EXHIBIT 99.1
SECURITIES PURCHASE AGREEMENT
BY AND AMONG
KI EQUITY PARTNERS I, LLC ("BUYER")
AND
XXXXX X. XXXXXX ("SELLER")
EXHIBIT 99.1
SECURITIES PURCHASE AGREEMENT
BY AND AMONG
KI EQUITY PARTNERS I, LLC ("BUYER")
AND
XXXXX X. XXXXXX ("SELLER")
DATED AS OF MARCH 16, 2005
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement") is made and
entered into as of March 16, 2005, by and between KI Equity Partners, LLC, a
Delaware limited liability company (the "Buyer"), and Xxxxx X. Xxxxxx, an adult
resident of the State of Colorado (the "Seller").
RECITALS
A. Seller owns 14,400,000 shares of the common stock of Multi-Link
Telecommunications, Inc., a Colorado corporation ("Company"), which shares
represent approximately 72.4% of the outstanding shares of common stock of the
Company as of the date hereof.
B. Buyer desires to purchase 13,074,204 shares of common stock of the
Company owned by Seller ("Shares"), and Seller desires to sell the Shares to
Buyer, on the terms and conditions hereinafter set forth.
C. Buyer further desires to purchase certain promissory notes issued by
the Company to Seller in the aggregate principal amount of $147,153.25
("Notes"), which such Notes are convertible into 6,628,978 shares of common
stock of the Company ("Conversion Shares"), and Seller desires to sell the Notes
to Buyer, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the above recitals, the covenants,
promises and representations set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
ARTICLE I
SALE AND PURCHASE
1.1 Sale and Purchase. At the Closing and subject to and upon the terms
and conditions of this Agreement, Seller agrees to sell, transfer and assign to
Buyer, and Buyer agrees to purchase from Seller, the Shares and the Notes. As of
Closing, the Shares shall constitute not less than 65.7% of the outstanding
shares of common stock of the Company. The sale and purchase of Shares and the
Notes contemplated hereunder shall be referred to herein as the "Transaction".
1.2 Closing. Unless this Agreement shall have been terminated pursuant
to Article IX hereof, the closing of the Transaction (the "Closing") shall take
place at the offices of Buyer at a time and date to be specified by the parties,
which shall be no later than the one business day after the satisfaction or
waiver of the conditions set forth in Article VII, or at such other time, date
and location as the parties hereto agree in writing (the "Closing Date").
1.3 Purchase Price. The aggregate purchase price for the Shares shall
be Two Hundred Fifty Two Thousand Eight Hundred Forty Six Dollars and Seventy
Five Cents ($252,846.75) ("Share Purchase Price"), and the aggregate purchase
price for the Notes shall be One Hundred Forty Seven Thousand One Hundred Fifty
Three Dollars and Twenty Five Cents ($147,153.25) ("Note Purchase Price"). The
sum of the Share Purchase Price and the Note Purchase Price shall herein be
collectively referred to as the "Purchase Price" At Closing, Buyer shall pay to
Seller the Purchase Price.
1.4 Delivery of Certificates Representing the Shares; Assignment of
Notes. At Closing, Seller shall deliver the certificate(s) representing the
Shares, duly endorsed in blank or accompanied by stock powers duly endorsed in
blank, with a medallion signature guarantee from a national bank and in a form
otherwise acceptable to Transfer Agent (as defined herein) and with (i) all such
other documents as may be required to vest in Buyer good and marketable title to
the Shares free and clear of any and all Liens (as defined in Section 2.3
hereof), and (ii) all necessary stock transfer and any other required
documentary stamps. At Closing, Seller shall deliver to Buyer the original Notes
together with an assignment of the Notes, duly executed by Seller, in a form
acceptable to Buyer.
1.5 Taking of Necessary Action; Further Action. If, at any time after
the Closing, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest Buyer with full right, title and
possession to the Shares, Seller will take all such lawful and necessary action.
