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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 2, 1999
SKYLYNX COMMUNICATIONS, INC.
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(Exact name of registrant as specified in its charter)
COLORADO 0-24687 84-1360029
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(State or other (Commission file number) (Employer Identi-
incorporation) fication No.)
103 Sarasota Quay, Sarasota, Florida 34236
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (941) 366-4747
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(Former name or former address, if changed since last report)
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ITEM 2: ACQUISITION OF ASSETS
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On February 2, 1999, SkyLynx Communications, Inc., a Colorado
corporation, ("SkyLynx" or the "Company") closed upon and consummated a
definitive Asset Purchase Agreement dated as of February 2, 1999, (the
"Agreement") between the Company and Interaccess Corporation, a Florida
corporation, ("Interaccess") pursuant to which the Company purchased
substantially all of the tangible and intangible properties and assets
("Assets") used by Interaccess in the business of internet service
provision (the "Business").
Under the terms of the Agreement, the Company acquired the Assets of
the Business, including inventories, accounts receivable, furniture,
fixtures, office machinery and equipment and other tangible property, all
mailing, client and customer lists, leasehold improvements and fixtures,
prepaid expenses, contracts and licenses, development assets and intangible
assets.
The purchase price paid by the Company to Interaccess for the Assets
of the Business and for a covenant not to compete was a total of $390,770,
payable $195,385 in cash at closing, with the balance of $195,385 by the
issuance by the Company to the shareholders of Interaccess, pro rata, an
aggregate of 35,234 shares of the Company's Common Stock, $.001 par value,
having an agreed upon aggregate fair market value of $195,385. Of the
shares of the Company's Common Stock issued in the transaction, twenty
percent (20%) of such shares was retained by the Company and will be held
for a period of one (1) year as security for the obligations of the sellers
under the various indemnification provisions of the Agreement.
The Company will continue to operate the Business from its facility in
Tampa, Florida.
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
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(a) Financial Statements
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Pursuant to Item 7(a)(4), the Registrant declares that it is
impracticable to provide the required audited financial statements relative
to the acquired business at the time of this Report. Such audited
financial statements required by Item 7(a) shall be filed not later than
sixty (60) days after the filing of this Current Report on Form 8-K.
(b) Pro Forma Financial Information
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Pursuant to Item 7(b) and Item 7(a)(4), the Registrant declares
it is impracticable to provide the required pro forma financial information
relative to the acquired business at the time of this Report. Such pro
forma financial information required by Item 7(b) shall be filed not later
than sixty (60) days after the filing of this Current Report on Form 8-K.
(c) Exhibits
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Item Title
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1.1 Asset Purchase Agreement dated as of February 2, 1999
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
SKYLYNX COMMUNICATIONS , INC.
Dated: February 15, 1999 By: /s/ Jeffery A. Mathias
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Jeffery A. Mathias,, President
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ASSET PURCHASE AGREEMENT
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This ASSET PURCHASE AGREEMENT (this "Agreement") is entered
into and made effective as of February 2, 1999 ("Effective
Date"), by and between SKYLYNX COMMUNICATIONS, INC., a Colorado
corporation ("Purchaser"), INTERACCESS CORP., a Florida
corporation ("Seller"), and each of those persons, jointly and
severally, who are all of the shareholders of Seller, namely:
Allen Cohen and Mark Dranoff, which persons are hereinafter
collectively referred to as the "Shareholders." Shareholders and
Seller are hereinafter collectively referred to as the "Sellers."
Certain other capitalized terms used herein are defined in
Article 11 and throughout this Agreement.
RECITALS
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A. Seller is engaged in the business of internet service
provision (the "Business") with its headquarters located in
Tampa, Florida, and is qualified to do business in the state of
Florida;
B. Seller has facilities and operations in the state of
Florida;
C. The Shareholders hold all of the outstanding capital
stock of Seller, and Purchaser is unwilling to enter into this
Agreement without the covenants and promises of Shareholders
herein set forth; and
D. Purchaser desires to purchase and acquire certain
assets, properties, and contractual rights of Seller used in
connection with the Business, and Seller desires to sell such
assets, properties, and contractual rights to Purchaser, all on
the terms and subject to the conditions hereinafter set forth.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties,
covenants and agreements contained herein, the parties hereto
agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 Description of Assets. Upon the terms and subject to
the conditions set forth in this Agreement, Seller does hereby
grant, convey, sell, transfer and assign to Purchaser the
following assets, properties, and contractual rights of Seller
(collectively, the "Assets"), wherever located, subject to the
exclusions hereinafter set forth:
(a) all machinery, leasehold improvements,
construction in progress, furniture and fixtures, computer
equipment and monitors, routers, servers, computer software, and
any other fixed assets owned by Seller and used in the operations
of the Business, including, without limitation, the fixed assets
listed on Schedule 1.1(a) attached hereto and made a part hereof
(the "Equipment");
(b) all real property interests (whether owned or
leased) used or for use in the Business (the "Real Property"), as
specifically described on Schedule 1.1(b) attached hereto and
made a part hereof, and all improvements thereon;
(c) all motor vehicles used or for use in the
Business, and all radios, attachments, and accessories now
located in or on such motor vehicles (the "Rolling Stock"), as
the same are listed and more completely described by
manufacturer, model number and model year on Schedule 1.1(c),
attached hereto and made a part hereof;
(d) all of Seller's interests and rights and benefits
under any leases of machinery, vehicles, equipment, tools,
furniture, fixtures or other fixed assets;
(e) all contractual rights of Seller with Seller's
customers (whether oral or in writing, and including without
limitation all ISP Service Agreements and Customer Agreements to
which Seller is a party, and all accounts receivable relating to
services prior to the Closing (the "Accounts Receivable"),
relating to the conduct of the Business and all other rights to
provide services to customers of Seller (the "Customer
Accounts"), and all commitments, lists, leases, permits,
licenses, consents, approvals, franchises and other instruments
relating to the Customer Accounts (the "Related Documents"); a
complete and accurate list of the Customer Accounts and the
Related Documents is set forth on Schedule 1.1(e), attached
hereto and made a part hereof, and true and complete copies of
all Customer Accounts (or descriptions of unwritten arrangements)
and Related Documents in printed or in electronic format shall be
maintained by Seller at all times in Hillsborough County,
Florida, which records shall be provided to Purchaser for
inspection upon twenty-four (24) hour advance notice to Seller;
Seller shall provide to Purchaser a copy of all material records
of Seller, including but not limited to those in electronic
format and CD-ROM media, which records shall be delivered to
Purchaser simultaneously with the execution and delivery of this
Agreement;
(f) the contracts and other agreements to which
Seller is a party listed on Schedule 1.1(f) (the "Assumed
Contracts");
(g) all of Seller's inventory of parts, supplies and
accessories of every kind, nature and description used or for use
in connection with the Business (the "Inventory");
(h) all proprietary rights of Seller, including,
without limitation, all right, title and interest of Seller in
and to all trade secrets, slogans, processes, rights, symbols,
trademarks, service marks, logos, and trade names used in the
Business;
(i) all permits, licenses (including Class C
licenses), franchises, consents and other approvals and operating
rights relating to the Business that are assignable or
transferable, which are more completely described and set forth
on Schedule 1.1(i), attached hereto and made a part hereof, true
and complete copies of which are attached to Schedule 1.1(i);
(j) all communications equipment (together with any
rights to frequencies related thereto) used in connection with
the Business, wherever located;
(k) all right, title and interest of Seller in and to
all telephone and telecopier numbers used by Seller in the
conduct of the Business;
(l) all of Seller's right, title and interest in and
to the name "InterAccess Corp.", and any other names used in
connection with the Business and the rights to use such names
(the "Business Names");
(m) all manual and automated routing and billing
information and components thereof, including, without
limitation, all routing and billing computer software and
programs containing any customer information;
(n) all operating data and records of Seller,
including, without limitation, all of Seller's existing
documents, files and other material related to all current or
past customers of the Business, financial, accounting and credit
records, correspondence, budgets and other similar documents and
records;
(o) all of the good will of the Business;
(p) all cash, securities, investment property, and
other such assets of Seller, including all amounts on deposit
with Seller; and
(q) all other tangible and intangible assets used in
the Business, including those set forth on Seller's balance sheet
dated as of December 31, 1998 (the "Current Balance Sheet"), a
copy of which is attached as Schedule 1.1(q) hereto.
All of the foregoing assets, properties and contractual rights
described in Section 1.1(a) through (q) are hereinafter sometimes
collectively called the "Assets."
1.2 Non-Assignment of Certain Customer Accounts.
Notwithstanding anything to the contrary in this Agreement, to
the extent that the assignment hereunder of any Customer Account
shall require the consent of any third party, neither this
Agreement nor any action taken pursuant to its provisions shall
constitute an assignment or an agreement to assign if such
assignment or attempted assignment would constitute a breach
thereof or result in the loss or diminution thereof; provided,
however that in each such case, Seller shall use its best efforts
to obtain the consent of such other party to such assignment to
Purchaser. If such consent is not obtained, Seller shall
cooperate with Purchaser in any reasonable arrangement designed
to provide for Purchaser the benefits under any such Customer
Account, including, without limitation, an adjustment of the
Purchase Price set forth in Section 2.1 hereof and enforcement
for the account and benefit of Purchaser, of any and all rights
of Seller against any other person arising out of the breach or
cancellation of any such Customer Account by such other person,
or otherwise. Attached hereto as Schedule 1.2 is a list of all
Customer Accounts requiring consent to their assignment.
1.3 Accounts Receivable. As described in Section 1.1(e)
above, the Accounts Receivable are to be conveyed to Purchaser at
the Closing. However, if Seller receives any payments after the
Closing in connection with the Accounts Receivable, then Seller
shall forward such payments to Purchaser on a regular basis (but
at least monthly), together with an itemized list of the sources
thereof. Attached hereto as Schedule 1.3 is a true and complete
list of all Accounts Receivable of Seller as of December 31,
1998.
