<PAGE>
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) June 28, 1999
-------------------------------
RMI.NET, Inc.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in charter)
Delaware
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation)
001-12063 84-1322326
- ------------------------------------ -------------------------------------
(Commission File Number) (IRS Employee Identification No.)
999 Eighteenth Street, Suite 2201 80202
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 672-0700
-----------------------------
Not Applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 5. OTHER EVENTS.
On June 28, 1999, the Registrant entered into an Asset Purchase
Agreement (the "CyberDesic Asset Purchase Agreement") by and between Rocky
Mountain Internet, Inc. d/b/a RMI.NET, Inc. and CyberDesic Communications
Corporation, Inc., an Illinois corporation headquartered in Peoria, Illinois
("CyberDesic"), pursuant to which the Registrant acquired the assets of
CyberDesic (the "CyberDesic Acquisition"). Pursuant to the terms of the
CyberDesic Asset Purchase Agreement, the Registrant agreed to pay $570,000,
payable in the form of 48,387 shares of common stock of the Registrant. The
consideration that the Registrant agreed to pay to CyberDesic was determined
through arm's length negotiation. There was no material relationship between
the Registrant and CyberDesic prior to the CyberDesic Acquisition. CyberDesic
is an Internet service provider. The Registrant intends to utilize the assets
acquired from CyberDesic in the same manner that CyberDesic utilized the
assets prior to their acquisition by the Registrant. Copies of the CyberDesic
Asset Purchase Agreement and the Registrant's press release are attached
hereto as Exhibits 10.1 and 20.1, respectively.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
List below the financial statements, pro forma financial information
and exhibits, if any, filed as a part of this report.
(a) Financial Statements of Businesses Acquired:
Not required.
(b) Pro Forma Financial Information:
Not required.
(c) Exhibits:
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- ---------------------------------------
<S> <C>
10.1 Asset Purchase Agreement by and between
Rocky Mountain Internet, Inc. d/b/a RMI.NET,
Inc. and CyberDesic Communications
Corporation, Inc.
20.1 News Release dated June 28, 1999 announcing
the Colorado Mountain Net Merger.
</TABLE>
<PAGE>
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: July 13, 1999 By: /s/ CHRISTOPHER J. MELCHER
---------------------------
Christopher J. Melcher
Vice President, General Counsel and
Corporate Secretary
<PAGE>
Exhibit 10.1
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
ROCKY MOUNTAIN INTERNET, INC.
D/B/A RMI.NET
AND
CYBERDESIC COMMUNICATIONS CORPORATION
JUNE 28, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. Definitions ............................................................1
2. Basic Transaction ......................................................4
(a) Purchase and Sale of Acquired Assets ..............................4
(b) Purchase Price ....................................................4
(c) Adjustments to Purchase Price .....................................5
(d) The Closing .......................................................5
(e) Deliveries at the Closing .........................................5
(f) Allocation ........................................................6
(g) No Assumption of Liabilities ......................................6
3. Representations and Warranties of the Seller ...........................6
(a) Organization of the Seller ........................................6
(b) Authorization of Transaction ......................................6
(c) Noncontravention ..................................................6
(d) Brokers' Fees .....................................................7
(e) Title to Acquired Assets ..........................................7
(f) Financial Statements ..............................................7
(g) Events Subsequent to Most Recent Month End ........................7
(h) Undisclosed Liabilities ...........................................7
(i) Legal Compliance ..................................................8
(j) Tax Matters .......................................................8
(k) Real Property .....................................................8
(l) Intellectual Property .............................................8
(m) Fixed Assets ......................................................8
(n) Contracts .........................................................8
</TABLE>
<PAGE>
<TABLE>
<S> <C>
(o) Insurance .........................................................8
(p) Litigation ........................................................8
(q) Warranties ........................................................9
(r) Guaranties ........................................................9
(s) State PUC Authorizations and FCC Authorizations ...................9
(t) Investment ........................................................9
(u) Disclosure ........................................................9
4. Representations and Warranties of the Buyer ............................9
(a) Organization of the Buyer ........................................10
(b) Authorization of Transaction .....................................10
(c) Noncontravention .................................................10
(d) SEC Filings ......................................................10
(e) Buyer Shares .....................................................10
(f) Brokers' Fees ....................................................10
(g) Disclosure .......................................................11
5. Pre-Closing Covenants .................................................11
