-----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, TSG2XJveLvHstQVnFlVFDEWiMgaOE+7g4Bq4SsYnllQbH6Uyr61uLmvDYurN9bxp 9euNpDoLl+1MtK0eCxOtXw== 0001047469-99-033825.txt : 19990830 0001047469-99-033825.hdr.sgml : 19990830 ACCESSION NUMBER: 0001047469-99-033825 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990730 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990826 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RMI NET 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: 99700371 BUSINESS ADDRESS: STREET 1: 999 18TH STREET STREET 2: STE 2201 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3036720700 MAIL ADDRESS: STREET 1: 999 18TH STREET STREET 2: STE 2201 CITY: DENVER STATE: CO ZIP: 80202 FORMER COMPANY: FORMER CONFORMED NAME: ROCKY MOUNTAIN INTERNET INC DATE OF NAME CHANGE: 19960508 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 (Date of earliest event reported) July 30, 1999 ----------------------------- RMI.NET, Inc. - ------------------------------------------------------------------------------- (Exact name of Registrant as specified in charter) Delaware - ------------------------------------------------------------------------------- (State or other jurisdiction of incorporation) 001-12063 84-1322326 - ----------------------------------- --------------------------------------- (Commission File Number) (IRS Employee Identification No.) 999 Eighteenth Street, Suite 2201 80202 - -------------------------------------------------------- ---------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (303) 672-0700 -------------- Not Applicable - ------------------------------------------------------------------------------- (Former name or former address, if changed since last report) ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. As previously announced in the Registrant's Quarterly Report on Form 10-Q for the Quarter ended June 30, 1999 and filed with the Securities and Exchange Commission on August 9, 1999, the Registrant recently acquired Triad Resources, L.L.C., an Oklahoma limited liability company doing business as "WebZone" and headquartered in Tulsa, Oklahoma. The Registrant agreed to pay approximately $5.25 million, payable in the form of 441,175 shares of common stock. The consideration that the Registrant agreed to pay was determined through arm's length negotiation. There was no material relationship between the Registrant and Triad Resources, L.L.C. prior to the acquisition. WebZone is an Internet service provider. The Registrant intends to use the assets acquired in the same manner that Triad Resources, L.L.C. and WebZone utilized the assets. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) Triad Resources, L.L.C. - Audited Financial Statements: Independent Auditors' Report - PricewaterhouseCoopers LLP Balance Sheets as of December 31, 1998, 1997 and 1996 Statements of Operations for the Years Ended December 31, 1998, 1997 and 1996 Statements of Stockholders' Equity (Deficiency) for the Years Ended December 31, 1998, 1997 and 1996 Statements of Members' Equity (Deficit) for the Years Ended December 31, 1998, 1997 and 1996 Statements of Cash Flows for the Years Ended December 31, 1998, 1997 and 1996 Notes to Financial Statements (b) Pro Forma Financial Information: Pro Forma Condensed Combined Balance Sheet as of June 30, 1999 Pro Forma Condensed Combined Statement of Operations for the Year Ended December 31, 1998 Pro Forma Condensed Combined Statement of Operations for the Six Months Ended June 30, 1999 (c) Exhibits: Exhibit Number Description ---------------------- -------------------------------------------- 10.1 Asset Purchase Agreement by and among RMI.NET, Inc. f/ka Rocky Mountain Internet, Inc. and Triad Resources, L.L.C. and Ms. Carol L. Mersch and Mr. Charles A. Bacher dated as of July 30, 1999 20.1 News Release dated August 3, 1999 announcing the Acquisition of WebZone. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. RMI.NET, Inc. ----------------------------------------------- (Registrant) Date: August 26, 1999 By: /s/ CHRISTOPHER J. MELCHER --------------------------------------- Christopher J. Melcher Vice President, General Counsel and Corporate Secretary TRIAD RESOURCES, L.L.C. REPORT ON AUDIT OF FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 REPORT OF INDEPENDENT ACCOUNTANTS To the Members Triad Resources, L.L.C. In our opinion, the accompanying balance sheets and the related statements of operations, members' equity (deficit) and cash flows present fairly, in all material respects, the financial position of Triad Resources, L.L.C. (the "Company") at December 31, 1998, 1997 and 1996, and the results of their operations and their cash flows for the years then ended in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. /s/ PricewaterhouseCoopers LLP July 6, 1999 1 TRIAD RESOURCES, L.L.C. BALANCE SHEETS December 31, 1998, 1997 and 1996
ASSETS 1998 1997 1996 ------ --------- -------- --------- Current assets: Cash $ 3,789 $ 5,794 $ 4,528 Accounts receivable 25,669 13,455 8,754 Note receivable 15,000 - - --------- -------- --------- Total current assets 44,458 19,249 13,282 --------- -------- --------- Property and equipment, net 543,168 305,602 125,013 --------- -------- --------- Total assets $ 587,626 $324,851 $ 138,295 --------- -------- --------- --------- -------- --------- LIABILITIES AND MEMBERS' EQUITY (DEFICIT) Current liabilities: Accounts payable $ 73,726 $ 76,684 $ 109,212 Accrued liabilities 9,802 10,614 7,305 Deferred revenue 89,230 44,362 14,883 Long term obligations, current portion 62,303 53,776 - Advances from members, current portion 24,964 212,433 122,433 Estimated liability for guarantees of obligations of investee (Note 6) 101,482 - - --------- -------- --------- Total current liabilities 361,507 397,869 253,833 --------- -------- --------- Long term obligations 140,466 19,533 47,437 Advances from members 62,574 - - Members' equity (deficit): Members' equity 165,227 191,711 117,649 Accumulated deficit (142,148) (284,262) (280,624) --------- -------- --------- Total members' equity (deficit) 23,079 (92,551) (162,975) --------- -------- --------- Total liabilities and members' equity (deficit) $ 587,626 $324,851 $ 138,295 --------- -------- --------- --------- -------- ---------
The accompanying notes are an integral part of the financial statements. 2 TRIAD RESOURCES, L.L.C. STATEMENTS OF OPERATIONS For the Years Ended December 31, 1998, 1997 and 1996
1998 1997 1996 ---------- ---------- ---------- Revenues: Recurring revenues $1,902,664 $ 852,177 $ 128,056 Other 182,847 122,058 39,590 ---------- ---------- ---------- 2,085,511 974,235 167,646 ---------- ---------- ---------- Expenses: Cost of operations 1,174,119 612,910 288,144 Selling, general and administrative 421,679 215,310 152,158 Depreciation 105,292 50,701 10,801 Loss on sale of property and - 20,590 - Loss on investment (Note 6) 216,603 48,450 - ---------- ---------- ---------- 1,917,693 947,961 451,103 ---------- ---------- ---------- Income (loss) from operations 167,818 26,274 (283,457) ---------- ---------- ---------- Interest expense 25,704 29,912 6,178 ---------- ---------- ---------- Net income (loss) $ 142,114 $ (3,638) $ (289,635) ---------- ---------- ---------- ---------- ---------- ----------
The accompanying notes are an integral part of the financial statements. 3 TRIAD RESOURCES, L.L.C. STATEMENTS OF MEMBERS' EQUITY (DEFICIT) For the Years Ended December 31, 1998, 1997 and 1996
Members' Accumulated Equity Deficit Total --------- --------- -------- Balance at December 31, 1995 $ 14,991 $ 9,011 $ 24,002 Member contributions 102,658 - 102,658 Net income (loss) - (289,635) (289,635) --------- --------- -------- Balance at December 31, 1996 117,649 (280,624) (162,975) Member contributions 74,062 - 74,062 Net income (loss) - (3,638) (3,638) --------- --------- -------- Balance at December 31, 1997 191,711 (284,262) (92,551) Member distributions (26,484) - (26,484) Net income (loss) - 142,114 142,114 --------- --------- -------- Balance at December 31, 1998 $ 165,227 $(142,148) $ 23,079 --------- --------- -------- --------- --------- --------
The accompanying notes are an integral part of the financial statements. 4 TRIAD RESOURCES, L.L.C. STATEMENTS OF CASH FLOWS
1998 1997 1996 --------- -------- --------- Cash flows from operating activities: Net income (loss) $ 142,114 $ (3,638) $(289,635) Adjustments to reconcile net income to cash provided by operating activities: Loss on sale of property and equipment - 20,590 - Loss on investment 125,752 8,280 - Depreciation 105,292 50,701 10,801 Decrease (increase) in accounts receivable (12,214) (4,701) (8,754) (Decrease) increase in accounts payable (2,958) (32,528) 109,212 (Decrease) increase in accrued liabilities (812) 3,309 7,305 (Decrease) increase in deferred revenue 44,868 29,479 14,883 --------- -------- --------- Net cash provided by (used in) operating activities 402,042 71,492 (156,188) --------- -------- --------- Cash flows from investing activities: Expenditures for property and equipment (342,858) (262,529) (135,814) Proceeds from disposition of property and equipment - 10,649 - Acquisition of investment (Note 6) (24,270) (8,280) - Increase in notes receivable (15,000) - - --------- -------- --------- Net cash used in investing activities (382,128) (260,160) (135,814) --------- -------- --------- Cash flows from financing activities: Proceeds from long-term obligations 217,000 107,468 47,437 Repayment of long-term obligations (87,540) (81,596) - Member contributions (distributions) (26,484) 74,062 102,658 Advances from members - 90,000 122,433 Repayment of advances from members (124,895) - - --------- -------- --------- Net cash provided by (used in) financing activities (21,919) 189,934 272,528 --------- -------- --------- Net increase (decrease) in cash (2,005) 1,266 (19,474) Cash at beginning of year 5,794 4,528 24,002 --------- -------- --------- Cash at end of year $ 3,789 $ 5,794 $ 4,528 --------- -------- --------- --------- -------- --------- Supplemental disclosure of cash flow information: Cash paid during the year for interest $ 48,458 $ 12,478 $ 858 --------- -------- --------- --------- -------- ---------
The accompanying notes are an integral part of the financial statements. 5 TRIAD RESOURCES, L.L.C. NOTES TO FINANCIAL STATEMENTS 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NATURE OF OPERATIONS - Triad Resources, L.L.C. (the "Company) (d.b.a. WebZone") is an Oklahoma limited liability company that operates as an internet service provider ("ISP") in Tulsa and Oklahoma City, Oklahoma. The Company was formed in 1993 and began the WebZone operations in June 1996. The Company's presence was established in Oklahoma City in September 1998. USE OF ESTIMATES - The preparation of financial statements in conformity with generally accepted accounting principals requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. PROPERTY AND EQUIPMENT - Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets or the lesser of the term of the lease or the useful life of the asset for leasehold improvements. Maintenance and repairs are charged to expense in the year incurred and renewals and betterments that extend the useful life of the asset are capitalized. Gain or loss on disposal of property and equipment is credited or charged to operations. The estimated useful life of equipment is five years. REVENUE RECOGNITION - Recurring revenues consist of monthly fees charged to customers for internet access and other ongoing services related to monthly internet service and are recognized over the period services are provided. Other revenues which include set-up fees charged to customers when their accounts are activated, domain name registration fees, web design and miscellaneous equipment sales are recognized as the service is performed or the equipment is delivered to the customer. ADVERTISING - The Company expenses advertising costs as incurred. During the years ended December 31, 1998, 1997 and 1996, the Company incurred $109,677, $41,352 and $25,759, respectively in advertising costs. INCOME TAXES - Under applicable provisions of the Internal Revenue Code, the Company is not taxed as a corporation, as its earnings are taxed to the individual members. Therefore, no provision for federal and state income taxes has been made in the accompanying financial statements. 6 TRIAD RESOURCES, L.L.C. NOTES TO FINANCIAL STATEMENTS 2. PROPERTY AND EQUIPMENT Property and equipment at December 31, 1998, 1997 and 1996 is comprised of the following:
1998 1997 1996 -------------------- ---------------------- -------------------- Computer equipment $ 658,388 $ 353,284 $ 131,791 Furniture and fixtures 21,160 1,133 1,133 Leasehold improvements 15,981 2,255 - Software 8,386 4,385 2,890 Accumulated depreciation (160,747) (55,455) (10,801) -------------------- ---------------------- -------------------- $ 543,168 $ 305,602 $ 125,013 -------------------- ---------------------- -------------------- -------------------- ---------------------- --------------------
