conditions.
(c) NONCONTRAVENTION. To the best of the Sellers' and the
Principals' respective Knowledge, neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby (including the assignments and assumptions referred
to in Section 2 above), 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 the Sellers are subject or any provision of the articles of
incorporation or organization, or bylaws or member agreements of the
Sellers 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 either of the Sellers is a party or by which
it is bound or to which any of their assets are subject (or result in
the imposition of any Security Interest upon any of its assets). The
Sellers do not need to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement.
(d) BROKERS' FEES. The Sellers have 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 for which
the Buyer could become liable or obligated, and the Buyer shall have no
Liability whatsoever to such broker.
(e) TITLE TO ACQUIRED ASSETS. As of the date of Closing, the
Sellers shall provide to the Buyer good and marketable title to all of
the Acquired Assets, free and clear of any Liabilities, including all
debts, obligations, claims, limitations, liens, Security Interests,
restrictions on transfer, and/or any other encumbrances whatsoever.
(f) FINANCIAL STATEMENTS. The Sellers have attached hereto, or
within sixty (60) days following the Closing shall deliver to the Buyer
for attachment hereto, as Exhibit F, the following financial statements
of both of the Sellers
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(collectively, the "Financial Statements"): (i) audited balance sheets
and statements of income, changes in stockholders' equity, and cash
flow relating to the Acquired Assets as of and for the fiscal years
ended January 31, 1997, January 31, 1998 and January 31, 1999 for
Wolfe L.L.C., and ended September 30, 1997 and September 30, 1998 for
Happy Man (the "Most Recent Fiscal Year End"); and (ii) unaudited
balance sheet and statements of income, changes in shareholders'
equity, and cash flow relating to the Acquired Assets as of and for
the interim period ended July 31, 1999 (the "Most Recent Month End")
(collectively, the "Most Recent Financial Statements"). The Most
Recent Financial Statements (without any notes thereto) have been
prepared in accordance with GAAP on a consistent basis throughout the
periods covered thereby, and are true, correct, and complete.
(g) EVENTS SUBSEQUENT TO MOST RECENT MONTH END. Since the Most
Recent Month End, there has not been any material adverse change in the
business, financial condition, operations, results of operations, or
future prospects of the Sellers relating to the Acquired Assets.
(h) UNDISCLOSED LIABILITIES. The Sellers have no Liability
relating to the Acquired Assets (and there is no basis for any present
or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against any of them giving rise to any
Liability), except for Liabilities set forth on the face of the Most
Recent Financial Statements (rather than in any notes thereto) and (ii)
Liabilities which have arisen after the Most Recent Month End 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).
(i) LEGAL COMPLIANCE. The Sellers have complied with all
applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all
agencies thereof), relating to the Acquired Assets, including all State
PUC Authorizations and the FCC Authorizations, and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand,
or notice has been filed or commenced against any of them alleging any
failure so to comply.
(j) TAX MATTERS. The Sellers have timely filed all Tax Returns
with respect to the ownership and operation of the Acquired Assets and
paid all Taxes due thereunder, and no Liability exists for any unpaid
Taxes relative to the Acquired Assets prior to the Closing.
(k) REAL PROPERTY. Section 3(k) of the Disclosure Schedule lists
and describes briefly all real property leased or subleased to the
Sellers related to the
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Acquired Assets. The Sellers have delivered to the Buyer correct and
complete copies of the leases and subleases listed in Section 3(k) of
the Disclosure Schedule (as amended to date). Other than such leases
or subleases, the Acquired Assets do not include any real property or
any interest therein. With respect to each lease and sublease listed
in Section 3(k) of the Disclosure Schedule:
i. the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect, except where the
illegality, invalidity, non-binding nature, unenforceability or
ineffectiveness would not have a material adverse effect on the
financial condition of the Sellers;
ii. the lease or sublease will continue to be legal, valid,
binding, enforceable, and in full force and effect on the terms
set forth therein following the consummation of the transactions
contemplated hereby, except where the illegality, invalidity,
non-binding nature, unenforceability or ineffectiveness would not
have a material adverse effect on the financial condition of
either the Sellers or the Buyer;
iii. no party to the lease or sublease is in breach or
default, and no event has occurred which, with notice or lapse of
time, would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
iv. no party to the lease or sublease has repudiated any
provision thereof;
v. there are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease;
vi. with respect to each sublease, the representations and
warranties set forth in subsections (i) through (v) above are true
and correct with respect to the underlying lease;
vii. the Sellers have not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold;
viii. all facilities leased or subleased thereunder have
received all approvals of governmental authorities (including
licenses and permits) required in connection with the operation
thereof and have been operated and maintained in accordance with
applicable laws, rules, and regulations; and
ix. all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the
operation of said facilities.
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(l) INTELLECTUAL PROPERTY. The Sellers own or have the right to
use pursuant to license, sublicense, agreement, or permission all
Intellectual Property necessary for the operation of the Acquired
Assets as presently operated, free and clear of any Security Interests,
Liabilities or other restrictions.
(m) TANGIBLE ASSETS. The Sellers own all tangible assets set forth
in Exhibit A-3 (the "Tangible Assets"). Each such Tangible Asset is
free from material defects (patent and latent), has been maintained in
accordance with normal industry practice, is in good operating
condition and repair (subject to normal wear and tear), and is suitable
for the purposes for which it presently is used.