1.4 Proration of February 1999 Net Income. As of the date
which is forty-five (45) days after the Closing Date, Purchaser
and Seller shall meet to account for amounts paid in respect of
Accounts Receivable relating to services performed for customers
in the month of February 1999, and the amount of expenses
incurred or paid in respect of February 1999 ("February 1999
Expenses"). To the extent that February 1999 Revenues exceed
February 1999 Expenses (with the difference being "February 1999
Net Income"), Seller shall be entitled to a portion thereof equal
to February 1999 Net Income times a fraction, the numerator of
which equals the number of days prior to the Closing Date in
February and the denominator of which is 28.
1.5 Change of Names. On the Closing Date, Seller shall
cease doing business under Seller's current Business Names to a
name not the same as or similar to InterAccess Corp. or any other
symbol, trademark, service mark, logo, or trade name now used by
Seller. Seller shall, on the Closing Date, deliver to Purchaser,
in form suitable for filing, such certificates, consents and
other documents as are necessary to effect the transfer of the
registration of the Business Names conveyed by Seller pursuant to
this Agreement in the State of Florida and in any other relevant
jurisdiction.
ARTICLE 2
PURCHASE PRICE AND RETENTION
2.1 Purchase Price. On the Closing Date, Purchaser shall
deliver to Seller in consideration for the Assets and the
restrictive covenants set forth herein, an aggregate of (a) One
Hundred Ninety-Five Thousand Three Hundred Eighty-Five Dollars
($195,385) in immediately available funds and (b) Purchaser shall
deliver to the Shareholders in consideration for the restrictive
covenants set forth herein, including but not limited to the
Covenant Not to Compete, shares of Common Stock having an
aggregate Market Value equal to One Hundred Ninety-Five Thousand
Three Hundred Eighty-Five Dollars ($195,385) (the "Shares");
provided, however, that twenty percent (20%) of the Shares (the
"Hold Back Shares") shall be retained by Purchaser for a period
of one (1) year from the Closing Date (the "Hold Back Period") as
security for the obligations of the Sellers (including without
limitation the indemnification obligations set forth in Article
10 hereof) of Sellers to Purchaser hereunder, and the
Shareholders acknowledge that forfeiture of the Hold Back Shares
may be required pursuant to Articles 10 and 11 hereof. In
addition to all other rights and remedies which Purchaser may
have with respect to the Hold Back Shares, Purchaser shall have
all rights and remedies of a secured party under the Florida
Uniform Commercial Code and other applicable law with respect to
the Hold Back Shares. It is agreed and understood that the
Shares are "restricted securities" under the Securities Act of
1933, as amended, and as such, such shares are unregistered and
are not readily tradeable in the public capital markets for a
period of at least one (1) year after their issuance. The
consideration set forth in this Section 2.1 shall be allocated
among the Sellers as set forth on Annex I attached hereto and
made a part hereof.
2.2 Liabilities. Except in connection with obligations
incurred after the Closing in connection with contracts assumed
by Purchaser hereunder, Purchaser is not assuming any liabilities
of Sellers. In particular, no liabilities arising or accruing
prior to the Closing are being assumed by Purchaser hereunder.
ARTICLE 3
CLOSING
3.1 Time and Place. Subject to the terms and conditions of
this Agreement, the closing of the purchase and sale of the
Assets (the "Closing") shall take place on February 3, 1999,
11:00 a.m., P.S.T., or such other time mutually agreed by both
parties, at the offices of Purchaser in Tampa, Florida. The date
on which the Closing occurs shall be referred to as the "Closing
Date."
3.2 Deliveries by Seller and Shareholders. At the Closing,
Seller and Shareholders shall deliver to Purchaser the following
executed documents:
(a) a General Conveyance, Assignment and Bill of Sale,
in form and substance satisfactory to Purchaser, and Sellers,
conveying, selling, transferring, and assigning to Purchaser all
of the Assets (the "Bill of Sale");
(b) Certificates of Title and/or registrations to the
Rolling Stock property endorsed to Purchaser;
(c) a receipt acknowledging payment by Purchaser of
the Purchase Price;
(d) fully executed consents to the assignment of the
Customer Accounts, if any, in form and substance satisfactory to
Purchaser;
(e) the documents evidencing Seller's change of
Business Names as required by Section 1.5;
(f) a certified copy of the resolutions of the
Shareholders and directors of Seller authorizing the execution,
delivery and performance of this Agreement, the sale of the
Assets to Purchaser, and the consummation of the transactions
contemplated herein, and a certificate of secretary of Seller,
dated the Closing Date, that such resolutions were duly adopted
and are in full force and effect, along with an incumbency
certificate of Seller;
(g) required consents for assignment of leases, if
any;
(h) the assignment of the Permits described on
Schedule 5.21;
(i) consents to the assignment of Assumed Contracts,
if any; and
(j) such other documents or separate instruments of
sale, assignment or transfer reasonably required by Purchaser.
3.3 Payment of Purchase Price. Purchaser shall pay the
Purchase Price in accordance with Section 2.1.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As a material inducement to Sellers to enter into this
Agreement and to consummate the transactions contemplated hereby,
Purchaser represents and warrants to Sellers that the statements
contained in this Article 4, except as set forth in any schedules
to the subsections of this Article 4 delivered by Purchaser to
the Sellers on the date hereof (such schedules hereinafter
collectively referred to as the "Disclosure Schedules" and,
individually, as a "Disclosure Schedule"), if any, which
schedules may be required to be supplemented from time to time by
Purchaser after the date of this Agreement in order to make such
representations and warranties true as of the date such
representation and warranties are given: (i) are correct and
complete as of the date of this Agreement; (ii) will be correct
as of the Effective Date and the Closing Date (as though made
then and as though the Effective Date and the Closing Date,
respectively, were substituted for the date of this Agreement
throughout this Article 4); and (iii) shall survive the Closing.
4.1 Corporate Status. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Colorado and has the requisite power and
authority to own or lease its properties and to carry on its
business as now being conducted.
4.2 Corporate Power and Authority. Purchaser has the
corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. Purchaser has taken all
action necessary to authorize the execution and delivery of this
Agreement, the performance of its obligations hereunder and the
consummation of the transactions contemplated hereby.
4.3 Enforceability. This Agreement has been duly executed
and delivered by Purchaser and constitutes a legal, valid, and
binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or
similar laws affecting the enforcement of creditors' rights
generally and general equitable principles regardless of whether
such enforceability is considered in a proceeding at law or in
equity.
4.4 No Violation. The execution and consummation of this
Agreement by Purchaser will not: (i) contravene any provision of
the certificate of incorporation or bylaws of Purchaser;
(ii) violate or conflict with any law, statute, ordinance, rule,
regulation, decree, writ, injunction, judgment, or order of any
Governmental Authority or of any arbitration award which is
either applicable to, binding upon, or enforceable against
Purchaser; or (iii) require the consent, approval, authorization,
or permit of, or filing with or notification to, any Governmental
Authority, any court or tribunal or any other Person.
4.5 SkyLynx Common Stock. Upon the Closing and the
issuance and delivery of certificates representing the Shares to
the Shareholders, the Shares will be validly issued, fully paid
and non-assessable shares of Common Stock of Purchaser and
subject to no Liens.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
As a material inducement to Purchaser to enter into this
Agreement and to consummate the transactions contemplated hereby,
the Sellers, jointly and severally, represent and warrant to
Purchaser that the statements contained in this Article 5, except
as set forth in the Disclosure Schedules to the subsections of
this Article 5 delivered by the Sellers to Purchaser on the date
hereof, if any, which schedules may be required to be
supplemented from time to time by the Sellers after the date of
this Agreement in order to make such representations and
warranties true as of the date such representations and
warranties are given: (i) are correct and complete as of the
date of this Agreement; (ii) will be correct as of the Effective
Date and the Closing Date (as though made then and as though the
Effective Date and the Closing Date, respectively, were
substituted for the date of this Agreement throughout this
Article 5); and (iii) shall survive the Closing. Nothing in the
Disclosure Schedules shall be deemed adequate to disclose an
exception to a representation or warranty made herein unless the
Disclosure Schedule identifies the exception with particularity
and describes the relevant facts in detail. In addition, nothing
in the Disclosure Schedules shall be deemed to limit the
indemnification provisions set forth in Article 10 hereof.
Without limiting the generality of the foregoing, the mere
listing (or inclusion of a copy) of a document or other item
shall not be deemed adequate to disclose an exception to a
representation or warranty made herein (unless the representation
or warranty has to do with the existence of a document or other
item itself). Nothing in this paragraph shall require the
disclosure of an exception on more than one (1) Disclosure
Schedule made a part of this Agreement; provided, however, that
in all such instances, the Disclosure Schedule on which the
requested information is located must be cross-referenced on the
appropriate Disclosure Schedule.
5.1 Corporate Status. Seller is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Florida and is in good standing and is qualified
to conduct business under all applicable laws, regulations,
ordinances, and orders of Governmental Authorities to carry on
its business, including but not limited to, the laws of the State
of Florida and has the requisite power and authority to own or
lease its properties and to carry on the Business as now being
conducted. Seller is duly authorized and qualified, under all
applicable laws, regulations, ordinances, and orders of
Governmental Authorities, to carry on the Business in the places
and in the manner as now conducted except where the failure to be
so authorized or qualified would not have a Material Adverse
Effect on the Business or on the operations, properties, assets
or conditions (financial or otherwise), of Seller.
5.2 Power and Authority. Each of the Sellers has taken all
action necessary to authorize the execution and delivery of this
Agreement, the performance of his, her, or its obligations
hereunder and the consummation of the transactions contemplated
hereby. Each Seller has the requisite competence and authority
to execute and deliver this Agreement, to perform his, her, or
its respective obligations hereunder and to consummate the
transactions contemplated hereby.
