EXHIBIT 1
ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION
This
Acquisition
Agreement and Plan of Reorganization (herein,
together
with all referenced Exhibits, "Agreement")
is entered in to as of DECEMBER 30,
2003 (the date of execution of this
Agreement), by and between H-Net.Net, Inc.,
a Colorado corporation ("H-NET") and Donobi, Inc., a Washington
corporation
("DONOBI").
This
Agreement sets forth the terms and
conditions upon which DONOBI will
be acquired by and become a wholly owned subsidiary of H-NET (the
"Acquisition"). DONOBI will exchange all of the issued
and outstanding voting
common stock of DONOBI ("DONOBI Shares") for 13,558,750
shares of the voting
----------
$.001 par value common stock of H-NET ("H-NET Shares").
In consideration of the mutual promises and covenants
contained herein,
DONOBI and H-NET agree as follows:
ARTICLE I
DEFINITIONS
As used in this
Agreement, the following terms (whether used in singular or
plural forms) shall have the following meanings:
"DONOBI
Shareholders"
shall mean all shareholders of the
Common Stock of
Donobi, Inc., as of the Closing Date.
"DONOBI
Shares" shall mean the shares of Common
Stock of Donobi, Inc., to
be exchanged for shares of H-NET common stock
in accordance with the terms and
conditions set forth herein.
"H-NET Shares"
shall mean the shares of Common Stock of H-Net.Net, Inc., to
be exchanged for all of the issued and outstanding shares of
Donobi, Inc.,
common stock in accordance with the terms and conditions set forth
herein.
"Closing
Date" shall mean JANUARY 19, 2004, which is also
the date upon
----------------
which the Acquisition shall occur in accordance with the
terms and conditions
set forth herein and subject to any
changes or modifications of said date which
result from the unforeseen delay in
obtaining all necessary shareholder consents
set forth herein.
"Contract"
means any written contract, mortgage, deed of trust, bond,
indenture, lease, license, note, franchise,
certificate, option, warrant, right,
or other instrument, document or agreement, and any
oral obligation, right or
agreement.
"Controlled
Group" means all trades or businesses (whether or not
incorporated) under common control that,
together with DONOBI, are treated as a
single employer under Section 414(b) or 414(c) of the
Code or Section 4001 of
ERISA.
<PAGE>
"GAAP"
means generally accepted accounting principles, as the term is
defined by the American Institute of Certified Public Accountants
under the
first standard of reporting under its generally
accepted accounting standards.
"Knowledge"of
DONOBI of or with respect to any matter means that any of the
executive officers, directors or managers of DONOBI has, or
after due inquiry
and investigation would have, actual
awareness or knowledge of such matter, and
"Knowledge" of H-NET of or with respect to any matter means
that any of the
executive officers, directors, or senior managers of H-NET has, or
after due
inquiry and investigation would have, actual awareness or knowledge of
such
matter.
"Legal
Requirements"
means applicable common law and any statute,
ordinance, code or other law, rule regulation, order, technical or other
standard requirement, judgment or procedure enacted, adopted, promulgated,
applied or followed by any governmental authority, including judgments.
"Lien"
means any security agreement, financing statement
filed with any
governmental authority, conditional sale statement filed
with any governmental
authority, conditional sale or other title retention agreement, any lease
consignment or bailment given for purposes of security, any lien,
mortgage,
indenture, pledge, option, encumbrance,
adverse interest, constructive trust or
other trust, claim, attachment, exception to or defect in title or other
ownership interest (including but not
limited to reservations, rights of entry,
possibilities of reverter, encroachments, casement,
rights of way, restrictive
covenants leases and licenses) of any kind, which otherwise constitutes
an
interest in or claim against property, whether arising
pursuant to any Legal
Requirement, Contract or otherwise.
"Acquisition"
shall mean the acquisition by H-NET of
the DONOBI Shares in
exchange for the H-NET Shares as further defined herein.
ARTICLE 2
ACQUISITION
Section
2.1 Acquisition Agreement and Plan of Reorganization. An
-----------------------------------------------------
Acquisition Agreement and Plan of Reorganization is
hereby adopted as follows:
<PAGE>
2.1.1.