(a) General ..........................................................11
(b) Notices and Consents .............................................11
(c) Operation of ....................................................11
(d) Preservation of Business .........................................11
(e) Full Access ......................................................11
(f) Notice of Developments ...........................................11
(g) Exclusivity ......................................................12
(h) Legend ...........................................................12
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
(i) Registration Rights Agreement ....................................12
6. Conditions to Obligation to Close .....................................12
(a) Conditions to Obligation of the Buyer ............................13
(b) Conditions to Obligation of the Seller ...........................14
7. Termination ...........................................................15
(a) Termination of Agreement .........................................15
(b) Effect of Termination ............................................16
8. Post-Closing Covenants ................................................16
(a) General ..........................................................16
(b) Litigation Support ...............................................16
(c) Transition .......................................................16
(d) Confidentiality ..................................................16
(e) Covenant Not to Compete ..........................................17
(f) Survival of Representations and Warranties .......................18
(g) Third Party Consents .............................................18
(h) Indemnification Provisions for Benefit of the Buyer ..............18
(i) Indemnification Provisions for Benefit of the Seller .............19
(j) Matters Involving Third Parties ..................................20
(k) Limitations on Liability .........................................21
(l) Certain Contracts ................................................21
9. Miscellaneous .........................................................22
(a) Press Releases and Public Announcements ..........................22
(b) No Third-Party Beneficiaries .....................................22
(c) Entire Agreement .................................................22
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
(d) Succession and Assignment ........................................22
(e) Counterparts .....................................................23
(f) Headings .........................................................23
(g) Notices ..........................................................23
(h) Governing Law ....................................................24
(i) Arbitration ......................................................24
(j) Amendments and Waivers ...........................................25
(k) Severability .....................................................25
(l) Expenses .........................................................25
(m) Construction .....................................................25
(n) Incorporation of Exhibits and Schedules ..........................26
(o) Specific Performance .............................................26
</TABLE>
Exhibit A - Acquired Assets
Exhibit A-1 - Customer Contracts
Exhibit A-2 - Supplier Contracts
Exhibit A-3 - Fixed Assets
Exhibit A-4 - Inventory
Exhibit B - Lockup Agreement
Exhibit C - Bill of Sale
Exhibit D - Assignment and Assumption of Customer Contracts
Exhibit E - Assignment and Assumption of Supplier Contracts
Exhibit F - Financial Statements
Exhibit G - PUC and FCC Authorizations
iv
<PAGE>
Exhibit H - Opinions of Counsel
Exhibit I - Registration Rights Agreement
Disclosure Schedules
v
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT entered into as of this 25th day of
June, 1999, by and between ROCKY MOUNTAIN INTERNET, INC., a Delaware
corporation d/b/a RMI.NET (the "Buyer"), and CYBERDESIC COMMUNICATIONS
CORPORATION, INC., an Illinois corporation (the "Seller"). The Buyer and the
Seller are referred to collectively herein as the "Parties".
This Agreement contemplates a transaction in which the Buyer will
purchase certain of the assets of the Seller 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 Seller 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.
"ASSET CONTRACTS" has the meaning set forth in Section 8(l) below.
"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.
"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.
<PAGE>
"CLOSING" has the meaning set forth in Section 2(d) below.
"CLOSING DATE" has the meaning set forth in Section 2(d) below.
"CONFIDENTIAL INFORMATION" means any information concerning the
businesses and affairs of the Parties that is not already generally available
to the public.
"CONTRACT PAYMENTS" has the meaning set forth in Section 8(l) below.
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 3 below.
"DISTRIBUTEES" has the meaning set forth in Section 2(b)(ii) below.
"EXCLUDED ASSETS" means the assets of the Seller not purchased by
the Buyer hereunder.
"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 Seller and to
conduct its business as it is currently conducted.
"FINANCIAL STATEMENTS" has the meaning set forth in Section 3(f)
below.
"FIXED ASSETS" has the meaning set forth in Section 3(m) 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).
2
<PAGE>
"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.
"LOCK-UP AGREEMENT" has the meaning set forth in Section 2(b) below.
"LOCK-UP PERIODS" has the meaning set forth in Section 2(b) below.
"LOCK-UP SHARES" has the meaning set forth in Section 2(b) 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.
"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).
