-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KcG6SgbkDO2rjqugXV7/pTvKXWUlWCyBtqRVhzNLgdLjgnp86gOQndKV5kaJwZqr D145nMadAjaHgihPMQ09Jw== 0001047469-98-043206.txt : 19981208 0001047469-98-043206.hdr.sgml : 19981208 ACCESSION NUMBER: 0001047469-98-043206 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19981120 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981207 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROCKY MOUNTAIN INTERNET INC CENTRAL INDEX KEY: 0001003282 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 841322326 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-28738 FILM NUMBER: 98765121 BUSINESS ADDRESS: STREET 1: 1099 18TH STREET STREET 2: STE 3000 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3036720700 MAIL ADDRESS: STREET 1: 1099 18TH STREET STREET 2: STE 3000 CITY: DENVER STATE: CO ZIP: 80202 8-K 1 FORM 8-K 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 (earliest event reported): November 20, 1998 Rocky Mountain Internet, Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 001-12063 84-1322326 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 1099 Eighteenth Street, 30th Floor, Denver, Colorado 80202 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (303) 672-0700 ---------------------------- - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report.) ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On November 20, 1998, the Company acquired all of the issued outstanding common stock of Internet Now, a Nevada corporation headquartered in Phoenix, Arizona ("Internet Now"), pursuant to the terms of the Merger Agreement dated November 20, 1998 (the "Internet Now Merger Agreement") by and among the Company, RMI-INI, Inc., a Colorado corporation, Internet Now, and Hutchinson Persons, Leslie Kelly, Taufik Islam, Susan Coupal and Gary Kim, the shareholders of Internet Now (the "Internet Now Shareholders"). The acquisition was effectuated by way of a merger (the "Internet Now Merger") of Internet Now with and into RMI-INI, Inc., a wholly-owned subsidiary of the Company. Pursuant to the Internet Now Merger Agreement, the Internet Now Shareholders received, in the aggregate, $150,000 in cash and 171,250 shares of common stock of the Company. The consideration given to the Internet Now Shareholders was determined through arm's-length negotiation. There was no material relationship between the Company and either Internet Now or the Internet Now Shareholders prior to the Internet Now Merger. A copy of the Internet Now Merger Agreement and a copy of the press release dated November 23, 1998 announcing the Internet Now Merger are attached hereto as Exhibits 10.19 and 99.3, respectively. On November 24, 1998, the Company acquired certain assets that comprised the access and hosting business of Unicom Communications, Inc., a Kansas corporation headquartered in Overland Park, Kansas ("Unicom") pursuant to the terms of the Asset Purchase Agreement dated November 24, 1998 (the "Unicom Asset Purchase Agreement") by and between the Company and Unicom. The consideration for the assets acquired was 172,152 shares of common stock of the Company, of which 137,722 were issued to Unicom at the closing of the acquisition, 17,215 are required to be issued to Unicom on January 3, 1999, and 17,215 are to be issued and deposited into an escrow account. The shares deposited into the escrow account are to be released from that account approximately 12 months after the closing of the acquisition, subject to reduction for the amount of damages, if any, awarded to the Company for losses suffered by the Company as a result of breaches of Unicom's representations or warranties given to the Company in connection with the acquisition. The consideration that the Company agreed to pay to Unicom was determined through arm's-length negotiation. There was no material relationship between the parties prior to the acquisition. The Company intends to continue to utilize substantially all the assets acquired from Unicom in the same manner that Unicom utilized the assets prior to their acquisition by the Company. A copy of the Unicom Asset Purchase Agreement and a copy of the press release dated November 25, 1998 announcing the Unicom asset purchase are attached hereto as Exhibits 10.20 and 99.4, respectively. ITEM 5. OTHER EVENTS. Effective as of November 1, 1998, the Company acquired substantially all of the assets of Stonehenge Business Systems Corporation, a Colorado corporation that provides Internet and networking services, located in Englewood, Colorado ("Stonehenge"), pursuant to the terms of the Asset Purchase Agreement dated November 30, 1998 (the "Stonehenge Asset Purchase Agreement") by and among the Company, Stonehenge, Todd Keener, and Danette Keener. The consideration for the assets acquired was -1- 49,862 shares of common stock of the Company, of which 39,890 were issued to Stonehenge at the closing of the acquisition and 9,972 were issued and deposited into an escrow account, and the assumption of certain liabilities. The shares deposited into the escrow account are to be released from that account in part upon the release of certain liens on certain of the assets acquired and upon the determination of the adjustments to the purchase price, as set forth in the Stonehenge Asset Purchase Agreement, with the remaining shares to be released approximately 18 months after the closing of the acquisition, subject to reduction for the amount of damages, if any, awarded to the Company for losses suffered by the Company as a result of breaches of Stonehenge's representations or warranties given to the Company in connection with the acquisition. The purchase price for the assets purchased from Stonehenge was determined through arm's-length negotiation. There was no material relationship between the Company and any of the other parties prior to the acquisition. The Company intends to continue to utilize substantially all of the assets acquired from Stonehenge in the same manner that Stonehenge utilized the assets prior to their acquisition by the Company. A copy of the Stonehenge Asset Purchase Agreement and a copy of the press release dated December 1, 1998 announcing the Stonehenge asset purchase are attached hereto as Exhibits 10.21 and 99.5, respectively. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. The following financial statements are filed as a part of this Report: (a) Financial statements of business acquired. (None required) (b) Pro forma financial information. (None required) (c) Exhibits. 10.19 Merger Agreement among Rocky Mountain Internet, Inc., RMI-INI, Internet Now, Hutchinson Persons, Leslie Kelly, Taufik Islam, Susan Coupal and Gary Kim. 10.20 Asset Purchase Agreement between Rocky Mountain Internet, Inc. and Unicom Communications, Inc. 10.21 Asset Purchase Agreement among Rocky Mountain Internet, Inc., Stonehenge Business Systems Corporation, Todd Keener, and Danette Keener. 99.3 News Release dated November 23, 1998, 1998 announcing the Internet Now Merger. 99.4 News Release dated November 25, 1998 announcing the Unicom asset purchase. 99.5 News Release dated December 1, 1998 announcing the Stonehenge asset purchase. -2- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Rocky Mountain Internet, Inc. ------------------------------ (Registrant) Date: December 7, 1998 By: /s/ Peter J. Kushar -------------------------- Peter J. Kushar, Secretary, Treasurer, and Chief Financial Officer EX-10.19 2 EXHIBIT 10.19 MERGER AGREEMENT AMONG ROCKY MOUNTAIN INTERNET, INC., a Delaware corporation, RMI-INI, INC., a Colorado corporation, AND INTERNET NOW an Nevada corporation, AND HUTCHINSON PERSONS, LESLIE KELLY, TAUFIK ISLAM, SUSAN COUPAL, AND GARY KIM, Shareholders November 20, 1998 MERGER AGREEMENT THIS MERGER AGREEMENT (this "Agreement") is entered into on November 20, 1998, by and among Rocky Mountain Internet, Inc., a Delaware corporation ("RMI"), RMI-INI, Inc., a Colorado corporation and wholly-owned subsidiary of RMI ("Subsidiary"), Internet Now, an Nevada corporation ("Internet Now") and Hutchinson Persons, Leslie Kelly, Taufik Islam, Susan Coupal and Gary Kim, the shareholders of Internet Now (individually "Shareholder" and collectively "Shareholders"). RMI, Subsidiary, Internet Now and Shareholders are collectively referred to herein as the "Parties". This Agreement contemplates a transaction in which RMI through Subsidiary will acquire all of the outstanding capital stock of Internet Now for cash and registered common stock of RMI delivered to Shareholders in a forward subsidiary merger whereby Internet Now will be merged with and into Subsidiary. Now, therefore, in consideration of the Earnest Money Deposit paid by RMI to Richard C. Onsager, P.C., as escrow agent, delivered in accordance with that certain Agreement by and between RMI and Internet Now dated October 21, 1998, the mutual promises made herein, and in consideration of the representations, warranties, and covenants herein contained, the Parties agree as follows: 1. DEFINITIONS. Capitalized terms used in this Agreement have the meaning provided in the above preface and in Section 12 below. 2. BASIC TRANSACTION. (a) THE MERGER. On and subject to the terms and conditions of this Agreement, Internet Now will merge with and into Subsidiary (the "MERGER") at the Closing in exchange for the Merger Consideration (defined below). Subsidiary shall be the corporation surviving the Merger ("SURVIVING CORPORATION"). (b) EARNEST MONEY DEPOSIT. RMI has delivered to Richard C. Onsager, P.C., as escrow agent, for the benefit of the Shareholders and RMI, an earnest money deposit in the amount of Twenty Thousand Dollars ($20,000) ("Earnest Money Deposit"), in accordance with that certain agreement by and between RMI and Internet Now dated October 21, 1998, which shall be released by Mr. Onsager pursuant to such agreement. (c) MERGER CONSIDERATION. Shareholders shall receive as consideration at Closing the purchase price as follows (collectively the "Purchase Price"): (i) Earnest Money Deposit plus One Hundred Thirty Thousand and No/Dollars ($130,000.00) payable by wire transfer or delivery of immediately available funds to the Shareholders as set forth below and (ii)one hundred seventy one thousand two hundred fifty (171,250) shares of RMI common stock registered in accordance with RMI Registration Statement on Form S-1 (File No. 333-52731) ("RMI Shares") to be distributed to the Shareholders as set forth below:
SHAREHOLDER (i) EARNEST MONEY DEPOSIT (ii) RMI SHARES ----------- ------------------------- --------------- PLUS CASH --------- Hutchinson Persons $ 85,285.50 98,866 RMI Shares Leslie Kelly $ 56,872.50 65,931 RMI Shares Taufik Islam $ 4,889.00 4,023 RMI Shares Susan Coupal $ 1,500.50 1,235 RMI Shares Gary Kim $ 1,452.50 1,195 RMI Shares
(d) THE CLOSING. The closing of the transactions contemplated by this Agreement (the "Closing") shall take place by facsimile and telephone commencing at 9:00 a.m. Denver and Phoenix time on or before November 30, 1998, or such other date as the Parties mutually agree (the "Closing Date"). (e) ACTIONS AT THE CLOSING. At the Closing: (i) Shareholders will deliver to RMI the various certificates, instruments, and documents referred to in Section 8 below; (ii) RMI will deliver to Shareholders the Purchase Price; and (iii) RMI and Internet Now will each file or caused to be filed with each of the respective Secretaries of States of the State of Colorado and Nevada Articles of Merger in substantially the form attached hereto as EXHIBIT A and such other forms as required by the respective Secretaries of States ( collectively the "Articles of Merger"). (f) EFFECT OF MERGER. (i) IN GENERAL. The Merger shall become effective at the time (the "EFFECTIVE TIME") RMI and Internet Now file or cause to be filed the Articles of Merger with each of the Secretaries of the State of the States of Colorado and Nevada. The Merger shall have the effect set forth in the Colorado Business Corporation Act and the Nevada Revised Statutes. The Subsidiary, as the Surviving Corporation, may, at any time after the Effective Time, take any action (including executing and delivering any document) in the name and on behalf of either Internet Now or Subsidiary in order to carry out and effectuate the transactions contemplated by this Agreement. (ii) ARTICLES OF INCORPORATION. The Articles of Incorporation of Subsidiary in effect at and as of the Effective Time shall remain the Articles of Incorporation of Surviving Corporation without modification or amendment. 2 (iii) BYLAWS. The Bylaws of Subsidiary in effect at and as of the Effective Time shall remain the Bylaws of Surviving Corporation without modification or amendment. (iv) DIRECTORS AND OFFICERS. The directors and officers of Subsidiary in office at and as of the Effective Time shall remain the directors and officers of the Surviving Corporation (retaining their respective positions and terms of office). (g) CONVERSION OF SECURITIES. At the Effective Time, by virtue of the Merger and without any further action on the part of RMI, Subsidiary, Internet Now or Shareholders, the shares of capital stock of Subsidiary and Internet Now shall be cancelled or converted as follows: (i) CAPITAL STOCK OF SUBSIDIARY. Each issued and outstanding share of capital stock of Subsidiary shall continue to be issued and outstanding. (ii) CANCELLATION OF CERTAIN SHARES OF CAPITAL STOCK OF INTERNET NOW. All Internet Now Shares that are owned directly or indirectly by Internet Now shall be cancelled and no stock of RMI or other consideration shall be delivered in exchange therefor. (iii) CONVERSION OF INTERNET NOW SHARES. The Internet Now Shares issued and outstanding (except the shares cancelled pursuant to Section 2(g)(ii) above) immediately prior to the Effective Time shall automatically be converted into the right to receive the Merger Consideration and then such Internet Now Shares shall be cancelled and retired, without any action on the part of the holders thereof, and each holder of a certificate representing such Internet Now Shares shall cease to have any rights with respect thereto, except as provided in this Section 2(g)(iii) upon the surrender of such certificates representing Internet Now Shares. (h) CLOSING OF TRANSFER RECORDS. After the Closing transfers of Internet Now Shares outstanding prior to the Effective Time shall not be made on the stock transfer books of the Surviving Corporation. If any certificates representing such shares are so presented to the Surviving Corporation, they shall be cancelled and the only right of the holder of such certificate shall be to share in the Merger Consideration. 3. REPRESENTATIONS AND WARRANTIES CONCERNING SHAREHOLDERS. To induce RMI to enter into this Agreement and consummate this transaction, each of the Shareholders, in his or her individual capacity and not on behalf of any other Shareholder, represents and warrants, except as otherwise specifically provided in this Section 3, to RMI that the statements contained in this Section 3 are true, correct and complete as of the date of this Agreement and will be true, correct, 3 complete as of Closing (as though made then and as though the Closing Date were substituted for the date of this Agreement). (a) AUTHORIZATION OF TRANSACTION. Shareholder has the legal capacity and the full power and authority to execute and deliver this Agreement and to perform the obligations hereunder. This Agreement constitutes the valid and legally binding obligation of such Shareholder, enforceable in accordance with its terms and conditions. Shareholder need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order to consummate the transactions contemplated by this Agreement. (b) INTERNET NOW SHARES. Shareholder holds of record and owns beneficially all of the Internet Now Shares set forth next to his or her name in Section 4(b) of the Disclosure Schedule, free and clear of any restrictions on transfer (other than any restrictions under any federal and state securities laws), Taxes, security interests (other than security interests that will be released at or prior to Closing), options, warrants, purchase rights, contracts, commitments, equities, claims, and demands. Shareholder is not a party to any option, warrant, purchase right, or other contract or commitment that could require Internet Now or such Shareholder to sell, transfer, or otherwise dispose of any capital stock of Internet Now (other than this Agreement). Shareholder is not a party to any voting trust, proxy, or other agreement or understanding with respect to the voting of any capital stock of Internet Now. (c) RMI PROSPECTUS. Each Shareholder hereby acknowledges that each has received and reviewed a copy of that certain Prospectus of RMI dated November 19, 1998 including all supplements and amendments thereto (as supplemented, the "RMI Prospectus") contained in RMI's shelf registration statement on Form S-1 (File No. 333-52731) as filed with the SEC. (d) SECURITIES REPRESENTATIONS. Each Warranting Shareholder fully understands the nature, scope and duration of the limitations on transfer contained herein and under applicable laws, including but not limited to SEC Rule 145. (e) AFFILIATES. The Warranting Shareholders are the only persons who are affiliates of Internet Now within the meaning of Rule 145 promulgated under the Securities Act. (f) SHAREHOLDERS NOT SUBJECT TO BACKUP WITHHOLDING. Each Shareholder hereby individually certifies under penalty of perjury, that each such Shareholder individually is not subject to the backup withholding provisions of Section 3406 of the Code. (g) RESTRICTIVE LEGEND. The Warranting Shareholders acknowledge and understand that a legend will be placed on all stock certificates representing the RMI Shares received by Warranting Shareholders as the Purchase Price substantially to the following effect: 4 THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION PURSUANT TO RULE 145 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THEY MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF. (h) LEGAL, ACCOUNTING AND OTHER FEES AND EXPENSES. Each Shareholder acknowledges and agrees that all legal, accounting and other fees, costs and expenses associated with this transaction incurred by such Shareholder and Internet Now shall be the sole obligation of and shall be paid by such Shareholder, and shall not be the obligation of Internet Now or RMI. (i) DISCLOSURE. The representations and warranties contained in this Section 3 do not contain any untrue statement of a fact or omit to state any fact necessary in order to make the statements and information contained in this Section 3 not misleading. 4. REPRESENTATIONS AND WARRANTIES CONCERNING INTERNET NOW. To induce RMI to enter into this Agreement and consummate this transaction, each of the Warranting Shareholders, jointly and severally, represents and warrants to RMI that the statements contained in this Section 4 are true, correct and complete as of the date of this Agreement and will be true, correct and complete as of Closing (as though made then and as though the Closing Date were substituted for the date of this Agreement), except as set forth in the Disclosure Schedule delivered by Shareholders to RMI on the date hereof and updated as of the Closing Date and initialed by each of the Warranting Shareholders (the "DISCLOSURE SCHEDULE"). Nothing in the Disclosure Schedule shall be deemed adequate to disclose an exception to a representation or warranty made herein, however, unless the Disclosure Schedule identifies the exception with particularity and describes the relevant facts in detail. Without limiting the generality of the foregoing, the mere listing (or inclusion of a copy) of a document or other item shall not be deemed adequate to disclose an exception to a representation or warranty made herein (unless the representation or warranty has to do with the existence of the document or other item itself). The Disclosure Schedule will be arranged in Sections corresponding to the lettered and numbered paragraphs and subparagraphs contained in this Agreement. (a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. Internet Now is a corporation duly organized, validly existing, and in good standing under the laws of Nevada. Internet Now is duly authorized to conduct business and is in good standing under the laws of the States of Arizona and Nevada. Internet Now has no offices or personnel outside the State of Arizona. To the Warranting Shareholders' Knowledge, Internet Now has full power and authority and all licenses, permits, and authorizations necessary to carry on the businesses in which it is engaged and to own and use the properties owned and used by it other than where the failure to have such would not have a material adverse effect. Notwithstanding the forgoing, the Parties acknowledge that 5 Internet Now is not qualified to do business in any state other than Arizona and Nevada. Section 4(a) of the Disclosure Schedule lists the directors and officers of Internet Now. Shareholders have delivered to RMI true, correct and complete copies of Internet Now's Articles of Incorporation (Certified by the Secretaries of State of the States of Nevada, dated within 45 days of the Closing), Certificate of Good Standing from the Secretary of States of the States of Arizona and Nevada, bylaws (as amended to date), minute books (containing the records of meetings of the Shareholders, the board of directors, and any committees of the board of directors), stock certificate books, and stock record books of Internet Now. Internet Now is not in default under or in violation of any provision of its Articles of Incorporation or bylaws. (b) CAPITALIZATION. The entire authorized capital stock of Internet Now consists of 25,000 common stock shares, of which 3,099 shares are issued and outstanding. All of the issued and outstanding Internet Now Shares have been duly authorized, are validly issued, fully paid, and nonassessable, and are held of record by Shareholders as set forth in Section 4(b) of the Disclosure Schedule. There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require Internet Now or any Shareholder to issue, purchase, acquire, sell, transfer, otherwise dispose of or cause to become outstanding any capital stock of Internet Now, other than pursuant to this Agreement or that certain Employment Agreement by and between Internet Now and George D. Wood, Ph.D. dated April 3,1998 (which shall be terminated by Internet Now at or prior to Closing, in a form approved by RMI). There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights with respect to Internet Now. There are no voting trusts, proxies, or other agreements or understandings with respect to the capital stock of Internet Now. The Internet Now Shares represent all of the issued and outstanding capital stock of Internet Now. (c) NONCONTRAVENTION. Except as set forth on Section 4(c) of the Disclosure Schedule, to the Warranting Shareholders' Knowledge, neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Internet Now is subject or any provision of the Articles of Incorporation or bylaws of Internet Now or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which Internet Now is a party or by which it is bound or to which any of its assets is subject (or result in the imposition of any security interest upon any of its assets) which would have a material adverse effect on Internet Now. (d) AUTHORIZATION OF TRANSACTION. Internet Now has the full power and authority to execute and deliver this Agreement and to perform the obligations hereunder. This Agreement constitutes the valid and legally binding obligation of Internet Now, enforceable in accordance 6 with its terms and conditions. To the Warranting Shareholders' Knowledge, Internet Now need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any Person or governmental agency in order to consummate the transactions contemplated by this Agreement. (e) TITLE TO ASSETS. Section 4(e) of the Disclosure Schedule sets forth a true, correct and complete list of the properties and assets owned or leased by Internet Now indicating such as either owned or leased. Except as set forth on Section 4(e) of the Disclosure Schedule, Internet Now has good and marketable title to, or a valid leasehold interest in, the properties and assets used by it, located on its premises, or shown on Internet Now's October 31, 1997 balance sheet or acquired after the date thereof, free and clear of all liens, encumbrances or security interests, except for properties and assets disposed of in the Ordinary Course of Business for adequate consideration since the October 31, 1997 balance sheet. (f) SUBSIDIARIES, PREDECESSORS AND OTHER OWNERSHIP INTERESTS. There are not now nor have there ever been any subsidiaries of Internet Now. There are no predecessors to Internet Now. Internet Now is not a party to any joint ventures, partnerships of other types of associations. Internet Now has no ownership interest in any other entities. (g) FINANCIAL STATEMENTS. Section 4(g) of the Disclosure Schedule sets forth, as of Closing, copies of the following financial statements of Internet Now (collectively the "FINANCIAL STATEMENTS"): (i) audited balance sheets and statements of income, changes in stockholders' equity, and cash flow as of and for the fiscal year ended October 31, 1997 ("Audited Financial Statements"); (ii) unaudited balance sheets and statements of income, changes in stockholders' equity, and cash flow as of and for the fiscal year ended October 31, 1996; (iii) unaudited balance sheets and statements of income, changes in stockholders' equity and cash flow as of and for each full month since the Audited Financial Statements and through each full month ended prior to Closing Date; (iv) accounts payables, accounts receivables, cash balances and loan and line of credit balances current to within two (2) business days of the Closing Date; and (v) all advances from and to and notes, receivables and payables owing between Internet Now and Shareholders or any of their Affiliates. To the Warranting Shareholders' Knowledge, the Financial Statements (including the notes thereto), present fairly the financial condition of Internet Now as of such dates and the results of operations of Internet Now for such periods, are true, correct and complete, and are consistent with the books and records of Internet Now (which books and records are true, correct and complete). The Parties acknowledge that RMI's certified public accountants prepared the Audited Financial Statements based upon information provided by Shareholders and Internet Now. The Warranting Shareholders have had sufficient opportunity to review the Audited Financial Statements to make the representations and warranties set forth in this Section 4(g). All information provided by Shareholders and Internet Now to RMI and RMI's certified public accountants in conjunction with the preparation of Audited Financial Statements 7 was at the time provided and is as of the Closing Date, without the necessity of updating, to the Warranting Shareholders' Knowledge, true, correct and complete. (h) EVENTS SUBSEQUENT TO OCTOBER 31, 1997. Except as set forth on Section 4(h) of the Disclosure Schedule, to the Warranting Shareholders' Knowledge, since October 31, 1997, there has not been any material adverse change in the business, financial condition, operations, results of operations, or future prospects of Internet Now. Without limiting the generality of the foregoing, to the Warranting Shareholders' Knowledge, since that date: (i) Internet Now has not sold, leased, transferred, or assigned any of its assets, tangible or intangible, other than for a fair consideration in the Ordinary Course of Business; (ii) Internet Now has not entered into any agreement, contract, lease, or license (or series of related agreements, contracts, leases, and licenses) involving more than $5,000 or outside the Ordinary Course of Business; (iii) Internet Now has not accelerated, terminated, modified, or cancelled any agreement, contract, lease, or license (or series of related agreements, contracts, leases, and licenses) to which Internet Now is a party or by which it is bound involving more than $5,000 or outside the Ordinary Course of Business; (iv) Internet Now has not imposed any security interest upon any of its assets, tangible or intangible; (v) Internet Now has not made any capital expenditure (or series of related capital expenditures) either involving more than $5,000 or outside the Ordinary Course of Business; (vi) Internet Now has not made any capital investment in, any loan to, or any acquisition of the securities or assets of, any other Person (or series of related capital investments, loans, and acquisitions) other than loans to the Warranting Shareholders in a total amount of less than one hundred twenty thousand dollars ($120,000); (vii) Internet Now has not issued any note, bond, or other debt security or created, incurred, assumed, or guaranteed any indebtedness for borrowed money or capitalized lease obligation either involving more than $5,000 or outside the Ordinary Course of Business; (viii) Internet Now has not delayed or postponed the payment of accounts payable and other Liabilities outside the Ordinary Course of Business; 8 (ix) Internet Now has not cancelled, compromised, waived, or released any right or claim (or series of related rights and claims) involving more than $5,000 or outside the Ordinary Course of Business; (x) Internet Now has not granted any license or sublicense of any rights under or with respect to any Intellectual Property; (xi) there has been no change made or authorized in the Articles of Incorporation or bylaws of Internet Now; (xii) Internet Now has not issued, sold, or otherwise disposed of any of its capital stock, or granted any options, warrants, or other rights to purchase or obtain (including upon conversion, exchange, or exercise) any of its capital stock other than pursuant to that certain Employment Agreement by and between Internet Now and George D. Wood, Ph.D. dated April 3, 1998 (which shall be terminated by Internet Now at or prior to Closing, in a manner approved by RMI); (xiii) Internet Now has not declared, set aside, or paid any dividend or made any distribution with respect to its capital stock (whether in cash or in kind) or redeemed, purchased, or otherwise acquired any of its capital stock; (xiv) Internet Now has not experienced any damage, destruction, or loss (whether or not covered by insurance) to its property involving more than $5,000 dollars; (xv) Internet Now has not made any loan to, or entered into any other transaction with, any of its directors, officers, and employees outside the Ordinary Course of Business other than loans to the Warranting Shareholders in a total amount of less than one hundred twenty thousand dollars ($120,000); (xvi) Internet Now has not entered into any employment contract or collective bargaining agreement, written or oral, or modified the terms of any existing such contract or agreement other than that certain Employment Agreement by and between Internet Now and George D. Wood, Ph.D. dated April 3, 1998 (which shall be terminated by Internet Now at or prior to Closing, in a manner approved by RMI); (xvii) Internet Now has not granted any increase in the base compensation of any of its directors, officers, and employees outside the Ordinary Course of Business other than increases to the Warranting Shareholders as set forth in the Disclosure Schedule; 9 (xviii) Internet Now has not adopted, amended, modified, or terminated any bonus, profit-sharing, incentive, severance, or other plan, contract, or commitment for the benefit of any of its directors, officers, and employees (or taken any such action with respect to any other Employee Benefit Plan); (xix) Internet Now has not made any other change in employment terms for any of its directors, officers, and employees outside the Ordinary Course of Business; (xx) Internet Now has not made or pledged to make any charitable or other capital contribution; (xxi) there has not been any other occurrence, event, incident, action, failure to act, or transaction outside the Ordinary Course of Business involving Internet Now; and (xxii) Internet Now has not made any commitments or agreements of any kind or nature with respect to any of the foregoing. (i) UNDISCLOSED LIABILITIES. Except as set forth on Section 4(i) of the Disclosure Schedule, as of the Closing Date, Internet Now has no Liability (and to the Warranting Shareholders' Knowledge, there is no Basis) for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against Internet Now giving or that could give rise to any Liability, except for (i) Liabilities set forth on the face of the Audited Financial Statements (rather than in any notes thereto) and (ii) Liabilities which have arisen after the Audited Financial Statements in the Ordinary Course of Business (none of which results from, arises out of, relates to, is in the nature of, or was caused by any breach of contract, breach of warranty, tort, infringement, or violation of law). (j) LEGAL COMPLIANCE. To the Warranting Shareholders' Knowledge, Internet Now and its Affiliates have complied with all applicable laws (including rules, regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder) of federal, state or local governments (and all agencies thereof), and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or notice has been filed or commenced or is pending or to the Knowledge of the Warranting Shareholders threatened against Internet Now alleging any failure so to comply other than where the failure to comply would not have a material adverse effect. Notwithstanding the forgoing, the Parties acknowledge that Internet Now has not qualified or registered to do business in any state other than the States of Arizona and Nevada. (k) TAX MATTERS. Except as set forth on Section 4(k) of the Disclosure Schedule: (i) Internet Now has timely filed all federal and State of Arizona Tax Returns that it was required to file. All such Tax Returns were true, correct and complete in all 10 respects. All Taxes owed by Internet Now (whether or not shown on any Tax Return) have been paid. Internet Now currently is not the beneficiary of any extension of time within which to file any Tax Return. Internet Now has not filed Tax Returns in any state other than Arizona, but to the Warranting Shareholders' Knowledge, no claim has ever been made by an authority in a jurisdiction where Internet Now does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. There are no security interests on any of the assets of Internet Now that arose in connection with any failure (or alleged failure) to pay any Tax. (ii) Internet Now has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party. (iii) Neither Warranting Shareholder expects any authority to assess any additional Taxes for any period for which Tax Returns have been filed. There is no dispute or claim concerning any Tax Liability of Internet Now either (A) claimed or raised by any authority in writing or (B) as to which the Warranting Shareholders has Knowledge based upon contact with any agent of such authority. (iv) Section 4(k) of the Disclosure Schedule lists all federal, state, and local Tax Returns filed with respect to Internet Now for taxable periods ended on or after December 31, 1995, indicates those Tax Returns that have been audited, and indicates those Tax Returns that currently are the subject of audit. Shareholders have delivered to RMI correct and complete copies of all federal and state income Tax Returns, examination reports, and statements of deficiencies assessed against or agreed to by Internet Now since December 31, 1995. (v) Internet Now has not waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency. (vi) Internet Now has not made any payments, is not obligated to make any payments, or is not a party to any agreement that under certain circumstances could obligate it to make any payments that will not be deductible under Code Section 280G. Internet Now has disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Code Section 6662. Internet Now is not a party to any Tax allocation or sharing agreement. Internet Now (A) has not been a member of an Affiliated Group filing a consolidated federal income Tax Return or (B) has no Liability for the Taxes of any Person under Reg. Section 1.1502-6 (or any similar provision of state or local law), as a transferee or successor, by contract, or otherwise. 