Subject to the terms and conditions
hereinafter set forth, on the
Closing Date, and in the manner
hereinafter provided, (i) DONOBI's shareholders
shall exchange all of the issued and outstanding DONOBI
Shares for the H-NET
Shares in the amounts set forth herein; DONOBI shall
continue to exist as a
separate corporate legal entity (wholly owned subsidiary);
and H-NET shall be
the parent corporation. The DONOBI shareholders shall receive H-NET Shares
equaling 87.4758% of the issued and
outstanding H-NET Shares, thereby obtaining
actual majority control over H-NET. The Acquisition shall be
structured as a
pooling of interests and as a tax deferred reorganization as
defined under
Section 368(a)(1) of the Internal Revenue Code.
2.1.2.
H-NET and DONOBI, respectively, shall take,
or cause to be taken,
such action as may be necessary or appropriate in order to effectuate
the
transactions contemplated hereby.
In the event that
after the Closing Date, any
further action is necessary or desirable to carry out the purposes of
this
Agreement and to vest H-NET or the DONOBI
Shareholders with full title to the
securities to be exchanged hereby, the officers and directors of H-NET or
DONOBI, as the case may be, shall take all such necessary action.
Section
2.2 Effective Date of the Acquisition for Accounting
Purposes.
------------------------------------------------------------
The transactions contemplated by this Agreement shall be effective on the
Closing Date, for accounting purposes and for
all other purposes to the extent
permissible by law.
Section
2.3 Consideration and Basis of
Exchange of Shares. The manner and
---------------------------------------------
basis of exchanging the DONOBI Shares
for the H-NET Shares shall be as follows:
2.3.1.
Restricted Shares.
On the Closing
Date, the DONOBI
Shareholders,
-----------------
by and through counsel for DONOBI, shall deliver to H-NET
original, written
consents and assignments approving the
transaction and executed by a majority of
DONOBI Shareholders sufficient to approve this transaction in
accordance with
Washington law; the DONOBI Shareholders shall be issued and
will receive, in
exchange for the DONOBI Shares held of
record on the Closing Date, an aggregate
of 13,558,750 H-NET Shares. The DONOBI Shareholders, DONOBI,
and H-NET agree
that the DONOBI Shares and the H-NET Shares exchanged hereby shall be
"restricted securities" as that term is
defined in Rule 144 under the Securities
Act of 1933, as amended (the "1933 Act"),
and all certificates issued under this
Agreement shall bear an appropriate legend to such effect. DONOBI will
have
received the necessary approval of its Board of
Directors and Shareholders for
this transaction.
2.3.2.
Share Exchange Terms.
DONOBI Shareholders
will exchange all of the
--------------------
issued and outstanding DONOBI Shares for
13,558,750 newly issued H-NET Shares.
At Closing, DONOBI Shareholders will own 13,558,750 H-NET Shares,
which will
equal approximately 87.4758% of the
issued and outstanding shares of H-Net.Net,
Inc., after issuance of shares to the DONOBI shareholders and others as
contemplated herein. DONOBI shall become a wholly owned subsidiary
of H-NET,
with the public company being the parent
entity. Upon closing
or upon action by
the new board of directors and shareholder
approval, H-Net.Net, Inc. will change
its name to Donobi, Inc. DONOBI Shareholders shall receive their pro rata
portion of the H-NET Shares based on the
percentage of DONOBI Shares they own on
the Closing Date.
<PAGE>
2.3.3.
Reverse Split of H-NET Shares. Approved at a shareholder
meeting
-------------------------------
which occurred on December 22, 2003, and effective before the
Closing Date,
H-Net has reverse split its outstanding common stock by a factor of 32:1,
issuing 1 share of new common stock in
exchange for every 32 outstanding shares
held of record by existing H-NET
shareholders on December 22, 2003. The parties
agree that there will be no more than 15.5
million shares issued and outstanding
after the reverse split and after the issuance of new H-NET Shares
for the
Donobi acquisition as contemplated herein.
2.3.4.
Stephens Compensation Agreement.
---------------------------------
(A) Anton Stephens, current CEO of H-Net,
and Christine Stephens, current
Secretary of H-Net, will collectively be paid the balance of their
existing
compensation packages from available cash left in H-NET
at closing as a buyout
of their employment agreements and any golden parachute payments
with H-Net.
The existing compensation packages will be paid in full as a condition to
Closing and will not be a continuing liability
of H-NET after the Acquisition.
