STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is entered into effective this
1st day of January, 2002 by and between INDIGINET, INC., a Florida corporation
("Indiginet") whose address is 00-000 Xxxxxxx 000, Xxxxx 000, Xxxx Xxxxxx,
Xxxxxxxxxx 00000, FOX TELECOMMUNICATIONS, INC., a Colorado corporation ("FTI)"
whose address is 0000 Xxxxx Xxxxxxx Xxxxxxx, Xxxxx 0, Xxxxxxxxx, Xxxxxxxx 00000,
and XXXXXXX XXX, an individual whose address is 00000 Xxxx Xxxxx Xxxxx,
Xxxxxxxxx, Xxxxxxxx 00000 ("Fox") (hereinafter collectively referred to as "the
parties").
X. Xxx is the President of FTI and owns all of the issued and outstanding
shares of FTI;
B. Indiginet wishes to acquire all of the issued and outstanding shares of FTI
from Fox.
THEREFORE, IT IS AGREED AS FOLLOWS:
1. Stock Purchase and Purchase Price. Fox shall transfer, assign and
deliver to Indiginet twenty thousand (20,000) shares of the common stock, no par
value ("FTI Stock"), which represents one hundred percent (100%) of the issued
and outstanding shares of FTI's stock, and Indiginet shall pay the sum of Two
Hundred Fifty Thousand Dollars ($250,000) ("Purchase Price") as follows:
1.1 Cash. One Hundred Thousand Dollars ($100,000) payable to Fox on
the Closing Date, as herein defined.
1.2 Note. A promissory note ("Note"), in substantially the same form
attached hereto as Exhibit 1.2, from Indiginet to Fox delivered on the
Closing Date in the amount of One Hundred Twenty-Five Thousand Dollars
($125,000) bearing simple interest at the rate of eight percent (8%) per
annum, payable sixty (60) days after the Closing Date, subject to any
extension granted pursuant to the terms of the Note and secured by the
accounts receivable of FTI.
1.3 Indiginet Stock. The issuance to Fox on the Closing Date of Two
Hundred Fifty Thousand (250,000) shares of the no par value common stock of
Indiginet ("Indiginet Stock"), which the parties agree will have a value
equal to Twenty-Five Thousand Dollars ($25,000).
1.4 Personal Guarantees. On or before ninety (90) days following the
Closing Date, Indiginet and/or FTI shall obtain full releases of Fox's
personal guarantees relating to FTI's lines of credit and notes payable.
2. Closing.
2.1 Closing Date. The Closing Date shall be that date on which all
required approvals have become final and the transactions contemplated
under this Agreement are no longer subject to administrative review
(audit), or such other date as shall be agreed upon by the parties but no
later than March 31st, 2002.
2.2 Closing Events. The following shall occur on the Closing Date and
at the Closing, each such requirement being considered as occurring
simultaneously:
2.2.1 Fox shall deliver to Indiginet a stock certificate, or
certificates, together with duly executed stock powers executed in
blank, representing all of the issued and outstanding shares of the
FTI Stock, free and clear of all liens, encumbrances, equities and
claims;
2.2.2 FTI shall deliver to Indiginet a copy of resolutions
adopted by its Board of Directors approving the transactions
contemplated hereby, which shall be certified by FTI's Secretary to be
a true and correct copy of the original and that the original thereof
was duly, validly and regularly obtained;
2.2.3 FTI and Fox shall deliver to Indiginet the officers'
certificate, in the form appended hereto as Exhibit 2.2.3 dated as of
the Closing Date, that Fox and the officers of FTI are not aware of
any violation or breach of this Agreement which exists or existed on
or as of the date of this Agreement, the Closing Date, or at any time
between the date of this Agreement and the Closing Date;
2.2.4 Indiginet shall deliver to Fox the remainder of the
Purchase Price, including the Note and a copy of the minutes of
Indiginet's board of directors authorizing the issuance of the
Indiginet Stock;
2.2.5 Indiginet, Fox and Eicher shall execute and deliver the Fox
Agreement and the Eicher Agreement, as applicable.
2.2.6 FTI shall deliver the resignations of each of its officers
and directors, along with the corporate books and seals of FTI.
3. Conditions Precedent to Obligations.
3.1 Conditions Precedent to Indiginet's Obligations. The obligations
of Indiginet to be performed under this Agreement at Closing are subject to
each and all of the following conditions, any one or more of which may,
however, be waived in whole or in part by Indiginet in which event the
waived condition(s) shall be treated as conditions subsequent to
Indiginet's obligations pursuant to Section 6.1 hereof:
3.1.1 Representations and Warranties. The representations and
warranties of FTI and Fox herein contained shall to the best of Fox's
knowledge be true on and as of the date hereof and as of the Closing
Date in all material respects with the same force and effect as though
made on and as of the applicable date.
3.1.2 Performance of Obligations. Fox and FTI shall have
performed in all material respects all of Fox's and FTI's obligations
and agreements under this Agreement and complied with all of the
material covenants and conditions contained in this Agreement to be
performed by FTI and Fox.
3.1.3 Performance at Closing. Fox and FTI shall have performed
each of the acts they are required to perform and delivered each of
the certificates and other documents they are required to deliver, or
appeared at Closing ready, willing and able to perform each of the
acts they are required to perform and deliver each of the certificates
and other documents they are required to deliver.
3.1.4 Absence of Restraining Action. No suit, action or other
proceeding shall be pending, or threatened, before any court or
governmental agency in which it will be, or it is, sought to restrain
or prohibit or to obtain damages or other relief in connection with
this Agreement or the consummation of the transactions contemplated
hereunder.
3.1.5 Absence of Litigation. No suit, action or other proceeding
shall be pending before any court or governmental agency, or
threatened against or affecting FTI or Fox which, if adversely
determined, would have a material adverse effect on the value of the
business, assets, or properties of FTI, or the value of the FTI Stock.
3.1.6 No Attachment. None of FTI's assets or properties shall
have been attached or levied upon or passed into the hands of a
receiver or assignee for the benefit of creditors. No petition or
similar instrument shall have been filed with respect to Fox or FTI
under any bankruptcy or insolvency law, and no injunction or
restraining order shall have been instituted against Fox or FTI that
would have a material adverse effect on FTI.
3.1.7 No Liens, Indebtedness. FTI shall not be subject to
indebtedness nor its properties and or assets subject to liens or
encumbrances of any kind, other than (i) indebtedness and liens for
current taxes, wages and operating expenses in the normal course of
business, payment of which at the time of Closing shall not yet be
due; and (ii) indebtedness identified in FTI's Financial Statements as
set forth in Schedule 3.1.7 attached hereto.
3.1.8 Consents. All consents from third parties, including
without limitation any governmental or regulatory bodies, necessary
for the consummation of the transactions contemplated hereby shall
have been obtained.
3.2 Conditions Precedent to FTI's and Fox's Obligations. The
obligations of FTI and Fox to be performed under this Agreement at Closing
are subject to each and all of the following conditions, any one or more of
which may, however, be waived in whole or in part by FTI or Fox, as
applicable:
3.2.1 Representations and Warranties. The representations and
warranties of Indiginet set forth in this Agreement shall be true and
correct in all material respects on and as of the date hereof and as
of the Closing Date with the same effect as if made on and as of the
applicable date.
3.2.2 Performance of Obligations. Indiginet shall have performed
all of Indiginet's obligations and agreements herein to be performed,
as applicable, on or before Closing and complied with all of the
covenants and conditions contained in this Agreement to be performed
by Indiginet.
3.2.3 Performance at Closing. Indiginet shall have performed each
of the acts it is required to perform and delivered each of the
certificates and other documents it is required to deliver, or
appeared at Closing ready, willing and able to perform each of the
acts it is required to perform and deliver each of the certificates
and other documents it is required to deliver.
4. Representations and Warranties
4.1 Representations and Warranties of Fox and FTI. FTI and Fox (for
purposes hereof the term "FTI" shall include FTI's subsidiaries, if any,
whether or not specific reference is made to the subsidiaries in the
representations and warranties set forth below), jointly and severally, to
the best of Fox's knowledge represent and warrant to Indiginet as of the
date hereof and as of the Closing Date, as follows:
4.1.1 Good Standing. FTI is a corporation duly organized, validly
existing and in good standing under the laws of the State of its
incorporation, with full corporate power and authority to own, operate
and lease its properties and to carry on its business as now being
conducted. Each of FTI's subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the state
where each such subsidiary was incorporated as set forth in Schedule
4.1.1 attached hereto, with full corporate power and authority to own,
operate and lease its properties and to carry on its business as now
being conducted. FTI and each of its subsidiaries are qualified to do
business and in good standing in all jurisdictions where their
properties, assets and/or activities and operations so require, which
states are listed in Schedule 4.1.1 attached hereto. A true and
correct copy of FTI's and of each subsidiary's Articles of
Incorporation or Charter and all amendments thereto and restatements
thereof, certified by the secretary of state or other appropriate
state office in the state of FTI's or such subsidiary's incorporation
and FTI's and each subsidiary's By-Laws and all amendments thereof and
restatements thereto, certified as true, complete and accurate by the
Secretary of FTI are set forth in Schedule 4.1.1 attached hereto.