1.6 Escrow. Notwithstanding any provision of this Agreement to the
contrary, the Closing of the Transaction contemplated hereunder shall be
completed in escrow, with Xxxxxxx X. Xxxxxxx, Esq., acting as escrow agent (the
"Escrow Agent"), and shall take place at his office and any funds and all
documents delivered in escrow shall be held and disposed of by the Escrow Agent
in accordance with the terms and provisions of a certain escrow agreement by and
among Seller, Buyer and Escrow Agent, in substantially the form attached hereto
as Exhibit A (the "Escrow Agreement") and this Agreement. The Escrow Agreement
shall be executed and delivered by Seller, Buyer and Escrow Agent (as defined
below). In furtherance of the foregoing, the following shall apply:
(a) In lieu of delivering the Purchase Price to Seller as
provided for in Section 1.3, Buyer shall deliver or cause to be delivered, at or
prior to Closing, to Escrow Agent for deposit into escrow pursuant to the Escrow
Agreement, the aggregate amount of $400,000 representing the Purchase Price.
(b) In lieu of delivering to Buyer certificates for the Shares
and the original Notes provided for in Section 1.4, Seller shall deliver or
cause to be delivered to Escrow Agent, at or prior to Closing, for deposit into
escrow pursuant to the Escrow Agreement, certificate(s) registered in the name
of the Seller representing the Shares, accompanied by stock powers duly endorsed
in blank with a medallion signature guarantee by a national bank, and the
original Notes together with a duly executed acceptable assignment. Prior to or
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at Closing, Seller shall also deliver to Escrow Agent certificates registered in
the name of the Seller representing an additional 600,000 shares of the
Company's common stock ("Escrow Shares"), together with stock powers duly
endorsed in blank with medallion signature guarantee, to be deposited in escrow
and held in accordance with Section 1.6(c) below.
(c) At such time as all of the conditions precedent to Closing
under Article VII hereof have been satisfied by the respective parties, and no
party shall be in breach of any term, warranty, representation, covenant or
agreement applicable to it or him, and each party shall have made all deliveries
required by each of them under this Agreement, the parties hereto shall provide
written notice to Escrow Agent directing that the funds and documents deposited
in escrow be disposed of in accordance with the Escrow Agreement and the terms
of this Agreement; provided, however, that the Escrow Agent shall retain the
Escrow Shares in escrow to satisfy any indemnification obligations of Seller
under Section 8.2 hereof and under the Assumption Agreement (as defined in Sec-
tion 7.3(d) hereof) ("Indemnity Escrow"). On the date forty-five (45) days
following the Closing Date, to the extent that the Indemnity Escrow has not been
and is not the subject of an indemnification claim under Section 8.2 hereof or
under the Assumption Agreement, the Indemnity Escrow shall be released to the
Seller.
(d) Buyer agrees to wire transfer a total sum of $30,000 (the
"Deposit") to Escrow Agent upon execution and delivery of this Agreement and the
Escrow Agreement, with the Deposit to be held in escrow in accordance with the
terms and conditions set forth in this Agreement and the Escrow Agreement. The
Deposit shall be refunded and paid to Buyer in the event that the Transaction
fails to close for any reason (other than solely as a result of Buyer's failure
to satisfy the conditions precedent to Closing that are applicable to it under
Section 7.2 or as a result of a material breach or inaccuracy of any
representation, warranty, agreement or covenant by Buyer under this Agreement).
The Deposit shall be paid to Seller in the event that the Transaction fails to
close solely as a result of Buyer's failure to satisfy the conditions precedent
to Closing that are applicable to it under Section 7.2 or solely as a result of
a material breach or inaccuracy of any representation, warranty, agreement or
covenant by Buyer under this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER WITH RESPECT TO SELLER
Seller hereby represents and warrants to, and covenants with, Buyer as
follows:
2.1 Ownership of Shares and Notes. Seller is both the record and
beneficial owner of the Shares and the Notes. True, complete and accurate copies
of the Notes, including any and all amendments thereto, are attached hereto as
Schedule 2.1.