(B) The post-acquisition public entity will execute, at Closing, a
separate Consulting Agreement with Mrs. Stephens for a total value of
$370,500.00. The Consulting Agreement will be paid over time, payable in
-----------
quarterly installments over five (5)
successive fiscal quarters, with quarterly
payments to commence on the 90th day after the Closing Date.
The periodic
payments will bear interest amortized over
the term of the Consulting Agreement
at 9.5% per annum, simple interest.
(C) This compensation package is in addition to and separate from
Mr.
Stephens' share ownership interest in the
post-acquisition public entity, which
share ownership will be 4.99%, as discussed
herein. Mr. Stephens will retain his
shares in H-NET and be issued additional shares in
order to maintain a 4.99%
interest after the Donobi acquisition and based upon a 15.5 million share
capitalization for H-NET. H-NET shares held by
Anton Stephens (i.e., his 4.99%)
will have registration rights in the
anticipated SB-2 registration statement to
be undertaken by the post-acquisition public entity. Based upon this 15.5
million share capitalization structure, Anton Stephens will
retain all shares
previously held in his name (656,250 shares after the
reverse split approved
December 22, 2003) and will receive an additional 117,200
H-NET shares upon
-------
Closing.
(D) The post-acquisition public entity (newly named DONOBI)
will provide
Mrs. Stephens with collateral, in the form
of a Promissory Note.
The amount of
the Promissory Note will be equal to the fee due and owing to
Mrs. Stephens
(bearing simple interest at 9.5%), and such
Note will be used in order to secure
the payment of the monetary
consideration set forth above. Said Promissory Note
shall be retired in proportion to the fees paid to
Mrs. Stephens and shall be
actionable only in the event that the post-acquisition public
entity DONOBI
defaults on the Note.
2.3.5.
The H-NET Board of Directors will appoint William
Wright, Terry
Stein, and up to three additional persons
designated by DONOBI, as new members
of the post-acquisition public entity's Board of Directors
in compliance with
SEC proxy rules.
2.3.6.
The Stephens shall
have the option, in their sole discretion, to
buy all the assets, liabilities and corporate organization of the
following
operating subsidiaries of H-Net.Net, Inc.: H-Net.com, Inc. and Alphabytes
Computer Corporation (both Canadian
corporations) from the combined entity. This
option shall be valid for a period of
fifteen (15) days from the Closing Date of
the proposed acquisition transaction, includes
both entities jointly and shall
be for a combined purchase price of US$1,000.
2.3.7.
At Closing, the
post-acquisition public entity shall issue shares
to a third party, ROHAN KEVIN RUBERU, equal to 0.51% of the issued and
outstanding shares of H-Net.Net, Inc., after issuance of new shares to the
DONOBI shareholders, based upon a 15.5 million share
capitalization for H-NET.
H-NET shares held by Rohan Kevin Ruberi
(i.e., his 0.51%) will have registration
rights in the anticipated SB-2 registration
statement to be undertaken by the
post-acquisition public entity. Based upon this 15.5 million share
capitalization structure, Rohan Ruberi will receive 79,050 H-NET shares
upon
------
Closing. Prior to Closing, H-NET, its management and
Rohan Kevin Ruberu shall
make standard representations and
warranties to DONOBI that Mr. Ruberu is not an
affiliate of H-NET or its management.
2.3.8
At Closing, DONOBI shall make the
following payments in addition to
the other payments set forth herein: $10,000.00 to Bruce Pritchett, Esq.,
$10,000.00 to Anton Stephens, $5,000.00 to Marcus A. Luna, Esq.
<PAGE>
Section
2.4 Closing. Closing of this Agreement shall be
held on or about
-------
JANUARY 19, 2004 at the offices of DONOBI's counsel in
Las Vegas, Nevada, or
such other place as the parties may mutually agree in
writing. The
parties
shall exchange such other documents and take such other actions as may be
necessary or appropriate for completing the transactions
contemplated by the
Agreement.
Section
2.5 Mechanics for Closing Acquisition. The Parties shall
------------------------------------
undertake to complete the necessary conditions to the
Acquisition prior to or
concurrent with the Closing, which will
occur on or about JANUARY 19, 2004. Upon
the approval by DONOBI's Board of
Directors and DONOBI's Shareholders, and upon
approval of H-NET's Board of Directors, as set forth in the opinion
letter
provided to DONOBI by Colorado counsel) approving the
Donobi Acquisition. In
addition, at Closing, Mr. Ruberu's shares will be delivered to him; the
Consulting Agreement will be executed
between the post-acquisition public entity
and Mrs. Stephens, and the Promissory Note will be issued to Mrs.