"PURCHASE PRICE" has the meaning set forth in Section 2(c) below.
"RECURRING REVENUE RATE" has the meaning set forth in Section 2(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 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.
"SELLER" has the meaning set forth in the preface above.
3
<PAGE>
"SELLER PRINCIPALS" means James R. DeBord, M.D., Kevin Giovanetto
and Hal Baylor.
"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 Seller and to conduct its business as it is currently
conducted.
"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 Seller, and the Seller agrees 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
Acquired Assets delivered.
(b) PURCHASE PRICE. The Buyer agrees to pay to the Seller
at the Closing:
i. In exchange for the Acquired Assets, the
Buyer will issue to the Seller that number of the Buyer Shares
equal to $618,000 (the "Purchase Price") divided by the
average closing price per share of the Buyer Shares for the
five (5) day period ending on the day prior to the Closing
Date.
ii. The number of shares of Buyer Shares to be
issued pursuant to Section 2(b)(i) above shall be allocated
among and distributed by the Seller to itself and its
shareholders, officers and directors (the "Distributees") as
determined by the Seller in its sole and absolute discretion.
4
<PAGE>
iii. At the Closing Date, thirty percent (30%) of
the Buyer's Shares issued pursuant to Section 2(b)(i) above
will be registered under the Securities Act (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 4,000 of such Registered Shares in any one
trading day.
iv. The remaining seventy percent (70%) 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 B (the "Lockup Agreement")
for the following periods of time following the Closing Date:
fifty percent (50%) 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.
(c) ADJUSTMENTS TO PURCHASE PRICE. The Purchase Price set
forth in Section 2(b)(i) above is based upon a combined monthly
Recurring Revenue Rate directly derived from the Acquired Assets for
the month immediately preceding the Closing Date of thirty four
thousand three hundred thirty three and no/100ths dollars ($34,333.00).
In the event that the Recurring Revenue Rate exceeds or is less than
thirty four thousand three hundred thirty three and no/100ths dollars
($34,333.00), the Purchase Price shall be increased or reduced,
whichever may be the case, by eighteen dollars and no/100ths dollars
($18.00) for each dollar that the Recurring Revenue Rate exceeds or is
less than such amount;
(d) THE CLOSING. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place by
telephone conference call commencing at 4:00 p.m. local time on the
earlier of (i) the second business day following the satisfaction or
waiver of all conditions to the obligations of the Parties to
consummate the transactions contemplated hereby (other than conditions
with respect to actions the respective Parties will take at the Closing
itself) or (ii) June 25, 1999 (the "Closing Date"); PROVIDED, HOWEVER,
that the Closing Date may be extended until June 30, 1999, upon mutual
written agreement of the Parties.
(e) DELIVERIES AT THE CLOSING. At the Closing, (i) the
Buyer will deliver to the Seller (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 Seller 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 C; (C) the Assignment and Assumption of
Customer Contracts in the form of Exhibit D (the "Assignment and
Assumption of Customer Contracts"); (D) the Assignment and Assumption
of Supplier Contracts
5
<PAGE>
in the form of Exhibit E (the "Assignment and Assumption of Supplier
Contracts"); 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 may
allocate the Purchase Price (and all other capitalizable costs) among
the Acquired Assets for all purposes (including financial accounting
and tax purposes) in the most tax-efficient manner available to the
Buyer.
(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 Seller
pursuant to this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller
represents and warrants 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"). The Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this
Section 3:
(a) ORGANIZATION OF THE SELLER. The Seller is a
corporation duly organized, validly existing, and in good standing
under the laws of Illinois.
(b) AUTHORIZATION OF TRANSACTION. The Seller has full
power and authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its 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 Seller to perform this
Agreement. This Agreement constitutes the valid and legally binding
obligation of the Seller, 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 Seller is subject or any provision of the articles of
incorporation or bylaws of the Seller 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 Seller is a
party or by which it is bound or to which any of its assets is subject
(or
6
<PAGE>
result in the imposition of any Security Interest upon any of its
assets). The Seller 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.
(d) BROKERS' FEES. The Seller 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 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 Seller 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. To be delivered at least five
(5) days before the Closing Date and attached hereto as Exhibit F are
the following financial statements of the Company (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 calendar years ended December 31 1998
(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 period ended May
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 Acquired Assets of the Seller.