5.3 Enforceability. This Agreement has been duly executed
and delivered by each Seller, and constitutes the legal, valid
and binding obligation of each Seller, enforceable against each
Seller in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting the enforcement of
creditors' rights generally and general equitable principles
regardless of whether such enforceability is considered in a
proceeding at law or in equity.
5.4 Y2K. Sellers are unaware of any potential material Y2K
impact on the Business.
5.5 Subsidiaries. Seller does not presently own of record
or beneficially, or control, directly or indirectly, any capital
stock, securities convertible into capital stock, or any other
equity interest in any corporation, association or business
entity, nor is Seller, directly or indirectly, a participant in
any joint venture, partnership or other non-corporate entity,
except as provided in Schedule 5.5.
5.6 No Violation. The execution and consummation of this
Agreement will not: (i) contravene any provision of the articles
of incorporation or bylaws of Seller (the "Charter Documents");
(ii) violate or conflict with any law, statute, ordinance, rule,
regulation, decree, writ, injunction, judgment or order of any
Governmental Authority or of any arbitration award, which is
either applicable to, binding upon or enforceable against Seller,
its assets or securities, or any Seller; (iii) conflict with,
result in any breach of, or constitute a default (or an event
which would, with the passage of time or the giving of notice or
both, constitute a default) under, or give rise to a right to
terminate, amend, modify, abandon or accelerate, any Contract
which is applicable to, binding upon or enforceable against any
Seller or the assets or securities of Seller; (iv) result in or
require the creation or imposition of any Lien upon or with
respect to any of the assets or securities of Seller; or (v) to
the best of each of the Shareholder"s or Seller"s
knowledge, require the consent, approval, authorization or permit
of, or filing with or notification to, any Governmental
Authority, any court or tribunal or any other Person.
5.7 Taxes. Sellers acknowledge and agree that the
Purchaser has made no representations to Sellers regarding the
tax consequences of any amounts received by Sellers pursuant to
this Agreement. Sellers agree to pay federal or state taxes
which are required by law to be paid with respect to this
Agreement.
5.8 No Commissions. None of the Shareholders or Seller has
incurred any obligation for any finder's or broker's or agent's
fees or commissions or similar compensation in connection with
the transactions contemplated hereby.
5.9 Financial Statements. The Sellers have delivered to
Purchaser the financial statements of Seller for the years ending
December 31, 1997, and December 31, 1998, including the notes
thereto, (collectively, the "Financial Statements"), a copy of
which is attached hereto as Schedule 5.9. The balance sheet
dated as of December 31, 1998, of Seller included in the
Financial Statements is referred to herein as the "Current
Balance Sheet." The Financial Statements fairly present the
financial position of Seller pertaining to the Assets at each of
the balance sheet dates and the results of operations for the
periods covered thereby, and have been prepared in accordance
with generally accepted accounting principles consistently
applied in respect of cash basis accounting except for the lack
of footnotes accompanying Financial Statements, throughout the
periods indicated. The books and records of Seller fully and
fairly reflect all transactions, properties, assets, and
liabilities of Seller. There are no material special or non-
recurring items of income or expense during the periods covered
by the Financial Statements, and the Current Balance Sheet does
not reflect any write-up or revaluation increasing the book value
of any assets, except as specifically disclosed in the notes
thereto. The Financial Statements reflect all adjustments
necessary for a fair presentation of the financial information
contained therein.
5.10 Changes Since the Current Balance Sheet. Except as
provided in Schedule 5.10, since the date of the Current Balance
Sheet, Seller has not: (i) sold, leased or transferred any of its
properties or assets; (ii) made or obligated itself to make
capital expenditures consistent with past practice;
(iii) incurred any obligations or liabilities (including any
indebtedness) or entered into any transaction or series of
transactions other than in the ordinary course of business,
except for this Agreement and the transactions contemplated
hereby; (iv) waived, cancelled, compromised or released any
rights; (v) made or adopted any change in its accounting practice
or policies; (vi) made any adjustment to its books and records;
(vii) entered into any transaction with any Affiliate other than
transactions in the ordinary course of business consistent with
past practice; (viii) terminated, amended, or modified any
agreement; (ix) imposed any security interest or other Lien on
any of its assets; (x) entered into any other transaction or was
subject to any event which had or may have a Material Adverse
Effect on Seller or the Business; (xi) except as contemplated in
this section, engaged in any other transaction out of the
ordinary course of the Business; (xii) paid any dividends or made
any distribution of cash or property to the Shareholders (except
for payment of their regular salaries); or (xiii) agreed to do or
authorized any of the foregoing.
5.11 Litigation. Except as provided in Schedule 5.11, there
is no action, suit, or other legal or administrative proceeding
or governmental investigation pending or to any Seller"s
knowledge threatened against, by or affecting any Shareholder,
Seller, the Business, or the assets of Seller, or which questions
the validity or enforceability of this Agreement or the
transactions contemplated hereby, and to any Seller"s knowledge
there is no basis for any of the foregoing. There are no
outstanding orders, decrees or stipulations issued by any
Governmental Authority in any proceeding to which the
Shareholders or Seller is or was a party which have not been
complied with in full or which continue to impose any material
obligations on the Assets.
5.12 Liabilities. Schedule 5.12 sets forth all liabilities
or obligations, whether accrued, absolute, contingent or
otherwise, of Seller not reflected on the Current Balance Sheet,
including: (i) liabilities and obligations existing on the date
hereof, incurred in the ordinary course of business consistent
with past practice since the date of the Current Balance Sheet;
and (ii) liabilities incurred in the ordinary course of Business
prior to the date of the Current Balance Sheet which were not
required to be recorded thereon, including but not limited to
liabilities arising out of guarantees, repurchases of any of
Seller"s securities, and indemnification agreements (the
liabilities and obligations referenced in (i) and (ii) above are
referred to as the "Designated Liabilities"). None of the
Designated Liabilities relates to any breach of contract, breach
of warranty, tort infringement, or violation of law, and none
arose out of any action, suit, claim, governmental investigation,
or arbitration proceeding.
5.13 Indebtedness. Schedule 5.13 sets forth the
outstanding principal amount of and outstanding interest on (as
of the date set forth in the Schedule) all indebtedness for
borrowed money and capitalized lease obligations (including the
outstanding principal amount and accrued but unpaid interest and
the name of the lender) owed to a bank or any other Person by
Seller and the name and telephone number of Seller"s contact at
such bank or other Person.
5.14 Environmental Matters. To the best of each of the
Sellers" knowledge, Seller has not received any notice (nor would
there be any basis for such a notice) from any local, state or
federal agency having jurisdiction over the Business, Seller"s
operations, properties, or assets or responsibility for the
enforcement of local, state, or federal environmental, health,
and safety laws (as defined in this Section) of any violation of
any environmental, health and safety laws by Seller or its
officers or employees, in connection with the assets.
5.15 Real Property, Leases and Significant Personal
Property. Seller does not own any real property. Schedule 5.15
sets forth:
(a) All personal property owned by Seller or used by
the Business as of the Current Balance Sheet date, included on
the Current Balance Sheet, all of which is included in the
accounts reflected on the Current Balance Sheet;
(b) All other personal property of Seller acquired
since the Current Balance Sheet date; and
(c) All leases for real and personal property to which
Seller is a party involving real or personal property, including
in each case true, complete and correct copies of all such leases
and including an indication as to which real and personal
property is currently owned, or was formerly owned, by any of the
Shareholders or Seller. All of the material machinery and
equipment and all other tangible assets of Seller are in good
working order and condition, ordinary wear and tear excepted, and
have been maintained in accordance with industry practice. All
leases set forth in Schedule 5.15, are in full force and effect
and constitute valid and binding agreements of Seller and
constitute valid and binding agreements of the other parties
thereto in accordance with their respective terms, and all fixed
assets used by Seller are either owned by Seller or leased under
a valid agreement. Schedule 5.15 also sets forth a summary
description of all plans or projects involving the opening of new
operations or the acquisition of any real property or existing
business, with respect to which Seller has made any material
expenditure in the one-year period prior to the date of the
Agreement, or entered into a written commitment therefor, which
if pursued by Seller would require additional expenditures of
capital.
5.16 Good Title, Adequacy and Condition.
(a) Seller has, and at Closing will have, good and
marketable title to the Assets with full power to sell, transfer
and assign the same, free and clear of any Lien, and by virtue of
the grant, conveyance, sale, transfer, and assignment of Assets
hereunder, Purchaser shall receive good and marketable title to
all of the Assets, free and clear of all Liens.
(b) The Assets constitute, in the aggregate, all of
the assets and properties necessary for the conduct of the
Business in the manner in which and to the extent to which such
business is currently being conducted and, except as provided in
Schedule 5.16, include, without limitation, all tangible and
intangible assets owned by Seller including all vehicles,
equipment and inventory (more particularly described in
Schedule 5.16), and all Contracts, customer lists, intellectual
property, cash and accounts receivable, and licenses and permits
of Seller.
5.17 Compliance with Laws. Except as provided in
Schedule 5.17 and to the best of Seller"s and the Shareholders"
knowledge, Seller is in compliance with all laws and regulations
and is not in violation of any order of any court or federal,
state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality having jurisdiction over
Seller and there are no claims, actions, suits or proceedings
pending or, to the knowledge of Seller or any of the
Shareholders, threatened, against or affecting Seller or the
Business, at law or in equity, before or by any federal, state,
municipal or other governmental department, commission, board,
bureau, agency or instrumentality having jurisdiction over any of
them, and no notice of any such claim, action, suit or
proceeding, whether pending or threatened, has been received.