Property under capital lease, primarily computer equipment included above, aggregated $107,468, at December 31, 1998 and 1997. Included in accumulated depreciation are amounts related to property under capital lease of $42,000 and $21,000 at December 31, 1998 and 1997, respectively. Depreciation expense included $21,000 in both 1998 and 1997 pertaining to property under capital lease. 7 TRIAD RESOURCES, L.L.C. NOTES TO FINANCIAL STATEMENTS 3. LONG-TERM OBLIGATIONS AND LINE OF CREDIT The Company's long-term obligations at December 31, 1998, 1997 and 1996 were as follows:
1998 1997 1996 --------- -------- --------- Bank line of credit ($100,000 facility) bearing interest at the WSJ prime rate plus 1% (8.75% at December 31, 1998), expiring in July 2000 $ 28,066 $ 17,066 $ 47,437 Long-term loan payable in monthly installments of $2,208, plus intereest at 9.05%, final maturity in April 2000 86,125 - - Long-term loan payable in monthly installments of $2,778, plus interest at varying rates, final maturity in August 2001 86,111 - - Capital lease obligation payable in monthly installments, plus interest at 9.25%, with the balance due in January 1999 2,467 56,243 - --------- -------- --------- 202,769 73,309 47,437 Less current maturities (62,303) (53,776) - --------- -------- --------- $ 140,466 $ 19,533 $ 47,437 --------- -------- --------- --------- -------- ---------
Maturities of the Company's long-term obligations are as follows: 1999 $ 62,303 2000 87,902 2001 45,939 2002 6,625 --------- $202,769 --------- ---------
8 TRIAD RESOURCES, L.L.C. NOTES TO FINANCIAL STATEMENTS 4. RELATED PARTY TRANSACTIONS The Company periodically receives advances from its members which amounts due include interest at 8.5%. Amounts due under the advances at December 31, 1998, 1997 and 1996 were $87,538, $212,433 and $122,433, respectively. Interest expense on such advances was $7,562, $17,434 and $5,320 for the years ended December 31, 1998, 1997 and 1996, respectively. Prior to 1998, no specific repayment terms existed with respect to the advances, and the amounts due were classified as current liabilities. In 1998, certain advances were repaid and the remaining advance was established with monthly installments payable over a 48-month period. Costs of shared services between the Company and a company with common ownership are allocated to the Company based on management's estimate of all such costs that are applicable to the Company. Management believes these allocations are reasonable based on their knowledge of the Company's historical operations. The Company was charged $91,692, $117,665 and $100,800 by the affiliate for the years ended December 31, 1998, 1997 and 1996, respectively, representing corporate costs for such shared services, including rent, insurance and other general and administrative expenses. 5. COMMITMENTS The Company leases certain office facilities under noncancelable operating leases expiring at various dates through 2001. Future minimum lease payments are as follows: 1999 $54,733 2000 18,009 2001 18,009 ------- $90,751 ------- -------
Total rental expense for 1998, 1997 and 1996 was $58,791, $20,623 and $17,799, respectively. 9 TRIAD RESOURCES, L.L.C. NOTES TO FINANCIAL STATEMENTS 6. INVESTMENT In 1997, the Company acquired a 50% interest in an internet-based environmental, health and safety information services company. The Company has accounted for this investment under the equity method of accounting; accordingly, the investment has been adjusted for the Company's proportionate share of the losses of the investee totalling $125,752 and $8,280 in 1998 and 1997, respectively. The Company has guaranteed debt of the investee up to $200,000 (of which $191,750 of the debt was owed by the investee at December 31, 1998). Associated with the Company's recording of its equity in the losses of the investee, a liability related to this guarantee of $101,482 has been recorded at December 31, 1998. The Company has also dedicated certain of its employees to the development of the investee's internet operations for which the Company will not be compensated. The costs associated with these services totalling $90,851 and $40,170 in 1998 and 1997, respectively, have been expensed as a component of the Company's loss on investment in the accompanying statements of operations. 7. SUBSEQUENT EVENT On April 14, 1999, the Company signed a letter of intent to sell the assets associated with its ISP operations for an amount to be derived based on specified Company operations in 1999. 10 SELECTIVE UNAUDITED PRO FORMA COMBINED FINANCIAL DATA The following selected unaudited pro forma combined financial information presented below has been derived from the unaudited or audited historical financial statements of the Company, Triad Resources L.L.C. (d/b/a WebZone), IdealDial Corporation and August 5th Corporation (d/b/a Dave's World) and reflects management's present estimate of pro forma adjustments, including a preliminary estimate of the purchase price allocations, which ultimately may be different. The acquisition is being accounted for using the purchase method of accounting. Accordingly, assets acquired and liabilities assumed are recorded at their estimated fair values, which are subject to further adjustment based upon appraisals and other analysis, with appropriate recognition given to the effect of the Company's borrowing rates and income tax rates. The unaudited pro forma combined statements of operations for the six months ended June 30, 1999 and the year ended December 31, 1998 give effect to the acquisitions as if they had been consummated at the beginning of such period. These pro forma statements of operations combines the historical consolidated statements of operations for the periods reported for the Company, Triad Resources L.L.C. (d/b/a WebZone), IdealDial Corporation and August 5th Corporation (d/b/a Dave's World). The unaudited pro forma condensed combined balance sheet as of June 30, 1999 gives effect to the acquisition as if it had been consummated on that date. This pro forma balance sheet combines the historical consolidated balance sheet at that date for the Company and for Triad Resources L.L.C. (d/b/a WebZone). The unaudited pro forma condensed combined financial statements may not be indicative of the results that actually would have occurred if the transaction described above had been completed and in effect for the periods indicated or the results that may be obtained in the future. The unaudited pro forma condensed combined financial data presented below should be read in conjunction with the audited and unaudited historical financial statements and related notes thereto of the Company. 11 Pro Forma Condensed Combined Balance Sheet As of June 30, 1999 (Unaudited)
------------------------------------------------------------------------------------------- Triad Pro Forma Pro Forma Pro Forma RMI.NET, Inc. Resources LLC Subtotal Adjustments (B) Combined ------------------------------------------------------------------------------------------- (Dollars in Thousands) ASSETS CURRENT ASSETS Cash and cash equivalents 4,423 18 4,441 - 4,441 Trade receivables less allowance for doubtful accounts 4,687 74 4,761 - 4,761 Inventories 237 - 237 - 237 Other 840 16 856 - 856 ------------------------------------------------------------------------------------------- Total Current Assets 10,187 108 10,295 - 10,295 ------------------------------------------------------------------------------------------- PROPERTY AND EQUIPMENT, net 8,270 742 9,012 - 9,012 Goodwill, net 21,637 - 21,637 4,885 (1) 26,522 Other 117 61 178 - 178 ------------------------------------------------------------------------------------------- Total Assets 40,211 911 41,122 4,885 46,007 ------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable 4,361 86 4,447 - 4,447 Current maturities of long term debt and capital lease obligations 1,919 140 2,059 - 2,059 Deferred revenue 1,076 - 1,076 - 1,076 Accrued payroll & related taxes 408 408 - 408 Accrued expenses & other 2,070 142 2,212 - 2,212 ------------------------------------------------------------------------------------------- Total Current Liabilites 9,834 368 10,202 - 10,202 ------------------------------------------------------------------------------------------- LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS 3,227 178 3,405 - 3,405 ------------------------------------------------------------------------------------------- Total liabilites 13,061 546 13,607 - 13,607 - REDEEMABLE CONVERTIBLE PREFERRED STOCK 4,594 - 4,594 - 4,594 Stockholders' Equity Common Stock 12 - 12 - 12 Additional paid in capital 47,422 50 47,472 (50)(3) 47,422 5,250 5,250 Accumulated deficit (24,878) 315 (24,563) (315) (2) (24,878) Unearned compesation - - - - - ------------------------------------------------------------------------------------------- 22,556 365 22,921 4,885 27,806 ------------------------------------------------------------------------------------------- 40,211 911 41,122 4,885 46,007 ------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------
12 Pro Forma Condensed Combined Statement of Operations For the Year Ended December 31, 1998 (Unaudited)
Historical --------------------------------------------------------------------------------- Previously Reported Triad Pro Forma Pro Forma Pro Forma RMI.NET, Inc. Acquisitions Resources LLC Subtotal Adjustments (B) Combined --------------------------------------------------------------------------------- (Amount in Thousands, Except Per Share Data) Revenue Communication Services 7,974 11,494 2,086 21,554 0 21,554 Web Solutions 2,113 0 0 2,113 0 2,113 --------------------------------------------------------------------------------- 10,087 11,494 2,086 23,667 0 23,667 --------------------------------------------------------------------------------- Cost of revenue earned Communication Services 3,471 8,737 1,174 13,382 0 13,382 Web Solutions 50 0 0 50 0 50 --------------------------------------------------------------------------------- 3,521 8,737 1,174 13,432 0 13,432 --------------------------------------------------------------------------------- --------------------------------------------------------------------------------- Gross profit 6,566 2,757 912 10,235 0 10,235 --------------------------------------------------------------------------------- General, selling and administrative expenses 9,184 3,145 639 12,968 0 12,968 Cost related to unsuccessful merger attempt 6,071 0 0 6,071 0 6,071 Depreciation and amortization 1,789 365 105 2,259 1,851(5) 4,110 --------------------------------------------------------------------------------- Operating loss (10,478) (753) 168 (11,063) (1,851) (12,914) --------------------------------------------------------------------------------- Other income (expense) Interest expense (320) (114) (26) (460) 0 (460) Interest Income 51 0 0 51 0 51 Other income (expense), net 78 98 0 176 0 176 --------------------------------------------------------------------------------- (191) (16) (26) (233) 0 (233) --------------------------------------------------------------------------------- Net loss (10,669) (769) 142 (11,296) (1,851) (13,147) --------------------------------------------------------------------------------- --------------------------------------------------------------------------------- Preferred stock dividends 33 33 Net loss applicable to common Stockholders (10,702) (13,180) Basic and Diluted loss per share from (1.39) (1.55) continuing operations ----------- -------- ----------- -------- Average number of common shares 7,690 8,500 outstanding (5) ----------- -------- ----------- --------
13 Pro Forma Condensed Combined Statement of Operations For the Six Months Ended June 30, 1999 (Unaudited)
Historical ---------------------------------------------------------------------------------- Previously Reported Triad Pro Forma Pro Forma Pro Forma RMI.NET, Inc. Acquisitions Resources LLC Subtotal Adjustments (B) Combined ---------------------------------------------------------------------------------- (Amount in Thousands, Except Per Share Data) Revenue Communication Services 9,801 3,059 1,645 14,505 0 14,505 Web Solutions 1,851 0 0 1,851 0 1,851 ---------------------------------------------------------------------------------- 11,652 3,059 1,645 16,356 0 16,356 ---------------------------------------------------------------------------------- Cost of revenue earned Communication Services 5,406 2,315 926 8,647 0 8,647 Web Solutions 511 0 0 511 0 511 ---------------------------------------------------------------------------------- 5,917 2,315 926 9,158 0 9,158 ---------------------------------------------------------------------------------- ---------------------------------------------------------------------------------- Gross profit 5,735 744 719 7,198 0 7,198 ---------------------------------------------------------------------------------- General, selling and administrative expenses 10,222 875 205 11,302 0 11,302 Cost related to unsuccessful merger attempt 0 0 0 0 0 0 Depreciation and amortization 2,605 112 46 2,763 611(4) 3,374 ---------------------------------------------------------------------------------- Operating loss (7,092) (243) 468 (6,867) (611) (7,478) ---------------------------------------------------------------------------------- Other income (expense) Interest expense (228) (29) (12) (269) 0 (269) Interest Income 68 1 1 70 0 70 Other income (expense), net 0 0 0 0 0 0 ---------------------------------------------------------------------------------- (160) (28) (11) (199) 0 (199) ---------------------------------------------------------------------------------- Net loss (7,252) (271) 457 (7,066) (611) (7,677) ---------------------------------------------------------------------------------- ---------------------------------------------------------------------------------- Preferred stock dividends 178 178 Net loss applicable to common Stockholders (7,430) (7,855) Basic and Diluted loss per share from continuing operations (0.73) (0.72) -------- -------- -------- -------- Average number of common shares outstanding (5) 10,141 10,727 -------- -------- -------- --------