(h) UNDISCLOSED LIABILITIES. The Seller has no Liability
with respect 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.
7
<PAGE>
(i) LEGAL COMPLIANCE. The Seller has 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), with respect 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 Seller will 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 will exist
for any unpaid Taxes relative to the Acquired Assets prior to the
Closing.
(k) REAL PROPERTY. The Acquired Assets do not include any
real property or any interest therein.
(l) INTELLECTUAL PROPERTY. The Seller owns or has 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) FIXED ASSETS. The Seller owns all fixed assets set
forth in Exhibit A-3 (the "Fixed Assets"). Each such Fixed 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 the Seller 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. The Seller (i) is not subject to any
outstanding injunction, judgment, order, decree, ruling, or charge,
relative to the Acquired Assets, nor (ii) is it a party or, to the
Knowledge of the Seller, 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 Seller does 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.
8
<PAGE>
(q) WARRANTIES. No product or service sold, leased, or
delivered by the Seller with respect to the Acquired Assets is subject
to any guaranty, warranty, or other indemnity.
(r) GUARANTIES. The Seller is not 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 the Seller with respect
to the Acquired Assets. None of the State PUC Authorizations or the FCC
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 Buyer and the Seller
understands that (i) certain of the Buyer 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 Seller is
acquiring the Buyer Shares solely for its own account for investment
purposes, and not with a view to the distribution thereof (except to
the shareholders of the Seller); (iii) the Seller is a sophisticated
investor with knowledge and experience in business and financial
matters; (iv) the Seller has received certain information concerning
the Buyer and has 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 Seller is able to bear the economic
risk and lack of liquidity inherent in holding the Buyer Shares; (vi)
the Seller together with its 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; (vii) notwithstanding the foregoing, the
Seller shall be entitled to rely on the representations and warranties
made by the Buyer as set forth herein and nothing herein shall limit or
diminish the Seller's rights to such representations and warranties;
and (viii) the Seller is an Accredited Investor.
(u) 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 Seller 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).
9
<PAGE>
(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 its incorporation.
(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/NASDAQ. The Buyer has filed all required
reports, schedules, forms, statement 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 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. The Buyer Shares are listed
on the NASDAQ Stock Market.
(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.
(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 Seller could become liable or obligated.
10
<PAGE>
(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.
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 Seller will give any
notices to third parties, and the Seller will use its 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 any further filings that may be necessary, proper, or
advisable in connection therewith.
(c) OPERATION OF THE ACQUIRED ASSETS. The Seller will not
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 Seller 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 Seller 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 Seller, to all of the Seller's 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.
11
<PAGE>
(g) EXCLUSIVITY. Until the Closing Date, as it may be
extended pursuant to Section 2(d) above, the Seller will not (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
the Seller (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.
The Seller will notify the Buyer immediately if any Person makes any
proposal, offer, inquiry, or contact with respect to any of the
foregoing.
(h) LEGEND. The Buyer and the Seller covenant and agree
that seventy percent (70%) of the Buyer Shares will bear the following
legend until the Buyer Shares are registered pursuant to Section
2(b)(iv) 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 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. D/B/A RMI.NET.
(i) REGISTRATION RIGHTS AGREEMENT. The Buyer shall agree,
and upon any distribution of the Buyer Shares to the Seller, the Seller
shall agree to become a party to and be bound by a Registration Rights
Agreement in the form attached hereto as Exhibit J (the "Registration
Rights Agreement"), setting forth the terms of ownership of the Buyer
Shares; PROVIDED, HOWEVER, that except as provided in Section 2(b)(iv)
hereof the Seller receiving the Buyer Shares shall not be entitled to
any demand registration rights.