11 (l) REAL PROPERTY. (i) Internet Now does not own and has never owned any real property. (ii) Section 4(l) of the Disclosure Schedule lists and describes briefly all real property leased or subleased to Internet Now. Attached to Section 4(l) of the Disclosure Schedule, as of the Closing Date, is an estoppel certificate, in a form satisfactory to RMI, executed by each landlord or sublandlord. Warranting Shareholders have delivered to RMI true, correct and complete copies of the leases and subleases listed in Section 4(l) of the Disclosure Schedule (as amended through the Closing Date). Except as set forth on Section 4(l) of the Disclosure Schedule and to the Warranting Shareholders' Knowledge, with respect to each lease and sublease listed in Section 4(l) of the Disclosure Schedule: (A) the lease or sublease is legal, valid, binding, enforceable, and in full force and effect; (B) the lease or sublease will continue to be legal, valid, binding, enforceable, and in full force and effect on identical terms following the consummation of the transactions contemplated hereby; (C) no party to the lease or sublease is in breach or default, and no event has occurred which, with notice or lapse of time, would constitute a breach or default or permit termination, modification, or acceleration thereunder; (D) no party to the lease or sublease has repudiated any provision thereof; (E) there are no disputes, oral agreements, or forbearance programs in effect as to the lease or sublease; (F) Internet Now has not assigned, transferred, conveyed, mortgaged, deeded in trust, or encumbered any interest in the leasehold or subleasehold; (G) all facilities leased or subleased thereunder have received all approvals of governmental authorities (including licenses and permits) required in connection with the operation thereof and have been operated and maintained in accordance with applicable laws, rules, and regulations; (H) all facilities leased or subleased thereunder are supplied with utilities and other services necessary for the operation of said facilities; and 12 (I) the owner of the facility leased or subleased has good and marketable title to the parcel of real property, free and clear of any security interest, easement, covenant, or other restriction, except for installments of special easements not yet delinquent and recorded easements, covenants, and other restrictions which do not impair the current use, occupancy, or value, or the marketability of title, of the property subject thereto. (m) INTELLECTUAL PROPERTY. To the Knowledge of Warranting Shareholders: (i) Internet Now owns or has the right to use pursuant to license, sublicense, agreement, or permission all Intellectual Property necessary for the operation of the business of Internet Now as presently conducted. Each item of Intellectual Property owned or used by Internet Now immediately prior to the Closing hereunder will be owned or available for use by RMI on identical terms and conditions immediately subsequent to the Closing hereunder. Internet Now has taken all reasonable and necessary actions to maintain and protect each item of Intellectual Property that it owns or uses. (ii) Internet Now has not interfered with, infringed upon, misappropriated, or otherwise come into conflict with any Intellectual Property rights of third parties, and Internet Now has not received any charge, complaint, claim, demand, or notice alleging any such interference, infringement, misappropriation, or violation (including any claim that Internet Now must license or refrain from using any Intellectual Property rights of any third party).No third party has interfered with, infringed upon, misappropriated, or otherwise come into conflict with any Intellectual Property rights of Internet Now. (iii) Internet Now has no patents or registrations with respect to any of its Intellectual Property. Internet Now has not granted any licenses, agreements, or other permission to any third party with respect to any of its Intellectual Property. (iv) Internet Now has registered the service mark "doitnow" with the Country of Tunisia, and the domain names "doitnow.com", "doitnow.net", "ramworld.com" and "webmovers.com" with Internic Domain Registration Service. Internet Now has no other trade names or unregistered trademarks used in connection with its business. With respect to each name above: (A) Internet Now possess all right, title, and interest in and to the item, free and clear of any Security Interest, license, or other restriction; (B) the item is not subject to any outstanding injunction, judgment, order, decree, ruling, or charge; 13 (C) no action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand is pending or is threatened which challenges the legality, validity, enforceability, use, or ownership of the item; and (D) Internet Now has not agreed to indemnify any Person for or against any interference, infringement, misappropriation, or other conflict with respect to the item. (v) Section 4(m) of the Disclosure Schedule identifies each item of Intellectual Property that any third party owns and that Internet Now uses pursuant to license, sublicense, agreement, permission or otherwise. Shareholders have delivered to RMI true, correct and complete copies of all such licenses, sublicenses, agreements, and permissions (as amended to date). With respect to each item of Intellectual Property required to be identified in Section 4(m) of the Disclosure Schedules: (A) the license, sublicense, agreement, or permission covering the item is legal, valid, binding, enforceable, and in full force and effect and no party thereto has repudiated any provision thereof; (B) the license, sublicense, agreement, or permission will continue to be legal, valid, binding, enforceable, and in full force and effect on identical terms following the consummation of the transactions contemplated hereby; (C) no party to the license, sublicense, agreement, or permission is in breach or default, and no event has occurred which with notice or lapse of time would constitute a breach or default or permit termination, modification, or acceleration thereunder; (D) Internet Now has not granted any sublicense or similar right with respect to such license, sublicense, agreement, or permission. (vi) Internet Now has not granted any licenses, agreements, or permission to any third party with respect to any of its Intellectual Property. (n) TANGIBLE ASSETS. Section 4(n) of the Disclosure Schedule list all of the tangible assets of Internet Now, indicating those assets leased by Internet Now. Except as set forth on Section 4(n) of the Disclosure Schedule, Internet Now owns or leases all buildings, machinery, equipment, and other tangible assets necessary for the conduct of its businesses as presently conducted. Except as set forth on Section 4(n) of the Disclosure Schedule, to the Knowledge of the Warranting Shareholders, each such tangible asset is free from defects, has been maintained in 14 accordance with normal industry practice, is in good operating condition and repair, and is suitable for the purposes for which it presently is used, all subject to normal wear and tear. (o) INVENTORY. Internet Now has no inventory. (p) CONTRACTS. Section 4(p) of the Disclosure Schedule lists the following contracts and other agreements to which Internet Now is a party as of the Closing Date: (i) any agreement (or group of related agreements) for the lease of personal property to or from any Person; (ii) any agreement (or group of related agreements) for the purchase or sale of raw materials, commodities, supplies, products, or other personal property, or for the furnishing or receipt of services, the performance of which involves consideration in excess of $1,000.00, other than to customers of Internet Now in the Ordinary Course of Business; (iii) any agreement concerning a partnership or joint venture; (iv) any agreement (or group of related agreements) under which it has created, incurred, assumed, or guaranteed any indebtedness for borrowed money, or any capitalized lease obligation; (v) any agreement concerning confidentiality or noncompetition; (vi) any agreement with Shareholders or Affiliates (other than Internet Now); (vii) any profit sharing, stock option, stock purchase, stock appreciation, deferred compensation, severance, or other plan or arrangement for the benefit of its current or former directors, officers, and employees; (viii) any collective bargaining agreement; (ix) any agreement for the employment of any individual on a full-time, part-time, consulting, independent contractor or other basis providing annual compensation in excess of $40,000 or providing severance benefits; (x) any agreement under which it has advanced or loaned any amount to any of its directors, officers, and employees or any affiliates thereof outside the Ordinary Course of Business; 15 (xi) any agreement under which a Shareholder provided a personal guarantee; (xii) any agreement under which the consequences of a default or termination could have a material adverse effect on the business, financial condition, operations, results of operations, or future prospects of Internet Now; or (xiii) any other agreement (or group of related agreements) the performance of which involves consideration in excess of $5,000. Shareholders have delivered to RMI a true, correct and complete copy of each written agreement listed in Section 4(p) of the Disclosure Schedule (as amended to date) and a written summary setting forth the terms and conditions of each oral agreement referred to in Section 4(p) of the Disclosure Schedule. To the Warranting Shareholders' Knowledge, with respect to each such agreement: (A) the agreement is legal, valid, binding, enforceable, and in full force and effect; (B) the agreement will continue to be legal, valid, binding, enforceable, and in full force and effect in identical terms following the consummation of the transaction contemplated hereby; (C) no party is in breach or default, and no event has occurred which with notice or lapse of time would constitute a breach or default, or permit termination, modification, or acceleration, under the agreement; and (D) no party has repudiated any provision of the agreement. (q) NOTES AND ACCOUNTS RECEIVABLE. As of the Closing Date Section 4(q) of the Disclosure Schedule will set forth a true, correct and complete list of all notes and accounts receivables. Except as set forth Section 4(q) of the Disclosure Schedule, all notes and accounts receivable of Internet Now are reflected properly on the books and records, are valid receivables subject to no setoffs or counterclaims, are current and collectible, and will be collected in accordance with their terms at their recorded amounts. (r) POWERS OF ATTORNEY. Except as set forth on Section 4(r) of the Disclosure Schedule, there are no outstanding powers of attorney executed on behalf of Internet Now. (s) INSURANCE. Section 4(s) of the Disclosure Schedule sets forth the following information with respect to each insurance policy (including policies providing property, casualty, liability, and workers' compensation coverage and bond and surety arrangements) to which Internet Now has been a party, a named insured, or otherwise the beneficiary of coverage at any time within the past two (2) years: (i) the name, address, and telephone number of the agent; (ii) the name of the insurer, the name of the policyholder, and the name of each covered insured; 16 (iii) the policy number and the period of coverage; (iv) the scope (including an indication of whether the coverage was on a claims made, occurrence, or other basis) and amount (including a description of how deductibles and ceilings are calculated and operate) of coverage; (v) a description of any retroactive premium adjustments or other loss-sharing arrangements; and (vi) claims reports and loss runs. To the Warranting Shareholders Knowledge, with respect to each such insurance policy, prior to and as of the Closing Date, each policy is legal, valid, binding, enforceable, and in full force and effect. Internet Now has been covered since its incorporation by insurance in scope and amount customary and reasonable for the businesses in which it has engaged during such period. Internet Now has no self-insurance arrangements. (t) LITIGATION. Section 4(t) of the Disclosure Schedule sets forth each instance in which, to the Warranting Shareholders' Knowledge, Internet Now (i) is subject to any outstanding injunction, judgment, order, decree, ruling, or charge or (ii) is a party or, to the Knowledge of Warranting Shareholders, is threatened to be made a party to any action, suit, proceeding, hearing, or investigation of, in, or before any court or quasi-judicial or administrative agency of any federal, state or local jurisdiction or before any arbitrator. Except as set forth of Section 4(t) of the Disclosure Schedule, none of the actions, suits, proceedings, hearings, and investigations set forth in Section 4(t) of the Disclosure Schedule could result in a material adverse change in the business, financial condition, operations, results of operations, or future prospects of Internet Now. None of the Warranting Shareholders has any reason to believe that any such action, suit, proceeding, hearing, or investigation may be brought or threatened against Internet Now. (u) PRODUCT WARRANTY. Internet Now does not provide any warranties or guaranties for any product manufactured, sold, leased, or delivered by Internet Now. (v) PRODUCT LIABILITY. To the Knowledge of Warranting Shareholders, Internet Now has no Liability (and there is no Basis for any present or, future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against Internet Now giving rise to any Liability) arising out of any injury to individuals or property as a result of the ownership, possession, or use of any product manufactured, sold, leased, or delivered by Internet Now. (w) EMPLOYEES. All employees providing services to Internet Now (other than the Warranting Shareholders) are leased to Internet Now by AmeriCare Employers Group, Inc. Section 4(w) of the Disclosure Schedules lists all such employees and contractors along with their 17 respective job titles, current salary and other benefits offered by Internet Now. To the Knowledge of the Warranting Shareholders, no key employee or contractors or group of employees or contractors has any plans to terminate employment with Internet Now. To the Knowledge of the Warranting Shareholders, Internet Now has not committed any unfair labor practice. Section 4(w) of the Disclosure Schedule has attached to it true, correct and complete copies of all contracts, agreements and a written summary setting forth the terms and conditions of each oral agreement with respect to such employee or contractor, including but not limited to that contract by and between Internet Now and AmeriCare Employers Group, Inc., as amended as of the Closing Date. (x) EMPLOYEE BENEFITS. Internet Now does not maintain or contribute and has never maintained or contributed, or to the Knowledge of the Warranting Shareholders, ever been required to maintain or contribute to any Employee Benefit Plan, Employee Pension Benefit Plan, Multiemployer Plan or Employee Welfare Benefit Plan providing medical, health, or life insurance or other welfare-type benefits for current or future retired or terminated employees, their spouses, or their dependents (other than in accordance with Code Section 4980B). (y) GUARANTIES. Internet Now is not a guarantor or otherwise liable for any Liability or obligation (including indebtedness) of any other Person. (z) ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS. Except as set forth on Section 4(z) of the Disclosure Schedule and to the Warranting Shareholders' Knowledge, Internet Now and Affiliates have complied and are in compliance with all Environmental, Health, and Safety Requirements. (aa) CERTAIN BUSINESS RELATIONSHIPS WITH INTERNET NOW. Except as set forth on Section 4(aa) of the Disclosure Schedule, Shareholders and any Affiliates have not been involved in any business arrangement or relationship with Internet Now, other than as employees, within the past twelve (12) months, and Shareholders and any Affiliates do not own any asset, tangible or intangible, which is used in the business of Internet Now. (bb) AVERAGE MONTHLY REVENUES. On the date of Closing, Internet Now has or will have at least 5,700 "Internet Service Customers" (defined below). Internet Now's average monthly gross revenues from its Internet Service Customers for internet access under their subscription agreement (described below) for the months of August, September and October, 1998 (determined in accordance with GAAP) is $110,000. For purposes of this Section 4(bb), "Internet Service Customers" shall mean all customers of Internet Now: (i) whose subscription for internet access is in effect, (ii) whose payment for such access is not more than twenty-nine days past due, and (iii) with respect to whom Internet Now has not received notice of termination of such subscription for internet access. 18 (cc) Specific Liabilities. On the date of Closing, Internet Now has or will have specific liabilities in the following categories of not more than: (A) $65,000 of future obligations from the date of Closing through May 31, 2000 under that certain Sublease dated May 30, 1996 between Goodnet Incorporated, as sublessor, and Internet Now, as sublessee, for the property located at 404 South Mill Avenue, Suite 201, Tempe, Arizona; (B) $165,000 of future obligations from the date of Closing in capital equipment leases; and (C) $250,000 of Deferred Revenue Liabilities. For purposes of this subsection, "Deferred Revenue Liabilities" shall mean amounts prepaid to Internet Now by it's Customers for Internet services, such service which have not yet been delivered to said Customers at the time of Closing. These Amounts shall be calculated as follows: The amount paid by the Customer for prepaid service shall be divided by the number of full Customer Months of service remaining for such Customer at the Closing. For purposes of this subsection, a "Customer Month" shall be determined based on a particular Customer's next scheduled rebilling date. A "Customer" is as defined in Section 4 (bb). Thus, if a Customer is scheduled to be re-billed on the 3rd of a given month, the Customer Month, for this example Customer, shall be from the 3rd of a given month to the 2nd of the following month. For example, if on November 3, 1999 a Customer is scheduled to be re-billed $204 for one year's service and the merger Closing Date is November 20, 1998, the prepaid revenue liability for this example Customer shall be $187 (11/12 of $204 = $17, $17 x 11 full Customer Months remaining = $187). (dd) BROKERS' FEES. Internet Now has no Liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement. The Parties acknowledge and agree that any brokerage or other fees due to Rampart Associates, Inc. as a result of this transaction shall be paid by RMI. (ee) LEGAL, ACCOUNTING AND OTHER FEES AND EXPENSES. Warranting Shareholders, jointly and severally, acknowledge and agree that all of Internet Now's legal, accounting and other fees, costs and expenses associated with this transaction shall be the sole obligation of and shall be paid by the Shareholders, and shall not be the obligation of Internet Now. Notwithstanding the forgoing, the Parties acknowledge and agree that RMI shall be solely responsible for the costs of its certified public accountants to complete the Audited Financial Statements and any audits requested by RMI for the stub period from October 31, 1997 through the Closing Date. 19 (ff) DISCLOSURE. The representations and warranties contained in this Section 4 do not contain any untrue statement of a fact or omit to state any fact necessary in order to make the statements and information contained in this Section 4 not misleading. 5. REPRESENTATIONS AND WARRANTIES OF RMI. RMI represents and warrants to Internet Now and Shareholders that the statements contained in this Section 5 are true, correct and complete as of the date of this Agreement and will be true, correct and complete as of Closing (as though made then and as though the Closing Date were substitutes for the date of this Agreement). (a) ORGANIZATION. RMI is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation. RMI has the requisite corporate power and authority to own, lease and operate its properties and is duly authorized and licensed to carry on its business as such business is currently being conducted, except where such would not have a material adverse effect. (b) AUTHORIZATION OF TRANSACTION. RMI has the full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of RMI, enforceable in accordance with its terms and conditions. The execution, delivery and performance of this agreement by RMI has been duly authorized by all requisite corporate action on the part of RMI. (c) NONCONTRAVENTION. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which RMI is subject or any provision of its charter or bylaws. (d) RMI PROSPECTUS. At the Closing, the RMI Prospectus will not contain any untrue statements of material fact or omit to state any material fact necessary to make the statements contained therein not materially misleading, or omit to state any material fact which would have a material adverse effect on the business of RMI, its future prospects, or the value or marketability of the RMI Stock. Notwithstanding the foregoing, however, RMI makes no representation or warranty as to the future performance or business of RMI, its future prospects, or the value or marketability of the RMI stock. 6. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to the period between the execution of this Agreement and the Closing. (a) NOTICES AND CONSENTS. Shareholders will assist RMI and its counsel to give any notices to third parties, and will assist RMI to obtain any third party consents, that are required or that 20 RMI deems necessary in connection with this transaction. Each of the Parties will (and Shareholder will cause Internet Now to) give any notices to, make any filings with, and use its best efforts to obtain any authorizations, consents, and approvals of governments and governmental agencies. (b) TERMINATION OF GEORGE D. WOOD'S EMPLOYMENT AGREEMENT. At or prior to Closing, Internet Now will terminate that certain Employment Agreement by and between Internet Now and George D. Wood, Ph.D. dated April 3, 1998 in a form acceptable to RMI and its counsel. (c) LOANS TO WARRANTING SHAREHOLDERS. Internet Now will in a form satisfactory to RMI, its counsel and certified public accountants pay a bonus to the Warranting Shareholders as an entry on the books and records of Internet Now effective October 31, 1998 to offset the loans made by Internet Now to the Warranting Shareholders in an amount not to exceed one hundred fifty thousand and no/Dollars ($150,000) in such a manner that Internet Now shall only be responsible for one half and Warranting Shareholders shall be responsible for one half of any local, state or federal withholding, employment, income or any other Taxes in connection with the fees paid to Warranting Shareholders. Each Warranting Shareholder agrees to hold Internet Now and RMI and its respective officers, directors and agents harmless with respect to any loss, liability, cost or expenses pertaining to any of these taxes related to the compensation payable to the Warranting Shareholders, including any and all interest and penalties associated therewith. (d) PRESERVATION OF BUSINESS. Warranting Shareholders will cause Internet Now to keep its business, properties and goodwill substantially intact, including its present operations, physical facilities, working conditions, and relationships with lessors, licensors, suppliers, customers, and employees. (e) FULL ACCESS. Shareholders will permit, and Shareholders will cause Internet Now to permit, representatives of RMI to have full access (including providing introductions, where necessary), to all premises, properties, personnel, customers, lessors, licensors, licensees, vendors, supplies, creditors, debtors, books, records (including Tax records), contracts, and documents of or pertaining to Internet Now. Notwithstanding the forgoing, RMI shall contact Hutchinson Persons prior to contacting or interviewing any customer, employee or subcontracted staff member of Internet Now. Mr. Persons shall have the right to be present at all interviews of said customers, employees or subcontracted staff members. In addition, Shareholders will provide to RMI's legal counsel copies of or description of all personnel, customers, lessors, licensors, licensees, vendors, suppliers, creditors, debtors, books, records (including Tax records), contracts, and documents of or pertaining to Internet Now. Internet Now will cause its independent accountants to make available their work papers with respect to Internet Now and to otherwise provide such assistance as is reasonably requested by RMI. No discovery by RMI shall 21 be deemed to amend or supplement the Disclosure Schedule or to prevent or cure any misrepresentation, breach of warranty, or breach of covenant. 7. POST-CLOSING COVENANTS. The Parties agree as follows with respect to the period following the Closing. (a) GENERAL. In case at any time after the Closing any further action is necessary or desirable to carry out the purposes of this Agreement, each of the Parties will take such further action (including the execution and delivery of such further instruments and documents) as any other Party reasonably may request, all at the sole cost and expense of the requesting Party (unless the requesting Party is entitled to indemnification therefor under Section 9 below). Shareholders and Internet Now acknowledge and agree that from and after Closing RMI will be entitled to possession of all documents, books, records (including Tax records), agreements, and financial data of any sort relating to Internet Now. (b) WITHHOLDING TAXES ON LOAN TO WARRANTY SHAREHOLDERS. Warranty Shareholders shall be individually responsible for one half of any local, state or federal withholding, employment income or any other Taxes in connection with the bonus paid to Warranting Shareholders pursuant to Section 6(c) above. In addition, Warranting Shareholders shall be solely responsible for any and all interest and penalties assessed against the Warranting Shareholders and Internet Now in connection therewith, if any. (c) COOPERATION IN THE ISSUANCE OF THE AUDITED FINANCIAL STATEMENTS. The Warranting Shareholders shall cooperate with RMI and KPMG Peat Marwick in the issuance of the Audited Financial Statements, including but not limited to the execution of all documents reasonably requested by RMI or KPMG Peat Marwick to finalize the Audited Financial Statements. (d) LITIGATION SUPPORT. In the event and for so long as any Party actively is contesting or defending against any action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand in connection with (i) any transaction contemplated under this Agreement or (ii) any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction accruing on or prior to the Closing Date involving Internet Now, each of the other Parties will cooperate with the contesting party and its counsel in the contest or defense, make available their personnel, and provide such testimony and access to their books and records as shall be necessary in connection with the contest or defense, all at the sole cost and expense of the contesting or defending Party (unless the contesting or defending Party is entitled to indemnification therefor under Section 9 below). (e) TRANSITION. During the term of the covenant not to compete set forth in Section 7(i), Shareholders will not take any action that is designed, intended or could reasonably be expected to have the effect of discouraging any lessor, licensor, customer, supplier, employee, independent 22 contractor or other business associate of Internet Now from maintaining the same business relationships with Internet Now after Closing as it maintained with Internet Now prior to the Closing. During the term of the covenant not to compete set forth in Section 7(i) below, Shareholders will refer all customer inquiries relating to the businesses of Internet Now to RMI. For no additional consideration, each of the Shareholders active in the business of Internet Now prior to Closing shall provide assistance to RMI, its employees, agents and advisors in the transition of the management of Internet Now on a full time basis as requested by RMI for a period not to exceed one (1) month following Closing. In addition for a period not to exceed an additional two (2) months thereafter, such Shareholders active in the business of Internet Now shall provide assistance to RMI, its employees, agents and advisors on a paid consulting basis, as mutually agreed to by RMI and each such Shareholder. (f) RELEASE OF SHAREHOLDER PERSONAL GUARANTEES. RMI will use its best efforts to obtain within 30 days of Closing the release of any obligations of Internet Now which are personally guaranteed by a Shareholder and set forth on Section 7(f) of the Disclosure Schedule, including but not limited to sending a certified letter to each such lender, landlord, vendor or other Person at the address set forth on Section 7(f) of the Disclosure Schedule, offering to substitute the guaranty of RMI for the personal guarantee of such Shareholder. If RMI is unable to obtain the release of any Shareholder's personal guarantee within 30 days of Closing, RMI shall agree to be primary guarantor of such obligation within 60 days of Closing. If RMI is not accepted as a primary guarantor, RMI shall offer to be an additional guarantor. Section 7(f) of the Disclosure Schedule sets forth the personal guarantees of the Shareholders by name, address, principal contact person of each such obligee to which such request shall be sent and the nature and amount of the personal guarantee along with the name of the Shareholder granting the personal guarantee. Shareholders shall have provided true, correct and complete copies of all such contracts containing any personal guarantees. RMI shall not be obligated to request the release of any personal guarantees not set forth on Section 7(f) of the Disclosure Schedules. RMI agrees to indemnify and hold harmless such Shareholder from and against any costs or liability accruing from and after Closing with respect to any liability specifically set forth on Section 7(f) of the Disclosure Schedule. RMI shall not be responsible and shall not indemnify nor hold harmless such Shareholder from or against any liability accruing prior to or as of the Closing Date. (g) CONFIDENTIALITY. The Parties acknowledge and agree that RMI is acquiring as part of this transaction all of the Confidential Information of Internet Now and the Shareholders will deliver any and all tangible evidence of Internet Now's Confidential Information to RMI prior to the Closing Date. Notwithstanding the foregoing, each Shareholder may retain copies of any agreements or other documents to which such Shareholder, in his or her individual capacity and not in the capacity as a shareholder, officer, director or agent of Internet Now is or was a party. Each of the Shareholders and Internet Now will treat and hold as confidential all of the Confidential Information, refrain from using any of the Confidential Information except in connection with this Agreement, and deliver promptly to RMI as of Closing all tangible 23 embodiments (and all copies) of the Confidential Information which are in his, her or its possession. In the event that any Shareholder is requested or required (by oral question or request for information or documents in any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar process) to disclose any Confidential Information, such Shareholder will notify RMI promptly of the request or requirement so that RMI may seek an appropriate protective order or waive compliance with the provisions of this Section 7(g). If, in the absence of a protective order or the receipt of a waiver hereunder, such Shareholder is, on the advice of counsel, compelled to disclose any Confidential Information to any tribunal or else stand liable for contempt, such Shareholder may disclose the Confidential Information to the tribunal; PROVIDED, HOWEVER, that such Shareholder shall use his or her best efforts to obtain, at the request of RMI and at RMI's expense, an order or other assurance that confidential treatment will be accorded to such portion of the Confidential Information required to be disclosed as RMI shall designate. The foregoing provisions shall not apply to any Confidential Information which is generally available to the public immediately prior to the time of disclosure or such Confidential Information and information that is currently in a Shareholders possession on a non-confidential basis. This Section 7(g) shall survive Closing. (h) NON-SOLICITATION. Each Shareholder agrees that for a period of one (1) year from and after Closing, he or she will not, in any manner, directly or indirectly, either as owner, officer, employer, employee, independent contractor, stockholder, agent, principal, manager, consultant, advisor, partner or otherwise, (i) solicit any Person who is a customer of Internet Now as of the Closing Date, (ii) induce any Person who is an employee, agent, contractor or subcontractor of RMI, Internet Now and/or any affiliate thereof as of the Closing Date to terminate his, her or its employment, agency, contractor or subcontractor relationship with RMI, Internet Now or any affiliate thereof, or (iii) hire or attempt to hire any Person who is an employee, agent, contractor or subcontractor of RMI, Internet Now or any affiliate thereof as of the Closing Date. In the case of any Shareholder other than the Warranting Shareholders, the prohibition of this Section 7(h) shall only apply to the extent such Shareholder does not personally engage or personally participate in the prohibited conduct. EACH SHAREHOLDER AGREES THAT THE COVENANTS MADE IN THIS SECTION ARE REASONABLE WITH RESPECT TO THEIR DURATION AND PROSCRIPTION. Shareholder further agrees that the covenants made in this Section 7(h) shall be construed as an agreement independent of any other provision of this Agreement. Hence, the covenants made in this Section 7(h) shall survive Closing. Moreover, the existence of any claim or cause of action of Shareholders against RMI, whether or not predicated upon the terms of this Agreement, shall not constitute a defense to the enforcement by Internet Now or RMI of these covenants. (i) COVENANT NOT TO COMPETE. For a period of one (1) year from and after the Closing Date, Hutchinson Persons and Leslie Kelly will not directly or indirectly own, manage, operate, control, be employed by, participate in or be connected in any manner with the ownership, 24 management, operation or control of any business providing Internet access or web hosting services in the State of Arizona; PROVIDED, HOWEVER, that no owner of less than five percent (5%) of the outstanding stock of any publicly-traded corporation shall be deemed to engage solely by reason thereof in any of its businesses. If the final judgment of a court of competent jurisdiction declares that any term or provision of this Section is invalid or unenforceable, the Parties agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration, or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified after the expiration of the time within which the judgment may be appealed. EACH WARRANTING SHAREHOLDER AGREES THAT THE COVENANTS MADE IN THIS SECTION ARE REASONABLE WITH RESPECT TO THEIR DURATION, GEOGRAPHICAL AREA AND PROSCRIPTION. Each Warranting Shareholder further agrees that the covenants made in this Section 7(i) shall be construed as an agreement independent of any other provision of this Agreement. Hence, the covenants made in this Section 7(i) shall survive Closing. Moreover, the existence of any claim or cause of action of any Warranting Shareholder against Internet Now or RMI, whether or not predicated upon the terms of this Agreement, shall not constitute a defense to the enforcement by Internet Now or RMI of these covenants. (j) INTERNET ACCESS. For a period not to exceed one (1) year from and after the Closing Date, RMI shall provide to the Shareholders at no cost to them basic dial-up national internet access service, if available and offered by RMI. In addition, for a period not to exceed one (1) year from and after the Closing Date, RMI shall provide to Hutchinson Persons at no cost to him (except that Hutchinson shall be solely responsible for all US WEST or other such carrier charges) DSL internet access service in the Phoenix, Arizona area, if available and offered by RMI. Notwithstanding the forgoing, RMI may terminate such access in the event any Shareholder is in breach of any provision of this Agreement. (k) SECURITIES MATTERS. RMI shall furnish to Warranting Shareholders such reasonable number of copies of the RMI Prospectus and such other documentation as may be necessary to facilitate the sale of the RMI Shares by the Warranting Shareholders. (l) PERSONAL PROPERTY. The Parties acknowledge and agree that at Closing, Internet Now shall transfer to Hutchinson Persons ownership of the laptop computer currently used by him in its "as is" condition. (m) PARKING SPACE. After Closing for so long as Subsidiary, RMI or any Affiliate thereof is a tenant and during the initial term of the lease for the office space located at 404 South Mill Avenue, Suite 201, Tempe, Arizona (Hayden Square), Subsidiary, RMI or its Affiliate shall 25 permit Hutchinson to use one (1) of the parking spaces in the Hayden Square Garage at no cost to Hutchinson Persons, provided that, Hutchinson Persons grants to Subsidiary, RMI or its Affiliate the use of one (1) parking space elsewhere in the Hayden Square Garage at no cost to Subsidiary, RMI or its Affiliate. Each of Subsidiary, RMI or its Affiliate, as the case may be, and Hutchinson Persons shall comply with all reasonable requests of the landlord of the premises with respect to the parking space, including but not limited to parking in such space as designated by landlord, affixing an identification sticker(s) to the automobile, complying with all rules and regulations established by the landlord. Neither Subsidiary, RMI, or its Affiliate, nor Hutchinson Persons shall not be responsible or liable for any loss (including without limitation, loss of identification stickers or parking entrance cards, if any) or the damage arising out of or related to the use or occupancy of the parking privileges granted by the landlord. 