<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 17, 1999
SKYNET HOLDINGS, INC.
---------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 0-25229 65-0861800
- ----------------- ------- ----------
(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification No.)
incorporation)
</TABLE>
343 South Glasgow Avenue
Inglewood, CA 90301
-------------------------------------
(Address of principal executive office)
Registrant's telephone number, including area code: (310) 642-7776
--------------
________________________________________________________________________________
(Former name or former address, if changed since last report)
<PAGE>
ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS
Acquisition of Pony Express Delivery Services, Inc.
- ---------------------------------------------------
On June 17, 1999, SkyNet Holdings, Inc. (the "Company") acquired all of the
issued and outstanding common stock of Pony Express Delivery Services, Inc., a
Delaware corporation ("Pony Express"). The acquisition of Pony Express was made
pursuant to a Stock Purchase Agreement dated as of May 27, 1999 (the
"Agreement"), by and among the Company, Pony Express Delivery Services, Inc., a
Delaware corporation ("PX"), Mustang Holdings, Inc., a Kansas corporation,
("Mustang"), Greenstreet Pony Partners, LLC ("GPP"), a Missouri limited
liability company, Mustang Investment Partners ("MIP" and, collectively with
GPP, the "Mustang Stockholders"), a Kansas limited liability company; C.M.
"Connie" Carson and Diana Carson, as Trustees of the Carson Family Trust (the
"Carson Trust") and Richard L. Williams ("Williams").
As consideration for the purchase of the Pony Express common stock acquired
from Mustang, the Company issued 600,000 shares of its common stock, par value
$0.0001 per share, to Mustang, 390,000 shares of which (the "Escrow Shares")
were deposited into escrow as additional security for Mustang's indemnification
obligations under the Agreement. One-half of the Escrow Shares held by the
escrow agent and not subject to pending indemnification claims on June 17, 2000
are to be released at that time to Mustang, and the remainder of the Escrow
Shares, less shares held for indemnification claims pending at the time, are to
be released on December 17, 2000.
In consideration for the forgiveness of certain indebtedness of Pony
Express to GPP, MIP, the Carson Trust and Williams, the Company issued an
aggregate of $6,790,464 in stated value of its newly-issued Series B Convertible
Preferred Stock (the "Series B Preferred"). The holders of Series B Preferred
will be entitled to receive, prior to the payment of dividends or any other
distributions on any of the Company's common stock or Series A Convertible
Preferred Stock, preferred dividends which will begin to accrue at a rate of 6%
of the stated value of the Series B Preferred commencing December 17, 2000,
which dividend rate will increase to 8% on December 17, 2001, 10% on December
17, 2002 and 12% on December 17, 2003 and thereafter. The Series B Preferred is
convertible into shares of the Company at a conversion price of $8.00 in stated
value of Series B Preferred for each share of common stock (the "Conversion
Price"), which price is subject to adjustment upon the occurrence of certain
events.
The holders of the Series B Preferred are also entitled to a liquidation
preference pursuant to which the Corporation is required to pay to the holders
of Series B Preferred upon the liquidation of the Company an amount equal to (i)
the aggregate stated value of Series B Preferred held by such holder, plus (ii)
all accrued and unpaid dividends on such Series B Preferred as of the date of
liquidation, prior to any distributions to any other holder of the Company's
common stock or the Company's Series A Convertible Preferred Stock.
The Corporation has the right to redeem the Series B Preferred by giving
fifteen (15) days' written notice (the "Redemption Notice") to all holders
-----------------
thereof. Following receipt of a Redemption Notice, all holders of the Series B
Preferred have the right to convert their shares of Series B Preferred into
common shares of the Company.
2
<PAGE>
If at any time when any Series B Preferred is outstanding the Corporation
offers to the public, on an underwritten basis for its own account, any newly-
issued debt or equity securities (an "Underwritten Offering"), holders of Series
---------------------
B Preferred who were issued in excess of $600,000 in original aggregate stated
value of Series B Preferred have the right, subject to certain provisions, to
require the Company to use the proceeds of the Underwritten Offering to redeem
all or part of such holder's Series B Preferred Stock.
The Company has the right to require the holders of the Series B Preferred
to convert the Series B Preferred and all accrued and unpaid dividends thereon
to common stock in the event the average closing price of the Company's common
stock (if such stock is traded on a national securities exchange or the
NASDAQ/NMS) or the closing bid price of the common stock (if traded over-the-
counter (other than NASDAQ/NMS)) for any period of ten consecutive trading days
is equal to or exceeds 200% of the then-effective Conversion Price. The
Company's right to cause the holders of the Series B Preferred to convert their
holdings to common stock is subject to the requirement that the common stock
into which the Series B Preferred is to be converted be registered for resale on
a then-effective registration statement filed under the Securities Act of 1933
(the "Securities Act").
The Company has also entered into a Registration Rights Agreement as of
June 17, 1999 with Mustang, GPP, MIP, the Carson Trust and Williams granting
those parties certain rights respecting the registration of the common stock
issued to Mustang (the "Mustang Shares") and the common stock into which the
Series B Preferred issued to GPP, MIP, the Carson Trust and Williams is
convertible (the "Conversion Shares"). Subject to certain limitations, the
Mustang Shares are eligible for inclusion on registration statements filed by
the Company under the Securities Act at any time following June 17, 2000
registering newly-issued common stock to be sold by or on behalf of the Company
for its own account. The inclusion of the Mustang Shares on such registrations
is subject to customary rights of underwriters to exclude such shares from
underwritten offerings. The Company has also agreed to file a registration
statement not later than June 17, 2000 (the first anniversary of the Closing
Date) to register the resale of the Conversion Shares.
As part its acquisition of Pony Express, the Company entered into a
Guaranty Agreement for the benefit of NationsCredit Commercial Corporation
("NationsCredit") in support of Pony Express' obligations to NationsCredit under
a Loan and Security Agreement dated as of May 28, 1998 (the "Pony Loan
Agreement"). The Company also caused one its wholly-owned subsidiaries to make
certain of its accounts receivable available to NationsCredit as additional
receivables against which Pony Express may borrow from time to time and as
additional obligations of Pony Express under the Pony Loan Agreement.
In connection with the completion of the transaction, the Company also
issued 500,000 warrants exercisable for a period of three years from the date of
issuance to purchase shares of the Company's Common Stock at a price of $5.00
per share (subject to adjustment) to an unaffiliated financial advisory firm for
advisory services provided in conjunction with the acquisition of Pony Express.
Pony Express and its wholly-owned subsidiary, Courier Express, Inc. operate
time-sensitive package, product and document delivery services from
approximately 100 locations in 22 states throughout the United States. Pony
Express' and Courier Express' operations include same day customized product
delivery services for manufacturers and distributors, routed delivery services
for financial institutions and specialized "on call" services for customers with
time-sensitive pick-up and delivery requirements.
3
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Acquired Business
-----------------------------------------
It is impracticable at the time of the filing of this Current Report
to provide the historical financial information for Pony Express required by
Regulation S-X. Accordingly, the Company will file the required historical
financial statements under cover of an Amendment to this Current Report on Form
8-K as soon as practicable, but in any event, not later than 60 days after the
date on which this Current Report must be filed with the Commission.
(b) Pro Forma Financial Statements of Businesses
--------------------------------------------
It is impracticable at the time of the filing of this Current Report
to provide the pro forma financial information for Pony Express required by
Regulation S-X. Accordingly, the Company will file the required pro forma
financial statements under cover of an Amendment to this Current Report on Form
8-K as soon as practicable, but in any event, not later than 60 days after the
date on which this Current Report must be filed with the Commission.
(c) Exhibits
--------
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number
(Referenced to
Item 601 of Reg.
S-K)
----------------
<S> <C>
2.1 Stock Purchase Agreement dated as of May 27, 1999 by and among SkyNet
Holdings, Inc., Pony Express Delivery Services, Inc., Mustang
Holdings, Inc., Greenstreet Pony Partners, LLC, Mustang Investment
Partners, LLC, C.M. "Connie" Carson and Diana Carson, as Trustees of
the Carson Family Trust, and Richard L. Williams.
2.2 Amendment No. 1 to Stock purchase Agreement dated as of June 17, 1999.
4.1 Certificate of Designation of Series B Convertible Preferred Stock
</TABLE>
4
<PAGE>
SIGNATURES
----------
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 thereunto duly authorized.
Dated: July 1, 1999 SKYNET HOLDINGS, INC.
BY: /s/ Vjekoslav Nizic
----------------------
Vjekoslav Nizic
Chief Executive Officer
5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number
(Referenced
to Item 601
of Reg. S-K)
- ------------
<S> <C>
2.1 Stock Purchase Agreement dated as of May 27, 1999 by and among SkyNet
Holdings, Inc., Pony Express Delivery Services, Inc., Mustang Holdings, Inc.,
Greenstreet Pony Partners, LLC, Mustang Investment Partners, LLC, C.M.
"Connie" Carson and Diana Carson, as Trustees of the Carson Family Trust, and
Richard L. Williams
2.2 Amendment No. 1 to Stock purchase Agreement dated as of June 17, 1999
4.1 Certificate of Designation of Series B Convertible Preferred Stock
</TABLE>
6
<PAGE>
EXHIBIT 2.1
================================================================================
STOCK PURCHASE AGREEMENT
by and among
SKYNET HOLDINGS, INC.,
PONY EXPRESS DELIVERY SERVICES, INC.,
MUSTANG HOLDINGS, INC.,
GREENSTREET PONY PARTNERS, LLC,
MUSTANG INVESTMENT PARTNERS
C.M. "CONNIE" CARSON AND DIANA CARSON,
AS TRUSTEES OF THE CARSON FAMILY TRUST,
and
RICHARD L. WILLIAMS
Dated as of May 27, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
----
<S> <C>
1. SALE AND TRANSFER OF SHARES1
1.1 Sale and Purchase of the Shares.............................................................................. 1
1.2 Consideration................................................................................................ 1
1.3 Escrow Shares................................................................................................ 2
2. CLOSING........................................................................................................... 2
2.1 Closing Date................................................................................................. 2
2.2 Closing Transactions......................................................................................... 2
2.3 Issuance of SkyNet Series B Preferred Stock to the Mustang Stockholders, the Carson Trust and Williams....... 5
2.4 Payment on Account of Cancellation of Management Agreements.................................................. 5
2.5 No Further Ownership Rights in Shares of PX Stock............................................................ 6
2.6 Taking of Necessary Action; Further Action................................................................... 6
3. REPRESENTATIONS AND WARRANTIES OF PX AND THE STOCKHOLDER.......................................................... 6
3.1 Organization of PX........................................................................................... 6
3.2 Authorization................................................................................................ 6
3.3 Capitalization of PX......................................................................................... 7
3.4 Authorization of PX.......................................................................................... 7
3.5 Officers and Directors....................................................................................... 7
3.6 Bank Accounts................................................................................................ 7
3.7 Subsidiaries................................................................................................. 7
3.8 Real Property................................................................................................ 8
3.9 Personal Property............................................................................................ 9
3.10 Environmental Matters........................................................................................ 9
3.11 Contracts.................................................................................................... 11
3.12 No Conflict or Violation; Consents........................................................................... 12
3.13 Permits...................................................................................................... 12
3.14 Financial Statements; Books and Record....................................................................... 13
3.15 Absence of Certain Changes or Events......................................................................... 13
3.16 Liabilities.................................................................................................. 15
3.17 Litigation................................................................................................... 15
3.18 Labor Matters................................................................................................ 15
3.19 Employee Benefit Plans....................................................................................... 16
3.20 Transactions with Related Parties............................................................................ 19
</TABLE>
i
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
3.21 Compliance with Law............................................................................................ 19
3.22 Intellectual Property.......................................................................................... 19
3.23 Tax Matters.................................................................................................... 20
3.24 Insurance...................................................................................................... 21
3.25 Accounts Receivable............................................................................................ 22
3.26 Purchase Commitments and Outstanding Bids...................................................................... 22
3.27 Customers and Suppliers........................................................................................ 22
3.28 Year 2000 Compliance........................................................................................... 22
3.29 Brokers; Transaction Costs..................................................................................... 23
3.30 No Other Agreements to Sell PX................................................................................. 23
3.31 Material Misstatements or Omissions............................................................................ 23
4. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER....................................................................... 23
4.1 Authorization.................................................................................................. 23
4.2 Organization of Mustang........................................................................................ 24
4.3 No Conflict or Violation; Consents............................................................................. 24
4.4 Ownership of PX Stock; Title................................................................................... 24
4.5 Certain Securities Laws Representations........................................................................ 24
5. REPRESENTATIONS AND WARRANTIES OF THE MUSTANG STOCKHOLDERS.......................................................... 25
5.1 Authorization.................................................................................................. 25
5.2 No Conflict or Violation; Consents............................................................................. 26
5.3 Certain Securities Laws Representations........................................................................ 26
6. REPRESENTATIONS AND WARRANTIES OF THE CARSON TRUST.................................................................. 27
6.1 Existence...................................................................................................... 27
6.2 Authorization.................................................................................................. 27
6.3 No Conflict or Violation; Consents............................................................................. 28
6.4 Absence of Claims.............................................................................................. 28
6.5 Ownership of PX Debenture...................................................................................... 28
7. REPRESENTATIONS AND WARRANTIES OF WILLIAMS.......................................................................... 28
7.1 Execution and Delivery......................................................................................... 29
7.2 No Conflict or Violation; Consents............................................................................. 29
7.3 Absence of Claims.............................................................................................. 29
7.4 Ownership of Williams PX Debenture............................................................................. 29
8. REPRESENTATIONS AND WARRANTIES OF SKYNET............................................................................ 29
</TABLE>
ii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
8.1 Organization.................................................................................................. 30
8.2 Capitalization................................................................................................ 30
8.3 Authorization................................................................................................. 31
8.4 No Conflict or Violation; Consents............................................................................ 31
8.5 Reports and Financial Statements.............................................................................. 31
8.6 Absence of Certain Changes or Events.......................................................................... 32
8.7 Disclosure.................................................................................................... 32
8.8 Litigation.................................................................................................... 32
9. AGREEMENTS OF THE PARTIES........................................................................................... 32
9.1 Conduct of Business........................................................................................... 32
9.2 Investigation by SkyNet....................................................................................... 34
9.3 Notification of Certain Matters; Amendment of Schedules....................................................... 34
9.4 No Purchases, Consolidations, Sale of Stock, Etc.............................................................. 34
9.5 Confidentiality............................................................................................... 35
9.6 Further Assurances............................................................................................ 36
10. CONDITIONS TO PX'S, THE STOCKHOLDER'S, THE MUSTANG STOCKHOLDER'S, THE CARSON TRUST'S AND WILLIAMS' OBLIGATIONS...... 36
10.1 Representations, Warranties and Covenants..................................................................... 36
10.2 Consents...................................................................................................... 37
10.3 No Actions or Court Orders.................................................................................... 37
10.4 Closing Documents............................................................................................. 37
10.5 Opinion of SkyNet Counsel..................................................................................... 37
10.6 Agreement with Holders of SkyNet Series A Preferred Stock..................................................... 37
10.7 Material Adverse Change....................................................................................... 37
10.8 Compliance with Hart-Scott-Rodino Act......................................................................... 37
10.9 Internal Mustang Agreement.................................................................................... 37
10.10 Release of Stockholder's Guaranty of Certain Obligations...................................................... 38
10.11 Release of Williams' Guaranty of Certain Obligations.......................................................... 38
10.12 Release of PX Debenture and the Williams PX Debenture from NationsCredit...................................... 38
11. CONDITIONS TO SKYNET'S OBLIGATIONS.................................................................................. 38
11.1 Representations, Warranties and Covenants..................................................................... 38
11.2 Consents...................................................................................................... 38
11.3 No Actions or Court Orders.................................................................................... 39
</TABLE>
iii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
11.4 Closing Documents............................................................................................. 39
11.5 Due Diligence Review.......................................................................................... 39
11.6 Agreement with NationsCredit.................................................................................. 39
11.7 Exemption under Federal and State Securities Laws............................................................. 39
11.8 Tax Matters................................................................................................... 39
11.9 Compliance with Hart-Scott-Rodino Act......................................................................... 39
11.10 Opinion of PX Counsel......................................................................................... 39
11.11 Agreement with Holders of SkyNet Series A Preferred Stock..................................................... 40
11.12 Release of MIP and GPP Notes, PX Debenture and the Williams PX Debenture from NationsCredit Commercial
Corporation................................................................................................... 40
11.13 Cancellation of Management Agreements......................................................................... 40
11.14 Material Adverse Change....................................................................................... 40
12. INDEMNIFICATION..................................................................................................... 40
12.1 Survival of Representations, Etc............................................................................... 40
12.2 Indemnification................................................................................................ 40
12.3 Limitation; Exclusivity of Escrow Shares as Source of Indemnification by Stockholder and Mustang Stockholders.. 42
12.4 Threshold...................................................................................................... 43
13. RESTRICTIVE COVENANTS............................................................................................... 43
13.1 Non-Competition............................................................................................... 44
13.2 Non-Solicitation of Employees of SkyNet....................................................................... 44
13.3 Non-Solicitation or Interference with Customers and Suppliers of SkyNet....................................... 44
13.4 Acknowledgments............................................................................................... 44
14. DEFINITIONS......................................................................................................... 45
14.1 Defined Terms................................................................................................. 45
14.2 Certain Additional Defined Terms.............................................................................. 51
14.3 Interpretation Provisions..................................................................................... 52
15. MISCELLANEOUS....................................................................................................... 52
15.1 Termination................................................................................................... 53
15.2 Assignment.................................................................................................... 53
15.3 Notices....................................................................................................... 53
15.4 Choice of Law................................................................................................. 55
15.5 Arbitration................................................................................................... 56
</TABLE>
iv
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
15.6 Descriptive Headings.......................................................................................... 56
15.7 Entire Agreement; Amendments and Waivers...................................................................... 56
15.8 Counterparts.................................................................................................. 56
15.9 Invalidity.................................................................................................... 56
15.10 Expenses...................................................................................................... 56
15.11 Publicity..................................................................................................... 57
15.12 No Third Party Beneficiaries.................................................................................. 57
</TABLE>
v
<PAGE>
TABLE OF EXHIBITS
EXHIBIT DESCRIPTION
Exhibit A Escrow Agreement
Exhibit B Registration Rights Agreement
vi
<PAGE>
TABLE OF SCHEDULES
[TO BE UPDATED]
<TABLE>
<CAPTION>
Schedule No. Description
- ------------ -----------
<S> <C>
2.3.1 Issuance of SkyNet Series B Preferred Stock to the Mustang Stockholders
3.1 Qualification of PX as a Foreign Corporation
3.5 Officers and Directors of PX
3.6 Bank Accounts
3.7 Subsidiaries
3.8.2 Owned Real Property
3.8.3 Leased Real Property
3.9.2 Owned Personal Property
3.9.3 Leased Personal Property
3.10 Environmental Matters
3.10.8 Environmental Reports
3.11 Contracts
3.12 PX - No Conflict, Violation; Consents
3.13 Permits
3.14.1 Financial Statements
3.14.4 Banking Matters; Authorized Signatories
3.15.4 Forgiveness of Loans
3.17 Litigation
3.18.1 Labor Agreements
3.18.4 Independent Contractors
3.19 Employee Benefit Plans
3.19.4 Benefit Arrangements; Terminability of Employees
3.20 Transactions with Related Parties
3.22.1 Intellectual Property
3.22.4 Absence of Claims Relating to Intellectual Property
3.23.1 Filing of Tax Returns
3.23.2 Payment of Taxes
3.23.3 Audits, Investigations or Claims
3.23.5 Tax Elections
3.24 Insurance
3.27 Purchase Commitments and Outstanding Bids
3.28 Customers and Suppliers
4.3 Stockholder - No Conflict or Violations; Consents
4.4 Ownership of PX Stock; Title
5.2 Mustang Stockholders - No Conflict or Violation; Consents
6.3 Carson Trust - No Conflict or Violation; Consents
7.2 Williams - No Conflict or Violation; Consents
8.1 SkyNet - Qualification as Foreign Corporation
8.4 SkyNet - No Conflict or Violation; Consents
9.1 Conduct of Business
</TABLE>
vii
<PAGE>
STOCK PURCHASE AGREEMENT dated as of May 27, 1999 (the "Agreement"),
by and among SKYNET HOLDINGS, INC., a Delaware corporation ("SkyNet"), PONY
EXPRESS DELIVERY SERVICES, INC., a Delaware corporation ("PX"), MUSTANG
HOLDINGS, INC., a Kansas corporation, (the "Stockholder"), GREENSTREET PONY
PARTNERS, LLC ("GPP"), a Missouri limited liability company, MUSTANG INVESTMENT
PARTNERS ("MIP" and, collectively with GPP, the "Mustang Stockholders"), a
Kansas limited liability company; C.M. "CONNIE" CARSON AND DIANA CARSON, AS
TRUSTEES OF THE CARSON FAMILY TRUST (the "Carson Trust") and RICHARD L. WILLIAMS
("Williams").
WITNESSETH:
WHEREAS, the Boards of Directors of SkyNet, PX and the Stockholder
have determined that it is advisable and in the best interests of their
respective stockholders for SkyNet, PX and the Stockholder to enter into a
business transaction upon the terms and subject to the conditions set forth
herein;
WHEREAS, in furtherance of such determination, the Boards of Directors
of SkyNet, PX and the Stockholder have each approved the purchase by SkyNet of
all of the issued and outstanding common stock of PX (the "Shares"), upon the
terms and subject to the conditions set forth herein, in accordance with the
applicable provisions of the Delaware General Corporation Law (the "GCL") and
the governing documents of each party hereto; and
WHEREAS, pursuant to this Agreement Stockholder shall receive SkyNet
Common Stock (as defined herein), and the Mustang Stockholders, the Carson Trust
and Williams will receive SkyNet Series B Preferred Stock (as defined herein),
upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the parties hereby agree as follows:
1. SALE AND TRANSFER OF SHARES
1.1 Sale and Purchase of the Shares.
Subject to the terms and conditions of this Agreement, at the
"Closing" (as defined herein), the Stockholder shall sell, assign, transfer,
convey and deliver to SkyNet, and SkyNet shall purchase and accept from
Stockholder, the Shares, in the manner and for the consideration set forth
herein.
1.2 Consideration.
1.2.1 The Stockholder shall deliver to SkyNet good and
sufficient certificates for the Shares, duly assigned in blank, with any
required transfer stamps or taxes paid and affixed thereto and cause the entire
right, title and interest in and to the Shares to be transferred of record to
SkyNet, free and clear of any claim, suit, proceeding, call, commitment, voting
trust, proxy, restriction, limitation, security interest, pledge, lien or
encumbrance of any kind or nature whatsoever, other than restrictions under the
Securities Act of 1933, as amended (the "Act"), or applicable state securities
laws.
1.2.2 In consideration of the delivery of the Shares by the
Stockholder, SkyNet shall deliver to the Stockholder as the purchase price for
the Shares, subject to adjustment as described in
<PAGE>
Section 15.10 hereof and the escrow provision described in Section 1.3 hereof,
certificates representing 600,000 shares (the "Stock Purchase Shares") of the
common stock, par value $0.01 per share, of SkyNet (the "SkyNet Common Stock").
The number of Stock Purchase Shares shall be subject to upward adjustment in the
event the Average Share Price shall be less than $6.00, in which event the
number of shares of SkyNet Common Stock to be issued hereunder shall be adjusted
by multiplying 600,000 by a fraction, the numerator of which shall be $8.00 and
the denominator of which shall be the Average Share Price. The number of Stock
Purchase Shares is subject to further adjustment as set forth in Section 15.10.
1.3 Escrow Shares.
At the Closing, the Stockholder shall deposit into escrow 65% of the
shares of SkyNet Common Stock identified and deliverable under Section 1.2.2
above (390,000 shares in the absence of any adjustment) (the "Escrow Shares").
The Escrow Shares shall serve as the exclusive basis for recovery with respect
to the indemnification obligations of the Stockholder pursuant to this
Agreement. SkyNet and the Stockholder consent to the appointment of StockTrans,
Inc. as the escrow agent (the "Escrow Agent"). The deposit, maintenance and
ultimate disposition of the Escrow Consideration shall be governed by the terms
of an escrow agreement, the form of which is attached hereto as Exhibit A (the
"Escrow Agreement"). As described on Exhibit A, the Escrow Agreement shall
continue for a period of eighteen (18) months from the Closing (the "Escrow
Period") and the number of Escrow Shares will be reduced by one half (and the
balance delivered to Stockholder) twelve (12) months after the Closing (subject
in all cases to the pending claims provisions of the Escrow Agreement).
2. CLOSING.
2.1 Closing Date.
The purchase and sale (the "Closing") provided for in this Agreement
will take place at the offices of PX or at such other place as the parties may
agree at 9:30 a.m. (local time) on the third business day after all conditions
to closing under Sections 10 and 11 have been satisfied or waived, or at such
other time as the parties may agree. The date of the Closing is hereinafter
referred to as the "Closing Date." In no event shall the Closing take place
later than sixty (60) days from the date of this Agreement (the "Termination
Date").