Certificates of Good Standing for each jurisdiction where FTI and each
of its subsidiaries are duly qualified to transact business as foreign
corporations will be included in Schedule 4.1.1.
4.1.2 Binding Agreement. This Agreement, executed by Fox and FTI,
constitutes the valid and binding obligation of Fox and FTI
enforceable in accordance with its terms, and will not conflict with,
breach, violate or be in contravention of or result in a default under
FTI's Articles of Incorporation or any other organizational or
governing instrument of FTI, or of any contract, lease, indenture,
promissory notes, agreement, mortgage or other instrument to which FTI
and/or Fox is a party or by which any of FTI's assets or property is
bound or affected or, to the best of FTI's knowledge, any law, rule,
license, regulation, judgment, decree or order of any court, agency or
other authority to which jurisdiction FTI is subject. All corporate
action necessary for the approval and/or ratification of this
Agreement has been taken.
4.1.3 Authorized Stock. The only authorized capital stock of FTI
is twenty thousand (20,000) shares of its no par value common stock,
of which, as of the date hereof, twenty thousand (20,000) shares of
FTI Stock are issued and outstanding. Fox owns all of the issued and
outstanding shares of FTI Stock. No other person has any legal
ownership interest in and to any shares of the FTI Stock, and there
are no outstanding or authorized options, warrants, purchase rights,
subscription rights or other contract rights or commitments or
appreciation, phantom stock, profit participation or similar rights,
with respect to the FTI Stock nor any outstanding or authorized stock.
4.1.4 Stock Fully Paid. All issued and outstanding shares of the
FTI Stock have been duly authorized and validly issued and are fully
paid and non-assessable. As of the Closing Date, there will not be any
(i) options, warrants or other rights to purchase any shares of the
FTI Stock or any debt or securities convertible into such shares or
(ii) obligations of FTI or Fox, contractual or contingent, to issue
any such options, warrants, rights or shares.
4.1.5 Ownership of Securities. As of the date hereof, record
ownership of the FTI Stock is held 100% by Fox. FTI and Fox represent
and warrant that the FTI Stock is free and clear of all pledges,
liens, security interests, encumbrances or other restrictions
(excluding restrictions imposed on the transfer of the FTI Stock under
the Securities Act of 1933, as amended (the "Securities Act")) and of
all voting trusts, voting agreements, proxies and other voting
restrictions.
4.1.6 Marketable Title. Indiginet will obtain good and marketable
title to the shares of the FTI Stock to be transferred pursuant to the
terms hereof and such shares at the Closing will be presented to
Indiginet, free and clear of all liens, encumbrances, equities and
claims.
4.1.7 No Agreements. There are no agreements with any person with
respect to (i) the sale, lease, exchange or other disposition of any
of FTI's properties or assets, except in the ordinary course of its
business; or (ii) the sale, hypothecation, transfer, assignment or
other disposition of the ownership, direct or indirect, of any of the
shares of the FTI Stock, the operation of which may in the future
result in a change in control of FTI.
4.1.8 Financial Representations. Attached hereto as Schedule
4.1.8 are a Balance Sheet, Statement of Income (Loss and Deficit) and
Statement of Changes in Financial Position (including notes to such
financial statements) at December 31, 2001 and for the fiscal year
then ended (the "Financial Statements"). The Financial Statements have
been prepared in accordance with generally accepted accounting
principles applied on a consistent basis, except as disclosed therein,
and present fairly the financial position of FTI as of December 31,
2001, ("Financial Statement Date") and the results of operations for
the year then ended.
4.1.9 No Liabilities. As of the Financial Statement Date FTI had
no liabilities or obligations of any nature (whether accrued,
absolute, contingent, and due or to become due) except as disclosed or
reflected in the Financial Statements, and as set forth in Schedule
4.1.9 attached hereto.
4.1.10 No Change In Financial Condition. Since the Financial
Statement Date, there has not been, and neither FTI nor Fox know of
(i) any event, condition or state of facts that has resulted or may
reasonably be expected to result in any material adverse change in the
financial condition, business, sales, income, properties, assets or
liabilities of FTI from that shown on the Financial Statements; or
(ii) any material adverse change with respect to any contracts to
which Fox is a party or any event, circumstance fact or other
occurrence which may result in any material adverse change to the
financial conditions, business, sales, income, properties or assets of
FTI; or (iii) any material damage, destruction or loss to the
properties, assets or business of FTI, whether or not covered by
insurance, as the result of any fire, explosion, accident, casualty,
labor disturbance or interruption, requisition or taking of property
by any governmental body or agency, flood, embargo, or act of God or
the public enemy, or cessation, interruption or diminution of
operations, whether or not covered by insurance, which has materially
and adversely affected or impaired or which may be reasonably expected
to materially or adversely affect or impair the conduct of FTI's
operations or business; or (iv) any labor trouble other than routine
grievances (including without limitation any negotiation, or request
for negotiation, for any representation or any labor contract) or to
FTI's and Fox's knowledge any event or condition of any character
which has materially and adversely affected or which may be reasonably
expected to materially and adversely affect or impair the conduct of
FTI's operations or business; or (v) any declaration, setting aside or
payment of any dividend, or any distribution, in respect of the FTI
Stock; or (vi) any redemption, purchase or other acquisition by FTI of
any shares of the FTI Stock; or (vii) any significant loss of
customers of FTI.
4.1.11 Certain Tax Matters. FTI has prepared and duly filed (and
to the best of its knowledge has done so accurately and correctly) all
federal, state, county and local income, franchise, use, real property
and personal property tax returns and reports required to be filed as
of the date hereof with respect to FTI and has duly paid, withheld or
reserved for all taxes, penalties and other governmental charges
required to be paid as of the date hereof that have been assessed or
levied against or upon it or its properties, assets, income,
franchises, licenses or sales, including, without limitation, income,
gross receipt property taxes, or to the extent that they relate to
periods on or prior to the Financial Statement Date are reflected as a
liability on the Financial Statements, or if not paid, is contesting
such amounts in good faith by the appropriate proceedings. In the
event FTI is contesting such amounts in good faith, FTI has
established a reserve account sufficient to satisfy the assessment or
levy being contested. FTI does not know or have any reason to know of
any proposal by any taxing authority for additional taxes or
assessments against or upon FTI. To the best of FTI's and Fox's
knowledge and belief, all monies required to be withheld by FTI from
employees for income taxes, social security and unemployment insurance
taxes have, as of the date hereof, been collected or withheld, and
either paid to the respective governmental agencies or set aside in
cash for such purpose. FTI has not entered into any agreement for the
extension of time or the assessment of any tax or tax delinquency, nor
has FTI received any outstanding or unresolved notices from the
Internal Revenue Service or any taxing body of any proposed
examination or of any proposed deficiency or assessment or of any tax
returns or tax liabilities due and payable. At least thirty (30) days
prior to the Closing Date, FTI will deliver to Indiginet an accurate,
correct and complete copy of each return or statement filed by, on
behalf of or including FTI for federal income tax purposes or state
and local income or franchise tax purposes for the last three (3) tax
years of FTI. All material elections with respect to the taxes
affecting FTI as of the date hereof are set forth in Schedule 4.1.11.
It is recognized that FTI has made an "S" election and, therefore,
maintains its books on a cash accounting basis. Any restatement of
FTI's financial statements to reflect an accrual accounting basis will
be undertaken at Indiginet's expense. After the date hereof, no
written election will be made by FTI without Indiginet's express
written consent.
4.1.12 Financial Disclosure. FTI and Fox have made available to
Indiginet all information known to FTI or Fox with respect to (i)
accounts, borrowing resolutions and deposit boxes maintained by FTI at
any bank or other financial institution and the account numbers and
the names and addresses of all of the persons authorized to effect
transactions in such accounts and pursuant to such resolutions and
with access to such boxes; and (ii) the names of all persons, firms,
associations, corporations or business organizations holding general
or special powers of attorney from Fox or FTI and a summary of the
terms thereof.
4.1.13 Condition of Tangible Assets. To the best of FTI's and
Fox's knowledge, all material tangible portions of the assets, and
properties owned by FTI, including all real properties or leasehold
interests in real property and structures thereon, are in good
condition and repair, subject only to ordinary wear and tear in light
of their respective ages and the respective uses for which they are
currently used, and that the use of such tangible properties and
assets conform and comply in all material respects with all rules,
regulations and standards applicable to FTI or its assets or property,
imposed by applicable federal, state or local laws or regulations.