14 NOTES TO THE PRO FORMA CONSENSED COMBINED FINANCIAL DATA (UNAUDITED) (A) BASIS OF PRESENTATION The accompanying unaudited pro forma condensed combined balance sheet is presented as of June 30, 1999. The accompanying unaudited pro forma condensed combined statements of operations are presented for the three months ended June 30, 1999 and the year ended December 31, 1998. (B) PRO FORMA ADJUSTMENTS The following pro forma adjustments have been made to the unaudited condensed combined balance sheet as of June 30, 1999 and the unaudited condensed combined statements of operations for the six months ended June 30, 1999 and the year ended December 31, 1998: (1) To reflect the 439,493 shares of RMI stock valued at $5.3 million which is the number of shares issued in connection with the acquisition of Triad Resources L.L.C. (d/b/a WebZone). The excess purchase price over the fair value of the assets acquired has been allocated to goodwill. The pro forma adjustment reflects the incremental goodwill in the amount of $4.9 million. Shares of Common Stock issued for the acquisition were recorded at fair market value as based on the current market price of RMI's publicly traded stock. The final allocation of the purchase price will be made after the appropriate appraisals or analyses are performed. Upon completion of the appraisals and in accordance with the terms thereof, the excess purchase price currently allocated to goodwill will be allocated to the appropriate asset classifications, including customer list and goodwill. While goodwill will be amortized over a period of five years, customer list or other identified intangibles may be amortized over shorter periods, which would therefore increase amortization expense. (2) To eliminate the equity accounts of the acquisition. (3) To adjust amortization expense due to increase in the carrying value of goodwill, using a life of five years, as if such acquisitions had been completed as of January 1, 1998. (4) To adjust for revenues and expenses for the acquisition of Triad Resources L.L.C. (d/b/a WebZone) and IdealDial Corporation as if such acquisitions had been completed as of January 1, 1999. (5) To adjust for revenues and expenses for the acquisition of Triad Resources L.L.C. (d/b/a WebZone) and IdealDial Corporation as if such acquisition had been completed as of January 1, 1998. 15 EX-10.1 2 EXHIBIT 10.1 EXHIBIT 10.1 ASSET PURCHASE AGREEMENT BY AND AMONG RMI.NET, INC. F/K/A ROCKY MOUNTAIN INTERNET, INC. AND TRIAD RESOURCES, L.L.C. AND MS. CAROL L. MERSCH AND MR. CHARLES A. BACHER DATED AS OF JULY 30, 1999 TABLE OF CONTENTS 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2. Basic Transaction . . . . . . . . . . . . . . . . . . . . . . . 5 (a) Purchase and Sale of Acquired Assets . . . . . . . . . . 5 (b) Purchase Price . . . . . . . . . . . . . . . . . . . . . 5 (c) Adjustments to Purchase Price . . . . . . . . . . . . . . 6 (d) The Closing . . . . . . . . . . . . . . . . . . . . . . . 7 (e) Deliveries at the Closing . . . . . . . . . . . . . . . . 7 (f) Allocation . . . . . . . . . . . . . . . . . . . . . . . 8 (g) Assumption of Liabilities . . . . . . . . . . . . . . . . 8 3. Representations and Warranties of the Seller. . . . . . . . . . 8 (a) Organization of the Seller . . . . . . . . . . . . . . . 8 (b) Authorization of Transaction . . . . . . . . . . . . . . 8 (c) Noncontravention . . . . . . . . . . . . . . . . . . . . 8 (d) Brokers' Fees . . . . . . . . . . . . . . . . . . . . . . 9 (e) Title to Acquired Assets . . . . . . . . . . . . . . . . 9 (f) Financial Statements . . . . . . . . . . . . . . . . . . 9 (g) Events Subsequent to Most Recent Month End . . . . . . . 9 (h) Undisclosed Liabilities . . . . . . . . . . . . . . . . . 9 (i) Legal Compliance . . . . . . . . . . . . . . . . . . . . 10 (j) Tax Matters . . . . . . . . . . . . . . . . . . . . . . . 10 (k) Real Property . . . . . . . . . . . . . . . . . . . . . . 10 (l) Intellectual Property . . . . . . . . . . . . . . . . . . 10 (m) Fixed Assets . . . . . . . . . . . . . . . . . . . . . . 10 (n) Contracts . . . . . . . . . . . . . . . . . . . . . . . . 10
(o) Insurance . . . . . . . . . . . . . . . . . . . . . . . . 10 (p) Litigation . . . . . . . . . . . . . . . . . . . . . . . 10 (q) Warranties . . . . . . . . . . . . . . . . . . . . . . . 11 (r) Guaranties . . . . . . . . . . . . . . . . . . . . . . . 11 (s) State PUC Authorizations and FCC Authorizations . . . . . 11 (t) Investment . . . . . . . . . . . . . . . . . . . . . . . 11 (u) Disclosure . . . . . . . . . . . . . . . . . . . . . . . 11 4. Representations and Warranties of the Buyer . . . . . . . . . . 11 (a) Organization of the Buyer . . . . . . . . . . . . . . . . 12 (b) Authorization of Transaction . . . . . . . . . . . . . . 12 (c) Noncontravention . . . . . . . . . . . . . . . . . . . . 12 (d) Complete Investigation . . . . . . . . . . . . . . . . . 12 (e) SEC Filings . . . . . . . . . . . . . . . . . . . . . . . 12 (f) Absence of Certain Changes . . . . . . . . . . . . . . . 12 (g) The Buyer Shares . . . . . . . . . . . . . . . . . . . . 13 (h) Brokers' Fees . . . . . . . . . . . . . . . . . . . . . . 13 (i) Disclosure . . . . . . . . . . . . . . . . . . . . . . . 13 5. Pre-Closing Covenants . . . . . . . . . . . . . . . . . . . . . 13 (a) General . . . . . . . . . . . . . . . . . . . . . . . . . 13 (b) Notices and Consents . . . . . . . . . . . . . . . . . . 13 (c) Operation of the Acquired Assets . . . . . . . . . . . . 13 (d) Preservation of Business . . . . . . . . . . . . . . . . 13 (e) Full Access/Due Diligence . . . . . . . . . . . . . . . . 13 (f) Audit . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ii (g) Notice of Developments . . . . . . . . . . . . . . . . . 14 (h) Exclusivity . . . . . . . . . . . . . . . . . . . . . . . 14 (i) Registration Rights Agreement . . . . . . . . . . . . . . 14 6. Conditions to Obligation to Close . . . . . . . . . . . . . . . 14 (a) Conditions to Obligation of the Buyer . . . . . . . . . . 14 (b) Conditions to Obligation of the Seller . . . . . . . . . 16 7. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 17 (a) Termination of Agreement . . . . . . . . . . . . . . . . 17 (b) Effect of Termination . . . . . . . . . . . . . . . . . . 18 8. Post-Closing Covenants . . . . . . . . . . . . . . . . . . . . 18 (a) General . . . . . . . . . . . . . . . . . . . . . . . . . 18 (b) Litigation Support . . . . . . . . . . . . . . . . . . . 18 (c) Transition . . . . . . . . . . . . . . . . . . . . . . . 19 (d) Confidentiality . . . . . . . . . . . . . . . . . . . . . 19 (e) Covenants Not to Compete . . . . . . . . . . . . . . . . 19 (f) Survival of Representations and Warranties . . . . . . . 20 (g) Third Party Consents . . . . . . . . . . . . . . . . . . 20 (h) Indemnification Provisions for Benefit of the Buyer . . . 20 (i) Indemnification Provisions for Benefit of the Seller . . 21 (j) Matters Involving Third Parties . . . . . . . . . . . . . 22 (k) Other Indemnification Provisions . . . . . . . . . . . . 23 (l) Limitations on Indemnification Obligations . . . . . . . 23 9. Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . 23 10. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 24
iii (a) Press Releases and Public Announcements . . . . . . . . . 24 (b) No Third-Party Beneficiaries . . . . . . . . . . . . . . 24 (c) Entire Agreement . . . . . . . . . . . . . . . . . . . . 24 (d) Succession and Assignment . . . . . . . . . . . . . . . . 24 (e) Counterparts . . . . . . . . . . . . . . . . . . . . . . 24 (f) Headings . . . . . . . . . . . . . . . . . . . . . . . . 24 (g) Notices . . . . . . . . . . . . . . . . . . . . . . . . . 24 (h) Governing Law . . . . . . . . . . . . . . . . . . . . . . 26 (i) Arbitration . . . . . . . . . . . . . . . . . . . . . . . 26 (j) Amendments and Waivers . . . . . . . . . . . . . . . . . 26 (k) Severability . . . . . . . . . . . . . . . . . . . . . . 27 (l) Expenses . . . . . . . . . . . . . . . . . . . . . . . . 27 (m) Construction . . . . . . . . . . . . . . . . . . . . . . 27 (n) Incorporation of Exhibits and Schedules . . . . . . . . . 27 (o) Specific Performance . . . . . . . . . . . . . . . . . . 27
Exhibit A - Acquired Assets Exhibit B - Excluded Assets Exhibit C - Assumed Liabilities Exhibit D - Bill of Sale Exhibit E - Assignment and Assumption of Customer Contracts Exhibit F - Assignment and Assumption of Supplier Contracts Exhibit G - Financial Statements Exhibit H - PUC and FCC Authorizations iv Exhibit I - Opinions of Counsel Exhibit J - Registration Rights Agreement Exhibit K - Allocation Schedule Exhibit L - Escrow Agreement Disclosure Schedules v ASSET PURCHASE AGREEMENT THIS ASSET PURCHASE AGREEMENT (this "Agreement") entered into as of this 30th day of July, 1999, by and between RMI.NET, INC., a Delaware corporation, f/k/a ROCKY MOUNTAIN INTERNET, INC. (the "Buyer"), TRIAD RESOURCES, L.L.C., an Oklahoma limited liability company (the "Seller"), and Ms. Carol L. Mersch and Mr. Charles A. Bacher (the "Members"). The Buyer, the Seller and the Members are referred to collectively herein as the "Parties". This Agreement contemplates a transaction in which the Buyer will purchase certain of the assets (and assume certain of the liabilities) of the Seller in return for the consideration hereinafter set forth. Now, therefore, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained, the Parties agree as follows. 1. DEFINITIONS. "ACQUIRED ASSETS" means all right, title, and interest in and to the assets of the Seller set forth on Exhibit A hereto. "ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid in settlement, liabilities, obligations, taxes, liens, losses, expenses, and fees, including court costs and reasonable attorney's fees and expenses. "AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Securities Exchange Act. "ASSIGNMENT AND ASSUMPTION OF CUSTOMER CONTRACTS" has the meaning set forth in Section 2(e) below. "ASSIGNMENT AND ASSUMPTION OF SUPPLIER CONTRACTS" has the meaning set forth in Section 2(e) below. "ASSUMED LIABILITIES" has the meaning set forth in Section 2(g) below, as set forth on Exhibit C hereto. "BUYER" has the meaning set forth in the preface above. "BUYER SHARES" means any share of the common stock, $0.001 par value per share, of the Buyer. "CASH" means cash and cash equivalents (including marketable securities and short term investments) calculated in accordance with GAAP applied on a basis consistent with the preparation of the Financial Statements. "CLOSING" has the meaning set forth in Section 2(d) below. "CLOSING DATE" has the meaning set forth in Section 2(d) below. "CLOSING PRICE" has the meaning set forth in Section 2(b)(i) below. "COMPANY" means WebZone, a division of Triad, L.L.C. "CONFIDENTIAL INFORMATION" means any information concerning the businesses and affairs of the Parties that is not already generally available to the public. "DILUTIVE EVENT" has the meaning set forth in Section 2(b)(vi) below. "DISCLOSURE SCHEDULE" has the meaning set forth in Section 3 below. "DISTRIBUTEES" has the meaning set forth in Section 2(b)(ii) below. "ESCROW AGENT" has the meaning set forth in Section 2(b)(iv) below. "ESCROW AGREEMENT" means the Escrow Agreement to be executed by the Buyer and the Seller substantially in the form of Exhibit L. "ESCROW FUND" has the meaning set forth in Section 9 below. "ESCROW PERIOD" has the meaning set forth in Section 2(b)(iv) below. "ESCROW SHARES" has the meaning set forth in Section 2(b)(iv) below. "EXCLUDED ASSETS" means the assets of the Seller not purchased by the Buyer hereunder, as set forth on Exhibit B hereto. "FCC" means the Federal Communications Commission. "FCC AUTHORIZATIONS" means all approvals, consents, permits, licenses, certificates, and authorizations given by the Federal Communications Commission or similar federal governmental agency to provide the telecommunications services currently provided by the Seller and to conduct its business as it is currently conducted. "FINANCIAL STATEMENTS" has the meaning set forth in Section 3(f) below. 