2.2 Closing Transactions.
At the Closing, the following transactions shall occur, all of such
transactions being deemed to occur simultaneously:
2.2.1 The Stockholder will deliver, or shall cause to be
delivered, to SkyNet, the following documents and shall take the following
actions:
2.2.1.1 The Stockholder shall surrender and deliver to
SkyNet the certificate or certificates representing all of the Shares;
2.2.1.2 A certificate (the "Stockholder's Closing
Certificate") shall be executed by the Stockholder to the effect that: (i) all
representations and warranties made by the Stockholder under this Agreement are
true and correct as of the Closing; and (ii) the conditions precedent identified
in Section 10 hereof have been satisfied;
2
<PAGE>
2.2.1.3 A certificate of good standing shall be delivered by
the Stockholder from the Secretary of State of the State of Delaware and
California, dated at or about the Closing, to the effect that PX and the
Subsidiary is in good standing under the laws of the state of such entities'
formation;
2.2.1.4 An incumbency certificate shall be delivered by the
Stockholder signed by all of the officers of PX dated at or about the Closing;
2.2.1.5 A Certified Certificate of Incorporation dated at or
about the Closing and a copy of the Bylaws of the PX certified by the Secretary
of PX dated at or about the Closing shall be delivered by the Stockholder;
2.2.1.6 A Certified Articles of Incorporation dated at or
about the Closing and a copy of the Bylaws of the Subsidiary, certified by the
Secretary of the Subsidiary dated at or about the Closing shall be delivered by
the Stockholder;
2.2.1.7 The Escrow Agreement, in the form of Exhibit A, shall
be executed and delivered by the Stockholder, SkyNet and the Escrow Agent;
2.2.1.8 A registration rights agreement (the "Registration
Rights Agreement"), the form of which is attached hereto as Exhibit B, shall be
executed and delivered by the Stockholder;
2.2.1.9 Each of the officers and directors of PX and the
Subsidiary other than Williams shall have tendered their resignation from such
offices in form and substance satisfactory to SkyNet;
2.2.1.10 The Stockholder shall cause NationsCredit to
surrender and deliver to SkyNet the PX Debenture and the Williams PX Debenture,
marked satisfied;
2.2.1.11 The delivery of an opinion of counsel of the
Stockholder in form and substance satisfactory to SkyNet; and
2.2.1.12 Each of the parties to this Agreement shall have
otherwise executed such documents and agreements, provided such consents or
approvals and taken all actions as are required under this Agreement.
2.2.2 SkyNet will deliver, or shall cause to be delivered, to the
Stockholder, the following documents and shall take the following actions:
2.2.2.1 Subject to subsection 1.3 herein, SkyNet shall deliver
or shall cause to be delivered to the Stockholder a certificate or certificates
representing the SkyNet Common Stock;
2.2.2.2 The Escrow Agreement, in the form of Exhibit A, shall
be executed and delivered by SkyNet;
2.2.2.3 SkyNet shall deliver the Escrow Consideration into
escrow pursuant to the terms of the Escrow Agreement;
2.2.2.4 A certificate (the "SkyNet Closing Certificate") shall
be executed by SkyNet's Chief Executive Officer to the effect that (i) all
representations and warranties of SkyNet under
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this Agreement are true and correct as of the Closing and (ii) the conditions
precedent identified in Section 11 hereof have been satisfied;
2.2.2.5 A certificate of good standing and certified copies of
SkyNet's certificate of incorporation shall be delivered by SkyNet from the
Secretary of the State of Delaware dated at or about the Closing that SkyNet is
in good standing under the laws of said state;
2.2.2.6 Certified board resolutions shall be delivered by
SkyNet dated at or about the Closing authorizing the transactions contemplated
under this Agreement;
2.2.2.7 An incumbency certificate shall be delivered by SkyNet
signed by all of the officers thereof dated at or about the Closing;
2.2.2.8 SkyNet will execute and deliver the Registration
Rights Agreement with the Stockholder, the form of which is attached hereto as
Exhibit B;
2.2.2.9 The delivery of an opinion of counsel of SkyNet in
form and substance satisfactory to the Stockholder; and
2.2.2.10 Each of the parties to this Agreement shall have
otherwise executed such documents and agreements, provided such consents or
approvals and shall have taken all such actions as are required under this
Agreement.
2.2.3 The Carson Trust will deliver, or shall cause to be delivered,
to SkyNet, the following documents and shall take the following actions:
2.2.3.1 The Carson Trust shall execute and deliver the Carson
Trust Release described in Section 2.3.2 hereof;
2.2.3.2 A certificate (the "Carson Trust's Closing
Certificate") shall be executed by the Carson Trust to the effect that: (i) all
representations and warranties made by it under this Agreement are true and
correct as of the Closing; and (ii) the conditions precedent identified in
Section 10 hereof have been satisfied;
2.2.3.3 The Registration Rights Agreement shall be executed
and delivered by the Carson Trust; and
2.2.3.4 An investment letter setting forth the Carson Trust's
investment intent will be executed and delivered by the Carson Trust.
2.2.4 Williams will deliver, or shall cause to be delivered, to
SkyNet, the following documents and shall take the following actions:
2.2.4.1 Williams shall execute and deliver the Williams
Release described in Section 2.3.3 hereof;
2.2.4.2 A certificate (the "Williams Closing Certificate")
shall be executed by Williams to the effect that: (i) all representations and
warranties made by it under this Agreement are true and correct as of the
Closing; and (ii) the conditions precedent identified in Section 10 hereof have
been satisfied;
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2.2.4.3 The Registration Rights Agreement shall be
executed and delivered by Williams; and
2.2.4.4 An investment letter setting forth Williams
investment intent will be executed and delivered by Williams.
2.3 Issuance of SkyNet Series B Preferred Stock to the Mustang
Stockholders, the Carson Trust and Williams.
2.3.1 On the date hereof, each of the Mustang Stockholders shall
execute and deliver a release, in form and substance acceptable to the Mustang
Stockholders and SkyNet, pursuant to which each of the Mustang Stockholders, as
of the Closing, (i) agrees to cancel any indebtedness of PX to either of the
Mustang Shareholders arising from certain promissory notes dated as of September
16, 1998 (the "MIP and GPP Notes") or otherwise, and (ii) forever releases any
and all claims it or any of its Affiliates may have against PX and SkyNet in
connection with or arising out of events occurring on or before the Closing
Date, In consideration of the execution of the Mustang Stockholders' release
described above, SkyNet shall issue to the Mustang Stockholders, in the stated
amounts set forth on Schedule 2.3.1 hereof, SkyNet Series B Preferred Stock
--------------
having a stated value of $3,000,000 plus all accrued interest on such notes as
of the date of this Agreement.
2.3.2 On the date hereof, the Carson Trust shall execute and
deliver a release, in form and substance acceptable to the Carson Trust and
SkyNet, pursuant to which the Carson Trust, as of the Closing, (i) agrees to
cancel any indebtedness of PX to the Carson Trust arising from PX's subordinated
debenture dated September 15, 1998 (the "PX Debenture"), and (ii) forever
releases any and all claims it or any of its Affiliates may have against PX and
SkyNet in connection with or arising out of such subordinated debenture. In
consideration of the execution of the Carson Trust's release described above,
SkyNet shall issue to the Carson Trust SkyNet Series B Preferred Stock having a
stated value of $3,000,000 plus all accrued interest on the PX Debenture as of
the date of this Agreement.
2.3.3 On the date hereof, Williams shall execute and deliver a
release, in form and substance acceptable to Williams and SkyNet, pursuant to
which Williams, as of the Closing, (i) agrees to cancel any indebtedness of PX
to Williams arising from PX's subordinated debenture dated September 15, 1998
(the "Williams PX Debenture"), or otherwise, and (ii) forever releases any and
all claims he or any of his Affiliates may have against PX and SkyNet in
connection with or arising out of events occurring on or before the Closing
Date. In consideration of William's release described above, SkyNet shall issue
to Williams SkyNet Series B Preferred Stock having a stated value of $600,000
plus all accrued interest on the Williams PX Debenture as of the date of this
Agreement.
2.4 Payment on Account of Cancellation of Management Agreements.
SkyNet shall cause PX, as of the Closing Date, to make payments to the
persons and in the amounts set forth on Schedule 2.4 in consideration of the
-------------
cancellation as of the Closing Date of certain agreements between each of Merit
Capital Management, Inc. and GreenStreet Capital, Inc. and PX dated as of May
29, 1998 calling for the provision of management, advisory or administrative
services on behalf of PX or its Subsidiaries. In connection with the
cancellation of such agreements, on or before the Closing Date the parties,
other than PX, to all such agreements shall execute and deliver releases for the
benefit of PX in which such parties forever release any and all claims such
party or any of its Affiliates may have against PX in connection with or arising
out of such agreements on or before the Closing Date
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2.5 No Further Ownership Rights in Shares of PX Stock.
The shares of SkyNet Stock delivered upon the surrender for exchange of PX
Stock in accordance with the terms hereof shall be deemed to have been issued in
full satisfaction of all rights pertaining to such shares of PX Stock, and there
shall be no further registration of transfers of PX Stock which were outstanding
immediately prior to the Closing on the records of PX.
2.6 Taking of Necessary Action; Further Action.
Each of SkyNet, PX, the Stockholder, the Mustang Stockholders, the Carson
Trust and Williams will take all such reasonable action as may be reasonably
necessary or appropriate in order to effect the Stock Purchase in accordance
with this Agreement as promptly as practicable. If, at any time after the
Closing Date, any such further action is reasonably necessary or desirable to
carry out the purposes of this Agreement, to vest SkyNet with full right, title
and possession the Shares, to vest the Stockholder with full right, title and
possession of the Stock Purchase Shares, and to vest the other parties with
shares of SkyNet Series B Preferred Stock issued to them, the officers and
directors of SkyNet, PX and the Stockholder immediately prior to the Closing are
fully authorized in the name of their respective corporations or otherwise to
take, and will take, all such lawful and necessary action.
3. REPRESENTATIONS AND WARRANTIES OF PX AND THE STOCKHOLDER
As an inducement of SkyNet to enter into this Agreement, PX and Stockholder
hereby make, jointly and severally, as of the date hereof and as of the Closing
Date, the following representations and warranties to SkyNet, except as
otherwise set forth in written disclosure schedules (the "Schedules") delivered
---------
to SkyNet prior to the date hereof, a copy of which is attached hereto. Unless
the context would otherwise require, the representations of PX hereunder are
deemed to include representations on the same matter respecting any Subsidiary.
The Schedules are numbered to correspond to the various sections of this Article
3 and set forth certain information described in and exceptions to the
representations and warranties contained in this Article 3 and certain other
information called for by this Agreement. Unless otherwise specified, no
disclosure made in any particular Schedule shall be deemed made in any other
Schedule unless expressly made therein (by cross-reference or otherwise).
3.1 Organization of PX.
PX is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. PX has the requisite corporate power
and authority to conduct its business as it is presently being conducted and to
own or lease, as applicable, the assets owned or leased by it. PX is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which such qualification is necessary under applicable law
as a result of the conduct of its business or the ownership of its properties
and where the failure to be so qualified or in good standing would not have a
Material Adverse Effect on PX. Each jurisdiction in which PX is qualified to do
business as a foreign corporation is set forth on Schedule 3.1.
-----------
3.2 Authorization.
The Stockholder has all necessary power and authority to enter into this
Agreement and the Ancillary Agreements to which it is a party and has taken all
actions necessary to consummate the transactions contemplated hereby and thereby
and to perform its obligations hereunder and thereunder. This Agreement has been
duly executed and delivered by the Stockholder and is, and upon the execution
and delivery thereof each Ancillary Agreement to which it is a party will be, a
valid and binding
6
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obligation of the Stockholder, enforceable against the Stockholder in accordance
with its terms, except that enforceability may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights of creditors or (b) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or in
equity).
3.3 Capitalization of PX.
3.3.1 As of the date of this Agreement, there are 100 shares of PX
Stock authorized under its Certificate of Incorporation, 100 of which are issued
and outstanding. PX has no other capital stock authorized, issued or
outstanding. Stockholder is the only holder of issued and outstanding PX Stock.
3.3.2 There are no outstanding options, warrants, convertible
securities or rights of any kind to purchase or otherwise acquire any shares of
capital stock or other securities of PX.
3.3.3 All outstanding shares of PX Stock are validly issued, fully
paid and non-assessable and not subject to any preemptive rights created by
statute, PX's Certificate of Incorporation or Bylaws or any Contract. The
shares of PX Stock have been issued in compliance with all federal and state
corporate and securities laws.
3.3.4 Other than the transactions contemplated by this Agreement,
there is no outstanding vote, plan, pending proposal or right of any Person to
cause any redemption of PX Stock or the Stock Purchase or consolidation of PX
with or into any other entity.
3.4 Authorization of PX.
PX has all necessary power and authority to enter into this Agreement and
the Ancillary Agreements to which it is a party and has taken all actions
necessary to consummate the transactions contemplated hereby and thereby and to
perform its obligations hereunder and thereunder. This Agreement has been duly
executed and delivered by PX and is, and upon the execution and delivery thereof
each Ancillary Agreement to which it is a party will be, a valid and binding
obligation of PX, enforceable against PX in accordance with its terms, except
that enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors or (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
3.5 Officers and Directors.
Schedule 3.5 contains a true, correct and complete list of all the officers
------------
and directors of PX.
3.6 Bank Accounts.
Schedule 3.6 contain a list true, correct and compete of all of PX's bank
------------
accounts, safe deposit boxes, and persons authorized to draw thereon or have
access thereto.
3.7 Subsidiaries
Schedule 3.7 contains a list true, correct and compete of all Persons in
------------
which PX holds an equity or voting interest and, where such interest represents
less than all of the equity and voting interest in such Person, the percentage
of equity and/or voting interest held in such Person.
7
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3.8 Real Property.
3.8.1 General. PX owns or leases all real property necessary for the
-------
conduct of its business as presently conducted.
3.8.2 Owned Real Property. Schedule 3.8.2 contains a list of all
------------------- --------------
real property owned by PX ("Owned Property"). PX has good and valid fee title
to, and enjoys peaceful and undisturbed possession of, all Owned Property, free
and clear of any and all Encumbrances created by PX other than any Permitted
Encumbrances, and provided that PX has entered into, or intends to enter into,
contracts to sell the Owned Property. With respect to each such parcel of Owned
Property (i) there are no pending or threatened condemnation proceedings
relating to such Owned Property or any portion thereof, (ii) neither PX nor
third party has entered into any sublease, license, option, right, concession or
other agreement or arrangement, written or oral, granting to any person the
right to use or occupy such Owned Property or any portion thereof or interest
therein (other than the sale contracts described above) and (iii) PX has not
received notice of any pending or threatened special assessment relating to such
Owned Property or otherwise have any knowledge of any pending or threatened
special assessment relating thereto. Each Facility located on Owned Property is
supplied with utilities necessary for the operation of such Facility as
currently conducted.
3.8.3 Leased Real Property.
--------------------
3.8.3.1 Schedule 3.8.3 sets forth all leases pursuant to which
--------------
Facilities are leased by PX (as lessee), true and correct copies of which have
been made available to SkyNet. Such leases constitute all leases, subleases or
other occupancy agreements pursuant to which PX occupies or uses Facilities. PX
has good and valid leasehold title to, and enjoys peaceful and undisturbed
possession of, all leased property described in such leases (the "Leased
Property"), free and clear of any and all Encumbrances created by PX other than
any Permitted Encumbrances which would not permit the termination of the lease
therefor by the lessor. With respect to each such parcel of Leased Property, to
the knowledge of PX or the Stockholder (i) ,there are no pending or threatened
condemnation proceedings relating to such Leased Property or any portion
thereof, (ii) neither PX nor third party has entered into any sublease, license,
option, right, concession or other agreement or arrangement, written or oral,
granting to any person the right to use or occupy such Leased Property or any
portion thereof or interest therein and (iii) PX has not received notice of any
pending or threatened special assessment relating to such Leased Property or
otherwise have any knowledge of any pending or threatened special assessment
relating thereto. Each leased Facility is supplied with utilities necessary for
the operation of such facility as currently conducted.
3.8.3.2 With respect to each lease listed on Schedule 3.8.3,
--------------
(i) there has been no material default under any such lease by PX or, to the
knowledge of PX, by any other party, (ii) the execution, delivery and
performance of this Agreement and the Ancillary Agreements and the consummation
of the transactions contemplated hereby and thereby will not cause a material
default under any such lease, (iii) such lease is a valid and binding obligation
of PX, is in full force and effect with respect to PX and is enforceable against
PX, in accordance with its terms, except as the enforceability thereof may be
limited by (1) applicable bankruptcy, insolvency, moratorium, reorganization,
fraudulent conveyance or similar laws in effect which affect the enforcement of
creditors' rights generally or (2) general principles of equity, whether
considered in a proceeding at law or in equity, (iv) no action has been taken by
PX, and no event has occurred which, with notice or lapse of time or both, would
permit termination, modification or acceleration by a party thereto other than
PX without the consent of PX under any such lease that is material to PX, (v) no
party has repudiated in writing any term thereof or threatened in writing to
terminate, cancel or not renew any such lease that is
8
<PAGE>
material to PX and (vi) PX has not assigned, transferred, conveyed, mortgaged or
encumbered any interest therein or in any leased property subject thereto (or
any portion thereof).
3.9 Personal Property.
3.9.1 General. PX owns or leases all personal property assets
-------
necessary for the conduct of its business as presently conducted, and the
personal property assets (taken as a whole) are in such operating condition and
repair (subject to normal wear and tear) as is necessary for the conduct of its
business as presently conducted.
3.9.2 Owned Personal Property. Except as set forth on Schedule
----------------------- --------
3.9.2, PX has good and marketable title to all such personal property owned by
it, free and clear of any and all Encumbrances other than Permitted
Encumbrances. With respect to each such item of personal property (i) there are
no leases, subleases, licenses, options, rights, concessions or other
agreements, written or oral, granting to any party or parties the right of use
of any portion of such item of personal property (except licenses of Proprietary
Rights in the ordinary course of business), (ii) there are no outstanding
options or rights of first refusal in favor of any other party to purchase any
such item of personal property or any portion thereof or interest therein and
(iii) there are no parties (other than PX, any Subsidiary, and their respective
Employees) who are in possession of or who are using any such item of personal
property.
3.9.3 Leased Personal Property.
------------------------
3.9.3.1 PX has good and valid leasehold title to all of such
Fixtures and Equipment, vehicles and other tangible personal property assets
leased by it from third parties, free and clear of any and all Encumbrances
created by PX other than Permitted Encumbrances which would not permit the
termination of the lease therefor by the lessor. Except as set forth on Schedule
--------
3.9.3, PX is not a party to any lease for personal property involving annual
- -----
payments in excess of $25,000.
3.9.3.2 With respect to each lease listed on the Schedules,
(i) there has been no material default under any such lease by PX or, to the
knowledge of PX, by any other party, (ii) the execution, delivery and
performance of this Agreement and the Ancillary Agreements and the consummation
of the transactions contemplated hereby and thereby will not cause a material
default under any such lease, (iii) such lease is a valid and binding obligation
of PX, is in full force and effect with respect to PX, and is enforceable
against PX, in accordance with its terms, except as the enforceability thereof
may be limited by (1) applicable bankruptcy, insolvency, moratorium,
reorganization, fraudulent conveyance or similar laws in effect which affect the
enforcement of creditors' rights generally or (2) general principles of equity,
whether considered in a proceeding at law or in equity, (iv) no action has been
taken by PX, and no event has occurred which, with notice or lapse of time or
both, would permit termination, modification or acceleration by a party thereto
other than PX without the consent of PX under any such lease that is material to
PX, (v) no party has repudiated in writing any term thereof or threatened in
writing to terminate, cancel or not renew any such lease that is material to PX
and (vi) PX has not assigned, transferred, conveyed, mortgaged or encumbered any
interest therein or in any leased property subject thereto (or any portion
thereof).
3.10 Environmental Matters.
3.10.1 Except as disclosed on Schedule 3.10, PX is in material
-------------
compliance with all Environmental Laws, including, without limitation, all
Permits required thereunder to conduct its business as currently being conducted
or proposed to be conducted. All such Permits are listed on the Schedules. PX
has not received any notice to the effect that, or otherwise have knowledge
that, (i) PX is
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not in compliance in any material respect with, or is in violation of, any such
Environmental Laws or Permits required thereunder or (ii) any currently existing
circumstances are likely to result in a failure of PX to comply with, or a
violation by PX of, any such Environmental Laws or Permits required thereunder.
PX has not taken any action during the previous five years that would, to the
knowledge of PX, or the Stockholder, constitute a violation of any Environmental
Laws.
3.10.2 There are no existing or potential Environmental Claims
against PX, nor has it received any written notification or otherwise have any
knowledge, of any allegation of any actual, or potential responsibility for, or
any inquiry or investigation regarding, any disposal, release or threatened
release at any location of any Hazardous Substance generated or transported by
PX.
3.10.3 To the knowledge of PX or the Stockholder, except as disclosed
on Schedule 3.10, (i) no underground tank or other underground storage
-------------
receptacle for Hazardous Substances is currently located on the Facilities, and
there have been no releases of any Hazardous Substances from any such
underground tank or related piping and (ii) there have been no releases (i.e.,
----
any past or present releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, disposing, or dumping) of
Hazardous Substances in quantities exceeding the reportable quantities as
defined under federal or state law by PX on, upon or into the Facilities other
than those authorized by Environmental Laws including, without limitation, the
Permits required thereunder. In addition, to the knowledge of PX or the
Stockholder, there have been no such releases by PX or PX's corporate
predecessors and no releases in quantities exceeding the reportable quantities
as defined under federal or state law on, upon, or into any real property in the
vicinity of any of the real properties of PX other than those authorized by
Environmental Laws which, through soil or ground water contamination, may have
come to be located on the properties of PX.
3.10.4 To the knowledge of PX, or the Stockholder there are no PCBs
or asbestos-containing materials located at or on the Facilities.
3.10.5 Except as disclosed on Schedule 3.10, PX is not a party,
-------------
whether as a direct signatory or as successor, assign or third-party
beneficiary, or otherwise bound, to any lease or other Contract (excluding
insurance policies disclosed on the Schedules) under which PX is obligated by or
entitled to the benefits of, directly or indirectly, any representation,
warranty, indemnification, covenant, restriction or other undertaking concerning
Environmental Conditions.
3.10.6 Except as disclosed on the Schedules, PX has not released any
other person from any claim under any Environmental Law or waived any rights
concerning any Environmental Condition.
3.10.7 There are no consent decrees, consent orders, judgments,
judicial or administrative orders or agreements (other than Permits) with or
liens by, any Governmental Authority or quasi-governmental entity relating to
any Environmental Law which regulate, obligate or bind PX.
3.10.8 Complete and accurate copies of the Environmental Reports, as
well as all other written environmental reports, audits or assessments which
have been conducted, either by PX, the Stockholder or any person engaged by PX
or the Stockholder for such purpose, at any Facility owned or formerly owned by
PX have been made available to SkyNet and a list of all such Environmental
Reports, audits and assessments is set forth on Schedules 3.10.8.
----------------
3.10.9 PX has submitted on a timely basis all applications for
operating permits required pursuant to Title V of the Clean Air Act, and to the
knowledge of PX, no additional capital
10
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expenditures will be required by PX for purposes of compliance with permitting
conditions likely to be imposed pursuant to Title V of the Clean Air Act.
3.11 Contracts.
3.11.1 Disclosure. Schedule 3.11 sets forth a complete and accurate
---------- -------------
list of all of the Contracts of the following categories:
3.11.1.1 Contracts not made in the ordinary course of
business;
3.11.1.2 Joint development agreements;
3.11.1.3 License agreements or royalty agreements, whether PX
is the licensor or licensee thereunder;
3.11.1.4 Confidentiality and non-disclosure agreements
(whether PX is the beneficiary or the obligated party thereunder);
3.11.1.5 Research agreements;
3.11.1.6 Contracts with each of PX's twenty-five (25) largest
customers (measured on the basis of purchases of services from PX during the
period from January 1, 1999 through February 28, 1999) as of February 28, 1999;
3.11.1.7 Contracts or commitments involving future
expenditures or Liabilities, actual or potential, in excess of $25,000 after the
date hereof;
3.11.1.8 Employment contracts, consulting contracts and
severance agreements, including Contracts (A) to employ or terminate personnel
and other contracts with present or former stockholders of PX or (B) that will
result in the payment by, or the creation of any Liability of PX, the
Stockholders or SkyNet to pay any severance, termination, "golden parachute," or
other similar payments to any present or former personnel following termination
of employment or otherwise as a result of the consummation of the transactions
contemplated by this Agreement;
3.11.1.9 Indemnification agreements;
3.11.1.10 Promissory notes, loans, agreements, indentures,
evidences of indebtedness, letters of credit, guarantees, or other instruments
relating to an obligation to pay money, whether PX shall be the borrower, lender
or guarantor thereunder (excluding credit provided by PX in the ordinary course
of business to purchasers of its products and obligations to pay vendors in the
ordinary course of business and consistent with past practice);
3.11.1.11 Contracts containing covenants limiting the freedom
of PX, or the Stockholder, Employee or Affiliate of PX, to engage in any line of
business or compete with any Person that relates directly or indirectly to the
Business;
3.11.1.12 Any Contract with the federal, state or local
government or any agency or department thereof other than a contract described
in subsection 3.11.1.5 hereof;
3.11.1.13 Any Contract with a Related Party;
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3.11.1.14 Any other Contract under which the consequences of
a default or termination would reasonably be expected to have a Material Adverse
Effect on PX.