4.1.14 All Assets. The properties and assets of FTI as of the
date hereof include (i) all properties and assets reflected on the
balance sheet included in the Financial Statements, and (ii) assets
acquired by FTI after such date and on or before the date hereof,
other than such properties and assets as shall have been transferred
or otherwise disposed of by FTI in the ordinary course of business,
any such disposition being set forth at Schedule 4.1.14 attached
hereto.
4.1.15 Stock Transfer Records and Minute Books. The stock
transfer records and corporate minutes books of FTI and its
subsidiaries will be made available to Indiginet for inspection at
least ten (10) days prior to the Closing Date and will be complete and
correct in all respects. The minutes books will accurately reflect all
meetings, comments and other actions of the shareholders and Board of
Directors of FTI and its subsidiaries since their incorporation.
4.1.16 Marketable Title.Except for Permitted Encumbrances (as
defined herein), FTI has good and marketable title to all of its
assets and properties, including fee interests in real property and
title to all its other properties and assets owned as of the date
hereof, free and clear of all mortgages, liens, pledges, charges,
claims (real or asserted) or encumbrances of any nature whatsoever.
4.1.17 Permitted Encumbrances. The following liens, charges and
other encumbrances of a similar nature are collectively referred to
herein as the "Permitted Encumbrances" with respect to the properties
and assets of FTI:
(i) liens for current state or local property taxes not yet
due and payable or subject to penalties;
(ii) zoning ordinances, building laws, restrictions and
regulations imposed by governmental, authorities, if any, none of
which is materially violated by existing buildings and uses by
FTI;
(iii) any assessment for local benefits levied by any
governmental authority and not now a lien upon all or any portion
of such real property; provided, however, neither FTI nor Fox
know or have reason to know of any such assessment;
(iv) liens of carriers, warehousemen, mechanics and
materialmen, and other like liens, in existence less than 120
days from the date of creation thereof, all of which shall be
satisfied and released on or prior to the Closing Date;
(v) any mortgage, deeds of trust or other encumbrances on
leasehold properties which FTI is leasing from a third party
which is the owner of the property being leased by FTI subject to
any such encumbrance; and
(vi) such imperfections of title, liens, easements or
encumbrances, if any, as are not material in character, amount or
extent and do not, severally or in the aggregate, materially
detract from the value or materially and adversely interfere with
the present use of the property subject thereto or affected
thereby or otherwise materially impair the business and
operations of FTI.
4.1.18 Leases and Licenses. Schedule 4.1.18 attached hereto sets
forth, as of the date hereof and as of the Closing Date, an accurate
and complete list of all leases and purchases of real property,
license agreements and leases and purchases of personal property
(covering property with a purchase price as of the date hereof greater
than $1,000) to which FTI is a party (whether as purchaser, lessor,
lessee, licensor or licensee) (collectively, the "Leases and
Licenses"). FTI, as purchaser, lessee or licensee, has entered into
all such Leases and Licenses which FTI reasonably believes may be
necessary for the conduct of the business and operation as now
conducted. FTI has furnished to Indiginet accurate and complete copies
of all such Leases and Licenses. FTI has title to each of the
leasehold and other interests created by the Leases and Licenses, free
and clear of all security interests, claims, liens and encumbrances of
any nature, other than Permitted Encumbrances. To the best of the
knowledge of FTI and Fox each such Lease and License is in full force
and effect. Each such Lease and License constitutes the legal, valid
and binding obligation of FTI and, to the best of FTI's and Fox's
knowledge the other party thereto, enforceable against FTI in
accordance with its respective terms except as may be limited by
bankruptcy, insolvency, reorganization, readjustment of debt,
moratorium or other law of general application related to or affecting
the enforcement of creditor's rights generally. Neither Fox nor FTI
has received notice or have any reason to know, of any claimed default
under any such Lease and License.
4.1.19 Insurance. Schedule 4.1.19 attached hereto sets forth, as
of the date hereof, an accurate and complete list and brief
description of the terms of all policies of insurance carried by FTI
and designating FTI as the insured thereunder. The description of each
policy consists of a description of the subject property, the
insurance coverage, the deductibles and the additional insureds. FTI
has furnished to Indiginet an accurate and complete copy of all such
insurance policies. No insurance carrier has refused any application
for insurance by FTI or any other person on behalf of FTI on any of
its properties or assets.
4.1.20 Intellectual Property Rights. Schedule 4.1.20 attached
hereto sets forth, as of the date hereof, an accurate and complete
list of all letters patent, patent applications, trademarks, service
marks, trade names, brands, logos, copyrights and licenses both
domestic and foreign, and rights with respect to the foregoing,
whether or not registered or registrable with any governmental
authority, now owned or used by FTI. Neither FTI nor Fox have received
notice, or otherwise have any reason to know, of any claimed or
threatened infringement of the rights of others with respect to any
patents, trademarks, service marks, trade names, brands, logos,
copyrights and licenses used or owned by FTI, the loss of which would
have a material adverse effect upon the business, operations, assets
or financial condition of FTI.
4.1.21 No Litigation. To the best of FTI's and Fox's knowledge
there are no pending or threatened suits, actions, claims, or
litigation, administrative, arbitration or other proceedings or
governmental investigations or inquiries to which Fox or FTI is a
party or to which any of the properties or assets thereof is subject.
4.1.22 No Violation of Laws or Regulations. To the best of FTI's
and Fox's knowledge, FTI has materially complied with, and is not in
any material respect in default under or in violation of, any laws,
ordinances, requirements, regulations or orders applicable to its
businesses and properties, including without limitation the rules and
regulations of the Federal Communications Commission ("FCC"), nor is
FTI in violation of or in default of any order, writ, injunction,
judgment or decree of any court, arbitrator, or federal, state or
local department official, commission, authority, board, bureau,
agency or other instrumentality issued or pending against FTI which
might adversely affect Fox's or FTI's ability to execute, deliver and
perform their obligations under this Agreement or to consummate the
transactions contemplated hereby or which challenges or seeks to
prevent, enjoin, alter or materially delay any such transactions.
Neither FTI nor Fox have received notice, or otherwise have any reason
to know, of any claimed default or violation with respect to any of
the foregoing. There have been no illegal payments, kickbacks, bribes
or political contributions made by Fox or FTI to any person, entity or
governmental or regulatory body in the United States or any foreign
country or political subdivision.
4.1.23 Approvals. All consents necessary or required for the
consummation of the transactions contemplated hereby are set forth in
Schedule 4.1.23. FTI and Fox will have obtained, on or before Closing,
all such consents, approvals and authorizations of all designations,
declarations and notices on the part of FTI and Fox required to be
obtained or given, as the case may be, pursuant to the Articles of
Incorporation or the Bylaws of FTI or, to the best of FTI's knowledge,
any Lease, contract, License, Permit, agreement, indenture or other
instrument to which either of them is a party or by which any of them
or any of their properties or assets is bound in connection with the
execution, delivery and performance of this Agreement and the
consummation of each transaction referred to in this Agreement.
Subject to obtaining the approvals set forth in Schedule 4.1.23,
neither the execution, delivery or performance of this Agreement nor
the conclusion of any transaction contemplated by this Agreement will
result in any violation of, be in conflict with or constitute a
default under any term or provision of the Articles of Incorporation
or the Bylaws of FTI or any such agreement, indenture or other
instrument or the rules and regulations of any regulatory body. FTI
has furnished to Indiginet accurate and complete copies of the
Articles of Incorporation and Bylaws of FTI, each as in effect as of
the date hereof.
4.1.24 Compliance With Laws. The entering into and consummation
of the transactions contemplated hereunder will not result in any
default under or violation of any of the terms and provisions of any
contract, lease or other agreement to which FTI or Fox are a party or
by which FTI or Fox is bound or, to the knowledge of FTI and/or Fox,
any law, rule, license, regulation, judgment, order or decree
governing or affecting FTI and/or Fox. Except as provided in Schedule
4.1.23, no consent, approval or authorization by any person is
required in connection with FTI's execution, delivery or performance
of this Agreement.
4.1.25 Labor Agreements. To the best of FTI's and Fox's
knowledge, there are no collective bargaining agreements between FTI
and any labor union or other representative of employees, including
local agreements, amendments, supplements, letters and memoranda of
understanding of all kinds and all employment or consulting contracts
not terminable at will without penalty to which FTI is a party.