2 "FIXED ASSETS" has the meaning set forth in Section 3(m) below. "GAAP" means United States generally accepted accounting principles as in effect from time to time, and applied consistently throughout the period involved. "INTELLECTUAL PROPERTY" means (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof, (b) all trademarks, service marks, trade dress, logos, trade names, and corporate names, together with all translations, adaptations, derivations, and combinations or variations 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), together with all goodwill associated with the foregoing and all rights to use the foregoing. "INSTALLMENT PERIODS" has the meaning set forth in Section 2(b)(v) below. "INSTALLMENT SHARES" has the meaning set forth in Section 2(b)(v) below. "KNOWLEDGE" means actual knowledge after reasonable investigation. "LIABILITY" OR "LIABILITIES" means any and all 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. "MEMBERS" has the meaning set forth in the preface above. "MOST RECENT FINANCIAL STATEMENTS" has the meaning set forth in Section 3(f) below. "MOST RECENT FISCAL MONTH END" has the meaning set forth in Section 3(f) below. "MOST RECENT FISCAL YEAR END" has the meaning set forth in Section 3(f) below. "ORDINARY COURSE OF BUSINESS" means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency). 3 "PARTY" has the meaning set forth in the preface above. "PERSON" means any individual, partnership, corporation, association, joint stock company, trust, joint venture, unincorporated organization, syndicate, group or a governmental entity (or any department, agency, or political subdivision thereof). "PURCHASE PRICE" has the meaning set forth in Section 2(b) below. "RECURRING REVENUE RATE" has the meaning set forth in Section 2(c) below. "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement to be executed by the Buyer and the Seller substantially in the form of Exhibit J. "REGISTERED SHARES" has the meaning set forth in Section 2(b)(iii) below. "SEC" means the United States Securities and Exchange Commission. "SEC Filings" has the meaning set forth in set forth in Section 4(d) below. "SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance, charge, or other security interest, OTHER THAN (a) mechanic's, materialmen's, and similar liens, (b) liens for Taxes not yet due and, (c) purchase money liens and liens securing rental payments under capital lease arrangements, and (d) other liens arising in the Ordinary Course of Business and not incurred in connection with the borrowing of money. "SELLER" has the meaning set forth in the preface above. "STATE PUC AUTHORIZATIONS" means all approvals, consents, permits, licenses, certificates, and authorizations given by any state or local regulatory authority to provide the telecommunications services currently provided by the Seller and to conduct its business as it is currently conducted. "TAX" means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code Section 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not. "TAX RETURN" means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof. 4 2. BASIC TRANSACTION. (a) PURCHASE AND SALE OF ACQUIRED ASSETS. On the basis of the representations and warranties and subject to the terms and conditions of this Agreement, the Buyer agrees to purchase from the Seller, and the Seller agrees to sell, transfer, assign, convey, and deliver to the Buyer, all of the Acquired Assets at the Closing, for the consideration specified below in this Section 2, free and clear of all Security Interests, Liabilities, and other debts, obligations, claims, limitations, liens, and/or any other encumbrances whatsoever, except for the Assumed Liabilities as set forth in Section 2(g) hereof. (b) PURCHASE PRICE. The Buyer agrees to pay to the Seller at the Closing: i. In exchange for the Acquired Assets, the Buyer will issue to the Seller that number of the Buyer Shares equal to six million seventy-five thousand and no/100ths dollars ($6,075,000.00) adjusted per subsection (c) below (the "Purchase Price") divided by the average closing price per share of the Buyer Shares for the ten (10) day trading period ending on the day prior to the Closing Date (the "Closing Price"). ii. The number of shares of the Buyer Shares to be issued pursuant to Section 2(b)(i) above shall be allocated among and distributed by the Seller to itself and its Members (the "Distributees") as determined by the Seller in its discretion. iii. At the Closing Date, forty percent (40%) of the Buyer Shares issued pursuant to Section 2(b)(i) above will be registered under the Securities Act (the "Registered Shares"). The Distributees shall be allowed to sell, trade and otherwise transfer the Registered Shares; PROVIDED, HOWEVER, that the Distributees may not sell, trade, or otherwise transfer more than the greater of 4,000 of such Registered Shares in any one trading day, or more than five percent (5%) of the average trading volume of such Registered Shares for the previous ten day (10) trading periods in any one trading day, for a period of thirty (30) days after the Closing Date. iv. At the Closing Date, the Buyer will require that the Seller deposit with an escrow agent (the "Escrow Agent") ten percent (10%) of the Buyers Shares (the "Escrow Shares"), which Escrow Shares shall be held by the Escrow Agent for twenty-four (24) months following the Closing Date (the "Escrow Period"). The Escrow Shares will be registered under the Securities Act on or prior to the date of the expiration of the Escrow Period. Such Escrow Shares will be without restriction against sale, trade and transfer of any kind at the expiration of the Escrow Period. 5 v. The remaining portion of the Purchase Price (approximately fifty percent (50%)) not paid in Buyer Shares at Closing, as the same may be further adjusted by post-closing adjustments made pursuant to that certain Post-Closing Agreement executed by the Parties at the Closing, shall be paid in Buyer Shares issued to the Seller in the following installments subsequent to the Closing: (A) one-half (1/2) thereof (approximately twenty-five (25%) percent of the Purchase Price) six (6) months following the Closing Date; and (B) one-half (1/2) thereof (approximately twenty-five percent (25%) of the Purchase Price) twelve (12) months following the Closing Date (collectively the "Installment Periods" and each an "Installment Period"). The number of Buyer Shares to be issued at the end of each Installment Period shall be determined by dividing the Closing Price (adjusted as provided in Sections 2(b)(vi) and 2(c)(iii)) into the portion of the Purchase Price, adjusted as provided in Sections 2(c)(i) and 2(c)(iii). The Buyer Shares so issued will be registered under the Securities Act on or prior to the date of the expiration of the Installment Periods and will be without restriction against sale, trade and transfer of any kind. vi. The Installment Shares issued at the end of the Installment Periods shall be fully protected against a Dilutive Event, as defined below, prior to the actual issuance as set forth in this Section 2(b)(vi). If, on or after the Closing Date, the Buyer issues any Buyer Shares as a result of any stock splits, stock dividend or similar event (a "Dilutive Event"), the Closing Price shall be adjusted, as appropriate, to reflect and account for the effect of the Dilutive Event on the price of the Buyer Shares; E.G., a 2:1 stock split shall cause the Closing Price to be divided by two (2); a six percent (6%) stock dividend shall cause the Closing Price to be divided by 1.06. After calculating and reflecting the effect of the Dilutive Event in the Closing Price, the adjustment set forth in Section 2(c)(iii) shall be calculated. (c) ADJUSTMENTS TO PURCHASE PRICE. The Purchase Price shall be determined and adjusted as follows: i. The Purchase Price will be based upon a monthly Recurring Revenue Rate derived from the Acquired Assets for the month immediately preceding the Closing Date of two hundred seventy thousand and no/100ths dollars ($270,000.00). In the event that the Recurring Revenue Rate exceeds or is less than two hundred seventy thousand and no/100ths dollars ($270,000.00), the Purchase Price shall be increased or reduced, whichever may be the case, by twenty two dollars and 50/100ths dollars ($22.50) for each dollar that the Recurring Revenue Rate exceeds or is less than such amount. For the purposes of this Section 2(c)(i), the only revenues of the Seller not included in the definition 6 of "Recurring Revenue Rate" shall be unusual, non-recurring revenues of the Seller unrelated to the Seller's internet access businesses, including, but not limited to, set-up charges, web formatting charges, and equipment sales. ii. The Purchase Price shall be increased by the total amount of accounts receivable acquired by the Buyer as of the Closing Date and shall be decreased by (A) the total amount of accounts payable that are related to the business of the Company and that are accrued as of the Closing Date; (B) the amount of deferred revenue accrued as of the Closing Date; and (C) one hundred thousand and no/100ths dollars ($100,000.00) in exchange for the Buyer's agreement to assume the lease obligations and the term loan as described below in Section 2(g). iii. The number of the Buyer Shares to be issued pursuant to Sections 2(b)(i) above shall be increased or decreased on the date of issuance as follows: In the event the average closing price per share of the Buyer Shares for the ten (10) day trading period ending on the day prior to a date for issuance of the Installment Shares at the expiration of the respective Installment Periods is: (A) lower than the Closing Price determined at the Closing Date as set forth in Section 2(b) above and as adjusted for any Dilutive Events, the Purchase Price of such Installment Shares shall be decreased by $0.125 per share; and (B) higher than the Closing Price determined at the Closing Date as set forth in Section 2(b) above and as adjusted for any Dilutive Events, the Purchase Price of such Installment Shares shall be increased by $0.125 per share. (d) THE CLOSING. The closing of the transactions contemplated by this Agreement (the "Closing") shall take place at the corporate headquarters of the Buyer, 999 18th Street, North Tower, 22nd Floor, Denver, Colorado 80202, commencing at 10:00 a.m. local time on the earlier of (i) the second business day following the satisfaction or waiver of all conditions to the obligations of the Parties to consummate the transactions contemplated hereby (other than conditions with respect to actions the respective Parties will take at the Closing itself) or (ii) July 30, 1999 (the "Closing Date"); PROVIDED, HOWEVER, that the Closing Date may be extended until August 13, 1999, upon mutual written agreement of the Parties. (e) DELIVERIES AT THE CLOSING. At the Closing, (i) the Buyer will deliver to the Seller (A) the various certificates, instruments, and documents referred to in Section 6 below; and (B) the Purchase Price specified in Section 2(b); (ii) the Seller will deliver to the Buyer (A) the various certificates, instruments, and documents referred to in Section 6 below; (B) the Bill of Sale in the form attached hereto as Exhibit D; (C) the Assignment and Assumption of Customer Contracts in the form of Exhibit E (the "Assignment and Assumption of Customer Contracts"); (D) the Assignment and Assumption of Supplier Contracts in the form of Exhibit F (the "Assignment and Assumption of Supplier Contracts"); and (iii) 7 each Party shall deliver such other instruments of sale, transfer, conveyance, and assignment as the other Party and its counsel reasonably may request. (f) ALLOCATION. The Parties agree that the allocation of the Purchase Price (and all other capitalizable costs) among the Acquired Assets for all purposes (including financial accounting and tax purposes) shall be in accordance with the allocation schedule attached hereto as Exhibit K. (g) ASSUMPTION OF LIABILITIES. i. The Parties agree and acknowledge that, except as expressly provided in this Section 2(g), the Buyer will not assume any Liability or other obligation of the Seller pursuant to this Agreement. ii. On the terms and subject to the conditions set forth in this Agreement, the Seller shall, on the Closing Date, assume the Liabilities of the Seller as set forth on Exhibit C hereto (the "Assumed Liabilities"). 3. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE MEMBERS. The Seller and the Members represent and warrant to the Buyer that the statements contained in this Section 3 are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Section 3), except as set forth in the disclosure schedule accompanying this Agreement and initialed by the Parties (the "Disclosure Schedule"). The Disclosure Schedule will be arranged in paragraphs corresponding to the lettered and numbered paragraphs contained in this Section 3: (a) ORGANIZATION OF THE SELLER. The Seller is a limited liability company duly organized, validly existing, and in good standing under the laws of Oklahoma. (b) AUTHORIZATION OF TRANSACTION. The Seller has full power and authority (including full legal power and authority) to execute and deliver this Agreement and to perform its obligations hereunder. Without limiting the generality of the foregoing, all individuals who are signatories to this Agreement and Exhibits and Schedules have been duly authorized to execute, deliver, and cause the Seller to perform this Agreement. This Agreement and Exhibits and Schedules constitute the valid and legally binding obligation of the Seller, enforceable in accordance with its terms and conditions. (c) NONCONTRAVENTION. Neither the execution and the delivery of this Agreement and Exhibits and Schedules, nor the consummation of the transactions contemplated hereby (including the assignments and 8 assumptions referred to in Section 2 above), will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which the Seller is subject or any provision of the articles of organization or operating agreement of the Seller or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which the Seller is a party or by which it is bound or to which any of its assets is subject (or result in the imposition of any Security Interest upon any of its assets). The Seller does not need to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order for the Parties to consummate the transactions contemplated by this Agreement. (d) BROKERS' FEES. The Seller has no Liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which the Buyer could become liable or obligated, and the Buyer shall have no Liability whatsoever to such broker. (e) TITLE TO ACQUIRED ASSETS. As of the date of Closing, the Seller shall provide to the Buyer good and marketable title to all of the Acquired Assets, free and clear of any Liabilities and Security Interests, including all debts, obligations, claims, limitations, liens, restrictions on transfer, and/or any other encumbrances whatsoever, except as described in Section 2(g) hereof. (f) FINANCIAL STATEMENTS. Attached hereto as Exhibit G are the following financial statements of the Company (collectively, the "Financial Statements"): (i) audited balance sheets and statements of income, changes in stockholders' equity, and cash flow relating to the Company as of and for the calendar years ended December 31, 1996, 1997 and 1998 relating to the Company (the "Most Recent Fiscal Year End"); and (ii) unaudited balance sheet and statements of income, changes in Members' equity, and cash flow relating to the Acquired Assets as of and for the period ended June 30, 1999 (the "Most Recent Month End") (collectively, the "Most Recent Financial Statements"). The Most Recent Financial Statements (without any notes thereto) have been prepared in accordance with GAAP on a consistent basis throughout the periods covered thereby, present fairly and accurately the financial condition of the Seller as of such dates and the results of operations of the Seller of the Acquired Assets for such periods, and are true, correct, and complete. (g) EVENTS SUBSEQUENT TO MOST RECENT MONTH END. Since the Most Recent Month End, there has not been any material adverse change in the business, financial condition, operations, results of operations, or future prospects of the Acquired Assets of the Seller. 9 (h) UNDISCLOSED LIABILITIES. The Seller has no Liability with respect to the Acquired Assets (and there is no basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against any of them giving rise to any Liability), except for (i) Liabilities set forth on the face of the Most Recent Financial Statements (rather than in any notes thereto), (ii) Liabilities which have arisen after the Most Recent Month End in the Ordinary Course of Business (none of which results from, arises out of, relates to, is in the nature of, or was caused by any breach of contract, breach of warranty, tort, infringement, or violation of law; and (iii) those obligations expressly assumed herein. (i) LEGAL COMPLIANCE. The Seller has complied with all applicable laws (including rules, regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder) of federal, state, local, and foreign governments (and all agencies thereof), with respect to the Acquired Assets, including all State PUC Authorizations and the FCC Authorizations, and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or notice has been filed or commenced against any of them alleging any failure so to comply. (j) TAX MATTERS. The Seller will have timely filed all Tax Returns with respect to the ownership and operation of the Acquired Assets and paid all Taxes due thereunder, and no Liability will exist for any unpaid Taxes relative to the Acquired Assets prior to the Closing. (k) REAL PROPERTY. Section 3(k) of the Disclosure Schedule lists and describes briefly all real property leased or subleased to the Seller. The Seller has delivered to the Buyer correct and complete copies of the leases and subleases listed in Section 3(k) of the Disclosure Schedule (as amended to date). Each of such leases and subleases is, and will continue to be after the Closing, legal, valid, binding, enforceable, and in full force and effect, and no party to such leases and subleases is in breach or default thereunder or has repudiated any provision thereof. (l) INTELLECTUAL PROPERTY. The Seller owns or has the right to use pursuant to license, sublicense, agreement, or permission all Intellectual Property necessary for the operation of the Acquired Assets as presently operated, free and clear of any Security Interests, Liabilities or other restrictions. (m) FIXED ASSETS. The Seller owns all fixed assets comprised in the Acquired Assets set forth in Exhibit A (the "Fixed Assets"). Each such Fixed Asset is free from material defects (patent and latent), has been maintained in accordance with normal industry practice, is in good operating condition and repair (subject to normal wear and tear), and is suitable for the purposes for which it is presently used. 10 (n) CONTRACTS. Except as set forth in Section 3(n) of the Disclosure Schedule, no material contracts or other agreements exist relating to the Acquired Assets to which the Seller or the Company is a party. (o) INSURANCE. The Acquired Assets have been, and will be until the Closing Date, covered by an insurance policy (providing property, casualty, and liability coverage) adequately insuring the Acquired Assets. (p) LITIGATION. The Seller (i) is not subject to any outstanding injunction, judgment, order, decree, ruling, or charge, relative to the Acquired Assets, nor (ii) is it a party or, to the Knowledge of the Seller, is threatened to be made a party to any action, suit, proceeding, hearing, or investigation of, in, or before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction or before any arbitrator with respect to the Acquired Assets. The Seller does not have any reason to believe that any such action, suit, proceeding, hearing, or investigation may be brought or threatened against the Seller relative to the Acquired Assets. (q) WARRANTIES. No product or service sold, leased, or delivered by the Seller with respect to the Acquired Assets is subject to any guaranty, warranty, or other indemnity. (r) GUARANTIES. The Seller is not a guarantor or otherwise is liable for any Liability or other obligation (including indebtedness) of any other Person with respect to the Acquired Assets. (s) STATE PUC AUTHORIZATIONS AND FCC AUTHORIZATIONS. Exhibit H hereto identifies each of the State PUC Authorizations and the FCC Authorizations which has been issued to the Seller with respect to the Acquired Assets. None of the State PUC Authorizations or the FCC Authorizations has been modified, amended, or otherwise altered, and each remains legal, valid, binding, in full force and effect, and unaffected by the transactions contemplated by this Agreement. (t) INVESTMENT. Each of the Buyer and the Seller understands that (i) certain of the Buyer Shares have not been registered, and will not be registered, under the Securities Act, or under any state securities laws, until after the Closing Date, and are being offered and sold in reliance upon federal and state exemptions for transactions not involving any public offering; (ii) the Seller is acquiring the Buyer Shares solely for its own account for investment purposes, and not with a view to the distribution thereof (except to the Members of the Seller); (iii) each Member of the Seller is a sophisticated investor with knowledge and experience in business and financial matters; (iv) each Member of the Seller has received certain information concerning the Buyer and has had the opportunity to obtain additional information as desired in order to evaluate the merits and the risks inherent in holding the Buyer Shares; (v) each Member 11 of the Seller is able to bear the economic risk and lack of liquidity inherent in holding the Buyer Shares; and (vi) each Member of the Seller together with its legal, tax and financial advisers have investigated the Buyer and its business and have negotiated transactions contemplated herein and have independently determined to enter into such transactions. (u) DISCLOSURE. The representations and warranties contained in this Section 3 do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained in this Section 3 not misleading. 4. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents and warrants to the Seller that the statements contained in this Section 4 are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Section 4). (a) ORGANIZATION OF THE BUYER. The Buyer is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation. (b) AUTHORIZATION OF TRANSACTION. The Buyer has full power and authority (including full legal power and authority) to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of the Buyer, enforceable in accordance with its terms and conditions. (c) NONCONTRAVENTION. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby (including the assignments and assumptions referred to in Section 2 above), will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which the Buyer is subject or any provision of its charter or bylaws or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which the Buyer is a party or by which it is bound or to which any of its assets is subject. The Buyer does not need to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order for the Parties to consummate the transactions contemplated by this Agreement (including the assignments and assumptions referred to in Section 2 above). (d) COMPLETE INVESTIGATION. The Buyer has been afforded an opportunity to conduct, and has conducted to its 12 satisfaction, a complete due diligence investigation of the Seller, the Acquired Assets, and the Assumed Liabilities. The Seller has cooperated in connection with the Buyer's investigation. The Buyer has been furnished such information, and the Buyer has had an opportunity to ask such questions and have them answered by the Seller as the Buyer deemed necessary in order to make an informed investment decision with respect to its acquisition of the Acquired Assets. (e) SEC FILINGS. The Buyer has filed all required reports, schedules, forms, statement and other documents with the SEC since January 1, 1998 (the "SEC Filings"). As of their respective dates, the SEC Filings complied in all material respects with the requirements of the Securities Act or the Securities Exchange Act, as the case may be, the rules and regulations of the SEC promulgated thereunder applicable to such SEC Filings, and such SEC Filings were true, complete and accurate in all respects. (f) ABSENCE OF CERTAIN CHANGES. Since the date of filing with the SEC of its most recent quarterly report on Form 10-Q, as supplemented by subsequent current reports on any Forms 8-K thereafter, there has not been any material adverse change with respect to the business of the Buyer or any event, occurrence, or development of a set of circumstances or facts known to the Buyer, which, as of the date hereof, could reasonably be expected to have a material adverse effect on the Buyer. (g) THE BUYER SHARES. The Buyer Shares will be, when issued, duly issued, validly existing fully paid and non-assessable, free and clear of any Liabilities and other encumbrances and restrictions, except as set forth herein. (h) BROKERS' FEES. The Buyer has no Liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which the Seller could become liable or obligated. (i) DISCLOSURE. The representations and warranties contained in this Section 4 do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained in this Section 4 not misleading. 5. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to the period between the execution of this Agreement and the Closing. (a) GENERAL. Each of the Parties will use its reasonable best efforts to take all action and to do all things necessary, proper, or advisable in order to consummate and make effective the transactions contemplated by 13 this Agreement (including satisfaction, but not waiver, of the Closing conditions set forth in Section 6 below). (b) NOTICES AND CONSENTS. The Seller will give any notices to third parties, and the Seller will use its reasonable best efforts to obtain any third party consents, that the Buyer reasonably may request in connection with the matters referred to in Section 3 above. Each of the Parties will give any notices to, make any filings with, and use its reasonable best efforts to obtain any authorizations, consents, and approvals of governments and governmental agencies in connection with the matters referred to in Section 3 and Section 4 above. (c) OPERATION OF THE ACQUIRED ASSETS. The Seller will not engage in any practice, take any action, or enter into any transaction outside the Ordinary Course of Business, with respect to the Acquired Assets that could reasonably be expected to adversely affect the transactions contemplated hereby or the Acquired Assets or business, financial condition or prospects of the Seller. (d) PRESERVATION OF BUSINESS. The Seller will keep the Acquired Assets substantially intact, including its present use and operation thereof, and its relationships with licensors, suppliers, customers, and employees related to the Acquired Assets, and, except as required in the Ordinary Course of Business, the Seller will not cause or permit the Seller to acquire or accrue any capital assets having an individual cost in excess of $10,000.00, or an aggregate cost in excess of $50,000.00, or incur any liability in excess of $25,000.00 without the prior written consent of the Seller. (e) FULL ACCESS/DUE DILIGENCE. The Seller will permit representatives of the Buyer to have full access at all reasonable times, and in a manner so as not to interfere with the normal business operations of the Seller, to all of the Seller's premises, properties, operations, personnel, books, records (including Tax records), contracts, and any and all documents of, or pertaining to, the Acquired Assets, and the Buyer shall be entitled to make copies of all such materials. (f) AUDIT. The Seller will obtain an audit acceptable to the Buyer of the Company's financial statements through the Seller's fiscal years ending December 31, 1996, 1997 and 1998. The cost of such audit shall be borne equally by the Seller and the Buyer, but the Buyer shall have the right to approve the choice of auditors prior to their engagement. (g) NOTICE OF DEVELOPMENTS. Each Party will give prompt written notice to the other Party of any material adverse development causing a breach of any of its own representations and warranties in Section 3 and Section 4 above. No disclosure by any Party pursuant to this Section 5(f), 14 however, shall be deemed to amend or supplement this Agreement or the Exhibits hereto or to prevent or cure any misrepresentation, breach of warranty, or breach of covenant. (h) EXCLUSIVITY. Until the Closing Date, as it may be extended pursuant to Section 2(d) above, the Seller will not (i) solicit, initiate, or encourage the submission of any proposal or offer from any Person relating to the acquisition of any capital stock or other voting securities, or any substantial portion of the Acquired Assets, of the Seller (including any acquisition structured as a merger, consolidation, or share exchange) or (ii) participate in any discussions or negotiations regarding, furnish any information with respect to, assist or participate in, or facilitate in any other manner any effort or attempt by any Person to do or seek any of the foregoing. The Seller will notify the Buyer immediately if any Person makes any proposal, offer, inquiry, or contact with respect to any of the foregoing. In the event of the Seller's breach of this Section 5(h), the Seller shall pay to the Buyer the sum of Twenty Five Thousand Dollars ($25,000). (i) REGISTRATION RIGHTS AGREEMENT. The Buyer shall agree, and upon any distribution of the Buyer Shares to the Seller, the Seller shall agree to become a party to and be bound by a Registration Rights Agreement in the form attached hereto as Exhibit I (the "Registration Rights Agreement"), setting forth the terms of ownership of the Buyer Shares; PROVIDED, HOWEVER, that the Seller receiving the Buyer Shares shall not be entitled to any demand registration rights. 6. CONDITIONS TO OBLIGATION TO CLOSE. (a) CONDITIONS TO OBLIGATION OF THE BUYER. The obligation of the Buyer to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions: i. the representations and warranties set forth in Section 3 above shall be true and correct in all material respects at and as of the Closing Date; ii. the Seller shall have performed and complied with all of its covenants hereunder in all material respects through the Closing; iii. no action, suit, or proceeding shall be pending before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would (A) prevent consummation of any of the transactions contemplated by this Agreement, (B) cause any of the transactions contemplated by this Agreement to be rescinded following consummation, or (C) affect adversely the right of the Buyer to own the Acquired Assets, to operate the Acquired Assets 15 (and no such injunction, judgment, order, decree, ruling, or charge shall be in effect); iv. the Seller and the Buyer shall have entered into the Assignment and Assumption of Customers; v. the Seller and the Buyer shall have entered into the Assignment and Assumption of Suppliers; vi. the Seller shall have delivered to the Buyer the Bill of Sale; vii. the Seller and the Buyer shall have received all other authorizations, consents, and approvals of governments and governmental agencies referred to in Section 3 and Section 4 above; viii. the Seller shall have delivered to the Buyer a certificate to the effect that each of the conditions specified above in Section 6(a)(i)-(iii) is satisfied in all respects; ix. the Buyer shall have received from counsel to the Seller an opinion in form and substance as set forth in Exhibit I attached hereto, addressed to the Buyer, and dated as of the Closing Date; x. the Buyer shall have completed and shall be satisfied with its due diligence examination of the Seller; xi. the Buyer's board of directors shall have approved this Agreement; xii. all actions to be taken by the Seller in connection with consummation of the transactions contemplated hereby and all certificates, opinions, instruments, and other documents required to effect the transactions contemplated hereby will be reasonably satisfactory in form and substance to the Buyer; xiii. there shall have been no material adverse change in the Seller's assets, financial condition, operating results, customer and employee relations, business, prospects or financing arrangements, since February 28, 1999; xiv. the Buyer and certain key employees of the Seller identified by the Buyer shall have entered into mutually acceptable employment arrangements; and xv. the Buyer shall have received audited financial statements for the Seller's fiscal years ending December 31, 1996, 1997 and 1998, audited by an independent accounting firm approved by the Buyer, the cost of which shall be bore equally by the Seller and the Buyer, and unaudited financial statements prepared by management of the Seller with respect to the Seller's operations for 16 the fiscal period ending June 30, 1999, not later than five (5) days prior to the Closing Date. The Buyer may waive any condition specified in this Section 6(a) if it executes a writing so stating at or prior to the Closing. (b) CONDITIONS TO OBLIGATION OF THE SELLER. The obligation of the Seller to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions: i. the representations and warranties set forth in Section 4 above shall be true and correct in all material respects at and as of the Closing Date; ii. the Buyer shall have performed and complied with all of its covenants hereunder in all material respects through the Closing; iii. no action, suit, or proceeding shall be pending or threatened before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction or before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would (A) prevent consummation of any of the transactions contemplated by this Agreement, or (B) cause any of the transactions contemplated by this Agreement to be rescinded following consummation (and no such injunction, judgment, order, decree, ruling, or charge shall be in effect); iv. the Seller and the Buyer shall have entered into the Assignment and Assumption of Customers; v. the Seller and the Buyer shall have entered into the Assignment and Assumption of Suppliers; vi. the Buyer shall have delivered to the Seller a certificate to the effect that each of the conditions specified above in Section 6(b)(i)-(iii) is satisfied in all respects; vii. the Seller shall have received from counsel to the Buyer an opinion in form and substance as set forth in Exhibit I attached hereto, addressed to the Seller, and dated as of the Closing Date; viii. the Seller's Members shall have approved and duly signed this Agreement; ix. the Purchase Price, as adjusted pursuant to Section 2(c), is not less than Four Million Nine Hundred Fifty Thousand Dollars ($4,950,000); 17 x. the Buyer and certain key employees of the Seller identified by the Buyer shall have entered into mutually acceptable employment arrangements; and xi. all actions to be taken by the Buyer in connection with consummation of the transactions contemplated hereby and all certificates, opinions, instruments, and other documents required to effect the transactions contemplated hereby will be reasonably satisfactory in form and substance to the Seller. The Seller may waive any condition specified in this Section 6(b) if it executes a writing so stating at or prior to the Closing. 7. TERMINATION. (a) TERMINATION OF AGREEMENT. Either of the Parties may terminate this Agreement as provided below: i. the Buyer may terminate this Agreement by giving written notice to the Seller at any time prior to the Closing (A) in the event the Seller has breached any material representation, warranty, or covenant contained in this Agreement in any material respect, the Buyer has notified the Seller of the breach, and the breach has continued without cure for a period of fifteen (15) days after the notice of breach, or (B) if the Closing shall not have occurred on or before July ____, 1999 (or such later date, if extended pursuant to Section 2), by reason of the failure of any condition precedent under Section 6(a) hereof (unless the failure results primarily from the Buyer itself breaching any representation, warranty, or covenant contained in this Agreement); and ii. the Seller may terminate this Agreement by giving written notice to the Buyer at any time prior to the Closing (A) in the event the Buyer has breached any material representation, warranty, or covenant contained in this Agreement in any material respect, the Seller has notified the Buyer of the breach, and the breach has continued without cure for a period of fifteen (15) days after the notice of breach, or (B) if the Closing shall not have occurred on or before July ____, 1999 (or such later date, if extended pursuant to Section 2), by reason of the failure of any condition precedent under Section 6(b) hereof (unless the failure results primarily from the Seller itself breaching any representation, warranty, or covenant contained in this Agreement). (b) EFFECT OF TERMINATION. In the event that the Buyer fails to consummate the transactions set forth and contemplated in this Agreement for any reason other than material cause, the Seller shall be entitled to receive from the Buyer $25,000. The Parties agree that material cause shall be defined as a material decline in the revenues of the Seller's business that results in a Recurring Revenue Rate for the calendar month preceding the Closing Date of less than 18 $220,000; a material misrepresentation by the Seller regarding the business to be acquired by the Buyer; a material change in the Seller's business or the Acquired Assets described above which impairs the ability of the Seller (or the Buyer following acquisition of the business) to continue to adequately serve the customers associated with the business or to maintain the monthly Recurring Revenue Rate at current levels; the inability of the Company to deliver the Internet business and all Acquired Assets described above free and clear of all Liabilities, Security Interests, claims, liens, encumbrances and other similar burdens and interests, except for the Assumed Liabilities; or the failure of the Buyer to be able to fully satisfy all obligations and terms and conditions required pursuant to this Agreement. Notwithstanding the termination of this Agreement, the confidentiality provisions of this Agreement shall survive. 