5.18 Absence of Certain Changes or Events. Since January 1,
1998, except as provided in Schedule 5.18, there has not been:
(i) any Material Adverse Change in the business, operations,
properties, condition (financial or other), or prospects of the
Business, taken as a whole, and no factor or condition exists and
no event has occurred that would be likely to result in any such
change; or (ii) any material loss, damage, or other casualty to
the assets. Since January 1, 1998, the Seller has operated the
Business in the ordinary course of business consistent with past
practice and has not: (i) incurred or failed to pay or satisfy
any material obligation or liability (whether accrued, contingent
or otherwise) relating to the operations of the Business except
in the ordinary course of business consistent with past practice;
(ii) incurred or failed to discharge or satisfy any Lien other
than Liens arising in the ordinary course of business that do
not, individually or in the aggregate, interfere with the use,
operation, enjoyment or marketability of any of the assets, all
of which shall be released as of the Closing Date; (iii) sold or
transferred any of the assets of the Business or canceled any
debts or claims or waived any rights material to the Business
relating to the operations of the Business, except in the
ordinary course of business consistent with past practices;
(iv) defaulted on any material obligation relating to the
Business; (v) entered into any transaction material to the
Business, or materially amended or terminated any arrangement
material to the Business or relating to the Business, except in
the ordinary course of business consistent with past practice; or
(vi) entered into any agreement or made any commitment to do any
of the foregoing.
5.19 Intellectual Property. Schedule 5.19 hereto sets forth
a true and complete list of all of the Sellers" patents, patent
applications, licenses, copyrights, copyright registrations,
copyright registration applications, trade names, trademarks,
trademark registrations, trademark applications, servicemarks,
servicemark registrations and servicemark applications, domain
names, IP addresses, trade secrets and similar rights, and any
applications in respect thereto (the "Intellectual Property")
used by the Sellers in whole or in part for the conduct of the
Business as now conducted. All the Intellectual Property is
owned by the Sellers free and clear of any and all Liens, and no
licenses for the use of any of such rights have been granted by
the Shareholders or Seller to any third parties. All of such
rights are valid and in good standing and are adequate and
appropriate for the Business as now conducted. Except as listed
on Schedule 5.19, all of such rights will be acquired by
Purchaser at the Closing, and the transfer of and use by
Purchaser of such rights will not require the consent of any
other person. To the Shareholders" and Seller"s best knowledge,
the operation of the Business does not infringe in any way on or
conflict with any registered or unregistered patent, trademark,
trade name, copyright, license or other right, of any person, and
the Sellers do not license any such right from others. The
Sellers do not know of any person who has wrongfully used, or
threatened to use, any of the Intellectual Property. No claim is
pending or threatened or has been made within the past five (5)
years, to the effect that any such infringement or conflict has
occurred. The Intellectual Property is adequate and appropriate
for the Business as now conducted, and the Sellers" rights in the
same are valid and subsisting. The Sellers have the full right
to use their name in every jurisdiction where they do business.
5.20 Accounts Receivable. Except as provided in
Schedule 5.20, all of the Accounts Receivable of Seller are valid
and legally binding, represent bona fide transactions, and arose
in the ordinary course of business of Seller. To the best of
Seller"s and the Shareholders" knowledge, all of such Accounts
Receivable posted on or after October 1, 1998, are good and
collectible receivables and will be collected in full in
accordance with the terms of such Accounts Receivable, without
set-off or counterclaims; provided, however, that to the extent
that the Accounts Receivable are not collected, the allowance for
doubtful accounts contained in the Current Financial Statement is
adequate based on Seller"s historical experience.
5.21 Licenses and Permits. Except as provided in
Schedule 5.21, and to the best of Seller"s and Shareholders"
knowledge, Seller possesses all licenses and required
governmental or official approvals, permits or authorizations
(collectively, the "Permits") for its Business and operations.
All Permits are valid and in full force and effect, Seller is in
compliance in all material respects with their requirements, and
no proceeding is pending or to Seller"s or any Shareholder"s
knowledge threatened to revoke or amend any of the Permits. None
of the Permits is or will be impaired or in any way affected by
the execution and delivery of this Agreement or the transactions
contemplated hereby.
5.22 Contracts, Customer Lists and Employment Matters.
Schedule 5.22 lists all customers and contracts of Seller that
account for more than 1% of Seller"s annual gross revenue, all
contracts of Seller requiring payment or performance involving
$10,000 or more, and all contracts and obligations with a term
longer than one (1) year (collectively, the "Material
Contracts"). All of the Material Contracts: (i) are valid and
binding obligations of the parties; (ii) are not in default and
will not become in default solely upon notice or the passage of
time without curative action; and (iii) will remain in full force
and effect following the Closing, without requiring the consent
of the other parties thereto and without causing a default, right
to terminate or right to modify any terms under any such Material
Contracts, notwithstanding any provisions in any such Material
Contracts which may set forth a restriction or change in control
of Seller. Seller has delivered to Purchaser true, complete and
correct copies of all Material Contracts prior to Closing. None
of the parties to the Material Contracts (which include all of
Seller"s significant Customers) has cancelled or substantially
reduced or, to the knowledge of Seller or any of the
Shareholders, is currently attempting or threatening to cancel
any Material Contract or substantially reduce utilization of the
services provided by Seller, and Seller has complied with all
commitments and obligations pertaining to any Material Contract,
and is not in default under any such Material Contract, and no
notice of default has been received.
5.23 Predecessor Status, Etc. There have been no
predecessor corporations of Seller for the past five (5) years.
Seller has not been a subsidiary or division of another
corporation or part of an acquisition which was later rescinded.
5.24 Spin-Off by Seller. Within the preceding two (2)
years, there has not been any sale, spin-off or split-up of
material assets of Seller or any other person or entity that
directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with,
Seller.
5.25 Records of Seller. All material corporate actions
taken by Seller have been duly authorized or ratified. All
accounts, books, ledgers and official and other records of Seller
have been fully, properly and accurately kept and completed in
all material respects, and there are no material inaccuracies or
discrepancies of any kind contained therein.
5.26 Accuracy of Information Furnished by Seller and the
Shareholders. No statement or information contained in this
Agreement and the various Schedules and Annex attached hereto or
in any certificate furnished to Purchaser pursuant hereto,
contains or shall contain any untrue statement of a fact or omits
or shall omit any fact necessary to make the information
contained therein not misleading. The Sellers have provided
Purchaser with true, accurate and complete copies of all
documents listed or described in the various Schedules attached
hereto. If the Sellers become aware of any fact or circumstance
which would change a representation or warranty of Seller in this
Agreement, the party with such knowledge shall immediately give
notice of such fact or circumstance to Purchaser. However, such
notification shall not relieve the Sellers of their obligation
under this Agreement, and at the sole option of Purchaser, the
truth and accuracy of any and all warranties and representations
of Seller at the date of this Agreement shall be a precondition
to the consummation of this transaction.
5.27 Investment Intent. The Shareholders are acquiring the
Shares hereunder for their own account and not with a view to, or
for the sale in connection with, any distribution of any of the
Shares, except in compliance with applicable federal and state
securities laws. The Shareholders have had the opportunity to
discuss the transactions contemplated hereby with Purchaser and
have had the opportunity to obtain such information pertaining to
Purchaser as has been requested, including but not limited to,
filings made by Purchaser with the Securities and Exchange
Commission (the "SEC") under the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
5.28 Acknowledgment Regarding Disclosure of Certain
Materials. The Shareholders hereby acknowledge and warrant that
each of the Shareholders has been provided access to the
following information: (i) all material books and records of
Purchaser; (ii) all material contracts and documents relating to
the transaction contemplated by this Agreement; (iii) all
documents required to be provided to the Shareholders pursuant to
Rule 502 of the Exchange Act; and (iv) the opportunity to
question the appropriate executive officers and partners.
5.29 Survival. Each of the representations and warranties
set forth in this Article 5 shall survive the Closing.
ARTICLE 6
CONDUCT OF BUSINESS PENDING THE CLOSING
6.1 Conduct of Business by Seller Pending the Closing.
Except as provided in Schedule 6.1, Seller and the Shareholders,
jointly and severally, covenant and agree that, except as
otherwise expressly required or permitted by the terms of this
Agreement, between the date of this Agreement and the Closing,
the business of Seller shall be conducted only in, and Seller
shall not take any action except in, the ordinary course of
business consistent with past practice. Seller and the
Shareholders shall use its or their reasonable best efforts to
preserve intact Seller"s business organizations, to keep
available the services of its current officers, employees and
consultants, and to preserve its present relationships with
customers, suppliers and other Persons with which it has business
relations. By way of amplification and not limitation, Seller
shall not, except as expressly required or permitted by the terms
of this Agreement between the date of this Agreement and the
Closing, directly or indirectly, do or propose or agree to do any
of the following without the prior written consent of Purchaser:
(a) amend or otherwise change its Charter Documents;
(b) issue, sell, pledge, dispose of, encumber, or
authorize the issuance, sale, pledge, disposition, grant or
encumbrance of any of its assets, tangible or intangible, except
in the ordinary course of business consistent with past practice;
or any shares of its capital stock of any class, or any options,
warrants, convertible securities or other rights of any kind to
acquire any shares of such capital stock;
(c) declare, set aside, make or pay any dividend or
other distribution, payable in cash, stock, property or
otherwise, with respect to any of its capital stock or other
securities;
(d) sell, lease or transfer any of its properties or
assets (other than in the ordinary course of business consistent
with past practice), or acquire (including, without limitation,
for cash or shares of stock, by merger, consolidation or
acquisition of stock or assets) any interest in any corporation,
partnership or other business organization or division thereof or
any assets; or make any investment either by purchase of stock or
securities, contributions of capital or property transfer, or
purchase any property or assets of any other Person (except in
the ordinary course of business consistent with past practice);
make or obligate itself to make capital expenditures out of the
ordinary course of business consistent with past practice; other
than in the ordinary course of business consistent with past
practice, incur any obligations or liabilities including, without
limitation, any indebtedness for borrowed money, issue any debt
securities or assume, guarantee or endorse or otherwise as an
accommodation become responsible for, the obligations of any
Person, or make any loans or advances, modify, terminate, amend
or enter into any Contract other than as expressly required or
permitted herein or in the ordinary course of business consistent
with past practice, or impose any security interest or other Lien
on any of its assets other than in the ordinary course of
business consistent with past practice;
(e) pay any bonus to its officers or employees, or
increase the compensation payable or to become payable to its
officers or employees or, except as presently bound to do, grant
any severance or termination pay to, or enter into any employment
or severance agreement with, any of its directors, officers or
employees, or establish, adopt, enter into or amend or take any
action to accelerate any rights or benefits which any collective
bargaining, bonus, profit sharing trust, compensation, stock
option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of
any directors, officers or employees;
(f) take any action with respect to accounting
policies or procedures other than in the ordinary course of
business and in a manner consistent with past practices;
(g) pay, discharge or satisfy any existing claims,
liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction in the ordinary course of business and
consistent with past practice of due and payable liabilities
reflected or reserved against in the Financial Statements, as
appropriate, or liabilities incurred after the date thereof in
the ordinary course of business and consistent with past practice
or delay paying any amount payable beyond forty-five (45) days
following the date on which it is due, except to the extent being
contested in good faith;
(h) enter into any transaction or agreement with any
of the Sellers or an Affiliate thereof except for such
transactions or agreements expressly permitted herein; or
(i) agree, in writing or otherwise, to take or
authorize any of the foregoing actions or any action which would
make any representation or warranty in Article 5 untrue or
incorrect in any respect.