4.1.26 Contracts. Schedule 4.1.26 attached hereto sets forth, as
of the date hereof and as of the Closing Date, accurate and complete
lists of the following:
(i) except for the Leases and Licenses, all agreements,
contracts, arrangements, commitments, understandings or
obligations, oral or written, of FTI which are to be performed in
whole or in part on or after the date hereof and which require or
may require the payment by FTI in an amount, or under which FTI
is required or may be required to provide goods or services of a
value, greater than one thousand dollars ($1,000) during any
period of twelve (12) consecutive months;
(ii) any agreement to which FTI is a party or by which its
properties or assets are bound that limits the freedom of such
corporation to compete in any line of business or with any
person; and
(iii) all other agreements, contracts, arrangements,
commitments, understandings or obligations, oral or written
(other than oral contracts of employment), between FTI on the one
part and Fox or any other officer or director of FTI on the other
part, or in which any of such persons or entities has any
financial interest, direct or indirect (including without
limitation any agreements affecting FTI's properties or assets
and agreements to make loans). FTI has furnished Indiginet a copy
of each agreement, contract, arrangement, commitment or
obligation set forth on Schedule 4.1.26. Collectively the
contracts, agreements, arrangements, commitments or obligations
set forth in this Section and listed in Schedule 4.1.26 are
referred to herein as the "Contracts." Each such Contract is in
full force and effect and to the best of Fox's and FTI's
knowledge FTI has performed in all material respects all of the
obligations under each Contract required to be performed by it as
of the date hereof and as of the Closing Date and no such
Contract is in default, nor has any event occurred which with the
passage of time or giving of notice or both will result in the
occurrence of a default under any such Contract.
4.1.27 Employees. FTI is not a party to any agreement, contract,
arrangement, plan, commitment or understanding which has resulted or
would result, upon the consummation of the transactions contemplated
under this Agreement or otherwise, separately or in the aggregate, in
the payment of any "excess parachute payment" within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended ("Code")
nor is FTI obligated to pay any severance arrangements with any
current or former employees of FTI or any of its subsidiaries.
Attached hereto as Schedule 4.1.27 is a true and complete list of all
employees of FTI compensated by FTI. There are no employees of FTI who
have employment contracts or employee benefit rights which cannot be
terminated upon reasonable notice. Fox and FTI acknowledge that
Indiginet will not be obligated to retain any other employees of FTI
and that Indiginet will have the right to review each current employee
and to make a determination of whether or not to offer such employee
continued employment, in Indiginet's sole discretion. Any liability or
termination fees for any employees not retained by Indiginet will be
Fox's responsibility.
4.1.28 Environmental Matters. To the best knowledge of Fox and
FTI, FTI has duly complied with, and the operation of its business,
equipment and other assets in the facilities owned or leased by FTI
and its subsidiaries are in compliance with the provisions of all
applicable federal, state and local environmental, health and safety
laws, statutes, ordinance, rules and regulations of any governmental
or quasi governmental authority relating to (i) error omissions, (ii)
discharges to surface water or ground water, (iii) solid or liquid
waste disposal, (iv) the use, storage, generation, handling,
transport, discharge, release or disposal of toxic or hazardous
substances or waste, (v) the emission of non-ionizing electromagnetic
radiation, or (vi) other environmental, health or safety matters,
including, without limitation, the Comprehensive Environmental
Response Compensation and Liability Act of 1980, as amended by the
Superfund Amendments and Authorization Act of 1986; the Occupational
Safety and Health Act; the Resource Conservation and Recovery Act of
1976, as amended; the Federal Water Pollution Control Act of 1970; the
Safe Drinking Water Act of 1974; the Toxic Substances Control Act of
1976; the Emergency Planning and Community Right to Know Act of 1986,
as amended; and the Clean Air Act, as amended (collectively
"Environmental and Health Laws") or the Federal Communications Act, as
amended ("FCC Laws"). To the best knowledge of Fox and FTI, there are
no investigations, administrative proceedings, judicial actions,
orders, claims or notices which are pending, anticipated or threatened
against FTI, relating to violations of the Environmental and Health
Laws and the FCC Laws. FTI has not received a notice of, and does not
know or have any reason to suspect, any facts which might constitute a
violation of any Environmental and Health Laws which relate to the
use, ownership or occupancy of any property or facilities used by FTI
in connection with the operation of its business or any activity of
FTI's business which would result in a violation or threaten violation
of any Environmental and Health Laws and the FCC Laws.
4.1.29 Stock Representations. Fox (i) intends to acquire the
shares of Indiginet Stock pursuant to Section 1 hereof solely for the
purpose of investment and not for the resale and distribution thereof,
and has no present intention to offer, sell, pledge, hypothecate,
assign or otherwise dispose of the same; (ii) understands and
acknowledges that the sale of such shares of Indiginet Stock will not
be registered under the Securities Act, the Indiginet Stock being
acquired pursuant to this Agreement constitute "restricted securities"
as that term is defined under Rule 144 promulgated under the
Securities Act and may not be sold except pursuant to a registration
statement under the Securities Act or pursuant to an exemption
available under federal and applicable Securities laws, and such
shares may be required to be held indefinitely unless the shares are
subsequently registered under the Securities Act or an exemption from
such registration is available, (iii) agrees that he will not offer,
sell, pledge, hypothecate, transfer, assign or otherwise dispose of
any such shares of Indiginet Stock unless such shares and such offer,
pledge, hypothecation, transfer, assignment or other disposition shall
be registered or exempt from registration under the Securities Act and
shall comply with all applicable federal and state securities laws,
and (iv) agrees and acknowledges that the stock certificates
representing the shares of Indiginet Stock which will be acquired by
Fox under this Agreement will contain a legend restricting the
transferability of the shares as provided herein and that stop order
instructions may be imposed by Indiginet's transfer agent restricting
the transferability of each shares.
4.1.30 Licenses, Facilities.
(i) All licenses and authorizations material to the
operation of FTI's facilities, such facilities being identified
at Schedule 4.1.30, and/or to the conduct of FTI's business are
listed at Schedule 4.1.30 attached hereto. FTI is operating the
facilities identified in full compliance with the authorizations
identified; neither FTI nor Fox have any knowledge of any matters
which might result in the suspension or revocation of such
authorizations, or the issuance of any citation or forfeiture to
FTI. There are no unsatisfied citations or notices of apparent
liability issued or investigations ongoing, by the FCC or any
other agency of the federal or any state government with respect
to the facilities or their operation.
(ii) FTI owns all of the equipment necessary or useful in
the operation of the facilities in accordance with their licenses
and with FTI obligations under any agreements now in effect (the
"Equipment"). All of the Equipment is in good repair and operable
condition and have been, and will be operated in accordance with
the authorizations for the facilities and the Rules and
Regulations of the FCC or any other regulatory agency.
4.1.31 Accounts Receivable. All of the accounts receivable of FTI
constitute valid receivables, have been incurred in the ordinary
course of business consistent with past practices and, except to the
extent of the reserve for bad debts shown on the balance sheet of FTI
as of the date of such Financial Statement, and to Fox's and FTI's
knowledge are fully collectable in the ordinary course of FTI's
business and are not subject to any set-off or counterclaim. To the
best of FTI's knowledge, no part of such accounts receivable is
contingent upon the performance by FTI of any obligation, and no
agreements for deduction or discounts have been made with respect to
any part of such receivables.
4.1.32 Payables. The list of itemized accounts payable of FTI as
shown on Schedule 4.1.32 attached hereto represent a complete list of
all of FTI's accounts payable to its creditors, are true and correct
and are not currently in default as of the date hereof and as of the
Closing Date. FTI shall not incur any additional accounts payable
between the date hereof and the Closing Date other than in the
ordinary course of business without Indiginet's express written
consent.
4.1.33 Permits. To the best knowledge of Fox and FTI, FTI has
obtained all permits, licenses, zoning variances, approval, rights of
way, easements and other authorizations (collectively "Permits")
necessary for the operation of its business as presently operated. All
such Permits are listed in Schedule 4.1.33. All such Permits are
presently valid and in full force and effect and no renovation,
cancellation, or withdrawal thereof has been effective or to the best
of the knowledge of Fox and FTI, threatened. Except as disclosed
herein, the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby, will not
result in the termination of, or change in, any such Permits.
4.1.34 Employee Benefit Matters.
(i) Employee Benefits. Schedule 4.1.34 attached hereto
constitutes a true and complete list of all plans, programs and
arrangements providing profit sharing, retirement, pension,
savings, thrift, deferred compensation, stock options, stock
purchases, group insurance, accident, sickness, medical, dental
and disability benefits, and all vacation pay, severance pay,
incentive compensation, consulting agreements, bonus and other
employee benefits or fringe benefits maintained currently or at
any time in past three (3) years by FTI or with respect to which
contributions are made or have been made at any time in the past
six (6) years by FTI (including health insurance, life insurance
and other benefit plans maintained for retirees) whether or not
such plans, programs and arrangements constitute "employee
benefit plans" within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"),
whether or not such plans, programs and arrangements are in the
nature of formal or informal understandings, and whether or not
such plans, programs and arrangements are pursuant to any
collective bargaining arrangements. Such plans, programs and
arrangements are collectively referred to herein as "Benefit
Plans."