(n) CONTRACTS. Except as set forth in Section 3(n) of the
Disclosure Schedule, no material contracts or other agreements exist
relating to the Acquired Assets to which either of the Sellers is a
party.
(o) INSURANCE. The Acquired Assets have been, and will be until
the Closing Date, covered by an insurance policy (providing property,
casualty, and liability coverage) adequately insuring the Acquired
Assets.
(p) LITIGATION. Neither of the Sellers (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge,
relative to the Acquired Assets, or (ii) is a party or, to the
Knowledge of the Sellers, 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, local, or foreign jurisdiction or before any arbitrator with
respect to the Acquired Assets. The Sellers do not have any reason to
believe that any such action, suit, proceeding, hearing, or
investigation may be brought or threatened against the Seller relative
to the Acquired Assets.
(q) WARRANTIES. No product or service sold, leased, or delivered
by the Sellers with respect to the Acquired Assets is subject to any
guaranty, warranty, or other indemnity, except any such guarantees,
warranties or other indemnities reflected in agreements assigned to and
assumed by Buyer in connection herewith.
(r) GUARANTIES. Neither Seller is a guarantor or otherwise is
liable for any Liability or other obligation (including indebtedness)
of any other Person with respect to the Acquired Assets.
(s) STATE PUC AUTHORIZATIONS AND FCC AUTHORIZATIONS. Exhibit G
hereto identifies each of the State PUC Authorizations and the FCC
Authorizations which has been issued to either of the Sellers with
respect to the Acquired Assets. None of the State PUC Authorizations or
the FCC
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Authorizations has been modified, amended, or otherwise altered, and
each remains legal, valid, binding, in full force and effect, and
unaffected by the transactions contemplated by this Agreement.
(t) INVESTMENT. Each of the Sellers and the Distributees
understands that (i) the Escrow Shares and the Lockup Shares have not
been registered, and will not be registered, under the Securities Act,
or under any state securities laws, until after the Closing Date, and
are being offered and sold in reliance upon federal and state
exemptions for transactions not involving any public offering; (ii) the
Sellers and the Distributees are acquiring the Buyer Shares solely for
their own account for investment purposes, and not with a view to the
immediate distribution thereof (except to the Distributees); (iii) the
Sellers and the Distributees are sophisticated investors with knowledge
and experience in business and financial matters; (iv) the Sellers and
the Distributees have received certain information concerning the Buyer
and have had the opportunity to obtain additional information as
desired in order to evaluate the merits and the risks inherent in
holding the Buyer Shares; (v) the Sellers and the Distributees are able
to bear the economic risk and lack of liquidity inherent in holding the
Buyer Shares; (vi) the Sellers and the Distributees together with their
respective legal, tax and financial advisers have investigated the
Buyer and its business and have negotiated transactions contemplated
herein and have independently determined to enter into such
transactions; and (vii) the Sellers are Accredited Investors.
(u) REAL PROPERTY LEASES.
i. That certain Lease Agreement between Wolfe L.L.C. and
Yesterdays Village, Inc. ("Yesterdays"), dated May 21, 1996 (the
"Yakima Lease"), is currently in full force and effect. Neither
the Sellers nor any of the Principals has received any notice,
whether verbal, written or otherwise, from Yesterdays or any of
its affiliates, agents or employees, relating either to the
termination of the Yakima Lease, or Yesterdays' determination to
increase the rent due thereunder.
ii. Pursuant to a certain Lease Agreement between Wolfe
L.L.C. and Sixth & Virginia Properties ("Virginia"), dated
September 30, 1994 (the "19th Floor Lease"), Wolfe L.L.C. leases
from Virginia the 19th floor of the building commonly referred to
as the Westin Building. The Sellers and the Principals agree to
use their best efforts to cause Virginia to extend the term of the
19th Floor Lease, subject to the same terms and conditions
currently in effect under the 19th Floor Lease, until at least
March 30, 2000. The Sellers and the Principals agree to indemnify
the Buyer from and against any adverse consequences resulting from
the failure of Virginia to grant such extension of the 19th Floor
Lease.
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(v) DISCLOSURE. The representations and warranties contained in
this Section 3 do not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the
statements and information contained in this Section 3 not misleading.
4. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents
and warrants to the Sellers that the statements contained in this Section 4 are
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 4).
(a) ORGANIZATION OF THE BUYER. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of the State of Delaware.
(b) AUTHORIZATION OF TRANSACTION. The Buyer has full power and
authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of the
Buyer, 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 (including the assignments and assumptions referred to in
Section 2 above), 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 the Buyer is subject or any provision of its charter or bylaws
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 the Buyer is a party or by which it is bound or to
which any of its assets is subject. The Buyer does not need to give any
notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order for the
Parties to consummate the transactions contemplated by this Agreement
(including the assignments and assumptions referred to in Section 2
above).
(d) SEC FILINGS. The Buyer has filed all required reports,
schedules, forms, registration statements and other documents with the
SEC since January 1, 1998 (the "SEC Filings"). As of their respective
dates, the SEC Filings complied in all material respects with the
requirements of the Securities Act or the Securities Exchange Act, as
the case may be, the rules and regulations of the SEC promulgated
thereunder applicable to such SEC Filings , and none of the SEC Filings
when filed contained any untrue statement of a material fact or omitted
to
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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.