8. POST-CLOSING COVENANTS. The Parties agree as follows with respect to the period following the Closing: (a) GENERAL. In case at any time after the Closing any further action is necessary or desirable to carry out the purposes of Agreement, each of the Parties will take such further action (including the execution and delivery of such further instruments and documents) as any other Party reasonably may request, all at the sole cost and expense of the requesting Party. The Seller acknowledges and agrees that, from and after the Closing, the Buyer will be entitled to possession of all documents, books, records (including Tax records), agreements, directly relating to the Acquired Assets (but not the Excluded Assets); PROVIDED, HOWEVER, that the Buyer shall provide the Seller and its Members with reasonable access to such documents, books, records, agreements, and financial data as necessary. Seller may retain copies of any such material as it deems necessary for such 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 on or prior to the Closing Date involving the Acquired Assets, each of the other Parties will cooperate with the contesting or defending Party and his or its counsel in the contest or defense, make available his or its personnel, and provide such testimony and access to his or its books and records as shall be necessary in connection with the contest or defense, all at the sole cost and expense of the contesting or defending Party (unless the contesting or defending Party is entitled to indemnification therefor under Section 8(h), Section 8(i), or Section 8(j) below). (c) TRANSITION. None of the Seller nor its Members will take any action that is designed or intended to have the effect of discouraging any carrier, supplier, lessor, licenser, customer, or other business associate of the Seller from maintaining the same business relationships with the Buyer after the Closing as it maintained with the Seller prior to the Closing. Each of the Seller and its 19 Members will refer all customer inquiries relating to the business of the Seller to the Buyer from and after the Closing. (d) CONFIDENTIALITY. The Seller and the Buyer shall, and shall cause each of its shareholders and Members to, treat and hold as such all of the Confidential Information, refrain from using any of the Confidential Information except in connection with this Agreement, and deliver promptly to the other party or destroy, at the request and option of the other party, all tangible embodiments (and all copies) of the Confidential Information which are in his/her or its possession. In the event that the Seller, or the Buyer, as the case may be, or any of their shareholders or Members are 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, each party will notify the other party promptly of the request or requirement so that an appropriate protective order or waive compliance with the provisions of this Section 8(d). If, in the absence of a protective order or the receipt of a waiver hereunder, either party or its shareholders or Members are, on the advice of counsel, compelled to disclose any Confidential Information to any tribunal or else stand liable for contempt, either party or its shareholders or Members may disclose the Confidential Information to the tribunal; PROVIDED, HOWEVER, that either party and its shareholders or Members shall use its reasonable best efforts to obtain, at the reasonable request of the other party, an order or other assurance that confidential treatment will be accorded to such portion of the Confidential Information required to be disclosed as the Buyer shall designate. The obligations of the parties under this Section 8(d) shall survive the Closing Date for a period of two (2) years. (e) COVENANTS NOT TO COMPETE. For a period of two (2) years from and after the Closing Date, the Members agree not to engage directly or indirectly in any business that offers dial-up internet access, dedicated internet access and web-hosting to third parties in any geographic area in which the Seller conducts that business as of the Closing Date; PROVIDED, HOWEVER, that i. notwithstanding the provisions of Section 8(e) above, the covenant not to compete set forth herein shall not impede or in any manner prohibit the full participation of the Members in the business activities related to Enviryx, L.L.C., MBA, Inc., Teleradiology, and their direct and indirect involvement in development of software programs, including web-enabling programs and internet application programs for customers of MBA and Enviryx; ii. no owner of less than one percent (1%) of the outstanding stock of any publicly traded corporation shall be deemed to be engaged solely by reason thereof in any business activity in contravention hereof; and iii. if the final judgment of a court of competent jurisdiction declares that any term or provision of this Section 8(e) is invalid or unenforceable, the 20 Parties agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration, or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified after the expiration of the time within which the judgment may be appealed. (f) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the representations and warranties of the Parties contained in this Agreement shall survive the Closing and shall continue in full force and effect for a period of two (2) years thereafter. (g) THIRD PARTY CONSENTS. The Seller shall use its best efforts to procure, and assist the Buyer in procuring, any material third party consents. (h) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER. i. In the event the Seller or the Members breach any of their representations, warranties, and covenants contained in this Agreement, and, if there is an applicable survival period pursuant to Section 8(f) above, provided that the Buyer makes a written claim for indemnification against the Seller and the Members within such survival period, then the Seller and Members agree to indemnify the Buyer from and against the entirety of any Adverse Consequences the Buyer may suffer through and after the date of the claim for indemnification resulting from, arising out of, relating to, in the nature of, or caused by the breach. ii. In the event the Seller or the Members breach any of its representations, warranties, and covenants contained in this Agreement, and, if there is an applicable survival period pursuant to Section 8(f) above, provided that the Buyer makes a written claim for indemnification against the Seller and the Members within such survival period, then the Seller and the Members agree to indemnify the Buyer from and against the entirety of any Adverse Consequences the Buyer may suffer through and after the date of the claim for indemnification resulting from, arising out of, relating to, in the nature of, or caused by the breach (or the alleged breach). iii. The Seller and the Members agree to indemnify the Buyer from and against the entirety of any Adverse Consequences the Buyer may suffer resulting from, arising out of, relating to, in the nature of, or caused by any Liability of the Seller, other than the Assumed Liabilities. 21 iv. The Seller and the Members agree to indemnify the Buyer from and against the entirety of any Adverse Consequences the Buyer may suffer resulting from, arising out of, relating to, in the nature of, or caused by any Liability of the Seller for Taxes of the Seller with respect to the Acquired Assets. v. The Seller and the Members agree to indemnify the Buyer from and against the entirety of any Adverse Consequences the Buyer may suffer resulting from, arising out of, relating to, in the nature of, or caused by any Liability of the Seller in relation to the termination of any of the Seller's employees who are not employed by the Buyer. vi. The Seller shall not have any liability to the Buyer for any Adverse Consequences set forth in this Section 8(i) to the extent that such Adverse Consequences are covered by insurance of the Buyer. Buyer shall cause its insurer to waive any subrogation rights against Seller. (i) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SELLER AND THE MEMBERS. i. In the event the Buyer breaches any of its representations, warranties, and covenants contained in this Agreement, and, if there is an applicable survival period pursuant to Section 8(f) above, provided that the Seller and the Members make a written claim for indemnification against the Buyer within such survival period, then the Buyer agrees to indemnify the Seller and the Members from and against the entirety of any Adverse Consequences the Seller and the Members may suffer through and after the date of the claim for indemnification resulting from, arising out of, relating to, in the nature of, or caused by the breach. ii. The Buyer agrees to indemnify the Seller and the Members from and against the entirety of any Adverse Consequences the Seller and its Members may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Buyer's operation of the Acquired Assets after the Closing. iii. The Buyer shall not have any Liability to the Seller and the Members for any Adverse Consequences set forth in this Section 8(i) to the extent that such Adverse Consequences are covered by insurance of the Seller. Seller shall cause its isurer to waive any subrogation rights against Buyer. (j) MATTERS INVOLVING THIRD PARTIES. i. If any third party shall notify any Party (the "Indemnified Party") with respect to any matter (a "Third Party Claim") which may give rise to a claim 22 for indemnification against any other Party (the "Indemnifying Party") under this Section 8, then the Indemnified Party shall promptly notify each Indemnifying Party thereof in writing; PROVIDED, HOWEVER, that no delay on the part of the Indemnified Party in notifying any Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the Indemnifying Party thereby is prejudiced. ii. (ii) Any Indemnifying Party will have the right to defend the Indemnified Party against the Third Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Party so long as (A) the Indemnifying Party notifies the Indemnified Party in writing within fifteen (15) after the Indemnified Party has given notice of the Third Party Claim that the Indemnifying Party will indemnify the Indemnified Party from and against the entirety of any Adverse Consequences the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third Party Claim, (B) the Indemnifying Party provides the Indemnified Party with evidence reasonably acceptable to the Indemnified Party that the Indemnifying Party will have the financial resources to defend against the Third Party Claim and fulfill its indemnification obligations hereunder, (C) the Third Party Claim involves only money damages and does not seek an injunction or other equitable relief, (D) settlement of, or an adverse judgment with respect to, the Third Party Claim is not, in the good faith judgment of the Indemnified Party, likely to establish a precedential custom or practice materially adverse to the continuing business interests of the Indemnified Party, and (E) the Indemnifying Party conducts the defense of the Third Party Claim actively and diligently. iii. So long as the Indemnifying Party is conducting the defense of the Third Party Claim in accordance with Section 8(j)(ii) above, (A) the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Third Party Claim, (B) the Indemnified Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnifying Party (not to be withheld unreasonably), and (C) the Indemnifying Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnified Party (not to be withheld unreasonably). iv. In the event any of the conditions in Section 8(j)(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 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), (B) the Indemnifying Party will reimburse the Indemnified Party promptly and periodically for the costs of defending against the Third Party Claim (including reasonable attorneys' fees and 23 expenses), and (C) the Indemnifying Party 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 8(j). (k) OTHER INDEMNIFICATION PROVISIONS. The indemnification provisions set forth in Sections 8(h) through Section 8(j) above, are in addition to, and not in derogation of, any statutory, equitable, or common law remedy any Party may have with respect to the other Party or Parties, or the transactions contemplated by this Agreement. (l) LIMITATIONS ON INDEMNIFICATION OBLIGATIONS. Notwithstanding the provisions of Section 8(h), through 8(k) above, neither Party shall be obligated to indemnify the other Party or Parties, as the case may be, from and against any Adverse Consequences (A) until such Party or Parties have suffered Adverse Consequences in excess of fifty thousand and no/100ths dollars ($50,000) in the aggregate after deduction of insurance proceeds and after giving effect to income tax benefits, if any, (after which point the Indemnifying Party or Parties will be obligated only to indemnify the indemnified Party or Parties from and against further Adverse Consequences), or (B) to the extent that such Adverse Consequences exceeds the sum of five hundred thousand and no/100ths dollars ($500,000) in the aggregate after deduction of insurance proceeds and after giving effect to the income tax benefits; PROVIDED, HOWEVER, that any claims brought by a Party against another Party or Parties for fraud or willful misconduct shall not be subject to the foregoing limitations; and PROVIDED, FURTHER, that the Members' obligations under Sections 8(h) through 8(k), shall be several and not joint, and shall be proportionate to their respective ownership interests in the Seller. 9. ESCROW AGREEMENT. As security for the indemnity of the Buyer by the Seller provided for in Section 8 above, the Escrow Shares shall be registered in the name of the Seller, and deposited (with an executed assignment in blank) with Norwest Bank, N.A. as Escrow Agent, such deposit to constitute an escrow fund (the "Escrow Fund") to be governed by the terms set forth herein and in the Escrow Agreement to be signed by all parties thereto. In the event of any conflict between the terms of this Agreement and the Escrow Agreement, the terms of the Escrow Agreement shall govern. All costs and fees of the Escrow Agent for establishing and administering the Escrow Fund shall be borne equally by the Parties. Upon compliance with the terms hereof, the Buyer shall be entitled to obtain indemnity first from the Escrow Fund for all Adverse Consequences covered by the indemnity provided for in Section 8 above. If the Escrow Fund is not sufficient to cover any such Adverse Consequences covered by Section 8 above, then the Buyer shall be entitled to seek payment directly from the Seller and, if the Seller cannot or will not cover such Adverse Consequences, then the buyer shall be entitled to seek payment directly from the Members. The form of the Escrow Agreement is attached hereto as Exhibit L. 10. MISCELLANEOUS. 