(ii) Compliance with ERISA. To the best knowledge of Fox and
FTI, each Benefit Plan of FTI or any of its subsidiaries, which
is covered by ERISA complies in all material respects and has
been administered in all material respects in accordance with the
applicable provisions of ERISA and the Code, including, without
limitation, the satisfaction of all applicable recording,
disclosure, fiduciary and tax qualification requirements under
ERISA and the Code. FTI has filed or caused to be filed with the
Internal Revenue Service annual reports on a Form 5500 or 5500C
or 5500R, as applicable, for each Benefit Plan for all years and
periods for which such reports were required. To the best
knowledge of Fox and FTI, all statements and disclosures made on
the documents or forms filed or distributed pursuant to the
applicable reporting and disclosure requirements under ERISA and
the Code have been true and complete in all material respects and
have been filed or distributed timely. No Benefit Plan has
incurred any excise tax liability.
(iii) Funding. FTI has made all payments and contributions
to all Benefit Plans on a timely basis as required by the terms
of each such plan, ERISA and the Code. All such payments and
contributions have been deducted fully by FTI for federal income
tax purposes. Such deductions have not been challenged or
disallowed by any governmental authority and FTI has no reason to
believe that such deductions are not properly allowable. FTI has
funded or will fund each Benefit Plan in accordance with the
terms of each Benefit Plan and, with respect to the current plan
year for benefits accrued through the Closing Date, including the
payment of applicable premiums on any insurance contract funding
a Benefit Plan for coverage provided through the date hereof.
(iv) Prohibited Transactions. To the best knowledge of Fox
and FTI, no "prohibited transaction," as defined in Section 406
of ERISA or Section 4975 of the Code, has occurred with respect
to any Benefit Plan. To the best knowledge of Fox and FTI, no
fiduciary violations, as defined in Section 404 of ERISA, have
occurred with respect to which FTI could have any present or
future liability or obligations. To the best knowledge of Fox and
FTI, each Benefit Plan is, and has been, operated and
administered in accordance with the appropriate written plan
documents.
(v) Determination Letters. The Internal Revenue Service has
issued to FTI letters determining that any Benefit Plan operated
by FTI is a qualified plan under Section 401(a), 401(k) and
related Sections of the Code to the extent applicable, and the
related trusts of such Benefit Plans operated as qualified plans
are exempt from federal income tax under Section 501(a) of the
Code. To the best knowledge of Fox and FTI, there have been no
occurrences since the date of any such determination letter which
have adversely effected or which could adversely effect such
qualification.
(vi) Medical Plans. To the best knowledge of Fox and FTI,
each Benefit Plan which provides medical and related benefits has
been operated in compliance with all requirements of Section 601
through 608 of ERISA and either (i) Section 162(1) and any other
applicable provisions of the Code, relating to the continuation
of coverage under certain circumstances in which coverage would
otherwise cease. Schedule 4.1.34 contains a true and complete
list of all former employees of FTI and its subsidiaries and
their respective beneficiaries who, as of the date hereof and as
of the Closing Date, will be receiving or will be eligible to
elect to receive benefits pursuant to such Benefit Plans and the
continued coverage provisions of ERISA and the Code. No Benefit
Plan maintained by FTI or any of its subsidiaries provides
post-retirement medical benefits, post-retirement death benefits
or other post-retirement welfare benefits, except to the extent
of the continuation coverage rules as provided under the
applicable provisions of ERISA and the Code.
4.1.35 Directors and Officers. Schedule 4.1.35 attached hereto is
a correct and complete list as of the date hereof showing the names of
each of the Officers and Directors, each of whom has been duly elected
or appointed, and the names of each of the Officers and Directors of
each of FTI's subsidiaries, each of whom has been duly elected or
appointed by each such subsidiary. Each such officer and director
shall deliver his or her resignation from FTI and each of FTI's
subsidiaries on the Closing Date.
4.1.36 Full Disclosure. None of the written information provided
by Fox and FTI to Indiginet in connection with the negotiation of this
Agreement contains any untrue or misleading statement of a material
fact. There is no fact which Fox or FTI has not disclosed to Indiginet
in writing which materially affects or which will materially affect
adversely FTI's business, sales, income, properties, assets,
liabilities, activities, customers, or the ability of FTI and Fox to
perform under this Agreement.
4.2 Representations and Warranties of Indiginet. Indiginet represents
to FTI as follows:
4.2.1 Good Standing. Indiginet is a corporation duly organized,
validly existing and in good standing under the laws of the state of
Florida, with full corporate power and authority to own, operate and
lease their properties and to carry on their business as now being
conducted. Indiginet is qualified to do business and in good standing
in all jurisdictions where its properties, assets and operations so
require. Indiginet has all requisite power and authority to enter into
this Agreement and perform its obligations under this Agreement.
4.2.2 Binding Agreement. This Agreement, as executed by
Indiginet, constitutes the valid and binding obligation of Indiginet
enforceable in accordance with its terms, except as such enforcement
may be limited by applicable bankruptcy, insolvency, moratorium or
similar laws affecting the rights of creditors generally. This
Agreement and the performance of this Agreement by Indiginet will not
conflict with, breach, violate or be in contravention of or result in
a default under Indiginet's Articles of Incorporation or any other
organizational or governing instrument of Indiginet, or of any
agreement, mortgage or other instrument to which Indiginet is a party
or by which any of its assets or property is bound or affected or, to
the best of Indiginet's knowledge, any law, rule, license, regulation,
judgment, decree or order of any court, agency or other authority
which has jurisdiction over the business, properties, assets and
activities of Indiginet. All corporate action necessary for the
approval and/or ratification of this Agreement has been, or will be,
prior to Closing, taken.
4.2.3 Stock Acquired for Investment. Indiginet (i) intends to
acquire the FTI Stock solely for the purpose of investment and not for
the resale and distribution thereof and has no present intention to
offer, sell, pledge, hypothecate, assign or otherwise dispose of the
same, (ii) understands and acknowledges that the sale of the FTI Stock
will not be registered under the Securities Act, and such shares may
be required to be held indefinitely unless the share are subsequently
registered under the Securities Act or an exemption from such
registration is available, and (iii) agrees that it will not offer,
sell, pledge, hypothecate, transfer, assign or otherwise dispose of
any such shares unless such shares and such offer, pledge,
hypothecation, transfer, assignment or other disposition shall be
registered or exempt from registration under the Securities Act and
shall comply with all applicable federal and state securities laws.
4.2.4 Litigation; Compliance with Laws. There are no pending or
threatened suits, actions, claims, arbitrations, administrative or
legal or other proceedings or governmental investigations or inquires
pending or to which Indiginet is a party or to which any of its
properties or assets thereof is subject, nor in any material respect
any failure to comply with, nor any default under, any law, ordinance,
requirement, regulation or order applicable to Indiginet and its
businesses and properties nor any violation of or default with respect
to any order, writ, injunction, judgment or decree of any court,
arbitrator, or federal, state or local department, official,
commission, authority, board, bureau, agency or other instrumentality,
issued or pending against Indiginet which might adversely affect
Indiginet's ability to execute, deliver and perform its obligations
under this Agreement or to consummate the transactions contemplated
hereby or which challenges or seeks to prevent, enjoin, alter or
materially delay any such transaction.