(e) BUYER SHARES. The Buyer Shares will be, when issued, duly
issued and validly existing, free and clear of any Liabilities and
other encumbrances and restrictions, except as set forth herein. All
Buyer Shares shall be registered under the Securities Act prior to the
expiration of the transfer restrictions set forth in this Agreement.
(f) BROKERS' FEES. The Buyer 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 for which the Sellers
could become liable or obligated.
(g) DISCLOSURE. The representations and warranties contained in
this Section 4 do not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the
statements and information contained in this Section 4 not misleading.
(h) LITIGATION. The Buyer is not a party or, to the Knowledge of
the Buyer, 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, local,
or foreign jurisdiction or before any arbitrator that would threaten
Buyer's ability to perform its obligations under this Agreement.
5. 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 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 6 below).
(b) NOTICES AND CONSENTS. The Sellers will give any notices to
third parties, and the Sellers will use their reasonable best efforts
to obtain any third party consents, that the Buyer reasonably may
request in connection with the matters referred to in Section 3 above.
Each of the Parties will give any notices to, make any filings with,
and use its reasonable best efforts to obtain any authorizations,
consents, and approvals of governments and governmental agencies in
connection with the matters referred to in Section 3 and Section 4
above. Without limiting the generality of the foregoing, each of the
Parties will
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make any further filings that may be necessary, proper, or advisable
in connection therewith.
(c) OPERATION OF THE ACQUIRED ASSETS. Neither of the Sellers will
engage in any practice, take any action, or enter into any transaction
outside the Ordinary Course of Business, with respect to the Acquired
Assets.
(d) PRESERVATION OF BUSINESS. The Sellers will keep the Acquired
Assets substantially intact, including its present use and operation
thereof, and its relationships with licensors, suppliers, customers,
and employees related to the Acquired Assets.
(e) FULL ACCESS. The Sellers will permit representatives of the
Buyer to have full access at all reasonable times, and in a manner so
as not to interfere with the normal business operations of the Sellers,
to all of the Sellers' premises, properties, personnel, books, records
(including Tax records), contracts, and documents of, or pertaining to,
the Acquired Assets.
(f) NOTICE OF DEVELOPMENTS. Each Party will give prompt written
notice to the other Party of any material adverse development causing a
breach of any of its own representations and warranties in Section 3
and Section 4 above. No disclosure by any Party pursuant to this
Section 5(f), however, shall be deemed to amend or supplement this
Agreement or the Exhibits hereto or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
(g) EXCLUSIVITY. Until the Closing Date, as it may be extended
pursuant to Section 2(d) above, neither of the Sellers will (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
either of the Sellers (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.
(h) LEGEND. The Buyer and the Sellers covenant and agree that the
Escrow Shares and the Lockup Shares will bear the following legend
until registered pursuant to Sections 2(b)(iv) and 2(b)(v) hereof and
the Registration Rights Agreement (as defined below):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER
HEREOF, BY ACCEPTING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE
ISSUER THAT SUCH
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SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO
THE ISSUER, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES
LAWS, (C) IN ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT AND IN
COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR (D) IN
ACCORDANCE WITH ANY OTHER EXEMPTION UNDER THE SECURITIES ACT AND IN
COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS UPON THE DELIVERY
OF A LEGAL OPINION, REASONABLY SATISFACTORY TO THE ISSUER, TO THE
FOREGOING EFFECT. THE TRANSFER OF THE SECURITIES IS ALSO RESTRICTED
UNDER THE TERMS OF A REGISTRATION RIGHTS AGREEMENT, A COPY OF WHICH IS
ON FILE AT THE PRINCIPAL OFFICES OF ROCKY MOUNTAIN INTERNET, INC.
(i) REGISTRATION RIGHTS AGREEMENT. The Buyer shall agree, and upon
any distribution of the Buyer Shares to the Sellers, the Sellers shall
agree to become a party to and be bound by a Registration Rights
Agreement in the form attached hereto as Exhibit H (the "Registration
Rights Agreement"), setting forth the registration rights of the Buyer
Shares; PROVIDED, HOWEVER, that except as provided in Sections 2(b)(iv)
and 2(b)(v) hereof the Sellers receiving the Buyer Shares shall not be
entitled to any demand registration rights.
(j) ASSIGNMENT OR SUBLEASE. To the extent permitted by applicable
real property leases, co-location agreements and other such agreements,
the Buyer shall assume any lease of Wolfe L.L.C. relating to, or
sublease from Wolfe L.L.C., if appropriate, any commercial office space
or other real property (including space associated with co-location
agreements) necessary to support Wolfe L.L.C.'s Internet-related
business, on terms mutually agreeable to the Parties.
(k) EMPLOYMENT AGREEMENTS. Prior to or at Closing, the Buyer shall
assume the obligations and accept Wolfe L.L.C.'s full assignment of
rights under Wolfe L.L.C.'s current employment agreements between Wolfe
L.L.C. and its employees.
6. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO OBLIGATION OF THE BUYER. The obligation of the
Buyer to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions:
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i. the representations and warranties set forth in Section 3 above
shall be true and correct in all material respects at and as of the Closing
Date;
ii. the Sellers shall have performed and complied with all of their
covenants hereunder in all material respects through the Closing;
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 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, or (C) materially affect adversely the right of the Buyer to
own the Acquired Assets or to operate the Acquired Assets (and no such
injunction, judgment, order, decree, ruling, or charge shall be in effect);
iv. the Sellers and the Buyer shall have entered into the Assignment
and Assumption of Customer Contracts;
v. the Sellers and the Buyer shall have entered into the Assignment and
Assumption of Supplier Contracts;
vi. the Sellers shall have delivered to the Buyer the Bill of Sale;
vii. the Sellers and the Buyer shall have received all other
authorizations, consents, and approvals of governments and governmental
agencies referred to in Section 3 and Section 4 above;
viii. the Sellers shall have delivered to the Buyer a certificate to
the effect that each of the conditions specified above in Section
6(a)(i)-(vii) is satisfied in all respects;
ix. the Buyer shall have received from counsel to the Sellers an
opinion in form and substance as set forth in Exhibit I attached hereto,
addressed to the Buyer, and dated as of the Closing Date;
x. no later than ten days prior to the Closing, the Buyer shall have
completed and shall be satisfied with its due diligence examination of the
Sellers;
xi. the Buyer's board of directors has preliminarily approved the
transaction contemplated by this Agreement, and shall have provided final
approval of this Agreement prior to the Closing; and
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xii. all actions to be taken by the Sellers 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 the Buyer.
The Buyer may waive any condition specified in this Section 6(a) if it
executes a writing so stating at or prior to the Closing.
(b) CONDITIONS TO OBLIGATION OF THE SELLERS. The obligation of the
Sellers to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
i. the representations and warranties set forth in Section 4 above
shall be true and correct in all material respects at and as of the
Closing Date;
ii. the Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
iii. no action, suit, or proceeding shall be pending or threatened
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) prevent registration of the Escrow Shares
or the Lockup Shares under the Securities Act;
iv. Douglas H. Hanson shall be of sound mind and good health, and
shall be fully involved with the Buyer to same extent he is as of the
date of this Agreement;
v. the Sellers and the Buyer shall have entered into the
Assignment and Assumption of Customer Contracts;
vi. the Sellers and the Buyer shall have entered into the
Assignment and Assumption of Supplier Contracts;
vii. the Buyer shall have delivered to the Sellers a certificate
to the effect that each of the conditions specified above in Section
6(b)(i)-(v) is satisfied in all respects;
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viii. the Sellers shall have received from counsel to the Buyer an
opinion in form and substance as set forth in Exhibit J attached
hereto, addressed to the Sellers, and dated as of the Closing Date;
ix. Wolfe L.L.C.'s members, and Happy Man's board of directors,
shall have approved this Agreement; and
x. all actions to be taken by the Buyer 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 the Sellers.
The Sellers may waive any condition specified in this Section 6(b) if
they execute a writing so stating at or prior to the Closing.
7. TERMINATION.
(a) TERMINATION OF AGREEMENT. Either of the Parties may terminate this
Agreement as provided below:
i. the Buyer may terminate this Agreement by giving written notice
to the Sellers at any time prior to the Closing (A) in the event either
of the Sellers has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect, the Buyer
has notified the Sellers of the breach, and the breach has continued
without cure for a period of fifteen (15) days after the notice of
breach, or if a longer period is reasonably necessary to effect such a
cure, that the Sellers have failed to commence such cure within this
fifteen (15) day period or to thereafter diligently pursue a cure, or
(B) if the Closing shall not have occurred on or before August 31,
1999, by reason of the failure of any condition precedent under Section
6(a) hereof (unless the failure results primarily from the Buyer itself
breaching any representation, warranty, or covenant contained in this
Agreement); and
ii. the Sellers may terminate this Agreement by giving written
notice to the Buyer at any time prior to the Closing (A) in the event
the Buyer has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect, the
Sellers have notified the Buyer of the breach, and the breach has
continued without cure for a period of fifteen (15) days after the
notice of breach, or if a longer period is reasonably necessary to
effect such a cure, that the Buyer has failed to commence such cure
within this fifteen (15) day period or to thereafter diligently pursue
a cure, or (B) if the Closing shall not have
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occurred on or before August 31, 1999, by reason of the failure of any
condition precedent under Section 6(b) hereof (unless the failure
results primarily from the Sellers themselves breaching any
representation, warranty, or covenant contained in this Agreement).
(b) EFFECT OF TERMINATION.