Complete and accurate copies of all of the Contracts listed on Schedule
--------
3.11, including all amendments and supplements thereto, have been made available
- ----
to SkyNet. PX has included as part of Schedule 3.11 a brief summary of the
-------------
material terms of each oral Contract required to be disclosed under this
Section.
3.11.2 Absence of Defaults. Except as set forth on Schedule 3.11,
------------------- -------------
all of the Contracts identified on Schedule 3.11 are valid, binding and
-------------
enforceable in accordance with their terms with no existing (or to the knowledge
of PX or the Stockholder, threatened) Default or dispute. PX has fulfilled all
of its material obligations under each of such Contracts. To the knowledge of
PX and the Stockholder, all parties to such Contracts have complied in all
material respects with the provisions thereof, no party is in Default thereunder
and no notice of any claim of Default has been given to PX, or any of the
Stockholders.
3.12 No Conflict or Violation; Consents.
Except as set forth on Schedule 3.12, none of the execution, delivery or
-------------
performance of this Agreement or any Ancillary Agreement, the consummation of
the transactions contemplated hereby or thereby, nor compliance by PX or the
Stockholder with any of the provisions hereof or thereof, will (a) violate or
conflict with any provision of the governing documents of PX or the Stockholder,
(b) materially violate, materially conflict with, or result in a material breach
of or constitute a Default (with or without notice of passage of time) under, or
result in the termination of, or accelerate the performance required by, or
result in a right to terminate, accelerate, modify or cancel under, or require a
notice under, or result in the creation of any Encumbrance upon any of its
respective assets under, any Contract, lease, sublease, license, sublicense,
franchise, permit, indenture, agreement or mortgage for borrowed money,
instrument of indebtedness, security interest or other arrangement to which PX
or the Stockholder is a party or by which PX or the Stockholder is bound or to
which any of their respective assets are subject, (c) violate any applicable
Regulation or Court Order or (d) impose any Encumbrance on any assets. Except
as set forth on Schedule 3.12, no notices to, declaration, filing or
-------------
registration with, approvals or Consents of, or assignments by, any Persons
(including any federal, state or local governmental or administrative
authorities) are necessary to be made or obtained by PX or the Stockholder in
connection with the execution, delivery or performance of this Agreement or any
Ancillary Agreement or the consummation of the transactions contemplated hereby
or thereby.
3.13 Permits.
Schedule 3.13 sets forth a complete list or summary of all material
-------------
Permits, all of which are as of the date hereof, and will be as of the Closing
Date, in full force and effect. PX has, and at all times has had, all material
Permits required under any applicable Regulation in its operations and owns or
possesses such Permits free and clear of all Encumbrances. PX is not in Default,
nor has PX or the Stockholder received any notice of any claim of Default, with
respect to any such Permit. Except as otherwise governed by law, all such
Permits are renewable by their terms or in the ordinary course of business
without the need to comply with any special qualification procedures or to pay
any amounts other than routine filing fees and, except as set forth on Schedule
--------
3.13, will not be adversely affected by the completion of the transactions
- ----
contemplated by this Agreement or the Ancillary Agreements.
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3.14 Financial Statements; Books and Record.
3.14.1 Except as set forth on Schedule 3.14.1, the Financial
--------------
Statements, copies of which are set forth on Schedule 3.14.1, fairly present in
---------------
all material respects the assets and Liabilities of PX and financial condition
and results of operations indicated thereby.
3.14.2 PX maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed
with management's authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in accordance with GAAP and to
maintain accountability for assets, (iii) access to assets is permitted only in
accordance with management's authorization and (iv) the recorded accountability
for assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
3.14.3 The Books and Records, in reasonable detail, accurately and
fairly reflect the activities of PX and the Business and have been made
available to SkyNet for its inspection.
3.14.4 To the Stockholder's knowledge, PX has not engaged in any
transaction, maintained any bank account or used any corporate funds except for
transactions, bank accounts or funds which have been and are reflected in the
normally maintained Books and Records. A complete list of such accounts,
including account numbers and identifications of authorized signatures with
respect to such accounts, is set forth on Schedule 3.14.4.
---------------
3.14.5 The stock records and minute books of PX that have been made
available to SkyNet fully reflect all minutes of meetings, resolutions and other
material actions and proceedings of their respective stockholders and boards of
directors and all committees thereof, all issuances, transfers and redemptions
of capital stock of which the Stockholder is aware and contain true, correct and
complete copies of PX's Certificate of Incorporation and Bylaws and all
amendments thereto through the date hereof.
3.15 Absence of Certain Changes or Events.
Except as set forth on Schedule 3.15, since the Balance Sheet Date there has
-------------
not been any:
3.15.1 Material Adverse Change;
3.15.2 failure to operate its business in the ordinary course so as
to use its commercially reasonable efforts to preserve its business intact and
to preserve the continued services of its Employees and the goodwill of
suppliers, customers and others having business relations with PX;
3.15.3 resignation or termination of any Manager or Employee in an
executive managerial position, any increase in the rate of compensation payable
or to become payable to any officer, Employee or Representative of PX, including
the making of any loan to, or the payment, grant or accrual of any bonus,
incentive compensation, service award or other similar benefit to, any such
Person, or the addition to, modification of, or contribution to any Employee
Plan (as defined below);
3.15.4 payment, loan or advance of any amount to or in respect of, or
the sale, transfer or lease of any properties or the assets to, or entering into
of any Contract with, any Related Party except (i) directors' fees, (ii)
compensation to Employees at the rates disclosed pursuant to Section 3.17(d) and
(iii) forgiveness of loans in the amounts and to the individuals set forth on
Schedule 3.15.4;
- ---------------
13
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3.15.5 sale, assignment, license, transfer or Encumbrance of any
assets, tangible or intangible, singly or in the aggregate, other than sales of
products and services in the ordinary course of business and consistent with
past practice;
3.15.6 new Contracts, or extensions, modifications, terminations or
renewals thereof, except for Contracts entered into, modified or terminated in
the ordinary course of business and consistent with past practice;
3.15.7 actual or threatened termination of any material customer
account or group of accounts or actual or threatened material reduction in
purchases or royalties payable by any such customer or occurrence of any event
that is likely to result in any such termination or reduction;
3.15.8 disposition or lapsing of any Proprietary Rights of PX, in
whole or in part, or any disclosure of any trade secret, process or know-how to
any Person not an Employee;
3.15.9 change in accounting methods or practices by PX;
3.15.10 revaluation by PX of any assets, including writing off notes
or accounts receivable other than for which adequate reserves have been
established;
3.15.11 damage, destruction or loss (whether or not covered by
insurance) having a Material Adverse Effect on PX;
3.15.12 declaration, setting aside or payment of dividends or
distributions in respect of any PX Stock or any redemption, purchase or other
acquisition of any equity securities of PX;
3.15.13 issuance or reservation for issuance by PX of, or commitment
of it to issue or reserve for issuance, PX Stock or other equity securities or
obligations or securities convertible into or exchangeable for PX Stock or other
equity securities;
3.15.14 increase, decrease or reclassification of the PX Stock of PX;
3.15.15 amendment of the Articles of Incorporation or Bylaws of PX;
3.15.16 capital expenditure or execution of any lease or any
incurring of liability therefor by PX, involving payments in excess of $10,000
in the aggregate that are not in the ordinary course of business;
3.15.17 failure to pay any material obligation of PX when due;
3.15.18 cancellation of any indebtedness or waiver of any rights of
substantial value to PX, except in the ordinary course of business and
consistent with past practice;
3.15.19 indebtedness incurred by PX for borrowed money or any
commitment to borrow money entered into by PX, or any loans made or agreed to be
made by PX;
3.15.20 liability incurred by PX except for Liabilities incurred in
the ordinary course of business and consistent with past practice, or any
increase or change in any assumptions underlying or methods of calculating any
bad debt, contingency or other reserves;
14
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3.15.21 payment, discharge or satisfaction of any Liabilities of PX
other than the payment, discharge or satisfaction in the ordinary course of
business and consistent with past practice of Liabilities reflected or reserved
against in the Financial Statements or incurred in the ordinary course of
business and consistent with past practice since the Balance Sheet Date or
expenses of the Stockholder incurred in connection with the transactions
contemplated by this Agreement, as more fully described in Section 15.10 hereof;
3.15.22 acquisition of any equity interest in any other Person; or
3.15.23 agreement by PX to do any of the foregoing.
3.16 Liabilities.
PX has no material Liabilities (absolute, accrued, contingent or otherwise)
except (i) Liabilities which are reflected and properly reserved against in the
Financial Statements, (ii) Liabilities incurred in the ordinary course of
business and consistent with past practice since the Balance Sheet Date and
(iii) liabilities arising under the Contracts set forth on Schedule 3.11 or
-------------
or which are not required to be disclosed on such Schedule and which have
arisen or been incurred in the ordinary course of business. Except as
identified in the Schedules to this Agreement, none of the Liabilities described
in this Section 3.16 relates to any breach of Contract, breach of warranty,
tort, infringement or violation of law or arose out of any action, order writ,
injunction, judgment or decree outstanding or claim, suit, litigation,
proceeding, investigation or dispute (collectively, "Actions"). The reserves
set forth on the Balance Sheet for liabilities are reasonable.
3.17 Litigation.
Except as set forth on Schedule 3.17, there is no Action, pending or, to
-------------
the knowledge of PX or the Stockholder, threatened or anticipated against,
relating to or affecting PX or which seeks to enjoin or obtain damages in
respect of the transactions contemplated hereby or by the Ancillary Agreements.
To the knowledge of PX or the Stockholder, there is no basis for any Action,
which if adversely determined against the Stockholder or PX, or any other Person
could reasonably be expected to result in a loss to PX, individually or in the
aggregate, in excess of $50,000. There are presently no outstanding judgments,
decrees or orders of any court or any governmental or administrative agency
against or affecting PX. Schedule 3.17 contains a complete and accurate
-------------
description of all Actions currently pending to which PX or the Stockholder has
been a party which are reasonably anticipated to result in liability to PX,
which, if adversely determined against PX, would result in liability in excess
of $50,000, or any such Actions which were settled prior to the institution of
formal proceedings, other than Actions brought by PX for collection of monies
owed in the ordinary course of business. No representation is made in this
Section 3.17 with respect to matters covered in Section 3.23 (Tax Matters).
3.18 Labor Matters.
3.18.1 Except as set forth on Schedule 3.18.1, PX is not a party to
---------------
any labor agreement with respect to its Employees with any labor organization,
group or association and has not experienced any attempt by organized labor or
its representatives to make PX conform to demands of organized labor relating to
its Employees or to enter into a binding agreement with organized labor that
would cover the Employees of PX. There is no unfair labor practice charge or
complaint against PX pending before the National Labor Relations Board or any
other governmental agency arising out of PX's activities, and to PX's knowledge
no facts exist which would give rise thereto; there is no labor strike or labor
disturbance pending or threatened against PX nor is any grievance currently
being asserted against it; and neither PX
15
<PAGE>
has experienced a work stoppage or other labor difficulty. There are no material
controversies pending or, to the knowledge of PX or the Stockholder, threatened
between PX and any of its Employees, and none of PX or the Stockholder is aware
of any facts which could reasonably result in any such controversy.
3.18.2 PX is in material compliance with all applicable Regulations
respecting employment practices, terms and conditions of employment, wages and
hours, equal employment opportunity, and the payment of social security and
similar taxes, and none of them are engaged in any unfair labor practice. PX is
not liable for any claims for past due wages or any penalties for failure to
comply with any of the foregoing.
3.18.3 Except with respect to the employment agreements identified on
Schedule 3.11 (the "Existing Employment Agreements"), PX has not entered into
- -------------
any severance or similar arrangement in respect of any present or former
Employee that will result in any obligation (absolute or contingent) of SkyNet
or PX to make any payment to any present or former Employee following
termination of employment or upon consummation of the transactions contemplated
by this Agreement. Neither the execution and delivery of this Agreement or any
Ancillary Agreement nor the consummation of the transactions contemplated hereby
or thereby will result in the acceleration or vesting of any other rights of any
Person to benefits under any Employee Plans.
3.18.4 Except as set forth on Schedule 3.18.4 and as to Persons with
---------------
whom PX has contracted and withheld amounts on account of federal, state or
local taxing authorities in the same manner as it would its own employees, PX
has not, at any time during its existence, retained any person to provide
services to or on behalf of PX as an independent contractor
3.19 Employee Benefit Plans.
3.19.1 Schedule 3.19 contains a complete list of Employee Plans.
-------------
True and complete copies of each of the following documents have been made
available by PX to SkyNet: (i) each Employee Plan (and, if applicable, related
trust agreements, annuity contracts or other funding instruments) which covers
or has covered employees of PX (with respect to their relationship with PX) and
all amendments thereto, all summary plan descriptions, summary of material
modifications (as defined in ERISA) and all written interpretations and
descriptions thereof which PX generally has distributed to participants therein,
the number of and a general description of the level of employees covered by
each Benefit Arrangement and a complete description of any Employee Plan which
is not in writing, (ii) the most recent determination letter, if any, issued by
the Internal Revenue Service and any opinion letter issued by the Department of
Labor with respect to each Pension Plan and each voluntary employees'
beneficiary association as defined under Section 501(c)(9) of the Code (other
than a Multiemployer Plan) which covers or has covered employees of PX (with
respect to their relationship with PX), (iii) for the three most recent plan
years, Annual Reports on Form 5500 Series required to be filed with any
governmental agency for each Pension Plan or Welfare Plan which covers or has
covered Employees of PX (with respect to their relationship with PX), (iv) all
actuarial reports prepared for the last three plan years for each Pension Plan
which covers or has covered Employees of PX (with respect to their relationship
with PX), and (v) a description setting forth the amount of any liability of PX
as of the Closing Date for payments more than thirty (30) calendar days past due
with respect to any Welfare Plan.
16
<PAGE>
3.19.2 Pension Plans.
-------------
3.19.2.1 No Pension Plan is subject to the minimum funding
requirements of ERISA. As of the last day of the last plan year of each Pension
Plan and as of the Closing Date, the "amount of unfunded benefit liabilities" as
defined in Section 4001(a)(18) of ERISA (but excluding from the definition of
"current value" of "assets" of such Pension Plan, accrued but unpaid
contributions) did not and will not exceed zero. None of PX or any ERISA
Affiliate has engaged in, or is a successor or parent corporation to an entity
that has engaged in, a transaction described in Section 4069 of ERISA. None of
PX or any ERISA Affiliate has, at any time, (1) ceased operations at a facility
so as to become subject to the provisions of Section 4062(e) of ERISA, (2)
withdrawn as a substantial employer so as to become subject to the provisions of
Section 4063 of ERISA, or (3) ceased making contributions on or before the
Closing Date to any Pension Plan subject to Section 4064(a) of ERISA to which PX
or any ERISA Affiliate made contributions during the six years prior to the
Closing Date.
3.19.2.2 Each Pension Plan and each related trust agreement,
annuity contract or other funding instrument which covers or has covered
employees or former employees of PX (with respect to their relationship with PX)
which has been operated as a qualified plan (1) has received, or has applied for
and not yet, received a favorable determination letter (or is not required under
applicable law to have received) from the Internal Revenue Service stating that
such Pension Plan and each related trust is qualified and tax-exempt under the
provisions of Code Sections 401(a) and 501(a) and (2) has been so qualified
during the period from its adoption to the date of such determination letter.
3.19.2.3 Each Pension Plan and each related trust agreement,
annuity contract or other funding instrument which covers or has covered
employees or former employees of PX (with respect to their relationship with PX)
currently complies in all material respects and has been maintained in
compliance in all material respects with its terms and, both as to form and in
operation, with the requirements prescribed by any and all statutes, orders,
rules and regulations which are applicable to such plans, including, without
limitation, ERISA and Code Sections 401(a) and 501(a).
3.19.2.4 Multiemployer Plans. Neither PX nor any ERISA Affiliate
-------------------
has any liability with respect to a Multiemployer Plan, and no liability will
arise or be imposed on PX or any ERISA Affiliate under, or with respect to, any
Multiemployer Plan.
3.19.3 Welfare Plans.
-------------
3.19.3.1 Each Welfare Plan which covers or has covered employees
or former employees of PX (with respect to their relationship with PX) currently
complies in all material respects and has been maintained in compliance in all
material respects with its terms and, both as to form and operation, with the
requirements prescribed by any and all statutes, orders, rules and regulations
which are applicable to such Welfare Plan, including, without limitation, ERISA
and the Code.
3.19.3.2 Except as required by Section 4980B of the Code or Part 6
of Title 1, Subtitle B of ERISA, none of PX, any ERISA Affiliate or any Welfare
Plan has any present or future obligation to make any payment to, or with
respect to any present or former employee of PX or any ERISA Affiliate pursuant
to, any retiree medical benefit plan, or other retiree Welfare Plan, and no
condition exists which would prevent PX or an ERISA Affiliate from amending or
terminating any such benefit plan or such Welfare Plan.
3.19.3.3 Each Welfare Plan which covers or has covered employees
or former employees of PX (with respect to their relationship with PX) and which
is a "group health plan," as
17
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defined in Section 607(1) of ERISA, presently complies in all material respects
with and has been operated in compliance in all material respects with
provisions of Part 6 of Title I, Subtitle B of ERISA and Sections 162(k) and
4980B of the Code at all times.
3.19.3.4 Neither PX or any ERISA Affiliate has, at any time,
maintained, contributed to or had any obligation to maintain or contribute to
any Welfare Plan that is a "multiemployer plan," as defined in Section 3(37) of
ERISA.
3.19.3.5 The insurance policies or other funding instruments,
if any, for each Welfare Plan provide coverage for each employee, consultant,
independent contractor or retiree of PX (and, if applicable, their respective
dependents) who has been advised by PX, whether through an Employee Plan or
otherwise, that he or she is covered by such Welfare Plan.
3.19.4 Benefit Arrangements. Each Benefit Arrangement presently
--------------------
complies and has been maintained in compliance in all material respects with its
terms and with the requirements prescribed by any and all statutes, orders,
rules and regulations which are applicable to such Benefit Arrangement,
including, without limitation, the Code. Except as provided by law or in any
employment agreement set forth on Schedule 3.11 or collective bargaining
-------------
agreements set forth on Schedule 3.18.1, the employment of all persons presently
---------------
employed or retained by PX is terminable at will.
3.19.5 Unrelated Business Taxable Income; Unpaid Contributions. No
-------------------------------------------------------
Employee Plan (or trust or other funding vehicle pursuant thereto) has incurred
any liability under Code Section 511. Neither PX nor any ERISA Affiliate has
any liability for unpaid contributions under Section 515 of ERISA with respect
to any Employee Plan.
3.19.6 Deductibility of Payments. There is no contract, agreement,
-------------------------
plan or arrangement covering any employee or former employee of PX (with respect
to such employee's relationship with PX) that, individually or collectively,
requires the payment by PX of any amount (i) that is not deductible under
Section 162(a)(1) or 404 of the Code or (ii) that is an "excess parachute
payment" pursuant to Section 280G of the Code.
3.19.7 Fiduciary Duties and Prohibited Transactions. None of PX, or
--------------------------------------------
any plan fiduciary of any Welfare Plan or Pension Plan has engaged in, or has
any liability in respect of, any transaction in violation of Sections 404 or 406
of ERISA or any "prohibited transaction," as defined in Section 4975(c)(1) of
the Code, for which no exemption exists under Section 408 of ERISA or Section
4975(c)(2) or (d) of the Code, or has otherwise violated the provisions of Part
4 of Title I, Subtitle B of ERISA so as to create any liability of PX or any
Employee Plan. PX has not participated in a violation of Part 4 of Title I,
Subtitle B of ERISA by any plan fiduciary of any Welfare Plan or Pension Plan,
and PX has not been assessed any civil penalty under Section 502(l) of ERISA.
3.19.8 Litigation. There is no action, order, writ, injunction,
----------
judgment or decree outstanding or claim (other than routine claims for
benefits), suit, litigation, proceeding, arbitration proceeding, governmental
audit or investigation relating to or seeking benefits under any Employee Plan
that is pending or, to the knowledge of PX, anticipated or threatened against
PX, any ERISA Affiliate or any Employee Plan.
3.19.9 No Amendments. Neither PX nor any ERISA Affiliate has
-------------
announced to employees, former employees, consultants or directors an intention
to create, or otherwise created, a legally binding commitment to adopt any
additional Employee Plan which is intended to cover employees or former
employees of PX (with respect to their relationship with PX) or to amend or
modify
18
<PAGE>
any existing Employee Plan which covers or has covered employees or former
employees of PX (with respect to their relationship with PX).
3.19.10 Insurance Contracts. None of PX or any Employee Plan (other
-------------------
than a Multiemployer Plan) holds as an asset of any Employee Plan any interest
in any annuity contract, guaranteed investment contract or any other investment
or insurance contract issued by an insurance company that is the subject of
bankruptcy, conservatorship or rehabilitation proceedings.
3.19.11 No Acceleration or Creation of Rights. Except with respect
-------------------------------------
to the Existing Employment Agreements, neither the execution and delivery of
this Agreement or the Ancillary Agreements by PX nor the consummation of the
transactions contemplated hereby or the related transactions will result in the
acceleration or creation of any rights of any person to benefits under any
Employee Plan (including, without limitation, the acceleration of the vesting or
exercisability of any stock options, the acceleration of the vesting of any
restricted stock, the acceleration of the accrual or vesting of any benefits
under any Pension Plan or the acceleration or creation of any rights under any
severance, parachute or change in control agreement).
3.19.12 No Other Material Liability. No event has occurred which
---------------------------
could subject PX or any Employee Plan, directly or indirectly, to any material
liability (A) under any statute, regulation or governmental order relating to
any Employee Plan or (B) pursuant to any obligation of PX to indemnify any
person against liability incurred under any such statute, regulation or order as
they relate to the Employee Plans.
3.20 Transactions with Related Parties.
Except as disclosed on Schedule 3.20, to the knowledge of PX or the
-------------
Stockholder, no Related Party or Employee has (a) borrowed or loaned money or
other property to PX which has not been repaid or returned, (b) any contractual
or other claims, express or implied, of any kind whatsoever against PX or (c)
any interest in any property used by PX.
3.21 Compliance with Law.
PX has conducted the Business in material compliance with all applicable
Regulations and Court Orders. Neither PX nor the Stockholder has received any
notice to the effect that, or has otherwise been advised that, PX is not in
compliance with any such Regulations or Court Orders, and neither PX nor the
Stockholder has any reason to anticipate that any existing circumstances are
likely to result in any material violation of any of the foregoing.
3.22 Intellectual Property.
3.22.1 General. Schedule 3.22.1 sets forth with respect to
------- ---------------
Proprietary Rights of PX: (i) for each trademark, trade name or service mark,
whether or not registered, the application serial number or registration number,
the class of goods covered, the nature of the goods or services, the countries
in which the names or mark is used and the expiration date for each country in
which a trademark has been registered, (ii) a description of all Trade Secrets
and (iii) all such Proprietary Rights in the form of licenses. True and correct
copies of all Proprietary Rights (including all pending applications,
application related documents and materials and written materials relating to
Trade Secrets) owned, controlled or used by or on behalf of PX or in which PX
has any interest whatsoever have been provided or made available to SkyNet.
19
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3.22.2 Royalties and Licenses. Except with respect to the Existing
----------------------
Employment Agreements, PX has no obligation to compensate any Person for the use
of any of its Proprietary Rights nor, except in the ordinary course of business,
has PX granted to any Person any license, option or other rights to use in any
manner any of its Proprietary Rights, whether requiring the payment of royalties
or not.
3.22.3 Ownership. PX owns or has a valid right to use its
---------
Proprietary Rights, and such Proprietary Rights will not cease to be valid
rights of PX by reason of the execution, delivery and performance of this
Agreement or the Ancillary Agreements or the consummation of the transactions
contemplated hereby or thereby.
3.22.4 Absence of Claims. Except as set forth on Schedule 3.22.4, PX
----------------- ---------------
has not (A) received any notice alleging, or otherwise have knowledge of facts
that might give rise to, invalidity with respect to any of the Proprietary
Rights of PX or (B) received any notice of alleged infringement of any rights of
others due to any activity by PX. To the knowledge of PX, PX's use of its
Proprietary Rights in its past and current products do not and would not
infringe upon or otherwise violate the valid rights of any third party anywhere
in the world. No other Person (i) has notified PX or the Stockholder that it is
claiming any ownership of or right to use any of PX's Proprietary Rights or (ii)
to the knowledge of PX, is infringing upon any such Proprietary Rights in any
way.
3.22.5 Protection of Proprietary Rights. All of the pending
--------------------------------
applications for PX's Proprietary Rights have been duly filed and all other
actions to protect such Proprietary Rights have been taken. PX has taken
reasonable steps necessary or appropriate (including, entering into appropriate
confidentiality and nondisclosure agreements with officers, directors,
subcontractors, Employees, licensees and customers in connection with PX) to
safeguard and maintain the secrecy and confidentiality of, and the proprietary
rights in, the Proprietary Rights that are material to the Business. Neither PX
nor the Stockholder has knowledge of any breach of any such confidentiality or
nondisclosure agreement by any party thereto.