5. Activities Prior To The Closing Date
5.1 Operation of FTI's Business. FTI and Fox (for purposes of this
Section 5, all references to the "Company" shall include each of FTI's
subsidiaries) hereby agree that from and after the date hereof to the
Closing Date, except as otherwise contemplated by this Agreement, FTI,
shall and Fox shall cause FTI to, conduct its business solely in the
ordinary course consistent with past practices, and FTI shall, and Fox
shall cause FTI to:
5.1.1 Organizational Documents. Not amend its Articles of
Incorporation or Charter or Bylaws, except as may be necessary to
carry out this Agreement or as required by law;
5.1.2 Corporate Name. Not change its corporate name or permit the
use thereof by any other corporation, person or entity;
5.1.3 Compensation. Not pay or agree to pay any employee,
officer, or director, without the consent of Indiginet, compensation
which is in excess of the current compensation level of each employee,
officer or director, except for standard periodic increases to
non-management employees consistent with past practices in terms of
timing and amount;
5.1.4 Management. Not make any changes in management without the
prior written consent of Indiginet;
5.1.5 Reorganizations or Other Related Transactions. Not merge or
consolidate with any other corporation, or acquire, agree to acquire
or be acquired by any corporation, association, partnership, joint
venture or other entity without the prior written consent of
Indiginet;
5.1.6 Disposition of Assets. Not sell, transfer or otherwise
dispose of any of its properties or assets without the prior written
consent of Indiginet, except in the ordinary course of business;
5.1.7 Indebtedness. Not create, incur, assume or guarantee any
indebtedness for money borrowed except for trade indebtedness incurred
in the ordinary course of business;
5.1.8 Encumbrances. Not create or suffer to exist any Encumbrance
on any of its properties or assets, except those in existence on the
date hereof;
5.1.9 Increase of Indebtedness. Not increase the amount of any
indebtedness outstanding under any loan agreement, mortgage or
borrowing arrangement in existence on the date hereof, except for
additional borrowings required to fund the working capital needs of
FTI in the ordinary course of business under any line of credit loan
identified in FTI's Financial Statements to the extent permitted
thereunder by the documentation relating thereto in effect as of the
date hereof and then only to the extent that FTI has first notified
Indiginet of any such borrowings under the line of credit subsequent
to the date hereof and Indiginet approves such borrowings;
5.1.10 Payables. Pay when due in accordance with past practices
all of its accounts payables and trade obligations;
5.1.11 Maintenance of Assets. Maintain its facilities, assets and
properties in good operating repair, order and condition, reasonable
wear and tear excepted, and notify Indiginet promptly upon any loss
of, damage to or destruction of any of its facilities, properties or
assets;
5.1.12 Insurance. Maintain in full force and effect all insurance
coverage of the types and in the amounts set forth in the Schedules
attached hereto and apply the proceeds received under any insurance
policy or as a result of any loss of, damage to, or destruction of any
of its facilities, properties or assets to the repair or replacement
of such facilities, properties or assets;
5.1.13 Contracts and Permits. Maintain in full force and effect
all Contracts and Permits for or related to the operation of its
business in all respects and in all places as its business is now
conducted;
5.1.14 Goodwill. Use its best efforts to preserve its business
organization in tact, to keep available the services of its present
employees and to preserve the goodwill of its customers and others
having business relations with it;
5.1.15 Issuance of Securities. Not issue any additional capital
stock, options, warrants, or other rights to purchase capital stock or
securities convertible into or exchangeable for capital stock of FTI;
not declare, set aside or pay any dividend or make any other
distributions in respect of any of FTI's shares of capital stock;
5.1.16 Repurchase of Securities and Repayment of Indebtedness.
Except as approved by Indiginet after first being notified of any such
event, not make any direct or indirect redemption, purchase or other
acquisition of shares of FTI's capital stock or make any direct or
indirect repurchase, repayment or retirement of any principal of, or
interest on, any indebtedness other than regularly scheduled payments
of principal and interest as provided in the promissory note
evidencing any of FTI's indebtedness;
5.1.17 Litigation. Promptly advised Indiginet in writing of the
commencement of, and of any known threat to commence, any suit, claim,
action, arbitration, legal or administrative proceedings, governmental
investigation or tax audit against FTI;
5.1.18 Monthly Financial Statements. Deliver to Indiginet as soon
as available monthly financial statements ("Monthly Financial
Statements") of FTI commencing with the month of January 2002, and for
each calendar month thereafter prior to the Closing Date; and
5.1.19 Miscellaneous. Not enter into any agreement or otherwise
agree to take any action in violation of the negative covenants set
forth in this Section 5 or take, agree to take or omit to take any
action that would make any representation or warranty inaccurate.
5.2 Access to Information. FTI will cooperate fully with Indiginet,
and FTI shall provide, and Fox shall cause FTI to provide, to Indiginet and
its accountants, counsel and other representatives (collectively
"Advisors") during normal business hours, (i) full access to the books,
records, equipment, real estate contracts and other assets of FTI and all
work papers relating to FTI of FTI's independent accountants and (ii) full
opportunity to discuss FTI's business affairs and assets with its officers,
employees, agents and independent accounts ("FTI's Representatives") and
furnish to Indiginet and its Advisors copies of such documents, records and
information with respect to the affairs of FTI as Indiginet or its Advisors
may reasonably request.
5.3 Confidentiality. Indiginet shall retain in confidence and shall
cause its Advisors to retain in confidence, all information obtained by
them pursuant to the investigations made by Indiginet or its Advisors
pursuant to this Section (the "Confidential Information"). Fox, FTI, its
officers, directors and employees and FTI's Advisors shall retain in
confidence, all information obtained by them in connection with any
investigation undertaken by such persons as a result of Indiginet providing
such persons such access to information of Indiginet as provided in this
Agreement. The parties agree that Confidential Information shall not
include information which (i) was or becomes generally available to the
public other than as a result of a disclosure by Indiginet, FTI, Fox or any
of their officers, directors or employees or any of their Advisors, (ii)
was or becomes available to Indiginet, FTI, Fox, any of their officers,
directors or employees or their Advisors on a non-confidential basis from a
source other than Indiginet, FTI, Fox or FTI's Representatives, provided
that such source is not bound by a confidentiality agreement or (iii) was,
or in the future is, developed independently by Indiginet or their Advisors
or by FTI, Fox or their Advisors without reference to the information
furnished by Indiginet, FTI, Fox or FTI's Representatives, as the case may
be. The parties understand and agree that all of the Confidential
Information supplied to Indiginet or their Advisors or to FTI, Fox or FTI's
Representatives is provided on the understanding that such Confidential
Information remains the property of Indiginet or FTI, as the case may be,
and that all copies and originals will be returned to any such party
promptly upon its request after termination of this Agreement pursuant to
Section 7 hereof.
5.4 Benefit Plans. Between the date hereof and the Closing Date, FTI
shall maintain, and Fox shall cause FTI to maintain, in full force and
effect the Benefit Plans as they pertain to FTI's employees or former
employees and in connection therewith;
5.4.1 Plan Changes. Except as may be required by law or as may be
necessary to continue the qualified status under Section 401 of the
Code, FTI shall not adopt, terminate, amend, extend, or otherwise
change any Benefit Plan without the prior written consent of
Indiginet, and Fox and FTI shall give Indiginet prior written notice
of FTI's intention to take any such action required by law or
necessary to continue the qualified status of any Benefit Plans as
they pertain to FTI's employees or its former employees; and
5.4.2 Contributions and Payments. FTI shall not make, cause to be
made, or agree to make any contribution, award or payment under any
Benefit Plans as they pertain to FTI's employees or former employees,
except at the time and to the extent required by the written terms
thereof, without the prior written consent of Indiginet.
5.5 Commercially Reasonable Efforts and Standstill. Subject to the
other provisions of this Agreement, each of FTI and Fox will use their
commercially reasonable efforts to cause the conditions listed in Section
3.1 hereof to be satisfied on or before the Closing Date. Subject to the
other conditions of this Agreement, Indiginet will use its commercially
reasonable efforts to cause the conditions listed in Section 3.2 hereof to
be satisfied on or before the Closing Date. Each of FTI and Fox further
agrees that they will not enter into, request, solicit or engage in any
discussions, negotiations, understandings or agreements with any person or
entity other than Indiginet relating to the sale of the FTI Stock or the
properties and assets of FTI (other than in the ordinary course of
business) unless this Agreement is terminated pursuant to Section 7 hereof.
6. Post-Closing Covenants. FTI, Fox and Indiginet agree as follows with
respect to the period following the Closing.
6.1 Performance of Waived Conditions. To the extent that any
conditions under Section 3.1 hereof are waived by Indiginet as a condition
precedent to Indiginet's obligation to close the transactions contemplated
hereby, such waived condition to the extent required by Indiginet shall be
performed by Fox within the time period agreed upon by the parties hereto,
but in any event no later than sixty (60) days following the Closing Date,
unless Indiginet agrees to an extended period of time in which such
performance can be completed. Indiginet acknowledges that Fox will be an
employee of Indiginet and Indiginet will allow Fox to use whatever time is
necessary during working hours to complete any waived conditions at
Indiginet's expense.
6.2 Confidential Information. FTI and its former officers and
directors will 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 Indiginet or destroy, at the
request and option of Indiginet, all tangible correspondence, documents,
instruments, memorandums and all other writings (and all copies thereof)
which embody the Confidential Information which are in such persons'
possession. If FTI or its former officers or directors are requested or
required (by oral question or request for information or document in any
legal proceeding, interrogatory, subpoena, civil investigative demand, or
similar process) to disclose any Confidential Information, FTI and its
former officers or directors will notify Indiginet promptly of any such
request or requirement to enable Indiginet to seek an appropriate
injunction or waive compliance with the provisions of this Section. The
foregoing provision shall not apply to any Confidential Information which
is generally available to the public immediately prior to the time of
disclosure.
6.3 Fox's Cooperation After Closing. In case at any time after the
Closing Date any further action is necessary or desirable to carry out and
accomplish the purposes of this Agreement and the transactions contemplated
hereunder, Fox will take such further action as Indiginet may request,
including executing and delivering such further instruments and documents
as shall be necessary or appropriate to accomplish and effectuate such
transaction. Indiginet acknowledges that Fox will be an employee of
Indiginet and Indiginet will allow Fox to use whatever time is necessary
during working hours to take any such actions at Indiginet's expense.