i. Notwithstanding the termination of this Agreement, the
confidentiality provisions of this Agreement shall survive;
ii. The Buyer shall pay to the Sellers the sum of $125,000 in the
event that the Buyer does not proceed with the purchase of the Acquired
Assets as contemplated in this Agreement for any reason other than
material cause. For purposes of this Section 7(b)(ii), "material cause"
shall be limited to: (A) a material decline in the revenues of the
Sellers' Internet business that results in Recurring Revenue for the
calendar month preceding the Closing Date of less than $250,000; (B) a
material misrepresentation by either of the Sellers or the Principals
relating to the Acquired Assets or the Sellers' Internet-related
business which impairs the ability of the Sellers (or the Buyer
following the Closing) to continue to adequately serve the customers
associated with the Acquired Assets or the Sellers' Internet-related
business or to maintain the monthly Recurring Revenue at current
levels; (C) the inability of the Sellers to deliver the Acquired Assets
and the Sellers' Internet-related business free and clear of all
claims, liens, Security Interests, encumbrances and other similar
burdens and interests; (D) the failure of the Sellers to be able to
fully satisfy all obligations and terms and conditions required of them
pursuant to the letter of intent between the Sellers and the Buyer
dated June 3, 1999 (the "Letter of Intent"); or (E) the Buyer's
reasonable dissatisfaction with the due diligence information gathered
regarding the Sellers, which due diligence investigation shall be
completed no later than ten (10) days prior to Closing; and
iii. The Sellers shall pay to the Buyer the sum of $125,000 in the
event that the Sellers do not proceed with the sale of the Acquired
Assets as contemplated in this Agreement for any reason other than
material cause. For purposes of this Section 7(b)(iii), "material
cause" shall be limited to: (A) a material misrepresentation by the
Buyer regarding its business; (B) a material change in the business of
the Buyer which impairs the ability of the Buyer to satisfy its payment
and other obligations in connection with the purchase and sale of the
Acquired Assets; (C) the failure of the Buyer to be able to fully
satisfy all obligations and terms and conditions required of it
pursuant to the Letter of Intent; or (D) the Sellers' reasonable
dissatisfaction with the documentation and information
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provided to the Sellers pursuant to the Letter of Intent in order that
the Sellers' might evaluate the management ability, structure,
organization, viability, value or any other component of the Buyer.
8. 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 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. The Sellers acknowledge and agree that, from and after the Closing,
the Buyer will be entitled to possession of all documents, books, records
(including Tax records), agreements, directly relating to the Acquired
Assets (but not the Excluded Assets); PROVIDED, HOWEVER, that the Buyer
shall provide the Sellers and their shareholders and members with
reasonable access to such documents, books, records, agreements, and
financial data as necessary.
(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 on or
prior to the Closing Date involving the Acquired Assets, each of the other
Parties will cooperate with the contesting or defending Party and his or
its counsel in the contest or defense, make available his or its personnel,
and provide such testimony and access to his or its 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 8(h), Section 8(i), or Section 8(j) below).
(c) TRANSITION. None of the Sellers, the Principals nor the Sellers'
shareholders or members will take any action that is designed or intended
to have the effect of discouraging any carrier, supplier, lessor, licenser,
customer, or other business associate of either of the Sellers from
maintaining the same business relationships with the Buyer after the
Closing as it maintained with the Sellers prior to the Closing. Each of the
Sellers, the Principals and the Sellers' shareholders and members will
refer all customer inquiries relating to the Acquired Assets to the Buyer
from and after the Closing.
(d) CONFIDENTIALITY. The Sellers shall, and shall cause each of the
members of Wolfe L.L.C. and the shareholders of Happy Man to, treat and
hold
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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 the Buyer or destroy, at the request and option of the
Buyer, all tangible embodiments (and all copies) of the Confidential
Information which are in his/her or its possession. In the event that
either of the Sellers, any of the members of Wolfe L.L.C. or the
shareholders of Happy Man 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, the Sellers will notify the Buyer
promptly of the request or requirement so that the Buyer may seek an
appropriate protective order or waive compliance with the provisions of
this Section 8(d). If, in the absence of a protective order or the receipt
of a waiver hereunder, the Sellers, the members of Wolfe L.L.C. or the
shareholders of Happy Man are, on the advice of counsel, compelled to
disclose any Confidential Information to any tribunal or else stand liable
for contempt, the Sellers, the members of Wolfe L.L.C. or the shareholders
of Happy Man (as the case may be) may disclose the Confidential Information
to the tribunal; PROVIDED, HOWEVER, that the Sellers, the members of Wolfe
L.L.C. and the shareholders of Happy Man shall use their reasonable best
efforts to obtain, at the reasonable request of the Buyer, an order or
other assurance that confidential treatment will be accorded to such
portion of the Confidential Information required to be disclosed as the
Buyer shall designate.
(e) COVENANT NOT TO COMPETE. For a period of two (2) years from and
after the Closing Date, the Sellers, their Affiliates and the Principals
agree not to engage directly or indirectly in any business similar to the
business of the Sellers in any geographic area in which the Seller conducts
that business as of the Closing Date; PROVIDED, HOWEVER, that
i. Irving S. Wolfe may not engage in any business offering any
goods or services currently offered by Wolfe L.L.C., other than
e-commerce and related software or web design, but shall be permitted
to engage in any business whatsoever in Australia or New Zealand;
ii. no owner of less than one percent (1%) of the outstanding
stock of any publicly traded corporation shall be deemed to be engaged
solely by reason thereof in any business activity in contravention
hereof (nor shall ownership of any percentage of the outstanding stock
of Buyer or exercise of the rights of a shareholder in connection
therewith constitute a violation of this provision); and
iii. if the final judgment of a court of competent jurisdiction
declares that any term or provision of this Section 8(e) is invalid or
unenforceable, the Parties agree that the court making the
determination of
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invalidity or unenforceability shall have the power to reduce the
scope, duration, or area of the term or provision, to delete specific
words or phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
(f) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the Parties contained in this Agreement
shall survive the Closing and shall continue in full force and effect for a
period of two (2) years thereafter.