6. CONDITIONS TO OBLIGATION TO CLOSE.
12
<PAGE>
(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:
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 Seller 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 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) affect adversely the
right of the Buyer to own the Acquired Assets, to operate the
Acquired Assets (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect);
iv. the Seller and the Buyer shall have entered
into the Assignment and Assumption of Customer Contracts;
v. the Seller and the Buyer shall have entered
into the Assignment and Assumption of Supplier Contracts;
vi. the Seller shall have delivered to the Buyer
the Bill of Sale;
vii. the Seller 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 Seller shall have delivered to the Buyer
a certificate to the effect that each of the conditions
specified above in Section 6(a)(i)-(iii) is satisfied in all
respects;
ix. the Buyer shall have received from counsel
to the Seller an opinion in form and substance as set forth in
Exhibit H attached hereto, addressed to the Buyer, and dated
as of the Closing Date;
x. at its discretion, the Buyer shall have
entered into agreements with the Seller's underlying carrier
is QST and AmeriTech, relative to the commercialization of the
Acquired Assets, on terms and conditions reasonably acceptable
to the Buyer, to provide and receive
13
<PAGE>
services, commensurate with the services provided and received
by the Seller in connection with the Acquired Assets as of the
date of this Agreement, from and after the Closing;
xi. the Buyer shall have completed and shall be
satisfied with its due diligence examination of the Seller;
xii. the Buyer's board of directors shall have
approved this Agreement; and
xiii. all actions to be taken by the Seller 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 SELLER. The
obligation of the Seller 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, or (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);
iv. the Seller and the Buyer shall have entered
into the Assignment and Assumption of Customer Contracts;
v. the Seller and the Buyer shall have entered
into the Assignment and Assumption of Supplier Contracts;
14
<PAGE>
vi. the Buyer shall have delivered to the Seller
a certificate to the effect that each of the conditions
specified above in Section 6(b)(i)-(iii) is satisfied in all
respects;
vii. the Seller shall have received from counsel
to the Buyer an opinion in form and substance as set forth in
Exhibit H attached hereto, addressed to the Seller, and dated
as of the Closing Date;
viii. the Seller's board of directors shall have
approved this Agreement; and
ix. 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 Seller.
The Seller may waive any condition specified in this Section 6(b) if it
executes 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 Seller at any time prior to the
Closing (A) in the event the Seller has breached any material
representation, warranty, or covenant contained in this
Agreement in any material respect, the Buyer has notified the
Seller of the breach, and the breach has continued without
cure for a period of fifteen (15) days after the notice of
breach, or (B) if the Closing shall not have occurred on or
before June 17, 1999 (or such later date, if extended pursuant
to Section 2), 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 Seller 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 Seller has 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 (B) if the Closing shall not have occurred on or before
June 17, 1999 (or such later date, if extended pursuant to
Section 2), by reason of the failure of any condition
15
<PAGE>
precedent under Section 6(b) hereof (unless the failure
results primarily from the Seller itself breaching any
representation, warranty, or covenant contained in this
Agreement).
(b) EFFECT OF TERMINATION. Notwithstanding the
termination of this Agreement, the confidentiality provisions of this
Agreement shall survive.
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 Seller acknowledges and agrees
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
Seller and its shareholders 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 Seller nor its shareholders
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 the Seller from maintaining the same
business relationships with the Buyer after the Closing as it
maintained with the Seller prior to the Closing. Each of the Seller and
its shareholders will refer all customer inquiries relating to the
business of the Seller to the Buyer from and after the Closing.
(d) CONFIDENTIALITY. The Seller shall, and shall cause
its shareholders to, treat and hold as such all of the Confidential
Information, refrain from using
16
<PAGE>
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 the Seller or any of its shareholders
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, that the Seller 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, either the Seller or its shareholders are, on
the advice of counsel, compelled to disclose any Confidential
Information to any tribunal or else stand liable for contempt, the
Seller or its shareholders may disclose the Confidential Information to
the tribunal; PROVIDED, HOWEVER, that the Seller and its shareholders
shall use its 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. Except as set forth below,
for a period of two (2) years from and after the Closing Date, the
Seller (including any subsidiaries or divisions of the Seller) and the
Seller Principals agree not to engage directly or indirectly in any
business that offers dial-up internet access, dedicated internet access
and web-hosting to third parties in any geographic area in which the
Seller conducts such business as of the Closing Date; PROVIDED,
HOWEVER, that
i. with respect to Hal Baylor, the application
of the above restrictions shall be limited to one (1) year and
to a one-hundred (100) mile radius around Peoria, Illinois;
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;
iii. the Seller's providing (A) dial-up internet
access, dedicated internet access, and/or web hosting for
itself; and/or (B) interim web hosting on a staging server for
third parties as a part of the Seller's ongoing internet
consulting, design, and application development business,
shall not be deemed to be business activities in contravention
hereof and, therefore, shall not constitute a breach of the
non-competion covenant set forth in this Section 8(e);
iv. the Seller Principals may obtain employment
from an entity that, as part of its overall business, provides
dial-up internet access,
17
<PAGE>
dedicated internet access and web-hosting to third parties,
so long as the Seller Principals do not participate in those
aspects of the entity's business; and
v. 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 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 Seller shall use its best
efforts to procure, and assist the Buyer in procuring, all of the
consents of QST and AmeriTech and any other 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 Seller 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 Buyer makes
a written claim for indemnification against the Seller within
such survival period, then the Seller agrees 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.
ii. In the event the Seller 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 Buyer makes
a written claim for indemnification against the Seller within
such survival period, then the Seller agrees 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).