3.23 Tax Matters.
3.23.1 Filing of Tax Returns. Except as set forth in Schedule
--------------------- --------
3.23.1, PX has timely filed with the appropriate taxing authorities all Tax
Returns in respect of Taxes required to be filed through the date hereof. The
Tax Returns filed are complete and accurate in all material respects. Except as
specified in Schedule 3.23.1, PX has not requested any extension of time within
---------------
which to file Tax Returns in respect of any Taxes. PX has not yet filed its
federal, state and local Tax Returns for the year ended December 31, 1998 but
has obtained filing extensions with respect to all such returns.
3.23.2 Payment of Taxes. All Taxes due from PX, or for which it
----------------
could be liable, in respect of periods (or portions thereof) beginning before
the Closing Date have been timely paid or an adequate reserve (in conformity
with GAAP) has been established therefor, as set forth in Schedule 3.23.2 or the
---------------
Financial Statements, and PX has no material Liability for Taxes in excess of
the amounts so paid or reserves so established. All Taxes that PX is required
by law to withhold or collect have been duly withheld or collected and have been
timely paid over to the appropriate governmental authorities to the extent due
and payable.
3.23.3 Audits, Investigations or Claims. No deficiencies for Taxes
--------------------------------
of PX has been claimed, proposed or assessed by any taxing or other governmental
authority. There are no pending or, to the knowledge of PX or the Stockholder,
threatened audits, assessments or other Actions for or relating to any Liability
in respect of Taxes of PX or the Stockholder, and there are no matters under
20
<PAGE>
discussion with any governmental authorities, or known to PX or the Stockholder,
with respect to Taxes that are likely to result in an additional Liability for
Taxes. Audits of federal, state and local Tax Returns by the relevant taxing
authorities have been completed for the periods set forth on Schedule 3.23.3
---------------
and, except as set forth in such Schedule, PX has not been notified that any
taxing authority intends to audit a Tax Return for any other period. No
extension of a statute of limitations relating to Taxes is in effect with
respect to PX.
3.23.4 Lien. There are no Encumbrances for Taxes (other than for
----
Permitted Encumbrances) on any assets.
3.23.5 Tax Elections. All elections with respect to Taxes affecting
-------------
PX as of the date hereof are set forth on PX's latest Tax Returns or on Schedule
--------
3.23.5. PX has not (i) consented at any time under Section 341(f)(1) of the Code
- ------
to have the provisions of Section 341(f)(2) of the Code apply to any disposition
of any assets; (ii) agreed, or is not required, to make any adjustment under
Section 481(a) of the Code by reason of a change in accounting method or
otherwise; (iii) has made an election, or is required, to treat any Asset as
owned by another Person pursuant to the provisions of Section 168(f) of the Code
or as tax-exempt bond financed property or tax-exempt use property within the
meaning of Section 168 of the Code; (iv) directly or indirectly secured any debt
the interest on which is tax exempt under Section 103(a) of the Code; or (v)
made any of the foregoing elections or is required to apply any of the foregoing
rules under any comparable state or local Tax provision.
3.23.6 Prior Affiliated Groups. PX has never been a stockholder of an
-----------------------
affiliated group of corporations within the meaning of Section 1504 of the Code
or any group that has filed a combined consolidated or unitary state or local
return.
3.23.7 Tax Sharing Agreements. Except as otherwise disclosed in the
----------------------
Schedules, there are no Tax-sharing agreements or similar arrangements
(including indemnity arrangements) with respect to or involving PX, and, after
the Closing Date, PX shall not be bound by any such Tax-sharing agreements or
similar arrangements or have any Liability thereunder for amounts due in respect
of periods prior to the Closing Date.
3.23.8 Partnerships. PX has no interest in and is not subject to any
------------
joint venture, partnership, or other arrangement or contract which is treated as
a partnership for federal income tax purposes. PX is not a successor to any
other Person by way of purchase, reorganization or similar transaction.
3.23.9 No Withholding. The transaction contemplated herein is not
--------------
subject to the tax withholding provisions of Section 3406 of the Code, or of
Subchapter A of Chapter 3 of the Code or of any other provision of law.
3.24 Insurance.
Schedule 3.24 contains a complete and accurate list of all policies or
-------------
binders of insurance (showing as to each policy or binder the carrier, policy
number, coverage limits, expiration dates, annual premiums, a general
description of the type of coverage provided and any pending claims thereunder)
of which PX is the owner, insured or beneficiary. Copies of all such policies
have been made available to SkyNet. To the knowledge of PX, all of such
policies are sufficient for (i) compliance with all Regulations and all of the
Contracts, and (ii) covering all reasonably foreseeable damage to and
liabilities or contingencies relating to PX's conduct of its business. PX is not
in default under any of such policies or binders, and has not failed to give any
notice or to present any claim under any such policy or binder
21
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in a due and timely fashion. There are no facts known to PX or the Stockholder
upon which an insurer might be justified in reducing or denying coverage or
increasing premiums on existing policies or binders. There are no outstanding
unpaid claims under any such policies or binders. Such policies and binders are
in full force and effect on the date hereof and shall be kept in full force and
effect by PX through the Closing Date.
3.25 Accounts Receivable.
The accounts and notes receivable reflected in the Balance Sheet, and
all accounts or notes receivable arising since the Balance Sheet Date, represent
bona fide claims against debtors for sales, services performed or other charges
arising on or before the date of recording thereof, and all the goods delivered
and services performed which gave rise to said accounts were delivered or
performed in accordance with the applicable orders, Contracts or customer
requirements. To the knowledge of PX or the Stockholder and except as disclosed
in the Schedules to this Agreement, all such receivables are fully collectible
in the ordinary course of business except to the extent of an amount not in
excess of the reserve for doubtful accounts reflected on the Balance Sheet and
additions to such reserves as reflected on the Books and Records.
3.26 Purchase Commitments and Outstanding Bids.
Except as disclosed on the Schedules, as of the date of this
Agreement, the aggregate of all Contracts for the purchase of supplies by PX
does not exceed $25,000, all of which were made in the ordinary course of
business. No outstanding purchase or outstanding lease commitment of PX
presently is in excess of the normal, ordinary and usual requirements of its
business or was made at any price in excess of the now current market price or
contains terms and conditions more onerous than those usual and customary in
PX's business. The Schedules set forth a list of all currently outstanding
proposals for Contracts providing for, in the aggregate, payments to PX by third
parties in excess of $25,000.
3.27 Customers and Suppliers.
Schedule 3.27 sets forth a complete and accurate list of the names of
-------------
the ten customers who purchased from PX the greatest dollar volume of services
during its last fiscal year and last fiscal quarter. Since the Balance Sheet
Date, except as disclosed in the Schedules to this Agreement, there has been no
Material Adverse Change in the business relationship of PX with any customer or
supplier named on Schedule 3.27. PX has not received any written communication
-------------
from any customer or supplier named on Schedule 3.28 of any intention to return,
-------------
terminate or materially reduce purchases from or supplies to PX.
3.28 Year 2000 Compliance.
PX has reviewed its products, business, services and operations which
could be adversely affected by the risk that computer applications developed,
marketed, sold and delivered or used by PX may be unable to recognize and
properly perform date-sensitive functions involving dates prior to and after
December 31, 1999 (the "Year 2000 Problem"). Except as disclosed on Schedule
--------
3.28, PX's products, services, applications or other deliverables provided or
- ----
delivered to its customers and PX's internal information and business systems
are Year 2000 compliant. The Year 2000 Problem has not resulted in, and, to the
knowledge of PX or the Stockholders, is not reasonably expected to have, a
Material Adverse Effect on PX.
22
<PAGE>
3.29 Brokers; Transaction Costs.
PX has not entered into or will enter into any contract, agreement,
arrangement or understanding with any Person which will result in the obligation
of SkyNet, PX or the Stockholders to pay any finder's fee, brokerage commission
or similar payment in connection with the transactions contemplated by this
agreement.
3.30 No Other Agreements to Sell PX.
Neither PX nor the Stockholder has any legal obligation, absolute or
contingent, to any other Person to sell the assets of PX (other than Inventory
in the ordinary course of business and PX's owned real property) or to sell any
PX Stock of PX or to effect any Purchase, consolidation or other reorganization
of PX or to enter into any agreement with respect thereto, except pursuant to
this Agreement.
3.31 Material Misstatements or Omissions.
No representations or warranties by PX or the Stockholder in this
Agreement or any Ancillary Agreement to which it is a party or in any document,
written information, exhibit, statement, certificate or schedule heretofore or
hereinafter furnished by PX or such Stockholder or any of its Representatives to
SkyNet pursuant hereto, or in connection with the transactions contemplated by
this Agreement or by such Ancillary Agreements contains or will contain any
untrue statement of a material fact, or omits or will omit to state any material
fact necessary to make the statements or facts contained therein not misleading.
4. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER
As an inducement of SkyNet to enter into this Agreement, the
Stockholder hereby makes, as of the date hereof and as of the Closing Date, the
following representations and warranties to SkyNet, except as otherwise set
forth in the Schedules delivered to SkyNet prior to the date hereof, a copy of
which is attached hereto. The Schedules are numbered to correspond to the
various sections of this Article 4 setting forth certain information referenced
in and exceptions to the representations and warranties contained in this
Article 4 and certain other information called for by this Agreement. Unless
otherwise specified, no disclosure made in any particular Schedule shall be
deemed made in any other Schedule unless expressly made therein (by cross-
reference or otherwise).
4.1 Authorization.
The Stockholder has all necessary power and authority to enter into
this Agreement and the Ancillary Agreements to which it is a party and has taken
all actions necessary to consummate the transactions contemplated hereby and
thereby and to perform its obligations hereunder and thereunder. This Agreement
has been duly executed and delivered by the Stockholder and is, and upon the
execution and delivery of each Ancillary Agreement to which it is a party will
be, a valid and binding obligation of the Stockholder, enforceable against the
Stockholder in accordance with its terms, except that enforceability may be
limited by (a) bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights of creditors or (b) general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
23
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4.2 Organization of Mustang.
Mustang is a corporation duly organized, validly existing and in good
standing under the laws of the State of Kansas. Mustang has the requisite
corporate power and authority to conduct its business as it is presently being
conducted and to own or lease, as applicable, the assets owned or leased by it.
4.3 No Conflict or Violation; Consents.
None of the execution, delivery or performance of this Agreement or
any Ancillary Agreement, the consummation of the transactions contemplated
hereby or thereby, nor compliance by the Stockholder with any of the provisions
hereof or thereof, will (a) violate, conflict with, or result in a breach of or
constitute a default (with or without notice of passage of time) under, or
result in the termination of, or accelerate the performance required by, or
result in a right to terminate, accelerate, modify or cancel under, or require a
notice under, or result in the creation of any Encumbrance upon any of its
respective assets under, any contract, lease, sublease, license, sublicense,
franchise, permit, indenture, agreement or mortgage for borrowed money,
instrument of indebtedness, security interest or other arrangement to which the
Stockholder is a party or by which the Stockholder is bound or to which any of
its assets are subject or (b) violate any applicable Regulation or Court Order.
Except as set forth on Schedule 4.3, no notices to, declaration, filing or
------------
registration with, approvals or Consents of, or assignments by, any Persons
(including any federal, state or local governmental or administrative
authorities) are necessary to be made or obtained by the Stockholder in
connection with the execution, delivery or performance of this Agreement or any
Ancillary Agreement or the consummation of the transactions contemplated hereby
or thereby.
4.4 Ownership of PX Stock; Title.
The number of shares of PX Stock held by the Stockholder are
accurately set forth on Schedule 4.4 and all of such shares of PX Stock are
------------
lawfully owned of record and, except as set forth on Schedule 4.4, beneficially
------------
owned by the Stockholder, free and clear of any Encumbrances. Except as set
forth on Schedule 4.4, the PX Shares held by the Stockholder are not subject to
------------
any stockholder agreement, voting trust, proxy or other agreement or
understanding with respect to or concerning the purchase, sale or voting of such
PX Stock.
4.5 Certain Securities Laws Representations.
The Stockholder represents as follows with respect to the Stock
Purchase Shares to be acquired in connection with the Stock Purchase:
4.5.1 The Stockholder has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of the investment in the Stock Purchase Shares;
4.5.2 The Stockholder is receiving such shares for investment
for its own account and not with a view to, or for resale in connection with,
the distribution or other disposition thereof, other than as contemplated by
this Agreement;
4.5.3 The Stockholder has been given the opportunity to obtain
any information or documents relating to, and to ask questions and receive
answers about, SkyNet and the business and prospects of SkyNet which it deems
necessary to evaluate the merits and risks related to its investment in such
shares and to verify the information received, and the Stockholder's knowledge
and experience in
24
<PAGE>
financial and business matters are such that it is capable of evaluating the
merits and risks of its receipt of such shares;
4.5.4 The Stockholder's financial condition is such that it can
afford to bear the economic risk of holding the shares for an indefinite period
of time and to suffer a complete loss of its investment in such shares; and
4.5.5 The Stockholder has been advised that (i) SkyNet's issuance of
shares to the Stockholder will not have been registered under the Securities
Act, (ii) such shares may need to be held indefinitely, and the Stockholder must
continue to bear the economic risk of the investment in such shares unless they
are subsequently registered under the Securities Act or an exemption from such
registration is available, (iii) there may not be a public market for such
shares, (iv) when and if such shares may be disposed of without registration in
reliance on Rule 144 promulgated under the Securities Act, such disposition can
be made only in limited amounts in accordance with the terms and conditions of
such Rule, (v) if the Rule 144 exemption is not available, public sale without
registration will require compliance with an exemption under the Securities Act
and (vi) a restrictive legend in the following form shall be placed on the
certificates representing such shares:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR QUALIFIED
UNDER ANY APPLICABLE STATE SECURITIES LAWS (THE "STATE ACTS"), HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND QUALIFICATION UNDER THE STATE ACTS OR EXEMPTIONS FROM SUCH REGISTRATION OR
QUALIFICATION REQUIREMENTS (INCLUDING, IN THE CASE OF THE SECURITIES ACT, THE
EXEMPTION AFFORDED BY RULE 144). UNLESS WAIVED BY SKYNET HOLDINGS, INC., SKYNET
HOLDINGS, INC. SHALL BE FURNISHED WITH AN OPINION OF COUNSEL OPINING AS TO THE
AVAILABILITY OF EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION AS A
PRECONDITION TO ANY SUCH TRANSFER.
5. REPRESENTATIONS AND WARRANTIES OF THE MUSTANG STOCKHOLDERS
As an inducement of SkyNet to enter into this Agreement, the Mustang
Stockholders hereby make, as of the date hereof and as of the Closing Date, the
following representations and warranties to SkyNet, except as otherwise set
forth in the Schedules delivered to SkyNet prior to the date hereof, a copy of
which is attached hereto. The Schedules are numbered to correspond to the
various sections of this Article 5 setting forth certain exceptions to the
representations and warranties contained in this Article 5 and certain other
information called for by this Agreement. Unless otherwise specified, no
disclosure made in any particular Schedule shall be deemed made in any other
Schedule unless expressly made therein (by cross-reference or otherwise).
5.1 Authorization.
Each of the Mustang Stockholders has all necessary power and authority to
enter into this Agreement and the Ancillary Agreements to which it is a party
and has taken all actions necessary to consummate the transactions contemplated
hereby and thereby and to perform its obligations hereunder and thereunder. This
Agreement has been duly executed and delivered by each of the Mustang
Stockholders and is, and upon the execution and delivery thereof each Ancillary
Agreement to which it is a party will be, a valid and binding obligation of the
Mustang Stockholder, enforceable against the
25
<PAGE>
Mustang Stockholder in accordance with its terms, except that enforceability may
be limited by (a) bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights of creditors or (b) general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
5.2 No Conflict or Violation; Consents.
Except as may be provided in the Subordination Agreements dated September
15, 1998 of the Mustang Stockholders for the benefit of and NationsCredit, none
of the execution, delivery or performance of this Agreement or any Ancillary
Agreement, the consummation of the transactions contemplated hereby or thereby,
nor compliance by each of the Mustang Stockholders with any of the provisions
hereof or thereof, will (a) violate, conflict with, or result in a breach of or
constitute a default (with or without notice of passage of time) under, or
result in the termination of, or accelerate the performance required by, or
result in a right to terminate, accelerate, modify or cancel under, or require a
notice under, or result in the creation of any Encumbrance upon any of its
respective assets under, any Contract, lease, sublease, license, sublicense,
franchise, permit, indenture, agreement or mortgage for borrowed money,
instrument of indebtedness, security interest or other arrangement to which such
Mustang Stockholder is a party or by which such Mustang Stockholder is bound or
to which any of its assets are subject or (b) violate any applicable Regulation
or Court Order. Except as set forth on Schedule 5.2, no notices to, declaration,
------------
filing or registration with, approvals or Consents of, or assignments by, any
Persons (including any federal, state or local governmental or administrative
authorities) are necessary to be made or obtained by either of the Mustang
Stockholders in connection with the execution, delivery or performance of this
Agreement or any Ancillary Agreement or the consummation of the transactions
contemplated hereby or thereby.
5.3 Certain Securities Laws Representations.
Each Mustang Stockholder represents as follows with respect to the SkyNet
Series B Preferred Stock to be acquired by it under this Agreement:
5.3.1 Such Mustang Stockholder has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of the investment in the Stock Purchase Shares;
5.3.2 Such Mustang Stockholder is receiving such shares for
investment for its own account and not with a view to, or for resale in
connection with, the distribution or other disposition thereof, other than as
contemplated by this Agreement;
5.3.3 Such Mustang Stockholder has been given the opportunity to
obtain any information or documents relating to, and to ask questions and
receive answers about, SkyNet and the business and prospects of SkyNet which it
deems necessary to evaluate the merits and risks related to its investment in
such shares and to verify the information received, and the Mustang
Stockholder's knowledge and experience in financial and business matters are
such that it is capable of evaluating the merits and risks of its receipt of
such shares;
5.3.4 Such Mustang Stockholder's financial condition is such that it
can afford to bear the economic risk of holding the shares for an indefinite
period of time and to suffer a complete loss of its investment in such shares;
and
26
<PAGE>
5.3.5 Such Mustang Stockholder has been advised that (i) SkyNet's
issuance of shares to the Mustang Stockholder will not have been registered
under the Securities Act, (ii) such shares may need to be held indefinitely, and
the Mustang Stockholder must continue to bear the economic risk of the
investment in such shares unless they are subsequently registered under the
Securities Act or an exemption from such registration is available, (iii) there
may not be a public market for such shares, (iv) when and if such shares may be
disposed of without registration in reliance on Rule 144 promulgated under the
Securities Act, such disposition can be made only in limited amounts in
accordance with the terms and conditions of such Rule, (v) if the Rule 144
exemption is not available, public sale without registration will require
compliance with an exemption under the Securities Act and (vi) a restrictive
legend in the following form shall be placed on the certificates representing
such shares:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR QUALIFIED
UNDER ANY APPLICABLE STATE SECURITIES LAWS (THE "STATE ACTS"), HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND QUALIFICATION UNDER THE STATE ACTS OR EXEMPTIONS FROM SUCH REGISTRATION OR
QUALIFICATION REQUIREMENTS (INCLUDING, IN THE CASE OF THE SECURITIES ACT, THE
EXEMPTION AFFORDED BY RULE 144). UNLESS WAIVED BY SKYNET HOLDINGS, INC., SKYNET
HOLDINGS, INC. SHALL BE FURNISHED WITH AN OPINION OF COUNSEL OPINING AS TO THE
AVAILABILITY OF EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION AS A
PRECONDITION TO ANY SUCH TRANSFER.
6. REPRESENTATIONS AND WARRANTIES OF THE CARSON TRUST
As an inducement of SkyNet to enter into this Agreement, the Carson Trust
hereby makes, as of the date hereof and as of the Closing Date, the following
representations and warranties to SkyNet, except as otherwise set forth the
Schedules delivered to SkyNet prior to the date hereof, a copy of which is
attached hereto. The Schedules are numbered to correspond to the various
sections of this Article 6 setting forth certain information described in and
exceptions to the representations and warranties contained in this Article 6 and
certain other information called for by this Agreement.
6.1 Existence.
The Carson Trust was created under and is governed by the terms of a Trust
Agreement dated as of July 12, 1995 among the settlors designated therein, C.M.
"Connie" Carson and Diana Carson as Trustees, for the benefit of the
beneficiaries set forth in. The Carson Trust has not been terminated and is in
valid existence under the laws of the State of California.
6.2 Authorization.
The Trustees have all necessary power and authority to enter into this
Agreement and the Ancillary Agreements to which the Carson Trust is a party and
have taken all actions necessary to consummate the transactions contemplated
hereby and thereby and to perform all obligations hereunder and thereunder.
This Agreement has been duly executed and delivered by each of the Trustees and
is, and upon the execution and delivery thereof each Ancillary Agreement to
which it is a party will be, a valid and binding obligation of the Carson Trust,
enforceable against the Carson Trust in accordance with its terms, except that
enforceability may be limited by (a) bankruptcy, insolvency, reorganization,
27
<PAGE>
moratorium or other similar laws relating to or affecting the rights of
creditors or (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
6.3 No Conflict or Violation; Consents.
Except as may be provided in the Subordination Agreements dated September
15, 1998 of the Carson Trust for the benefit of Mustang Investment Partners LLC,
Greenstreet Pony Partners LLC and NationsCredit, none of the execution, delivery
or performance of this Agreement or any Ancillary Agreement, the consummation of
the transactions contemplated hereby or thereby, nor compliance by the Carson
Trust with any of the provisions hereof or thereof, will (a) violate, conflict
with, or result in a breach of or constitute a default (with or without notice
of passage of time) under, or result in the termination of, or accelerate the
performance required by, or result in a right to terminate, accelerate, modify
or cancel under, or require a notice under, or result in the creation of any
Encumbrance upon any of its respective assets under, any Contract, lease,
sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, security interest or
other arrangement to which the Carson Trust is a party or by which it is bound
or to which any of its assets are subject or (b) violate any applicable
Regulation or Court Order. Except as set forth on Schedule 6.3, no notices to,
------------
declaration, filing or registration with, approvals or Consents of, or
assignments by, any Persons (including any federal, state or local governmental
or administrative authorities) are necessary to be made or obtained by the
Carson Trust in connection with the execution, delivery or performance of this
Agreement or any Ancillary Agreement or the consummation of the transactions
contemplated hereby or thereby.
6.4 Absence of Claims.
The Carson Trust has asserted no claim for indemnification against PX under
the Stock Purchase Agreement dated as of July 12, 1998, as amended, by and among
Mustang, PX (as Mustang's assignee), the Carson Trust and Williams (the "Courier
Express Stock Purchase Agreement"), and the Trustees are not aware of the
occurrence of events that would provide them with the basis of asserting any
such indemnification claims under the Courier Express Stock Purchase Agreement.
6.5 Ownership of PX Debenture.
Except as contemplated by the Subordination Agreements dated September 15,
1998 of the Carson Trust for the benefit of NationsCredit, MIP and GPP, the
Carson Trust owns the PX Debenture free and clear of any Encumbrances, and the
Carson Trust has not assigned, pledged, hypothecated or otherwise transferred
any legal or beneficial interest in the PX Debenture to any Person.
7. REPRESENTATIONS AND WARRANTIES OF WILLIAMS
As an inducement of SkyNet to enter into this Agreement, Williams hereby
makes, as of the date hereof and as of the Closing Date, the following
representations and warranties to SkyNet, except as otherwise set forth the
Schedules delivered to SkyNet prior to the date hereof, a copy of which is
attached hereto. The Schedules are numbered to correspond to the various
sections of this Article 7 setting forth certain exceptions to the
representations and warranties contained in this Article 7 and certain other
information called for by this Agreement. Unless otherwise specified, no
disclosure made in any particular Schedule shall be deemed made in any other
Schedule unless expressly made therein (by cross-reference or otherwise).
28
<PAGE>
7.1 Execution and Delivery.
This Agreement has been duly executed and delivered by Williams and
is, and upon the execution and delivery thereof each Ancillary Agreement to
which he is a party will be, a valid and binding obligation of Williams,
enforceable against Williams in accordance with its terms, except that
enforceability may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights of
creditors or (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
7.2 No Conflict or Violation; Consents.
Except as may be provided in the Subordination Agreement dated
September 15, 1998 of Williams for the benefit of NationsCredit, none of the
execution, delivery or performance of this Agreement or any Ancillary Agreement,
the consummation of the transactions contemplated hereby or thereby, nor
compliance by Williams with any of the provisions hereof or thereof, will (a)
violate, conflict with, or result in a breach of or constitute a default (with
or without notice of passage of time) under, or result in the termination of, or
accelerate the performance required by, or result in a right to terminate,
accelerate, modify or cancel under, or require a notice under, or result in the
creation of any Encumbrance upon any of his assets under, any contract, lease,
sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, security interest or
other arrangement to which Williams is a party or by which it is bound or to
which any of his assets are subject or (b) violate any applicable Regulation or
Court Order. Except as set forth on Schedule 7.2, no notices to, declaration,
------------
filing or registration with, approvals or Consents of, or assignments by, any
Persons (including any federal, state or local governmental or administrative
authorities) are necessary to be made or obtained by Williams in connection with
the execution, delivery or performance of this Agreement or any Ancillary
Agreement or the consummation of the transactions contemplated hereby or
thereby.