2.2 Authority of Seller. Seller has full power and authority and is
competent to (i) execute, deliver and perform this Agreement, and each ancillary
document which Seller has executed or delivered or is to execute or deliver
pursuant to this Agreement, and (ii) carry out Seller's obligations hereunder
and thereunder, without the need for any authorization, consent, order, permit,
or approval of any kind. The execution and delivery of this Agreement and the
consummation by Seller of the transactions contemplated hereby (including the
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Transaction) have been duly and validly authorized by all necessary action on
the part of Seller, and no other actions or proceedings on the part of Seller
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. The execution, delivery and performance by Seller of this
Agreement and each ancillary document does not and will not conflict with,
result in a breach of, or constitute a default or require a consent or action
under, any agreement or other instrument to or by which the Seller is a party or
is bound or to which any of the properties or assets of Seller are subject, or
any federal, state, local, municipal, foreign or other law or regulation, or
result in the creation of any Lien (as defined in Section 2.3) on the Shares or
the Notes. This Agreement, and each ancillary document to be executed and
delivered by the Seller at the Closing, has been duly executed and delivered by
the Seller, and this Agreement constitutes, and each ancillary document, when
executed and delivered by the Seller will constitute, the Seller's legal, valid
and binding obligation, enforceable against the Seller in accordance with its
terms.
2.3 Title To Shares and Notes. Seller has and shall transfer to Buyer at
the Closing, good and marketable title to the Shares and Notes, free and clear
of all liens, claims, charges, encumbrances, pledges, mortgages, security
interests, options, rights to acquire, proxies, voting trusts or similar
agreements, restrictions on transfer or adverse claims of any nature whatsoever
("Liens"). The Notes are assignable by their terms, are immediately convertible
at Closing, at the election of the holder thereof, subject only to an increase
in the Company's authorized shares of common stock, into the Conversion Shares
without further payment or consideration by the holder, and the entire principal
balance under the Notes remains due and payable to holder as of the Closing.
Seller has not and will not, directly or indirectly, assign or otherwise
transfer his right to receive all or any portion of any amount which may become
payable pursuant to this Agreement or any ancillary document or any interest
therein.
2.4 Approvals and Consents. The execution and delivery of this Agreement
by Seller does not, and the performance of his obligations hereunder will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any court, administrative agency, commission, governmental or
regulatory authority, domestic or foreign (a "Governmental Entity") or any other
person, except for applicable requirements, if any, of the Securities Act of
1933, as amended (the "Securities Act"), the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations thereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER WITH RESPECT TO COMPANY
Seller hereby represents and warrants to, and covenants with, Buyer, as
follows:
3.1 Organization and Qualification.
(a) Company is a corporation duly incorporated or organized,
validly existing and in good standing under the laws of the State of Colorado.
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The Company is duly qualified to conduct its business in each state, province
and/or jurisdiction listed on Schedule 3.1 hereof. Company has timely filed, and
paid any fees or charges required under, any annual corporate or information
report ("Annual Report") required to be filed by it in each state, province or
jurisdiction in which it is required to make such filing or payment. Complete
and correct copies of the articles of incorporation or organization and by-laws
(or other comparable governing instruments with different names) (collectively
referred to herein as "Charter Documents") of Company, as amended and currently
in effect, and each Annual Report have been heretofore delivered to Buyer.
Company is not in violation of any of the provisions of the Company's Charter
Documents.
(b) The minute books of Company contain true, complete and
accurate records of all meetings and consents in lieu of meetings of its Board
of Directors (and any committees thereof), similar governing bodies and stock-
holders ("Corporate Records"). Copies of such Corporate Records of Company have
been heretofore delivered to Buyer.
(c) The stock ownership records of Company contain true,
complete and accurate records of the ownership of the Company's capital stock
("Stock Records"). Copies of such Stock Records have been heretofore delivered
to Buyer by the Company's transfer agent, Computershare Trust company, Inc.
("Transfer Agent").
3.2 Subsidiaries. Except as set forth in Schedule 3.2, the Company will
have no subsidiaries at Closing. All operating business activities of the
Company have been conducted by or through one or more of the former subsidiaries
of Company, and the Company has, since its inception, only acted as a holding
company.