ARTICLE 7
CERTAIN AGREEMENTS AND COVENANTS OF THE PARTIES
7.1 Further Assurances. Each party shall execute and
deliver such additional instruments and other documents and shall
take such further actions as may be necessary or appropriate to
effectuate, carry out and comply with all of the terms of this
Agreement and the transactions contemplated hereby and to satisfy
the conditions set forth in Articles 8 and 9. The Sellers shall
cause Seller to comply with all of the covenants of Seller under
this Agreement. The Sellers covenant and agree to deliver to
Purchaser at the Closing the certificates, opinions and other
documents required to be delivered to Purchaser pursuant to
Article 8, and Purchaser covenants and agrees to deliver to the
Sellers the certificates and other documents required to be
delivered to the Sellers pursuant to Article 9.
7.2 Confidentiality, Publicity. Except as required by law,
neither party shall disclose the terms of this transaction to any
third party nor make any public announcement related to this
Agreement or the transactions contemplated hereby without the
prior notification of the other party hereto. The disclosing
party shall provide the other party with a copy of all public
announcements proposed to be made by such party which relate to
this Agreement or the transactions contemplated hereby prior to
the release of such announcements to the public.
7.3 No Other Discussions. Until this Agreement is
terminated as herein provided, none of the Shareholders, Seller,
or their respective Affiliates, employees, agents, and
representatives will: (i) initiate, encourage the initiation by
others of discussions or negotiations with third parties or
respond to solicitations by third persons relating to any merger,
sale, or other disposition of any substantial part of the assets,
the Business or the properties of Seller (whether by merger,
consolidation, sale of stock, sale of assets, or otherwise); or
(ii) enter into any agreement or commitment (whether or not
binding) with respect to any of the foregoing transactions. The
Sellers will immediately notify Purchaser if any third party
attempts to initiate any solicitation, discussion, or negotiation
with respect to any of the foregoing transactions.
7.4 Due Diligence Investigation. Purchaser shall be
entitled to conduct, prior to Closing, a due diligence
investigation of Seller, its assets and the Business. Seller
shall provide Purchaser and its designated agents and consultants
with reasonable access during normal business hours to Seller"s
business and the assets and all books, records, documents,
correspondence and other materials ("Proprietary Documents")
related thereto which Purchaser, its agents and consultants
reasonably require to conduct such due diligence review;
provided, however, that without the prior consent of Seller,
Purchaser shall not contact, interview, meet, solicit or
otherwise discuss the transactions contemplated by this Agreement
with any customers, employees, or suppliers of Seller. Purchaser
agrees to keep strictly confidential and not to disclose to third
parties all or any portion of Proprietary Documents. Upon
termination of this Agreement, Purchaser shall return all
Proprietary Documents, copies, extracts, and summaries thereof,
in any form or medium, in its possession, to Seller.
7.5 Related Party Agreements. Set forth in Schedule 7.5
are all of the existing agreements between Seller and the
Shareholders or their Affiliates affecting the Assets, the
Business, or the Sellers" ability to perform their respective
obligations hereunder, and unless otherwise stated, such
agreements shall continue to survive after the Closing.
7.6 Cooperation. Each of the parties agrees to cooperate
with the others in the preparation and filing of all forms,
notifications, reports and information, if any, required or
reasonably deemed advisable pursuant to any law, rule or
regulation in connection with the transactions contemplated by
this Agreement and to use their respective best efforts to agree
jointly on a method to overcome any objections by any
Governmental Authority to any such transactions.
7.7 Other Actions. Prior to the Closing, each of the
parties hereto shall take all appropriate actions, and do, or
cause to be done, all things necessary, proper or advisable under
any applicable laws, regulations, and contracts to consummate and
make effective the transactions contemplated herein, including,
without limitation, obtaining all licenses, permits, consents,
approvals, authorizations, qualifications, and orders of any
Governmental Authority and parties to Contracts with Seller as
are necessary for the consummation of the transactions
contemplated hereby. Each of the parties shall make on a prompt
and timely basis all governmental or regulatory notifications and
filings required to be made by it for the consummation of the
transactions contemplated hereby. The parties also agree to use
best efforts to defend all lawsuits or other legal proceedings
challenging this Agreement or the consummation of the
transactions contemplated hereby and to lift or rescind any
injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the
transactions contemplated hereby.
7.8 Notification of Certain Matters. The Sellers shall
give prompt notice to Purchaser of the occurrence or non-
occurrence of any event which would likely cause any
representation or warranty contained herein to be untrue or
inaccurate, or any covenant, condition, or agreement contained
herein not to be complied with or satisfied.
7.9 Payoff and Estoppel Letters. Prior to the Closing, the
Sellers shall request and deliver to Purchaser, with respect to
any Indebtedness affecting the Assets, the Business, or the
Sellers" ability to perform their respective obligations
hereunder, payoff and estoppel letters from such holders of any
Indebtedness, which letters shall contain payoff amounts, per
diem interest, wire transfer instructions and an agreement to
deliver to Purchaser, upon full payment of any such Indebtedness,
UCC-3 termination statements, satisfactions of mortgage or other
appropriate releases and any original promissory notes or other
evidences of indebtedness marked canceled.
7.10 Consulting Services. As requested by the Purchaser
during normal business hours, the Shareholders agree to provide
consulting services to the Purchaser for up to six (6) months
following the Closing, to be performed during normal business
hours, not to exceed thirty (30) hours in any one month. The
first fifteen (15) cumulative hours shall be performed without
charge, and all subsequent services shall be performed at an
hourly rate of $100.
7.11 Accounting Treatment. Sellers and Purchaser agree to
follow tax accounting treatment and allocations in respect of the
sale of the Assets consistent with the treatment and allocations
described in Schedule 7.11.
7.12 Covenant Not to Compete. In order to ensure that
Purchaser will realize the benefits of the transactions
contemplated hereby, the Sellers agree with Purchaser that the
Sellers will not, directly or indirectly, alone or as a partner,
joint venturer, officer, director, employee, consultant, agent,
independent contractor, trustee, custodian, fiduciary, lender, or
security holder of any company, business, or entity, or
otherwise:
(a) for a period of eighteen (18) months following the
Closing Date, engage in, or finance or provide financial
assistance with respect to, any business conducted by Seller in
the preceding eighteen (18) months, including, without
limitation, the Business, in the Restricted Territory; provided,
however, that, the beneficial ownership of less than five percent
(5%) of the shares of stock of any corporation having a class of
equity securities actively traded on a national securities
exchange or over-the-counter market shall not be deemed, in and
of itself, to violate the prohibitions of this section;
(b) for a period of eighteen (18) months following the
Closing Date, directly or indirectly: (i) induce any Person
which is a customer of Seller to patronize any business directly
or indirectly in competition with the Business in the Restricted
Territory; (ii) canvass, solicit, or accept from any Person which
is a customer of the Business in the Restricted Territory, any
such competitive business; or (iii) request or advise any Person
which has a business relationship with the Business in the
Restricted Territory to withdraw, curtail, or cancel any such
Person"s business with the Business;
(c) for a period of eighteen (18) months following the
Closing Date, directly or indirectly employ, or solicit the
employment of, any person who was employed by Seller or the
Purchaser Companies at or within the prior six (6) months, or in
any manner seek to induce any such person to leave his or her
employment; provided, however, that the Sellers may hire any
employee that is terminated by Purchaser; and
(d) at any time following the Closing Date, directly
or indirectly, in any way utilize, disclose, copy, reproduce, or
retain in its or their possession Seller"s proprietary rights or
records, including, but not limited to, any of its customer
lists.
Seller expressly agrees that Purchaser has a legitimate
business interest justifying the existence of this Section 7.12.
Seller acknowledges that Seller may be exposed to: (i) certain
information and document of Purchaser that derive independent
economic value, actual or potential, from not being generally
known to, and not being readily ascertainable, by proper means,
by other persons who can obtain economic value from its
disclosure or use which is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy (the
"Trade Secrets"); and (ii) valuable confidential business and
professional information of Purchaser that does not otherwise
qualify as Trade Secrets of Purchaser; and (iii) substantial
relationships of Purchaser with specific prospective or existing
customers, and clients of Purchaser; and (iv) the customer, and
client goodwill associated with Purchaser"s businesses.