7.3 Absence of Claims
To the knowledge of Williams, Mustang has complied in all material
respects with the provisions of the Stock Purchase Agreement dated as of July
12, 1998 by and between Mustang, the Carson Trust and Williams and Williams has
no outstanding claims for indemnification on account of any breach of
representations, warranties, covenants or other obligations of Mustang
thereunder, and is not aware of the existence of facts that, with the passage of
time, the giving of notice or otherwise, would constitute a breach of a
representation, warranty, covenant or other obligation or give rise to an
indemnification claim thereunder.
7.4 Ownership of Williams PX Debenture.
Except as contemplated by the Subordination Agreements dated September
15, 1998 of the Williams for the benefit of NationsCredit, MIP and GPP, Williams
owns the Williams PX Debenture free and clear of any Encumbrances, and Williams
has not assigned, pledged, hypothecated or otherwise transferred any legal or
beneficial interest in the Williams PX Debenture to any Person.
8. REPRESENTATIONS AND WARRANTIES OF SKYNET
As an inducement of PX, the Stockholder, each of the Mustang
Stockholders, the Carson Trust and Williams to enter into this Agreement, SkyNet
hereby makes as of the date hereof and as of the Closing Date, the following
representations and warranties to PX, the Stockholder, the Mustang
29
<PAGE>
Stockholders, the Carson Trust and Williams, except as otherwise set forth in
the Schedules delivered to PX, the Stockholder, the Mustang Stockholders, the
Carson Trust and Williams prior to the date hereof, a copy of which is attached
hereto. The Schedules are numbered to correspond to the various sections of this
Article 9 setting forth certain exceptions to the representations and warranties
contained in this Article 9 and certain other information called for by this
Agreement. Unless otherwise specified, no disclosure made in any particular
Schedule shall be deemed made in any other Schedule unless expressly made
therein (by cross-reference or otherwise).
8.1 Organization.
SkyNet is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. SkyNet has full corporate
power and authority to conduct its business as it is presently being conducted
and to own or lease, as applicable, the assets owned or leased by it. SkyNet is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which such qualification is necessary under applicable
law as a result of the conduct of its business or the ownership of its
properties and where the failure to be so qualified would have a Material
Adverse Effect on SkyNet. Each jurisdiction in which SkyNet is qualified to do
business as a foreign corporation is set forth in Schedule 8.1.
------------
8.2 Capitalization.
8.2.1 There are 50,000,000 shares of SkyNet Common Stock
authorized under its Certificate of Incorporation, 18,903,915 of which were
issued and outstanding as of March 31, 1999 and 5,000,000 authorized shares of
Preferred Stock, $.0001 par value, of SkyNet ("SkyNet Preferred Stock" and
together with the SkyNet Stock, the "SkyNet Securities") authorized under its
Certificate of Incorporation, of which (i) 2,450,000 shares have been designated
Series A Preferred Stock and issued as of March 31, 1999, and (ii) 825,000
shares will be designated Series B Preferred Stock as of the Closing Date.
SkyNet has no other stock authorized, issued or outstanding. The Series A
Preferred Stock designation is attached as Schedule 8.2.
------------
8.2.2 Except for the issued and outstanding shares of Series A
Preferred Stock described in Section 8.2.1, options to purchase 965,000 shares
of SkyNet Common Stock issued pursuant to SkyNet's 1998 Incentive Stock Option
Plan, additional options to purchase 1,800,000 shares of SkyNet Common Stock and
warrants to purchase 933,400 shares of SkyNet Common Stock, there are no
outstanding options, warrants, convertible securities or rights of any kind to
purchase or otherwise acquire any shares of capital stock or other securities of
SkyNet.
8.2.3 All outstanding shares of SkyNet Common Stock are, and
the Stock Purchase Shares, the Series B Preferred Stock, and the shares of
SkyNet Common Stock issuable upon the conversion of the Series B Preferred Stock
shall be, validly issued, fully paid and non-assessable and not subject to any
preemptive rights created by statute, SkyNet's Certificate of Incorporation or
Bylaws or any Contract. The shares of SkyNet Common and Preferred Stock have
been issued in compliance with all federal and state corporate and securities
laws.
8.2.4 There is no outstanding vote, plan, pending proposal or
right of any Person to cause any redemption of SkyNet Stock or consolidation of
SkyNet with or into any other entity.
8.2.5 To SkyNet's knowledge, there are no existing agreements
among any stockholders of SkyNet.
30
<PAGE>
8.3 Authorization.
SkyNet has all necessary corporate power and authority to enter into
this Agreement and the Ancillary Agreements to which it is a party and has taken
all action necessary to consummate the transactions contemplated hereby and
thereby and to perform its respective obligations hereunder and thereunder.
This Agreement has been duly executed and delivered by SkyNet, and this
Agreement is, and upon execution and delivery each of the Ancillary Agreements
to which SkyNet is a party will be, a valid and binding obligation of SkyNet
enforceable against SkyNet in accordance with its terms, except that
enforceability may be limited by the effect of (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors or (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
8.4 No Conflict or Violation; Consents.
None of the execution, delivery or performance of this Agreement or
any Ancillary Agreement, the consummation of the transactions contemplated
hereby or thereby, nor compliance by SkyNet with any of the provisions hereof or
thereof, will (a) violate or conflict with any provision of SkyNet's governing
documents to the extent applicable, (b) violate, conflict with, or result in a
breach of or constitute a default (with or without notice of passage of time)
under, or result in the termination of, or accelerate the performance required
by, or result in a right to terminate, accelerate, modify or cancel under, or
require a notice under, or result in the creation of any Encumbrance upon any of
its assets under, any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, security interest or other arrangement to which SkyNet is a party
or by which SkyNet is bound or to which any of its respective assets are
subject, (c) violate any Regulation or Court Order applicable to SkyNet or (d)
impose any Encumbrance on any assets of SkyNet. Except as set forth on Schedule
--------
8.4, no notices to, declaration, filing or registration with, approvals or
- ---
Consents of, or assignments by, any Persons (including any federal, state or
local governmental or administrative authorities) are necessary to be made or
obtained by SkyNet in connection with the execution, delivery or performance of
this Agreement or any Ancillary Agreement or the consummation of the
transactions contemplated hereby or thereby.
8.5 Reports and Financial Statements.
SkyNet has timely filed all reports required to be filed or filed
voluntarily with the SEC pursuant to the Exchange Act or the Securities Act
(collectively, the "SEC Reports"), and has previously made available to PX true
and complete copies of all such SEC Reports. Such SEC Reports, as of their
respective dates, complied in all materials respects with the applicable
requirements of the Securities Act and the Exchange Act, as the case may be, and
none of such SEC Reports contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements of SkyNet,
including the notes thereto, included in the SEC Reports have been prepared in
accordance with GAAP consistently applied and fairly present the consolidated
financial condition of SkyNet as at the dates thereof and consolidated results
of operations and cash flows for the periods then ended.
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8.6 Absence of Certain Changes or Events.
Except as set forth in the SEC Reports, since March 31, 1999, there
has not been any fact, event, circumstance or change affecting or relating to
SkyNet which has had or is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on SkyNet (an "SkyNet Material Adverse
Effect"); provided, however, that an SkyNet Material Adverse Effect shall not
include any adverse effect following the date of this Agreement which is solely
attributable to (i) the announcement or pendency of the transactions
contemplated by this Agreement or (ii) changes in national economic conditions
or industry conditions generally.
8.7 Disclosure.
No representations or warranties by SkyNet in this Agreement or any
Ancillary Agreement to which it is a party or in any document, written
information, exhibit, statement, certificate or schedule heretofore or
hereinafter furnished by SkyNet, or any of SkyNet's officers, directors,
affiliates or any of its Representatives to PX and the Stockholder pursuant
hereto, or in connection with the transactions contemplated by this Agreement or
by such Ancillary Agreements contains or will contain any untrue statement of a
material fact, or omits or will omit to state any material fact necessary to
make the statements or facts contained therein not misleading.
8.8 Litigation.
Except as may be set forth in the SEC Reports, there is no action,
suit, or other legal or administrative proceeding or governmental investigation
pending, threatened, anticipated or contemplated against, by or affecting
SkyNet, or any of its properties or assets, or which questions the validity or
enforceability of this Agreement or the transactions contemplated hereby, and,
to the knowledge of SkyNet, there is no basis for any of the forgoing. Except
as may be set forth in the SEC Reports, there are no outstanding court orders in
any proceeding to which SkyNet is or was a party which have not been complied
with in full or which continue to impose any material obligations on SkyNet and
Sub.
9. AGREEMENTS OF THE PARTIES
The parties, each as indicated below, covenant as follows:
9.1 Conduct of Business.
From the date hereof through the Closing, PX shall, except as
contemplated by this Agreement, or as consented to by SkyNet in writing, or as
set forth on Schedule 9.1, continue operations in the ordinary course of
------------
business and in accordance with past practice and will not take any action
inconsistent with this Agreement, the Ancillary Agreements or the consummation
of the Closing. Without limiting the generality of the foregoing, the
Stockholder and the Mustang Stockholders shall not cause PX to, except as
specifically contemplated by this Agreement or as consented to by SkyNet in
writing:
9.1.1 incur any indebtedness for borrowed money (other than
advances made to or on behalf of PX by NationsCredit Commercial Corporation or
SkyNet), or assume, guarantee, endorse (other than endorsements for deposit or
collection in the ordinary course of business), or otherwise become responsible
for obligations of any other Person;
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9.1.2 issue or commit to issue any PX Stock or any other
securities or any securities convertible into PX Stock or any other securities,
including, without limitation, any options to acquire PX Stock;
9.1.3 pay or incur any obligation to pay any distribution or
dividend or effect any redemption with respect to any PX Stock;
9.1.4 make any change to PX's Certificate of Incorporation or
Bylaws;
9.1.5 mortgage, pledge or otherwise encumber any asset or
sell, transfer, license or otherwise dispose of any asset except for the
licensing of PX's products and services in the ordinary course of business and
consistent with past practice;
9.1.6 cancel, release or assign any indebtedness owed to it or
any claims or rights held by it, except in the ordinary course of business and
consistent with past practice;
9.1.7 make any investment of a capital nature either by
purchase of stock or securities, contributions to capital, property transfer or
otherwise, or by the purchase of any property or assets of any other Person;
9.1.8 terminate any material Contract or make any change in
any material Contract;
9.1.9 except as set forth in Schedule 9.1, enter into or
------------
modify any employment Contract, (ii) pay any compensation to or for any
Employee, officer or director other than in the ordinary course of business and
pursuant to existing employment arrangements, (iii) pay or agree to pay any
bonus, incentive compensation, service award or other like benefit or (iv) enter
into or modify any other Employee Plan;
9.1.10 enter into or modify any Contract with a Related Party;
9.1.11 make any payment or distribution to the Stockholder or
the Mustang Stockholders or redeem or purchase any PX Stock;
9.1.12 make any change in any method of accounting or
accounting practice;
9.1.13 fail to pursue new Contracts or the development and
introduction of new products and technology advances in connection with its
operations on a basis consistent with past practice;
9.1.14 fail to comply with all material Regulations applicable
to it consistent with past practices;
9.1.15 fail to use its commercially reasonable efforts to (i)
maintain its business, (ii) retain the Employees so that such Employees will
remain available to SkyNet on and after the Closing Date (provided that PX shall
not enter into any employment agreement with any Employee pursuant to this
Section 9.1.15, (iii) maintain existing relationships with suppliers and
customers and others having business dealings with PX and (iv) otherwise to
preserve the goodwill of its business so that such relationships and goodwill
will be preserved on and after the Closing Date; or
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9.1.16 do any other act which would cause any representation
or warranty of PX or the Stockholder in this Agreement to be or become untrue in
any material respect or that is not in the ordinary course of business
consistent with past practice.
9.2 Investigation by SkyNet.
From the date hereof through the Closing Date, PX shall, and shall
cause PX's Employees and Representatives to, afford the Representatives of
SkyNet access upon reasonable notice and at all reasonable times to its business
for the purpose of inspecting the same, and to its officers, Employees and
Representatives, properties, Books and Records, Contracts and other assets, and
shall furnish SkyNet and its Representatives, upon reasonable notice and in a
timely manner, all financial, operating and other data and information
(including with respect to Proprietary Rights) as SkyNet or its Affiliates,
through their respective Representatives, may reasonably request.
9.3 Notification of Certain Matters; Amendment of Schedules.
From the date hereof through the Closing Date, PX, the Stockholder and
SkyNet shall give prompt notice to the other parties of (i) the discovery,
occurrence, or failure to occur, of any event which occurrence or failure would
be likely to cause any representation or warranty of PX, the Stockholder, or
SkyNet contained in this Agreement to be untrue or inaccurate in any material
respect and (ii) any material failure of PX, the Stockholder or SkyNet to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that such disclosure shall not be
deemed to cure any breach of a representation, warranty, covenant or agreement
or to satisfy any condition. PX, the Stockholder and the Mustang Stockholders
shall promptly notify SkyNet of any Default hereunder and (iii) the threat or
commencement of any Action, or any development that occurs before the Closing
that could reasonably be expected to result in a Material Adverse Effect on
either PX or SkyNet. All parties shall have the unrestricted right to update
and revise any schedule to this agreement and to add schedule references at any
time prior to the Closing. If a party elects not to proceed with the
transactions contemplated by this Agreement because of a material revision to
such schedules, no party (including the party revising the Schedules) will have
any liability to any other. If a party elects to proceed with the Closing, the
revised Schedules will control for all purposes including indemnification.
9.4 No Purchases, Consolidations, Sale of Stock, Etc.
From the date hereof through the Closing Date, PX will not, and the
Stockholder and the Mustang Stockholders will not permit PX to, directly or
indirectly, (a) solicit any inquiries or proposals or enter into or continue any
discussions, negotiations or agreements relating to (i) the sale or exchange of
the PX Stock, (ii) the merger or consolidation of PX with, or the direct or
indirect disposition of a significant amount of its assets other than to or with
SkyNet or its Affiliates or (iii) the licensing of PX's Proprietary Rights to
any Person other than in the ordinary course of business consistent with past
practice, or (b) provide any assistance or any information to or otherwise
cooperate with any Person in connection with any such inquiry, proposal or
transaction. PX, the Stockholder and the Mustang Stockholders hereby represent
that neither PX, the Stockholder nor the Mustang Stockholder is now engaged in
discussions or negotiations with any party other than SkyNet with respect to any
transaction of the kind described in clauses (a) (i) through (a) (iii) of the
preceding sentence (a "Proposed Acquisition Transaction"). PX, the Stockholder
and the Mustang Stockholder agree not to release any third party from, or waive
any provision of, any confidentiality or standstill agreement to which any of
them is a party. PX, the Stockholder and the Mustang Stockholders shall (w)
immediately notify SkyNet (orally and in writing) if any offer is made, any
discussions or negotiations are sought to be initiated, any
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inquiry, proposal or contact is made or any information is requested with
respect to any Proposed Acquisition Transaction, (x) promptly notify SkyNet of
the terms of any proposal which any of them may receive in respect of any such
Proposed Acquisition Transaction, including, without limitation, the identity of
the prospective purchaser or soliciting party, (y) promptly provide SkyNet with
a copy of any such offer, if written, or a written summary (in reasonable
detail) of such offer, if not in writing, and (z) keep SkyNet informed of the
status of such offer and the offeror's efforts and activities with respect
thereto.
9.5 Confidentiality.
9.5.1 With respect to information concerning the PX that is
made available to SkyNet pursuant to the terms of this Agreement, SkyNet agrees,
that it shall, both before and after the Closing Date, hold such information in
strict confidence, shall not use such information except for the sole purpose of
evaluating the Agreement and related transactions and shall not disseminate or
disclose any of such information other than to its directors, officers,
employees, shareholders, affiliates, agents and representatives who need to know
such information for the sole purpose of evaluating the Agreement and the
related transactions (each of whom shall be informed in writing by SkyNet of the
confidential nature of such information and directed by SkyNet in writing to
treat such information confidentially). If this Agreement is terminated pursuant
to the provisions of Section 15, SkyNet shall immediately return all such
information, all copies thereof and all information prepared by SkyNet based
upon the same; provided, however, that one copy of all such material may be
retained by SkyNet's outside legal counsel for purposes only of resolving any
disputes under this Agreement. The above limitations on use, dissemination and
disclosure shall not apply to information that (i) is learned by SkyNet from a
third party entitled to disclose it; (ii) becomes known publicly other than
through SkyNet or any party who received the same through SkyNet, provided that
SkyNet has no knowledge that the disclosing party was subject to an obligation
of confidentiality; (iii) is required by law or court order to be disclosed by
SkyNet; or (iv) is disclosed with the express prior written consent thereto of
the Stockholder. SkyNet shall undertake all necessary steps to ensure that the
secrecy and confidentiality of such information will be maintained in accordance
with the provisions of this subsection 9.5.1. Notwithstanding anything contained
herein to the contrary, in the event a party is required by court order or
subpoena to disclose information which is otherwise deemed to be confidential or
subject to the confidentiality obligations hereunder, prior to such disclosure,
the disclosing party shall: (i) promptly notify the non-disclosing party and, if
having received a court order or subpoena, deliver a copy of the same to the
non-disclosing party; (ii) cooperate with the non-disclosing party, at the
expense of the non-disclosing party in, obtaining a protective or similar order
with respect to such information; and (iii) provide only such of the
confidential information as the disclosing party is advised by its counsel is
necessary to strictly comply with such court order or subpoena.
9.5.2 With respect to information concerning SkyNet that is
made available to the Stockholder pursuant to the provisions of this Agreement,
the PX and the Stockholder agree that they shall, both before and, in the case
of the Stockholder, after the Closing Date, hold such information in strict
confidence, shall not use such information except for the sole purpose of
evaluating this Agreement and the related transactions, and shall not
disseminate or disclose any of such information other than to the PX's
directors, officers, employees, affiliates, agents and representatives who need
to know such information for the sole purpose of evaluating the Agreement and
the related transactions (each of whom shall be informed in writing by the PX or
the Stockholder of the confidential nature of such information and directed by
such party in writing to treat such information confidentially). If this
Agreement is terminated pursuant to the provisions of Section 15, the
Stockholder agrees to return immediately all such information, all copies
thereof and all information prepared by either the Stockholder or the PX based
upon the same; provided, however, that one copy of all such material may be
retained by PX's or
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the Stockholder's legal counsel for purposes only of resolving any disputes
under this Agreement. The above limitations on use, dissemination and disclosure
shall not apply to information that (i) is learned by either PX or the
Stockholder from a third party entitled to disclose it; (ii) becomes known
publicly other than through any of the Stockholder or any party who received the
same through either PX or the Stockholder, provided that PX or the Stockholder
has no knowledge that the disclosing party was subject to an obligation of
confidentiality; (iii) is required by law or court order to be disclosed by PX
or the Stockholder; or (iv) is disclosed with the express prior written consent
thereto of SkyNet. PX and the Stockholder agree to undertake all necessary steps
to ensure that the secrecy and confidentiality of such information will be
maintained in accordance with the provisions of this Section 9.5.2.
Notwithstanding any thing contained herein to the contrary, in the event a party
is required by court order or subpoena to disclose information which is
otherwise deemed to be confidential or subject to the confidentiality
obligations hereunder, prior to such disclosure, the disclosing party shall: (i)
promptly notify the non-disclosing party and, if having received a court order
or subpoena, deliver a copy of the same to the non-disclosing party; (ii)
cooperate with the non-disclosing party at the expense of the non-disclosing
party in obtaining a protective or similar order with respect to such
information; and (iii) provide only such of the confidential information as the
disclosing party is advised by its counsel is necessary to strictly comply with
such court order or subpoena.
9.6 Further Assurances.
Upon the terms and subject to the conditions contained herein, the
parties agree, in each case both before and after the Closing, (i) to use all
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement and the Ancillary
Agreements, (ii) to execute any documents, instruments or conveyances of any
kind which may be reasonably necessary or advisable to carry out any of the
transactions contemplated hereunder and thereunder and (iv) to cooperate with
each other in connection with the foregoing. Without limiting the foregoing,
the parties agree to use their respective reasonable efforts (A) to give all
notices to, and make all registrations and filings with third parties, including
submissions of information requested by governmental authorities and (B) to
fulfill all other conditions to this Agreement. Notwithstanding the foregoing,
(y) no amendment or modification shall be made to any Contract to obtain any
required Consent without the prior written consent of SkyNet and (z) no party
hereto or any of their respective Affiliates shall be required to sell,
transfer, divest or otherwise dispose of any of its respective business, assets
or properties in connection with this Agreement or any of the transactions
contemplated hereby.
10. CONDITIONS TO PX'S, THE STOCKHOLDER'S, THE MUSTANG STOCKHOLDER'S, THE
CARSON TRUST'S AND WILLIAMS' OBLIGATIONS
The obligations of PX, the Stockholder, the Mustang Stockholders, the
Carson Trust and Williams to effect the Stock Purchase and complete the related
transactions contemplated by this Agreement are subject, in the discretion of
the Stockholder, the Mustang Stockholders, the Carson Trust and Williams, to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions or the waiver of such conditions:
10.1 Representations, Warranties and Covenants.
All representations and warranties of SkyNet contained in this
Agreement shall be true and correct at and as of the Closing Date as if such
representations and warranties were made at and as of the Closing Date, and
SkyNet shall have performed in all material respects all agreements and
covenants required hereby to be performed by it prior to or at the Closing Date.
There shall be delivered to the
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Stockholder a certificate signed by a senior officer of SkyNet to the foregoing
effect ("SkyNet Closing Certificate").
10.2 Consents.
The Stockholder and the Mustang Stockholders shall be satisfied that
all approvals required under any Regulations to permit SkyNet to carry out the
transactions contemplated by this Agreement and the Ancillary Agreements shall
have been obtained.
10.3 No Actions or Court Orders.
No Action by any court, governmental authority or other Person shall
have been instituted or threatened which questions the validity or legality of
the transactions contemplated hereby and by the Ancillary Agreements. There
shall not be any Regulation or Court Order that makes the Stock Purchase
contemplated hereby illegal or otherwise prohibited.
10.4 Closing Documents.
SkyNet shall have taken all actions and delivered the documents and
other items described in Section 2.2 and such other documents and items as the
Stockholder may reasonably require.
10.5 Opinion of SkyNet Counsel.
Buchanan Ingersoll Professional Corporation, counsel to SkyNet, shall
have delivered its opinion dated as of the Closing Date, in form and substance
acceptable to PX, the Stockholder and their counsel.
10.6 Agreement with Holders of SkyNet Series A Preferred Stock.
SkyNet shall have entered into an agreement, acceptable to the Mustang
Stockholders, the Carson Trust and Williams, whereby (i) the current holders of
SkyNet's Series A Preferred Stock will agree to subordinate their right to
receive preferential dividends and other distributions to the right of the
holders of SkyNet Series B Preferred Stock to receive dividends and other
distributions (including upon liquidation) as described in the terms of the
SkyNet Series B Preferred Stock, (ii) such holders will have converted their
preferred stock interests to SkyNet Common Stock, or (iii) some other agreement
shall have been reached, acceptable in form and substance to the prospective
holders of the Series B Preferred Stock, with respect to the interests of the
holders of Series A Preferred Stock.
10.7 Material Adverse Change.
There shall not have been any Material Adverse Change with respect to
SkyNet.
10.8 Compliance with Hart-Scott-Rodino Act
SkyNet shall have complied with the premerger notification
requirements of the Hart-Scott-Rodino Act and the applicable notification period
thereunder shall have expired or been terminated by the Federal Trade Commission
and the Department of Justice at the request of the parties.
10.9 Internal Mustang Agreement.
The Mustang Stockholders, Borg-Warner Security Corporation,
NationsCredit, Williams and all other parties, other than the Carson Trust, with
any rights or obligations with respect to the Stockholder
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(including any guaranty obligations) shall have released all such rights or
obligations and, if applicable, shall have entered into appropriate agreements
with respect to the final distribution of consideration received by Stockholder
as a result of the transactions contemplated by this Agreement.
10.10 Release of Stockholder's Guaranty of Certain Obligations.
The Carson Trust shall have released Stockholder from only those
obligations relating to the repayment of the PX Debenture under a certain
Guaranty Agreement dated as of September 15, 1998 for the benefit of the Carson
Trust (the "Mustang Guaranty"). All other obligations of Stockholder under the
Mustang Guaranty shall continue in full force and effect.
10.11 Release of Williams' Guaranty of Certain Obligations.
The Carson Trust shall have released Williams from only those
obligations relating to the repayment of the PX Debenture under a certain
Guaranty Agreement dated as of September 14, 1998 for the benefit of the Carson
Trust (the "Williams Guaranty"). All other obligations of Williams under the
Williams Guaranty shall continue in full force and effect.
10.12 Release of PX Debenture and the Williams PX Debenture from
NationsCredit.