(g) THIRD PARTY CONSENTS. The Sellers shall use their best efforts to
procure, and assist the Buyer in procuring, any consents of any third party
whose consent is required in connection with the transactions contemplated
by this Agreement.
(h) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER.
i. In the event the Sellers or the Principals breach any of their
representations, warranties, and covenants contained in this Agreement,
and, if there is an applicable survival period pursuant to Section 8(f)
above, provided that the Buyer makes a written claim for
indemnification against the Sellers or Principals within such survival
period, then the Sellers agree to indemnify the Buyer from and against
the entirety of any Adverse Consequences the Buyer may suffer through
and after the date of the claim for indemnification resulting from,
arising out of, relating to, in the nature of, or caused by the breach
(or the alleged breach).
ii. The Sellers agree to indemnify the Buyer from and against the
entirety of any Adverse Consequences the Buyer may suffer resulting
from, arising out of, relating to, in the nature of, or caused by any
Liability of the Sellers.
iii. The Sellers agree to indemnify the Buyer from and against the
entirety of any Adverse Consequences the Buyer may suffer resulting
from, arising out of, relating to, in the nature of, or caused by any
Liability of the Sellers for Taxes accruing prior to the Closing Date
of either of the Sellers related to the Acquired Assets.
iv. The Sellers agree to indemnify the Buyer from and against the
entirety of any Adverse Consequences the Buyer may suffer resulting
from, arising out of, relating to, in the nature of, or caused by any
Liability
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<PAGE>
of either of the Sellers in relation to the termination of any of the
Sellers' employees who are not employed by the Buyer; provided,
however, that the Buyer shall remain liable to satisfy the obligations
arising under the termination provisions of the employment agreements
of such employees.
v. The Sellers shall not have any liability to the Buyer for any
Adverse Consequences set forth in this Section 8(h) to the extent that
such Adverse Consequences are covered by insurance of the Buyer.
vi. Notwithstanding anything contained herein to the contrary, the
Sellers shall have no liability to the Buyer as a result of any breach
of any representation, warranty or covenant, to the extent that the
Buyer knew that such representation, warranty or covenant was incorrect
prior to the Closing Date, except when such breach is the result of
fraud or willful misconduct.
vii. The liability of the Sellers pursuant to this Section 8(h)
shall not exceed the current market value of the Buyer's Shares
provided to the Seller at the Closing pursuant to Section 2 above,
except where such liability is the result of fraud or willful
misconduct.
(i) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SELLERS.
i. In the event the Buyer breaches any of its representations,
warranties, and covenants contained in this Agreement, and, if there is
an applicable survival period pursuant to Section 8(f) above, provided
that the Sellers make a written claim for indemnification against the
Buyer within such survival period, then the Buyer agrees to indemnify
the Sellers from and against the entirety of any Adverse Consequences
the Sellers may suffer through and after the date of the claim for
indemnification resulting from, arising out of, relating to, in the
nature of, or caused by the breach.
ii. The Buyer agrees to indemnify the Sellers from and against the
entirety of any Adverse Consequences the Sellers and its members or
shareholders may suffer resulting from, arising out of, relating to, in
the nature of, or caused by the Buyer's operation of the Acquired
Assets after the Closing.
iii. The Buyer agrees to indemnify the Sellers from and against
the entirety of any Adverse Consequences the Sellers may suffer
resulting from, arising out of, relating to, in the nature of, or
caused by any Liability of the Buyer for Taxes accruing after the
Closing Date related to the Acquired Assets.
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<PAGE>
iv. The Buyer agrees to indemnify the Sellers from and against the
entirety of any Adverse Consequences the Sellers may suffer resulting
from, arising out of, relating to, in the nature of, or caused by any
Liability of Buyer in relation to the termination of any of the
Sellers' former employees who are employed by the Buyer after the
Closing Date, but only to the extent that such Liability relates solely
to events occurring after the Closing Date, provided, however, that the
Buyer shall remain liable to satisfy the obligations arising under the
termination provisions of the employment agreements of such employees.
v. The Buyer shall not have any Liability to the Sellers for any
Adverse Consequences set forth in this Section 8(i) to the extent that
such Adverse Consequences are covered by insurance of the Sellers.
vi. Notwithstanding anything contained herein to the contrary, the
Buyer shall have no liability to the Sellers as a result of any breach
of any representation, warranty or covenant, to the extent that the
Sellers knew that such representation, warranty or covenant was
incorrect prior to the Closing Date, except where such breach is the
result of fraud or willful misconduct.
vii. The liability of the Buyer pursuant to this Section 8(i)
shall not exceed the current market value of the Buyer's Shares
provided to the Seller at the Closing pursuant to Section 2 above,
except where such liability is the result of fraud or willful
misconduct.
(j) 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 8, then the Indemnified Party
shall promptly notify each Indemnifying Party thereof in writing;
PROVIDED, HOWEVER, that no delay on the part of the Indemnified Party
in notifying any Indemnifying Party shall relieve the Indemnifying
Party from any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party thereby is prejudiced.
ii. Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its
choice reasonably satisfactory to the Indemnified Party so long as (A)
the Indemnifying Party notifies the Indemnified Party in writing within
fifteen (15) after the Indemnified Party has given notice of the Third
Party Claim that the Indemnifying Party will indemnify the Indemnified
Party from and
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<PAGE>
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 materially 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.
iii. So long as the Indemnifying Party is conducting the defense
of the Third Party Claim in accordance with Section 8(i)(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,
(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
withheld unreasonably), and (C) 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).