Stephens
securing payment of said Consulting Agreement.
Section 2.5.1.
Ongoing Audit and reporting Obligations. H-NET is subject to
ongoing audit and SEC reporting obligations.
H-NET's next fiscal quarter ended
on October 31, 2003, and its quarterly audit must
be completed and filed with
the SEC within 45 days of this fiscal
quarter's end date. This report was filed
with the SEC on December 12, 2003. Future
reporting requirements will be the
responsibility of the post-acquisition public entity.
Section
2.6 Further Assurances. At or after Closing, DONOBI, at the
------------------
request of H-NET, shall promptly execute
and deliver, or cause to be delivered,
to H-NET all such documents and
instruments, in form and substance satisfactory
to H-NET, as H-NET reasonably may
request in order to carry out or evidence the
terms of this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF H-NET
H-NET
represents
and warrants to
DONOBI, as of the date of this Agreement
and as of the Closing, as follows:
Section
3.1 Organization and Qualification of H-NET. H-NET is a
-------------------------------------------
corporation duly organized, validly existing and in good standing under the
laws of the State of Colorado and has all requisite power and
authority to
conduct its business as now conducted and
to own or lease and operate the assets
and property now owned or leased or operated by it. H-NET is qualified to
transact business in those jurisdictions wherein its business requires
such
action.
Section
3.2 Authority. H-NET has all requisite corporate power and
---------
authority to execute, deliver and perform this Agreement. The execution,
delivery and performance of this Agreement by H-NET has
been duly and validly
executed and delivered by H-NET's Board of
Directors and is a valid and binding
obligation of H-NET, enforceable against H-NET in accordance with
its terms.
Section
3.3 Ownership and Number of Shares of H-NET Common Stock.
The
-------------------------------------------------------
shareholders' list attached hereto as Exhibit 3.3 accurately reflects the
currently issued and outstanding shares of H-NET Common Stock currently
outstanding in the shareholder ledger maintained by the company (DONOBI
may
obtain a shareholder list from H-NET's
transfer agent for a more detailed list
of shareholders). There are not, and will not be at Closing (prior to
the
issuance of H-NET shares to the Donobi shareholders
and issuance of shares to
Anton Stephens and Rohan Ruberi as contemplated hereinabove), more than
1,125,000 outstanding shares of H-NET Common Stock.
<PAGE>
Section
3.4 Subsidiaries. Except as set forth in Exhibit 3.4 hereto,
------------
H-NET does not control or hold direct or indirect
equity interest in, or hold
rights to control or acquire direct or indirect equity interests in, any
corporation.
Section
3.5 No Conflicts; Required Consent.
The execution,
delivery, and
------------------------------
performance by H-NET of this Agreement will not: (i)
conflict with or violate
any provision of the Articles of
Incorporation or Bylaws of H-NET; (ii) violate
any Legal Requirements; (iii) result in the
creation or imposition of any Lien
against or upon the H-NET Shares or any of the assets
or properties owned or
leased by H-NET; or (iv) require any
consent, approval, or authorization of, or
filing of any certificate, notice,
application, report or other document with,
any governmental authority or other person.
Section
3.6 Litigation. There is no litigation pending or, to
H-NET's
----------
knowledge, threatened, by or before any governmental authority or private
arbitration tribunal, against H-NET or its operations, except as
described in
Exhibit 3.6 attached hereto and incorporated
herein by this reference, nor, to
H-NET's knowledge, is there any basis for any such litigation.
Section
3.7 Compliance with Applicable Legal Requirements. Conduct by
------------------------------------------------
H-NET of its activities as currently
conducted does not violate or infringe any
Legal Requirements currently in effect,
or, to the knowledge of H-NET, proposed
to become effective; and H-NET has
received no notice of any violation by H-NET
of any Legal Requirements applicable to H-NET or its
activities as currently
conducted; and H-NET knows of no basis for
the allegation of any such violation.