Purchaser and the Sellers have carefully considered the
nature and extent of the restrictions imposed by this Section
7.12 (collectively, the "Restrictive Covenant") and the rights
and remedies conferred upon Purchaser under the Restrictive
Covenant and hereby expressly acknowledge and agree that: (i) any
restricted period and the Restricted Territory and all other
restrictions contained in the Restrictive Covenant are designed
to eliminate competition which would otherwise be unfair to
Purchaser; (ii) the Restrictive Covenant is reasonable and
necessary and fully required to protect the legitimate business
interests of Purchaser; (iii) Purchaser's legitimate business
interests extend throughout the State of Florida and Purchaser
currently has, customers, arrangements, and relationships
throughout the State of Florida; (iv) the Restrictive Covenant
imposes a reasonable restraint upon the Sellers; (v) any
violation of the terms of the Restrictive Covenant could have a
substantial detrimental effect on Purchaser's business; (vi) the
Restrictive Covenant does not stifle the Sellers" inherent skill
and experience; (vii) the Restrictive Covenant does not confer a
benefit upon Purchaser disproportionate to the detriment to
Seller; and (viii) the Sellers expressly acknowledge that the
Sellers shall have the ability to practice the Sellers"
profession outside of the Restricted Territory and that the
Restrictive Covenant shall not inhibit the Sellers" ability to
practice the Sellers" profession.
The Sellers agree and acknowledge that any damages resulting
from any violation of the Restrictive Covenant would be difficult
to ascertain and, for that reason, the Sellers expressly agree
that, in the event of any violation of the Restrictive Covenant,
Purchaser shall be entitled to preliminary and permanent
injunctive relief restraining any such violation of any or all of
the Restrictive Covenant either directly or indirectly, from any
court of competent jurisdiction, without proof of actual damages
and without posting bond, and such right of Purchaser shall be
cumulative and shall in no way limit any other remedies which the
Purchaser Companies may have (including, without limitation, the
right to seek monetary damages). Purchaser and each of the
Sellers hereby agrees that Purchaser may assign, without
limitation, the foregoing restrictive covenants to any successor
to Purchaser"s business or any of Purchaser"s Companies.
The Sellers hereby agree and acknowledge that Purchaser
would suffer irreparable harm if any Seller violates the
Restrictive Covenant, and Purchaser shall be entitled to
equitable relief in the enforcement thereof, including without
limitation injunctive relief. The Sellers acknowledge that the
Restrictive Covenant has been called to the attention of Seller
and Seller understands that the Restrictive Covenant is a
material covenant of this Agreement and that Purchaser would not
have entered into this Agreement without the existence of the
Restrictive Covenant. Purchaser and Seller further agree that,
in the event of any litigation at law or at equity with regard to
the enforcement or interpretation of the Restrictive Covenant,
Purchaser shall be entitled to be reimbursed by the Sellers for
all reasonable attorneys' fees and costs which Purchaser and
Purchaser's Affiliates incur, at all levels of all such
litigation, including without limitation, pre-trial and appellate
levels.
Nothing in this Section 7.12 is intended to prevent, nor
shall it prevent, Mark Dranoff from continuing to provide
contract programming (including but not limited to Visual Basic
and SQL) and network consulting (including but not limited to
TCP/IP, LAN and WAN) which may or may not involve Internet-
related services (but not ISP services), nor is it intended to
prevent, nor shall it prevent, Allen Cohen from continuing his
ownership and employment with Graphics & Design, Inc., which has
been and will continue to be involved with internet-related
services (but not ISP services) including primarily, but not
exclusively, the design and programming of web pages for its
clients, many of whom subsequently have become clients of Seller
through the efforts of Graphics and Designs Inc., as Internet
Access or Networking customers.
If a court having jurisdiction over this Agreement shall
determine that any restricted period or the Restricted Territory
or any other restriction contained in the Restrictive Covenant is
overbroad or is unenforceable for any reason whatsoever, it is
the intention of Purchaser and Seller that the Restrictive
Covenant shall not thereby be terminated or void, but shall be
deemed amended to the extent required by such court to render it
valid and enforceable to the greatest extent permissible by such
court and the applicable law and public policy.
If any Seller violates the Restrictive Covenant, and
Purchaser's successors and assigns or any of Purchaser's
Affiliates bring legal action for injunctive or other relief,
such party bringing the action shall not, as a result of the time
involved in obtaining the relief, be deprived of the benefit of
the full period of the Restrictive Covenant. Accordingly, for
any time period any Seller is in violation of the Restrictive
Covenant, such time period shall not be included in calculating
the Restricted Period.
7.13 Employment. Purchaser agrees to hire Lisa Cockburn and
Tom Gilmer at weekly salaries of Four Hundred Fifty Dollars
($450.00) and Four Hundred Twenty-Five Dollars ($425.00),
respectively, less applicable tax withholdings or other
deductions required by law following the Closing. Such
individuals will work for Purchaser on an "at will" basis,
terminable at any time except that Purchaser agrees that if
either of them is terminated within ninety (90) days of the
Closing, such person shall receive a severance payment equal to
ninety (90) days pay. Seller has agreed to and has expressly
represented to Purchaser that Seller will be terminating the
employment of the foregoing individuals effective as of the
Closing Date; provided, however, that Seller will remain
responsible for all salary, benefit, and tax matters pertaining
to such individual"s former employment with Seller.
7.14 Internet Access. Purchaser agrees to provide Internet
access and dedicated connectivity to the Shareholders and to
Graphics & Design, Inc. following the Closing, following the
parameters set forth in Purchaser's standard 256K internet access
agreement (except that the Shareholders at Graphic and Design,
Inc. shall not be charged for such access for the first eighteen
(18) months with the exception of Telco charges to GTE or other
carrier).
7.15 Leased Premises. Allen Cohen, an employee and owner of
that certain business commonly referred to as Graphics & Design,
Inc., agrees that he will cause Graphics & Design, Inc. to
continue make available to Purchaser, for a period not to exceed
six (6) months from the Closing Date, approximately five hundred
(500) square feet of rental space (for administrative and
equipment purposes), under substantially the same rental
conditions, rights, privileges, restrictions and terms as
currently provided by Graphics & Design, Inc. to Seller currently
(the "Demised Premises") at its leased premises located at 1723
West Kennedy Boulevard, Suite 200, Tampa, Florida, at a monthly
rental obligation of five hundred fifty dollars ($550.00).
Purchaser agrees to pay all applicable Florida sales tax,
currently a rate of six and three quarters percent (6.75%), as it
applies to the leasing of the Demised Premises. Purchaser agrees
to provide Graphics & Design, Inc. at least thirty (30) days"
prior notice of its intent to cease using some or all of the
space in question if such cessation of use would occur prior to
the date which is six (6) months after the Closing Date.
Purchaser agrees to procure liability insurance (pursuant to
which Graphics & Design, Inc. shall be named as an additional
insured) for the Demised Premises and shall provide proof of
liability insurance to Graphics & Design, Inc. within a
reasonable period of time after the Closing. This Section 7.15
is a mutual covenant which shall survive the Closing and is
intended to serve as a lease agreement between Graphics & Design,
Inc. and Purchaser, governing the terms and conditions of the
leasing of the Demised Premises.
ARTICLE 8
CONDITIONS TO THE OBLIGATIONS OF PURCHASER
The obligations of Purchaser to effect the transactions
contemplated hereby shall be subject to the fulfillment at or
prior to the Closing Date of the following conditions, any or all
of which may be waived in whole or in part by Purchaser;
8.1 Accuracy of Representations and Warranties; Compliance
with Obligations. The representations and warranties of the
Sellers and Seller contained in this Agreement shall be true and
correct in all material respects at and as of the Closing Date
with the same force and effect as though made at and as of that
time except: (i) for changes specifically permitted by or
disclosed pursuant to this Agreement; and (ii) that those
representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date.
The Shareholders and Seller shall have performed and complied
with all of their obligations required by this Agreement to be
performed or complied with at or prior to the Closing Date,
including those obligations set forth in Article 7 herein. The
Shareholders and Seller shall have delivered to Purchaser a
certificate, dated as of the Closing Date, duly signed,
certifying that all such obligations have been performed and
complied with.
8.2 No Material Adverse Change or Destruction of Property.
Between January 1, 1998, and the Closing Date: (i) there shall
have been no Material Adverse Change in Seller or the Business;
(ii) there shall have been no adverse federal, state, or local
legislative or regulatory change affecting in any material
respect the service or products of Seller or the Business; and
(iii) no material portion of the Assets shall have been damaged
by fire, flood, casualty, riot, or other cause (regardless of
insurance coverage for such damage), and there shall have been
delivered to Purchaser a certificate to that effect, dated as of
the Closing Date and signed by the Sellers.
8.3 Corporate Certificate. Seller shall have delivered to
Purchaser copies of resolutions adopted by its Board of Directors
and shareholders authorizing the transactions contemplated by
this Agreement, certified as of the Closing Date by the Secretary
of Seller as being true, correct, and complete.
8.4 Consent. Seller and the Shareholders shall have
received consents to the transactions contemplated hereby and
waivers of rights to terminate or modify any material rights or
obligations of Seller and the Shareholders from any person from
whom such consent or waiver is required under any contract to
which the Shareholders, Seller, or the Assets are bound, or who,
as a result of the transactions contemplated hereby, would have
such rights to terminate or modify such contracts, either by the
terms thereof or as a matter of law. Without limiting the
foregoing, the Sellers shall have received all necessary consents
to the transactions contemplated by this Agreement including,
without limitation, the transfer and assignment of all operating
permits necessary for the operation of the Business, and shall
have provided all proper notifications to and obtained all
necessary consents from such local, municipal, state or
governmental authorities as may be necessary in order to
consummate the transactions contemplated hereunder.
8.5 No Adverse Litigation. There shall not be pending or
threatened any action or proceeding by or before any court or
other governmental body which shall seek to restrain, prohibit,
invalidate or collect damages arising out of the transactions
contemplated hereby, and which, in the judgment of Purchaser,
makes it inadvisable to proceed with the transactions
contemplated hereby.
8.6 Opinion of Counsel. Purchaser shall have received an
opinion dated as of the Closing Date from counsel for Seller and
the Shareholders, in substantially the form attached hereto as
Annex II.