(k) LIMITATIONS ON INDEMNIFICATION OBLIGATIONS. Notwithstanding the
provisions of Section 8(h), through 8(j) above, none of the Parties shall
be obligated to indemnify or pay damages to any other Party or Parties, as
the case may be, from and against any Adverse Consequences arising from or
related to this Agreement to the extent that such Adverse Consequences
arising from or related to this Agreement exceed the Purchase Price;
PROVIDED, HOWEVER, that any claims brought by a Party against another Party
or Parties for fraud or willful misconduct shall not be subject to the
foregoing limitations.
9. ADDITIONAL AGREEMENTS.
(a) ESCROW AGREEMENT. As security for the indemnity of the Buyer by the
Sellers provided for in Section 8(h)(i)-(iii) above, the Escrow Shares
shall be registered in the name of the Distributees, and deposited (with an
executed assignment in blank) with Norwest Bank, N.A. as Escrow Agent such
deposit to constitute an escrow fund (the "Escrow Fund") to be governed by
the terms set forth herein and in the Escrow Agreement to be signed by all
parties thereto (the
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"Escrow Agreement"). In the event of any conflict between the terms of this
Agreement and the Escrow Agreement, the terms of the Escrow Agreement shall
govern. All costs and fees of the Escrow Agent for establishing and
administering the Escrow Fund shall be borne by the Buyer. Upon compliance
with the terms hereof, the Buyer shall be entitled to obtain indemnity
first from the Escrow Fund for all Adverse Consequences covered by the
indemnity provided for in Section 8 above. If the Escrow Fund is not
sufficient to cover any such Adverse Consequences covered by Section 8
above, then the Buyer shall be entitled to seek payment directly from the
Sellers and, if the Sellers can not or will not cover such Adverse
Consequences, then the Buyer shall be entitled to seek payment directly
from Irving S. Wolfe. The form of the Escrow Agreement is attached hereto
as Exhibit K.
10. MISCELLANEOUS.
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue any
press release or make any public announcement relating to the subject
matter of this Agreement prior to the Closing without the prior written
approval of the other Party; PROVIDED, HOWEVER, that any Party may make any
public disclosure it believes in good faith is required by applicable law
or any listing or trading agreement concerning its publicly-traded
securities (in which case the disclosing Party will use its reasonable best
efforts to advise the other Party prior to making the disclosure).
(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 and the Exhibits and Schedules
hereto (including the documents referred to herein) constitutes the entire
agreement between the Parties and supersedes any prior understandings,
agreements, or representations by or between 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 its rights, interests, or obligations hereunder without the prior
written approval of the other Party; PROVIDED, HOWEVER, that the Buyer may
(i) assign any or all of its rights and interests hereunder to one or more
of its Affiliates and (ii) designate one or more of its Affiliates to
perform its obligations hereunder (in any or all of which cases the Buyer
nonetheless shall remain responsible for the performance of all of its
obligations hereunder).
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(e) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument. This Agreement may be
executed by facsimile, provided that the original counterpart is delivered
within five (5) days of such execution.
(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 if (and
then 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 THE SELLERS:
Wolfe Internet Access, L.L.C. / Happy Man Corporation
4410 S.W. Point Robinson Road
Vashon, WA 98070
Attention: Irving S. Wolfe
COPY TO:
Betts Patterson & Mines, P.S.
800 Financial Center
1215 Fourth Avenue
Seattle, Washington 98161-1090
Attention: Mr. Ronald D. Allen
IF TO THE BUYER:
Rocky Mountain Internet, Inc.
999 18th Street, 22nd Floor
Denver, Colorado 80202
Attention: Mr. Douglas H. Hanson, Chairman & CEO
COPIES TO:
Rocky Mountain Internet, Inc.
999 18th Street, 22nd Floor
Denver, Colorado 80202
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Attention: Mr. Chris J. Melcher, General Counsel
Holland & Hart LLP
215 South State Street, Suite 500
Salt Lake City, Utah 84111-23117
Attention: Mr. David R. Rudd
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 Party 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) ARBITRATION. The Parties hereby covenant and agree that, except as
otherwise set forth in this Agreement, any suit, dispute, claim, demand,
controversy or cause of action of every kind and nature whatsoever, known
or unknown, fixed or contingent, that the Parties may now have or at any
time in the future claim to have based in whole or in part, or arising from
or that in any way is related to the negotiations, execution,
interpretation or enforcement of this Agreement (collectively, the
"Disputes") shall be completely and finally settled by submission of any
such Disputes to arbitration under the Rules of Arbitration and
Conciliation of the American Arbitration Association then in effect. If the
Parties to the Dispute are unable to agree on a single arbitrator, then
such binding arbitration shall be conducted before a panel of three (3)
arbitrators that shall be comprised of one (1) arbitrator designated by
each Party to the Dispute and a third arbitrator designated by the two (2)
arbitrators selected by the Parties to the Dispute. Unless the Parties to
the Dispute agree otherwise, the arbitration proceedings shall take place
in Denver, Colorado and the arbitrator(s) shall apply the law of the State
of Colorado, USA, to all issues in dispute, in accordance with Section
10(h). The findings of the arbitrator(s) shall be final and binding on the
Parties to the Dispute. Judgment on such award may be entered in any court
of appropriate jurisdiction, or application may be made to that court for a
judicial acceptance of the award and an order of enforcement, as the party
seeking to enforce that award may elect. Notwithstanding any applicable
rules of
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arbitration, all arbitral awards shall be in writing and shall set forth in
particularity the findings of fact and conclusions of law of the arbitrator
or arbitrators.