7. Termination
7.1 Events of Termination. Anything contained elsewhere in this
Agreement to the contrary notwithstanding, prior to the Closing Date, this
Agreement may be terminated by written notice of termination as follows:
7.1.1 Mutual Consent. Anytime by mutual consent of FTI, Fox and
Indiginet;
7.1.2 Prior to Closing Date. By FTI and Fox or Indiginet if the
other party shall have (i) misstated any representation or been in
breach of any warranty contained herein, (ii) been in breach of any
covenant, undertaking or restriction contained herein and such
misstatement or breach is not been cured by the earlier of (a) thirty
(30) days after the giving of notice of such party of such
misstatement or breach or (b) the Closing Date, or (iii) failed to
consummate the transactions contemplated herein;
7.1.3 Failure to Close. By FTI and Fox or Indiginet if the
transactions contemplated by this Agreement are not consummated on or
before March 31, 2002.
7.2 Consequences of Termination. In the event of a termination and
abandonment hereof pursuant to the provisions of this Section 7, this
Agreement shall become void and have no effect, without any liability on
any of the parties or their directors or officers or stockholders in
respect of this Agreement. Notwithstanding anything contained herein to the
contrary, if this Agreement is terminated by any party for any reason, any
amounts paid by Indiginet to FTI or Fox shall be returned to Indiginet.
8. Additional Agreements.
8.1 Employment Agreements.
8.1.1 Fox Agreement. On the Closing Date, FTI and Fox shall enter
into an employment agreement ("Fox Agreement"), in substantially the
same form as Exhibit 8.1.1 attached hereto.
8.1.2 Eicher Agreement. On the Closing Date, FTI and Xxxxxx
Xxxxxx shall enter into an employment agreement ("Eicher
Agreement"), in substantially the same form as Exhibit 8.1.2
attached hereto.
8.2 Agreement Not to Compete. Fox understands that Indiginet shall be
entitled to protect and preserve the value of FTI and that Indiginet would
not have entered into this Agreement absent the provisions of this Section
8.2, and therefore agrees that he will not after the Closing Date and prior
to the later to occur of (a) the third anniversary of the Closing Date or
(b) six (6) months following the termination of Fox's employment, if
applicable: (i) directly or indirectly, own, manage, operate, control or
participate in the ownership, management, operation or control of a
business that provides products or services similar to those provided by
FTI within any area or at any location constituting a Relevant Area. The
"Relevant Area" shall be defined for the purposes of this Agreement as any
area located within one hundred (100) miles of the legal boundaries or
limits of any city within which Indiginet, FTI or any affiliate is
providing products or services, has commenced obtaining appropriate
licenses or authorizations for the purpose of providing products or
services or has announced the intention to provide products or services,
(ii) directly or indirectly induce any former employee of FTI retained by
Indiginet to leave the employ of Indiginet or FTI or to accept any other
position of employment (provided, however, that general solicitations such
as general advertisements, participation in job fairs and other such
activities shall not be prohibited), and (iii) at any time communicate or
divulge any confidential information, knowledge or data related to FTI or
its business, including but not limited to FTI's customer lists, all of
which Fox agrees to hold in a fiduciary capacity for the benefit of
Indiginet, to any party other than Indiginet. Notwithstanding the
foregoing, any confidential information, knowledge or data related to FTI
shall not be subject to the restrictions of this Section 8.2 if the
information, knowledge or data (a) is generally known to the public and did
not become so known through any violation of law, (b) became known to the
public through no fault of Fox or FTI, (c) is required to be disclosed by
order of court or government agency with subpoena powers, (d) is disclosed
in the course of any litigation between any of the parties hereto or (e) is
conveyed by a party to a party's accountants, attorneys, brokers or
advisors solely for purposes of consummating the transactions contemplated
by this Agreement, provided that those entities are obligated to keep the
information, knowledge or data confidential.
For purposes of this Section 8.2, the phrase "directly or indirectly engage
in" shall include having a direct or indirect ownership interest (other
than ownership of less than five percent of the outstanding voting
securities of an entity which is registered under Section 12 of the
Securities Exchange Act of 1934, as amended) in any entity that engages in
the business in question.
8.3 Registration Rights.
8.3.1 Piggyback Registration. If at any time Indiginet shall
determine to register any of its securities, either for its own
account or the account of a security holder or holders (other than (i)
a registration statement on Form S-4 or S-8 (or any substitute form
that may be adopted by the Securities and Exchange Commission ("SEC"))
or (ii) a registration statement filed in connection with an offer of
securities solely to Indiginet's existing security holders), then upon
each and every occasion Indiginet shall give prior written notice of
the proposed registration to Fox of its intention to do so promptly
and in any event not later than the tenth business day before the
anticipated filing date of the applicable registration statement. The
notice shall specify whether the proposed registration is for the
account of Indiginet, for the account of one or more other persons or
both and also specify the kind and number or amount of securities
proposed to be registered on behalf of each thereof and the proposed
offering price or prices and distribution methods and arrangements.
Upon the terms and subject to the conditions and limitations set forth
in this Section 8.3, Fox may elect to participate in the registration
by giving Indiginet, within ten (10) days after the notice has been
given by Indiginet, a written request to register any or all of Fox's
Indiginet Stock in connection with the registration (any such
registration as to which any request is made being sometimes referred
to as a "Piggyback Registration"); provided, however, that if the
registration is a "demand" registration made pursuant to the exercise
of existing registration rights by other holders of Indiginet's common
stock, then Fox shall not be entitled to participate in the
registration unless the other holders participating in the
registration otherwise agree in writing.
8.3.2 Notice. Any request by Fox shall state (i) the number of
shares of Indiginet Stock to be included in the registration by Fox,
(ii) Fox's preferred method of distribution of the shares of Indiginet
Stock and (iii) any other information that Indiginet reasonably
requests in the notice given by it to Fox. Upon receipt of one or more
of requests, Indiginet shall, subject to Section 8.3.3, as soon as
practicable, file with the SEC and use its reasonable efforts to cause
to become effective, a registration statement which shall cover the
Indiginet Stock requested to be registered by Fox and shall take all
such other actions as may be necessary or advisable to permit Fox to
dispose of all shares of Indiginet Stock requested to be included in
the Piggyback Registration in accordance with the permitted intended
method or methods of distribution in compliance with the Securities
Act and state "blue sky" and securities laws.
8.3.3 Reduction in Number of Shares to be Registered. If the
registration of which Indiginet gives notice is for a registered
public offering involving an underwriting, Indiginet shall so advise
Fox as a part of the written notice. In such event, the right of Fox
to participate in the registration pursuant to this Section 8.3 shall
be conditioned upon Fox's participation in the underwriting and the
inclusion of the Indiginet Stock in the underwriting to the extent
provided herein. If any Piggyback Registration is for (or includes) an
underwritten offering, Indiginet will permit Fox to include any or all
of the Indiginet Stock in the underwritten offering on the same terms
and conditions as any similar securities included therein. In a
registration involving an underwritten public offering, if Indiginet's
Board of Directors, or the managing underwriter or underwriters of the
underwritten offering, have informed Indiginet that in the Board of
Director's or underwriter's reasonable opinion, as the case may be,
the total number of securities which Indiginet, Fox and any other
persons desiring to participate in the registration intend to include
in the offering is such as to materially and adversely affect the
success of the offering, including the price at which the securities
can be sold, then Indiginet will be required to include in the
registration only the amount of securities which it is so advised
should be included in the registration.
8.3.4 Withdrawal of Registration. Indiginet may, without the
consent of Fox, delay, suspend, abandon or withdraw any Piggyback
Registration and any related proposed offering or other distribution
in which Fox has requested inclusion of the Indiginet Stock.
9. Miscellaneous
9.1 Notices. Any notices under this Agreement shall be in writing,
signed by the party giving the same and transmitted by registered or
certified United States Mail or by a generally accepted national courier
service providing confirmation of delivery, and addressed to the party to
receive the notice at the address set forth below or such other address as
any party may specify by notice to the other party, and shall be deemed
properly given and received when actually given and received:
If to Indiginet: Xxxxxxx Xxxxxx
President
0000 X. Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
with a copy to: Xxxxxx X. Xxxxxxx, Esq.
M.E. Xxxxxxx & Associates, LLC
X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxx 00000-0000
if to FTI: 0000 Xxxxx Xxxxxxx Xxxxxxx
Xxxxx 0
Xxxxxxxxx, Xxxxxxxx 00000
if to Fox: 00000 Xxxx Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
9.2 Brokerage Commissions.
9.2.1 FTI and Fox hereby represent and warrant to Indiginet that
neither FTI nor Fox has engaged or utilized the services of any broker
or finder in connection with this transaction and that no commissions
are payable with respect to this transaction. FTI and Fox hereby agree
to indemnify and hold Indiginet harmless from and against any
liability for any claims of any broker or finder claiming by, through
or under FTI or Fox.