3.3 Capitalization.
(a) The authorized capital stock of Company consists of
20,000,000 shares of common stock, no par value ("Company Common Stock") and
5,000,000 shares of preferred stock, par value $0.01 per share ("Company
Preferred Stock"). At the close of business on the business day prior to the
date hereof, (i) 19,886,935 shares of Company Common Stock were issued and
outstanding, all of which are validly issued, fully paid and nonassessable; (ii)
no shares of Company Preferred Stock were issued and outstanding; (iii) no
shares of Company Common Stock were reserved for issuance upon the exercise of
outstanding options to purchase Company Common Stock granted to employees of
Company or other parties ("Company Stock Options"), (iv) no shares of Company
Common Stock were reserved for issuance upon the exercise of outstanding
warrants to purchase Company Common Stock ("Company Warrants"), except for
100,000 shares of common stock reserved for issuance under warrants to purchase
common stock at an exercise price in excess of $14.00 per share, which expire
June 30, 2005, and (v) no shares of Company Common Stock were reserved for
issuance upon the conversion of the Company Preferred Stock or any outstanding
convertible notes, debentures or securities ("Convertible Securities"). There
are no outstanding stock options, warrants or convertible securities (other than
the Notes), and there are no agreements or commitments obligating the Company to
issue or grant any stock options, warrants or convertible securities. All
outstanding shares of Company Common Stock and the Notes have been issued in
compliance with (i) all applicable securities laws and (in all material
respects) other applicable laws and regulations, and (ii) all requirements set
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forth in any applicable contracts. The Notes are assignable, have been validly
issued by the Company and constitute a binding obligation of the Company in
accordance with the terms set forth therein, are convertible into the Conversion
Shares, and, upon conversion of the Notes and without any further payment by the
holder thereof, the Conversion Shares upon issuance by the Company will be duly
authorized, validly issued, fully paid and nonassessable. (b) Except as set
forth in Section 3.3(a) hereof, there are no equity securities, or similar
ownership interests of any class of any equity security of Company, or any
securities exchangeable or convertible into or exercisable for such equity
securities, or similar ownership interests, issued, reserved for issuance or
outstanding, and there are no subscriptions, options, warrants, equity
securities, or similar ownership interests, calls, rights (including preemptive
rights), commitments or agreements of any character to which Company is a party
or by which it is bound obligating Company to issue, deliver or sell, or cause
to be issued, delivered or sold, or repurchase, redeem or otherwise acquire, or
cause the repurchase, redemption or acquisition of, any shares of capital stock
or similar ownership interests of Company or obligating Company to grant,
extend, accelerate the vesting of or enter into any such subscription, option,
warrant, equity security, call, right, commitment or agreement.
(c) Except as contemplated by this Agreement and except as set
forth in Schedule 3.3 hereto, there are no registration rights, and there is no
voting trust, proxy, rights plan, antitakeover plan or other agreement or
understanding to which Company is a party or by which Company is bound with
respect to any equity or debt security of any class of the Company.
3.4 Compliance. Company has complied with, is not in violation of, any
laws, rules or regulations of any Governmental Entity including, without
limitation, any and all applicable securities laws, environmental laws, and laws
regarding hazardous substances and wastes, except for failures to comply or
violations which, individually or in the aggregate, have not had and are not
reasonably likely to have a Material Adverse Effect on Company. Company is not
in default or violation of any term, condition or provision of any applicable
Charter Documents.
3.5 Financial Statements; Filings. Company has made available to Buyer
each report and statement filed by Company with any Governmental Entity (the
"Company Reports"), which are all the forms, reports and documents required to
be filed by Company with any Governmental Entity, and such Company Reports are
true, correct and complete. Company has provided to Buyer a correct and complete
copy of the consolidated annual financial statements (including, in each case,
any related notes thereto) of Company for the prior three (3) fiscal years
ended, which financial statements comply as to form in all material respects
with the published rules and regulations of any applicable Governmental Entity,
have been prepared in accordance with the generally accepted accounting
principles of the United States ("U.S. GAAP") applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes
thereto), have been audited by and contain the unqualified opinion of a
certifying accountant registered with the Public Company Accounting Oversight
Board ("PCAOB"), and each fairly presents in all material respects the
consolidated financial position of Company at the respective dates thereof and
the results of its operations and cash flows for the periods indicated. Company
has provided to Buyer a correct and complete copy of the consolidated quarterly
financial statements (including, in each case, any related notes thereto) of
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Company for the prior three (3) fiscal years and interim quarterly periods ended
since the last fiscal year end, which financial statements comply as to form in
all material respects with the published rules and regulations of any applicable
Governmental Entity, have been prepared in accordance with U.S. GAAP applied on
a consistent basis throughout the periods involved (except as may be indicated
in the notes thereto), have been reviewed by a certifying accountant registered
PCAOB, and each fairly presents in all material respects the consolidated
financial position of Company at the respective dates thereof and the results of
its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal adjustments
which were not or are not expected to have a Material Adverse Effect on the
Company.