Section
3.8 Financial Statements. H-NET will deliver to DONOBI the
---------------------
audited balance sheet and statements of operations of
H-NET as of January 31,
2002 and 2003 as well as any other
interim periods (including Quarterly Reports
for periods after) as determined by H-NET's
auditors. The financial statements
will be prepared in accordance with United States
GAAP and present fairly the
financial position of H-NET as of the dates indicated and the results of
operations of H-NET for the periods ended
January 31, 2002 and 2003. The cost of
said audits and interim reviewed statements
shall be borne by H-NET. The parties
hereto agree that as part of this transaction,
H-NET must file a Form 8-K with
the Securities and Exchange Commission that contains audited and pro forma
financial statements of H-NET as well as Donobi, and
that failure to file this
report on a timely basis could result in
the de-listing of H-NET's stock as well
as the Securities and Exchange Commission taking
action against H-NET for its
failure. Therefore, in the preparation of the audits and any interim or
pro
forma financial statements, both parties agree that time is of the
essence.
<PAGE>
Section
3.9 Liabilities. H-NET has no
liabilities or obligations, whether
-----------
absolute, accrued, contingent, or otherwise, that are not reflected in the
Balance Sheet or non-delinquent obligations
for ordinary and recurring expenses,
including expenses occurring in the ordinary course
of business of H-NET since
the date of the Balance Sheet. Attached as Exhibit 3.9 is a list of all
accounts payable of H-NET. At Closing, H-NET and its
subsidiaries will have no
existing debt or liabilities.
Section 3.10
Tax Returns and Payments. H-NET has timely paid all
taxes,
--------------------------
including all federal and state payroll
taxes that have become due and payable,
whether or not shown on such tax returns.
H-NET has not received
any notice of,
nor does H-NET have any knowledge of, any
deficiency or assessment of proposed
knowledge of, any deficiency or assessment
of proposed deficiency or assessment
from any taxing governmental authority.
There are no tax
audits pending with
respect to H-NET, and there are no
outstanding agreements or waivers by or with
respect to H-NET, that extend the
statutory period of limitations applicable to
any federal, state, local or foreign tax returns for any period.
Section 3.11
Absence of Certain
Changes or Events.
Since the date H-Net's
------------------------------------
most recent Quarterly Report to the SEC, there has not occurred:
(a) any material and adverse change in the financial condition or
operations of H-NET, except it will close or sell its
operating subsidiaries
effective on the Closing Date;
(b) any damage, destruction or loss to
or of any of the material assets of
properties owned or leased by H-NET;
(c) the creation or attachment of any Lien against H-NET;
(d) any waiver, release, discharge,
transfer, or cancellation by H-NET of
any rights or claims of material value;
(e) any issuance by H-NET of any
securities above the 1,125,000 shares of
common stock it expects to be issued and
outstanding as of the Closing Date, or
any merger or consolidation of H-NET with any
other Person, or any acquisition
by H-NET of the business of any other Person.
(Set forth in Exhibit
3.3 is a
list of shareholders of H-NET setting
forth all of the current shareholders of
H-NET, and the number of shares held by each);
(f) any incurrence, assumption or
guarantee by H-NET of
any indebtedness
or liability;
(g) any declaration, setting aside or
payment by H-NET of
any dividends
on, or any other distribution with respect to, any H-NET Shares or any
repurchase, redemption, or other acquisition of any H-NET Shares;
(h) (A) any payment of any bonus, profit sharing, pension or
similar
payment or arrangement or special
compensation to any employee of H-NET, except
in the ordinary course of the
administration of H-NET (which the parties agree
expressly includes Anton and Christine Stephens' employment agreements and
golden parachute payments referenced in section 2.3.4(A) above), or (B)
any
increase in the compensation payable to any employee of H-NET; or
<PAGE>
(i) the entry by H-NET into any Contract to do any of the
foregoing.