8. DELIVERIES AT CLOSING. (a) INTERNET NOW AND SHAREHOLDER DELIVERIES. At the Closing, Shareholders and Internet Now shall provide or cause to be provided the following documents: (i) evidence satisfactory to RMI that this Agreement, the Merger and the transaction contemplated hereby has received the Requisite Stockholder Approval and Internet Now's Board of Director's approval; (ii) Shareholder and Internet Now shall have delivered to RMI and Subsidiary a Disclosure Schedule as of Closing; (iii) Shareholder shall have delivered to RMI and Subsidiary a Merger Agreement by and between the Surviving Corporation and Internet Now in the form attached hereto as EXHIBIT A; (iv) Certificates of the Secretary of Internet Now dated as of the Closing Date certifying that the following are true, correct and complete copies or the originals thereof: Articles of Incorporation of Internet Now, as amended, and certified by the Nevada Secretary of State since August 1, 1998, bylaws (as amended to date), minute books (containing the records of meetings of the Shareholders, the board of directors, and any committees of the board of directors), stock certificate books, transfer ledger and stock record books of Internet Now; (v) Certificate of Warranting Shareholders dated as of the Closing Date certifying that the following are true, correct and complete copies: the Financial Statements, Accounts Payable Aging Report, Accounts Receivables Aging Report, Accrued Employee Benefits Report, current cash balances, loan and line of credit balances, amount of all 26 advances from and to and notes, receivables and payables owing between Internet Now and Shareholders or any of their Affiliates; (vi) an opinion of counsel from Richard C. Onsager, P.C. in form and substance satisfactory to counsel for RMI, addressed to RMI, and dated as of the Closing Date; (vii) resignations, effective as of the Closing Date, of each director and officer of Internet Now, satisfactory to RMI and its counsel; (viii) evidence satisfactory to RMI and its counsel of the termination of that certain Employment Agreement by and between Internet Now and George D. Wood, Ph.D. dated April 3, 1998 in a form acceptable to RMI and its counsel; and (ix) evidence satisfactory to RMI, its counsel and certified public accountants of the bonuses paid to the Warranting Shareholders as an entry on the books and records of Internet Now to offset the loans made by Internet Now to the Warranting Shareholders in such a manner that Internet Now shall only be responsible for one half and Warranting Shareholders shall be responsible for one half of any local, state or federal withholding, employment, income or any other taxes in connection with the fees paid to Warranting Shareholders. Each Warranting Shareholder agrees to hold Internet Now and RMI and its respective officers, directors and agents harmless with respect to any loss, liability, cost or expenses pertaining to any of these taxes related to the compensation payable to the Warranting Shareholders, including any and all interest and penalties associated therewith. (b) RMI DELIVERIES. At Closing, RMI shall provide or cause to be provided the Merger Consideration and evidence satisfactory to Internet Now and Shareholders that this Agreement, the Merger and the transaction contemplated hereby has received the approval of the Board of Directors of RMI and the Subsidiary. 9. REMEDIES FOR BREACHES OF THIS AGREEMENT. (a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the representations and warranties of the Parties contained in this Agreement shall survive the Closing hereunder (even if the damaged Party knew or had reason to know of any misrepresentation or breach of warranty or covenant at the time of Closing) and continue in full force and effect until March 31, 2000, except that the representations and warranties set forth in Sections 3(b), 4(b), 4(e), 4(k) and 4(x) hereof shall survive for the applicable statute of limitations. (b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF RMI. Shareholders agree to indemnify RMI from and against the entirety of any Adverse Consequences RMI may suffer (including any Adverse Consequences suffered after the making of any claim for indemnification or after the end 27 of any applicable survival period) resulting from, arising out of, relating to, in the nature of, or caused by any of the following: (i) Shareholders' or Internet Now's breach (or the allegation by any third party of facts that, if true, would mean either has breached) of any of the representations, warranties, and covenants contained in this Agreement. For purposes of the representations and warranties set forth in Section 3 of this Agreement, such indemnification shall be from the Shareholder violating such representation or warranty, individually and not jointly and severally with the remaining Shareholders. For purposes of the representations and warranties set forth in Section 4 of this Agreement, such indemnification of the Warranting Shareholders shall be joint and several. For purposes of calculating the amount of any Adverse Consequences, qualifications such as "material," "materiality" or similar qualification, shall be disregarded; (ii) any Liability of Internet Now (x) for any Taxes of Internet Now with respect to any Tax year or portion thereof ending on or before the Closing Date (or for any Tax year beginning before and ending after the Closing Date to the extent allocable (determined in a manner consistent with Section 10(c)) to the portion of such period beginning before and ending on the Closing Date), to the extent such Taxes are not reflected in the reserve for Tax Liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) shown on the face of the Closing Balance Sheet, and (y) for the unpaid Taxes of any Person (other than Internet Now) under Reg. Section 1.1502-6 (or any similar provision of state, local, or foreign law) or as a transferee or successor, by contract, or otherwise; or (iii) any actions, judgements, costs and expenses (including reasonable attorney fees and all other expenses incurred in investigating, preparing or defending any litigation or proceeding, commenced or threatened) incident to any of the foregoing. RMI's knowledge of a breach of a representation, warranty or covenant shall not be considered as a waiver of any of the above conditions. (c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF SHAREHOLDERS. In the event RMI breaches (or in the event any third party alleges facts that, if true, would mean RMI has breached) any of its representations, warranties, and covenants contained herein, then RMI agrees to indemnify Shareholders from and against the entirety of any Adverse Consequences Shareholders may suffer through and after the date of the claim for indemnification (including any Adverse Consequences Shareholders may suffer after the end of any applicable survival period) resulting from, arising out of, relating to, in the nature of, or caused by the breach (or the alleged breach). 28 (d) MATTERS INVOLVING THIRD PARTIES. (i) If any third party shall notify any Party (the "INDEMNIFIED PARTY") with respect to any matter (a "THIRD PARTY CLAIM") which may give rise to a claim for indemnification against any other Party (the "INDEMNIFYING PARTY") under this Section 9, then the Indemnified Party shall promptly notify each Indemnifying Party thereof in writing; PROVIDED, HOWEVER, that no delay on the part of the Indemnified Party in notifying any Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the Indemnifying Party thereby is prejudiced. (ii) Any Indemnifying Party will have the right to defend the Indemnified Party against the Third Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Party so long as (A) the Indemnifying Party notifies the Indemnified Party in writing within fifteen (15) days after the Indemnified Party has given notice of the Third Party Claim that the Indemnifying Party will indemnify the Indemnified Party from and against the entirety of any Adverse Consequences the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third Party Claim, (B) the Indemnifying Party provides the Indemnified Party with evidence reasonably acceptable to the Indemnified Party that the Indemnifying Party will have the financial resources to defend against the Third Party Claim and fulfill its indemnification obligations hereunder, (C) the Third Party Claim involves only money damages and does not seek an injunction or other equitable relief, (D) settlement of, or an adverse judgment with respect to, the Third Party Claim is not, in the good faith judgment of the Indemnified Party, likely to establish a precedential custom or practice adverse to the continuing business interests of the Indemnified Party, and (E) the Indemnifying Party conducts the defense of the Third Party Claim actively and diligently. Notwithstanding anything herein to the contrary, the Indemnifying Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnified Party (not to be withheld unreasonably). (iii) So long as the Indemnifying Party is conducting the defense of the Third Party Claim in accordance with Section 9(d)(ii) above, (A) the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Third Party Claim and (B) the Indemnified Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnifying Party (not to be unreasonably withheld, conditioned or delayed). (iv) In the event any of the conditions in Section 9(d)(ii) above is or becomes unsatisfied, however, (A) the Indemnified Party may defend against, and consent to the entry of any judgment or enter into any settlement with respect to, the Third Party Claim 29 in any manner it reasonably may deem appropriate (and the Indemnified Party shall consult with and obtain consent from, any Indemnifying Party in connection therewith not to be unreasonably withheld, conditioned or delayed), (B) the Indemnifying Parties will reimburse the Indemnified Party promptly and periodically for the costs of defending against the Third Party Claim (including reasonable attorneys' fees and expenses), and (C) the Indemnifying Parties will remain responsible for any Adverse Consequences the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third Party Claim to the fullest extent provided in this Section 9. (e) REMEDIES. The foregoing indemnification provisions are in addition to, and not in derogation of, any statutory, equitable, or common law remedy (including without limitation any such remedy arising under Environmental, Health, and Safety Requirements) any Party may have with respect to Internet Now, or the transactions contemplated by this Agreement. (f) OTHER INDEMNIFICATION PROVISIONS. Each of the Shareholders hereby agrees that they will not make any claim for indemnification against Internet Now by reason of the fact that he was a director, officer, employee, or agent of any such entity or was serving at the request of any such entity as a partner, trustee, director, officer, employee, or agent of another entity (whether such claim is for judgments, damages, penalties, fines, costs, amounts paid in settlement, losses, expenses, or otherwise and whether such claim is pursuant to any statute, charter document, bylaw, agreement, or otherwise) with respect to any action, suit, proceeding, complaint, claim, or demand brought by RMI against such Shareholders (whether such action, suit, proceeding, complaint, claim, or demand is pursuant to this Agreement, applicable law, or otherwise). 10. TAX MATTERS. The following provisions shall govern the allocation of responsibility as between RMI and Shareholders for certain tax matters following the Closing Date: (a) TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE. Warranting Shareholders shall be responsible for filing all Tax Returns except the Federal and State Income Tax Returns for the Fiscal Year ended October 31, 1998 and any Tax Return set forth on Section 10(a) of the Disclosure Schedule. Shareholders shall cooperate with RMI in the preparation and filing of the Federal and State Income Tax Returns for the Fiscal Year ended October 31, 1998 and those Tax Returns set forth on Section 10(a) of the Disclosure Schedule for Internet Now. RMI shall obtain the consent of the Warranting Shareholders (which consent shall not be unreasonably withheld or delayed) prior to filing of the Federal and State Income Tax Returns for the Fiscal Year ended October 31, 1998 and any Tax Return set forth on Section 10(a) of the Disclosure Schedule. Shareholders shall permit RMI to review and comment on any Tax Return filed by Internet Now after October 31, 1998. 30 (b) COOPERATION ON TAX MATTERS. (i) RMI, Internet Now and Shareholders shall each cooperate fully, as and to the extent reasonably requested by the other parties, in connection with the filing of Tax Returns pursuant to this Section and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include retention and, upon the other party's request, provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. Internet Now and Shareholders shall provide to RMI, who agrees to retain, all books and records with respect to Tax matters pertinent to Internet Now relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations and, to the extent notified by Shareholders, any extensions thereof of the respective taxable periods, and to abide by all record retention agreements entered into with any taxing authority. (ii) RMI and Shareholders further agree, upon request, to use their best efforts to obtain any certificate or other document from any governmental authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the transactions contemplated hereby). (iii) RMI and Shareholders further agree, upon request, to provide the other party with all information that either party may be required to report pursuant to Section 6043 of the Code and all Treasury Department Regulations promulgated thereunder. (c) CERTAIN TAXES. All transfer, documentary, sales, use, stamp, registration and other such Taxes and fees (including any penalties and interest) incurred in connection with the execution and consummation of the transaction contemplated by this Agreement shall be paid by Shareholders when due, and Shareholders will, at their own expense, file all necessary Tax Returns and other documentation with respect to all such transfer, documentary, sales, use, stamp, registration and other Taxes and fees, and, if required by applicable law, RMI will, and will cause its affiliates to, join in the execution of any such Tax Returns and other documentation. 11. TERMINATION. (a) TERMINATION OF AGREEMENT. Either Party may terminate this Agreement in its sole and absolute discretion by giving written notice to the other party at any time on or before the Closing Date. 31 (b) EFFECT OF TERMINATION. If a Party terminates this Agreement pursuant to Section 11(a) above, all rights and obligations of the Parties hereunder shall terminate without any liability of any Party to any other Party (except for any liability of any Party then in breach); provided however, the Earnest Money Deposit shall be distributed in accordance with that certain Agreement by and between Internet Now and RMI dated October 21, 1998. 12. DEFINED TERMS. "ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, interest and fees, including court costs and attorneys' fees and expenses. "AFFILIATE" has the meaning set forth in Rules 12b-2 and 16b-1 of the regulations promulgated under the Securities Exchange Act. "AFFILIATED GROUP" means any affiliated group within the meaning of Code Section 1504(a) or any similar group defined under a similar provision of federal, state or local law. "BASIS" means any past or present fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction that forms or could form the basis for any specified consequence. "CLOSING" has the meaning set forth in Section 2(d). "CLOSING DATE" has the meaning set forth in Section 2(d). "CODE" means the Internal Revenue Code of 1986 and any regulation thereunder, as amended from time to time. "CONFIDENTIAL INFORMATION" means any information concerning the businesses and affairs of Internet Now that is not already or becomes generally known, used or available to the public other than through a breach of this Agreement or other breach. "DISCLOSURE SCHEDULE" has the meaning set forth in Section 4. "EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred compensation or retirement plan or arrangement which is an Employee Pension Benefit Plan, (b) qualified defined contribution retirement plan or arrangement which is an Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or arrangement which is an Employee Pension Benefit 32 Plan (including any Multiemployer Plan), or (d) Employee Welfare Benefit Plan or material fringe benefit plan or program. "EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA Section 3(2). "EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA Section 3(1). "ENVIRONMENTAL, HEALTH, AND SAFETY REQUIREMENTS" shall mean all federal, state, local and foreign statutes, regulations, ordinances and other provisions having the force or effect of law, all judicial and administrative orders and determinations, all contractual obligations and all common law concerning public health and safety, worker health and safety, and pollution or protection of the environment, including without limitation all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any hazardous materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated biphenyls, noise or radiation, each as amended and as now or hereafter in effect. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "FIDUCIARY" has the meaning set forth in ERISA Section 3(21). "FINANCIAL STATEMENT" has the meaning set forth in Section 4(g). "GAAP" means United States generally accepted accounting principles as in effect from time to time. "INDEMNIFIED PARTY" has the meaning set forth in Section 9(d). "INDEMNIFYING PARTY" has the meaning set forth in Section 9(d). "INTERNET NOW" has the meaning set forth in the preface above. "INTERNET NOW SHARE" means any share of the Common Stock, no par value per share, of Internet Now. "INTELLECTUAL PROPERTY" means (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof, (b) all trademarks, service marks, trade dress, logos, trade names, and corporate names, together with all translations, adaptations, derivations, 33 and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith, (c) all copyrightable works, all copyrights, and all applications, registrations, and renewals in connection therewith, (d) all mask works and all applications, registrations, and renewals in connection therewith, (e) all trade secrets and confidential business information (including ideas, research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals), (f) all computer software (including data and related documentation), (g) all other proprietary rights, and (h) all copies and tangible embodiments thereof (in whatever form or medium). "KNOWLEDGE" means actual knowledge after due inquiry and investigation or which should have reasonably been known. "LIABILITY" means any liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any liability for Taxes. "MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Section 3(37). "ORDINARY COURSE OF BUSINESS" means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency). "PARTY" has the meaning set forth in the preface above. "PERSON" means an individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a governmental entity (or any department, agency, or political subdivision thereof). "REQUISITE SHAREHOLDERS APPROVAL" means the affirmative vote of the holders of all Internet Now Shares in favor of this Agreement and this transaction required by federal or state law, corporate charters or bylaws, or other agreement. "RMI" has the meaning set forth in the preface above. "SECURITIES ACT" means the Securities Act of 1933, as amended. "SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "SHAREHOLDERS" has the meaning set forth in the preface. 34 "TAX" means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code Section 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not. "TAX RETURN" means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof. "THIRD PARTY CLAIM" has the meaning set forth in Section 9(d). "WARRANTING SHAREHOLDERS" shall mean Hutchinson Persons and Leslie Kelly. 13. MISCELLANEOUS. (a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. Internet Now and Shareholders shall not issue any press release or make any public announcement relating to the subject matter of this Agreement without the prior written approval of RMI in its sole and absolute discretion before and after Closing. Upon execution of this definitive agreement, RMI shall disclose or issue a statement or communication to the public regarding the proposed transaction. (b) NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns. (c) ENTIRE AGREEMENT. This Agreement (including the documents referred to herein) constitutes the entire agreement among the Parties and supersedes any prior understandings, agreements, or representations by or among the Parties, written or oral, to the extent they related in any way to the subject matter hereof. (d) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns. No Party may assign either this Agreement or any of his or its rights, interests, or obligations hereunder without the prior written approval of RMI and Internet Now. (e) COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. 35 (f) HEADINGS. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. (g) NOTICES. All notices, requests, demands, claims, and other communications hereunder will be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given two business days after it is sent by registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below: IF TO RMI: Rocky Mountain Internet, Inc . Douglas H. Hanson, President, CEO and Chairman 1099 18th Street, 30th Floor Denver, Colorado 80202 WITH A COPY TO: Minor & Brown, P.C. Lisa A. D'Ambrosia 650 South Cherry Street, Suite 1100 Denver, Colorado 80246 Facsimile: (303) 320-6336 IF TO ANY WARRANTING SHAREHOLDER: Hutchinson Persons 2051 South Dobson #17-214 Mesa, Arizona 85202 WITH A COPY TO: Richard C. Onsager, P.C. Richard C. Onsager 3200 North Central Avenue, Suite 1112 Phoenix, Arizona 85012 Facsimile: (602) 631-6786 IF TO ANY SHAREHOLDER, INDIVIDUALLY, THEN TO SUCH INDIVIDUAL SHAREHOLDERS, RESPECTIVELY: Hutchinson Persons Leslie Kelly 2051 South Dobson #17-214 Mesa, Arizona 85202 Susan Coupal 2855 S. Extension Rd. #243 Mesa, AZ 85210 36 Gary Kim 6951 S. Knolls Way Littleton, CO 80122 Taufik Islam 15850 North Thompson Peak Parkway, #2160 Scottsdale AZ 85260 WITH A COPY TO: Richard C. Onsager, P.C. Richard C. Onsager 3200 North Central Avenue, Suite 1112 Phoenix, Arizona 85012 Facsimile: (602) 631-6786 Any Party may send any notice, request, demand, claim, or other communication hereunder to the intended recipient at the address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic mail), but no such notice, request, demand, claim, or other communication shall be deemed to have been duly given unless and until it actually is received by the intended recipient. Any Party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other Parties notice in the manner herein set forth. (h) GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Colorado without giving effect to any choice or conflict of law provision or rule (whether of the State of Colorado or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Colorado. (i) AMENDMENTS AND WAIVERS. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by RMI and Internet Now. No waiver by any Party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. (j) SEVERABILITY. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. (k) CONSTRUCTION. The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this 37 Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, or local statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word "including" shall mean including without limitation. The Parties intend that each representation, warranty, and covenant contained herein shall have independent significance. If any Party has breached any representation, warranty, or covenant contained herein in any respect, the fact that there exists another representation, warranty, or covenant relating to the same subject matter (regardless of the relative levels of specificity) which the Party has not breached shall not detract from or mitigate the fact that the Party is in breach of the first representation, warranty, or covenant. (l) INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and Disclosure Schedule identified in this Agreement are incorporated herein by reference and made a part hereof. [INTENTIONALLY LEFT BLANK] 38 IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above written. RMI: RMI-INI: Rocky Mountain Internet, Inc., RMI-INI, Inc., a Colorado a Delaware corporation corporation By:/s/Douglas H. Hanson By: /s/Douglas H. Hanson ------------------------------- ------------------------------ Douglas H. Hanson, CEO, President, Douglas H. Hanson, President and Chairman of the Board INTERNET NOW: Internet Now, a Nevada corporation By: /s/Hutchinson Persons ------------------------- Hutchinson Persons, President SHAREHOLDERS: /s/Hutchinson Persons /s/Taufik Islam - ---------------------------------- --------------------------- Hutchinson Persons, Shareholder Taufik Islam, Shareholder /s/Leslie Kelly /s/Susan Coupal - ---------------------------------- --------------------------- Leslie Kelly, Shareholder Susan Coupal, Shareholder /s/Gary Kim - ---------------------------------- Gary Kim, Shareholder 39 EX-10.20 3 EXHIBIT 10.20 EXECUTION COPY ASSET PURCHASE AGREEMENT By and Between ROCKY MOUNTAIN INTERNET, INC., a Delaware corporation, and UNICOM COMMUNICATIONS, INC., a Kansas corporation November 24, 1998
TABLE OF CONTENTS Page ARTICLE I SALE AND PURCHASE OF SELLER'S ASSETS . . . . . . . . . . . . . . . 1 1.1 Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . 1 (a) Receivables . . . . . . . . . . . . . . . . . . . . . . . . 2 (b) Hardware. . . . . . . . . . . . . . . . . . . . . . . . . . 2 (c) Acquired Software . . . . . . . . . . . . . . . . . . . . . 2 (d) Third Party Software. . . . . . . . . . . . . . . . . . . . 2 (e) Tangible Personal Property. . . . . . . . . . . . . . . . . 2 (f) Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . 2 (g) Customer Contracts. . . . . . . . . . . . . . . . . . . . . 2 (h) Contracts and Other Agreements Relating to the Business . . 2 (i) Books, Records, Lists and Other Data. . . . . . . . . . . . 2 (j) Licenses, Permits . . . . . . . . . . . . . . . . . . . . . 3 (k) Prepayments . . . . . . . . . . . . . . . . . . . . . . . . 3 (l) Marks and Names . . . . . . . . . . . . . . . . . . . . . . 3 (m) Copyrights. . . . . . . . . . . . . . . . . . . . . . . . . 3 (n) Goodwill. . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.2 Licensed Assets. . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.3 Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . . . 3 (a) Retained Assets . . . . . . . . . . . . . . . . . . . . . . 3 (b) Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.4 Assumed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . 3 1.5 Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . . . 4 1.6 Title to the Purchased Assets; Documents of Conveyance . . . . . . 5 1.7 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1.8 Payment of Purchase Price. . . . . . . . . . . . . . . . . . . . . 5 1.9 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . 6 2.1 Organization, Qualification, and Corporate Power . . . . . . . . . 6 2.2 Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . . 6 2.3 Authorization of Transaction . . . . . . . . . . . . . . . . . . . 7 2.4 Title to Assets. . . . . . . . . . . . . . . . . . . . . . . . . . 7 2.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 7 2.6 Events Subsequent to August 31, 1998 . . . . . . . . . . . . . . . 7 2.7 Legal Compliance . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.8 Real Property and Personal Property. . . . . . . . . . . . . . . . 8 2.9 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . 8 2.10 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 2.11 Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . .10 2.12 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 2.13 Employee Benefits. . . . . . . . . . . . . . . . . . . . . . . . .11 2.14 Brokers' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . .11 2.15 Receipt of Disclosure Documents. . . . . . . . . . . . . . . . . .11 2.16 Ability to Evaluate Risks and Merits . . . . . . . . . . . . . . .12 2.17 Suitability of Investment; No Plan of Distribution . . . . . . . .12 2.18 Access to Information. . . . . . . . . . . . . . . . . . . . . . .12 2.19 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . . . . .12 3.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . .12 3.2 Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . .13 3.3 Authorization of Transaction . . . . . . . . . . . . . . . . . . .13 3.4 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 3.5 Brokers' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . .13 3.6 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 3.7 Registration . . . . . . . . . . . . . . . . . . . . . . . . . . .14 ARTICLE IV COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 4.1 Pre-Closing Covenants. . . . . . . . . . . . . . . . . . . . . . .14 (a) General . . . . . . . . . . . . . . . . . . . . . . . . . .14 (b) Notices and Consents. . . . . . . . . . . . . . . . . . . .14 (c) Financial Statements. . . . . . . . . . . . . . . . . . . .14 (d) Operation of Business . . . . . . . . . . . . . . . . . . .14 (e) Preservation of Business. . . . . . . . . . . . . . . . . .14 (f) Access. . . . . . . . . . . . . . . . . . . . . . . . . . .14 (g) Notice of Developments. . . . . . . . . . . . . . . . . . .15 4.2 Post-Closing Covenants . . . . . . . . . . . . . . . . . . . . . .15 (a) General . . . . . . . . . . . . . . . . . . . . . . . . . .15 (b) Litigation Support. . . . . . . . . . . . . . . . . . . . .15 (c) Transition. . . . . . . . . . . . . . . . . . . . . . . . .16 (d) Receivables . . . . . . . . . . . . . . . . . . . . . . . .16 (e) Confidentiality . . . . . . . . . . . . . . . . . . . . . .16 (f) Noncompetition and Nonsolicitation. . . . . . . . . . . . .17 (g) Prospectus. . . . . . . . . . . . . . . . . . . . . . . . .17 (h) Customer Contracts. . . . . . . . . . . . . . . . . . . . .17 (i) Equipment Inventory; Customer List for Retained Business. .17 ARTICLE V CONDITIONS TO OBLIGATION OF PARTIES TO CONSUMMATE CLOSING . . . .17 5.1 Conditions to Obligation of Purchaser. . . . . . . . . . . . . . .17 5.2 Conditions to Obligation of Seller . . . . . . . . . . . . . . . .19 ARTICLE VI REMEDIES FOR BREACH . . . . . . . . . . . . . . . . . . . . . . .20 6.1 Survival of Representations and Warranties . . . . . . . . . . . .20 6.2 Indemnification Provisions for Benefit of Purchaser. . . . . . . .21 6.3 Indemnification Provisions for Benefit of Seller . . . . . . . . .21 6.4 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 6.5 Basket . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 6.6 Maximum Liability. . . . . . . . . . . . . . . . . . . . . . . . .22 ARTICLE VII TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . .22 7.1 Termination of Agreement . . . . . . . . . . . . . . . . . . . . .22 7.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . .23 ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . .23 8.1 Press Releases and Public Announcements. . . . . . . . . . . . . .23 8.2 No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . .23 8.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . .23 8.4 Succession and Assignment. . . . . . . . . . . . . . . . . . . . .23 8.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . .23 8.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 8.7 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 8.8 Equitable Relief; Arbitration. . . . . . . . . . . . . . . . . . .24 8.9 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . .25 8.10 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . .25 8.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . .25 8.12 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . .25 8.13 Incorporation of Exhibits and Schedules. . . . . . . . . . . . . .26 8.14 Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . .26
EXHIBITS
Exhibit A-1 - Form of License Agreement (License - 1 Software) Exhibit A-2 - Form of License Agreement (License - 3 Software) Exhibit B - Form of Bill of Sale, Assignment and Assumption Agreement Exhibit C - Form of Escrow Agreement Exhibit D - Form of Noncompetition and Nonsolicitation Agreement Exhibit E - Form of Seller's Closing Certificate Exhibit F - Form of Employment Agreements Exhibit G - Form of Seller's Counsel Opinion Exhibit H - Form of Purchaser's Closing Certificate Exhibit I - Form of Purchaser's Counsel Opinion SCHEDULES Schedule 1 - The Business and the Retained Business Schedule 1.1(b) - Hardware Schedule 1.1(c) - Acquired Software Schedule 1.1(d) - Third Party Software Schedule 1.1(e) - Tangible Personal Property Schedule 1.1(f) - Real Property Schedule 1.1(g) - Customer Contracts Schedule 1.1(h) - Other Contracts Schedule 1.1(l) - Marks and Names Schedule 1.1(m) - Patents and Copyrights Schedule 1.2 - Licensed Assets Schedule 1.3(a) - Retained Assets Schedule 2.2 - Required Notices and Consents Schedule 2.4 - Permitted Encumbrances Schedule 2.8 - Real and Personal Property Schedule 2.9 - Intellectual Property Schedule 2.10 - Contracts Schedule 2.12 - Litigation Schedule 2.13 - Employee Benefits