(j) AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
the Buyer and the Sellers. 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.
(k) 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.
(l) EXPENSES. Each of the Buyer and the Sellers will bear their own
costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby.
The Buyer agrees to assume the costs associated with the registration of
the Buyer Shares.
(m) 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 provisions of this Agreement. Any reference to any
federal, state, local, or foreign 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. Nothing in the Disclosure Schedule shall be deemed
adequate to disclose an exception to a representation or warranty made
herein unless the Disclosure Schedule identifies the exception with
reasonable particularity and describes the relevant facts in reasonable
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 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
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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.
(n) INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made
a part hereof.
(o) SPECIFIC PERFORMANCE. Each of the Parties acknowledges and agrees
that the other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Party shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in
any action instituted in any court of the United States or any state
thereof having jurisdiction over the Parties and the matter (subject to the
provisions set forth in Section 10(i) above), in addition to any other
remedy to which it may be entitled, at law or in equity.
*****
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
RMI.NET, INC.
By:
-----------------------------------
Douglas H. Hanson, Chairman and CEO
WOLFE INTERNET ACCESS, L.L.C.
By:
----------------------------------
Print Name:
-------------------------
Title:
-------------------------------
HAPPY MAN CORPORATION
By:
----------------------------------
Print Name:
-------------------------
Title:
-------------------------------
PRINCIPALS
- --------------------------------------
Irving S. Wolfe
- --------------------------------------
M. Mercedes Shereda
- --------------------------------------
Daniel M. Raybin
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Exhibit 20.1
RMI.NET EXPANDS PRESENCE IN PACIFIC NORTHWEST BY ACQUIRING THE ASSETS OF
WOLFENET, A SEATTLE-BASED ISP
DENVER, Sept. 8 /PRNewswire/ -- RMI.NET, Inc. (Nasdaq: RMII), a national
e-business and convergent communications company, announced today that it has
acquired the assets of Seattle-based WolfeNet, a leading provider of web
hosting and Internet-related services, in a common stock transaction valued
at $6.6 million. Annualized revenue run rates for the WolfeNet acquisition
are expected to be $3.6 million. (Photo:
http://www.newscom.com/cgi-bin/prnh/19990628/RMILOGO )
WolfeNet provides a full range of Internet services that will complement
RMI.NET's existing regional and national operations, including web design,
web hosting, co-location and web marketing; electronic commerce solutions;
traditional Internet access for corporate networks and residential users; and
Intranet consulting.
"We are now positioned as a premier commerce solutions provider in the
Pacific Northwest," said Douglas H. Hanson, chairman and chief executive
officer for RMI.NET. "WolfeNet adds to our growing family of companies, based
in Seattle, that will provide the Pacific Northwest with the finest
e-commerce and Internet service solutions." Ray Gurke, president of WolfeNet,
will become RMI.NET's regional vice president for Pacific Northwest
operations.
"The combination of RMI.NET's existing companies with WolfeNet's operations
in the Pacific Northwest bodes well for small and medium-sized companies
looking to expand their e-commerce and Internet presence and capabilities,"
Gurke said. "We will be able to offer e-business capabilities, Internet
access and web solutions unparalleled in this marketplace."
In addition to its expanded presence in the Pacific Northwest, Hanson noted
that RMI.NET is uniquely positioned in the industry to offer its customers
the three major components of a successful e-commerce solutions provider:
e-business applications services; high-speed, dedicated Internet access
services; and Internet hosting and marketing services.
In a related announcement, RMI.NET also noted that its Seattle-based
subsidiary, Application Methods, has changed its name to RMI Web Solutions.
This better reflects its national corporate identity and the completion of
its integration into the parent company operations.
Denver-based RMI.NET, Inc., formerly Rocky Mountain Internet, is a national
commerce solutions provider focusing on turnkey e-business applications and
convergent communications. RMI.NET has developed and provides small and
medium-sized companies with scalable e-business capabilities; customized web
page development and hosting; nationwide Internet dialup and dedicated
access; Digital subscriber line (DSL) service; and traditional communication
services, including Internet telephony. The company wholly owns a proprietary
portal site and search engine, Infohiway, at www.infohiway.com. For more
information on RMI.NET, call (800) 864-4327, or visit the company's web site
at www.rmi.net.
This press release might contain forward-looking statements. These
forward-looking statements are subject to risks and uncertainties. Actual
results may differ materially from such forward-looking statements as a
result of risks and uncertainties which are described in the cautionary
statements section of the company's 10K dated December 31, 1998, and may
include other risks described in all Securities and Exchange Commission
filings submitted as of this date.
/CONTACT: Mark Stutz of RMI.NET, Inc., 303-313-0672, [email protected]/