SkyNet, the Stockholder and PX shall have arranged for the release of
the MIP and GPP Notes, the PX Debenture and the Williams PX Debenture from
NationsCredit for delivery and cancellation at the Closing. The consent of each
of the parties to this Agreement shall be required in order to waive the
satisfaction of this condition, and the Carson Trust and the Mustang
Stockholders shall have no liability of any kind for the failure of the parties
responsible for satisfying this condition to do so.
11. CONDITIONS TO SKYNET'S OBLIGATIONS
The obligations of SkyNet to effect the Stock Purchase and complete
the related transactions contemplated by this Agreement are subject, in the
discretion of SkyNet, to the satisfaction, on or prior to the Closing Date, of
each of the following conditions, or the waiver of such conditions by SkyNet:
11.1 Representations, Warranties and Covenants.
All representations and warranties of PX, the Stockholder, the Mustang
Stockholders, the Carson Trust and Williams contained in this Agreement shall be
true and correct at and as of the Closing Date as if such representations and
warranties were made at and as of the Closing Date, and PX, the Stockholder the
Mustang Stockholders, the Carson Trust and Williams shall have performed in all
material respects all agreements and covenants required hereby to be performed
prior to or at the Closing Date.
11.2 Consents.
All Consents, approvals and waivers from governmental authorities and
other parties necessary to permit the Stockholder, the Mustang Stockholders, the
Carson Trust and Williams to consummate the Stock Purchase as contemplated
hereby and by the Ancillary Agreements and for the operation PX after the
Closing (including all required third party consents under the Contracts) shall
have been obtained. SkyNet shall be satisfied that all approvals required under
any Regulations to permit the Stockholder, the Mustang Stockholders, the Carson
Trust and Williams to carry out the transactions contemplated by this Agreement
and the Ancillary Agreements shall have been obtained.
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11.3 No Actions or Court Orders.
No Action by any court, governmental authority or other Person shall
have been instituted or threatened which questions the validity or legality of
the transactions contemplated hereby and by the Ancillary Agreements and which
could reasonably be expected to damage SkyNet or PX materially if the
transactions contemplated hereby or thereby are consummated, including any
material adverse effect on the right or ability of SkyNet to own, operate or
transfer PX after the Closing. There shall not be any Regulation or Court Order
that makes the Stock Purchase contemplated hereby illegal or otherwise
prohibited or that otherwise may have a Material Adverse Effect on PX.
11.4 Closing Documents.
The Stockholder, the Mustang Stockholders, the Carson Trust and
Williams shall have taken all actions and delivered the documents and other
items described in Section 2.2 and such other documents and items as SkyNet may
reasonably require.
11.5 Due Diligence Review.
SkyNet shall have completed, to its satisfaction, a due diligence
review of the financial condition, results of operations, properties, assets,
liabilities, business and prospects of Seller.
11.6 Agreement with NationsCredit.
NationsCredit shall have agreed to such modifications to its existing
financing arrangements with PX as SkyNet may determine, in its sole and absolute
discretion, are necessary for the successful operation of PX following the
Closing.
11.7 Exemption under Federal and State Securities Laws.
The issuance of shares of SkyNet Stock in the Stock Purchase shall not
violate any federal or state securities laws.
11.8 Tax Matters.
No new elections with respect to Taxes, or changes in current
elections with respect to Taxes, affecting PX shall have been made after the
date of this Agreement without the prior written consent of SkyNet, which
consent shall not be unreasonably withheld.
11.9 Compliance with Hart-Scott-Rodino Act.
GPP shall have complied with the premerger notification requirements
of the Hart-Scott-Rodino Act and the applicable notification period thereunder
shall have expired or been terminated by the Federal Trade Commission and the
Department of Justice at the request of the parties hereto.
11.10 Opinion of PX Counsel.
The Corporate Counsel Group, LLP, counsel to PX, shall deliver its
opinion letter dated as of the Closing Date, in form and substance acceptable to
SkyNet and its counsel.
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11.11 Agreement with Holders of SkyNet Series A Preferred Stock.
SkyNet shall have entered into an agreement, acceptable to the Mustang
Stockholders, the Carson Trust and Williams, whereby the current holders of
SkyNet's Series A Preferred Stock agree to subordinate their right to receive
preferential dividends and other distributions to the right of the holders of
SkyNet Series B Preferred Stock to receive dividends and other distributions as
described in the terms of the SkyNet Series B Preferred Stock.
11.12 Release of MIP and GPP Notes, PX Debenture and the Williams PX
Debenture from NationsCredit Commercial Corporation.
SkyNet, the Stockholder and PX shall have arranged for the release of
the MIP and GPP Notes, the PX Debenture and the Williams PX Debenture from
NationsCredit for delivery and cancellation at the Closing. The consent of each
of the parties to this Agreement shall be required in order to waive the
satisfaction of this condition, and the Carson Trust and the Mustang
Stockholders shall have no liability of any kind for the failure of the parties
responsible for satisfying this condition to do so.
11.13 Cancellation of Management Agreements.
All parties to any agreement with PX calling for the provision of
management or administrative services on behalf of PX or its Subsidiary shall
have canceled such agreements effective the Closing Date and delivered a release
in form and substance acceptable to SkyNet releasing PX and its Affiliates from
any and all claims arising thereunder.
11.14 Material Adverse Change.
There shall not have been any Material Adverse Change with respect to
PX.
12. INDEMNIFICATION
12.1 Survival of Representations, Etc.
On the Closing Date, all representations and warranties contained in
this Agreement, any schedule or in any certificate or instrument of conveyance
delivered by or on behalf of the parties pursuant to this Agreement or in
connection with the transactions contemplated hereby, and made by PX and the
Stockholder shall expire as to PX and thereafter will be deemed to have been
made exclusively by the Stockholder. All such representations, warranties and
covenants, and all other representations, warranties and covenants contained
herein, shall survive the Closing Date and continue in full force and effect
until the end of the Escrow Period (the "Survival Period"). No investigation
made by any of the parties hereto (whether prior to, on or after the Closing
Date) shall in any way limit the representations and warranties of the parties.
The termination of the representations and warranties provided herein shall not
affect the rights of a party in respect of any claim made by such party in a
writing received by the other party prior to the expiration of the applicable
survival period provided herein.
12.2 Indemnification.
12.2.1 General.
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12.2.1.1 Subsequent to the Closing and subject to
the limitations on indemnity set forth in Section 12.4, the Stockholder shall
indemnify SkyNet, its Affiliates, and each of their
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respective, officers, directors, employees, members and agents ("SkyNet
Indemnified Parties") against, and hold each of the SkyNet Indemnified Parties
harmless from any damage, claim, loss, cost, liability or expense, including
without limitation, interest, penalties, reasonable attorneys' fees and expenses
of investigation, diminution of value, response action, removal action or
remedial action after deduction for any net tax savings, insurance reimbursement
or other third party recoveries (collectively "Damages") incurred by any such
SkyNet Indemnified Party, that are incident to, arise out of, in connection
with, or relate to, the breach of any warranty, representation, covenant or
agreement of PX, the Stockholder or the Mustang Stockholders contained in this
Agreement or any schedule hereto or in any certificate delivered by or on behalf
of PX, the Stockholder or the Mustang Stockholders pursuant to this Agreement or
in connection with the transactions contemplated hereby.
12.2.1.2 Subsequent to the Closing and subject to the
limitations on indemnity set forth in this subsection 12.4, the Carson Trust
shall indemnify the SkyNet Indemnified Parties against, and hold each of the
SkyNet Indemnified Parties harmless from, any Damages incurred by any such
SkyNet Indemnified Party, that are incident to, arise out of, in connection
with, or relate to, the breach of any warranty, representation, covenant or
agreement of the Carson Trust contained in this Agreement or any schedule hereto
or in any certificate delivered by or on behalf of the Carson Trust pursuant to
this Agreement or in connection with the transactions contemplated hereby.
12.2.1.3 Subsequent to the Closing and subject to the
limitations on indemnity set forth in this subsection 12.4, Williams shall
indemnify the SkyNet Indemnified Parties against, and hold each of the SkyNet
Indemnified Parties harmless from, any Damages incurred by any such SkyNet
Indemnified Party that are incident to, arise out of, in connection with, or
relate to, the breach of any warranty, representation, covenant or agreement of
Williams contained in this Agreement or any schedule hereto or in any
certificate delivered by or on behalf of Williams pursuant to this Agreement or
in connection with the transactions contemplated hereby.
12.2.1.4 Subsequent to the Closing, SkyNet shall indemnify
the Stockholder, the Mustang Stockholders and their respective Affiliates
("Stockholder Indemnified Parties"), the Carson Trust and its beneficiaries
(collectively, "Carson Trust Indemnified Parties"), and Williams from and
against, and hold each of the Stockholder Indemnified Parties, Carson Trust
Indemnified Parties and Williams harmless from, any Damages incurred by such
Stockholder Indemnified Party, Carson Trust Indemnified Party or Williams, that
are incident to, arise out of, in connection with, or related to, whether
directly or indirectly, the breach of any warranty, representation, covenant or
agreement of SkyNet contained in this Agreement, any schedule or in any
certificate or instrument of conveyance delivered by or on behalf of SkyNet
pursuant to this Agreement or in connection with the transactions contemplated
hereby.
12.2.1.5 The term "Damages" as used in this Section 10.2 is
not limited to matters asserted by third parties against Stockholder Indemnified
Parties, Carson Trust Indemnified Parties, Williams or SkyNet Indemnified
Parties, but includes Damages incurred or sustained by such persons in the
absence of third party claims.
12.2.2 Procedure for Claims.
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12.2.2.1 If a claim for Damages (a "Claim") is to be made
by a person entitled to indemnification hereunder, the person claiming such
indemnification (the "Indemnified Party"), subject to clause (ii) below, shall
give written notice (a "Claim Notice") to the indemnifying person (the
"Indemnifying Party") as soon as practicable after the Indemnified Party becomes
aware of any fact, condition or event which may give rise to Damages for which
indemnification may be sought under this
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Section 10.2, but in no event shall the Claim Notice be effective if it is
received after the expiration of the Survival Period. The failure of any
Indemnified Party to give timely notice hereunder shall not affect rights to
indemnification hereunder, except and only to the extent that, the Claim Notice
is received after the expiration of the Survival Period or the Indemnifying
Party demonstrates actual material damage caused by such failure. In the case of
a Claim involving the assertion of a claim by a third party (whether pursuant to
a lawsuit or other legal action or otherwise, a "Third-Party Claim"), if the
Indemnifying Party shall acknowledge in writing to the Indemnified Party that
the Indemnifying Party shall be obligated to indemnify the Indemnified Party
under the terms of its indemnity hereunder in connection with such Third-Party
Claim, then (A) the Indemnifying Party shall be entitled and, if it so elects,
shall be obligated at its own cost, risk and expense, (1) to take control of the
defense and investigation of such Third-Party Claim and (2) to pursue the
defense thereof in good faith by appropriate actions or proceedings promptly
taken or instituted and diligently pursued, including, without limitation, to
employ and engage attorneys of its own choice reasonably acceptable to the
Indemnified Party to handle and defend the same, and (B) the Indemnifying Party
shall be entitled (but not obligated), if it so elects, to compromise or settle
such claim, as long as such proposed settlement or judgment involves only the
payment of money damages; otherwise, the Indemnifying Party shall not compromise
or settle such claim without the prior written consent of the Indemnified Party,
which consent shall not be unreasonably withheld. In the event the Indemnifying
Party elects to assume control of the defense and investigation of such lawsuit
or other legal action in accordance with this Section 12.2.2, the Indemnified
Party may, at the Indemnifying Party's cost and expense, participate in the
investigation, trial and defense of such Third-Party Claim; provided that, if
the named persons to a lawsuit or other legal action include both the
Indemnifying Party and the Indemnified Party and the Indemnified Party has been
advised in writing by counsel that there may be one or more legal defenses
available to such Indemnified Party that are different from or additional to
those available to the Indemnifying Party, the Indemnified Party shall be
entitled, at the Indemnified Party's cost, risk and expense, to separate counsel
of its own choosing. If the Indemnifying Party fails to assume the defense of
such Third-Party Claim in accordance with this Section 12.2 within ten (10)
calendar days after receipt of the Claim Notice, the Indemnified Party against
which such Third-Party Claim has been asserted shall (upon delivering notice to
such effect to the Indemnifying Party) have the right to undertake, at the
Indemnifying Party's cost, risk and expense, the defense, compromise and
settlement of such Third-Party Claim on behalf of and for the account of the
Indemnifying Party; and shall be entitled to settle or compromise such Third
Party Claim without the prior written consent of such Indemnified Party, as long
as such compromise or settlement involves only the payment of money damages,
otherwise provided that such Third-Party Claim shall not be compromised or
settled without the written consent of the Indemnifying Party, which consent
shall not be unreasonably withheld. In the event the Indemnifying Party assumes
the defense of the claim, the Indemnifying Party shall keep the Indemnified
Party reasonably informed of the progress of any such defense, compromise or
settlement, and in the event the Indemnified Party assumes the defense of the
claim, the Indemnified Party shall keep the Indemnifying Party reasonably
informed of the progress of any such defense, compromise or settlement. The
Indemnifying Party shall be liable for any settlement of any Third-Party Claim
effected pursuant to and in accordance with this Section 10.2 and for any final
judgment (subject to any right of appeal), and the Indemnifying Party agrees to
indemnify and hold harmless each Indemnified Party from and against any and all
Damages by reason of such settlement or judgment.
12.3 Limitation; Exclusivity of Escrow Shares as Source of
Indemnification by Stockholder and Mustang Stockholders.
The obligations of the Stockholder hereunder with respect to the
Damages shall be limited to, and shall only be satisfied by the distribution to
the SkyNet Indemnified Party of, the Escrow Shares held pursuant to the Escrow
Agreement.
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12.4 Threshold.
12.4.1 The SkyNet Indemnified Parties shall not be entitled
to recover for any Damages from the Stockholder, the Mustang Stockholders, the
Carson Trust or Williams until such time as the Damages claimed by the SkyNet
Indemnified Parties from the Stockholder, the Mustang Stockholders the Carson
Trust or Williams exceed $50,000 (the "Damage Threshold"), at which time the
SkyNet Indemnified Parties shall be entitled to be indemnified against and
compensated and reimbursed for only those Damages in excess of the Damage
Threshold. Notwithstanding the foregoing, the Carson Trust's or the Mustang
Stockholders' aggregate liability to the SkyNet Indemnified Parties
(collectively or individually) for Damages shall not exceed $1,875,000, and
Williams' aggregate liability to the SkyNet Indemnified Parties (collectively or
individually) for Damages shall not exceed $375,000.
12.4.2 The Stockholder Indemnified Parties shall not be
entitled to recover for any Damages until such time as the Damages claimed by
the Stockholder Indemnified Parties in the aggregate exceed the Damage
Threshold, at which time the Stockholder Indemnified Parties shall be entitled
to be indemnified against and compensated and reimbursed for only those Damages
in excess of the Damage Threshold. Notwithstanding the foregoing, SkyNet's
aggregate liability to the Stockholder Indemnified Parties (collectively or
individually) for Damages shall not exceed the value of the Escrow Shares as of
the date of Closing (calculated by multiplying the number of Escrow Shares by
the Average Share Price).
12.4.3 The Carson Trust Indemnified Parties shall not be
entitled to recover for any Damages until such time as the Damages claimed by
the Carson Trust Indemnified Parties in the aggregate exceed the Damage
Threshold, at which time the Carson Trust Indemnified Parties shall be entitled
to be indemnified against and compensated and reimbursed for only those Damages
in excess of the Damage Threshold. Notwithstanding the foregoing, SkyNet's
aggregate liability to the Carson Trust Indemnified Parties (collectively or
individually) for Damages shall not exceed $1,875,000.
12.4.4 Williams shall not be entitled to recover for any
Damages until such time as the Damages claimed by him in the aggregate exceed
the Damage Threshold, at which time Williams shall be entitled to be indemnified
against and compensated and reimbursed for only those Damages in excess of the
Damage Threshold. Notwithstanding the foregoing, SkyNet's aggregate liability to
Williams for Damages shall not exceed $375,000.
12.4.5 Any Claim Notice delivered after the expiration of
the Survival Period shall be null and void and of no force or effect.
12.4.6 SkyNet acknowledges and agrees that, except (i)
where Claims, disputes, breaches, failures, Defaults or actions arise out of or
are related to the fraudulent act of the Stockholder, the Carson Trust and/or
Williams or (ii) in cases arising out of a breach or alleged breach of the
covenant of the Stockholder or the Mustang Stockholders under Article 13 hereof,
the foregoing indemnification provisions of this Article 12 shall be the sole
and exclusive remedy of SkyNet against the Stockholder, the Carson Trust and
Williams, whether in law, equity, contract, tort or otherwise, for any and all
Claims, disputes, breaches, failures, Defaults or actions arising out of this
Agreement or any Ancillary Agreements, Schedules, documents, certificates or
instruments relating to this Agreement, or the transactions contemplated hereby.
Except in instances involving damages related to the fraudulent act of the
Stockholder, the Carson Trust and/or Williams, SkyNet shall not be entitled to
recover any damages from the Stockholder, the Carson Trust and/or Williams that
are not Damages provided for in this Article 12.
13. RESTRICTIVE COVENANTS
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13.1 Non-Competition.
If the Stock Purchase is consummated, except as otherwise provided in
this Section 13.1, neither the Stockholder, the Mustang Stockholders nor any of
their respective Affiliates shall, for a period of three (3) years after the
Effective Date, directly or indirectly, engage, in a business or enterprise
which is the same as or similar to the Business.
13.2 Non-Solicitation of Employees of SkyNet.
If the Stock Purchase is consummated, neither the Stockholder nor
either of the Mustang Stockholders shall, directly or indirectly, for itself or
on behalf of any other individual or entity, hire any employee of SkyNet or its
subsidiaries, including, without limitation, any employees of PX, or induce nor
attempt to induce any such employee to leave his or her employment with SkyNet
or any of its subsidiaries, at any time within three (3) years from the
Effective Date.
13.3 Non-Solicitation or Interference with Customers and Suppliers of
SkyNet.
If the Stock Purchase is consummated, neither the Stockholder nor
either of the Mustang Stockholders shall, directly or indirectly, for itself or
on behalf of any other individual or entity, solicit, divert, take away or
attempt to take away any of SkyNet's, PX's, or any of their respective
subsidiaries' current customers or suppliers or the business or patronage of any
such customers or suppliers or in any way knowingly interfere with, disrupt or
attempt to disrupt any then existing relationships between SkyNet or any of its
subsidiaries and any of their current customers or suppliers at any time within
three (3) years from the Effective Date. If the Stock Purchase is not
consummated due to a breach, default or termination by PX, the Stockholder or
the Mustang Stockholders, neither PX, the Stockholder, either of the Mustang
Stockholders nor any of their respective Affiliates shall, directly or
indirectly, for itself or on behalf of any other individual or entity, solicit,
divert, take away or attempt to take away any current customers or suppliers of
SkyNet or any of its subsidiaries made known in writing to PX the Stockholder or
either of the Mustang Stockholders by SkyNet during the negotiation of this
Agreement or subsequent to its signing, or the business or patronage of any such
customers or suppliers or in any way knowingly interfere with or disrupt any
then existing relationships between SkyNet or any of its subsidiaries, and any
of such customers or suppliers at any time within three (3) years from the date
of written notice of termination of this Agreement.
13.4 Acknowledgments.
The Stockholder and each of the Mustang Stockholders acknowledge that,
in view of the nature of PX's business and the business objectives of SkyNet in
acquiring PX, and the consideration paid in the Stock Purchase to the
Stockholder therefor, the restrictions contained in this Article 13 are
reasonably necessary to protect the legitimate business interests of SkyNet and
that any violation of such restrictions will result in irreparable injury to
SkyNet and the business SkyNet has acquired hereunder for which damages will not
be an adequate remedy. Each of the Stockholders and the Mustang Stockholders
therefore acknowledge that, if any such restrictions are violated, SkyNet shall
be entitled to preliminary and injunctive relief as well as to an equitable
accounting of earnings, profits, and other benefits arising from such violation.
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14. DEFINITIONS
14.1 Defined Terms.
As used herein, the terms below shall have the following meanings:
"Affiliate" of a Person means any other Person which, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person. The term "control" (including, with correlative meaning, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, means the direct or indirect ownership of fifty percent (50%) or more of
the voting securities of such Person.
"Ancillary Agreements" means the Escrow Agreement, the Registration
Rights Agreement and all other agreements among some or all of the parties
hereto required hereunder to consummate the Stock Purchase.
"Average Share Price" means the average of the closing bid prices of
SkyNet Common Stock on the Nasdaq OTC Bulletin Board (the American Stock
Exchange if SkyNet becomes listed there) as reported for the five (5) trading
days ending on the day which is three (3) trading days prior to the Closing
Date, subject to appropriate adjustment for stock splits, stock dividends, etc..
Balance Sheet Date" means March 31, 1999, the date of the interim
balance sheet comprising part of the Financial Statements.
"Benefit Arrangement" means each plan, arrangement, program, agreement
or commitment (written or oral) providing for insurance coverage (including,
without limitation, any self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits, vacation benefits,
retirement benefits, life, health or accident benefits (including, without
limitation, any "voluntary employees' beneficiary association" as defined in
Section 501(c)(9) of the Internal Revenue Code providing for the same or other
benefits) or for deferred compensation, profit-sharing, bonuses, stock options,
stock appreciation rights, stock purchases or other forms of incentive
compensation or post-retirement insurance, compensation or benefits which (a) is
not a Welfare Plan, Pension Plan or Multiemployer Plan, (b) is entered into,
maintained, contributed to or required to be contributed to, as the case may be,
by PX or any ERISA Affiliate or under which PX or any ERISA Affiliate may incur
any liability, and (c) covers any employee or former employee of PX or any ERISA
Affiliate (with respect to their relationship with such entity).
"Books and Records" means (a) all product, business and marketing
plans, sales and promotional literature and artwork owned by PX, (b) all books,
records, lists, ledgers, financial data, files, reports, product and design
manuals, plans, drawings, technical manuals and operating records of every kind
owned by PX (including records and lists of customers, distributors, suppliers
and personnel) and (c) all telephone and fax numbers owned by PX, in each case
whether maintained as hard copy or stored in computer memory.
"Business" means (i) for the purpose of Article 13 hereunder, any
business currently conducted by SkyNet or its Affiliates or conducted by SkyNet
or its Affiliates on the date hereof and within three years after the date
hereof, including, without limitation, its routed delivery and time-sensitive
package delivery business operations, and (ii) the delivery business and
operations of PX, as such business is conducted as of the date hereof.
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"Bylaws" means the bylaws of PX dated as of November 4, 1986, as
amended.
"Closing" has the meaning set forth in Section 2.1.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
"Consents" means all consents, approvals or waivers from third parties
that are required for the consummation of the transactions contemplated by this
Agreement.
"Contract Rights" means all rights and obligations under the
Contracts.
"Contracts" means all agreements, contracts, leases (whether for real
or personal property), purchase orders, undertakings, covenants not to compete,
employment agreements, confidentiality agreements, licenses, instruments,
obligations and commitments to which PX is a party or by which PX is bound or
affected, whether written or oral.
"Court Order" means any judgment, decision, consent decree,
injunction, ruling or order of any foreign, federal, state or local court or
governmental agency, department or authority that is binding on any Person or
its property under applicable law.
"Default" means (a) a breach of or default under any Contract, (b) the
occurrence of an event that with the passage of time or the giving of notice or
both would constitute a breach of or default under any Contract or (c) the
occurrence of an event that with or without the passage of time or the giving of
notice or both would give rise to a right of termination, renegotiation or
acceleration under any Contract.
"Employee Plans" means all Benefit Arrangements, Multiemployer Plans,
Pension Plans and Welfare Plans.
"Employees" means Persons employed by PX on a full or part-time basis,
and the EVL and VAL drivers, as of the relevant date.
"Encumbrance" means any claim, lien, pledge, option, charge, easement,
security interest, deed of trust, mortgage, right-of-way, encroachment, building
or use restriction, conditional sales agreement, encumbrance or other right of
third parties, whether voluntarily incurred or arising by operation of law, and
includes any agreement to give any of the foregoing in the future, and any
contingent sale or other title retention agreement or lease in the nature
thereof.
"Environmental Claims" means all notices of violation, liens, claims,
demands, suits, or causes of action for any damage, including, without
limitation, personal injury, property damage (including, without limitation, any
depreciation or diminution of property values), lost use of property or
consequential damages, arising directly or indirectly out of Environmental
Conditions or Environmental Laws. By way of example only (and not by way of
limitation), Environmental Claims include (i) violations of or obligations under
any contract related to Environmental Laws or Environmental Conditions between
PX and any other person, (ii) actual or threatened damages to natural resources,
(iii) claims for nuisance or its statutory equivalent, (iv) claims for the
recovery of response costs, or administrative or judicial orders directing the
performance of investigations, responses or remedial actions under any
Environmental Laws, (v) requirements to implement "corrective action" pursuant
to
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any order or permit issued pursuant to the Resource Conservation and Recovery
Act, as amended ("RCRA"), or similar provisions of applicable state law, (vi)
claims related to Environmental Laws or Environmental Conditions for
restitution, contribution, or indemnity, (vii) fines, penalties or liens of any
kind against property related to Environmental Laws or Environmental Conditions,
(viii) claims related to Environmental Laws or Environmental Conditions for
injunctive relief or other orders or notices of violation from federal, state or
local agencies or courts, and (ix) with regard to any present or former
employees, claims relating to exposure to or injury from Environmental
Conditions.