18
<PAGE>
iii. The Seller agrees 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 Seller.
iv. The Seller agrees 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 Seller (A)
for Taxes of the Seller with respect to any Tax year or
portion thereof ending on or before the Closing Date, and (B)
for the unpaid Taxes of any Person (other than the Seller)
under Reg. Section1.1502.6 (or any similar provision of sate,
local, or foreign law), as a transferee or successor, by
contract, or otherwise.
v. The Seller agrees 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 Seller in
relation to the termination of any of the Seller's employees
who are not employed by the Buyer.
vi. The Seller 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.
vii. Notwithstanding anything contained herein to
the contrary, the Seller 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.
viii. At the Seller's sole option, the Seller may
elect to discharge all or any portion of any claim by the
Buyer against the Seller arising under this Agreement
(including a claim for indemnification for which the Seller is
liable under this Section 8) with the Buyer Shares with the
value of such Buyer Shares for this purpose deemed to be the
value thereof used in setting the Purchase Price under Section
2 hereof. For example, if Seller owes Buyer $20,000 for an
indemnification claim and the value of Buyer Shares for
purposes of Section 2 was $20/share, Seller (at its sole
option) may discharge this obligation by transferring 1,000
Buyer Shares to Buyer (even if the Buyer Shares at that time
of discharge have a value less than $20/share or no value).
(i) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SELLER.
19
<PAGE>
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 Seller makes
a written claim for indemnification against the Buyer within
such survival period, then the Buyer agrees to indemnify the
Seller from and against the entirety of any Adverse
Consequences the Seller 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 Seller
from and against the entirety of any Adverse Consequences the
Seller and its shareholders may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the
Seller's operation of the Acquired Assets after the Closing.
iii. The Buyer shall not have any Liability to
the Seller for any Adverse Consequences set forth in this
Section 8(i) to the extent that such Adverse Consequences are
covered by insurance of the Seller.
iv. Notwithstanding anything contained herein to
the contrary, the Seller 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.
v. In no event shall the liability of the Buyer
pursuant to this Section 8(i) exceed the current market value
of the Buyer's Shares provided to the Seller at the Closing
pursuant to Section 2 above.
(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. (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
20
<PAGE>
that the Indemnifying Party will indemnify the Indemnified
Party from and against the entirety of any Adverse
Consequences the Indemnified Party may suffer resulting from,
arising out of, relating to, in the nature of, or caused by
the Third Party Claim, (B) the Indemnifying Party provides the
Indemnified Party with evidence reasonably acceptable to the
Indemnified Party that the Indemnifying Party will have the
financial resources to defend against the Third Party Claim
and fulfill its indemnification obligations hereunder, (C) the
Third Party Claim involves only money damages and does not
seek an injunction or other equitable relief, (D) settlement
of, or an adverse judgment with respect to, the Third Party
Claim is not, in the good faith judgment of the Indemnified
Party, likely to establish a precedential custom or practice
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 LIABILITY. Notwithstanding the
provisions of Section 8(h), through 8(j) above, and Section 8(l) below,
neither Party shall be obligated to indemnify or pay damages to the
other Party or Parties, as the case may be, from and against any
Adverse Consequences arising from or related to this Agreement (A)
until such Party or Parties have suffered Adverse Consequences in
excess of $10,000 in the aggregate (after which point the Indemnifying
Party or Parties will be obligated only to indemnify or pay damages to
the indemnified Party or Parties for, from and against further Adverse
Consequences), or (B) to the extent that such Adverse Consequences
arising from or related to this Agreement exceed the Purchase Price;
PROVIDED, HOWEVER, that (i) neither Party shall be entitled to recover
from the other Party or Parties, as the case may be, damages for
Adverse Consequences, whether under this Section 8 or otherwise, in
excess of the Purchase Price; and (ii) any claims brought by a Party
against another Party or Parties for fraud shall not be subject to
the foregoing limitations.