8.7 Acknowledgment of Lease. Graphics & Design, Inc. shall
have provided an acknowledgment of the leasing of the Demised
Premises by Graphics & Design, Inc., as described in Section
7.15.
8.8 General. All actions taken by the Sellers and
Purchaser in connection with the consummation of the transaction
contemplated hereby and all certificates, opinions and other
documents required to effect the transactions contemplated
hereby, will be reasonably satisfactory in form and substance to
Purchaser.
ARTICLE 9
CONDITIONS TO THE OBLIGATIONS OF THE SELLERS
The obligations of the Sellers to effect the transactions
contemplated hereby shall be subject to the fulfillment at or
prior to the Closing Date of the following conditions, any or all
of which may be waived in whole or in part by the Sellers:
9.1 Accuracy of Representations and Warranties and
Compliance with Obligations. The representations and warranties
of Purchaser contained in this Agreement shall be true and
correct in all material respects at and as of the Closing Date
with the same force and effect as though made at and as of that
time except: (i) for changes specifically permitted by or
disclosed pursuant to this Agreement; and (ii) that those
representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date.
Purchaser shall have performed and complied in all material
respects with all of its obligations required by this Agreement
to be performed or complied with at or prior to the Closing Date.
Purchaser shall have delivered to the Sellers a certificate,
dated as of the Closing Date, and signed by an executive officer
thereof, certifying that such representations and warranties are
true and correct, and that all such obligations have been
performed and complied with, in all material respects.
9.2 Other Conditions. At the Closing, Purchaser shall have
delivered to the Sellers the Purchase Price.
9.3 Corporate Certificate. Purchaser shall have delivered
to Seller copies of resolutions adopted by its Board of Directors
authorizing the transactions contemplated by this Agreement
certified as of the Closing Date by the Secretary of Purchaser as
being true, correct, and complete.
9.4 No Adverse Litigation. There shall not be pending or
threatened any action or proceeding by or before any court or
other governmental body which shall seek to restrain, prohibit,
invalidate, or collect damages arising out of the transactions
contemplated hereby, and which, in the judgment of the Sellers,
makes it inadvisable to proceed with the transactions
contemplated hereby.
ARTICLE 10
NON-ASSUMPTION OF LIABILITIES; INDEMNIFICATION
10.1 Non-Assumption of Liabilities; Indemnification.
(a) The Sellers agree, jointly and severally, to
indemnify and hold Purchaser and its Affiliates harmless from and
against the aggregate of all expenses, losses, costs,
deficiencies, liabilities and damages (including, without
limitation, related counsel and paralegal fees and expenses)
incurred or suffered by Purchaser (collectively, "Indemnifiable
Damages") resulting from or arising out of: (i) any breach of a
representation or warranty made by the Sellers in or pursuant to
this Agreement; (ii) any breach of the covenants or agreements
made by the Sellers in this Agreement; (iii) any inaccuracy in
any certificate delivered by the Sellers pursuant to this
Agreement; (iv) any misrepresentation in or omission from any
Schedule to this Agreement; (v) any liability of the Sellers to
creditors of the Sellers which is imposed on Purchaser whether as
a result of bankruptcy proceedings or otherwise and whether as an
account payable by the Sellers or as a claim of alleged
fraudulent conveyance or preferential payments within the meaning
of the United States Bankruptcy Code or otherwise; (vi) the
existence of creditors of the Sellers which are not disclosed to
Purchaser; or (vii) any violation by the Sellers of the
requirements of any governmental authority relating to the
reporting and payment of federal, state, local or other income,
sales, use, franchise, excise, payroll, property or other tax
liabilities of the Sellers which occurs or exists prior to the
Closing Date. The indemnity obligation contained in this Section
10.1(a) shall continue for a period of three (3) years from and
after the Closing Date; provided, however, that the indemnity
obligations hereunder shall continue indefinitely with respect to
any claim arising from or relating to matters for which Purchaser
shall have provided notice to the Sellers of Purchaser"s intent
to seek indemnification for such claims prior to the expiration
of such three (3) year period.
(b) The Sellers agree, jointly and severally, to
indemnify and hold Purchaser and its Affiliates harmless from and
against the aggregate of all Indemnifiable Damages resulting from
or arising out of any occurrence or circumstance (whether known
or unknown) which occurs or exists on or prior to the Closing
Date and which constitutes, or which by the lapse of time or
giving notice (or both) would constitute, a breach or default by
the Sellers under any lease, Contract or other instrument or
agreement whether written or oral. The indemnity obligation
contained in this Section 10.1(b) shall continue for a period of
two (2) years from and after the Closing Date. Notwithstanding
the foregoing time limitation, the obligation of the Sellers to
indemnify Purchaser hereunder shall continue indefinitely with
respect to any claim arising from or relating to matters for
which Purchaser shall have received a formal demand or allegation
from a third party and provided notice thereof to the Sellers and
of Purchaser"s intent to seek indemnification for such claims
hereunder within two (2) years of the Closing Date.
10.2 Assumption of Specific Liabilities. Purchaser agrees
to perform all of the Sellers" contractual obligations related to
the Assets and the Business to the extent, and only to the
extent, such obligations have been expressly assumed by Purchaser
hereunder and that they first mature and are required to be
performed by Purchaser after the close of business on the Closing
Date. Purchaser agrees to indemnify and hold Sellers harmless
from all expenses, losses, costs, deficiencies, liabilities and
damages arising solely from events occurring after the Closing
related to Purchaser's ownership of the Assets and Purchaser's
conduct of the Business.
10.3 Survival of Representations and Warranties. Each of
the representations and warranties made by Seller and the
Shareholders in this Agreement or pursuant hereto shall survive
for a period of three (3) years following the Closing Date.
Notwithstanding any knowledge of facts determined or determinable
by any party by investigation, each party shall have the right to
fully rely on the representations, warranties, covenants, and
agreements of the other parties contained in this Agreement or in
any other documents or papers delivered in connection herewith.
Each representation, warranty, covenant and agreement of the
parties contained in this Agreement is independent of each other
representation, warranty, covenant and agreement.
10.4 Matters Involving Third Parties.
(a) If any third party shall notify Purchaser or any
of the Sellers with respect to any matter (a "Third Party Claim")
which may give rise to a claim for indemnification against the
other party under this Article 10, then the party receiving such
Third Party Claim shall promptly notify the other party in
writing; provided, however, that no delay on the part of the
notifying party in notifying the other party shall relieve such
party from any obligation hereunder unless (and then solely to
the extent) the indemnifying party is thereby prejudiced.
(b) Purchaser will have the right to defend against
all Third Party Claims with counsel of its choice reasonably
satisfactory to Sellers. If any of the Sellers is the notifying
party, such party may retain separate co-counsel at its sole
cost and expense and participate in the defense of the Third
Party Claim. Neither party will consent to the entry of any
judgment or enter into any settlement which does not include as
an unconditional term thereof the giving to the notifying party
by the third party of a release of all liability in respect of
such Third Party Claim or which seeks an injunction, specific
performance, or a declaration of rights or other equitable relief
that, in the good faith judgment of notifying party, will likely
have a material adverse effect on the notifying party"s
operations without the prior written consent of the notifying
party (which shall not to be withheld unreasonably).
ARTICLE 11
SECURITIES LAW MATTERS
11.1 Disposition of Shares. The Shareholders represent and
warrant that the Shares being acquired by the Shareholders
hereunder are being acquired and will be acquired for its own
account, and will not be sold or otherwise disposed of, except
pursuant to (a) an exemption from the registration requirements
under the Securities Act, which does not require the filing by
Purchaser with the SEC of any registration statement, offering
circular or other documents, in which case, the Shareholders
shall first supply to Purchaser an opinion of counsel (which
counsel and opinions shall be satisfactory to Purchaser) that
such exception is available, or (b) an effective registration
statement filed by Purchaser with the SEC under the Securities
Act.
11.2 Legend. The certificates representing the Shares shall
bear the following legend:
THE SALE OF THE SECURITIES REPRESENTED BY
THIS INSTRUMENT HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"). NO SALE, HYPOTHECATION, PLEDGE OR
OTHER DISPOSITION OF THESE SECURITIES MAY BE
EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATING THERETO UNLESS THE SALE OR
OTHER DISPOSITION IS MADE IN ACCORDANCE WITH
RULE 144 UNDER THE ACT OR THE HOLDER OF SUCH
SECURITIES PROVIDES AN OPINION OF COUNSEL
SATISFACTORY TO SKYLYNX COMMUNICATIONS, INC.
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE ACT.
11.3 Contractual Restriction Legend.
The Hold Back Shares shall bear the following legend:
THE SALE OR OTHER TRANSFER OF THE SHARES
REPRESENTED HEREBY HAS BEEN CONTRACTUALLY
RESTRICTED. THE HOLDER AGREES THAT SUCH
SHARES MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED WITHOUT THE PRIOR WRITTEN CONSENT
OF SKYLYNX COMMUNICATIONS, INC., UNTIL THE
EXPIRATION OF SUCH RESTRICTION ON FEBRUARY 3,
2000.
11.4 Delivery of the Hold Back Shares.
At the end of the Hold Back Period, the Contractual
Restriction Legend found in Section 11.3 shall be removed from
the Hold Back Shares to reflect the expiration of the Hold Back
Period. Purchaser shall cause shares to be issued and delivered
to the Shareholders, subject to adjustments that may be required
to the Hold Back Shares, including but not limited to, stock
splits, dividends, redemptions, and any forfeiture of the Hold
Back Shares, or any portion thereof; provided, however, that
should an adjustment or forfeiture to the Hold Back Shares be
required, Purchaser shall provide to the Shareholders a written
accounting of any adjustments that may be made by Purchaser.
11.5 No Bar.
If the Hold Back Shares are insufficient to set off any
claim for any Indemnifiable Damages hereunder (or have been
delivered in whole or part to the Shareholders prior to the
making or resolution of such claim), then Purchaser may take any
action or exercise any remedy available to it by appropriate
legal proceeding to collect the Indemnifiable Damages.