Section 3.12
Material H-NET
Contracts. As of the
date of this
Agreement,
------------------------
H-NET does not have except as discussed in Exhibit 3.12, (i) contracts
evidencing or relating to any liabilities or obligations of H-NET,
whether
absolute, accrued, contingent or otherwise, or granting any Person a Lien
against any properties or assets owned or
leased by H-NET; (ii) joint venture or
partnership Contracts between H-NET and any other person; (iii) Contracts
limiting the freedom of H-NET to engage in
or to compete in any activity, or to
use or disclose any information in its possession; (iv) any guarantees
of
indebtedness for any other entity; and (v)
any other Contracts to which H-NET is
a party or by which it or the assets or
properties owned or leased by it are
bound or affected that are not set forth on other
Exhibits hereto. H-NET
has
delivered to DONOBI true and complete copies of each of the Material
H-NET
Contracts, including any amendments thereto (or, in the
case of oral Material
H-NET Contracts, a memorandum of such contract), and all Material H-NET
Contracts are valid, in full force and
effect and enforceable in accordance with
its terms against the parties thereto
other than H-NET, and H-NET has fulfilled
when due, or has taken all action necessary
to enable it to fulfill when due all
of its obligations thereunder; (ii)
there has not occurred any default (without
regard to lapse of time, the giving
notice, or the election of any person other
then H-NET, or any combination thereof) by H-NET, nor, to the knowledge
of
H-NET, has there occurred any default (without regard to lapse
of time, the
giving of notice, or the election of H-NET,
or any combination thereof) by any
other person, under any of the Material
H-NET Contracts; and (iii) neither H-NET
nor, to the knowledge of H-NET, any other person is in arrears in the
performance or satisfaction of its obligation under any of the
Material H-NET
Contracts, and no waiver has been granted by any of the parties thereto.
Section 3.13
Real Property. As of the date of this Agreement,
H-NET does
--------------
not own any real property.
Section 3.14
Employees.
As of the Closing Date, H-NET will have no
---------
employees.
Section 3.15
Books and Records.
All of the books,
records and accounts of
-----------------
H-NET are in all material respects true and complete, are maintained in
accordance with good business practice and all
applicable Legal Requirements,
accurately present and reflect in all
material respects all of the transactions
therein described, and are reflected accurately in the
Financial Statements.
H-NET has previously delivered to DONOBI true and complete copies
of all the
minutes and meetings and all other actions of the Board of Directors and
Resolutions of Shareholders of H-NET since the date of its formation.
<PAGE>
Section 3.16
Certain Interests. None of H-NET or its officers or
------------------
directors, directly or indirectly is, or owns any
interest in, or controls, or
is an employee, officer or director or partner of or participant in, or
consultant to, any person which is a
competitor, supplier or customer of H-NET.
Section 3.17
Bank Accounts. Exhibit 3.17 sets forth all bank accounts,
--------------
brokerage accounts, and safe deposit boxes
of any kind maintained by H-NET and,
in each case, identifies the persons that are authorized
signatories for, or
which are authorized to have access to, each
of them. Prior to
Closing, H-Net
will have closed all existing bank accounts and
will provide documentation of
such closure to new management.
Section 3.18
Changes in
Circumstances. H-NET
has no knowledge of
(i) any
------------------------
current or future condition or state of facts of circumstances which
could
reasonably be expected to result in a material and adverse change in the
financial condition of operations of H-NET, or (ii) any Legal Requirements
currently in effect from which H-NET currently is, or any
currently proposed
Legal Requirements from which H-NET would be, except by reason of any
"grandfather" clauses of provisions contained therein, but which would be
applicable to DONOBI following closing.
Section 3.19
Accuracy of
Information. None of
the written information and
-----------------------
documents which have been or will be furnished by
H-NET or any representatives
of H-NET to DONOBI or any of the
representatives of DONOBI in connection with
the transactions contemplated by this
Agreement contains or will contain, as the
case may be, any untrue statement of a
material fact, or omits or will omit to
state a material fact necessary in order to make the statements
therein not
misleading in light of the circumstances in which made.
To the knowledge
of
H-NET, H-NET has disclosed to DONOBI as the purchaser of
H-NET Interests all
material information relating to H-NET and its activities as currently
conducted.
Section 3.20
Resignation of
Directors and Officers. H-NET shall deliver
-------------------------------------
to DONOBI the resignation of all officers
and Directors of H-NET and appointment
of new officers and Directors consisting
of the current Board of Directors and
officers of DONOBI, concurrent with and
effective upon Closing, such that upon
Closing, the officers and directors of the
post-acquisition public entity shall
be as follows:
William
M. Wright, III, Director, President and CEO
Terry
Stein, Director and Chief Financial Officer
Such
other officers and directors as DONOBI shall designate in
Exhibit
3.20.