ASSET PURCHASE AGREEMENT This ASSET PURCHASE AGREEMENT ("Agreement") is entered into as of November 24, 1998, by and between ROCKY MOUNTAIN INTERNET, INC., a Delaware corporation ("Purchaser"), and UNICOM COMMUNICATIONS, INC., a Kansas corporation (the "Seller"). Purchaser and Seller are each individually referred to as a "Party" and collectively referred to as the "Parties." RECITALS A. Seller is in the business in part of conducting the Business as defined in Schedule 1. B. Seller owns and leases certain assets and properties, real and personal, tangible and intangible, which are used by Seller in the conduct of the Business. C. Seller also is in the business of conducting the Retained Business as defined in Schedule 1. D. Seller owns and leases certain assets and properties, real and personal, tangible and intangible, which are used by Seller in the conduct of the Retained Business. E. Subject to the terms and conditions contained in this Agreement, Seller desires to transfer to Purchaser, and Purchaser desires to acquire from Seller, substantially all of Seller's assets that are used in the operation of the Business (the "Acquisition"), but not in the operation of the Retained Business. AGREEMENT NOW, THEREFORE, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained, the Parties agree as follows. ARTICLE I SALE AND PURCHASE OF SELLER'S ASSETS I.1 PURCHASED ASSETS. On the terms and subject to the conditions contained herein, at the Closing (as defined in Section 1.9 below) Seller shall sell to Purchaser, free and clear of all liens, claims, security interests, encumbrances or rights of others, except for the Permitted Encumbrances (as defined in Section 1.6 below), all of Seller's right, title and interest in and to the assets (the "Purchased Assets") used by Seller in the Business existing as of the date on which the transactions contemplated hereby are consummated (the "Closing Date"), and which are listed below: (a) RECEIVABLES. All accounts receivable, notes receivable and similar receivables accruing from the Business and existing as of the Closing Date and accruing after the Closing Date. (b) HARDWARE. All of the hardware listed on SCHEDULE 1.1(b), any related documentation or manuals, and Seller's rights under related warranties. (c) ACQUIRED SOFTWARE. All of the software listed on SCHEDULE 1.1(c) (the "Acquired Software"), including all inventories of computer program code for that software, any related documentation or manuals, and Seller's rights under all related warranties. (d) THIRD PARTY SOFTWARE. All third party software licensed by Seller and listed on SCHEDULE 1.1(d), including any related documentation and user materials, and Seller's rights under all related warranties (the "Third Party Software"). (e) TANGIBLE PERSONAL PROPERTY. The fixed assets listed on SCHEDULE 1.1(e), and all other tangible personal property listed on SCHEDULE 1.1(e). The tangible personal property included in the Purchased Assets is sold "as is, where is," without express or implied warranties of condition, merchantability, suitability for a particular purpose or otherwise. (f) LEASES. That portion of Seller's leasehold interest in the real property listed on SCHEDULE 1.1(f) (the "Real Property Leases") and used in the Business (which leasehold interest shall be assigned pursuant to a mutually acceptable Sublease and/or other documentation to be entered into by the Parties after the Closing Date) and all of Seller's leasehold interest in the hardware, fixed assets and other tangible personal property listed on SCHEDULE 1.1(f) (the "Personal Property Leases"). (g) CUSTOMER CONTRACTS. All contracts, agreements, licenses, permits, arrangements, permissions and other commitments with customers with respect to the Business listed on SCHEDULE 1.1(g) (the "Customer Contracts"). (h) CONTRACTS AND OTHER AGREEMENTS RELATING TO THE BUSINESS. All agreements, licenses, permits, personal property leases, permissions and other commitments and arrangements, oral or written, or the parts thereof, that relate only to the Business and not to the Retained Business and that are listed on SCHEDULE 1.1(h) (collectively with Customer Contracts, the "Acquired Contracts"). (i) BOOKS, RECORDS, LISTS AND OTHER DATA. Copies of all customer lists used directly in the Business and the related books, records, files, invoices, accounts, surveys, records, supplier lists, catalogs, price lists, marketing and advertising information, purchasing histories, profiles and materials, technical bulletins, books and records of account and other financial, customer and credit data, and all firmware, tapes and other materials used to store, record or produce such data, owned, leased or licensed by Seller and used directly in the Business. 2 (j) LICENSES, PERMITS. All applicable governmental licenses, permits, approvals and authorizations that relate to the operation of the Business (to the extent transferable). (k) PREPAYMENTS. All security, utility or similar deposits or prepaid expenses of Seller. (l) MARKS AND NAMES . The trademarks, service marks, and trade names (including registrations, licenses, and applications to register pertaining thereto) listed on SCHEDULE 1.1(l). (m) COPYRIGHTS. The copyrights (including registrations, licenses, and applications to register pertaining thereto), and other intellectual property rights, trade secrets, and other proprietary information, processes, and formulas necessary for the operation of, the Business and listed on SCHEDULE 1.1(m). (n) GOODWILL. All goodwill of the Business as a going concern associated with the Business including the trademarks, service marks, trade names and domain names set forth in SCHEDULES 1.2(l) AND 1.2(m) and excluding the goodwill associated with the Retained Business. I.2 LICENSED ASSETS. On the Closing Date and pursuant to the terms of the License Agreements in the forms of EXHIBITS A-1 AND A-2 attached hereto, Seller shall grant to Purchaser permanent, paid-up, royalty-free, non-exclusive licenses for the software listed on SCHEDULE 1.2 (the "Licensed Software") for the uses and subject to the limitations described on SCHEDULE 1.2. I.3 EXCLUDED ASSETS. The assets of Seller not expressly set forth in SECTION 1.1 (the "Excluded Assets") shall be retained by Seller, including without limitation the following: (a) RETAINED ASSETS. All assets of Seller used in or material to or necessary to the operation of the Retained Business, including without limitation the items listed on SCHEDULE 1.3(a). (b) CASH. Cash and cash equivalents held by Seller. I.4 ASSUMED LIABILITIES. At the Closing, Purchaser shall assume and shall thereafter pay, discharge and perform all of the obligations of Seller related to the Business arising after the Closing (the "Assumed Liabilities"), which consist of the following: (a) All obligations related to the Real Property Leases and Personal Property Leases arising after the Closing Date, PROVIDED THAT liabilities resulting from the obligation to make lease payments on the Personal Property Leases assumed hereunder shall not exceed, in the 3 aggregate, $230,447 from and after the Closing Date through the date of termination in effect for each lease on the date hereof. (b) All obligations related to the Acquired Contracts arising after the Closing Date. (c) All accounts payable relating to the Business and arising after the Closing Date. (d) Obligations related to the Meridian Phone System; Purchaser and Seller agree that, with respect to the Meridian phone system, Purchaser shall assume the rental cost under the existing lease and Seller shall agree to pay Purchaser at least $750 per month for twelve months for use of such phone system. For the remainder of the month in which the Closing Date occurs (the "Closing Month"), Seller shall immediately forward to Purchaser all invoices due with respect to the Business (but not with respect to the Retained Business), and Purchaser shall pay all invoices relating to the Assumed Liabilities when due. Within forty-five (45) days after the Closing Date, the Parties will jointly prepare a reconciliation of such payments and obligations, at which time, Seller shall reimburse Purchaser for its pro rata share of such payments and obligations based upon the number of days elapsed from the Closing Date to the end of the Closing Month. I.5 EXCLUDED LIABILITIES. Other than as set forth in Section 1.4, Purchaser shall not assume or be liable for, and Seller shall retain and remain responsible for, all of Seller's debts, liabilities and obligations of any nature whatsoever, whether accrued, absolute or contingent, whether known or unknown, whether due or to become due and whether related to the Purchased Assets or otherwise, including without limitation: (a) Income and capital gains taxes incurred as a result of the transactions contemplated hereby. (b) All accounts payable of the Business arising in periods on or before the Closing Date notwithstanding when any billing statement therefor is received. (c) All obligations with respect to employees of Seller who are subsequently hired by Purchaser arising on or prior to the Closing Date, including, without limitation, discharge of all wages and salaries of the employees and all other costs and expenses related to their employment, including any taxes, accrued holiday pay, accrued bonus, and contributions to retirement benefit plans or other sums payable in respect of service prior to such date. I.6 TITLE TO THE PURCHASED ASSETS; DOCUMENTS OF CONVEYANCE. At the Closing, Seller shall convey all of its right, title and interest in and to the Purchased Assets to Purchaser, free and clear of all liabilities, obligations, liens, encumbrances and rights of others, excepting only the liens, claims, encumbrances or rights of others set forth on SCHEDULE 2.4 attached hereto 4 (the "Permitted Encumbrances"). Title to the Purchased Assets shall be conveyed by Seller to the Purchaser pursuant to a Bill of Sale, Assignment and Assumption Agreement, in the form of EXHIBIT B attached hereto, and by such other documents as are reasonably acceptable to counsel for Purchaser in accordance with the terms hereof. Each of the parties hereto agrees to use its best efforts to take or cause to be taken all action, and to do, or cause to be done, all things reasonably necessary, proper or advisable, whether before or after Closing, to ensure that the transfer of title to the Purchased Assets to Purchaser occurs as contemplated hereunder. I.7 PURCHASE PRICE. The purchase price for the Purchased Assets shall be $1,700,000 (the "Purchase Price"). I.8 PAYMENT OF PURCHASE PRICE. (a) The Purchase Price shall be paid in the form of shares (the "Purchaser Shares") of Purchaser's common stock, par value $.001 per share (the "Purchaser Common Stock"), which shares shall be valued at the average of the closing trading prices of Purchaser's Common Stock on the Nasdaq SmallCap Market for the five (5) trading days immediately prior to the Closing. The Purchaser Shares issued shall be registered when issued under the Securities Act of 1933, as amended (the "Securities Act"). (b) The Purchase Price shall be paid as follows: (i) 80% of the Purchaser Shares shall be issued at Closing; (ii) 10% of the Purchaser Shares shall be issued on the date which is thirty (30) days after the Closing Date (but in no event prior to January 3, 1999); and (iii) 10% of the Purchaser Shares shall be deposited (the "Escrow Deposit") with a mutually acceptable escrow agent (the "Escrow Agent") pursuant to the terms of an escrow agreement in the form of EXHIBIT C attached hereto (the "Escrow Agreement") by and among Purchaser, the Company and the Escrow Agent. The Escrow Deposit shall be distributed as follows: Within five (5) business days after the date which is twelve (12) months after the Closing Date, Purchaser shall instruct the Escrow Agent to disburse to the Seller from the Escrow Deposit that number of Purchaser Shares remaining after reducing such number of shares by the aggregate amount of any and all damages awarded to Purchaser as of such date under a final judgment of a court of law or arbitral body for Purchaser Losses pursuant to Article VI hereto. I.9 CLOSING. The consummation of the transactions contemplated hereby (the "Closing") shall occur as soon as practicable after the date hereof, but in no event later than the date which is ten (10) days after the satisfaction or waiver of all of the conditions precedent set forth herein, as determined by Purchaser, at the offices of Purchaser's counsel, or by facsimile should the Parties so agree. 5 ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER To induce Purchaser to enter into this Agreement and consummate this transaction, Seller represents and warrants to Purchaser that the statements contained in this Article II are true, correct and complete as of the date of this Agreement and will be true, correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article II). As used in this Agreement, the term "Material Adverse Effect" means a material adverse effect on the operations, properties, assets, condition (financial or other) or results of operations of the Business. II.1 ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. The Seller is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation. Seller is duly authorized to conduct business and is in good standing under the laws of each jurisdiction where such qualification is required other than where the failure to be duly qualified would not have a Material Adverse Effect. Seller has full power and authority and all licenses, permits, and authorizations necessary to carry on the businesses in which it is engaged and to own and use the properties owned and used by it other than where the failure to have such would not have a Material Adverse Effect. Seller has provided to Purchaser (i) true and correct copies of the Seller's Articles of Incorporation and all amendments thereto; (ii) true and correct copies of the Seller's bylaws and all amendments thereto; and (ii) a list of the current directors and officers of Seller. Seller is not in default under or in violation of any provision of its Articles of Incorporation or bylaws. II.2 NONCONTRAVENTION. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Seller is subject or any provision of the Articles of Incorporation or bylaws of Seller or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which Seller is a party or by which it is bound or to which any of its assets is subject (or result in the imposition of any security interest upon any of its assets), except where such action would not have a Material Adverse Effect. Except as set forth on SCHEDULE 2.2, Seller need not give any notice to, make any filing with, or obtain any authorization, consent or approval of any governmental agency or third party in order for the Parties to consummate the transactions contemplated by this Agreement including, but not limited to, the assignment of the Acquired Contracts. II.3 AUTHORIZATION OF TRANSACTION. Seller has the full power and authority to execute and deliver this Agreement and to perform the obligations hereunder. This Agreement constitutes the valid and legally binding obligation of Seller, enforceable in accordance with its terms and conditions. This Agreement has been approved by the Board of Directors and the shareholders of the Seller, and no other corporate proceedings on the part of the Seller are 6 necessary to authorize the execution and delivery of this Agreement or the consummation by the Seller of the transactions contemplated hereby. Seller believes it has provided adequate information to its shareholders on which the shareholders can make an informed decision regarding the approval of the transactions contemplated hereby. II.4 TITLE TO ASSETS. Seller has good and marketable title to, or a valid leasehold interest in, the Purchased Assets and the Licensed Software, free and clear of all liens, claims, security interests, encumbrances or rights of others, except for the Permitted Encumbrances listed on SCHEDULE 2.4. II.5 FINANCIAL STATEMENTS. Seller has provided or shall provide prior to Closing copies of the following financial statements relating to the Business (collectively the "Financial Statements"): (i) unaudited financial statements and a related report with respect to the fiscal year of Seller ended December 31, 1997 and for the period ended August 31, 1998 (prorated financial statement for the Business); (ii) accounts payables and accounts receivables current within two (2) business days of the date hereof; and (iii) the balance sheet for the Business for the period ended October 31, 1998 (the "Ending Balance Sheet"). The Ending Balance Sheet has been prepared in accordance with generally accepted accounting principles, consistently applied (except as may be indicated thereon or in the notes thereto) and fairly presents the financial condition of the Seller's Business as of the date thereof and the results of its operations and changes in financial condition for the periods then ended, subject, in the case of unaudited interim financial statements, to normal year-end and audit adjustments and any other adjustments described therein; the other material comprising the Financial Statements have been prepared on a comprehensive basis of accounting other than generally accepted accounting principles. II.6 EVENTS SUBSEQUENT TO AUGUST 31, 1998. Since August 31, 1998: (a) Seller has conducted its Business in the ordinary course and has not undergone any change in the business, financial condition, operations, results of operations, or future prospects of Seller that would reasonably be expected to result in a Material Adverse Effect. (b) Seller has not entered into any agreement, contract, lease, or license (or series of related agreements, contracts, leases, and licenses) related to the Business involving more than $10,000 or outside the ordinary course of business; (c) Seller has not delayed or postponed the payment of material accounts payable and other material liabilities related to the Business outside the ordinary course of business; and (d) Seller has not canceled, compromised, waived, or released any material right or claim (or series of related material rights and claims) related to the Business; II.7 LEGAL COMPLIANCE. Seller, its predecessors and affiliates, have complied with all applicable laws (including rules, regulations, codes, plans, injunctions, judgments, orders, 7 decrees, rulings, and charges thereunder) of federal, state or local governments (and all agencies thereto) applicable to the Business, and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or notice has been filed or commenced against Seller alleging any failure so to comply other than where the failure to comply would not have a Material Adverse Effect. II.8 REAL PROPERTY AND PERSONAL PROPERTY. SCHEDULE 2.8 sets forth a list containing a description of all interests in Real Property (including, without limitation, leasehold interests) and Personal Property owned or leased by Seller and necessary to the conduct of the Business. Seller has good and marketable title to (or leasehold interests in) and rightful possession of all of its Real and Personal Property, tangible and intangible, necessary to the conduct of the Business, including that reflected in the Ending Balance Sheet and all assets acquired by Seller since the date of the Ending Balance Sheet. Except for the Permitted Encumbrances, the Real and Personal Property necessary to the conduct of the Business is owned by Seller free and clear of any liens, encumbrances, security interests, claims or rights of another (including any rights of a subsidiary or other affiliate). The tangible personal property of Seller is in good operating condition and repair, normal wear and tear excepted, but is sold "as is, where is," without express or implied warranties of condition, merchantability, suitability for a particular purpose or otherwise. The Purchased Assets and the Licensed Assets reflected in the Ending Balance Sheet, and any fully-depreciated assets, acquired since the date of the Ending Balance Sheet, constitute all the assets of Seller with respect to the Business. The operation of the Business of Seller in the manner in which they are now operated does not violate any material rules, regulations, or laws. II.9 INTELLECTUAL PROPERTY. (a) To the best of Seller's knowledge, Seller owns or has the rights to use pursuant to license, sublicense, agreement, or permission all intellectual property necessary for the operation of the Business of Seller as presently conducted. To the best of Seller's knowledge, each item of intellectual property owned or used by Seller immediately prior to the Closing hereunder that is a Purchased Asset will be owned or available for use by Purchaser on identical terms and conditions immediately subsequent to the Closing hereunder. Seller has taken all necessary actions to maintain and protect each item of intellectual property that it owns or uses in connection with the Business. (b) In the conduct of the Business, to the best of Seller's knowledge, Seller has not interfered with, infringed upon, misappropriated, or otherwise come into conflict with any material intellectual property rights of third parties, and Seller, directors and officers (and employees with responsibility for intellectual property matters) of Seller have not received any charge, complaint, claim, demand, or notice alleging any such interference, infringement, misappropriation, or violation (including any claim that Seller must license or refrain from using any intellectual property rights of any third party) asserting such infringement, misappropriation or conflict. To the knowledge of the Seller, directors and officers (and employees with responsibility for intellectual property matters) of Seller, no third party has interfered with, 8 infringed upon, misappropriated, or otherwise come into conflict with any intellectual property rights of Seller. (c) SCHEDULE 2.9 identifies each trade name or unregistered trademark used by Seller in connection with its Business. With respect to each item of intellectual property required to be identified on SCHEDULE 2.9, except as indicated on such SCHEDULE 2.9: (i) Seller possesses all right, title, and interest in and to the item, free and clear of any security interest, license, or other restriction; (ii) the item is not subject to any outstanding injunction, judgment, order, decree, ruling, or charge; (iii) no action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand is pending or, to the knowledge of the Seller, directors and officers (and employees with responsibility for intellectual property matters) of Seller, is threatened which challenges the legality, validity, enforceability, use, or ownership of the item; and (iv) Seller has not agreed to indemnify any person for or against any interference, infringement, misappropriation, or other conflict with respect to the item. (d) To the best of Seller's knowledge, SCHEDULE 2.9 identifies each item of intellectual property that any third party owns and that Seller uses in the conduct of the Business pursuant to license, sublicense, agreement, or permission. To the best of Seller's knowledge, Seller has delivered to Purchaser true, correct and complete copies of all such licenses, sublicenses, agreements, and permissions (as amended to date). With respect to each item of intellectual property required to be identified on SCHEDULE 2.9, to the best of Seller's knowledge and except as set forth on such Schedule 2.9: (i) the license, sublicense, agreement, or permission covering the item is legal, valid, binding, enforceable, and in full force and effect; (ii) the license, sublicense, agreement, or permission will continue to be legal, valid, binding, enforceable, and in full force and effect on identical terms following the consummation of the transactions contemplated hereby; (iii) no party to the license, sublicense, agreement, or permission is in breach or default, and no event has occurred which with notice or lapse of time would constitute a breach or default or permit termination, modification, or acceleration thereunder; (iv) no party to the license, sublicense, agreement, or permission has repudiated any provision thereof; 9 (v) with respect to each sublicense, the representations and warranties set forth in subsections (i) through (iv) above are true and correct with respect to the underlying license; (vi) the underlying item of intellectual property is not subject to any outstanding injunction, judgment, order, decree, ruling, or charge; (vii) no action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand is pending or, to the knowledge of the Seller, directors and officers (and employees with responsibility for intellectual property matters) of Seller, is threatened which challenges the legality, validity, or enforceability of the underlying item of intellectual property; and (viii) Seller has not granted any sublicense or similar right with respect to the license, sublicense, agreement, or permission. (e) SCHEDULE 2.9 identifies each domain name, dedicated Access customer IP block, trade name or unregistered trademark used by Seller in connection with the Business. II.10 CONTRACTS. SCHEDULE 1.1(g) is a complete list of all of Seller's customer contracts that relate to the Business. The Acquired Contracts set forth in SCHEDULE 1.1(h) comprise all of the material contracts of Seller related to the Business. Except as disclosed on SCHEDULE 2.10: (a) Seller has fulfilled all material obligations required to be performed by it prior to the date hereof with respect to each of the Acquired Contracts; and (b) To Seller's knowledge, no other contracting party to an Acquired Contract is in breach thereof. II.11 ACCOUNTS RECEIVABLE. The accounts receivable of the Business (i) have arisen in the ordinary course of business of Seller; (ii) represent bona fide payment obligations of the applicable account debtors; (iii) subject only to reserves for bad debts set forth on the Financial Statements, which reserves have been computed in a manner consistent with past practice and subject to customer trade discounts consistent with past practice, have been collected or will be collected in the ordinary course of business of Seller in the aggregate recorded amounts thereof in accordance with their terms; and (iv) they are not subject to any recoupments, set-offs or counterclaims, except as allowed in clause (iii). II.12 LITIGATION. Other than as set forth on SCHEDULE 2.12, in relation to the Business there is no material outstanding injunction, judgment, order, decree, ruling, or charge, and no pending or, to the knowledge of Seller, threatened, adverse material claim, dispute, suit, proceeding, hearing or investigation of, in, or before any court or quasi-judicial or administrative agency of any federal, state or local jurisdiction or before any arbitrator. 10 II.13 EMPLOYEE BENEFITS. SCHEDULE 2.13 identifies the material employee benefits and all employee benefit plans to which the Business's employees are entitled. II.14 BROKERS' FEES. Other than its fee payable to Davids & Associates, Seller has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement. II.15 RECEIPT OF DISCLOSURE DOCUMENTS. Seller has received and carefully reviewed, and understands the information contained in, the Disclosure Documents identified below (including the risk factors contained therein) and all other documents Seller has requested from Purchaser. In evaluating the suitability of the Acquisition and the resulting acquisition of the Purchaser Shares and all other rights, whether contingent or fixed, to receive Purchaser Shares (collectively the "Securities") (the Acquisition and resulting acquisition of the Securities hereinafter referred to as the "investment in the Securities"), Seller has not relied upon any representations or other information (whether oral or written) from Purchaser, its officers, directors, or employees or from any other person other than as set forth herein, in the Disclosure Documents and in other documents requested by Seller from Purchaser. The "Disclosure Documents" consist of the following: (i) Purchaser's Annual Report on Form 10-KSB for the year ended December 31, 1997, (ii) Purchaser's Proxy Statement for its annual meeting held on March 12, 1998, (iii) Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998, June 30, 1998 and September 30, 1998, and Amendment to the Quarterly Report on Form 10-QSB/A-1 for the quarter ended March 31, 1998, (iv) the Registration Statement on Form S-1 dated November __, 1998, File No. 333-52731, with respect to the Purchaser Shares to be issued pursuant to the terms of this Agreement (the "Registration Statement"), including the prospectus contained therein (the "Prospectus"), (v) Current Reports on Form 8-K, dated June 5, 1998 (disclosing the acquisition of Infohiway, Inc., and the signing of an agreement and plan of merger with Internet Communications Corporation ("ICC")) and dated June 30, 1998 (disclosing the acquisition of Application Methods, Inc.), and Amendments No. 1 and No. 2 to the Current Report on Form 8-K/A dated June 5, 1998; and (vi) the press releases issued by ICC and Purchaser on or about October 14, 1998 with respect to the claims asserted by ICC. II.16 ABILITY TO EVALUATE RISKS AND MERITS. Seller has such knowledge and experience in financial and business matters that Seller is capable of evaluating the merits and risks of an investment in the Securities and has the capacity to protect Seller's own interests in connection with an investment in the Securities and has the net worth to undertake such risks. II.17 SUITABILITY OF INVESTMENT; NO PLAN OF DISTRIBUTION. Seller has obtained, to the extent Seller deems necessary, its own professional advice with respect to the risks inherent in the investment in the Securities and the suitability of an investment in the Securities in light of Seller's financial condition and investment needs. Seller does not intend to engage in any 11 transfer of the Purchaser Shares that is set forth in Rule 145(a) promulgated under the Securities Act. II.18 ACCESS TO INFORMATION. Seller has been given access to full and complete information regarding Purchaser and has utilized such access to Seller's satisfaction, for the purposes of asking questions and receiving answers concerning the terms and conditions of the Acquisition (including the offering of the Securities in connection with the Acquisition) or verifying the information included in the Disclosure Documents and obtaining any of the documents described in the Disclosure Documents. Seller has been given the opportunity to ask questions of, and to receive answers from, representatives of Purchaser to obtain information concerning the Acquisition and to receive any additional information, to the extent reasonably available, necessary to verify the accuracy of information provided in the Disclosure Documents. II.19 EXPENSES. Seller acknowledges that all costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby are the sole responsibility of each Party and Seller will pay its respective costs and expenses; provided, however that Purchaser and Seller shall each be responsible for one-half of the Escrow Agent's fees. ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER To induce Seller to enter into this Agreement and consummate this transaction, Purchaser represents and warrants to Seller that the statements contained in this Article III are true, correct and complete as of the date of this Agreement and will be true, correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article III). III.1 ORGANIZATION. Purchaser is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation. Purchaser is duly authorized to conduct business and is in good standing under the laws of each jurisdiction where such qualification is required other than where the failure to be duly qualified would not have a material adverse effect on Purchaser. Purchaser has full power and authority and all licenses, permits and authorizations necessary to carry on the businesses in which it is engaged and to own and use the properties owned and used by it other than where the failure to have such would not have a material adverse effect on Purchaser, as the case may be. III.2 NONCONTRAVENTION. Neither the execution nor the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Purchaser is subject or any provision of the Articles of Incorporation or bylaws of Purchaser or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, 12 instrument, or other arrangement to which Purchaser is a party or by which it is bound or to which any of its assets is subject (or result in the imposition of any security interest upon any of its assets), except where such action would not have a material adverse effect on Purchaser. Except to comply with federal and state securities laws, Purchaser need not give any notice to, make any filing with, or obtain any authorization, consent or approval of any governmental agency or third party in order for the Parties to consummate the transaction contemplated by this Agreement. III.3 AUTHORIZATION OF TRANSACTION. Purchaser has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of Purchaser, enforceable in accordance with its terms and conditions. No vote is required by the shareholders of Purchaser for the consummation of the transactions contemplated by this Agreement. The Purchaser Shares issuable pursuant to the terms hereof have been, or will be prior to the Closing Date, duly authorized and reserved for issuance. III.4 DISCLOSURE. As of the date thereof, the Registration Statement did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. III.5 BROKERS' FEES. Purchaser does not have any liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which Seller could become liable or obligated. III.6 EXPENSES. Purchaser acknowledges that all costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby are the sole responsibility of each Party and Purchaser will pay its respective costs and expenses; provided, however that Purchaser and Seller shall each be responsible for one-half of the Escrow Agent's fees. III.7 REGISTRATION. The Purchaser Shares shall be registered under the Securities Act when issued pursuant to the Registration Statement. Other than state "Blue Sky" laws compliance, no further registration or qualification is necessary for the issuance to Seller, and the Seller's shares shall be issued without any restrictive legends of any kind; Seller acknowledges the terms of Subsection 4.2(g) below. ARTICLE IV COVENANTS IV.1 PRE-CLOSING COVENANTS. The Parties agree as follows with respect to the period between the execution of this Agreement and the Closing. (a) GENERAL. Each of the Parties will use his or its reasonable best efforts to take all action and to do all things necessary, proper, or advisable in order to consummate and 13 make effective the transactions contemplated by this Agreement (including satisfaction, but not waiver, of the closing conditions set forth in Article V below). (b) NOTICES AND CONSENTS. Seller will give any notices to third parties, and Parties will use their best efforts to obtain any third party consents, that are required or that Purchaser may reasonably request in connection with this transaction. Each of the Parties will give any notices to, make any filings with, and use its best efforts to obtain any authorizations, consents, and approvals of governments and governmental agencies. (c) FINANCIAL STATEMENTS. The Seller will obtain and deliver to Purchaser prior to the date which is three (3) days prior to the Closing Date unaudited financial statements of Seller for the month-end preceding the Closing Date. (d) OPERATION OF BUSINESS. After the date hereof, with respect to the Business, Seller will not engage in any practice, take any action, or enter into any transaction outside the ordinary course of business without prior written consent from Purchaser. Without limiting the generality of the foregoing, Seller will not (i)sell, dispose or otherwise transfer any of the assets related to the Business, including without limitation waive any material rights or claims, or impose any security interest upon any of its assets, (ii) commit to doing any of the foregoing; or (ii) otherwise engage in any practice, take any action, or enter into any transaction of the sort described above or that would cause any condition, representation or warranty to be breached or to become untrue. (e) PRESERVATION OF BUSINESS. Seller will keep the Business, its properties and related goodwill substantially intact, including its present operations, physical facilities, working conditions, and relationships with lessors, licensors, suppliers, customers, and employees. (f) ACCESS. Seller will permit representatives of Purchaser to have reasonable access (including providing introductions, where necessary) to all premises, properties, personnel, lessors, licensors, vendors, supplies, creditors, books, records (including tax records), contracts, and documents of or pertaining to Seller. Seller will cause its independent accountants to make available their work papers with respect to Seller and to otherwise provide such assistance as is reasonably requested by Purchaser. (g) NOTICE OF DEVELOPMENTS. Seller will give prompt written notice to Purchaser of any adverse development causing a breach or a potential breach of any of the representations and warranties in Article II above. Purchaser shall give prompt written notice to Seller of any adverse development causing a breach or a potential breach of any of the representations and warranties in Article III above, and of any event that could reasonably have a material adverse effect on the financial condition of Purchaser or the market for its shares of Common Stock. No disclosure or discovery by a party hereto shall be deemed to amend or supplement any Schedule hereto or to prevent or cure any misrepresentation, breach of warranty, or breach of covenant. 