9.2.2 Indiginet hereby represents and warrants to FTI and Fox
that Indiginet has not engaged or utilized the services of any broker
or finder in connection with this transaction and that no commissions
are payable with respect to this transaction. Indiginet hereby agrees
to indemnify and hold FTI and Fox harmless from and against any
liability for any claims of any other broker or finder claiming by,
through or under Indiginet.
9.3 Successors and Assigns. This Agreement is personal to the parties
hereto and may not be assigned, transferred, delegated or nullified without
the prior written consent of all of the parties hereto; provided, that,
Indiginet shall have the right to assign this Agreement to any wholly owned
subsidiary or controlled affiliate of Indiginet. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and permitted
assigns.
9.4 Arbitration. Notwithstanding anything to the contrary herein, any
dispute arising pursuant to or in any way related to this Agreement or the
transactions contemplated hereby shall be settled by arbitration at a
mutually agreed upon location in Denver, Colorado; provided, however, that
nothing in this Section shall restrict the right of any party to apply to a
court of competent jurisdiction for emergency relief pending final
determination of a claim by arbitration in accordance with this Section.
All arbitration shall be conducted in accordance with the rules and
regulations of the American Arbitration Association, in force at the time
of any such dispute. Each party shall pay its own expenses associated with
such arbitration, provided that the prevailing party in any arbitration
shall be entitled to reimbursement of reasonable attorneys' fees and
expenses (including, without limitation, arbitration expenses) relating to
such arbitration. The decision of the arbitrator(s), based upon written
findings of fact and conclusions of law, shall be binding upon the parties;
and judgment in accordance with that decision may be entered in any court
having jurisdiction thereof.
9.5 No Oral Modifications. No amendments or modifications to this
Agreement shall be made or deemed to have been made unless in writing
executed and delivered by the party to be bound thereby. Any provision of
this Agreement may be waived, amended, supplemented or modified only by
agreement in writing of the parties hereto.
9.6 Waiver. The failure of any party to this Agreement to insist upon
strict performance of any of the terms of this Agreement will not
constitute a waiver of any of its rights under this Agreement or its right
subsequently to assert, rely upon, or enforce any provision of this
Agreement.
9.7 Governing Law. This Agreement shall be interpreted, governed by
and enforced according to the laws of the State of Colorado.
9.8 Severability. If any provision of this Agreement shall be held
invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions of this Agreement will not in
any way be affected or impaired thereby.
9.9 Headings and Captions for Convenience. The headings and captions
contained in this Agreement are for convenience only and shall not be
considered in interpreting the provisions hereof.
9.10 Counterparts. This agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, all of
which together shall constitute one and the same instrument.
9.11 Representations, Warranties and Covenants. Notwithstanding any
investigation made by or on behalf of Fox, FTI or Indiginet prior to or
after the Closing Date, and except with respect to any liabilities
associated with any taxes, fines or penalties outstanding, all
representations, warranties and covenants of the parties hereto contained
herein shall survive and remain in full force and effect for a period of
two (2) years after the Closing Date. All representations, warranties and
covenants of FTI and Fox hereto with regard to taxes shall survive and
remain in full force and effect for the applicable statute of limitations
period.
9.12 Fox's Indemnification. Notwithstanding the Closing and regardless
of any investigation at any time made by or on behalf of Indiginet or of
any information Indiginet may have in respect thereof, Fox will indemnify,
defend and save and hold Indiginet harmless from and against any costs,
expenses, damages, liabilities, losses or deficiencies, including, without
limitation, reasonable attorneys' fees and other costs and expenses
incident to any suit, action or proceeding (collectively "Losses") suffered
or incurred by Indiginet arising out of or resulting from, and will pay
Indiginet on demand the full amount of any such amounts which Indiginet may
pay or may become obligated to pay in respect of:
(a) any material inaccuracy in any representation or document
delivered under or pursuant to this Agreement or the material breach
of any warranty made by FTI or Fox in or pursuant to this Agreement;
(b) any misrepresentations in or omission from any Exhibit,
Schedule, or other attachment to this Agreement;
(c) any failure by FTI or Fox duly to perform or observe any
term, provision, covenant, or agreement in this Agreement to be
performed or observed on the part of FTI or Fox; or
(d) any action, suit, investigation, proceeding, demand,
assessment, audit, judgment and claim, including any
employment-related claim arising out of the foregoing (collectively
"Claims") against FTI or any of its subsidiaries, even though such
Claims may not be filed or come to light until after the Closing Date.
Indiginet hereby covenants and agrees to immediately provide to Fox any and
all notifications or other correspondence it receives related to matters
which may affect this indemnity and hereby agrees to allow Fox to defend
any and all actions affecting this indemnity and shall not settle any
action or dispute affecting this indemnity without obtaining the prior
written consent of Fox. However, failure to provide any such notifications
or other correspondence in a timely manner will not relieve Fox of his
obligation to indemnify Indiginet under this Section 9.12. If Indiginet
becomes unsatisfied with the conduct of the defense of the Claims,
Indiginet may defend against, and consent to the entry of any judgment or
enter into any settlement with respect to such Claims in any manner it may
deem to be appropriate and Fox shall reimburse Indiginet promptly for the
acts of defending against such Claims and will otherwise remain responsible
for any Loss which Indiginet may suffer from, arising out of, relating to
or caused by such Claims to the full extent provided in this Section.
All statements of fact contained in any written statement (including the
Financial Statements), deed, certificate, schedule or other document
delivered to Indiginet by or on behalf of FTI or Fox pursuant to this
Agreement shall be deemed representations and warranties by FTI and Fox
hereunder.
9.13 Indiginet's Indemnification. Indiginet agrees that
notwithstanding the Closing and regardless of any investigation of any time
made by or on behalf of Fox or FTI or any information Fox or FTI may have
in respect thereof, Indiginet will indemnify and save and hold Fox harmless
from and against any Losses suffered or incurred by Fox arising out of or
resulting from, and will pay Fox on demand the full amount of any such
amounts which Fox may pay or may become obligated to pay in respect of:
(a) any material inaccuracy in any representation or the breach
of any warranty made by Indiginet in or pursuant to this Agreement; or
(b) any failure by Indiginet duly to perform or observe any item,
provision, covenant or agreement in this Agreement to be performed or
observed on the part of Indiginet.
9.14 Limitation of Indemnification.
9.14.1 Fox's Limitation. Notwithstanding anything contained
herein to the contrary, Fox shall not have any liability or obligation
to indemnify Indiginet for any Losses unless and until Indiginet's
Losses equal or exceed $5,000. Under no circumstances shall Fox be
required to reimburse or pay Indiginet any monies in excess of $50,000
for any breach or inaccurate representation or warranty issues or
combination of issues arising from any item or items in this entire
agreement and all schedules and exhibits associated with this
agreement.
9.14.2 Indiginet's Limitation. Notwithstanding anything contained
herein to the contrary, Indiginet shall not have any liability or
obligation to indemnify Fox for any Losses unless and until Fox's
Losses equal or exceed $5,000 in the aggregate for all Losses. Under
no circumstances shall Indiginet's liability for Fox's Losses exceed
$5,000.
9.15 No Benefit To Others. The representations, warranties, covenants
and agreements contained in this Agreement are for the sole benefit of the
parties hereto and their respective heirs, successors, assigns, and such
representations, warranties, covenants and agreements shall not be
construed as conferring, and are not intended to confer, any rights on any
other persons.
9.16 Publicity. Prior to the Closing Date, all notices to third
parties and all other publicity relating to the transactions contemplated
by this Agreement shall be jointly planned, coordinated and approved by
Fox, on behalf of FTI and himself, and Indiginet; provided, however, that
such approval shall not be unreasonably withheld.
9.17 Costs and Expenses. All expenses incurred by Fox, FTI or
Indiginet in connection with the transactions contemplated hereby,
including, without limitation, legal and accounting fees, shall be the
responsibility of and for the account of the party who ordered the
particular service or incurred the particular expense; provided, that, any
expenses relating to attorney's fees and accounting fees incurred by FTI
prior to the Closing Date in connection with the transactions contemplated
hereby and which are equal to or less than $5,000 in the aggregate shall be
the responsibility of Fox.
10. Entire Agreement. This Agreement, together with Exhibits, Schedules and
Attachments hereto, represents the entire agreement between the parties hereto
with respect to the subject matter hereof and nullifies all prior agreements,
understandings or negotiations, including the Second Confidential Disclosure
Agreement dated November 27, 2001 and associated exhibits and attachments. No
representations, warranties, promises or agreements, express or implied, shall
exist between the parties, except as stated herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first above written.
INDIGINET, INC., XXXXXXX X. XXX
a Florida corporation
By:
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Title:
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FOX TELECOMMUNICATIONS, INC.,
a Colorado corporation
By:
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Title:
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Signature Date:
