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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): July 29, 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.)
600 South Cherry Street, Suite 305, Denver, Colorado 80246
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 316-0400
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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 July 29, 1999, SkyLynx Communications, Inc., a Colorado
corporation, through a wholly owned subsidiary, SkyLynx Communications MST,
Inc., a Delaware corporation, ("SkyLynx" or the "Company") closed upon and
consummated an Asset Purchase Agreement dated as of July 29, 1999, (the
"Agreement") between the Company and Inficad Computing and Design, LLC, an
Arizona limited liability company, ("Inficad"), and Hunter Bennett, Deborah
C. Bennett and Alva James Bennett, as members of Inficad (the "Members")
(hereafter Inficad and the Members may collectively be referred to as
"Seller" or "Sellers"), pursuant to which the Company acquired certain
assets, properties and contractual rights of Sellers used in their business
of providing residential and business dial-up and dedicated phone line and
data access to the internet, along with web design, co-location and hosting
services (the "Business").
Under the terms of the Agreement, the Company acquired (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; (b) all real property interests (whether owned
or leased) used or for use in the Business; (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; (d) all of Sellers' 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 which relate to the conduct of the
Business; (f) the contracts and other agreements to which Seller is a party
in connection with the Business; (g) all of Seller's inventory of parts,
supplies and accessories used in the Business; (h) all proprietary rights
of Seller; (i) all permits, licenses, franchises, consents and other
approvals and operating rights relating to the Business; (j) all
communications equipment (together with any rights to frequencies related
thereto) used in connection with the Business; (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 "Inficad Computing and Design" and any other
names used in connection with the Business and the rights to use such
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 goodwill of the Business; (p) all 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.
In consideration of the acquisition of the above assets of Inficad,
the Company paid the following purchase price:
The Purchase Price, as defined in the Agreement, was (a) the sum of
$1,125,000 in immediately available funds as follows: (i) $125,387.59 was
retained by SkyLynx in repayment of a loan, (ii) $520,552.51 was paid to
certain of Seller's creditors; and (iii) $479,059.90, the remainder of the
cash portion, was paid to Sellers; and (b) an aggregate number of shares of
common stock of SkyLynx, par value $.001 ("the "Consideration Shares")
determined by dividing $1,450,000 by the market value of a share of SkyLynx
Common Stock, less the holdback shares described below. The market value
of the Consideration Shares is deemed to be the average closing price of a
share of SkyLynx Common Stock on the Over-the-Counter Market for the ten
(10) trading days immediately preceding the Closing Date.
Of the Consideration Shares, shares having a market value of $257,500
(the "Holdback Shares"), were retained by the Company as security for the
Sellers' indemnification obligations under the Agreement. The Holdback
Shares will be retained by the Company for a period of one year and used as
collateral to satisfy any claims the Company may have against the Sellers
for indemnity under the terms of the Agreement. The source of funds used
by the Company to pay the cash portion of the purchase price was working
capital derived from the Company's recently completed private placement of
equity securities.
The Company will continue to operate the business from its principal
facilities in Phoenix, Arizona. As part of those continuing operations,
Hunter Bennett agreed to continue in the employ of the Company for a period
of two years at a base salary of $6,250 per month.
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 due date 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 due date 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 July 29, 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: August 10, 1999 By: /s/ Jeffery A. Mathias
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Jeffery A. Mathias, President
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ASSET PURCHASE AGREEMENT
among
SKYLYNX COMMUNICATIONS, INC.
a Colorado corporation,
and
SKYLYNX COMMUNICATIONS MST, INC.
a Delaware corporation,
and
INFICAD COMPUTING AND DESIGN, L.L.C.
an Arizona limited liability company
and
HUNTER BENNETT, DEBORAH C. BENNETT AND ALVA JAMES BENNETT
<PAGE>
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into and made
effective as of July 29, 1999 ("Effective Date"), by and among SKYLYNX
COMMUNICATIONS, INC., a Colorado corporation ("SkyLynx"), SKYLYNX
COMMUNICATIONS MST, INC., a Delaware corporation, a wholly-owned subsidiary of
SkyLynx ("Purchaser"), INFICAD COMPUTING AND DESIGN, L.L.C., an Arizona
limited liability company ("Seller"), and each of those persons, jointly and
severally, who are all of the members of Seller, namely: Hunter Bennett,
Deborah C. Bennett, and Alva James Bennett, (collectively referred to as the
"Members"). Members and Seller are hereinafter collectively referred to as
the "Sellers." Certain other capitalized terms used herein are defined in
Article 12 and throughout this Agreement.