14 (h) EXCLUSIVITY. Seller will not (i) solicit, initiate, or encourage the submission of any proposal or offer from any person relating to the acquisition of any capital stock or other voting securities, or any substantial portion of the assets, of Seller (including, any acquisition structured as a merger, consolidation, or share exchange) or (ii) participate in any discussions or negotiations regarding, furnish any information with respect to, assist or participate in, or facilitate in any other manner any effort or attempt by any person to do or seek any of the foregoing. Seller will notify Purchaser immediately if any person makes any proposal, offer, inquiry, or contact with respect to any of the foregoing. Seller acknowledges that the restriction set forth in this Section 4.1(h) is material to Purchaser and, that, if breached, Purchaser shall be entitled to equitable relief. IV.2 POST-CLOSING COVENANTS. The Parties agree as follows with respect to the period following the Closing. (a) GENERAL. In case at any time after the Closing any further action is necessary or desirable to carry out the purposes of this Agreement, each of the Parties will take such further action (including, the execution and delivery of such further instruments and documents) as any other Party reasonably may request, all at the sole cost and expense of the requesting Party (unless the requesting Party is entitled to indemnification therefor under Article VI below). Seller agrees that from and after Closing for a period of one year, upon a reasonable request by Purchaser, Seller will promptly supply copies of any documents, books, records (including tax records), agreements, and financial data of any sort relating, to the Business. (b) LITIGATION SUPPORT. In the event and for so long as any Party actively is contesting or defending against any action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand in connection with (i) any transaction contemplated under this Agreement or (ii) any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction accruing on or prior to the Closing Date involving Seller, each of the other Parties will cooperate with it and its counsel in the contest or defense, make available their personnel, and provide such testimony and access to their books and records as shall be necessary in connection with the contest or defense, all at the sole cost and expense of the contesting or defending Party (unless the contesting or defending Party is entitled to indemnification therefor under Article VI below). (c) TRANSITION. Seller will not take any action that is designed, intended or could reasonably be expected to have the effect of discouraging any lessor, licensor, customer, supplier, or other business associate of Seller from maintaining the same business relationships with Seller after Closing as it maintained with Seller prior to the Closing. Seller will refer all customer inquiries relating to the Business of Seller to Purchaser from and after the Closing. (d) RECEIVABLES. Purchaser and Seller each agree to cooperate in the collection of accounts receivable of the other party. Purchaser will attempt to collect the accounts receivable of Seller in a manner consistent with Seller's reasonable commercial practices prior to the Closing Date (but without resort to litigation or the use of collection 15 agencies or similar efforts). If Purchaser receives funds attributable to an account receivable of Seller, or Seller receives funds attributable to an account receivable of Purchaser (including receivables arising after the Closing Date which are attributable to the Business), the party receiving such funds shall promptly convey them to the other party. (e) CONFIDENTIALITY. The parties will treat and hold as confidential all of the confidential information, refrain from using any of the confidential information of the other party except as provided in this Agreement, and deliver promptly to the other party, or destroy, at the request and option of that party, all tangible embodiments (and all copies) of the confidential information which are in his or its possession. In the event that either party is requested or required (by oral question or request for information or documents in any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar process) to disclose any confidential information, such party will notify the other party promptly of the request or requirement so that the party subject to the request or requirement may seek an appropriate protective order or waive compliance with the provisions of this Section 4.2(e). If, in the absence of a protective order or the receipt of a waiver hereunder, a party hereto is, on the advice of counsel, compelled to disclose any confidential information to any tribunal or else stand liable for contempt, such party may disclose the confidential information to the tribunal; PROVIDED, HOWEVER, that the party subject to such request or requirement shall use its best efforts to obtain, at the request of such party, an order or other assurance that confidential treatment will be accorded to such portion of the confidential information required to be disclosed as such Party shall designate. The foregoing provisions shall not apply to any confidential information which is generally available to the public immediately prior to the time of disclosure. Seller acknowledges and understands that confidential information, including the existence of this Agreement before dissemination to the public, may include "material, non-public information," as the term is understood and interpreted under federal and state securities laws and rules. Seller further acknowledges and understands that purchasing or selling securities while in possession of material non-public information may subject the purchaser, seller and/or person(s) who have provided such information to liability under such laws, including potential criminal liability. Seller hereby agrees that all confidential information, whether furnished before or after the date of this Agreement, shall be treated confidentially. (f) NONCOMPETITION AND NONSOLICITATION. Seller and Purchaser agree to comply with the terms and conditions set forth in the Noncompetition and Nonsolicitation Agreement, the form of which is attached hereto as EXHIBIT D. (g) PROSPECTUS. As long as Seller holds Purchaser Shares, a current prospectus regarding the common stock of Purchaser shall be available for use by Seller for one (1) year after the Closing Date; provided such prospectus may not be available at times when Purchaser has to update the disclosure pursuant to a supplement or post-effective amendment; provided further that any such period of unavailability shall not exceed thirty (30) days and the total of such periods shall not exceed ninety (90) days in the one year following the Closing Date (and 16 any excess beyond ninety (90) days shall automatically extend such one-year period by an equivalent number of days). (h) CUSTOMER CONTRACTS. Purchaser and Seller shall each perform the obligations under the Customer Contracts reasonably attributable to the Business or the Retained Business, respectively. (i) EQUIPMENT INVENTORY; CUSTOMER LIST FOR RETAINED BUSINESS. Within ten (10) business days after the Closing Date, Seller shall deliver to Purchaser a comprehensive inventory of all Personal Property included in the Purchased Assets. Within thirty (30) days after the Closing Date, Seller shall deliver to Purchaser a comprehensive list of Seller's customers with respect to the Retained Business (the "Retained Business Customers"). ARTICLE V CONDITIONS TO OBLIGATION OF PARTIES TO CONSUMMATE CLOSING V.1 CONDITIONS TO OBLIGATION OF PURCHASER. The obligation of Purchaser to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions: (a) this Agreement and the Acquisition shall have received the requisite Seller approval; (b) Seller shall have procured all third party consents as set forth on SCHEDULE 2.2; (c) Seller shall have procured all necessary governmental consents, and Purchaser shall have obtained a valid effectiveness order from the Securities and Exchange Commission and shall have obtained any applicable state securities law approvals; (d) all of the representations and warranties set forth in Articles II above shall be true and correct in all respects at and as of the Closing Date and Purchaser shall have received a certificate of Seller in the form of EXHIBIT E hereto to that effect; (e) Seller shall have performed and complied with all of its covenants hereunder in all material respects through the Closing; (f) no action, suit, or proceeding shall be pending or threatened before any court or quasi-judicial or administrative agency of any federal, state, or local jurisdiction or before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would (i) prevent consummation of any of the transactions contemplated by this Agreement, (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation or (iii) affect adversely the right of Purchaser to own the Purchased Assets, (and no such injunction, judgment, order, decree, ruling, or charge shall be in effect); 17 (g) Seller shall deliver to Purchaser, a Certificate of the Secretary of Seller dated as of Closing certifying that the following are true, correct and complete copies and the originals thereof: Articles of Incorporation of Seller, as amended, and certified by the Kansas Secretary of State, bylaws (as amended to date), resolutions of the board of directors recommending approval of the Acquisition; (h) Seller shall have delivered to Purchaser a certificate to the effect that each of the conditions specified above in this Section 5.1 have been satisfied in all respects, in the form attached hereto as EXHIBIT E; (i) Seller shall have delivered to Purchaser a Noncompetition and Nonsolicitation Agreement by and between it and Purchaser, substantially in the form attached hereto as EXHIBIT D; (j) Grant Rogers and Gerald Combs shall have executed and delivered to Purchaser the Employment Agreements, substantially in the form of EXHIBIT F attached hereto; (k) Purchaser shall have received an opinion from Seller's counsel substantially in the form of EXHIBIT G attached hereto; (l) Seller shall have at the Closing Date annualized revenues (measured retrospectively based on the last full month immediately preceding the Closing Date) of at least $1,100,000, of which $1,000,000 shall be from recurring sources provided that if Seller does not have such revenue levels, Purchaser shall have the right to acquire the Purchased Assets at an adjusted Purchase Price based on agreed upon multiple of revenues. Such revenue shall be generated from: (i) at least 146 content hosting customers generating $18,000 monthly recurring revenue; (ii) at least 100 dedicated access service customers generating $30,000 in monthly recurring revenue; (iii) at least 1,700 dial-up access customers generating $32,000 in monthly recurring revenue; and (iv) guaranteed monthly recurring revenue of at least $5,000 from Seller. (m) Purchaser shall have received the Financial Statements; (n) all actions to be taken by Seller in connection with consummation of the transactions contemplated hereby and all certificates, instruments, and other documents required 18 to effect the transactions contemplated hereby will be reasonably satisfactory in form and substance to Purchaser; and (o) there shall have been no Material Adverse Change since August 31, 1998. Purchaser may waive any condition specified in this Section 5.1 only if it executes a writing so stating, at or prior to the Closing. V.2 CONDITIONS TO OBLIGATION OF SELLER. The obligation of Seller to consummate the transactions to be performed by them in connection with the Closing is subject to satisfaction of the following conditions: (a) all of the representations and warranties set forth in Article III above shall be true and correct in all respects at and as of the Closing Date and Seller shall have received a certificate of Purchaser in the form of EXHIBIT H hereto to that effect; (b) Seller shall have procured all necessary governmental consents and Purchaser shall have obtained a valid effectiveness order from the Securities and Exchange Commission and shall have obtained any applicable state securities law approvals; (c) Purchaser shall have performed and complied with all of its covenants hereunder in all material respects through the Closing; (d) no action, suit, or proceeding shall be pending before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction or before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would (i) prevent consummation of any of the transactions contemplated by this Agreement, or (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation (and no such injunction, judgment, order, decree, ruling, or charge shall be in effect); (e) Purchaser shall deliver to Seller, a Certificate of the Secretary of Purchaser dated as of Closing and certifying the resolutions of the board of directors approving the Acquisition and all transactions contemplated by this Agreement; (f) Purchaser shall have delivered to Seller the Non-Compete Agreement by and between Purchaser and Seller, substantially in the form attached hereto as EXHIBIT D; (g) Purchaser shall have delivered to Seller the Non-Solicitation Agreement by and between Purchaser and Seller, substantially in the form attached hereto as EXHIBIT C; (h) Seller shall have received an opinion from Purchaser's counsel substantially in the form of EXHIBIT I attached hereto. 19 (i) the shelf registration statement of Purchaser with respect to the resale by Seller of the Purchaser Shares shall continue to be effective under the Securities Act with no stop order pending or threatened; (j) all actions to be taken by Purchaser in connection with consummation of the transactions contemplated hereby and all certificates, instruments, and other documents required to effect the transactions contemplated hereby will be satisfactory in form and substance to Seller; and (k) there shall have been no event which could reasonably have a material adverse effect on the financial condition of Purchaser from the date hereof until the Closing Date. Seller may waive any condition specified in this Section 5.2 only if it executes a writing so stating, at or prior to the Closing. ARTICLE VI REMEDIES FOR BREACH VI.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the representations and warranties of the Parties contained in this Agreement shall survive the Closing hereunder and continue in full force and effect until one (1) year from the date of Closing. VI.2 INDEMNIFICATION PROVISIONS FOR BENEFIT OF PURCHASER. Seller shall indemnify, defend and hold harmless Purchaser, the officers, directors, employees, partners, members, shareholders, of Purchaser, affiliates of Purchaser (and their officers, directors, employees, members, partners and shareholders), and agents (collectively, the "Purchaser Indemnified Parties") from and against any action, loss, liability, damage, claim, fine, penalty, lien or expense, including legal costs, attorneys' fees, and expenses, (collectively, "Purchaser Loss") to the extent the same arises out of (i) any breach by Seller of any representation, warranty, agreement, or covenant made by Seller in Article II herein, (ii) Seller's failure to comply with any bulk sales or similar law, (iii) any tax, including use or sales tax, for which Seller or any of its shareholders, directors or officers is or may be liable in respect of the conduct of the Business prior to the Closing, (iv) any claim arising out of or in connection with the conduct of the Business prior to the Closing Date alleging that all, or any portion of, the Business infringes any intellectual property right or other interest of any person or entity, (v) any obligation of Seller that is an Excluded Liability, whether arising before or after the Closing and (vi) any claim by any shareholder of Seller with respect to the transactions contemplated hereby. Each Purchaser Indemnified Party will give prompt notice to Seller of any claim or condition to which the foregoing indemnification covenant relates. At its election, Seller may control the defense of such claim, at its expense, but shall not settle any such claim without the consent of the respective Purchaser Indemnified Party or Parties, which consent will not be unreasonably withheld. 20 VI.3 INDEMNIFICATION PROVISIONS FOR BENEFIT OF SELLER. Purchaser shall indemnify, defend and hold harmless Seller, its officers, directors, employees, partners, members, shareholders, affiliates (and their officers, directors, employees, members, partners and shareholders), and agents (collectively, the "Seller Indemnified Parties") from and against any action, loss, liability, damage, claim, fine, penalty, lien or expense, including legal costs, attorneys' fees, and expenses, (collectively, "Seller Loss") to the extent the same arises out of (i) any breach by Purchaser of any representation or warranty made by Purchaser in Article III herein, (ii) any tax, including use or sales tax, for which Purchaser or any of its shareholders, directors or officers is or may be liable in respect of the conduct of the Business after the Closing Date, (iii) any claim incurred and arising from the conduct of the Business after the Closing Date alleging that all, or any portion of, the Business infringes any intellectual property right or other interest of any person or entity, and (iv) any obligation of Seller expressly assumed by Purchaser as an Assumed Obligation, to the extent such obligation was incurred and arose from the conduct of the Business after the Closing. Each Seller Indemnified Party will give prompt notice to Purchaser of any claim or condition to which the foregoing indemnification covenant relates. At its election, Purchaser may control the defense of such claim, at its expense, but shall not settle any such claim without the consent of the respective Seller Indemnified Party or Parties, which consent will not be unreasonably withheld. VI.4 REMEDIES. Except with respect to any breach of Sections 4.1(h) and 4.2(e), (f) and (g), and except with respect to any Party's obligation to consummate the transactions contemplated hereby after the applicable conditions set forth in Article V have been satisfied, the remedies set forth in this Article VI shall be the exclusive remedy of Seller and Purchaser with respect to the transactions contemplated by this Agreement. VI.5 BASKET. No Party shall have liability under this Article VI until the aggregate amount of indemnifiable losses (i.e., Purchaser Losses or Seller Losses, as the case may be) to the indemnified Party (i.e., a Purchaser Indemnified Party or a Seller Indemnified Party) as a result of all matters covered by this Article VI exceeds $25,000 (the "Basket"). If the aggregate amount of such indemnified losses exceeds the Basket, the indemnifying Party shall be liable for all indemnifiable losses, including the first $25,000 of such losses. VI.6 MAXIMUM LIABILITY. In no event shall Seller, on the one hand, or Purchaser, on the other hand, be liable under this Agreement for an aggregate amount in excess of $500,000. ARTICLE VII TERMINATION VII.1 TERMINATION OF AGREEMENT. Any of the Parties may terminate this Agreement with the prior authorization of its board of directors (whether before or after receiving the Requisite Seller Approval) as provided below: (a) the parties may terminate this Agreement by mutual written consent at any time prior to the Closing Date; 21 (b) Purchaser may terminate this Agreement by giving written notice to the Seller at any time prior to the Closing Date (i) in the event Seller has breached any representation, warranty, or covenant contained in this Agreement or (ii) if the Closing shall not have occurred on or before the date which is fifteen (15) days after the date hereof; provided that such date shall be extended if the conditions to Closing set forth in Section 5.2 above which are in the control of Purchaser or its representatives have not yet been satisfied. Purchaser's knowledge of the existence of a condition that would entitle Purchaser so to terminate this Agreement shall not be construed as a waiver of its rights so to terminate at any later date prior to the Closing Date. (c) Seller may terminate this Agreement by giving written notice to Purchaser at any time prior to the Closing Date (i) in the event Purchaser has breached any representation, warranty, or covenant contained in this Agreement or (ii) if the Closing shall not have occurred on or before the date which is fifteen (15) days after the date hereof; provided that such date shall be extended if the conditions to Closing set forth in Section 5.1 above which are in the control of Seller or its representatives have not yet been satisfied. Seller's knowledge of the existence of a condition that would entitle Seller so to terminate this Agreement shall not be construed as a waiver of its rights so to terminate at any later date prior to the Closing Date. VII.2 EFFECT OF TERMINATION. If any Party terminates this Agreement pursuant to Section 7.1(a) above, all rights and obligations of the Parties hereunder shall terminate without any liability of any Party to any other Party (except for any liability of any Party then in breach), except that the provisions contained in Section 4.2(e) above shall survive termination. ARTICLE VIII MISCELLANEOUS VIII.1 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. Seller shall not issue any press release or make any public announcement relating to the subject matter of this Agreement without the prior written approval of Purchaser both before and after Closing. VIII.2 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any rights or remedies upon any person other than the Parties and their respective successors and permitted assigns. VIII.3 ENTIRE AGREEMENT. This Agreement (including the documents referred to herein) constitutes the entire agreement among the Parties and supersedes any prior understandings, agreements, or representations by or among the Parties, written or oral, to the extent they related in any way to the subject matter hereof. VIII.4 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns. No 22 Party may assign either this Agreement or any of his or its rights, interests, or obligations hereunder without the prior written approval of Purchaser and Seller. VIII.5 COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. VIII.6 HEADINGS. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. VIII.7 NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, mailed by registered or certified mail (return receipt requested), sent by overnight courier or sent via facsimile to the Parties at the following addresses (or at such other address for a Party as shall be specified by like notice): If to Purchaser: Rocky Mountain Internet, Inc Douglas H. Hanson, President, CEO and Chairman 1099 18th Street, 30th Floor Denver, Colorado 80202 Facsimile: (303) 672-0711 Copy to: Jacobs Chase Frick Kleinkopf & Kelley LLC Matthew R. Perkins 1050 17th Street, Suite 1500 Denver, Colorado 80265 Facsimile: (303) 685-4869 If to Seller: Unicom Communications, Inc. Elie Balas, CEO 7223 W. 95th Street Suite 325 Overland Park, Kansas 66212 Facsimile: (913) 327-5376 Copy to: Morrison & Foerster LLP Matthew D. Berger 555 West Fifth Street Suite 3500 Los Angeles, CA 90013 Facsimile: (213) 892-5454 23 Any Party may send any notice, request, demand, claim, or other communication hereunder to the intended recipient at the address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic mail), but no such notice, request, demand, claim, or other communication shall be deemed to have been duly given unless and until it actually is received by the intended recipient. Any Party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other Parties notice in the manner herein set forth. VIII.8 EQUITABLE RELIEF; ARBITRATION. If the Parties have been unable to resolve any dispute or controversy arising under this Agreement, then any such dispute or controversy arising with respect to any such claim hereunder shall be settled by arbitration in Denver, Colorado by a panel of three arbitrators in accordance with the commercial rules of the American Arbitration Association, whose decisions shall be final, binding and non-appealable; PROVIDED, HOWEVER, that notwithstanding the foregoing, the Parties shall pursue all equitable remedies, if any (such as specific performance, injunctive relief, rescission, etc.), in a state or federal court of law in Colorado if the non-breaching party elects to do so and, in such case, the breaching party shall not be permitted to dispute such claim or claims in an arbitration proceeding. The three arbitrators shall be selected pursuant to the rules of the American Arbitration Association from a panel of independent and disinterested persons with at least ten years experience in significant corporate, business or accounting matters, and who are familiar with the purchase and sale of business concerns. The expenses of both Parties in the arbitration, including reasonable attorneys' fees and arbitration expenses, shall be paid by the prevailing party. If each party prevails in part, the arbitrators will determine the appropriate allocation of expenses among the Parties utilizing the principal described above. Judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction therefor, and the Parties consent to the jurisdiction of the Colorado courts for this purpose. VIII.9 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Colorado without giving effect to any choice or conflict of law provision or rule (whether of the State of Colorado or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Colorado. VIII.10 AMENDMENTS AND WAIVERS. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing, and signed by Purchaser and the Seller. No waiver by any Party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. VIII.11 SEVERABILITY. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. 24 VIII.12 CONSTRUCTION. The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring, any Party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, or local statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word "including" shall mean including without limitation. The Parties intend that each representation, warranty, and covenant contained herein shall have independent significance. If any Party has breached any representation, warranty, or covenant contained herein in any respect, the fact that there exists another representation, warranty, or covenant relating to the same subject matter (regardless of the relative levels of specificity) which the Party has not breached shall not detract from or mitigate the fact that the Party is in breach of the first representation, warranty, or covenant. VIII.13 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof. VIII.14 SUBMISSION TO JURISDICTION. Each of the Parties submits to the jurisdiction of any state or federal court sitting in Denver, Colorado in any action or proceeding arising out of or relating to this Agreement and agrees that all claims in respect of the action or proceeding may be heard and determined in any such court. Each party also agrees not to bring any action or proceeding arising out of or relating to this Agreement in any other court. Each of the Parties waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety, or other security that might be required of any other Party with respect thereto. Any Party may make service on any other Party by sending or delivering a copy of the process to the Party to be served at the address and in the manner provided for the giving of notices in Section 8.7 above. Nothing in this Section 8.14, however, shall affect the right of any Party to serve legal process in any other manner permitted by law or at equity. Each Party agrees that a final judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by law or at equity. * * * * * * 25 IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above written. ROCKY MOUNTAIN INTERNET, INC., a Delaware corporation By: /s/ Douglas H. Hanson ----------------------------------- Douglas H. Hanson, CEO, President, and Chairman of the Board UNICOM COMMUNICATIONS, INC., a Kansas corporation By: /s/ Elie Balas ----------------------------------- Elie Balas, Chief Executive Officer 26 SCHEDULE 1 Definitions of "Business" and "Retained Business" 1. The "Business" shall mean Seller's business providing the following services to customers: (y) Access, or a dedicated link of varying bandwidth between the Internet and a customer's content on a server or between the Internet and a customer via a direct dial-up to a server; and (z) Hosting, or the regular provision of hard disk storage space on, processing time from, and other use of the hardware, operating system, Internet server software, and certain core Internet application software of an Internet server in order to allow access via the Internet to, security for, and backup of a customer's content and Hosting services. 2. The "Retained Business" shall mean Seller's business of providing the following services to the existing customers: (y) Content Development, or the design, creation, development, construction, enabling, maintenance, modification, enhancement, and editing of a customer's software content in whatever form, including but not limited to text, graphics, audio, video, data, and computer code; and (z) Software Development, or the design, creation, development, construction, enabling, maintenance, modification, and enhancement of hardware, software, software systems and web-based services. EX-10.21 4 EXHIBIT 10.21 Exhibit 10.21 ASSET PURCHASE AGREEMENT By and Among ROCKY MOUNTAIN INTERNET, INC., a Delaware corporation, STONEHENGE BUSINESS SYSTEMS CORPORATION a Colorado corporation, TODD KEENER, an individual, and DANETTE KEENER, an individual November 30, 1998 TABLE OF CONTENTS ARTICLE I SALE AND PURCHASE OF SELLER'S ASSETS . . . . . . . . . . . . . . .1 1.1 Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . .1 (a) Receivables . . . . . . . . . . . . . . . . . . . . . . . . .2 (b) Inventories . . . . . . . . . . . . . . . . . . . . . . . . .2 (c) Tangible Personal Property. . . . . . . . . . . . . . . . . .2 (d) Real Property . . . . . . . . . . . . . . . . . . . . . . . .2 (e) Contracts and Other Agreements Relating to the Business . . .2 (f) Books, Records, Lists and Other Data. . . . . . . . . . . . .2 (g) Licenses, Permits . . . . . . . . . . . . . . . . . . . . . .3 (h) Proprietary Rights. . . . . . . . . . . . . . . . . . . . . .3 (i) General Intangibles . . . . . . . . . . . . . . . . . . . . .3 (j) Other Assets. . . . . . . . . . . . . . . . . . . . . . . . .3 1.2 Assumed Liabilities; No Assumption of Other Liabilities. . . . . .3 1.3 Title to the Purchased Assets; Documents of Conveyance . . . . . .4 1.4 Purchase Price; Adjustment . . . . . . . . . . . . . . . . . . . .4 1.5 Payment of Purchase Price. . . . . . . . . . . . . . . . . . . . .5 1.6 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 1.7 Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 1.8 Proration of Revenues and Expenses . . . . . . . . . . . . . . . .7 ARTICLE II REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS. . . . . . . . . .8 2.1 Authorization of Transaction . . . . . . . . . . . . . . . . . . .8 2.2 Legal, Accounting and Other Fees and Expenses. . . . . . . . . . .8 ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . .8 3.1 Organization, Qualification, and Corporate Power . . . . . . . . .9 3.2 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . .9 3.3 Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . .9 3.4 Authorization of Transaction . . . . . . . . . . . . . . . . . . 10 3.5 Title to Assets. . . . . . . . . . . . . . . . . . . . . . . . . 10 3.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 10 3.7 Events Subsequent to July 31, 1998.. . . . . . . . . . . . . . . 10 3.8 Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . 13 3.9 Legal Compliance . . . . . . . . . . . . . . . . . . . . . . . . 13 3.10 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . 13 3.11 Real Property and Personal Property. . . . . . . . . . . . . . . 15 3.12 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . 15 3.13 Tangible Assets. . . . . . . . . . . . . . . . . . . . . . . . . 18 3.14 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 i 3.15 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 3.16 Notes and Accounts Receivable. . . . . . . . . . . . . . . . . . 20 3.17 Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . 20 3.18 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 3.19 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 3.20 Product Warranty . . . . . . . . . . . . . . . . . . . . . . . . 21 3.21 Product Liability. . . . . . . . . . . . . . . . . . . . . . . . 21 3.22 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 3.23 Employee Benefits. . . . . . . . . . . . . . . . . . . . . . . . 22 3.24 Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 3.25 Environmental, Health, and Safety Matters. . . . . . . . . . . . 24 3.26 Certain Business Relationships with Seller . . . . . . . . . . . 26 3.27 Relationships with Suppliers and Carriers. . . . . . . . . . . . 26 3.28 Customers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 3.29 Legal, Accounting and Other Fees and Expenses. . . . . . . . . . 26 3.30 Receipt of Disclosure Documents. . . . . . . . . . . . . . . . . 26 3.31 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . . . . . 27 4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . 27 4.2 Authorization of Transaction . . . . . . . . . . . . . . . . . . 27 4.3 Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . 28 4.4 Brokers' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . 28 4.5 Purchaser Common Stock . . . . . . . . . . . . . . . . . . . . . 28 ARTICLE V COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 5.1 Pre-Closing Covenants. . . . . . . . . . . . . . . . . . . . . . 28 (a) General . . . . . . . . . . . . . . . . . . . . . . . . . . 28 (b) Notices and Consents. . . . . . . . . . . . . . . . . . . . 28 (c) Operation of Business . . . . . . . . . . . . . . . . . . . 29 (d) Preservation of Business. . . . . . . . . . . . . . . . . . 30 (e) Full Access . . . . . . . . . . . . . . . . . . . . . . . . 30 (f) Notice of Developments. . . . . . . . . . . . . . . . . . . 30 (g) Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . 30 (h) Repayment . . . . . . . . . . . . . . . . . . . . . . . . . 30 (i) Financial Statements. . . . . . . . . . . . . . . . . . . . 31 (j) Insurance Policies. . . . . . . . . . . . . . . . . . . . . 31 ii 5.2 Post-Closing Covenants . . . . . . . . . . . . . . . . . . . . . 31 (a) General . . . . . . . . . . . . . . . . . . . . . . . . . . 31 (b) Litigation Support. . . . . . . . . . . . . . . . . . . . . 31 (c) Transition. . . . . . . . . . . . . . . . . . . . . . . . . 32 (d) Confidentiality . . . . . . . . . . . . . . . . . . . . . . 32 (e) Non-Solicitation. . . . . . . . . . . . . . . . . . . . . . 33 (f) Covenant Not to Compete . . . . . . . . . . . . . . . . . . 34 (g) Release of Liens. . . . . . . . . . . . . . . . . . . . . . 34 (h) Public Information Requirement. . . . . . . . . . . . . . . 34 ARTICLE VI CONDITIONS TO OBLIGATION OF PARTIES TO CONSUMMATE CLOSING . . . 35 6.1 Conditions to Obligation of Purchaser. . . . . . . . . . . . . . 35 6.2 Conditions to Obligation of Shareholders and Seller. . . . . . . 37 ARTICLE VII REMEDIES FOR BREACH. . . . . . . . . . . . . . . . . . . . . . 37 7.1 Survival of Representations and Warranties . . . . . . . . . . . 37 7.2 Indemnification Provisions for Benefit of Purchaser. . . . . . . 38 7.3 Indemnification Provisions for Benefit of Seller and Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . 38 7.4 Matters Involving Third Parties. . . . . . . . . . . . . . . . . 39 7.5 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 7.6 Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . 40 ARTICLE VIII TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 41 8.1 Termination of Agreement. . . . . . . . . . . . . . . . . . . . 41 8.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . 41 ARTICLE IX MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 41 9.1 Press Releases and Public Announcements. . . . . . . . . . . . . 41 9.2 No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . 42 9.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 42 9.4 Succession and Assignment. . . . . . . . . . . . . . . . . . . . 42 9.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 42 9.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 9.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 9.8 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . 43 9.9 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . 43 9.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 44 9.11 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . 44 9.12 Incorporation of Exhibits and Schedules. . . . . . . . . . . . . 44 9.13 Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . 44 iii 9.14 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 9.15 Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 45 iv EXHIBITS Exhibit A - Bill of Sale and Assignment Agreement Exhibit B - Seller and Shareholders Closing Certificate Exhibit C - Employment Agreement for Todd Keener Exhibit D - Employment Agreement for Danette Keener Exhibit E - Form of Opinion of Seller's and Shareholders' Counsel SCHEDULES Schedule 1.1 - Excluded Assets Schedule 1.1(g) - Licenses and Permits Schedule 1.2 - Assumed Liabilities Schedule 1.3 - Permitted Encumbrances Schedule 1.7 - Allocation Schedule Schedule 3.1 - Seller Articles of Incorporation; Bylaws; Officers and Directors Schedule 3.3 - Required Notices and Consents Schedule 3.10 - Tax Matters Schedule 3.11 - Real and Personal Property Schedule 3.12 - Intellectual Property Schedule 3.15 - Contracts Schedule 3.18 - Insurance Schedule 3.19 - Litigation Schedule 3.20 - Product Warranties Schedule 3.23 - Employee Benefits Schedule 3.24 - Guaranties Schedule 3.25 - Environmental Health and Safety Matters Schedule 3.26 - Certain Business Relationships Schedule 3.27 - Supplier and Carrier Relationships Schedule 3.28 - Customers v ASSET PURCHASE AGREEMENT This ASSET PURCHASE AGREEMENT (the "Agreement") is entered into as of November 30, 1998, by and among ROCKY MOUNTAIN INTERNET, INC., a Delaware corporation (the "Purchaser"), STONEHENGE BUSINESS SYSTEMS CORPORATION, a Colorado corporation (the "Seller"), and TODD KEENER, an individual and a shareholder of Seller, DANETTE KEENER, an individual and a shareholder of Seller (collectively, the "Shareholders"), on behalf of themselves and the other shareholders of Seller. Purchaser, Seller and Shareholders are each individually referred to as a "Party" and collectively referred to as the "Parties." RECITALS A. Seller is engaged in the business of providing Internet and networking services (such business of Seller referred to herein as the "Business"). B. Seller owns and leases certain assets and properties, real and personal, tangible and intangible, which are used by Seller in the conduct of the Business. C. Subject to the terms and conditions contained in this Agreement, Purchaser desires to acquire from Seller, and Seller desires to transfer to Purchaser, substantially all of Seller's assets used in the operation of the Business (the "Acquisition"). AGREEMENT NOW, THEREFORE, in consideration of the premises and the mutual promises herein made, the representations, warranties, and covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows. ARTICLE I SALE AND PURCHASE OF SELLER'S ASSETS 1.1 PURCHASED ASSETS. On the terms and subject to the conditions contained herein, Purchaser shall acquire from Seller at the Closing (as defined in Section 1.6 below) all of Seller's right, title and interest in and to all assets used by Seller in the Business existing as of the Effective Date (as defined in Section 1.6 below), except for the assets described on SCHEDULE 1.1 attached hereto (the "Excluded Assets"), free and clear of all liens, claims, security interests, 1 encumbrances or rights of others, except for the Permitted Encumbrances (as defined in Section 1.3 below). Without limiting the generality of the foregoing, the assets to be purchased by Purchaser (collectively, the "Purchased Assets") shall include the following: (a) RECEIVABLES. All accounts receivable, notes receivable and similar receivables accruing from the Business and existing as of the Effective Date or accruing after the Effective Date. (b) INVENTORIES. All inventory items held by Seller and reflected on Seller's unaudited consolidated balance sheet as of the end of the month immediately preceding the Effective Date (the "Ending Balance Sheet"), plus any inventory items acquired by Seller in the ordinary course of business after the date of the Ending Balance Sheet but prior to Closing and minus any inventory items sold by Seller in the ordinary course of business after the date of the Ending Balance Sheet but prior to Closing. Inventory items shall include, without limitation, finished goods, work in progress, raw materials and supplies, but shall not include inventory items that are not saleable, are obsolete or are damaged. (c) TANGIBLE PERSONAL PROPERTY. All tangible personal property, such as equipment, machinery, tools, manufactured and purchased parts, supplies, furniture, fixtures, leasehold improvements, non-inventoried stores and supplies, trucks, vans, automobiles, forklifts, and other vehicles, computers and peripherals, any related documentation or manuals and Seller's rights under related warranties, and all maintenance and other operating supplies (whether inventoried or not) and other miscellaneous tangible personal property of Seller used in the Business, whether or not located at Seller's principal place of business at the Closing Date (as defined in Section 1.6 below) and whether or not reflected on the Ending Balance Sheet, a list of which is set forth on SCHEDULE 3.11 (collectively, the "Personal Property"). (d) REAL PROPERTY. All real property and interests in real property, such as leaseholds, subleaseholds, options or rights therein, and all plant, warehouse, office facilities, buildings, easements, rights of way and appurtenances thereon and thereto and other improvements and fixtures attached to such real property owned by Seller (collectively, the "Real Property"). All Real Property is identified as owned or leased and described on SCHEDULE 3.11 attached hereto. (e) CONTRACTS AND OTHER AGREEMENTS RELATING TO THE BUSINESS. All contracts (written or oral), licenses, leases, subleases, instruments, security interests and other agreements or arrangements of Seller that relate to the Business, including all agreements with customers, as set forth on SCHEDULE 3.15 attached hereto, and all insurance policies relating to the Purchased Assets, as set forth on SCHEDULE 3.18 attached hereto. (f) BOOKS, RECORDS, LISTS AND OTHER DATA. All files, books, records, invoices, accounts, surveys, customer lists and records, supplier lists, catalogs, price lists, marketing and 2 advertising information, purchasing histories, profiles and materials, technical bulletins, books and records of account and other financial, customer and credit data, and all computer programs, software, source code, hardware, firmware, tapes and other materials used to store, record or produce such data, owned, leased or licensed by Seller and used in or useful to the Business; PROVIDED, HOWEVER, that the Purchased Assets shall not include the corporate charter or minute books of Seller. (g) LICENSES, PERMITS. All applicable governmental licenses, permits, approvals and authorizations that relate to the operation of the Business (to the extent transferable, a complete list of which is set forth on SCHEDULE 1.1(g). (h) PROPRIETARY RIGHTS. All technology, mechanical processes, computer software used in the Business (including all inventories of computer program code for such software, all third-party software licensed by Seller, any related documentation or manuals and Seller's rights under all related warranties), source code, data and documentation (including electronic media), trade secrets (technical and non-technical), know-how, customer lists, pricing and cost information, business and marketing plans and proposals and other confidential business information and proprietary rights, including, without limitation, inventions, patents, patent disclosures, copyrights, copyrightable works, trademarks, service marks, trade dress, logos, domain names, trade names, IP addresses, corporate names and licenses or other agreements to or with third parties regarding the foregoing, which are used in or useful to the Business (including applications and registrations and the goodwill associated with any such patent, copyright, trademark, service mark, trade dress, logo, domain name, trade name or corporate name and including the name "Stonehenge"), all other proprietary rights and all copies and tangible embodiments thereof (in whatever form or medium), along with all licenses and sublicenses granted and obtained with respect to such proprietary rights, remedies against infringements thereof and rights to protection of interests therein under the laws of all jurisdictions. SCHEDULE 3.12 sets forth a complete list of such proprietary rights. (i) GENERAL INTANGIBLES. All general intangibles used by or useful to the Business including, without limitation, all goodwill as a going concern and any and all causes of action or claims of Seller against any third party that arose or will arise in connection with the Business prior to the Effective Date. (j) OTHER ASSETS. All other assets of Seller used in the conduct of the Business, whether or not reflected in the Ending Balance Sheet or on the books or records of Seller or the Business. 1.2 ASSUMED LIABILITIES; NO ASSUMPTION OF OTHER LIABILITIES. (a) Notwithstanding anything to the contrary contained in this Agreement, except for the liabilities of Seller expressly set forth on SCHEDULE 1.2 (the "Assumed Liabilities"), 3 which Purchaser shall assume effective as of the Effective Date, Purchaser shall not assume or be liable for any of Seller's debts, liabilities and obligations of any nature whatsoever, whether accrued, absolute or contingent, whether known or unknown, whether due or to become due and whether related to the Purchased Assets or otherwise, including but not limited to, all income and capital gains taxes incurred as a result of the transactions contemplated hereby, and costs, expenses and liabilities of the Business incurred on or prior to the Effective Date notwithstanding when any billing statement therefor is received (collectively, the "Liabilities"); and Seller shall retain and remain responsible for all such Liabilities. (b) Seller shall perform and discharge all obligations in respect of all its employees for its own account through the Closing Date including, without limitation, discharging all wages and salaries of the employees and all other costs and expenses related to their employment (including, without limitation, any taxes, accrued holiday pay, accrued bonus, and contributions to retirement benefit plans or other sums payable in respect of service prior to such date). The aggregate amount of any such obligations which arise on or after the Effective Date shall be included in the Seller's Reimbursement Amount (as defined in Section 1.8 below). 1.3 TITLE TO THE PURCHASED ASSETS; DOCUMENTS OF CONVEYANCE. At the Closing, Seller shall convey all of its right, title and interest in and to the Purchased Assets to Purchaser, free and clear of all liabilities, obligations, liens, encumbrances and rights of others, excepting only the liens, claims, encumbrances or rights of others set forth on SCHEDULE 1.3 attached hereto (the "Permitted Encumbrances"). Title to the Purchased Assets shall be conveyed by Seller to the Purchaser pursuant to a Bill of Sale and Assignment Agreement, in the form of EXHIBIT A attached hereto, and by such other documents as are reasonably acceptable to counsel for Purchaser in accordance with the terms hereof. Each of the parties hereto agrees to use its best efforts to take or cause to be taken all action, and to do, or cause to be done, all things reasonably necessary, proper or advisable, whether before or after Closing, to ensure that the transfer of title to the Purchased Assets to Purchaser occurs as contemplated hereunder. 1.4 PURCHASE PRICE; ADJUSTMENT. (a) The purchase price for the Purchased Assets shall be $450,000, subject to adjustment as set forth in Section 1.4(b) below (the "Purchase Price"). (b) By January 31, 1999, the Purchase Price shall be adjusted as follows: if, as of the Measurement Date (as defined below), the Business does not have at least 2,000 non-dedicated accounts and 13 dedicated access accounts delivering monthly revenues (including those generated by any new accounts established in the Yuma, Colorado and Sterling, Colorado markets after the Effective Date) of at least $45,200, with recurring monthly revenues of at least $41,200 (the "Recurring Revenue Target") and non-recurring monthly 4 revenues of at least $4,000 (the "Non-Recurring Revenue Target") (with any recurring monthly revenues in excess of the Recurring Revenue Target to be counted toward the Non-Recurring Revenue Target), the Purchase Price shall be decreased by the amount equal to the sum of (i) the product of 9.15 times the amount by which the aggregate recurring monthly revenues are less than the Recurring Revenue Target (or zero, if the aggregate recurring monthly revenues meet or exceed the Recurring Revenue Target) and (ii) the amount by which the aggregate non-recurring monthly revenues are less than the Non-Recurring Revenue Target (or zero, if the aggregate non-recurring monthly revenues meet or exceed the Non-Recurring Revenue Target). The "Measurement Date" shall be the date on which the Business' customers are billed for services to be provided in the month of December 1998. If the Parties, acting in good faith, are unable to agree upon the actual amounts of any adjustment to the Purchase Price pursuant to this Section 1.4(b) within thirty (30) days of the Measurement Date, then Seller and Purchaser shall each select an accounting firm and the two accounting firms selected shall select a third accounting firm (such third accounting firm referred to herein as the "Auditors") to conduct a review audit and determine such amounts in accordance with this Section 1.4(b). The decision of the Auditors shall be binding upon the Parties and the fees and expenses of the Auditors shall be borne equally by Seller and Purchaser. 1.5 PAYMENT OF PURCHASE PRICE. (a) The Purchase Price shall be paid in the form of shares (the "Purchaser Shares") of Purchaser's common stock, par value $.001 per share (the "Purchaser Common Stock"), which shares shall be valued at the average of the closing trading prices of Purchaser's Common Stock on the Nasdaq SmallCap National Market for the ten (10) trading days immediately prior to the Effective Date. The Purchaser Shares issued shall be registered when issued under the Securities Act of 1933, as amended (the "Securities Act"). (b) The Purchase Price shall be paid as follows: (i) 80% of the Purchaser Shares shall be issued at Closing; and (ii) 20% of the Purchaser Shares shall be deposited (the "Escrow Deposit") with a mutually acceptable escrow agent (the "Escrow Agent") pursuant to the terms of an escrow agreement (the "Escrow 5 Agreement") by and among Purchaser, Seller, the Shareholders and the Escrow Agent. The Escrow Deposit shall be distributed as follows: (A) upon receipt of written notice from the Purchaser that all liens set forth as liens to be released in connection with the Acquisition on SCHEDULE 1.3 attached hereto have been released, the Escrow Agent shall distribute 50% of the Escrow Deposit to Seller; (B) upon receipt of written notice executed by Purchaser and Seller setting forth the determination of the Purchase Price adjustment pursuant to Section 1.4(b) above, the Escrow Agent shall distribute to Purchaser the number of shares the value of which equals any downward adjustment of the Purchase Price (with such shares being valued in the same manner as set forth in Section 1.5(a) above; and (C) within five (5) business days after the date which is eighteen (18) months after the Closing Date, Purchaser shall instruct the Escrow Agent to disburse to the Seller from the Escrow Deposit that number of Purchaser Shares remaining after reducing such number of shares by the number of shares the value of which equals the aggregate amount of any and all damages awarded to Purchaser as of such date pursuant to the provisions of this Agreement as a result of any breach of the Seller's and/or Shareholders' representations and warranties contained in this Agreement, provided, that Purchaser shall give prompt notice of any such breach to Seller and allow Seller and Shareholders ten (10) days from the date of such notice to cure such breach, so long as the ten-day cure period does not detrimentally affect Purchaser. Such shares shall be valued in the same manner as set forth in Section 1.5(a) above. 1.6 CLOSING. The consummation of the transactions contemplated hereby (the "Closing") shall occur as soon as reasonably practicable after the date hereof, as determined by the Parties, at the offices of Purchaser's counsel, or by facsimile should the Parties so agree, to be effective as of November 1, 1998 (the "Effective Date"). The actual date of Closing is referred to herein as the "Closing Date." 6 1.7 ALLOCATION. The Purchase Price shall be allocated among the Purchased Assets for all purposes (including financial accounting and tax purposes) in accordance with the allocation schedule set forth on SCHEDULE 1.7 attached hereto. 1.8 PRORATION OF REVENUES AND EXPENSES. (a) Seller shall be entitled to all revenues from, and responsible for all expenses incurred in connection with, the Purchased Assets prior to the Effective Date. Beginning the Effective Date, Purchaser shall be entitled to all revenues from, and responsible for all expenses incurred in connection with, the Purchased Assets. (b) Seller shall be entitled to reimbursement from Purchaser (i) for all expenses paid for by Seller on or after the Effective Date in connection with the Purchased Assets and (ii) for all expenses of the Business paid for by Seller prior to the Effective Date for periods on or after the Effective Date, including the pro rata post-October 31, 1998 portion of any expenses which properly apply to periods commencing prior to and ending on or after the Effective Date (such amounts collectively referred to herein as the "Seller's Reimbursement Amount"). (c) Purchaser shall be entitled to receive from Seller all amounts received by Seller as prepayment for services provided to the customers of the Business subsequent to the Effective Date (the "Purchaser's Prepayment Share"). (d) Within thirty (30) days after Closing, Seller shall provide Purchaser, for Purchaser's review and approval, a detailed accounting of all revenues and expenses of the Business, based upon which Seller and Purchaser shall calculate the Seller's Reimbursement Amount and the Purchaser's Prepayment Share. If the Seller's Reimbursement Amount is greater than the Purchaser's Prepayment Share, Purchaser, within ten (10) business days after such accounting, shall pay Seller in cash the amount by which the Seller's Reimbursement Amount exceeds the Purchaser's Prepayment Share. If the Purchaser's Prepayment Share is greater than the Seller's Reimbursement Amount, Seller, within ten (10) business days after such accounting, shall pay Purchaser in cash the amount by which the Purchaser's Prepayment Share exceeds the Seller's Reimbursement Amount. 7 (e) In the event Seller and Purchaser are unable to agree on the calculations of the Seller's Reimbursement Amount and the Purchaser's Prepayment Share within the thirty-day period after Closing, they shall appoint the Auditors, selected according to the procedure set forth in Section 1.4(b) above, to conduct a review audit and determine such amounts in accordance with this Section 1.8. The decision of the Auditors shall be binding upon Seller and Purchaser and the fees and expenses of the Auditors shall be borne equally by Seller and Purchaser. ARTICLE II REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS To induce Purchaser to enter into this Agreement and consummate this transaction, each of the Shareholders, jointly and severally, represents and warrants to Purchaser that the statements contained in this Article II are true, correct and complete as of the date of this Agreement and will be true, correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article II). 2.1 AUTHORIZATION OF TRANSACTION. Shareholders have the legal capacity and the full power and authority to execute and deliver this Agreement and to perform the obligations hereunder. This Agreement constitutes the valid and legally binding obligation of each of the Shareholders, enforceable in accordance with its terms and conditions. Shareholders need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order to consummate the transactions contemplated by this Agreement. 2.2 LEGAL, ACCOUNTING AND OTHER FEES AND EXPENSES. All of Shareholders' legal, accounting and other fees, costs and expenses associated with this transaction shall be borne by them; provided, however, Purchaser and Seller shall share equally the costs associated with the Escrow Agreement. None of the Shareholders has any liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement. ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER To induce Purchaser to enter into this Agreement and consummate this transaction, Seller and each of the Shareholders, jointly and severally, 8 represent and warrant to Purchaser that the statements contained in this Article III are true, correct and complete as of the date of this Agreement and will be true, correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article III). 3.1 ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. The Seller is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation. Seller is duly authorized to conduct business and is in good standing under the laws of each jurisdiction where such qualification is required other than where the failure to be duly qualified would not have a material adverse effect. Seller has full power and authority and all licenses, permits, and authorizations necessary to carry on the businesses in which it is engaged and to own and use the properties owned and used by it other than where the failure to have such would not have a material adverse effect. SCHEDULE 3.1 has attached thereto (i) true and correct copies of the Seller's Articles of Incorporation and all amendments thereto; (ii) true and correct copies of the Seller's bylaws and all amendments thereto; and (iii) a list of the current directors and officers of Seller. Seller is not in default under or in violation of any provision of its Articles of Incorporation or bylaws. Seller has no predecessors. 3.2 SUBSIDIARIES. Seller has no direct or indirect interest in any corporation, partnership, limited liability company, joint venture or other entity. The Business is conducted by Seller and not through any other party or entity. 3.3 NONCONTRAVENTION. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Seller is subject or any provision of the Articles of Incorporation or bylaws of Seller or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which Seller is a party or by which it is bound or to which any of its assets is subject (or result in the imposition of any security interest upon any of its assets). Except as set forth on SCHEDULE 3.3, Seller need not give any notice to, make any filing with, or obtain any authorization, consent or approval of any governmental agency or third party in order for the Parties to 9 consummate the transactions contemplated by this Agreement, including without limitation the assignment of the contracts and other agreements set forth on SCHEDULE 3.15. 3.4 AUTHORIZATION OF TRANSACTION. Seller has the full power and authority to execute and deliver this Agreement and to perform the obligations hereunder. This Agreement constitutes the valid and legally binding obligation of Seller, enforceable in accordance with its terms and conditions. Seller need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order to consummate the transactions contemplated by this Agreement. This Agreement has been approved by the Board of Directors and the shareholders of Seller, and no other corporate proceedings are necessary to authorize Seller's execution and delivery of this Agreement or Seller's consummation of the transactions contemplated hereby. Seller has delivered, or prior to the shareholders' vote to approve the transactions contemplated hereby will deliver, to its shareholders copies of the Prospectus (as defined in Section 3.30 below), and Seller believes it has provided adequate information to its shareholders, with which its shareholders can make an informed decision regarding the approval of the transactions contemplated hereby. 3.5 TITLE TO ASSETS. Seller has good and marketable title to, or a valid leasehold interest in, the properties and assets used by it, located on its premises, or shown on the Ending Balance Sheet or acquired after the date thereof, free and clear of all liens, claims, security interests, encumbrances or rights of others, except for the Permitted Encumbrances. 3.6 FINANCIAL STATEMENTS. Seller and Shareholders have provided or shall provide prior to Closing copies of the following financial statements (collectively, the "Financial Statements"): (i) unaudited financial statements for the fiscal years ended December 31, 1996 and 1997 and for the ten (10) months ended October 31, 1998; (ii) accounts payable and accounts receivable current within two (2) business days of Closing; and (iii) the Ending Balance Sheet. The Financial Statements have been prepared using the accrual method of accounting and accurately reflect the financial condition and operating results of Seller throughout the periods covered thereby. 3.7 EVENTS SUBSEQUENT TO JULY 31, 1998. Since July 31, 1998, there has not been any material adverse change in the business, financial condition, operations, results of operations, or future prospects of Seller. Without limiting the generality of the foregoing since that date: 10 (a) Seller has not sold, leased, transferred, or assigned any of its assets, tangible or intangible, other than for a fair consideration in the ordinary course of business; (b) Seller has not entered into any agreement, contract, lease, or license (or series of related agreements, contracts, leases, and licenses) involving more than $10,000 or outside the ordinary course of business; (c) Seller has not accelerated, terminated, modified, or canceled any agreement, contract, lease, or license (or series of related agreements, contracts, leases, and licenses) involving more than $10,000 to which Seller is a party or by which it is bound; (d) Seller has not imposed any security interest upon any of its assets, tangible or intangible; (e) Seller has not made any capital expenditure (or series of related capital expenditures) having either an individual cost in excess of $2,500, or an aggregate cost in excess of $10,000 or outside the ordinary course of business; (f) Seller has not made any capital investment in, any loan to, or any acquisition of the securities or assets of, any other person (or series of related capital investments, loans, and acquisitions); (g) Seller has not issued any note, bond, or other debt security or created, incurred, assumed, or guaranteed any indebtedness for borrowed money or capitalized lease obligation either involving more than $10,000 or outside the ordinary course of business; (h) Seller has not delayed or postponed the payment of accounts payable and other liabilities outside the ordinary course of business; (i) Seller has not canceled, compromised, waived, or released any right or claim (or series of related rights and claims); (j) Seller has not granted any license or sublicense of any rights under or with respect to any intellectual property; 11 (k) there has been no change made or authorized in the Articles of Incorporation or bylaws of Seller; (l) Seller has not issued, sold, or otherwise disposed of any of its capital stock, or granted any options, warrants, or other rights to purchase or obtain (including upon conversion, exchange, or exercise) any of its capital stock; (m) Seller has not declared, set aside, or paid any dividend or made any distribution with respect to its capital stock (whether in cash or in kind) or redeemed, purchased, or otherwise acquired any of its capital stock; (n) Seller has not experienced any damage, destruction, or loss (whether or not covered by insurance) to its property; (o) Seller has not made any loan to, or entered into any other transaction with, any of its directors, officers, and employees outside the ordinary course of business; (p) Seller has not entered into any employment contract or collective bargaining agreement, written or oral, or modified the terms of any existing such contract or agreement; (q) Seller has not granted any increase in the base compensation of any of its directors, officers, and employees outside the ordinary course of business; (r) Seller has not adopted, amended, modified, or terminated any bonus, profit-sharing, incentive, severance, or other plan, contract, or commitment for the benefit of any of its directors, officers, and employees (or taken any such action with respect to any (i) nonqualified deferred compensation or retirement plan or arrangement which is an Employee Pension Benefit Plan (as such term is defined in the Employee Retirement Income Security Act of 1974, as amended ("ERISA") Section 3(2)), (ii) qualified defined contribution retirement plan or arrangement which is an Employee Pension Benefit Plan, (iii) qualified defined benefit retirement plan or arrangement which is an Employee Pension Benefit Plan (including any Multiemployer Plan (as such term is defined in ERISA Section 3(37)), or (iii) Employee Welfare Benefit Plan (as such term is defined in ERISA Section 3(l)) or material fringe benefit plan or program (each an "Employee Benefit Plan"); 12 (s) Seller has not made any other change in employment terms for any of its directors, officers, and employees outside the ordinary course of business; (t) Seller has not made or pledged to make any charitable or other capital contribution; (u) there has not been any other material occurrence, event, incident, action, failure to act, or transaction outside the ordinary course of business involving Seller; and (v) Seller has not committed to any of the foregoing. 3.8 UNDISCLOSED LIABILITIES. Seller has no liability (and there is no basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against Seller giving or that could give rise to any liability), except for (i) liabilities set forth on the face of the July 31, 1998 balance sheet (rather than in any notes thereto) and (ii) liabilities which have arisen after the July 31, 1998 balance sheet in the ordinary course of business (none of which results from, arises out of, relates to, is in the nature of, or was caused by any breach of contract, breach of warranty, tort, infringement, or violation of law). 3.9 LEGAL COMPLIANCE. Seller, its predecessors and affiliates, have complied with all applicable laws (including rules, regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder) of federal, state or local governments (and all agencies thereto), and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or notice has been filed or commenced against Seller alleging any failure so to comply other than where the failure to comply would not have a material adverse effect. 3.10 TAX MATTERS. Except as set forth on SCHEDULE 3.10 : (a) Seller has filed all tax returns that it was required to file. All such tax returns were true, correct and complete in all respects. All taxes owed by Seller (whether or not shown on any tax return) have been paid. Seller currently is not the beneficiary of any extension of time within which to file any tax return. No claim has ever been made by an authority in a jurisdiction where Seller does not file tax returns that it is or may be subject to taxation by 13 that jurisdiction. There are no security interests on any of the assets of Seller that arose in connection with any failure (or alleged failure) to pay any tax. (b) Seller has withheld and paid all taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party. (c) Neither Shareholders nor any director or officer (or employee responsible for tax matters) of Seller expects any authority to assess any additional taxes for any period for which tax returns have been filed. There is no dispute or claim concerning any tax liability of Seller either (i) claimed or raised by any authority in writing or (ii) as to which the Shareholders, directors and officers (and employees responsible for tax matters) of Seller has knowledge based upon personal contact with any agent of such authority. SCHEDULE 3.10 lists all federal, state, and local income tax returns filed with respect to Seller for taxable periods ended on or after December 31, 1995, indicates those tax returns that have been audited, and indicates those tax returns that currently are the subject of audit. Shareholders have delivered to Purchaser correct and complete copies of all federal and state income tax returns, examination reports, and statements of deficiencies assessed against or agreed to by Seller since December 31, 1995. (d) Seller has not waived any statute of limitations in respect of taxes or agreed to any extension of time with respect to a tax assessment or deficiency. (e) Seller has not made any payments, is not obligated to make any payments, or is not a party to any agreement that under certain circumstances could obligate it to make any payments that will not be deductible under Code Section 280G. Seller has disclosed on its federal income tax returns all positions taken therein that could give rise to a substantial understatement of federal income tax within the meaning of Code Section 6662. Seller is not a party to any tax allocation or sharing agreement. Seller (i) has not been a member of an affiliated group filing a consolidated federal income tax return or (ii) has no liability for the taxes of any person under Reg. Section 1.1502-6 (or any similar provision of state or local law), as a transferee or successor, by contract, or otherwise. (f) The unpaid taxes of Seller (i) did not, as of the Ending Balance Sheet, exceed the reserve for tax liability (rather than any reserve for deferred taxes established to reflect timing differences between book and tax 14 income) set forth on the face of the Ending Balance Sheet (rather than in any notes thereto) and (ii) do not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of Seller in filing its tax return. 3.11 REAL PROPERTY AND PERSONAL PROPERTY. SCHEDULE 3.11 sets forth a list containing a description of all interests in Real Property (including, without limitation, leasehold interests) and Personal Property owned or leased by Seller and utilized in the conduct of the Business. Seller has good and marketable title to (or leasehold interests in) and rightful possession of all of its Real and Personal Property, tangible and intangible, including those reflected in the Ending Balance Sheet and all assets acquired by Seller since the date of the Ending Balance Sheet. Such Real and Personal Property are owned by Seller free and clear of any liens, encumbrances, security interests, claims or rights of another (including any rights of a subsidiary or other affiliate). Seller's systems are fully operational; and outdated or defunct equipment constitute an immaterial part of the Purchased Assets. The Purchased Assets reflected in the Ending Balance Sheet, and any fully-depreciated assets, acquired since the date of the Ending Balance Sheet, constitute all the assets of Seller and constitute all the assets and properties that are necessary to permit Purchaser to continue to conduct the Business after the Closing in the same manner in which the Business is presently being conducted. No covenants, easements, rights-of-way, or regulations of record impair the uses of the respective properties of Seller for the purposes for which they are now operated. The leases identified on SCHEDULE 3.11 are in full force and effect and have not been breached or terminated, modified, amended or superseded by any agreement, contract or commitment not identified therein. 