"Environmental Conditions" means the state of the environment,
including natural resources (e.g., flora and fauna), soil, surface water, ground
water, any drinking water supply, subsurface strata or ambient air, relating to
or arising out of the use, handling, storage, treatment, recycling, generation,
transportation, release, spilling, leaking, pumping, pouring, emptying,
discharging, injecting, escaping, leaching, disposal, dumping or threatened
release of Hazardous Substances by PX or any of its predecessors or successors
in interest, or by its respective agents, representatives, employees or
independent contractors when acting in such capacity on behalf of PX. With
respect to Environmental Claims by third parties, Environmental Conditions also
include the exposure of persons to Hazardous Substances at the work place or the
exposure of persons or property to Hazardous Substances migrating from or
otherwise emanating from or located on property owned or occupied by PX.
"Environmental Laws" means all applicable federal, state, district and
local laws, all rules or regulations promulgated thereunder, and all orders,
consent orders, judgments, notices, permits or demand letters issued,
promulgated or entered pursuant thereto, relating to pollution or protection of
the environment (including, without limitation, ambient air, surface water,
ground water, land surface, or subsurface strata), including, without
limitation, (i) laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals, industrial materials, wastes or
other substances into the environment and (ii) laws relating to the
identification, generation, manufacture, processing, distribution, use,
treatment, storage, disposal, recovery, transport or other handling of
pollutants, contaminants, chemicals, industrial materials, wastes or other
substances. Environmental Laws shall include, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"), the Toxic Substances Control Act, as amended, the Hazardous
Materials Transportation Act, as amended, RCRA, the Clean Water Act, as amended,
the Safe Drinking Water Act, as amended, the Clean Air Act, as amended, the
Occupational Safety and Health Act, as amended, and all analogous laws
promulgated or issued by any state or other Governmental Authority.
"Environmental Reports" means any and all written analyses, summaries
or explanations, in the possession or control of PX, of (a) any Environmental
Conditions in, on or about the properties of PX, or (b) PX's compliance with
Environmental Laws.
"ERISA" means the Employee Retirement Income Security Act of 1974 and
the regulations promulgated thereunder.
"ERISA Affiliate" means any entity which is (or at any relevant time
was) a member of a "controlled group of corporations" with, under "common
control" with, or a member of an "affiliated service group" with, or otherwise
required to be aggregated with, PX as set forth in Section 414(b), (c), (m) or
(o) of the Code.
"Escrow Agent" means the escrow agent under the Escrow Agreement, or
any successor agent designated in accordance with the terms of the Escrow
Agreement.
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"Escrow Agreement" means the Escrow Agreement to be entered into among
SkyNet, PX, the Escrow Agent and the Stockholders substantially in the form of
Exhibit A hereof.
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"Escrow Shares" has the meaning set forth in Section 1.3.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Facility" means any real property and related facilities owned or
leased by PX, all as identified or listed on Schedule 3.8.2 (with respect to
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Owned Property) or Schedule 3.8.3.1 (with respect to Leased Property).
----------------
"Financial Statements" means (a) the balance sheet of PX as of
December 31, 1998 and the related statements of income, changes in Stockholders'
equity and cash flows of PX for the year then ended, and (b) the balance sheet
of PX as of March 31, 1999, and the related statement of income, changes in
Stockholders' equity and cash flows of PX for the three months then ended.
"Fixtures and Equipment" means all of the furniture, fixtures,
furnishings, machinery, computer hardware, and other tangible personal property
owned by PX, wherever located and including any such Fixtures and Equipment in
the possession of any of PX's respective suppliers or other vendors.
"Former Properties" means all plants, offices, manufacturing
facilities, stores, warehouses, administration buildings and all real property
and related facilities owned, leased or operated by PX prior to the date hereof,
but excluding Facilities.
"GAAP" means generally accepted accounting principles in the United
States set forth in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board applied on a
consistent basis.
"Hazardous Substances" means all pollutants, contaminants, chemicals,
wastes, and any other carcinogenic, ignitable, corrosive, reactive, toxic or
otherwise hazardous substances or materials (whether solids, liquids or gases)
subject to regulation, control or remediation under Environmental Laws. By way
of example only, the term Hazardous Substances includes petroleum, urea
formaldehyde, flammable, explosive and radioactive materials, PCBs, pesticides,
herbicides, asbestos, sludge, slag, acids, metals, solvents and waste waters.
"knowledge" or "to the knowledge" of a party (or similar phrases)
means to the extent of matters (i) which are actually known by such party or
(ii) which, based on facts of which such party is aware, would be known to a
reasonable Person in similar circumstances exercising reasonable judgment, and
when used in the context of PX shall be deemed to include the knowledge of the
Stockholder and the Mustang Stockholders.
"Liability" means any direct or indirect liability, indebtedness,
obligation, commitment, expense, claim, deficiency, guaranty or endorsement of
or by any Person of any type, whether accrued, absolute, contingent, matured,
unmatured, liquidated, unliquidated, known or unknown.
"Material Adverse Effect" or "Material Adverse Change" or a similar
phrase means, with respect to any Person, (a) any material adverse effect on or
material adverse change with respect to (i) the business, operations and assets
(taken as a whole), liabilities (taken as a whole), condition (financial or
otherwise) or results of operations, of such Person and its subsidiaries, taken
as a whole, or (ii) the right
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or ability of such Person or any of its subsidiaries to consummate any of the
transactions contemplated hereby or (b) any event or condition which, with the
passage of time, the giving or receipt of notice or the occurrence or
nonoccurrence of any other circumstance, action or event, would reasonably be
expected to constitute a "Material Adverse Effect" on or "Material Adverse
Change" with respect to such Person.
"Mustang Stockholders" means Greenstreet Pony Partners LLC., a
Missouri limited liability company, and Mustang Investment Partners LLC, a
Kansas limited liability company.
"Multiemployer Plan" means any "multiemployer plan," as defined in
Section 4001(a)(3) or 3(37) of ERISA, which (a) PX or any ERISA Affiliate
maintains, administers, contributes to or is required to contribute to, or,
after September 25, 1980, maintained, administered, contributed to or was
required to contribute to, or under which PX or any ERISA Affiliate may incur
any liability and (b) covers any employee or former employee of PX or any ERISA
Affiliate (with respect to their relationship with any such entity).
"NationsCredit" means NationsCredit Commercial Funding Corporation,
Through its NationsCredit Commercial Funding Division.
"Pension Plan" means any "employee pension benefit plan" as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan) which (a) PX or any
ERISA Affiliate maintains, administers, contributes to or is required to
contribute to, or, within the five years prior to the Closing Date, maintained,
administered, contributed to or was required to contribute to, or under which PX
or any ERISA Affiliate may incur any liability (including, without limitation,
any contingent liability) and (b) covers any employee or former employee of PX
or any ERISA Affiliate (with respect to their relationship with any such
entity).
"Permitted Encumbrances" means (a) liens for Taxes or governmental
charges or claims (i) not yet due and payable, or (ii) being contested in good
faith, if a reserve or other appropriate provision, if any, as shall be required
by GAAP shall have been made therefor, (b) statutory liens of landlords, liens
of carriers, warehouse persons, mechanics and material persons and other liens
imposed by law incurred in the ordinary course of business for sums (i) not yet
due and payable, or (ii) being contested in good faith, if a reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been made
therefor, (c) liens incurred or deposits made in connection with workers'
compensation, unemployment insurance and other similar types of social security
programs or to secure the performance of tenders, statutory obligations, surety
and appeal bonds, bids, leases, government contracts, performance and return of
money bonds and similar obligations, in each case in the ordinary course of
business, consistent with past practice, (d) easements, rights-of-way,
restrictions and other similar charges or encumbrances, in each case, which do
not interfere with the ordinary conduct of business of PX and do not materially
detract from the value of the property upon which such encumbrance exists, and
(e) the lien of NationsCredit granted pursuant to a certain Loan and Security
Agreement by and between NationsCredit and PX dated May 28, 1998, as amended.
"Permits" means all licenses, permits, franchises, approvals,
authorizations, consents or orders of, or filings with, any governmental
authority, whether foreign, federal, state or local, necessary or desirable for
the current conduct or operation of PX.
"Person" means any person or entity, whether an individual, trustee,
corporation, limited liability company, general partnership, limited
partnership, trust, unincorporated organization, business association, firm,
joint venture, governmental agency or authority or any similar entity.
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"Proprietary Rights" means all (a) U.S. and foreign patents, patent
applications, patent disclosures and improvements thereto, including pending
patents and utility models and applications therefor, (b) U.S. and foreign
trademarks, service marks, trade dress, logos, trade names and corporate names
and the goodwill associated therewith and registrations and applications for
registration thereof, (c) U.S. and foreign copyrights and registrations and
applications for registration thereof, (d) U.S. and foreign mask work rights and
registrations and applications for registration thereof, (e) Trade Secrets, (f)
copies and tangible embodiments thereof (in whatever form or medium) and (g)
licenses granting any rights with respect to any of the foregoing.
"Registration Rights Agreement" means the Registration Rights
Agreement to be entered into between SkyNet and the Stockholders substantially
in the form of Exhibit B hereof.
"Regulations" means any laws, statutes, ordinances, regulations,
rules, notice requirements, court decisions, agency guidelines, principles of
law and orders of any foreign, federal, state or local government and any other
governmental department or agency, including without limitation energy, motor
vehicle safety, public utility, zoning, building and health codes, Environmental
Laws, occupational safety and health and laws respecting employment practices,
employee documentation, terms and conditions of employment and wages and hours.
"Related Party" means (i) the Stockholder, the Mustang Stockholders
and any of their respective officers, directors, partners, associates or
relatives, and (ii) any Person in which PX, the Stockholder the Mustang
Stockholders or any Affiliate, associate or relative of any such Person has any
direct or indirect interest.
"Representative" of any Person means any officer, director, principal,
attorney, agent, employee, managing member or other representative of such
Person.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"SkyNet Common Stock" means the common stock, par value $.0001 per
share, of SkyNet.
"SkyNet Series B Preferred Stock" means the Series B Preferred Stock,
par value $0.0001 per share, of SkyNet issued to the Mustang Stockholders and
certain other persons in conjunction with the Stock Purchase.
"Tax Return" means any report, return, document, declaration or other
information or filing required to be supplied to any taxing authority or
jurisdiction (foreign or domestic) with respect to Taxes, including information
returns, any documents with respect to or accompanying requests for the
extension of time in which to file any such report, return, document,
declaration or other information.
"Taxes" mean any and all taxes, charges, fees, levies or other
assessments, including income, gross receipts, excise, real or personal
property, sales, withholding, social security, retirement, unemployment,
occupation, use, service, license, net worth, payroll, franchise and transfer
and recording, imposed by the Internal Revenue Service or any taxing authority
(whether domestic or foreign, including any federal, state, county, local or
foreign government or any subdivision or taxing agency thereof (including a U.S.
possession)), whether computed on a separate, consolidated, unitary, combined or
any other basis; and such term shall include any interest whether paid or
received, fines, penalties or
50
<PAGE>
additional amounts attributable to, or imposed upon, or with respect to, any
such taxes, charges, fees, levies or other assessments.
"Trade Secrets" means all trade secrets and confidential business
information that is not generally known to the public (including ideas,
formulas, compositions, inventions (whether patentable or unpatentable and
whether or not reduced to practice), know-how, research and development
information, software, drawings, specifications, designs, plans, proposals,
technical data, copyrightable works, financial, marketing and business data,
pricing and cost information, business and marketing plans and customer and
supplier lists and information).
"Welfare Plan" means any "employee welfare benefit plan" as defined in
Section 3(1) of ERISA, which (a) PX or any ERISA Affiliate maintains,
administers, contributes to or is required to contribute to, or under which PX
or any ERISA Affiliate may incur any liability and (b) covers any employee or
former employee of PX or any ERISA Affiliate (with respect to their relationship
with any such entity).
14.2 Certain Additional Defined Terms.
<TABLE>
<CAPTION>
Defined in
Term: Section:
----- -------
<S> <C>
Actions................................................... 3.16
Act 1.2.1................................................ 1.2.1
Agreement................................................. Recitals
Carson Trust Indemnified Parties.......................... 12.2.1.4
Certificates.............................................. 2.7.1
Claim..................................................... 10.2.2
Claim Notice.............................................. 10.2.2
Courier Express Stock Purchase Agreement.................. 6.4
Damage Ceiling............................................ 12.5.1
Damage Threshold.......................................... 12.5.1
Damages................................................... 10.2.1
Escrow Period............................................. 1.3
Existing Employment Agreements............................ 3.18.3
GCL....................................................... Recitals
GPP....................................................... Recitals
Indemnified Party......................................... 10.2.2
Indemnifying Party........................................ 10.2.2
Leased Property........................................... 3.8.3
MIP....................................................... Recitals
MIP and GPP Notes......................................... 2.3.1
Mustang Guaranty.......................................... 10.10
Owned Property............................................ 3.8.2
Purchase.................................................. Recitals
Proposed Acquisition Transaction.......................... 5.4
Purchase Shares........................................... 2.6.1
PX........................................................ Recitals
PX Closing Certificate.................................... 7.1
PX Debenture.............................................. 2.3.2
SEC Reports............................................... 8.5
SkyNet.................................................... Recitals
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
Defined in
Term: Section:
----- -------
<S> <C>
SkyNet Closing Certificate............................... 2.2.2.4
SkyNet Indemnified Parties............................... 12.2.1.4
SkyNet Material Adverse Affect........................... 4.6
SkyNet Options........................................... 4.2.2
SkyNet Preferred Stock................................... 4.2.1
SkyNet Securities........................................ 4.2.1
Stockholder.............................................. Recitals
Stockholder Indemnified Parties.......................... 12.2.1
Stockholder's Closing Certificate........................ 2.2.1.2
Survival Period.......................................... 9.1
Termination Date......................................... 2.1
Williams................................................. Recitals
Williams Closing Certificate............................. 2.2.4.2
Williams Guaranty........................................ 10.11
Williams PX Debenture.................................... 2.3.3
Year 2000 Problem........................................ 3.29
</TABLE>
14.3 Interpretation Provisions.
14.3.1 The words "hereof," "herein" and "hereunder" and words
of similar import when used in this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement, and article, section,
schedule and exhibit references are to this Agreement unless otherwise
specified. The meaning of defined terms shall be equally applicable to the
singular and plural forms of the defined terms. The term "or" is disjunctive but
not necessarily exclusive. The terms "include" and "including" are not limiting
and mean "including without limitation."
14.3.2 References to agreements and other documents shall be
deemed to include all subsequent amendments and other modifications thereto.
14.3.3 References to statutes shall include all regulations
promulgated thereunder and references to statutes or regulations shall be
construed as including all statutory and regulatory provisions consolidating,
amending or replacing the statute or regulation.
14.3.4 The captions and headings of this Agreement are for
convenience of reference only and shall not affect the construction of this
Agreement.
14.3.5 The language used in this Agreement shall be deemed to
be the language chosen by the parties to express their mutual intent, and no
rule of strict construction shall be applied against either party.
14.3.6 The annexes, schedules and exhibits to this Agreement
are a material part hereof and shall be treated as if fully incorporated into
the body of the Agreement.
15. MISCELLANEOUS
52
<PAGE>
15.1 Termination.
This Agreement may be terminated at any time prior to Closing:
15.1.1 By mutual written consent of SkyNet and PX;
15.1.2 By SkyNet or PX if the Closing shall not have occurred on
or before the Termination Date, other than due to a breach of this Agreement by
the party seeking to terminate;
15.1.3 By SkyNet if there is a material breach of any
representation or warranty set forth in Article 3, 3A or 3B or any covenant or
agreement to be complied with or performed by PX, the Stockholder or the Mustang
Stockholders pursuant to the terms of this Agreement, so long as any such breach
is not caused by the action or inaction of SkyNet; and
15.1.4 By PX if there is a material breach of any representation
or warranty set forth in Article 4 hereof or of any covenant or agreement to be
complied with or performed by SkyNet or Sub pursuant to the terms of this
Agreement, so long as any such breach is not caused by the action or inaction of
PX, the Stockholders, or either of the Mustang Stockholders.
15.1.5 In the event of termination of this Agreement, no party
hereto shall have any liability to any other party to this Agreement, except for
any breach of, or misrepresentation made in, this Agreement occurring prior to
the proper termination of this Agreement.
15.2 Assignment.
Neither this Agreement nor any of the rights or obligations hereunder may
be assigned by PX, the Stockholder or the Mustang Stockholders without the prior
written consent of SkyNet, or by SkyNet without the prior written consent of PX,
the Stockholder or the Mustang Stockholders.
15.3 Notices.
Unless otherwise provided herein, any notice, request, instruction or other
document to be given hereunder by any party to the other shall be in writing and
delivered in person or by courier, telegraphed, telexed, sent by facsimile
transmission, sent via overnight delivery service or mailed by registered or
certified mail (such notice to be effective upon receipt), as follows:
If prior to the Closing, to PX:
PONY EXPRESS DELIVERY SERVICE, INC.
6165 Barfield Road, Suite 200
Atlanta, GA 30328
Fax: 404-847-3179
Attention: Richard L. Williams, President
With a copy to:
Corporate Counsel Group, LLP
104 W. Ninth, Suite 404
Kansas City, MO 64105
Fax: 816-410-7201
Attention: Robert E. Marsh, Esquire
53
<PAGE>
If to the Stockholder:
MUSTANG HOLDINGS, INC.
8700 Monrovia
Suite 205
Lenexa, Kansas 66215
Fax: 913-307-9491
Attention: Michael J. Meyer, President
With a copy to:
Corporate Counsel Group, LLP
104 W. Ninth, Suite 404
Kansas City, MO 64105
Fax: 816-410-7201
Attention: Robert E. Marsh, Esquire
If to the Mustang Stockholders:
GREENSTREET PONY PARTNERS LLC
8700 Monrovia
Suite 205
Lenexa, Kansas 66215
Fax: 913-307-9491
Attention: Terry Matlack, Manager
MUSTANG INVESTMENT PARTNERS LLC
8700 Monrovia
Suite 205
Lenexa, Kansas 66215
Fax: 913-307-9491
Attention: Michael J. Meyer
With a copy to:
Corporate Counsel Group, LLP
104 W. Ninth, Suite 404
Kansas City, MO 64105
Fax: 816-410-7201
Attention: Robert E. Marsh, Esquire
If to the Carson Trust:
CARSON FAMILY TRUST
5147 Oakwood Ave.
La Canada, CA 91011
Attention: Connie Carson, Trustee
with a copy to:
54
<PAGE>
Knapp, Marsh, Jones & Doran, L.L.P.
Manulife Plaza, Suite 1400
515 S. Figueroa Street
Los Angeles, CA 90071
Fax: 213-627-7897
Attention: James G. Jones, Esquire
If to Williams:
RICHARD L. WILLIAMS
615 Granville Court N.E.
Atlanta, Georgia 30328
With a copy to:
Corporate Counsel Group, LLP
104 W. Ninth, Suite 404
Kansas City, MO 64105
Fax: 816-410-7201
Attention: Robert E. Marsh, Esquire
If to SkyNet:
SKYNET HOLDINGS, INC.
343 Glasgow Avenue
Inglewood, CA 90301
Fax: (310) 568-96370-1660
Attention: Vjekoslav Nizic
President and Chief Executive Officer
With a copy to:
Buchanan Ingersoll Professional Corporation
Eleven Penn Center - 14th Floor
1835 Market Street
Philadelphia, PA 19103
Fax: (215) 665-8760
Attention: Stephen M. Cohen, Esq.
or to such other place and with such other copies as either party may
designate as to itself by written notice to the others.
15.4 Choice of Law.
This Agreement shall be construed, interpreted and the rights of the
parties determined in accordance with the laws of the State of Delaware without
giving effect to principles of conflicts of law.
55
<PAGE>
15.5 Arbitration.
Any and all disputes, controversies or claims arising out of or relating to
this Agreement shall be resolved exclusively and conclusively by binding
arbitration in accordance with the rules of the American Arbitration
Association. Such arbitration shall be held in Los Angeles, California. Any
award or decision in arbitration shall be final and binding upon the parties,
shall not be subject to appeal and shall be enforceable by judgment of any court
of competent jurisdiction. The costs of any arbitration conducted under this
Section 15.5, including, without limitation, the fees and expenses of the
arbitrator, but not including each party's own costs incurred in connection with
the preparation for and conduct of the arbitration, shall be borne equally by
the party initiating the arbitration and the party (or parties) responding to
the initiation of the arbitration.
15.6 Descriptive Headings.
The headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement.
15.7 Entire Agreement; Amendments and Waivers.
This Agreement, together with all exhibits and schedules hereto, constitute
the entire agreement among the parties pertaining to the subject matter hereof
and supersede all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties, provided that the Letter
Agreement among the parties dated May 1, 1999 shall remain in effect as it
relates to obligations of the parties prior to the Closing Date. No
supplement, modification or waiver of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
15.8 Counterparts.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
15.9 Invalidity.
In the event that any one or more of the provisions contained in this
Agreement or in any other instrument referred to herein, shall, for any reason,
be held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any jurisdiction, such provisions shall be deemed amended to the extent
necessary for such provisions to be valid, reasonable and enforceable in such
jurisdiction; provided, however, that such provisions shall not be deemed
amended for purposes of their enforcement in any jurisdiction in which such
provisions would be valid, legal and enforceable without amendment.
15.10 Expenses.
SkyNet will be liable for its transaction expenses incurred in connection
with the negotiation, preparation, execution and performance of this Agreement.
PX will be liable for the transaction
56
<PAGE>
expenses of PX, the Stockholder, and the Mustang Stockholders incurred in
connection with the negotiation, preparation, execution and performance of this
Agreement up to a cap of $50,000, with any excess amount of expenses to be borne
by the Stockholder. The number of Stock Purchase Shares to be delivered to the
Stockholder shall be reduced by an amount equal to (i) the amount of transaction
expenses to be borne by PX plus the premium paid by Pony for "tail" coverage
under its directors and officers liability policy in force immediately prior to
the Closing Date for a period not to exceed three (3) years from the Closing
Date, divided by (ii) the Average Share Price. The filing fee to be paid in
conjunction with the filing required Hart-Scott-Rodino Act shall be paid by
SkyNet, in consideration of which and the number of Stock Purchase Shares issued
at the Closing shall be reduced by the number of shares equal to (i) $22,500
divided by (ii) the Average Share Price.
15.11 Publicity.
Except as required by law or on advice of counsel, neither party shall
issue any press release or make any public statement regarding the transactions
contemplated hereby without the prior approval of the other parties, and the
parties hereto shall issue a mutually acceptable press release as soon as
practicable after the date hereof and after the Closing Date. Notwithstanding
the foregoing, SkyNet shall be permitted to make any public statement without
obtaining the consent of any other party hereto if (i) the disclosure is
required by law and (ii) SkyNet has first used its reasonable efforts to consult
with (but not to obtain the consent of) the other parties about the form and
substance of such disclosure.
15.12 No Third Party Beneficiaries.
This Agreement shall be binding upon and inure solely to the benefit of
each party hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement, including,
without limitation, by way of subrogation, except as specifically set forth in
Article 12 hereof.
57
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused this Agreement to be duly executed on its behalf by its officer thereunto
duly authorized, as of the day and year first above written.
SKYNET HOLDINGS, INC.,
a Delaware corporation
By: /s/ Vjekoslav Nizic
----------------------------------------
Vjekoslav Nizic
President and Chief Executive Officer
PONY EXPRESS DELIVERY SERVICES, INC.
a Delaware corporation
By: /s/ Richard L. Williams
----------------------------------------
MUSTANG HOLDINGS, INC.
a Kansas corporation
By: /s/ Terry Matlack
----------------------------------------
Name: Terry Matlack
Title: Chairman
GREENSTREET PONY PARTNERS, LLC
a Missouri limited liability company
By: /s/ Terry Matlack
----------------------------------------
Name: Terry Matlack
Title: Manager
SIGNATURES CONTINUE ON FOLLOWING PAGE
<PAGE>
SIGNATURES CONTINUED FROM PREVIOUS PAGE
MUSTANG INVESTMENT PARTNERS, LLC
a Kansas limited liability company
By: Merit Capital Management, Inc.,
its Manager
By: /s/ Michael J. Meyer
------------------------------------
Name: Michael J. Meyer
Title: President
CARSON FAMILY TRUST
By: /s/ C.M. "Connie" Carson
------------------------------------
C.M. "Connie" Carson
Trustee
By: /s/ Diana Carson
------------------------------------
Diana Carson
Trustee
/s/ Richard L. Williams
----------------------------------------
RICHARD L. WILLIAMS
<PAGE>
EXHIBIT 2.2
AMENDMENT NO. 1 TO
STOCK PURCHASE AGREEMENT
AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT dated as of June 17, 1999 (the
"Agreement"), by and among SKYNET HOLDINGS, INC., a Delaware corporation
("SkyNet"), PONY EXPRESS DELIVERY SERVICES, INC., a Delaware corporation ("PX"),
MUSTANG HOLDINGS, INC., a Kansas corporation, (the "Stockholder"), GREENSTREET
PONY PARTNERS, LLC ("GPP"), a Missouri limited liability company, MUSTANG
INVESTMENT PARTNERS ("MIP" and, collectively with GPP, the "Mustang
Stockholders"), a Kansas limited liability company; C.M. "CONNIE" CARSON AND
DIANA CARSON, AS TRUSTEES OF THE CARSON FAMILY TRUST (the "Carson Trust") and
RICHARD L. WILLIAMS ("Williams").