(l) CERTAIN CONTRACTS. The Seller shall remain obligated
in all respects under the certain contracts relating to the Acquired
Assets, as described in
21
<PAGE>
Schedule 3(c) of the Disclosure Schedule (the "Asset Contracts"),
unless and until the Seller obtains the necessary consents to assign
such Asset Contracts to the Buyer. Upon receipt of such consents, the
Asset Contracts will automatically be deemed to be assigned to the
Buyer pursuant to the terms and conditions of the Assignment and
Assumption Agreements described in Section 2(e) above. Without limiting
the foregoing, until such consents have been received, the Seller shall
make, when due, all payments required under the Asset Contracts (the
"Contract Payments"); PROVIDED, HOWEVER, that until such consents have
been received, the Buyer shall pay to the Seller an amount equal to
each of the Contract Payments no later than five (5) days prior to
the date such Contract Payment is due under the Asset Contracts. In
order to facilitate the Buyer's ability to timely make such payments
to the Seller, the Seller shall provide the Buyer at the Closing with
a document setting forth the Contract Payments due under each of the
Asset Contracts, as well as the dates such Contract Payments are due
for the remainder of each of the Asset Contracts. In the event that
the Asset Contracts cannot be assigned or are canceled, the Seller
shall not be liable or held responsible for such non-assignment or
cancellation.
9. 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)
22
<PAGE>
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).
(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 SELLER:
CyberDesic Communications Corporation
124 SW Adams, Suite 400
Peoria, IL 61602
Attention: Hal J. Baylor
COPY TO:
Elias, Meginnes, Riffle & Seghetti, P.C.
416 Main Street, Suite 1400
Peoria, Illinois 61602
Attention: John S. Elias
IF TO THE BUYER:
Rocky Mountain Internet, Inc.
999 18th Street, 22nd Floor
Denver, Colorado 80202
Attention: Mr. Douglas H. Hanson, Chairman & CEO
COPY TO:
Rocky Mountain Internet, Inc.
23
<PAGE>
999 18th Street, 22nd Floor
Denver, Colorado 80202
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(i). 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
24
<PAGE>
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. If the Buyer makes any claim based
upon the alleged intentional fraud or willful misconduct of the Seller
or its shareholders and such claim is not found by the arbitrator(s)
to be valid or proven, the Buyer shall pay the costs of the Seller or
its shareholders incurred in connection with such arbitration
proceeding (including reasonable attorneys fees).
(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 Seller. 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 Seller will bear
its own costs and expenses (including legal fees and expenses) incurred
in connection with this Agreement and the transactions contemplated
hereby.
(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
25
<PAGE>
that there exists another representation, warranty, or covenant
relating to the same subject matter (regardless of the relative
levels of specificity) which the Party has not breached shall not
detract from or mitigate the fact that the Party is in breach of the
first representation, warranty, or covenant.
(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(j) above), in addition to any other remedy to
which it may be entitled, at law or in equity.
*****
26
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
ROCKY MOUNTAIN INTERNET, INC.
By:
------------------------------------
Douglas H. Hanson, Chairman and CEO
CYBERDESIC COMMUNICATIONS CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
THE FOLLOWING INDIVIDUALS ARE EXECUTING THIS AGREEMENT FOR PURPOSES OF
SECTION 8(e) ONLY, AND ONLY INSOFAR AS SECTION 8(e) APPLIES TO THEIR PERSONAL
CONDUCT:
- ---------------------------------------
James R. BeBord, M.D.
- ---------------------------------------
Kevin Giovanetto
- ---------------------------------------
Hal Baylor
GUARANTEE:
The undersigned, James R. DeBord, M.D., majority shareholder of the
Seller, hereby guarantees all of the Seller's obligations under Section 8 of
this Agreement effective as of the date first above written.
----------------------------------
James R. DeBord, M.D.