3.12 INTELLECTUAL PROPERTY. (a) Seller owns or has the rights to use pursuant to license, sublicense, agreement, or permission all intellectual property necessary for the operation of the Business of Seller as presently conducted. Each item of intellectual property owned or used by Seller immediately prior to the Closing hereunder, as set forth on SCHEDULE 3.12, except for certain assets expressly excluded from this representation on SCHEDULE 3.12, will be owned or available for use by Purchaser on identical terms and conditions immediately subsequent to the Closing hereunder. Seller has taken all necessary actions to maintain and protect each item of intellectual property that it owns or uses. (b) Seller has not interfered with, infringed upon, misappropriated, or otherwise come into conflict with any intellectual property rights of third parties, and Shareholders, directors and officers (and employees with responsibility for intellectual property matters) of Seller have not received any charge, complaint, claim, demand, or notice alleging any such interference, 15 infringement, misappropriation, or violation (including any claim that Seller must license or refrain from using any intellectual property rights of any third party). To the knowledge of the Shareholders, directors and officers (and employees with responsibility for intellectual property matters) of Seller, no third party has interfered with, infringed upon, misappropriated, or otherwise come into conflict with any intellectual property rights of Seller. (c) SCHEDULE 3.12 identifies each patent or registration which has been issued to Seller with respect to any of its intellectual property, identifies each pending patent application or application for registration which Seller has made with respect to any of its intellectual property, and identifies each license, agreement, or other permission which Seller has granted to any third party with respect to any of its intellectual property (together with any exceptions). Seller and Shareholders have delivered to Purchaser true, correct and complete copies of all such patents, registrations, applications, licenses, agreements, and permissions (as amended to date) and have made available to Purchaser true, correct and complete copies of all other written documentation evidencing ownership and prosecution (if applicable) of each such item. SCHEDULE 3.12 also identifies each trade name or unregistered trademark used by Seller in connection with its Business. With respect to each item of intellectual property required to be identified on SCHEDULE 3.12: (i) Seller possesses all right, title, and interest in and to the item, free and clear of any security interest, license, or other restriction; (ii) the item is not subject to any outstanding injunction, judgment, order, decree, ruling, or charge; (iii) no action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand is pending or, to the knowledge of the Shareholders, directors and officers (and employees with responsibility for intellectual property matters) of Seller, is threatened which challenges the legality, validity, enforceability, use, or ownership of the item; and (iv) Seller has not agreed to indemnify any person for or against any interference, infringement, misappropriation, or other conflict with respect to the item. 16 (d) SCHEDULE 3.12 identifies each item of intellectual property that any third party owns and that Seller uses pursuant to license, sublicense, agreement, or permission. The Seller and Shareholders have delivered to Purchaser true, correct and complete copies of all such licenses, sublicenses, agreements, and permissions (as amended to date). With respect to each item of intellectual property required to be identified on SCHEDULE 3.12, except for certain assets expressly excluded from this representation on SCHEDULE 3.12: (i) the license, sublicense, agreement, or permission covering the item is legal, valid, binding, enforceable, and in full force and effect; (ii) the license, sublicense, agreement, or permission will continue to be legal, valid, binding, enforceable, and in full force and effect on identical terms following the consummation of the transactions contemplated hereby; (iii) no party to the license, sublicense, agreement, or permission is in breach or default, and no event has occurred which with notice or lapse of time would constitute a breach or default or permit termination, modification, or acceleration thereunder; (iv) no party to the license, sublicense, agreement, or permission has repudiated any provision thereof; (v) with respect to each sublicense, the representations and warranties set forth in subsections (i) through (iv) above are true and correct with respect to the underlying license; (vi) the underlying item of intellectual property is not subject to any outstanding injunction, judgment, order, decree, ruling, or charge; (vii) no action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand is pending or, to the knowledge of the Shareholders, directors and officers (and employees with responsibility for intellectual property matters) of Seller, is threatened which challenges the legality, validity, or enforceability of the underlying item of intellectual property; and 17 (viii) Seller has not granted any sublicense or similar right with respect to the license, sublicense, agreement, or permission. (e) Except as set forth on SCHEDULE 3.12, Seller has no patents or registrations which have been issued to or applied for by Seller with respect to any of its intellectual property. Seller has not granted any licenses, agreements, or permission to any third party with respect to any of its intellectual property. SCHEDULE 3.12 identifies each domain name, IP address, trade name or unregistered trademark used by Seller in connection with any of its Business. (f) Seller will not interfere with, infringe upon, misappropriate, or otherwise come into conflict with, any intellectual property rights of third parties as a result of the continued operation of its Business as presently conducted. 3.13 TANGIBLE ASSETS. Seller owns or leases all buildings, machinery, equipment, and other tangible assets necessary for the conduct of its Business as presently conducted. To the best knowledge of Seller and Shareholders, except for certain immaterial assets, each such tangible asset is free from defects (patent and latent), has been maintained in accordance with normal industry practice, is in good operating condition and repair, and is suitable for the purposes for which it presently is used, all subject to normal wear and tear. 3.14 INVENTORY. The inventory of Seller consists of supplies, manufactured and purchased parts, and finished goods, all of which are merchantable and fit for the purpose for which it was procured or manufactured. 3.15 CONTRACTS. SCHEDULE 3.15 lists the following contracts and all other material agreements related to the Business to which Seller is a party: (a) any agreement (or group of related agreements) for the lease of personal property to or from any person providing for lease payments in excess of $10,000 per annum; (b) any agreement (or group of related agreements) for the purchase or sale of raw materials, commodities, supplies, products, or other personal property, or for the furnishing or receipt of services, the performance of which will extend over a period of more than one year, result in a loss to Seller, or involve consideration in excess of $10,000; 18 (c) any agreement concerning a partnership or joint venture; (d) any agreement (or group of related agreements) under which it has created, incurred, assumed, or guaranteed any indebtedness for borrowed money, or any capitalized lease obligation, in excess of $10,000 or under which it has imposed a security interest on any of its assets, tangible or intangible; (e) any agreement concerning confidentiality or noncompetition; (f) any agreement with Shareholders or their affiliates (other than Seller); (g) any profit sharing, stock option, stock purchase, stock appreciation, deferred compensation, severance, or other plan or arrangement for the benefit of Seller's current or former directors, officers, and employees; (h) any collective bargaining agreement; (i) any agreement under which it has advanced or loaned any amount to any of Seller's directors, officers, and employees outside the ordinary course of business; (j) any agreement under which the consequences of a default or termination could have an adverse effect on the business, financial condition, operations, results of operations, or future prospects of Seller; or (k) any other agreement (or group of related agreements) the performance of which involves consideration in excess of $10,000. Shareholders have delivered to Purchaser a true, correct and complete copy of each written agreement listed on SCHEDULE 3.15 (as amended to date) and a written summary setting forth the terms and conditions of each oral agreement referred to on SCHEDULE 3.15. With respect to each such agreement: (i) the agreement is legal, valid, binding, enforceable, and in full force and effect; (ii) the agreement will continue to be legal, valid, binding, enforceable, and in full force and effect in identical terms following the consummation of the transaction contemplated hereby; (iii) no party is in breach or default, and no event has occurred which with notice or lapse of time would constitute a breach or default, or permit termination, modification, or acceleration, under 19 the agreement; and (iv) no party has repudiated any provision of the agreement. 3.16 NOTES AND ACCOUNTS RECEIVABLE. All loans, notes and accounts receivable of Seller are reflected properly on the books and records, are valid receivables subject to no setoffs or counterclaims, are current and collectible, and will be collected in accordance with their terms at their recorded amounts, less an allowance for doubtful accounts of two percent (2%) of total accounts receivable on an annualized basis, and, except as set forth on SCHEDULE 1.3, are free and clear of any security interest, lien, encumbrance or other charge. 3.17 POWERS OF ATTORNEY. There are no outstanding powers of attorney executed on behalf of Seller. 3.18 INSURANCE. SCHEDULE 3.18 sets forth the following, information with respect to each insurance policy (including policies providing property, casualty, liability, and workers' compensation coverage and bond and surety arrangements) to which Seller has been a party, a named insured, or otherwise the beneficiary of coverage at any time within the past two (2) years: (a) the name, address, and telephone number of the agent; (b) the name of the insurer, the name of the policyholder, and the name of each covered insured; (c) the policy number and the period of coverage; (d) the scope and amount of coverage; and (e) a description of any retroactive premium adjustments or other loss-sharing arrangements. With respect to each such insurance policy: (i) the policy is legal, valid, binding, enforceable, and in full force and effect; (ii) unless expressly excluded on SCHEDULE 3.18, the policy will continue to be legal, valid, enforceable, and in full force and effect on identical terms following the consummation of the transactions contemplated hereby; (iii) neither Seller nor any other party to the policy is in breach or default (including, with respect to the payment of premiums or the giving of notices), and no event has occurred which, with notice or the lapse of time, would constitute such a breach or default, or permit termination, modification, or acceleration, under the policy; and (iv) no party to 20 the policy has repudiated any provision thereof. SCHEDULE 3.18 describes any self-insurance arrangements affecting Seller. 3.19 LITIGATION. SCHEDULE 3.19 sets forth each instance in which Seller (i) is subject to any outstanding injunction, judgment, order, decree, ruling, or charge or (ii) is a party or, to the knowledge of Shareholders, directors and officers (and employees with responsibility for litigation matters) of Seller, is threatened to be made a party to any action, suit, proceeding, hearing, or investigation of, in, or before any court or quasi-judicial or administrative agency of any federal, state or local jurisdiction or before any arbitrator. None of the actions, suits, proceedings, hearings, and investigations set forth on SCHEDULE 3.19 could result in a material adverse change in the business, financial condition, operations, results of operations, or future prospects of Seller. None of the Shareholders, directors and officers (and employees with responsibility for litigation matters) of Seller has any reason to believe that any such action, suit, proceeding, hearing, or investigation may be brought or threatened against Seller. 3.20 PRODUCT WARRANTY. To the knowledge of Shareholders and the directors, officers and management personnel of Seller, each product manufactured, sold, leased, or delivered by Seller has been in conformity with all applicable contractual commitments and all express and implied warranties, and Seller has no liability (and there is no basis for any present or to the knowledge of Shareholders and the directors, officers and management, future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against Seller giving rise to any liability) for replacement or repair thereof or other damages in connection therewith. No product manufactured, sold, leased, or delivered by Seller is subject to any guaranty, warranty, or other indemnity beyond the applicable standard terms and conditions of sale or lease. SCHEDULE 3.20 includes copies of the standard terms and conditions of sale or lease for Seller (containing applicable guaranty, warranty, and indemnity provisions). 3.21 PRODUCT LIABILITY. To the knowledge of Shareholders and the directors, officers and management personnel of Seller, Seller has no liability (and there is no basis for any present or to the knowledge of Shareholders, its directors, officers and management future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against Seller giving, rise to any liability) arising out of any injury to individuals or property as a result of the ownership, possession, or use of any product manufactured, sold, leased, or delivered by Seller. 21 3.22 EMPLOYEES. To the knowledge of the Shareholders, directors and officers (and employees with responsibility for employment matters) of Seller, no executive, key employee, or group of employees has any plans to terminate employment with Seller. Seller is not a party to or bound by any collective bargaining agreement, nor has Seller experienced any strikes, grievances, claims of unfair labor practices, or other collective bargaining disputes. Seller has not committed any unfair labor practice. None of the Shareholders, directors and officers (and employees with responsibility for employment matters) of Seller has any knowledge of any organizational effort presently being made or threatened by or on behalf of any labor union with respect to employees of Seller. 3.23 EMPLOYEE BENEFITS. (a) SCHEDULE 3.23 lists each Employee Benefit Plan that Seller maintains or to which Seller contributes. (i) Each such Employee Benefit Plan (and each related trust, insurance contract, or fund) complies in form and in operation in all material respects with the applicable requirements of ERISA, the Code, and other applicable laws. (ii) All required reports and descriptions (including Form 5500 Annual Reports, Summary Annual Reports, PBGC-l's, and Summary Plan Descriptions) have been filed or distributed appropriately with respect to each such Employee Benefit Plan. The requirements of Part 6 of Subtitle B of Title I of ERISA and of Code Section 4980B have been met with respect to each such Employee Benefit Plan which is an Employee Welfare Benefit Plan. (iii) All contributions (including all employer contributions and employee salary reduction contributions) which are due have been paid to each such Employee Benefit Plan which is an Employee Pension Benefit Plan and all contributions for any period ending on or before the Closing Date which are not yet due have been paid to each such Employee Pension Benefit Plan or accrued in accordance with the past custom and practice of Seller. All premiums or other payments for all periods ending on or before the Closing Date have been paid with respect to each such Employee Benefit Plan which is an Employee Welfare Benefit Plan. 22 (iv) Each such Employee Benefit Plan which is an Employee Pension Benefit Plan meets the requirements of a "qualified plan" under Code Section 401(a) and Seller has received, within the last two (2) years, a favorable determination letter from the Internal Revenue Service, and since such date no terms or provisions of such Employee Benefit Plans have been modified, revoked or terminated in a manner that is inconsistent with the qualified plan status of such Plan. To the knowledge of Shareholders, directors and officers and employees responsible for Employee Benefit Plans are not aware of any facts that would result in disqualification of any Employee Benefit Plan. (v) Seller has no Employee Benefit Plan which is a defined benefit Employee Pension Benefit Plan. (vi) Shareholders have delivered to Purchaser correct and complete copies of the plan documents and summary plan descriptions, the most recent determination letter received from the Internal Revenue Service, the most recent Form 5500 Annual Report, and all related trust agreements, insurance contracts, and other funding agreements which implement each such Employee Benefit Plan. (b) With respect to each Employee Benefit Plan that Seller maintains or ever has maintained or to which it contributes, ever has contributed, or ever has been required to contribute there have been no Prohibited Transactions (as such term is defined in ERISA Section 406 and Code Section 4975) with respect to any such Employee Benefit Plan. To the knowledge of Shareholders, its directors, officers and employees responsible for employee benefits, no Fiduciary has any liability for breach of fiduciary duty or any other failure to act or comply in connection with the administration or investment of the assets of any such Employee Benefit Plan. No action, suit, proceeding, hearing, or investigation with respect to the administration or the investment of the assets of any such Employee Benefit Plan (other than routine claims for benefits) is pending or, to the knowledge of Shareholders, directors and officers (and employees with responsibility for employee benefits matters) of Seller, threatened. None of the Shareholders, directors and officers (and employees with responsibility for employee benefits matters) of Seller has any knowledge of any basis for any such action, suit, proceeding, hearing, or investigation. 23 (c) Seller does not contribute to, never has contributed to, or never has been required to contribute to any Multiemployer Plan or has any liability (including withdrawal liability) under any Multiemployer Plan. (d) Seller does not maintain or has never maintained or contributes, ever has contributed, or ever has been required to contribute to any Employee Welfare Benefit Plan providing medical, health, or life insurance or other welfare-type benefits for current or future retired or terminated employees, their spouses, or their dependents (other than in accordance with Code Section 4980B). 3.24 GUARANTIES. Except as set forth on SCHEDULE 3.24 attached hereto, Seller is not a guarantor, nor is it otherwise liable for any liability or obligation (including indebtedness) of any other person. 3.25 ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS. Except as set forth on SCHEDULE 3.25: (a) Seller and its affiliates have complied and are in compliance with all federal, state, local and foreign statutes, regulations, ordinances and other provisions having the force or effect of law, all judicial and administrative orders and determinations, all contractual obligations and all common law concerning public health and safety, worker health and safety, and pollution or protection of the environment, including without limitation all those relating to the presence, use, production, operation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any hazardous materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated biphenyls, noise or radiation, each as amended and as now or hereafter in effect ("Environmental, Health, and Safety Requirements"). (b) Without limiting the generality of the foregoing, Seller and its affiliates have obtained and complied with, and are in compliance with, all permits, licenses and other authorizations that are required pursuant to Environmental, Health, and Safety Requirements for the occupation of its facilities and the operation of its Business. SCHEDULE 3.25 lists all such permits, licenses and other authorizations. (c) Neither Seller nor its affiliates have received any written or oral notice, report or other information regarding any actual or alleged violation 24 of Environmental, Health, and Safety Requirements, or any liabilities or potential liabilities (whether accrued, absolute, contingent, unliquidated or otherwise), including any investigatory, remedial or corrective obligations, relating to any of them or its facilities arising under Environmental, Health, and Safety Requirements. (d) None of the following exists at any property or facility owned or operated by Seller: (1) underground storage tanks, (2) asbestos-containing material in any form or condition, (3) materials or equipment containing polychlorinated biphenyls, or (4) landfills, surface impoundments, or disposal areas. (e) None of Seller or its affiliates have treated, stored, disposed of, arranged for or permitted the disposal of, transported, handled, or released any substance, including without limitation any hazardous substance, or owned or operated any property or facility (and no such property or facility is contaminated by any such substance) in a manner that has given or would give rise to liabilities, including any liability for response costs, corrective action costs, personal injury, property drainage, natural resources damages or attorney fees, pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), the Solid Waste Disposal Act, as amended ("SWDA") or any other Environmental, Health, and Safety Requirements. (f) Neither this Agreement nor the consummation of the transaction that is the subject of this Agreement will result in any obligations for site investigation or cleanup, or notification to or consent of government agencies or third parties, pursuant to any of the so-called "transaction-triggered" or "responsible property transfer" Environmental, Health, and Safety Requirements. (g) Neither Seller nor its affiliates have, either expressly or by operation of law, assumed or undertaken any liability, including without rotation any obligation for corrective or remedial action, of any other person relating to Environmental, Health, and Safety Requirements. (h) No facts, events or conditions relating to the past or present facilities, properties or operations of Seller or its affiliates will prevent, hinder or limit continued compliance with Environmental, Health, and Safety Requirements, give rise to any investigatory, remedial or corrective obligations pursuant to Environmental, Health, and Safety Requirements, or give rise to 25 any other liabilities (whether accrued, absolute, contingent, unliquidated or otherwise) pursuant to Environmental, Health, and Safety Requirements, including without limitation any relating to onsite or offsite releases or threatened releases of hazardous materials, substances or wastes, personal injury, property damage or natural resources drainage. 3.26 CERTAIN BUSINESS RELATIONSHIPS WITH SELLER. Except as set forth on SCHEDULE 3.26, Shareholders and their affiliates have not been involved in any business arrangement or relationship with Seller within the past twelve (12) months, and Shareholders and its affiliates do not own any asset, tangible or intangible, which is used in the Business of Seller. 3.27 RELATIONSHIPS WITH SUPPLIERS AND CARRIERS. Except as set forth on SCHEDULE 3.27, Seller has good relationships with its suppliers and network carriers and is not involved in any disputes, disagreements or proceedings involving any supplier or carrier. 3.28 CUSTOMERS. SCHEDULE 3.28 sets forth a list of customers as of the date of the Ending Balance Sheet. Seller is not involved in any disputes, disagreements or proceedings involving any of such customers and, to Seller's and Shareholders' best knowledge, monthly attrition of customers will not exceed 2.1%. 3.29 LEGAL, ACCOUNTING AND OTHER FEES AND EXPENSES. All of Seller's legal, accounting and other fees, costs and expenses associated with this transaction shall be borne by Seller; provided, however, Purchaser and Seller shall share equally the costs associated with the Escrow Agreement. Seller has no liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement. 3.30 RECEIPT OF DISCLOSURE DOCUMENTS. Seller has received and carefully reviewed, and understands the information contained in, the documents identified below (including the risk factors contained therein) and all other documents Seller has requested from Purchaser (collectively, the "Disclosure Documents"). In evaluating the suitability of the Acquisition and the resulting acquisition of the Purchaser Shares and all other rights, whether contingent or fixed, to receive Purchaser Shares (collectively the "Securities") (the Acquisition and resulting acquisition of the Securities hereinafter referred to as the "investment in the Securities"), Seller has not relied upon any representations or other information (whether oral or written) from Purchaser, 26 its officers, directors, or employees or from any other person other than as set forth herein and in the Disclosure Documents. The Disclosure Documents shall include, but not be limited to, the following: (i) Purchaser's Annual Report on Form 10-KSB for the year ended December 31, 1997, (ii) Purchaser's Proxy Statement for its annual meeting held on March 12, 1998, (iii) Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998 and June 30, 1998, and Amendment to the Quarterly Report on Form 10-QSB/A-1 for the quarter ended March 31, 1998, (iv) a prospectus dated November 19, 1998 with respect to the Purchaser Shares to be issued pursuant to the terms of this Agreement (the "Prospectus"), (v) Current Reports on Form 8-K, dated June 5, 1998 (disclosing the acquisition of Infohiway, Inc., and the signing of an agreement and plan of merger with Internet Communications Corporation ("ICC")) and dated June 30, 1998 (disclosing the acquisition of Application Methods, Inc.), and Amendments No. 1 and No. 2 to the Current Report on Form 8-K/A dated June 5, 1998; and (vi) the press releases issued by ICC and Purchaser on or about October 14, 1998 with respect to claims asserted by ICC. 3.31 DISCLOSURE. The representations and warranties contained in this Article III do not contain any untrue statement of a fact or omit to state any fact necessary in order to make the statements and information contained in this Article III not misleading. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER Purchaser represents and warrants to Seller and Shareholders that the statements contained in this Article IV are true, correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article IV). 4.1 ORGANIZATION. Purchaser is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation. 4.2 AUTHORIZATION OF TRANSACTION. Purchaser has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding 27 obligation of Purchaser, enforceable in accordance with its terms and conditions. 4.3 NONCONTRAVENTION. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Purchaser is subject or any provision of its charter or bylaws. 4.4 BROKERS' FEES. Purchaser has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which Seller or Shareholders could become liable or obligated. 4.5 PURCHASER COMMON STOCK. When delivered to Seller at Closing, the Purchaser Common Stock will be duly and validly authorized and issued, fully paid and nonassessable, free from all stamp taxes, liens and charges and will have been issued in compliance with applicable federal and state securities laws. ARTICLE V COVENANTS 5.1 PRE-CLOSING COVENANTS. The Parties agree as follows with respect to the period between the execution of this Agreement and the Closing. (a) GENERAL. Each of the Parties will use his or its reasonable best efforts to take all action and to do all things necessary, proper, or advisable in order to consummate and make effective the transactions contemplated by this Agreement (including satisfaction, but not waiver, of the closing conditions set forth in Article VI below). (b) NOTICES AND CONSENTS. Seller will, and Shareholders will cause Seller to, give any notices to third parties, and Seller will, and Shareholders will cause Seller to, use its best efforts to obtain any third party consents, that are required or that Purchaser may request in connection with this transaction. Each of the Parties will (and Shareholders will cause Seller to) give any notices to, make any filings with, and use its best efforts to obtain any authorizations, consents, and approvals of governments and governmental agencies. 28 (c) OPERATION OF BUSINESS. After the date hereof, Seller will not engage in any practice, take any action, or enter into any transaction outside the ordinary course of business without prior written consent from Purchaser. Without limiting the generality of the foregoing: (i) Seller will not authorize or effect any change in its Articles of Incorporation or bylaws; (ii) Seller will not grant any options, warrants, or other rights to purchase or obtain any of its capital stock or issue, sell, or otherwise dispose of any of its capital stock; (iii) Seller will not declare, set aside, or pay any dividend or distribution with respect to its capital stock (whether in cash or in kind), or redeem, repurchase, or otherwise acquire any of its capital stock; (iv) Seller will not issue any note, bond, or other debt security or create, incur, assume, or guarantee any indebtedness for borrowed money or capitalized lease obligation or create or suffer the creation of any other liability of Seller other than liabilities arising in the ordinary course of business; (v) Seller will not sell, dispose or otherwise transfer any of its assets, including without limitation waive any material rights or claims, or impose any security interest upon any of its assets; (vi) Seller will not make any capital investment in, make any loan to, or acquire the securities or assets of any other person; (vii) Seller will not make any change in employment terms for any of its directors, officers, and employees; (viii) Seller will not commit to any of the foregoing; and (ix) otherwise engage in any practice, take any action, or enter into any transaction of the sort described above or that would cause any condition, representation or warranty to be breached or to become untrue. 29 (d) PRESERVATION OF BUSINESS. Seller will, and Shareholders will cause Seller to, keep its Business, properties and goodwill substantially intact, including its present operations, physical facilities, working conditions, and relationships with lessors, licensors, suppliers, customers, and employees. (e) FULL ACCESS. Seller will permit, and Shareholders will cause Seller to permit, representatives of Purchaser to have full access (including providing introductions, where necessary to) all premises, properties, personnel, customers, lessors, licensors, vendors, supplies, creditors, books, records (including tax records), contracts, and documents of or pertaining to Seller. Seller will cause its independent accountants to make available their work papers with respect to Seller and to otherwise provide such assistance as is reasonably requested by Purchaser. (f) NOTICE OF DEVELOPMENTS. Seller and Shareholders will give prompt written notice to Purchaser of any adverse development causing a breach or a potential breach of any of the representations and warranties in Articles II and III above. No disclosure by Shareholders or Seller or discovery by Purchaser shall be deemed to amend or supplement any Schedule hereto or to prevent or cure any misrepresentation, breach of warranty, or breach of covenant. (g) EXCLUSIVITY. Seller will not, and Shareholders will not cause or permit Seller to (i) solicit, initiate, or encourage the submission of any proposal or offer from any person relating to the acquisition of any capital stock or other voting securities, or any substantial portion of the assets, of Seller (including, any acquisition structured as a merger, consolidation, or share exchange) or (ii) participate in any discussions or negotiations regarding, furnish any information with respect to, assist or participate in, or facilitate in any other manner any effort or attempt by any person to do or seek any of the foregoing. Shareholders will not vote the shares of capital stock they own of the Seller in favor of any such acquisition structured as a merger, consolidation, or share exchange other than for this transaction. Seller and Shareholders will notify Purchaser immediately if any person makes any proposal, offer, inquiry, or contact with respect to any of the foregoing. (h) REPAYMENT. At or before Closing, Shareholders and any of their affiliates shall repay all advances from and notes and receivables owing to Seller from such person. 30 (i) FINANCIAL STATEMENTS. At Closing, Seller and Shareholders shall deliver Financial Statements certified by each of the Seller and Shareholders as true, correct and complete, and consistent with the books and records of Seller (which books and records are true, correct and complete). (j) INSURANCE POLICIES. At or before Closing, Seller shall have Purchaser named as an additional insured on all insurance policies covering the Purchased Assets. 5.2 POST-CLOSING COVENANTS. The Parties agree as follows with respect to the period following the Closing. (a) GENERAL. In case at any time after the Closing any further action is necessary or desirable to carry out the purposes of this Agreement, each of the Parties will take such further action (including, the execution and delivery of such further instruments and documents) as any other Party reasonably may request, all at the sole cost and expense of the requesting Party (unless the requesting Party is entitled to indemnification therefor under Section 13 below). Shareholders and Seller acknowledge and agree that from and after Closing Purchaser will be entitled to possession of all documents, books, records (including tax records), agreements, and financial data of any sort relating to the Business, with the exception of the corporate charter and minute books of Seller; provided, however, that all such documents, books and records shall for a period of three (3) years after the Closing be available to Seller and Seller's representatives, upon reasonable notice and at all reasonable times, for inspection, audit and examination for tax and accounting purposes. (b) LITIGATION SUPPORT. In the event and for so long as any Party actively is contesting or defending against any action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand in connection with (i) any transaction contemplated under this Agreement or (ii) any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction accruing on or prior to the Closing Date involving Seller, each of the other Parties will cooperate with it and its counsel in the contest or defense, make available their personnel, and provide such testimony and access to their books and records as shall be necessary in connection with the contest or defense, all at the sole cost and expense of the contesting or defending Party (unless the contesting or defending Party is entitled to indemnification therefor under Article VII below). 