3.6 No Liabilities. Except as set forth in Schedule 3.6 hereto (each of
which shall be paid or satisfied in full at or prior to Closing), the Company
has no debts, liabilities, obligations, contracts, guaranties or commitments
(absolute, accrued, known or unknown, contingent or otherwise) of any kind or
nature.
3.7 Absence of Certain Changes or Events. Except as set forth in
Schedule 3.7 hereto or as disclosed in Company Reports filed prior to the date
hereof, since December 31, 2004, there has not been: (i) any Material Adverse
Effect on Company, (ii) any declaration, setting aside or payment of any
dividend on, or other distribution (whether in cash, stock or property) in
respect of, any of Company's capital stock, or any purchase, redemption or other
acquisition of any of Company's capital stock or any other securities of Company
or any options, warrants, calls or rights to acquire any such shares or other
securities, (iii) any split, combination or reclassification of any of Company's
capital stock, (iv) any granting by Company of any increase in compensation or
fringe benefits, except for normal increases of cash compensation in the
ordinary course of business consistent with past practice, (v) any material
change by Company in its accounting methods, principles or practices, except as
required by concurrent changes in U.S. GAAP, (vi) any change in the auditors of
Company, (vii) any issuance of capital stock of Company, or (vii) any
revaluation by Company of any of its respective assets, other than in the
ordinary course of business.
3.8 Litigation. Except as disclosed in Schedule 3.8 hereto, there are
no claims, suits, actions or, to the best knowledge of Seller, proceedings
pending or threatened against Company, before any court, governmental
department, commission, agency, instrumentality or authority, or any arbitrator
that seeks to restrain or enjoin the consummation of the transactions
contemplated by this Agreement.
3.9 Employee Benefit Plans. The Company has no employee compensation,
incentive, fringe or benefit plans, programs, policies, commitments or other
arrangements (whether or not set forth in a written document) covering any
active or former employee, director or consultant of Company or any Subsidiary,
with respect to which Company has liability (collectively, the "Plans"). Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment (including
severance, unemployment compensation, golden parachute, bonus or otherwise)
becoming due to the Seller, any stockholder, director, employee or consultant of
Company under any Plan or otherwise, (ii) materially increase any benefits
otherwise payable under any Plan, or (iii) result in the acceleration of the
time of payment or vesting of any such benefits.
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3.10 Taxes.
(a) Definition of Taxes. For the purposes of this Agreement,
"Tax" or "Taxes" refers to any and all federal, state, local and foreign taxes
imposed upon the Company and each of its Subsidiaries, including, without
limitation, gross receipts, income, profits, sales, use, occupation, value
added, ad valorem, transfer, franchise, withholding, payroll, recapture,
employment, excise and property taxes, assessments, governmental charges and
duties together with all interest, penalties and additions imposed with respect
to any such amounts and any obligations under any agreements or arrangements
with any other person with respect to any such amounts and including any
liability of a predecessor entity for any such amounts.
(b) Tax Returns and Audits. Except as set forth in Schedule
3.10 hereto:
(i) Company has filed all federal, state, local and
foreign returns, estimates, information statements and reports relating to Taxes
("Returns") required to be filed by Company with any Tax authority prior to the
date hereof, except such Returns which are not material to Company. All such
Returns are true, correct and complete in all material respects. Company has
paid all Taxes shown to be due on such Returns.
(ii) All Taxes that Company is required by law to with-
hold or collect have been duly withheld or collected, and have been timely paid
over to the proper governmental authorities to the extent due and payable.
(iii) Company has not been delinquent in the payment of
any material Tax nor is there any material Tax deficiency outstanding, proposed
or assessed against Company, nor has Company executed any unexpired waiver of
any statute of limitations on or extending the period for the assessment or
collection of any Tax.
(iv) No audit or other examination of any Return of
Company by any Tax authority is presently in progress, nor has Company been
notified of any request for such an audit or other examination.
(v) No adjustment relating to any Returns filed by
Company has been proposed in writing, formally or informally, by any Tax
authority to the Company or any representative thereof.
(vi) Company has no liability for any material unpaid
Taxes which have not been accrued for or reserved on Company's balance sheets
included in the audited financial statements for the most recent fiscal year
ended, whether asserted or unasserted, contingent or otherwise, which is
material to Company, other than any liability for unpaid Taxes that may have
accrued since the end of the most recent fiscal year in connection with the
operation of the business of Company in the ordinary course of business, none of
which is material.
3.13 Brokers; Third Party Expenses. The Company and Seller have not
incurred, nor will they incur, directly or indirectly, any liability for
brokerage or finders' fees or agent's commissions or any similar charges in
connection with this Agreement or any transactions contemplated hereby.
3.14 Agreements, Contracts and Commitments. Except as set forth in
Schedule 3.14, the Company is not a party to any contracts, agreements, leases,
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mortgages, indentures, note, bond, guaranty, liens, license, permit, franchise,
purchase orders, sales orders, arbitration awards, judgments, decrees, orders,
documents, instruments, understandings and commitments, or other instrument or
obligation (including without limitation outstanding offers or proposals) of any
kind, whether written or oral ("Contracts"). True, correct and complete copies
of each Contract (or written summaries in the case of oral Contracts) have been
heretofore delivered to Buyer.
3.15 Interested Party Transactions. Except as set forth in the Schedule
3.15 hereto or disclosed in the Company Reports filed prior to the date hereof,
no employee, officer, director or 5% or more stockholder of Company or a member
of his or her immediate family is indebted to Company, nor is Company indebted
(or committed to make loans or extend or guarantee credit) to any of them, other
than (i) for payment of salary for services rendered, (ii) reimbursement for
reasonable expenses incurred on behalf of Company, and (iii) for other employee
benefits made generally available to all employees, and all related party
transactions between such persons and the Company have been fully and properly
disclosed in the Company Reports.
3.16 Investment Company Act. The Company is not an "investment company"
or an "affiliated person" of or "promoter" or "principal underwriter" or an
"investment company" as such terms are defined in the Investment Company Act of
1940, as amended, nor is Company otherwise subject to regulation thereunder.
Company is not a "holding company" as that term is defined in, and is not
otherwise subject to regulation under, the Public Utility Holding Company Act of
1935. The Company is not a "blank check company" as defined under the Securities
Act and the regulations thereunder.
3.17 Officers and Directors. During the past five year period, to
Seller's knowledge, no current or former officer or director of Company has been
the subject of:
(a) a petition under the Federal bankruptcy laws or any other
insolvency or moratorium law or has a receiver, fiscal agent or similar officer
been appointed by a court for such person, or any partnership in which such
person was a general partner at or within two years before the time of such
filing, or any corporation or business association of which such person was an
executive officer at or within two years before the time of such filing;
(b) a conviction in a criminal proceeding or a named subject
of a pending criminal proceeding (excluding traffic violations or driving while
intoxicated or driving under the influence);
(c) any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining any such person from, or otherwise limiting, the following
activities:
(i) Acting as a futures commission merchant,
introducing broker, commodity trading advisor, commodity pool operator,
floor broker, leverage transaction merchant, any other person regulated
by the United States Commodity Futures Trading Commission or an
associated person of any of the foregoing, or as an investment adviser,
underwriter, broker or dealer in securities, or as an affiliated
person, director or employee of any investment company, bank, savings
and loan association or insurance company, or engaging in or continuing
any conduct or practice in connection with such activity;
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(ii) Engaging in any type of business practice; or
(iii) Engaging in any activity in connection with
the purchase or sale of any security or commodity or in connection with
any violation of Federal, state or other securities laws or commodities
laws;
(d) any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any Federal, state or local authority barring,
suspending or otherwise limiting for more than 60 days the right of any such
person to engage in any activity described in the preceding sub-paragraph, or to
be associated with persons engaged in any such activity;
(e) a finding by a court of competent jurisdiction in a civil
action or by the U.S. Securities and Exchange Commission ("SEC") to have
violated any securities law, regulation or decree and the judgment in such civil
action or finding by the SEC has not been subsequently reversed, suspended or
vacated; or
(f) a finding by a court of competent jurisdiction in a civil
action or by the Commodity Futures Trading Commission to have violated any
federal commodities law, and the judgment in such civil action or finding has
not been subsequently reversed, suspended or vacated.