24 (a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue any press release or make any public announcement relating to the subject matter of this Agreement prior to the Closing without the prior written approval of the other Party; PROVIDED, HOWEVER, that any Party may make any public disclosure it believes in good faith is required by applicable law or any listing or trading agreement concerning its publicly-traded securities (in which case the disclosing Party will use its reasonable best efforts to advise the other Party prior to making the disclosure). (b) NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns. (c) ENTIRE AGREEMENT. This Agreement and the Exhibits and Schedules hereto (including the documents referred to herein) constitutes the entire agreement between the Parties and supersedes any prior understandings, agreements, or representations by or between the Parties, written or oral, to the extent they related in any way to the subject matter hereof. (d) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns. No Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other Party; PROVIDED, HOWEVER, that the Buyer may (i) assign any or all of its rights and interests hereunder to one or more of its Affiliates and (ii) designate one or more of its Affiliates to perform its obligations hereunder (in any or all of which cases the Buyer nonetheless shall remain responsible for the performance of all of its obligations hereunder). (e) COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. This Agreement may be executed by facsimile, provided that the original counterpart is delivered within five (5) days of such execution. (f) HEADINGS. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. (g) NOTICES. All notices, requests, demands, claims, and other communications hereunder will be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given if (and then two business days after) it is sent by registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below: 25 IF TO THE SELLER: Triad Resources, L.L.C. 810 South Cincinnati, Suite 105 Tulsa, OK 74119-1601 Attention: Ms. Carol L. Mersch COPIES TO: Triad Resourses, L.L.C. 810 South Cincinnati, Suite 105 Tulsa, OK 74119-1601 Attention: Mr. Charles A. Bacher Holliman, Langholz, Runnels, Forsman & Sellers 10 East Third Street Tulsa, OK 74103-3695 Attention: Mr. Gail R. Runnels IF TO THE BUYER: Rocky Mountain Internet, Inc. d/b/a RMI.NET 999 18th Street, 22nd Floor Denver, Colorado 80202 Attention: Mr. Douglas H. Hanson, Chairman and Chief Executive Officer COPIES TO: Rocky Mountain Internet, Inc. d/b/a RMI.NET 999 18th Street, 22nd Floor Denver, Colorado 80202 Attention: Mr. Chris J. Melcher, General Counsel Holland & Hart LLP 215 South State Street, Suite 500 Salt Lake City, Utah 84111-23117 Attention: Mr. David R. Rudd Any Party may send any notice, request, demand, claim, or other communication hereunder to the intended recipient at the address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, 26 or electronic mail), but no such notice, request, demand, claim, or other communication shall be deemed to have been duly given unless and until it actually is received by the intended recipient. Any Party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other Party notice in the manner herein set forth. (h) GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Colorado without giving effect to any choice or conflict of law provision or rule (whether of the State of Colorado or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Colorado. (i) ARBITRATION. The Parties hereby covenant and agree that, except as otherwise set forth in this Agreement, any suit, dispute, claim, demand, controversy or cause of action of every kind and nature whatsoever, known or unknown, fixed or contingent, that the Parties may now have or at any time in the future claim to have based in whole or in part, or arising from or that in any way is related to the negotiations, execution, interpretation or enforcement of this Agreement (collectively, the "Disputes") shall be completely and finally settled by submission of any such Disputes to arbitration under the Rules of Arbitration and Conciliation of the American Arbitration Association then in effect. If the Parties to the Dispute are unable to agree on a single arbitrator, then such binding arbitration shall be conducted before a panel of three (3) arbitrators that shall be comprised of one (1) arbitrator designated by each Party to the Dispute and a third arbitrator designated by the two (2) arbitrators selected by the Parties to the Dispute. Unless the Parties to the Dispute agree otherwise, the arbitration proceedings shall take place in Denver, Colorado and the arbitrator(s) shall apply the law of the State of Colorado, USA, to all issues in dispute, in accordance with Section 10(i). The findings of the arbitrator(s) shall be final and binding on the Parties to the Dispute. Judgment on such award may be entered in any court of appropriate jurisdiction, or application may be made to that court for a judicial acceptance of the award and an order of enforcement, as the party seeking to enforce that award may elect. Notwithstanding any applicable rules of arbitration, all arbitral awards shall be in writing and shall set forth in particularity the findings of fact and conclusions of law of the arbitrator or arbitrators. If the Buyer makes any claim based upon the alleged intentional fraud or willful misconduct of the Seller or its Members and such claim is not found by the arbitrator(s) to be valid or proven, the Buyer shall pay the costs of the Seller or its Members incurred in connection with such arbitration proceeding (including reasonable attorneys fees). (j) AMENDMENTS AND WAIVERS. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by the Buyer and the Seller. No waiver by any Party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, 27 misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. (k) SEVERABILITY. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. (l) EXPENSES. Each of the Buyer and the Seller will bear its own costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby. (m) CONSTRUCTION. The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word "including" shall mean including without limitation. Nothing in the Disclosure Schedule shall be deemed adequate to disclose an exception to a representation or warranty made herein unless the Disclosure Schedule identifies the exception with reasonable particularity and describes the relevant facts in reasonable detail. Without limiting the generality of the foregoing, the mere listing (or inclusion of a copy) of a document or other item shall not be deemed adequate to disclose an exception to a representation or warranty made herein (unless the representation or warranty has to do with the existence of the document or other item itself). The Parties intend that each representation, warranty, and covenant contained herein shall have independent significance. If any Party has breached any representation, warranty, or covenant contained herein in any respect, the fact that there exists another representation, warranty, or covenant relating to the same subject matter (regardless of the relative levels of specificity) which the Party has not breached shall not detract from or mitigate the fact that the Party is in breach of the first representation, warranty, or covenant. (n) INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof. (o) SPECIFIC PERFORMANCE. Each of the Parties acknowledges and agrees that the other Party would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached. Accordingly, each of the Parties agrees that the other Party shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this 28 Agreement and the terms and provisions hereof in any action instituted in any court of the United States or any state thereof having jurisdiction over the Parties and the matter (subject to the provisions set forth in Section 10(j) above), in addition to any other remedy to which it may be entitled, at law or in equity. ***** 29 IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above written. RMI.NET, INC., F/K/A ROCKY MOUNTAIN INTERNET, INC. By: ------------------------------- Douglas H. Hanson Chairman and Chief Executive Officer TRIAD RESOURCES, L.L.C. By: ------------------------------- Its: ------------------------------- MEMBERS By: ------------------------------- Carol L. Mersch, Member By: ------------------------------- Charles A. Bacher, Member 30 EX-20.1 3 EXHIBIT 20.1 EXHIBIT 20.1 RMI.NET ACQUIRES WEBZONE OKLAHOMA'S LEADING INDEPENDENT INTERNET SERVICE PROVIDER DENVER, Aug. 3 /PRNewswire/ -- RMI.NET, Inc. (Nasdaq: RMII), formerly Rocky Mountain Internet, a national e-business and convergent communications company, has acquired WebZone, a Tulsa, Okla.-based Internet service provider (ISP), for approximately $5.25 million in common stock, the company announced today. WebZone has an annualized revenue run rate of approximately $3 million. (Photo: http://www.newscom.com/cgi-bin/prnh/19990628/RMILOGO ) Founded in 1996, WebZone in the largest independent ISP in Oklahoma. It has become the fastest-growing, locally owned and operated ISP in Oklahoma, delivering high-quality Internet connectivity and web-based solutions to businesses, individuals and other Internet providers. The WebZone provides a wide range of services, including high-speed, dedicated connections for business networks, website development and hosting, colocation facilities, and Internet application development. "This acquisition marks our entrance into the Oklahoma marketplace, and we believe we could not have chosen a better and more widely recognized partner than WebZone," said Douglas H. Hanson, chairman and chief executive officer for RMI.NET. "WebZone is locally known for its superior service, and it will be instrumental in our efforts to strategically expand our national e-commerce and Internet communications services to the small and medium-sized business marketplace." WebZone was voted "Absolute Best Place To Help You Get Online" by the readers of Urban Tulsa for the past two years. WebZone has approximately 12,000 customers throughout Oklahoma. "WebZone's success has been due in large part to the hard work and resourcefulness of its employees. We intend to combine the talent and expertise of our employees with the resources of RMI.NET, the objective being to continue our growth, expand our reach, and give WebZone a major regional presence in markets extending beyond our current service areas," said Pat Milton, president for WebZone. Milton will remain with RMI.NET in the Oklahoma market. WebZone marks the third company to be acquired by RMI.NET in the past five days. RMI.NET announced Friday that it had acquired Tucson, Ariz.-based Aces Research, Inc., a dedicated access ISP; and Net One Communications Corp., a Denver-based web hosting company. Since the first of the year, RMI.NET has acquired 10 companies for $16.8 million; the companies have annualized revenue run rates of approximately $18.4 million. Denver-based RMI.NET, Inc., formerly Rocky Mountain Internet, is a national commerce solutions provider focusing on turnkey e-business applications and convergent communications. RMI.NET has developed and provides small and medium-sized companies with scalable e-business capabilities; customized web page development and hosting; nationwide Internet dial up and dedicated access; digital subscriber line service (DSL); and local, long distance and enhanced telephony. RMI.NET also provides Internet, and data and voice communications services to consumer households. The company wholly owns a proprietary port site and search engine, Infohiway, at www.infohiway.com; and develops and markets Simplified Domains, a new and emerging Internet domain registration, at www.simplifieddomains.com. For more information on RMI.NET, call (800) 864-4327, or visit the company's web site at www.rmi.net. This press release might contain forward-looking statements. These forward-looking statements are subject to risks and uncertainties. Actual results may differ materially from such forward-looking statements as a result of risks and uncertainties which are described in the cautionary statements section of the company's 10K dated December 31, 1998, and may include other risks described in all Securities and Exchange Commission filings submitted as of this date. /CONTACT: Mark Stutz of RMI.NET, Inc., 303-313-0672, mark.stutz@corp.rmi.net/ -----END PRIVACY-ENHANCED MESSAGE-----