ARTICLE 12
DEFINITIONS
12.1 Defined Terms. As used herein, the following terms
shall have the following meanings:
"Affiliate" shall have the meaning ascribed to it in Rule
12b-2 of the General Rules and Regulations under the Securities
and Exchange Act of 1934, as in effect on the date hereof.
"Common Stock" shall mean shares of common stock of the
Purchaser, $0.001 par value.
"Contract" means any indenture, lease, sublease, license,
loan agreement, mortgage, note, indenture, restriction, will,
trust, commitment, obligation, or other contract, agreement, or
instrument, whether written or oral.
"Governmental Authority" means any nation or government, any
state, regional, local, or other political subdivision thereof,
and any entity or official exercising executive, legislative,
judicial, regulatory, or administrative functions of or
pertaining to government.
"Knowledge" or "to the best knowledge" or similar terms as
used in this Agreement, unless otherwise specifically defined
herein, shall mean the actual or constructive knowledge, after
due inquiry and investigation, of each of the Shareholders, the
officers and directors of Seller, and its key employees in
managerial roles.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien, or charge of any kind (including, but not
limited to, any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or
agreement to give any financing statement under the Uniform
Commercial Code or comparable law or any jurisdiction in
connection with such mortgage, pledge, security interest,
encumbrance, lien, or charge).
"Market Value" means the average closing bid price of a
share of the Common Stock on the over-the-counter market for the
ten (10) trading days immediately preceding the Closing Date.
"Material Adverse Change (or Effect)" means a change (or
effect), in the condition (financial or otherwise), properties,
assets, liabilities, rights, obligations, operations, business or
prospects which change (or effect) individually or in the
aggregate, is materially adverse to such condition, properties,
assets, liabilities, rights, obligations, operations, business or
prospects.
"Person" means an individual, partnership, corporation,
business trust, joint stock corporation, estate, trust,
unincorporated association, joint venture, Governmental Authority
or other entity, of whatever nature.
"Restricted Territory" means the area within a two hundred
fifty (250) mile radius of downtown Tampa, Florida.
"Shares" shall have the meaning set forth in Section 2.1(b)
above.
"Tax Return" means any tax return, filing or information
statement required to be filed in connection with or with respect
to any Taxes; and
"Taxes" means all taxes, fees or other assessments,
including, but not limited to, income, excise, property, sales,
franchise, intangible, withholding, social security, and
unemployment taxes imposed by any federal, state, local, or
foreign governmental agency, and any interest or penalties
related thereto.
ARTICLE 13
TERMINATION, AMENDMENT AND WAIVER
13.1 Termination. This Agreement may be terminated at any
time prior to the Closing:
(a) by mutual written consent of all of the parties
hereto at any time prior to Closing; or
(b) by Purchaser in the event of a material breach by
the Sellers of any provision of this Agreement; or
(c) by either party if the Closing shall not have
occurred by February 28, 1999, notwithstanding the diligent
efforts of all parties, and the parties hereto have not agreed to
extend the date to close.
13.2 Effect of Termination. Except as expressly stated
herein, in the event of termination of this Agreement pursuant to
Section 12.1, this Agreement shall forthwith become void;
provided, however, that nothing herein shall relieve any party
from liability for the willful breach of any of its
representations, warranties, covenants or agreements set forth in
this Agreement. Purchaser shall immediately return to the
Sellers any and all documents pursuant to Section 7.4.
ARTICLE 14
GENERAL PROVISIONS
14.1 Notices. All notices, requests, demands, claims, and
other communications hereunder shall be in writing and shall be
delivered (and shall be deemed delivered) by certified or
registered mail (first class postage pre-paid), guaranteed
overnight delivery, or facsimile transmission if such
transmission is confirmed by delivery by certified or registered
mail (first class postage pre-paid) or guaranteed overnight
delivery, to the following addresses and telecopy numbers (or to
such other addresses or telecopy numbers which such party shall
designate in writing to the other party):
(a) If to Purchaser or, following the Closing:
SkyLynx Communications, Inc.
103 Sarasota Quay
Sarasota, FL 34236
Attention: Chairman
Fax: (941) 365-4848
With a copy to:
McDermott, Will & Emery
2700 Sand Hill Road
Menlo Park, CA 94025
Attention: Robert L. Nelson, Jr., Esq.
Fax: (650) 233-5599
(b) If to the Sellers prior to the Closing:
InterAccess Corp.
1723 West Kennedy Boulevard, Suite 200
Tampa, FL 33606
Attention: Allen Cohen and Mark Dranoff
If to the Sellers after the Closing:
Allen & Mark, Inc.
1723 West Kennedy Boulevard, Suite 200
Tampa, FL 33606
Attention: Allen Cohen and Mark Dranoff
14.2 Entire Agreement. This Agreement (including the
Schedules and Annex attached hereto) and other documents
delivered at the Closing pursuant hereto, contains the entire
understanding of the parties in respect of its subject matter and
supersedes all prior agreements and understandings (oral or
written) between or among the parties with respect to such
subject matter. The Schedules and Annex constitute a part hereof
as though set forth in full above.
14.3 Expenses. Except as otherwise provided herein, the
parties shall pay their own fees and expenses, including their
own accounting and counsel fees, incurred in connection with the
negotiation and preparation of this Agreement or any transaction
contemplated hereby. Sellers shall be liable for all sales,
application, or transfer taxes or other such fees and costs
incurred in connection with this Agreement or any transaction
contemplated hereby.
14.4 Amendment; Binding Effect; Assignment. This Agreement
may not be modified, amended, supplemented, canceled or
discharged, except by written instrument executed by all parties.
The rights and obligations of this Agreement shall bind and inure
to the benefit of the parties and their respective successors and
assigns. Except as expressly provided herein, the rights and
obligations of this Agreement may not be assigned by the Sellers
without the prior written consent of Purchaser.
14.5 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original but
all of which together shall constitute one and the same
instrument.
14.6 Governing Law: Interpretation. This Agreement shall be
construed in accordance with and governed for all purposes by the
laws of the State of Florida applicable to contracts executed and
to be wholly performed within such State.
14.7 Access to Records. After the Closing Date, Purchaser
shall have reasonable access during regular business hours to the
books and records of Seller that are necessary to permit
Purchaser to exercise its rights hereunder, to operate the
Business and to obtain any information necessary for Purchaser"s
corporate tax matters, which documents shall be maintained by
Seller in Hillsborough County, Florida, which records shall be
provided to Purchaser for inspection upon twenty-four (24) hours
advance notice. Seller shall provide Purchaser with records in
the form described more fully in Section 1.1(e), above.
14.8 Attorneys' Fees. If either party to this Agreement
shall bring any action for any relief against the other,
declaratory or otherwise, arising out of or in connection with
this Agreement or the breach or interpretation hereof, the losing
party shall pay to the prevailing party a reasonable sum for
attorney fees incurred in bringing such suit and/or enforcing any
judgment granted therein, all of which shall be deemed to have
accrued upon the commencement of such action and shall be paid
whether or not such action is prosecuted to judgment. Any
judgment or order entered in such action shall contain a specific
provision providing for the recovery of attorney fees and costs
incurred in enforcing such judgment. For the purposes of this
section, attorney fees shall include, without limitation, fees
incurred in the following: (1) post-judgment motions; (2)
contempt proceedings; (3) garnishment, levy, and debtor and third
party examination; (4) collection proceedings; and (5) discovery.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly made effective as of the day and year first above
written.
SKYLYNX COMMUNICATIONS, INC.
a Colorado corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
INTERACCESS CORP.
a Florida corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
-----------------------------------
ALLEN COHEN
-----------------------------------
MARK DRANOFF
[Signature Page to Asset Purchase Agreement]
<PAGE>
<PAGE>
LIST OF SCHEDULES
Schedule 1.1(a ) -- Description of Equipment
Schedule 1.1(b) -- Description of Real Property
Schedule 1.1(c) -- Rolling Stock
Schedule 1.1(e) -- Related Documents
Schedule 1.1(f) -- Assumed Contracts
Schedule 1.1(i) -- Approvals and Operating Rights
Schedule 1.1(q) -- Tangible and Intangible Assets
Schedule 1.2 -- Non-Assignment of Certain Customer
Accounts
Schedule 1.3 -- Accounts Receivable
Schedule 5.5 -- Subsidiaries
Schedule 5.9 -- Financial Statements
Schedule 5.10 -- Changes Since the Current Balance Sheet
Schedule 5.11 -- Litigation
Schedule 5.12 -- Liabilities
Schedule 5.13 -- Indebtedness
Schedule 5.15 -- Real Property, Leases and Significant
Personal Property
Schedule 5.16 -- Good Title, Adequacy and Condition
Schedule 5.17 -- Compliance With Laws
Schedule 5.18 -- Absence of Certain Changes or Events
Schedule 5.19 -- Intellectual Property
Schedule 5.20 -- Accounts Receivable
Schedule 5.21 -- Licenses and Permits
Schedule 5.22 -- Contracts, Customer Lists and Employment
Matters
Schedule 6.1 -- Conduct of Business Pending Closing
Schedule 7.5 -- Related Party Agreements
Schedule 7.11 -- Accounting Treatment
<PAGE>
<PAGE>
ANNEX I
ALLOCATION OF PURCHASE PRICE
At the direction of InterAccess Corp. ("InterAccess") and
its Board of Directors, the following distribution of the
Purchase Price will be made by SkyLynx Communications, Inc. to
InterAccess and the Shareholders at the time of the Closing.
To InterAccess:
Form of
Asset Amount Consideration
Accounts Receivable $50,000 cash
Fixed Assets $145,385 cash
To the Shareholders:
Form of
Asset Amount Consideration
Covenant Not to Compete $195,385 stock
--------
Total Purchase Price $390,770
<PAGE>
<PAGE>
ANNEX II
OPINION OF COUNSEL