WITNESSETH
----------
WHEREAS, SkyNet, PX, Stockholder, GPP, MIP, the Carson Trust and Williams
are parties to that certain Stock Purchase Agreement dated as of May 27, 1999
(the "Stock Purchase Agreement") which provides, inter alia, for the acquisition
by SkyNet of all of the issued and outstanding common stock of PX from the
Stockholders; and;
WHEREAS, the parties desire to amend certain provisions of the Stock
Purchase Agreement as set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
parties hereby agree as follows:
1. Indemnification Respecting Certain Claims.
-----------------------------------------
Section 12.4.1 of the Stock Purchase Agreement shall be amended by adding
to the end thereof the following:
Notwithstanding the foregoing, the SkyNet Indemnified Parties shall be
entitled to recover for any Damages suffered in connection with or
arising out of the following, without regard to the Damage Threshold
described in this subsection 12.4.1:
12.4.1.1 Damages suffered by the SkyNet Indemnified Parties or
obligations or liabilities attributable to or incurred by PX for
matters described on Schedule 3.10 (Environmental Matters) disclosed
thereon, but only to the extent such Damages and obligations exceed
$150,000; and
12.4.1.2 Damages suffered by the SkyNet Indemnified Parties and
obligations or liabilities attributable to or incurred by PX on
account of any of the matters described on Schedule 3.17 hereto
(Litigation) or in item 1 of Schedule 3.18.1 hereto (Labor Agreements
or Violations), but only to the extent such Damages, obligations and
liabilities exceed $275,000.
12.4.1.3 Damages suffered by the SkyNet Indemnified Parties or
obligations or liabilities attributable to or incurred by PX for
matters described on Schedule 3.19 hereof (Employee Benefit Plans) for
matters related to Pony Express'
<PAGE>
obligation to make contributions to its Retirement Savings Plan for
the period from June 1, 1998 through the Closing Date, but only to the
extent such Damages and obligations exceed $275,000;
2. Miscellaneous.
-------------
Except as set forth in this Amendment, the remainder of the Stock Purchase
Agreement shall remain in full force and effect. This Amendment may be executed
in one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment or
caused this Agreement to be duly executed on its behalf by its officer thereunto
duly authorized, as of the day and year first above written.
SKYNET HOLDINGS, INC.,
a Delaware corporation
By: /s/ Vjekoslav Nizic
----------------------------------------------
Vjekoslav Nizic
President and Chief Executive Officer
PONY EXPRESS DELIVERY SERVICES, INC.
a Delaware corporation
By: /s/ Richard L. Williams
----------------------------------------------
MUSTANG HOLDINGS, INC.
a Kansas corporation
By: ______________________________________________
Name: Terry Matlack
Title: Chairman
GREENSTREET PONY PARTNERS, LLC
a Missouri limited liability company
By: /s/ Terry Matlack
----------------------------------------------
Name: Terry Matlack
Title: Manager
SIGNATURES CONTINUE ON FOLLOWING PAGE
<PAGE>
SIGNATURES CONTINUED FROM PREVIOUS PAGE
MUSTANG INVESTMENT PARTNERS, LLC
a Kansas limited liability company
By: Merit Capital Management, Inc.,
its Manager
By: /s/ Michael J. Meyer
---------------------------------------------
Name: Michael J. Meyer
Title: President
CARSON FAMILY TRUST
By: /s/ C.M. "Connie" Carson
----------------------------------------------
C.M. "Connie" Carson
Trustee
By: /s/ Diana Carson
----------------------------------------------
Diana Carson
Trustee
/s/ Richard L. Williams
--------------------------------------------------
RICHARD L. WILLIAMS
<PAGE>
EXHIBIT 4.1
SKYNET HOLDINGS, INC.
AMENDED CERTIFICATE OF DESIGNATION
SERIES B CONVERTIBLE PREFERRED STOCK
VJEKOSLAV NIZIC and MARTIN G. PARAVATO do hereby certify that they are the
President and Secretary, respectively, of SKYNET HOLDINGS, INC., a Delaware
corporation (hereinafter referred to as the "Corporation"); that, pursuant to
-----------
Corporation's Certificate of Incorporation and Section 151 of the Delaware
General Corporation Law, the Board of Directors of the Corporation adopted the
following resolutions on June 17, 1999;
WHEREAS, the Corporation filed on June 15, 1999 a Certificate of
Designation with the Delaware Department of State setting forth the relative
rights and preferences of the Corporation's Series B Convertible Preferred Stock
(the "June 15 Series B Preferred"); and
WHEREAS, none of the June 15 Series B Preferred has been issued or is
outstanding; and
WHEREAS, the Corporation has determined to restate its Designation of
Series B Convertible Preferred Stock pursuant to Section 151(g) of the Delaware
General Corporation Law; and
WHEREAS, the Corporation has determined to file this instrument as an
amended Certificate of Designation of Series B Preferred designating the rights
and preferences of shares of the Corporation's Series B Convertible Preferred
Stock.
NOW, THEREFORE, the Corporation's Series B Preferred shall have the rights
and preferences set forth below:
Series B Convertible Preferred Stock. There is hereby created a series of
------------------------------------
preferred stock designated as Convertible Preferred Stock, Series B (the "Series
------
B Preferred"), which will consist of 848,808 shares. The Series B Preferred
- -----------
shall have the preferences, voting powers, relative, participating, optional or
other special rights and privileges, and the qualifications, limitations and
restrictions as provided below:
(1) Dividends and Distributions.
---------------------------
(a) Beginning on the date that is eighteen (18) months from the date
of the issuance of the Series B Preferred (the "Dividend Commencement Date"),
the holders of shares of Series B Preferred shall be entitled to receive
dividends at the following rates:
<PAGE>
<TABLE>
<CAPTION>
Period Dividend Rate
------ -------------
<S> <C>
From the Dividend Commencement Date to the first 6% per annum of the Stated Value
anniversary of the Dividend Commencement Date (defined below)
From the first anniversary of the Dividend 8% per annum of the Stated Value
Commencement Date to the second anniversary of
the Dividend Commencement Date
From the second anniversary of the Dividend 10% per annum of the Stated Value
Commencement Date to the third anniversary of the
Dividend Commencement Date
From and after third anniversary of the Dividend 12% per annum of Stated Value
Commencement Date
</TABLE>
Dividends shall be fully cumulative, prior and in preference to any declaration
or payment of any dividend (payable other than in the Corporation's common
stock, par value $0.0001 per share (the "Common Stock")) or other distribution
------------
on any other class or series of Preferred Stock or the Common Stock of the
Corporation, including without limitation the Corporation's Series A Convertible
Preferred Stock (the "Series A Preferred"). The dividends on the Series B
------------------
Preferred shall accrue from the Dividend Commencement Date and shall be payable
quarterly on March 31, June 30, September 30 and December 31 of each year (each
a "Dividend Date"), commencing on December 31, 2000, except that if any such
-------------
date is a Saturday, Sunday or legal holiday (a "Non-Business Day") then such
----------------
dividend shall be payable on the next day that is not a Saturday, Sunday or
legal holiday on which banks in the State of Delaware are permitted to be closed
(a "Business Day") to holders of record as they appear on the stock books of the
------------
Corporation on the applicable record date, which shall be not more than 60 nor
less than 10 days preceding the payment date for such dividends, as fixed by the
Board of Directors (the "Record Date"). The dividends on the Series B Preferred
-----------
shall be payable only when, as and if declared by the Board of Directors out of
funds legally available therefor. The dividends shall, at the option of the
Corporation, either (1) be payable in cash, or (2) accrue, and thereafter shall
be payable in cash, provided, however, that at the option of the Corporation,
dividends accruing from the Dividend Commencement Date through the first
anniversary of the Dividend Commencement Date may be paid in cash or in shares
of the Corporation's Common Stock at a rate of one share of Common Stock for
each $8.00 of accrued dividends. Subject to the provisions of the preceding
sentence and the next paragraph, in the absence of an election by the Board of
Directors within 10 days of each Dividend Date to pay dividends in cash, the
dividends shall accrue. The amount of dividends payable for any period that is
shorter or longer than a full quarter shall be computed on the basis of a 360-
day year of twelve 30-day months.
2
<PAGE>
(2) Liquidation Rights. In the event of any liquidation, dissolution or
------------------
winding up of the Corporation, whether voluntary or involuntary, distributions
shall be made to the holders of Series B Preferred in respect of such Series B
Preferred, in the following manner:
(a) Series B Liquidation Preference. The holders of the Series B
-------------------------------
Preferred shall be entitled to be paid, prior to the payment of any amounts on
account of the liquidation of the Corporation to the holders of any other class
or Series of preferred stock or common stock of the Corporation, including
without limitation the Series A Preferred, out of the assets of the Corporation
available for distribution to holders of its capital stock, a preferred
distribution as set forth below. The liquidation preference payable to the
holders of the Series B Preferred shall be equal to the sum of (i) $8.00 per
share (the "Stated Value"), as appropriately adjusted to reflect any stock
------------
split, stock dividend, combination, recapitalization and the like (collectively
a "Recapitalization") of the Series B Preferred, plus (ii) all accrued or
----------------
declared but unpaid dividends (including any interest accrued thereon calculated
through the date of liquidation) (the sum of (i) and (ii) being collectively
referred to as the "Series B Liquidation Preference"). If, upon the occurrence
-------------------------------
of a liquidation, dissolution or winding up, the assets and funds thus
distributed among the holders of the Series B Preferred, shall be insufficient
to permit the payment to such holders of their full liquidation preferences,
then the entire assets and funds of the Corporation legally available for
distribution to the holders of capital stock shall be distributed to the holders
of the Series B Preferred.
(b) Remaining Assets. If assets are remaining after payment in full
----------------
of the Series B Liquidation Preference to all holders of the Series B Preferred,
then the holders of any other class or series of Preferred Stock , if any, shall
be entitled to their respective preferential amounts on liquidation, and
thereafter the holders of the Common Stock shall be entitled to share ratably in
all such remaining assets and surplus funds based on the number of shares of
Common Stock held by each.
(c) Events Deemed a Liquidation. For purposes of this Section 2, the
---------------------------
holders of a majority of the Series B Preferred then outstanding, voting
together as a single class, may elect to have treated as a liquidation,
dissolution or winding up of the Corporation, the consolidation or merger of the
Corporation with or into any other corporation or the sale or other transfer in
a single transaction or a series of related transactions of all or substantially
all of the assets of the Corporation, or any other reorganization of the
Corporation.
(d) Valuation of Securities and Property. In the event the
------------------------------------
Corporation proposes to distribute assets other than cash in connection with any
liquidation, dissolution or winding up of the Corporation, the value of the
assets to be distributed to the holders of shares of Series B Preferred shall be
determined in good faith by the Board of Directors. Any securities not subject
to the terms of an investment letter or similar restrictions on free
marketability shall be valued as follows:
(i) If traded on a national securities exchange or the NASDAQ
National Market System ("NASDAQ/NMS"), the value shall be deemed to be the
----------
average
3
<PAGE>
of the security's closing prices on such exchange or NASDAQ/NMS over the
thirty (30) calendar day period ending three (3) days prior to the
distribution;
(ii) If actively traded over-the-counter (other than
NASDAQ/NMS), the value shall be deemed to be the average of the closing
prices over the thirty (30) calendar day period ending three (3) days prior
to the distribution; and
(iii) If there is no active public market, the value shall be the
fair market value thereof as determined in good faith by the Board of
Directors.
The method of valuation of securities subject to investment letter or other
restrictions on free marketability shall be adjusted to make an appropriate
discount from the market value determined as above in clauses (i), (ii) or (iii)
to reflect the fair market value thereof as determined in good faith by the
Board of Directors. The holders of at least 50% of the outstanding Series B
Preferred shall have the right to challenge any determination by the Board of
Directors of fair market value pursuant to this Section 2(d), in which case the
determination of fair market value shall be made by an independent appraiser
selected jointly by the Board of Directors and the challenging parties, the cost
of such appraisal to be borne equally by the Corporation and the challenging
parties.
(3) Conversion. The Series B Preferred is subject to conversion at the
----------
times and on the terms set forth in this Section 3:
(a) Right of Holder to Convert.
(i) Election to Convert. The Series B Preferred shall initially
-------------------
be convertible, at the option of the holder thereof, at any time at the
principal office of the Corporation or any transfer agent for the Series B
Preferred, into that number of fully paid and nonassessable shares of Common
Stock as would equal, (A) the aggregate Stated Value of the Series B Preferred
to be converted, divided by (B) $8.00. Upon conversion, the aggregate amount of
all accrued or declared but unpaid dividends (including any interest accrued
thereon calculated as of the date of conversion) on the Series B Preferred shall
added to the aggregate Stated Value of the Series B Preferred to be converted
and converted into Common Stock at the same conversion rate set forth above.
(ii) Mechanics of Conversion. Before a holder of Series B
-----------------------
Preferred shall be entitled to convert the same into shares of Common Stock and
to receive certificates therefor, such holder shall surrender the certificate or
certificates therefor, duly endorsed, at the principal office of the Corporation
or of any transfer agent for the Series B Preferred, and shall give written
notice to the Corporation at such office that such holder elects to convert the
same. The Corporation shall, as soon as practicable after such delivery, issue
and deliver at such office to such holder of the Series B Preferred, a
certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled as aforesaid and a check payable to such holder on
account of any fractional share, if any. Such conversion shall be deemed to have
been made immediately prior to the close of business on the date of such
surrender of the shares of the Series B Preferred to be converted, and the
holder or holders entitled to receive the shares of
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<PAGE>
Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder or holders of such shares of Common Stock on such date.
(b) Conversion At Option of Corporation.
(i) Events Triggering Corporation's Right to Require Conversion.
-----------------------------------------------------------
In the event the average closing price of the Common Stock (the closing price of
such stock if the Common Stock shall be traded at such time on a national
exchange or the NASDAQ/NMS, or the closing bid price of the Common Stock if
traded over-the-counter (other than NASDAQ/NMS) at such time) for any period of
ten (10) consecutive trading days is equal to or exceeds 200% of the Conversion
Price, the Corporation may require the holders of Series B Preferred to convert
such shares to Common Stock, provided, however, that the resale of the Common
Stock issuable upon the conversion of the Series B Preferred pursuant to this
Subsection 3(b) shall be registered on a then-effective registration statement
filed pursuant to the Securities Act of 1933, as amended. The Series B Preferred
Stock convertible pursuant to this Subsection 3(b) shall be converted into that
number of shares of Common Stock equal to the aggregate Series B Liquidation
Preference of all issued and outstanding shares of Series B Preferred divided by
the Conversion Price.
(ii) Mechanics of Conversion at Option of Corporation. In the
------------------------------------------------
event the Corporation elects to exercise its right to require the holders of the
Series B Preferred to convert their Series B Preferred to Common Stock, the
Corporation shall give written notice to all holders thereof of its election to
require such conversion. The Corporation shall, as soon as practical after such
notice, issue and deliver to each holder of the Series B Preferred a certificate
for the number of shares of Common Stock into which such holder's Series B
Preferred is convertible as aforesaid and a check payable to such holder in the
amount of fractional shares as provided in Subsection 3(d), if any. Such
conversion shall be deemed to have been made immediately prior to the close of
business on the date of the Conversion Notice, and a holder entitled to receive
the shares of Common Stock issuable upon such conversion shall be treated for
all purposes as the record holder of such shares of Common Stock on such date.
(c) Adjustment of Conversion Price.
(i) Subdivisions, Combinations, or Consolidations of Common
-------------------------------------------------------
Stock. In the event the outstanding shares of Common Stock shall be subdivided,
- -----
combined or consolidated, by stock split, stock dividend, combination or like
event, into a greater or lesser number of shares of Common Stock, the Conversion
Price in effect immediately prior to such subdivision, combination,
consolidation or stock dividend shall, concurrently with the effectiveness of
such subdivision, combination or consolidation, be proportionately adjusted.
(ii) Reclassifications. In the case, at any time after the date
-----------------
hereof, of any capital reorganization or any reclassification of the stock of
the Company (other than as a result of a stock dividend or subdivision, split-up
or combination of shares), or the consolidation or merger of the Company with or
into another person (other than a consolidation or merger in which the Company
is the continuing entity and which does not result in any change in the Common
Stock), the shares of the Series B Convertible Preferred Stock shall, after such
reorganization,
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<PAGE>
reclassification, consolidation or merger be convertible into the kind and
number of shares of stock or other securities or property of the Company or
otherwise to which such holder would have been entitled if immediately prior to
such reorganization, reclassification, consolidation or merger such holder had
converted its shares of the Series B Preferred Stock into Common Stock.
(iii) Certificate as to Adjustments. Upon the occurrence of each
-----------------------------
adjustment or readjustment of the Conversion Price pursuant to this Section 5,
the Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
each the Series B Preferred so adjusted a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Company shall, upon the written request
at any time of any holder of a the Series B Preferred, furnish or cause to be
furnished to such holder a like certificate setting forth (i) such adjustments
and readjustments, (ii) the Conversion Price at the time in effect, and (iii)
the number of shares of Common Stock and the amount, if any, of other property
which at the time would be received upon the conversion of the Series B
Preferred.
(d) Status of Converted Stock. In case any shares of the Series B
-------------------------
Preferred shall be converted pursuant to Section 3 hereof, the shares so
converted shall, at the option of the Corporation, be canceled, and, if not
canceled, shall not be reissuable as shares of Series B Preferred but shall be
part of the authorized but unissued capital stock of the Corporation.
(e) Fractional Shares. In lieu of any fractional shares to which the
-----------------
holder of the Series B Preferred would otherwise be entitled upon conversion,
the Corporation shall pay cash equal to such fraction multiplied by the fair
market value of one share of Common Stock as determined by the Board of
Directors in the good faith exercise of its reasonable business judgment.
(f) Miscellaneous. All calculations under this Section 3 shall be
-------------
made to the nearest cent or to the nearest one hundredth (1/100) of a share, as
the case may be.
(g) No Impairment. The Corporation will not, through any
-------------
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 3 and in the
taking of all such action as may be necessary or appropriate in order to protect
the conversion rights of the holders of Series B Preferred against impairment.
(h) Reservation of Stock Issuable Upon Conversion. The Corporation
---------------------------------------------
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series B Preferred, such number of its shares of Common Stock
as shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series B Preferred. If at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of the Series B Preferred, the
Corporation will take such corporate
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<PAGE>
action as may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purpose.
(i) Registration of Stock Issuable Upon Conversion. The Corporation
----------------------------------------------
shall use its best efforts to register for public resale all of the Common Stock
which may be issued upon the conversion of the Series B Preferred by filing a
registration statement with the Securities and Exchange Commission not later
than June 17, 2000. The terms of such registration will be set forth in full
within a Registration Rights Agreement executed by the Corporation and the
holders of the Series B Preferred.
(4) Redemption of Series B Preferred.
(a) Optional Redemption. The Corporation shall have the right to
-------------------
redeem any or all of the issued and outstanding Series B Preferred from time to
time by giving fifteen (15) days' written notice (the "Redemption Notice") to
-----------------
all holders thereof. Following receipt of a Redemption Notice, all holders of
the Series B Preferred shall have the right to convert their shares of Series B
Preferred on the terms set forth in Section 3(a) above, provided, however, that
the requirement that such shares have been issued for not less than one year
shall not apply to any such conversion.
(b) Mandatory Redemption. If at any time while any Series B
--------------------
Preferred shall be outstanding the Corporation shall offer to the public, on an
underwritten basis for its own account, any newly-issued debt or equity
securities (an "Underwritten Offering"), any holders of Series B Preferred who
---------------------
were issued in excess of $600,000 in original aggregate Stated Value of Series B
Preferred shall have the right, subject to the provisions of this Section 4(b),
to require the Corporation to use the proceeds of the Underwritten Offering to
redeem all or part of such holder's Series B Preferred Stock. A holder's right
to require redemption of such holder's Series B Preferred shall be subject at
all times to the reasonable discretion of the lead underwriter of the
Underwritten Offering to object to the use of some or all of the proceeds of
such offering to redeem the Series B Preferred. In the event the proceeds
available from the Underwritten Offering are not, in the discretion of the lead
underwriter, sufficient to redeem fully all of the Series B Preferred which
holders wish to have redeemed: (i) the priority of such redemption shall be
first, on a pro rata basis among Series B Preferred held at such time by MIP and
GPP, and second, on a pro rata basis among the Series B Preferred held by the
Carson Trust and Williams; and (ii) the rights set forth in this Section 4(b)
shall continue in place as to any such future Underwritten Offering until all of
the Series B Preferred shall have been redeemed or converted.
(c) In the event the Corporation shall redeem any of the Series B
Preferred hereunder, the Corporation shall remit to the holders of any such
shares an amount per share, in cash, equal to the Stated Value of the shares
plus the accrued and declared but unpaid dividends on such shares, upon the
Corporation's receipt of the certificates evidencing the shares redeemed.
(5) Restrictions on Transfer of Common Stock.
The resale or other transfer of the Common Stock issuable upon the
conversion of the Series B Preferred by any holder thereof shall be subject to
the following limitations:
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<PAGE>
(i) No Shares of Common Stock issuable upon the conversion of
the Series B Preferred may be resold by the holder thereof prior to the
ninetieth (90th) day following the conversion of such holder's Series B
Preferred (the "Conversion Date").
---------------
(ii) In each of the four calendar quarters commencing with the
calendar quarter during which the ninetieth (90th) day following any share's
Conversion Date shall occur, the holder of such Common Stock may transfer not
more than twenty-five percent (25%) of the aggregate number of shares of Common
Stock issued to such holder on the Conversion Date applicable to such shares.
(6) Voting Rights. Except as otherwise required by law or by Section 9,
-------------
the holders of the Series B Preferred issued and outstanding shall not be
entitled to a vote.
(7) Notices of Record Date. In the event of any taking by the Corporation
----------------------
of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution, any right to subscribe for, purchase or otherwise acquire
any shares of stock of any class or any other securities or property, or to
receive any other right, the Corporation shall mail to each holder of the Series
B Preferred, at least twenty (20) days prior to the date specified therein, a
notice specifying the date on which any such record is to be taken for the
purpose of such dividend, distribution or right, and the amount and character of
such dividend distribution or right.
(8) Notices. Any notice required by the provisions of the Certificate to
-------
be given to the holders of the Series B Preferred shall be deemed given when
deposited in the United States mail, postage prepaid, and addressed to each
holder of record at his or her address appearing on the books of the
Corporation, or upon actual receipt when personally delivered or sent by
overnight or other courier delivery.
(9) Protective Provisions. So long as any shares of the Series B
---------------------
Preferred are outstanding, the Corporation shall not, without first obtaining
the approval of the holders of at least a majority in interest of the Series B
Preferred then outstanding, voting as a separate class, take any action that:
(i) alters the rights, preferences or privileges of the Series
B Preferred;
(ii) increases or decreases the authorized number of shares of
Series B Preferred of the Corporation;
(iii) creates any new class or series of shares that has a
preference over or is on a parity with the Series B Preferred with respect to
voting, dividends or liquidation preferences, or any other rights and/or
remedies;
(iv) reclassifies stock into shares having a preference over or
parity with the Series B Preferred with respect to voting, dividends or
liquidation preferences, or any other rights and/or remedies; or
8
<PAGE>
(v) authorizes any dividend or other distribution other than
with respect to the Series B Preferred.
(10) Specific Enforcement. The Company agrees that the rights created by
--------------------
this designation are unique, and that the loss of any such right is not
susceptible to monetary quantification. Consequently, the Company agrees that an
action for specific performance (including for temporary and/or permanent
injunctive relief) of the obligations created by this designation is a proper
remedy for the breach of the provisions of this designation, without the
necessity of proving actual damages. If any holder of the Series B Preferred is
forced to institute legal proceedings to enforce its rights in accordance with
the provisions hereof, such holder, if he prevails, shall be entitled to recover
from the Company his reasonable expenses, including attorneys' fees, incurred in
connection with any such action.
This Certificate may be delivered by facsimile and executed in one or more
counterparts, each of which shall constitute an original and all of which taken
together shall constitute one and the same Consent.
9
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Certificate of Designation
to be duly executed by its President and attested to by its Secretary and the
corporate seal to be affixed hereto, this 17th day of June, 1999.
SKYNET HOLDINGS, INC.
/s/ VJEKOSLAV NIZIC
-------------------------------------
VJEKOSLAV NIZIC
Date: _________________________ President
Attest:
/s/ MARTIN G. PARAVATO
-------------------------------------
MARTIN G. PARAVATO
Date: _________________________ Secretary
10