27
<PAGE>
EXHIBIT A
ACQUIRED ASSETS
"Acquired Assets" means all right, title, and interest of the Seller in and
to the Seller's IAO Business, including but not limited to the following
assets used by the Seller in the IAO Business: (a) all dial-up internet
access, dedicated internet access and web hosting customer contract rights
and customer lists of the Seller, including, without limitation, those listed
on Exhibit A-1 attached hereto ("Customer Contracts"); (b) all of the
Seller's rights to the name "Interaction Online"; (c) all of the Seller's
rights to logs, records, reports and documents attributed to the Customer
Contracts; (d) all supplier contracts of Seller used to support the Customer
Contracts, including, without limitation, those listed on Exhibit A-2
attached hereto ("Supplier Contracts"); (e) all fixed assets of the Seller
which are specifically listed on Exhibit A-3 attached hereto ("Fixed Assets")
and (f) all inventory of the Seller which is specifically listed on Exhibit
A-4 attached hereto ("Inventory"). Notwithstanding anything to the contrary,
the Acquired Assets do not include (i) any rights to the name "CyberDesic
Communications Corporation" and all derivatives thereof and/or (ii) any other
assets and rights used in or relating to any business or activities of the
Seller (other than the IAO Business), including, without limitation, Seller's
internet consulting, design and application development business.
For purposes of this Exhibit A, the term "IAO Business" shall mean the
Seller's business of providing internet dial-up access, dedicated internet
access and web hosting to third parties; provided, however, that the IAO
Business does not include the Seller's providing (i) dial-up internet access,
dedicated internet access, and/or web hosting for itself and/or (ii) interim
web hosting on a staging server for third parties as a part of the Seller's
internet consulting, design, and application development business.
28
<PAGE>
Exhibit 20.1
RMI.NET ACQUIRES ISP ASSETS OF ILLINOIS-BASED CYBERDESIC
COMMUNICATIONS; PURCHASE EXPANDS COMPANY'S PRESENCE IN NORTH CENTRAL
ILLINOIS MARKETPLACE
DENVER, June 28 /PRNewswire/ -- RMI.NET, Inc. (Nasdaq: RMII), formerly Rocky
Mountain Internet (RMI), a national e-business and convergent communications
company, announced today the acquisition of the Internet service provider
(ISP) assets of Peoria, Ill.-based CyberDesic Communications, Inc. The ISP
assets, including the customer base, were acquired for $570,000 in common
stock and have projected revenue run rates in excess of $385,000 for 1999.
This is RMI's second acquisition in the central Illinois area. RMI announced
in February, 1999 the acquisition of Dave's World, a full service Internet
communications provider based in Bloomington, Ill. This acquisition augments
Dave's World operations in Peoria and the central Illinois region.
"Our acquisition of CyberDesic's customer base of dedicated access and
hosting greatly strengthens our position in Illinois and our existing
operations in Bloomington," said Douglas H. Hanson, chairman and chief
executive officer for RMI.NET. "The addition of these assets is in keeping
with our geographic expansion plans and our strategic efforts to expand
RMI.NET's national presence."
"We are pleased to have a company with such an excellent reputation as
RMI.NET acquire these assets. Our customers will be well served," said Hal J.
Baylor, president of InterAction Online, the subsidiary of CyberDesic that
owns the assets. "We have provided quality service to our customers over the
years, and we know that RMI.NET will continue that tradition and expand on it
by providing a host of new e-commerce services to our market."
The acquisition marks the fifth major move by RMI in the past two weeks as it
continues to fulfill its promised, aggressive growth strategy in 1999. The
company also recently acquired Internet Connect, a Salt Lake City-based ISP;
IdealDial, a Denver-based enhanced telecommunications services provider;
Colorado Mountain Net, a Steamboat Springs, Colo.-based ISP; and
CommerceGate, a Seattle-based Internet e-commerce software development and
consulting services company.
RMI.NET, formerly Rocky Mountain Internet, is a Denver-based e-business and
convergent communications company focused on providing a single-source
network of Internet and telecommunication solutions for small to medium-size
businesses, small office/home offices (SOHOs) and consumer households. RMI
possesses the full spectrum of tools needed to effect the realization of
e-business and converging communications -- from commerce-enabled web design,
hosting and marketing to dial-up and dedicated Internet access and local,
long-distance and IP telephony. RMI also wholly owns a proprietary portal
site and search engine, Infohiway, at www.infohiway.com. For more information
call 1-800-864-4327, or visit our 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, 1997, and other
risks as set forth in the company SEC filings.
/CONTACT: Mark Stutz of RMI.NET, Inc., 303-313-0672, [email protected]/