<PAGE>
Section 3.21
Compliance
with ERISA. H-NET does not maintain or
-----------------------
contribute to any Plan other than as set forth
in Exhibit 3.21. H-NET and each
member of the Controlled Group have fulfilled their obligations under the
minimum funding standards of ERISA and the Code with respect
to each Plan and
are in compliance in all material respects with the
applicable provisions of
ERISA and the Code, and have not incurred any
liability to the PBGC or a Plan
under Title IV of ERISA; and no "prohibited
transaction" or "reportable event"
(as such terms are defined in ERISA) has occurred with
respect to any Plan.
Section 3.22
Environmental
Matters.
----------------------
(a) H-NET has obtained all permits, licenses and other authorizations
which are required under all Environmental
Laws, except to the extent failure to
have any such permit, license or
authorization would not have a material adverse
effect on the business, financial
condition or operations of H-NET. H-NET is in
compliance with the terms and conditions of all such permits, licenses
and
authorizations, and is also in compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements,
obligations,
schedules and timetables contained in any
applicable Environmental Law or in any
regulation, code, plan, order, decree, judgment,
injunction, notice or demand
letter issued, entered, promulgated or
approved thereunder, except to the extent
failure to comply would not have a material adverse effect on
the business,
financial condition or operations of H-NET.
(b) No notice, notification, demand, request for information,
citation,
summons or order has been issued, no complaint has
been filed, no penalty has
been assessed and no investigation or review is pending
or threatened by any
governmental or other entity with respect
to any alleged failure by H-NET or any
of its Subsidiaries to have any permit, license or
authorization required in
connection with the conduct of its business
or with respect to any Environmental
Laws, including, without limitation, Environmental Laws relating to the
generation, treatment storage, recycling,
transportation, disposal or release of
any Hazardous Materials.
(c) To the best of H-NET's knowledge, no material oral or written
notification of a release of a Hazardous
Material has been filed by or on behalf
of H-NET and no property now or previously owned,
leased or used by H-NET is
listed or proposed for listing on the National Priorities List under the
Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as
amended, or on any similar state list of sites requiring investigation
or
clean-up.
(d) There are no liens or encumbrances arising
under or pursuant to any
Environmental Laws on any of the real property or
properties owned, leased or
used by H-NET and no governmental actions have been
taken or are in process
which could subject any of such
properties to such liens or encumbrances or, as
a result of which H-NET would be required to place
any notice or restriction
relating to the presence of Hazardous
Materials at any property owned by it in
any deed to such property.
<PAGE>
(e) Neither H-NET nor, to the best
knowledge of H-NET, any previous owner,
tenant, occupant or user of any property
owned, leased or used by H-NET has (i)
engaged in or permitted any operations or activities upon or any use or
occupancy of such property, or any portion
thereof, for the purpose of or in any
way involving the handling, manufacture, treatment,
storage, use, generation,
release, discharge, refining, dumping or disposal (whether legal or
illegal,
accidental or intentional) of any Hazardous Materials on, under,
in or about
such property, except in compliance with all Environmental Laws, or (ii)
transported any Hazardous Materials to, from or
across such property except in
compliance with all Environmental Laws; nor
to the best knowledge of H-NET have
any Hazardous Materials migrated from other properties
upon, about or beneath
such property, nor, to the best
knowledge of H-NET, are any Hazardous Materials
presently constructed, deposited, stored or otherwise
located on, under, in or
about such property except in compliance with all Environmental Laws.
Section 3.23
Omitted intentionally.
Section 3.24
Franchises,
Patents, Copyrights, Etc. Exhibit 3.24 sets
--------------------------------------
forth an accurate and complete list of all franchises, patents,
copyrights,
trademarks, trade names, trademark
registrations, service names, service marks,
licenses, formulas and applications
therefore owned by H-NET or used or required
by H-NET in the operation of its
business, title to each of which is, except as
set forth in Exhibit 3.24 hereto, held by H-NET
free and clear of all adverse
claims, liens, security agreements,
restrictions or other encumbrances. Except
as set forth in Exhibit 3.24, H-NET owns or
possesses adequate (and will use its
best efforts to obtain as expediently as possible
any additional) licenses or
other rights to use all patents, trademarks,
trade names, service marks, trade
secrets or other intangible property rights and
know-how necessary to entitle
H-NET to conduct its business as presently being conducted. There is no
infringement action, lawsuit, claim or complaint which asserts that
H-NET's
operations violate or infringe the rights or the trade names, trademarks,
trademark registrations, service names, service marks or
copyrigh