R E C I T A L S:
A. Seller is engaged in the business of providing residential and
business dial-up and dedicated phone line and data access to the internet
along with web design, co-location and hosting services (the "Business") with
its headquarters located at 3800 North Central Avenue, Suite 615, Phoenix,
Arizona 85012;
B. The Members hold all of the outstanding membership interest of
Seller, and Purchaser is unwilling to enter into this Agreement without the
covenants and promises of Members herein set forth; and
C. 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; provided, however, that the Assets shall
not include those assets identified as "Excluded Assets" pursuant to Section
1.5:
(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, which
relate 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 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, and all other intellectual
property rights of Seller, including, without limitation, patents and
copyrights used in the Business;
(i) all permits, licenses, franchises, consents and other approvals
and operating rights relating to the Business including, without limitation,
those 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
"Inficad Computing and Design" 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 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 sheets dated as of December 31,
1998 and March 31, 1999, copies of which are 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 Assumption of Specific Liabilities. Purchaser and SkyLynx agrees to
perform all of the Sellers' contractual obligations related to the extent, and
only to the extent, such obligations have been expressly assumed by Purchaser
or SkyLynx hereunder and that they first mature and are required to be
performed by Purchaser or SkyLynx after the close of business on the Closing
Date ("Assumed Liabilities"). For purposes of this Agreement, Assumed
Liabilities shall mean the obligations from and after the Closing Date,
relating to the equipment leases, business and dial-up Customer Accounts,
Assumed Contracts, and real property and equipment leases and such other
indebtedness, all as more fully set forth in Schedule 1.3. Notwithstanding
anything contained herein to the contrary, Purchaser is not assuming any
obligations which accrued or arose prior to the Closing Date, regardless of
when such claims, demands, suits may be made or filed.
1.4 Change of Names. On the Closing Date, Seller shall cease doing
business under Seller's current Business Names or any name the same as or
similar to "Inficad Computing and Design" 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 Arizona and in any other relevant
jurisdiction.
1.5 Excluded Assets. Notwithstanding anything contained in Section 1.1,
Sellers shall not sell and Purchaser shall not acquire any right, title or
interest in or to (i) the accounts receivable of the Seller as at June 30,
1999 listed on Schedule 1.5, and (ii) the other assets identified in Schedule
1.5 (the "Excluded Assets").
ARTICLE 2
PURCHASE PRICE AND RETENTION
2.1 Purchase Price. On the Closing Date, Purchaser shall deliver in
consideration for the Assets and the restrictive covenants set forth herein,
the Purchase Price, consisting of the following:
(a) One Million One Hundred Twenty Five Thousand ($1,125,000) in
immediately available funds (the "Cash Portion"), disbursed as follows:
(i) A total of $125,387.59 shall be retained by Purchaser in
payment of the Promissory Note made by Seller payable to SkyLynx, and
$520,552.51 shall be paid to the Persons listed on Schedule 2.1(a), with each
Person thereon to receive the amount set forth opposite such Person's name, in
satisfaction of certain obligations of the Seller to such Persons; and
(ii) $479,059.90, the remainder of the Cash Portion, shall be
delivered to the Seller by wire transfer to an account designated by Seller;
and
(b) An aggregate number of shares of common stock of SkyLynx, par
value $.001 ("SkyLynx Common Stock") determined by dividing One Million Four
Hundred Fifty Thousand ($1,450,000) by the Market Value (the "Shares"), less
the Hold Back Shares (as defined below). The Shares shall be issued to the
Members in accordance with Schedule 2.1 (b) in consideration for the
restrictive covenants set forth herein, including but not limited to the
covenant not to compete described in Section 7.11.
2.2 Hold Back Shares. Notwithstanding anything contained herein to the
contrary, a number of the Shares equal to $257,500 divided by the Market Value
(the "Hold Back Shares") shall be set aside and retained by Purchaser for a
period of one (1) year from the Closing Date (the "Hold Back Period"). The
Hold Back Shares shall be held as security for obligations of the Sellers
(including without limitation the indemnification obligations set forth in
Article 10 hereof) to Purchaser, and Seller acknowledges 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 Arizona Uniform Commercial Code and other
applicable law with respect to the Hold Back Shares.
2.3 Post-Closing Adjustments. As of the date which is seventy-five (75)
days after the Closing Date, Purchaser and Seller shall meet for the purpose
of prorating income and expenses arising from the operation of the Business
after June 30, 1999 to reflect the fact that all income and expenses of the
Business up to the Closing Date are attributable to Seller and all income and
expenses of the Business after the Closing Date are attributable to Purchaser
(the "Adjustments"). The Adjustments shall include, but not be limited to,
office rent, utilities, sales, advertising expenses, office supplies, etc.
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 July 29, 1999, 10:00 a.m., P.S.T., or such other time
mutually agreed by both parties, at the offices of McDermott, Will and Emery
located at 2700 Sand Hill Road, Menlo Park, California, 94025. The date on
which the Closing occurs shall be referred to as the "Closing Date."
3.2 Deliveries by Seller and Members. At the Closing, Seller and
Members shall deliver to Purchaser and SkyLynx 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 1.4;
(f) a certified copy of the resolutions of the Members 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 (other than
equipment leases included on Schedule 1.1(f));
(h) the assignment of the Permits described on Schedule 5.20;
(i) an opinion of counsel to Seller and Members, in form and
substance reasonably satisfactory to Purchaser;
(j) consents to the assignment of Assumed Contracts, if any (other
than equipment leases included on Schedule 1.1(f));
(k) such other documents or separate instruments of sale,
assignment or transfer reasonably required by Purchaser;
(l) assignment of trademark and service mark rights registered by
Seller in the United States Patent and Trademark Office;
(m) estoppel certificate from Seller's landlord under that certain
real property lease for premises located at 3800 North Central Avenue, Suite
615, Phoenix Arizona;
(n) a certificate dated no later than ten (10) days prior to the
Closing Date, duly issued by the appropriate Governmental Authority in
Seller's state of incorporation and, unless waived by SkyLynx and Purchaser,
in each state in which Seller is authorized to do business, showing the Seller
is in good standing and authorized to do business and that all state franchise
and/or income tax returns and taxes due by the Seller for all periods prior to
the Closing have been filed and paid; and
(o) 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 Arizona and in
any other relevant jurisdiction, in form suitable for filing.
3.3 Deliveries by Purchaser and SkyLynx. At the Closing, or within a
reasonable period thereafter, as applicable, Purchaser and SkyLynx shall
deliver to Sellers the following items and executed documents:
(a) Bill of Sale affirming purchase of the Assets;
(b) Stock certificates representing the Shares, less the Hold Back
Shares;
(c) copies of resolutions adopted by the respective Board of
Directors of SkyLynx and Purchaser authorizing the transactions contemplated
by this Agreement certified as of the Closing Date by each of the Secretaries
of SkyLynx and Purchaser, as being true, correct, and complete; and
(d) the Cash Portion described in Section 2.1.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND SKYLYNX
As a material inducement to Sellers to enter into this Agreement and to
consummate the transactions contemplated hereby, Purchaser and SkyLynx
represent and warrant 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 and SkyLynx 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 and SkyLynx 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 Effective Date; (ii) will be correct as
of the Closing Date (as though made then and as though the Closing Date was
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,
authorized, validly existing and in good standing under the laws of the State
of Delaware and SkyLynx is a corporation duly organized, authorized, validly
existing and in good standing under the laws of the State of Colorado. Each
of Purchaser and SkyLynx has the requisite power and authority to own or lease
its respective properties and to carry on its respective business as now being
conducted.
4.2 Corporate Power and Authority. Each of Purchaser and SkyLynx has
the corporate power and authority to execute and deliver this Agreement, to
perform its respective obligations hereunder and to consummate the
transactions contemplated hereby. Each of Purchaser and SkyLynx has taken all
action necessary to authorize the execution and delivery of this Agreement,
the performance of their respective obligations hereunder and the consummation
of the transactions contemplated hereby.
4.3 Enforceability. This Agreement has been duly executed and delivered
by Purchaser and SkyLynx and constitutes a legal, valid, and binding
obligation of Purchaser and SkyLynx, enforceable against Purchaser and SkyLynx
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 and
ancillary agreements, by Purchaser and SkyLynx will not: (i) contravene any
provision of the certificate of incorporation or bylaws of Purchaser or
articles of incorporation or bylaws of SkyLynx; (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 SkyLynx; 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 Members, the Shares will
be validly issued, fully paid and non-assessable shares of SkyLynx Common
Stock and subject to no Liens.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
As a material inducement to Purchaser and SkyLynx to enter into this
Agreement and to consummate the transactions contemplated hereby, the Sellers,
jointly and severally, represent and warrant to Purchaser and SkyLynx 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 and SkyLynx on the date hereof, if any, which Disclosure 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 Effective Date; (ii) will be correct as of the
Closing Date (as though made then and as though the Closing Date was
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 Limited Liability Company Status. Seller is a limited liability
company duly organized, validly existing and in good standing under the laws
of the State of Arizona 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 Arizona 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.
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 or its obligations hereunder and the consummation of the
transactions contemplated hereby. Each of the Sellers has the requisite
competence and authority to execute and deliver this Agreement, to perform his
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 of the Sellers, and constitutes the legal, valid and binding
obligation of each of the Sellers, enforceable against each of the Sellers 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. All computer hardware or software included in the Assets,
including without limitation, microcode, firmware, system and application
programs, files, databases and computer services, the failure or
disfunctionality of which would either individually or in the aggregate would
have a Material Adverse Effect on the Business is Y2K Compliant. Y2K
Compliant means that such hardware or software will (a) process date data from
at least the years 1900 through 2001 without error or interruption, and (b)
maintain functionality with respect to the introduction, processing or output
of records continuing dates falling on or after January 1, 2000.
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 organization or
operating agreement of Seller, as applicable (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 of the Sellers;
(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 of the Sellers or the assets or securities of
any of the Sellers; (iv) result in or require the creation or imposition of
any Lien upon or with respect to any of the assets or securities of any of the
Sellers; or (v) to the best of each of the Member'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. Seller shall be solely responsible 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 and a balance sheet for the three month period ending March
31, 1999, including the notes thereto, (collectively, the "Financial
Statements"), copies of which are attached hereto as Schedule 5.9. The
balance sheet dated as of March 31, 1999, 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 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 Members (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 of the Members, 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 Members 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. 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. Schedule
5.15 sets forth:
(a) All real property owned by Seller;
(b) 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;
(c) All other personal property of Seller acquired since the
Current Balance Sheet date; and
(d) 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 Members 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, and licenses and permits of 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 such equipment have been maintained in accordance with industry
practice.
5.17 Compliance with Laws. Except as provided in Schedule 5.17 and to
the best of Seller's and the Members' 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 Members, 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, 1999, except
as provided in Schedule 5.18, there has not been: (i) any Material Adverse
Change in the Business, or (ii) any material loss, damage, or other casualty
to the Assets. Since January 1, 1999, 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; (v) entered into any transaction material to the Business, 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 Members or Seller to any third parties. All of such rights are valid and
enforceable 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
Members' 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 Licenses and Permits. As provided in Schedule 5.20, and to the best
of Seller's and Members' 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
Member'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.
5.21 Contracts and Customer Lists. Schedule 5.21 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 Members, 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.
5.22 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.
5.23 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.
5.24 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.
5.25 Accuracy of Information Furnished by Seller and the Members. No
statement or information contained in this Agreement and the various
Disclosure Schedules attached hereto or in any certificate furnished to
Purchaser pursuant hereto, contains or shall contain any material untrue
statement of a fact or omits or shall omit any material 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 Disclosure 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.
5.26 Investment Intent. The Seller is acquiring the Shares hereunder for
its 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 Members have had the opportunity to
discuss the transactions contemplated hereby with Purchaser and SkyLynx and
have had the opportunity to obtain such information pertaining to Purchaser
and SkyLynx as has been requested, including but not limited to, filings made
by SkyLynx with the Securities and Exchange Commission (the "SEC") under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Members
acknowledge that the Shares are subject to transfer limitations under federal
and state securities laws.
5.27 Acknowledgment Regarding Disclosure of Certain Materials. The
Seller and Members hereby acknowledge and warrant that each of the Members
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 Members pursuant to Rule 502 of the Exchange
Act by SkyLynx including the terms set forth in the Private Placement
Memorandum; and (iv) the opportunity to question the appropriate executive
officers and partners of Purchaser and SkyLynx.
5.28 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 Members, 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 Members 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, none of the
parties hereto 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 parties
hereto. The disclosing party shall provide the other parties with a copy of
all public announcements proposed to be made by such parties 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 Members, Seller, or its 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 notice 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 its Affiliates and between the Seller
and the Members 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 other
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 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 7.10.
7.11 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 two (2) years following the Closing Date,
engage in, or finance or provide financial assistance with respect to, any
business conducted by Seller in the preceding two (2) years, 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 two (2) years 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 two (2) years following the Closing Date,
directly or indirectly employ, or solicit the employment of, any person who
was employed by Seller or the Purchaser 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.
Sellers expressly agree that Purchaser has a legitimate business
interest justifying the existence of this Section 7.11. Sellers acknowledge
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"); (ii) valuable
confidential business and professional information of Purchaser that does not
otherwise qualify as Trade Secrets of Purchaser; (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 7.11 (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 Western United States and Purchaser
currently has customers, arrangements, and relationships throughout the
Western United States; (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 hereby agree and acknowledge that Purchaser would suffer
irreparable harm if any of the Sellers violate the Restrictive Covenant and
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 equitable relief, including 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 Purchaser may have (including, without
limitation, the right to seek monetary damages). Purchaser and each of the
Sellers hereby agree 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 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.
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.
Notwithstanding anything contained herein to the contrary, each of
the Restrictive Covenants described in this Section 7.11, as applicable to
Hunter Bennett, shall last for a duration of one (1) year from Mr. Bennett's
voluntary or involuntary termination of employment with Purchaser, which
employment shall commence effective the Closing Date.
7.12 Employment.
(a) Purchaser agrees to hire Hunter Bennett for a period of two (2)
years following the Closing (the "Term"), at a monthly salary of Six Thousand
Two Hundred Fifty Dollars ($6,250), less applicable tax withholdings or other
deductions required by law.
(b) Seller has agreed to and has expressly represented to Purchaser
that Seller will be terminating the employment of all of Seller's current
employees effective as of the Closing Date; provided, however, that Seller
will remain responsible for all salary, benefits, and tax matters pertaining
to each individual's former employment with Seller. Effective as of the
Closing, Purchaser agrees to hire the current employees of Seller, on an at-
will employment basis, at their current salary rates for a period of not less
than thirty (30) days.
ARTICLE 8
CONDITIONS TO THE OBLIGATIONS OF PURCHASER AND SKYLYNX
The obligations of Purchaser and SkyLynx 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 or SkyLynx:
8.1 Accuracy of Representations and Warranties; Compliance with
Obligations. The representations and warranties of the Members 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 Members 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 Members and Seller shall have
delivered to Purchaser and SkyLynx 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, 1999, 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 and SkyLynx a
certificate to that effect, dated as of the Closing Date and signed by the
Sellers.
8.3 Managers Certificate. Seller shall have delivered to Purchaser and
SkyLynx copies of resolutions adopted by its Managers and the Members
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 Members 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 Members from any person
from whom such consent or waiver is required under any contract to which the
Members, 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
and SkyLynx, makes it inadvisable to proceed with the transactions
contemplated hereby.
8.6 Opinion of Counsel. Purchaser and SkyLynx shall have received an
opinion dated as of the Closing Date from counsel for Seller and the Members,
in substantially the form attached hereto as Annex I.
8.7 General. All actions taken by the Sellers 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 and
SkyLynx.
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 and SkyLynx
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 and SkyLynx shall have performed
and complied in all material respects with all of its respective obligations
required by this Agreement to be performed or complied with at or prior to the
Closing Date. Purchaser and SkyLynx 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 Certificates. Purchaser and SkyLynx shall have delivered
to Seller copies of resolutions adopted by their respective Board of Directors
authorizing the transactions contemplated by this Agreement certified as of
the Closing Date by the Secretary of Purchaser and SkyLynx 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, SkyLynx and their respective Affiliates harmless from and against
the aggregate of all expenses, losses, costs, deficiencies, liabilities and
damages (including, without limitation, related counsel and legal fees and
expenses) incurred or suffered by Purchaser and SkyLynx (collectively,
"Indemnifiable Damages") resulting from or arising out of: (i) any material
breach of a representation or warranty made by the Sellers in or pursuant to
this Agreement; (ii) any material breach of the covenants or agreements made
by the Sellers in this Agreement; (iii) any material inaccuracy in any
certificate delivered by the Sellers pursuant to this Agreement; (iv) any
material misrepresentation in or omission from any Disclosure Schedule to this
Agreement; (v) any liability of the Sellers to creditors of the Sellers which
is imposed on Purchaser or SkyLynx 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 or SkyLynx shall have provided notice to the Sellers of Purchaser's
or SkyLynx' 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, SkyLynx and their respective 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 or SkyLynx hereunder shall continue
indefinitely with respect to any claim arising from or relating to matters for
which Purchaser or SkyLynx shall have received a formal demand or allegation
from a third party and provided notice thereof to the Sellers and of
Purchaser's or SkyLynx' intent to seek indemnification for such claims
hereunder within two (2) years of the Closing Date.
10.2 Assumption of Specific Liabilities. Purchaser and SkyLynx 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 or SkyLynx hereunder and that they first mature
and are required to be performed by Purchaser or SkyLynx after the close of
business on the Closing Date. Purchaser and SkyLynx agree to indemnify and
hold Sellers harmless from all reasonable expenses, losses, costs,
deficiencies, liabilities and damages, including attorneys' fees, 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 Members 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, SkyLynx, 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 parties in writing; provided, however, that no delay on the part of the
notifying party in notifying the other parties shall relieve such party from
any obligation hereunder unless (and then solely to the extent) the
indemnifying party is thereby prejudiced.
(b) Purchaser and SkyLynx will have the right to defend against all
Third Party Claims with counsel of its choice reasonably satisfactory to the
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. None of the parties 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 Members represent and warrant that the
Shares being acquired by Members hereunder are being acquired and will be
acquired for their 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 SkyLynx with the SEC
of any registration statement, offering circular or other documents, in which
case, the Seller shall first supply to SkyLynx an opinion of counsel (which
counsel and opinions shall be satisfactory to SkyLynx) that such exception is
available, or (b) an effective registration statement filed by SkyLynx 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 JULY 29, 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. SkyLynx shall cause shares to be issued and delivered to the Members,
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 or SkyLynx shall provide to the Members a written accounting of any
adjustments that may be made by Purchaser or SkyLynx.
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 Members prior to the making or resolution of such claim), then
Purchaser or SkyLynx may take any action or exercise any remedy available to
them 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.
"Agreement" shall have the meaning ascribed to it in the Preamble of this
Agreement.
"Assets" shall have the meaning ascribed to it in Section 1.1 of this
Agreement.
"Assumed Contracts" shall have the meaning ascribed to it in Section
1.1(f) of this Agreement.
"Assumed Liabilities" shall have the meaning ascribed to it in Section
1.3 of this Agreement.
"Bill of Sale" shall have the meaning ascribed to it in Section 3.2(a) of
this Agreement.
"Business" shall have the meaning ascribed to it in Recitals of this
Agreement.
"Business Names" shall have the meaning ascribed to it in Section 1.1(l)
of this Agreement.
"Cash Portion" shall have the meaning ascribed to it in Section 2.1 of
this Agreement.
"Charter Documents" shall have the meaning ascribed to it in Section 5.6
of this Agreement.
"Closing" shall have the meaning ascribed to it in Section 3.1 of this
Agreement.
"Closing Date" shall have the meaning ascribed to it in Section 3.1 of
this Agreement.
"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.
"Current Balance Sheet" shall have the meaning ascribed to it in Section
5.9 of this Agreement.
"Customer Accounts" shall have the meaning ascribed to it in Section
1.1(e) of this Agreement.
"Designated Liabilities" shall have the meaning ascribed to it in Section
5.12 of this Agreement.
"Disclosure Schedule" and "Disclosure Schedules shall have the meaning
ascribed to them in Article 4 of this Agreement.
"Effective Date" shall have the meaning ascribed to it in the Preamble of
this Agreement.
"Equipment" shall have the meaning ascribed to it in Section 1.1(a) of
this Agreement.
"Exchange Act" shall have the meaning ascribed to it in Section 5.26 of
this Agreement.
"Excluded Assets" shall have the meaning ascribed to it in Section 1.5 of
this Agreement.
"Financial Statements" shall have the meaning ascribed to it in Section
5.9 of this Agreement.
"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.
"Hold Back Period" shall have the meaning ascribed to it in Section 2.1
of this Agreement.
"Hold Back Shares" shall have the meaning ascribed to it in Section 2.1
of this Agreement.
"Indemnifiable Damages" shall have the meaning ascribed to it in Section
10.1(a) of this Agreement.
"Intellectual Property" shall have the meaning ascribed to it in Section
5.19 of this Agreement.
"Inventory" shall have the meaning ascribed to it in Section 1.1(g) of
this Agreement.
"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
Members, 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 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.
"Material Contracts" shall have the meaning ascribed to it in Section
5.21 of this Agreement.
"Members" shall have the meaning ascribed to it in the Preamble of this
Agreement.
"Permits" shall have the meaning ascribed to it in Section 5.20 of this
Agreement.
"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.
"Proprietary Documents" shall have the meaning ascribed to it in Section
7.4 of this Agreement.
"Purchase Price" shall have the meaning ascribed to it in Section 2.1 of
this Agreement.
"Purchaser" shall have the meaning ascribed to it in the Preamble of this
Agreement.
"Real Property" shall have the meaning ascribed to it in Section 1.1(b)
of this Agreement.
"Related Documents" shall have the meaning ascribed to it in Section
1.1(e) of this Agreement.
"Restricted Territory" means all of the counties in the State of Arizona.
"Rolling Stock" shall have the meaning ascribed to it in Section 1.1(c)
of this Agreement.
"SEC" shall have the meaning ascribed to it in Section 5.26 of this
Agreement.
"Seller" and "Sellers" shall have the meaning ascribed to them in the
Preamble of this Agreement.
"Shares" shall have the meaning set forth in Section 2.1(b) above.
"SkyLynx" shall have the meaning ascribed to it in the Preamble of this
Agreement.
"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.
"Term" shall have the meaning ascribed to it in Section 7.12(a) of this
Agreement.
"Third Party Claim" shall have the meaning ascribed to it in Section
10.4(a) of this Agreement.
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 or Seller in the event of a material breach by the
Sellers or Purchaser of any provision of this Agreement; or
(c) by either party if the Closing shall not have occurred by
October 31, 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 13.1, 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 MST, Inc.
600 South Cherry Street, Suite 305
Denver, Colorado 80246
Attention: CEO and President
Fax: (303) 316-0404
With a copy to:
McDermott, Will & Emery
600 13th Street, N.W.
Washington, D.C. 20005-3096
Attention: Robert N. Jensen, Esq.
Fax: (202) 756-8087
(b) If to SkyLynx or, following the Closing:
SkyLynx Communications, Inc.
600 South Cherry Street, Suite 305
Denver, Colorado 80246
Attention: CEO and President
Fax: (303) 316-0404
With a copy to:
McDermott, Will & Emery
600 13th Street, N.W.
Washington, D.C. 20005-3096
Attention: Robert N. Jensen, Esq.
(c) If to the Sellers prior to the Closing:
Inficad Computing and Design, L.L.C.
3800 North Central Avenue, Suite 615
Phoenix, AZ 85012
If to the Sellers after the Closing:
___________________________
___________________________
___________________________
14.2 Entire Agreement. This Agreement (including the Disclosure
Schedules and the Annexes 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 Disclosure Schedules and the Annexes 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
Colorado applicable to contracts executed and to be wholly performed within
such state.
14.7 Access to Records. After the Closing Date, the Sellers shall have
upon ten (10) days advance written notice reasonable access during regular
business hours to the books and records of Seller that are necessary to permit
the Sellers to exercise their rights hereunder and to obtain any information
necessary for their personal and corporate tax matters.
14.8 Attorneys' Fees. If any party to this Agreement shall bring any
action for any relief against any other party, 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's 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
attorneys' fees and costs incurred in enforcing such judgment. For the
purposes of this section, attorneys' 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.
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 and Title
SKYLYNX COMMUNICATIONS MST, INC.,
a Delaware corporation
By:
-------------------------------
Name and Title
INFICAD COMPUTING AND DESIGN, L.L.C.,
an Arizona limited liability company
By:
-------------------------------
Name and Title
------------------------------------
HUNTER BENNETT
------------------------------------
DEBORAH C. BENNETT
------------------------------------
ALVA JAMES BENNETT
<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 -- Assumption of Specific Liabilities
Schedule 1.5 -- Excluded Assets
Schedule 2.1 -- Payment of Certain Debt from Cash Portion at Closing
Schedule 2.1(a) -- Disbursements from Cash Portion to Pay Seller's
Obligations
Schedule 2.1(b) -- Allocation of Shares Among Members
Schedule 2.2 -- Liabilities
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 -- Licenses and Permits
Schedule 5.21 -- Contracts and Customer Lists
Schedule 6.1 -- Conduct of Business Pending Closing
Schedule 7.5 -- Related Party Agreements
Schedule 7.10 -- Accounting Treatment