31 (c) TRANSITION. Seller and Shareholders will not take any action that is designed, intended or could reasonably be expected to have the effect of discouraging any lessor, licensor, customer, supplier, or other business associate of Seller from maintaining the same business relationships with Seller after Closing as it maintained with Seller prior to the Closing. Shareholders will refer all customer inquiries relating to the Business of Seller to Purchaser from and after the Closing. (d) CONFIDENTIALITY. Each of the Shareholders and Seller will treat and hold as confidential all of the confidential information of Purchaser (the "Confidential Information"), refrain from using any of the Confidential Information except in connection with this Agreement, and deliver promptly to Purchaser or destroy, at the request and option of Purchaser, all tangible embodiments (and all copies) of the Confidential Information which are in his or its possession. In the event that Seller or any Shareholder is requested or required (by oral question or request for information or documents in any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar process) to disclose any Confidential Information, Seller or such Shareholder will notify Purchaser promptly of the request or requirement so that Purchaser may seek an appropriate protective order or waive compliance with the provisions of this Section 5.2(d). If, in the absence of a protective order or the receipt of a waiver hereunder, Seller or such Shareholder is, on the advice of counsel, compelled to disclose any Confidential Information to any tribunal or else stand liable for contempt, Seller or such Shareholder may disclose such Confidential Information to the tribunal; PROVIDED, HOWEVER, that Seller or such Shareholder shall use his/its best efforts to obtain, at the request of Purchaser, an order or other assurance that confidential treatment will be accorded to such portion of the Confidential Information required to be disclosed as Purchaser shall designate. The foregoing provisions shall not apply to any Confidential Information which is generally available to the public immediately prior to the time of disclosure. Seller and each of the Shareholders acknowledge and understand that Confidential Information, including the existence of this Agreement, may include "material, non-public information," as the term is understood and interpreted under federal and state securities laws and rules. Seller and each of the Shareholders further acknowledge and understand that purchasing or selling securities while in possession of material non-public information may subject the purchaser, seller and/or person(s) who have provided such information to liability under such laws, including potential criminal liability. Seller and each of the Shareholders hereby agree that all Confidential 32 Information, whether furnished before or after the date of this Agreement, shall be treated confidentially. (e) NON-SOLICITATION. Seller and each of the Shareholders agree that, for a period of two (2) years after the Closing, he/she/it will not, in any manner whether with or without cause, directly or indirectly, either as owner, officer, employer, employee, independent contractor, stockholder, agent, principal, manager, employee, consultant, partner or otherwise (i) induce any employee, agent or contractor of Seller, Purchaser or an affiliate company thereof, other than the Shareholders, to terminate his, her or its employment, agency or contractor relationship with Purchaser or an affiliate company thereof, or (ii) hire or attempt to hire any employee, agent or contractor of Purchaser or an affiliate company thereof, other than the Shareholders. Seller and each of the Shareholders agree that, for a period of two (2) years after the Closing, he/she/it will not, in any manner, whether with or without cause, directly or indirectly, either as owner, officer, employer, employee, independent contractor, stockholder, agent, principal, manager, consultant, partner or otherwise, have any business or employment relationship with any customer of Seller and/or Purchaser without the prior written consent of Purchaser, which consent shall not be unreasonably withheld, following written notice by Seller or Shareholder to Purchaser detailing the name of the customer and the nature of the proposed relationship. It shall not be unreasonable for Purchaser to withhold consent if such relationship could cause or result in any adverse or detrimental impact to Purchaser. The term "customer" includes, but is not limited to, persons or entities located within the Geographical Market (as defined below) who are customers of Seller or Purchaser, as the case may be. For purposes of this Agreement "Geographical Market" shall mean the United States, Mexico and Canada. Seller and each Shareholder hereby acknowledge that Purchaser is a full service, national communications company providing Internet access, local telephone service and IP telephone long distance service, Web development and hosting, network management, system integration and co-location services to clients and customers throughout the United States. Seller and each Shareholder further acknowledge that Purchaser plans expansions into the international market, including Mexico and Canada, and continued growth both within and outside the United States. Seller and each Shareholder further acknowledge that Purchaser's acquisition of the Purchased Assets as contemplated by this 33 Agreement evidences Purchaser's intent to integrate the Business and its operations as an integral part of Purchaser's plans for growth and expansion. (f) COVENANT NOT TO COMPETE. Seller and each Shareholder agree that, for a period of two (2) years following Closing, he/she/it will not, directly or indirectly, in any manner own, manage, operate, control, be employed by, participate in, or be connected in any manner with the ownership, management, operation, or control of any business headquartered in the State of Colorado that is substantially similar to the type of business conducted by Purchaser or any affiliate thereof; PROVIDED, HOWEVER, the foregoing shall not preclude Todd Keener from performing network management and/or system integration services for a company which is not a competitor of Purchaser or any of its affiliates. Notwithstanding the foregoing, Seller and each Shareholder shall be entitled to own stock in publicly traded companies whose products and/or services compete with those offered by Purchaser, so long as said ownership does not exceed two percent (2%) of any said publicly traded company. Seller and each Shareholder agree that the covenants he/she/it has made in this Section 5.2 are reasonable with respect to their duration, geographical area and proscription. Seller and each Shareholder further agree that the covenants he/she/it has made in this Section 5.2 shall be construed as an agreement independent of any other provision of this Agreement. Hence, the covenants made in this Section 5.2 shall survive the termination of this Agreement. Moreover, the existence of any claim or cause of action of Seller and/or Shareholders against Purchaser, whether or not predicated upon the terms of this Agreement, shall not constitute a defense to the enforcement by Purchaser of these covenants. (g) RELEASE OF LIENS. As soon as practicable upon Closing, Seller and Shareholders shall obtain releases of all liens on the Purchased Assets, as set forth on SCHEDULE 1.3 attached hereto, except for any that are Assumed Liabilities, and shall provide Purchaser with evidence of such releases satisfactory to Purchaser. (h) PUBLIC INFORMATION REQUIREMENT. Purchaser shall use its best efforts to comply with the current public information requirement of Rule 144(c) of the General Rules and Regulations promulgated under the Securities Act for two (2) years from the date of issuance of the Purchaser Shares. 34 ARTICLE VI CONDITIONS TO OBLIGATION OF PARTIES TO CONSUMMATE CLOSING 6.1 CONDITIONS TO OBLIGATION OF PURCHASER. The obligation of Purchaser to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions: (a) this Agreement and the Acquisition shall have received the requisite approval of the shareholders of Seller; (b) Seller shall have procured all third party consents as set forth on SCHEDULE 3.3; (c) Seller shall have procured all necessary governmental consents; (d) all of the representations and warranties set forth in Articles II and III above shall be true and correct in all respects at and as of the Closing Date and Purchaser shall have received a certificate of Seller and the Shareholders in the form of EXHIBIT B hereto to that effect; (e) Shareholders and Seller shall have performed and complied with all of its covenants hereunder in all material respects through the Closing; (f) Purchaser shall have received a network schedule listing all lines, carriers, rates, and all other pertinent information concerning Seller's network as of the date of the Ending Balance Sheet; (g) no action, suit, or proceeding shall be pending or threatened before any court or quasi-judicial or administrative agency of any federal, state, or local jurisdiction or before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would (i) prevent consummation of any of the transactions contemplated by this Agreement, (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation or (iii) affect adversely the right of Purchaser to own the Purchased Assets, (and no such injunction, judgment, order, decree, ruling, or charge shall be in effect); (h) Seller shall deliver to Purchaser, a Certificate of the Secretary of Seller dated as of Closing certifying that the following are true, correct and complete copies and the originals thereof: Articles of Incorporation of Seller, as amended, and certified by the Colorado Secretary of State, bylaws 35 (as amended to date), resolutions of the board of directors recommending approval of the Acquisition and all transactions contemplated by this Agreement to the Shareholders and resolutions approving the Acquisition and all transactions contemplated by this Agreement; (i) Shareholders and Seller shall have delivered to Purchaser a certificate to the effect that each of the conditions specified above in this Section 6.1 have been satisfied in all respects, in the form attached hereto as EXHIBIT B; (j) Todd Keener shall have delivered to Purchaser an Employment Agreement by and between him and Purchaser, substantially in the form attached hereto as EXHIBIT C; (k) Danette Keener shall have delivered to Purchaser an Employment Agreement by and between her and Purchaser, substantially in the form attached hereto as EXHIBIT D; (l) Purchaser shall have received from counsel to Seller an opinion in substantially the form attached hereto as EXHIBIT E addressed to Purchaser; (m) Seller shall have terminated all of its employees; (n) Purchaser shall have procured the approval of its Boards of Directors of the Acquisition as contemplated by this Agreement; (o) Seller shall have at Closing at least 1,500 non-dedicated accounts and at least 9 dedicated access accounts delivering monthly revenues of at least $35,250, with recurring monthly revenues of at least $32,250; (p) Purchaser shall have received unaudited financial statements of Seller for the periods reasonably requested by Purchaser; (q) all actions to be taken by Shareholders and Seller in connection with consummation of the transactions contemplated hereby and all certificates, opinions, instruments, and other documents required to effect the transactions contemplated hereby will be satisfactory in form and substance to Purchaser; and 36 (r there shall have been no material adverse change in the business, financial condition, operations, results of operations or future prospects of Seller since July 31, 1998. Purchaser may waive any condition specified in this Section 6.1 only if it executes a writing so stating, at or prior to the Closing. Purchaser's knowledge of a breach of a representation, warranty or covenant shall not be considered as a waiver of any of the above conditions. 6.2 CONDITIONS TO OBLIGATION OF SHAREHOLDERS AND SELLER. The obligation of Shareholders and Seller to consummate the transactions to be performed by them in connection with the Closing is subject to satisfaction of the following conditions: (a) each of the representations and warranties set forth in Article IV above shall be true and correct in all material respects at and as of the Closing Date; (b) Purchaser shall have performed and complied with all of its covenants hereunder in all material respects through the Closing; and (c) no action, suit, or proceeding shall be pending before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction or before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would (i) prevent consummation of any of the transactions contemplated by this Agreement or (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation (and no such injunction, judgment, order, decree, ruling, or charge shall be in effect). Shareholders and Seller may waive any condition specified in this Section 6.2 if they execute a writing so stating at or prior to the Closing. ARTICLE VII REMEDIES FOR BREACH 7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the representations and warranties of the Parties contained in this Agreement shall survive the Closing hereunder (even if the damaged Party knew or had reason to know of any misrepresentation or breach of warranty or covenant at the time of Closing) and continue in full force and effect until three (3) years from the date of Closing. 37 7.2 INDEMNIFICATION PROVISIONS FOR BENEFIT OF PURCHASER. Seller and Shareholders shall indemnify, defend and hold harmless Purchaser and its officers, directors, employees, partners, shareholders, agents and affiliates and the officers, directors, employees, partners, shareholders and agents of such affiliates (collectively, the "Purchaser Indemnified Parties") from and against the entirety of any and all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid in settlement, liabilities, obligations, taxes, liens, losses, expenses, interest and fees, including court costs and attorneys' fees and expenses ("Adverse Consequences") the Purchaser Indemnified Parties may suffer (including any Adverse Consequences suffered after the making of any claim for indemnification or after the end of any applicable survival period) resulting from, arising out of, relating to, in the nature of, or caused by any of the following (i) Shareholders' or Seller's breach (or the allegation by any third party of facts that, if true, would mean either has breached) of any of the representations, warranties, and covenants contained in this Agreement; (ii) except as expressly provided herein to the contrary, any liability or obligation of any nature, accruing prior to the Closing Date; (iii) any claim by any shareholder or Seller with respect to the transactions contemplated by this Agreement, except for any claim arising out of a breach by Purchaser of its representations, warranties or obligations hereunder; and (iv) any actions, judgments, costs and expenses (including reasonable attorney fees and all other reasonable expenses incurred in investigating, preparing or defending any litigation or proceeding, commenced or threatened) incident to any of the foregoing; PROVIDED, HOWEVER, that Seller and Shareholders shall not have any obligation to indemnify the Purchaser Indemnified Parties from and against any such Adverse Consequences until such Adverse Consequences in aggregate exceed $1,000 (at which point Seller and Shareholders will be obligated to indemnify the Purchaser Indemnified Parties from and against all such claims for indemnification relating back to the first dollar). Each Purchaser Indemnified Party will give prompt notice to Seller of any claim or condition to which the foregoing indemnification covenant relates. 7.3 INDEMNIFICATION PROVISIONS FOR BENEFIT OF SELLER AND SHAREHOLDERS. In the event Purchaser breaches (or in the event any third party alleges facts that, if true, would mean either has breached) any of its representations, warranties, and covenants contained herein, then Purchaser shall indemnify Seller and Shareholders (collectively, the "Seller Indemnified Parties") from and against the entirety of any Adverse Consequences the Seller Indemnified Parties may suffer through and after the date of the claim for 38 indemnification (including any Adverse Consequences the Seller Indemnified Parties may suffer after the end of any applicable survival period) resulting, from, arising, out of, relating to, in the nature of, or caused by the breach (or the alleged breach); PROVIDED; HOWEVER, that Purchaser shall not have any obligation to indemnify the Seller Indemnified Parties from and against any such Adverse Consequences until such Adverse Consequences in aggregate exceed $1,000 (at which point Purchaser will be obligated to indemnify the Seller Indemnified Parties from and against all such claims for indemnification relating back to the first dollar). Each Seller Indemnified Party will give prompt notice to Purchaser of any claim or condition to which the foregoing indemnification covenant relates. 7.4 MATTERS INVOLVING THIRD PARTIES. (a) If any third party shall notify any Party (the "Indemnified Party") with respect to any matter (a "Third Party Claim") which may give rise to a claim for indemnification against any other Party (the "Indemnifying Party") under this Article VII, then the Indemnified Party shall promptly notify each Indemnifying Party thereof in writing; PROVIDED, HOWEVER, that no delay on the part of the Indemnified Party in notifying any Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the Indemnifying Party thereby is prejudiced. (b) Any Indemnifying Party will have the right to defend the Indemnified Party against the Third Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Party so long as (i) the Indemnifying Party notifies the Indemnified Party in writing within 15 days after the Indemnified Party has given notice of the Third Party Claim that the Indemnifying Party will indemnify the Indemnified Party from and against the entirety of any Adverse Consequences the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third Party Claim, (ii) the Indemnifying Party provides the Indemnified Party with evidence reasonably acceptable to the Indemnified Party that the Indemnifying Party will have the financial resources to defend against the Third Party Claim and fulfill its indemnification obligations hereunder, (iii) the Third Party Claim involves only money damages and does not seek an injunction or other equitable relief, (iv) settlement of, or an adverse judgment with respect to, the Third Party Claim is not, in the good faith judgment of the Indemnified Party, likely to establish a precedential custom or practice adverse to the continuing business interests of the Indemnified Party, and (v) the Indemnifying Party conducts the defense of the Third Party Claim actively and diligently. Notwithstanding anything herein to the contrary, the Indemnifying 39 Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnified Party (not to be withheld unreasonably). (c) So long as the Indemnifying Party is conducting the defense of the Third Party Claim in accordance with Section 7.4(b) above, (i) the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Third Party Claim and (ii) the Indemnified Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnifying Party (not to be unreasonably withheld, conditioned or delayed). (d) In the event any of the conditions in Section 7.4(b) above is or becomes unsatisfied, however, (i) the Indemnified Party may defend against, and consent to the entry of any judgment or enter into any settlement with respect to, the Third Party Claim in any manner it reasonably may deem appropriate (and the Indemnified Party need not consult with, or obtain any consent from, any Indemnifying Party in connection therewith), (ii) the Indemnifying Parties will reimburse the Indemnified Party promptly and periodically for the costs of defending AGAINST the Third Party Claim (including reasonable attorneys' fees and expenses), and (iii) the Indemnifying Parties will remain responsible for any Adverse Consequences the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third Party Claim to the fullest extent provided in this Article VII. 7.5 REMEDIES. The foregoing indemnification provisions are in addition to, and not in derogation of, any statutory, equitable, or common law remedy (including without limitation any such remedy arising under Environmental, Health, and Safety Requirements) any Party may have with respect to Seller, or the transactions contemplated by this Agreement. Without limiting the generality of the foregoing, Purchaser shall be entitled, but not required, to setoff any amounts due either pursuant to this Article VII against any and all amounts payable to Seller and Shareholders under this Agreement or otherwise. 7.6 ARBITRATION. If the Parties are unable to resolve any dispute arising under this Article VII, then such dispute shall be settled by arbitration by a panel of three (3) arbitrators, all of whom shall be persons with at least ten (10) years' experience in significant corporate, business or accounting matters and familiar with the purchase and sale of business concerns, in accordance with the rules of the American Arbitration Association. The expenses of the 40 prevailing party, including attorneys' fees and arbitration expenses, shall be paid by the losing party. If each party prevails in part, the arbitrators will determine the appropriate allocation of expenses among the parties. Judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. The parties may pursue all other remedies with respect to any claim not subject to arbitration. ARTICLE VIII TERMINATION 8.1 TERMINATION OF AGREEMENT. Any of the Parties may terminate this Agreement with the prior authorization of its board of directors (whether before or after receiving the Requisite Shareholders Approval) as provided below: (a) the Parties may terminate this Agreement by mutual written consent at any time prior to the Closing Date; (b) Purchaser may terminate this Agreement by giving written notice to Seller at any time prior to the Closing Date (i) in the event Seller or Shareholders has breached any representation, warranty, or covenant contained in this Agreement or (ii) if the Closing shall not have occurred on or before December 31, 1998, by reason of the failure of any condition precedent under Section 6.1 hereof (unless the failure results primarily from a breach by Purchaser of any representation, warranty, or covenant contained in this Agreement). Purchaser's knowledge of the existence of a condition that would entitle Purchaser to so terminate this Agreement shall not be construed as a waiver of its rights to so terminate at any later date prior to the Closing Date. 8.2 EFFECT OF TERMINATION. If any Party terminates this Agreement pursuant to Section 8.1(a) above, all rights and obligations of the Parties hereunder shall terminate without any liability of any Party to any other Party (except for any liability of any Party then in breach), except that the provisions contained in Section 5.2 above shall survive termination. ARTICLE IX MISCELLANEOUS 9.1 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. Seller shall not issue any press release or make any public announcement relating to the subject matter of this Agreement without the prior written approval of Purchaser both before and after Closing. 41 9.2 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any rights or remedies upon any person other than the Parties and their respective successors and permitted assigns. 9.3 ENTIRE AGREEMENT. This Agreement (including the documents referred to herein) constitutes the entire agreement among the Parties and supersedes any prior understandings, agreements, or representations by or among the Parties, written or oral, to the extent they related in any way to the subject matter hereof. 9.4 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns. No Party may assign either this Agreement or any of his or its rights, interests, or obligations hereunder without the prior written approval of Purchaser and Seller. 9.5 COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. 9.6 HEADINGS. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. 9.7 NOTICES. All notices, requests, demands, claims, and other communications hereunder shall be in writing and shall be deemed duly given, if addressed to the intended recipient as set forth below, (i) two (2) business days after it is sent, if sent by registered or certified mail, return receipt requested, postage prepaid, (ii) upon delivery, if personally delivered, (iii) upon confirmation of transmission, if sent via facsimile, or (iv) one (1) day after it is sent, if sent via overnight courier: If to Purchaser: Rocky Mountain Internet, Inc. 1099 18th Street, 30th Floor Denver, Colorado 80202 Attn: Douglas H. Hanson, President, CEO and Chairman Facsimile: (303) 313-0698 42 Copy to: Jacobs Chase Frick Kleinkopf & Kelley LLC 1050 17th Street, Suite 1500 Denver, Colorado 80265 Attn: Matthew R. Perkins, Esq. Facsimile: (303) 685-4869 If to Shareholders or Seller: Stonehenge Business Systems Corporation 7340 South Alton Way, Unit F Englewood, Colorado 80112 Attn: Todd and Danette Keener Facsimile: (303) 267-0441 Copy to: Julian M. Izbiky, Esq. 7400 East Caley Avenue, Suite 300 Englewood, Colorado 80111 Facsimile: (303) 850-7081 Any Party may send any notice, request, demand, claim, or other communication hereunder to the intended recipient at the address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic mail), but no such notice, request, demand, claim, or other communication shall be deemed to have been duly given unless and until it actually is received by the intended recipient. Any Party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other Parties notice in the manner herein set forth. 9.8 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Colorado without giving effect to any choice or conflict of law provision or rule (whether of the State of Colorado or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Colorado. 9.9 AMENDMENTS AND WAIVERS. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing, and signed by Purchaser, the Shareholders and Seller. No waiver by any Party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant 43 hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. 9.10 SEVERABILITY. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. 9.11 CONSTRUCTION. The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring, any Party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, or local statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word "including" shall mean including without limitation. The Parties intend that each representation, warranty, and covenant contained herein shall have independent significance. If any Party has breached any representation, warranty, or covenant contained herein in any respect, the fact that there exists another representation, warranty, or covenant relating to the same subject matter (regardless of the relative levels of specificity) which the Party has not breached shall not detract from or mitigate the fact that the Party is in breach of the first representation, warranty, or covenant. 9.12 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof. 9.13 SUBMISSION TO JURISDICTION. Each of the Parties submits to the jurisdiction of any state or federal court sitting in Denver, Colorado in any action or proceeding arising out of or relating to this Agreement and agrees that all claims in respect of the action or proceeding may be heard and determined in any such court. Each party also agrees not to bring any action or proceeding arising out of or relating to this Agreement in any other court. Each of the Parties waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety, or other security that might be required of any other Party with respect thereto. Any Party may make service on any other Party by sending or delivering a copy of the process to the Party to be served at the address and in 44 the manner provided for the giving of notices in Section 9.7 above. Nothing in this Section 9.13, however, shall affect the right of any Party to serve legal process in any other manner permitted by law or at equity. Each Party agrees that a final judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by law or at equity. 9.14 EXPENSES. Each of the Parties acknowledges that all costs and expenses (including legal fees and expenses) incurred by such Party in connection with this Agreement and the transactions contemplated hereby are the sole responsibility of such Party and shall be paid by such Party. 9.15 TRANSFER TAXES. The Purchaser shall pay any state sales, use or transfer tax incurred in connection with the sale of the Purchased Assets to the Purchaser. * * * * * * 45 IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above written. ROCKY MOUNTAIN INTERNET, INC., a Delaware corporation By: /s/ Douglas H. Hanson ------------------------- Douglas H. Hanson, President, CEO, and Chairman STONEHENGE BUSINESS SYSTEMS CORPORATION, a Colorado corporation By: /s/ Todd Keener ------------------------- Name: Todd Keener ----------------------- Title: President ---------------------- SHAREHOLDERS /s/ Todd Keener ---------------------------- Todd Keener /s/ Danette Keener ---------------------------- Danette Keener EX-99.3 5 EXHIBIT 99.3 [LOGO] FOR IMMEDIATE RELEASE CONTACTS: Chad Morris or Barbara Archer Shiloh Kelly Metzger Associates Director of Communications chad@metzger.com Rocky Mountain Internet Inc. archer@metzger.com shi@rmi.net (303) 786-7000 (303) 672-0732 ROCKY MOUNTAIN INTERNET ACQUIRES ARIZONA-BASED ISP COMPANY EXPANDS REACH AND CUSTOMER BASE FOR STOCK DENVER - November 23, 1998 - Rocky Mountain Internet Inc. (NASDAQ SmallCap Market-RMII, RMIIW) announced today it has completed the acquisition of InternetNow! (http://www.doitnow.com), an Arizona-based Internet Service Provider, in a stock transaction of 171,250 shares. The 1998 revenue run rate for InternetNow! is $1.4 million. "This acquisition will bring us new customers and extend our reach into the lucrative southwestern United States," said Douglas H. Hanson, president, CEO and chairman of Rocky Mountain Internet (http://www.rmi.net). "It will be a valuable addition to our company as we drive to become a premier national communications company." As a result of the acquisition, RMI will take immediate control of InternetNow!'s network operations, facilities and customers. InternetNow! currently offers a variety of Internet-based services including dial-up and dedicated Internet access, web hosting and design, and online classified advertising and chat rooms. InternetNow! serves customers in California, Arizona and Nevada. ABOUT ROCKY MOUNTAIN INTERNET Rocky Mountain Internet (http://www.rmi.net) is a full-service, national telecommunications company providing a wide range of voice and data communication services to businesses and consumers. Services include dedicated, dial-up and wireless Internet access, Web development, hosting and marketing, electronic commerce (e-SELL) and banner advertising management software applications (INFOHIWAY), network management, system integration, co-location services, paging, voice mail, local and long distance phone service, 800 service and IP Telephony. (This press release contains forward-looking statements. These forward-looking statements are subject to risks and uncertainties. Actual results may differ materially from such forward-looking statements as a result of risks and uncertainties which are described in the cautionary statements section of the company's 10K dated December 31, 1997, and include the need for additional financing, the ICC litigation, changing technology, competition, possible future government regulation, competition for talented employees, the Company's ability to fund future operations and the Company's need to refinance debt.) # # # EX-99.4 6 EXHIBIT 99.4 [LOGO] FOR IMMEDIATE RELEASE CONTACTS: Chad Morris or Barbara Archer Shiloh Kelly Metzger Associates Director of Communications chad@metzger.com Rocky Mountain Internet Inc. archer@metzger.com shi@rmi.net (303) 786-7000 (303) 672-0732 ROCKY MOUNTAIN INTERNET EXPANDS ITS REACH INTO KANSAS RMI ADDS REVENUE AND CUSTOMER BASE THROUGH ACQUISITION OF UNICOM COMMUNICATIONS DENVER, November 25, 1998 -- Rocky Mountain Internet Inc. (NASDAQ SmallCap Market-RMII, RMIIW) announced today it has completed the acquisition of Overland Park, Kansas-based Unicom Communications' Internet access and hosting business (http://www.unicom.net), in a stock transaction valued at $1.7 million. For 1998, Unicom is experiencing a revenue run rate in excess of $1 million. "This acquisition, along with InternetNow!, which closed earlier this week, is keeping pace with our rapid expansion plans of becoming a national communications company," said Douglas H. Hanson, president, CEO and chairman of Rocky Mountain Internet (http://www.rmi.net). "As we move forward as a leading Web Solutions and e-commerce provider, Unicom's resources will be an unbelievable asset to our team." As a result of the acquisition, Rocky Mountain Internet will take immediate control of Unicom's network operations, facilities and customers. Founded in 1995, Unicom Communications is an Overland Park, Kan.-based ISP with 3,500 subscribers. In addition to Internet access, the company also provides Web hosting and e-commerce solutions. Among the company's primarily business subscribers are Kansas City Power and Light, Data Supply Outlet, Universal Underwriters Group and Integrated Medical Resources. ABOUT ROCKY MOUNTAIN INTERNET Rocky Mountain Internet (http://www.rmi.net) is a national Web solutions and e-commerce company providing a wide range of Internet and data communication services to businesses and consumers with an emphasis on e-commerce solutions. Services include dedicated, dial-up and wireless Internet access, Web development, hosting and marketing, electronic commerce (e-SELL) and banner advertising management software applications (INFOHIWAY), network management, system integration, co-location services, paging, voice mail, local and long distance phone service, 800 service and IP Telephony. (This press release contains forward-looking statements. These forward-looking statements are subject to risks and uncertainties. Actual results may differ materially from such forward-looking statements as a result of risks and uncertainties which are described in the cautionary statements section of the company's 10K dated December 31, 1997, and include the need for additional financing, the ICC litigation, changing technology, competition, possible future government regulation, competition for talented employees, the Company's ability to fund future operations and the Company's need to refinance debt.) # # # EX-99.5 7 EXHIBIT 99.5 [LOGO] FOR IMMEDIATE RELEASE CONTACTS: Chad Morris or Robyn Phipps Todd Keener Metzger Associates President (303) 786-7000 Stonehenge Internet Communications Corp. chad@metzger.com (303) 267-0424 robyn@metzger.com Shiloh Kelly Director of Communications Rocky Mountain Internet Inc. (303) 672-0732 shiloh.kelly@corp.rmi.net ROCKY MOUNTAIN INTERNET EXPANDS LOCAL CUSTOMER BASE RMI COMPLETES ACQUISITION OF STONEHENGE INTERNET COMMUNICATIONS CORP. DENVER, December 1, 1998 -- Rocky Mountain Internet Inc. (NASDAQ SmallCap Market-RMII, RMIIW) announced today it has completed the acquisition of Denver-based Stonehenge Internet Communications Corp. in a stock transaction valued at $450,000. According to Douglas H. Hanson, president, CEO and chairman of Rocky Mountain Internet, "This is an exciting acquisition because it is in our own backyard, and we can easily integrate this company. Completing this acquisition will not only strengthen our local customer base, it will help solidify our position as Colorado's leading Internet Solutions Provider." Founded in 1992, Stonehenge is a Colorado-based ISP with 2,200 subscribers. Run rate revenues for 1998 amount to $650,000. In addition to Internet access, the company also provides network consulting and cabling. As a result of the acquisition, RMI will obtain control of Stonehenge's network operations, facilities and customers. Todd Keener, president and founder, and other employees will join the RMI team. "We are excited about the opportunity to be a part of Rocky Mountain Internet, clearly a company on the move," commented Todd Keener, president and founder of Stonehenge. "Doug Hanson is a big reason why we are here." -more- ABOUT ROCKY MOUNTAIN INTERNET Rocky Mountain Internet (http://www.rmi.net) is a national Web Solutions and E-commerce company providing a wide range of Internet and data communication services to businesses and consumers with an emphasis on e-commerce solutions. Services include: a comprehensive browser-based electronic commerce software package (www.e-sell.com); a leading-edge portal site (www.infohiway.com); a browser-based banner advertising management software package (www.infohiway.com/adcafe/), and long distance IP-Telephony (www.ic-ephone.net). Other RMI services consist of dedicated, DSL, dial-up and wireless Internet access, network management, system integration, co-location, paging, voice mail, local and long distance phone service, 800 service and IP Telephony. (This press release contains forward-looking statements. These forward-looking statements are subject to risks and uncertainties. Actual results may differ materially from such forward-looking statements as a result of risks and uncertainties which are described in the cautionary statements section of the company's 10K dated December 31, 1997, and include the need for additional financing, the ICC litigation, changing technology, competition, possible future government regulation, competition for talented employees, the Company's ability to fund future operations and the Company's need to refinance debt.) ### -----END PRIVACY-ENHANCED MESSAGE-----