3.18 Over-the-Counter Bulletin Board Quotation. The Company's common
stock is quoted by one or more market makers on the Over-the-Counter Bulletin
Board ("OTC BB"). There is no action or proceeding pending or, to Sellers'
knowledge, threatened against the Company by NASDAQ or the National Association
of Securities Dealers ("NASD") with respect to any intention by such entities to
prohibit or terminate the quotation of the Company's common stock on the OTC BB.
There is no action pending or threatened, to Sellers' knowledge, by any market
maker in the Company's common stock to discontinue their market making
activities with respect thereto.
3.19 Exchange Act Compliance. The Company is in full compliance with,
and current in, all of the reporting, filing and other requirements under the
Exchange Act. The shares of the Company's common stock have been duly and
properly registered under Section 12(g) of the Exchange Act, and the Company is
in full compliance with all of the requirements under, and imposed by, Section
12(g) of the Exchange Act.
3.20 Representations and Warranties Complete. The representations and
warranties of Seller included in this Agreement and any list, statement,
document or information set forth in, or attached to, any Schedule provided
pursuant to this Agreement or delivered hereunder, are true and complete in all
material respects and do not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements contained therein not misleading, under the circumstance under
which they were made.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to, and covenants with Seller, as
follows:
4.1 Authority Relative to this Agreement. Buyer has full power and
authority to: (i) execute, deliver and perform this Agreement, and each
ancillary document which Buyer has executed or delivered or is to execute or
deliver pursuant to this Agreement, and (ii) carry out Buyer's obligations
hereunder and thereunder and, to consummate the transactions contemplated hereby
(including the Transaction). This Agreement has been duly and validly executed
and delivered by Buyer and, assuming the due authorization, execution and
delivery thereof by Seller, constitutes the legal and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity and public policy.
4.2 Required Filings and Consents. The execution and delivery of this
Agreement by Buyer does not, and the performance of its obligations hereunder
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any Governmental Entity, except for applicable
requirements, if any, of the Exchange Act and the rules and regulations
thereunder.
4.3 Brokers. Buyer has not incurred, nor will it incur, directly or
indirectly, any liability for brokerage or finders' fees or agent's commissions
or any similar charges in connection with this Agreement or any transaction
contemplated hereby.
4.4 Acquisition of Shares for Investment. Buyer is, or each of Buyer's
members are, an "accredited investor," as such term is defined in Section 2(15)
of the Securities Act and Rule 501 of Regulation D promulgated thereunder, Buyer
is purchasing the Shares for Buyer's own account, for investment purposes, in
Buyer's name and solely for Buyer's own beneficial interest and not as nominee
for, or on behalf of, or for the beneficial interest of, or with the intention
to transfer to, any other Person. Buyer understands and agrees that the Shares
being acquired pursuant to this Agreement have not been registered under the
Securities Act or under any applicable state securities laws and may not be
sold, pledged, assigned, hypothecated or otherwise transferred ("Transfer"),
except pursuant to an effective registration statement under the Securities Act
or pursuant to an exemption from registration under the Securities Act, the
availability of which shall to be established to the satisfaction of the Company
at or prior to the time of Transfer.
4.5 Representations and Warranties Complete. The representations and
warranties of Buyer included in this Agreement and any list, statement, document
or information set forth in, or attached to, any Schedule provided pursuant to
this Agreement or delivered hereunder, are true and complete in all material
respects and do not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements contained therein not misleading, under the circumstance under which
they were made.
11
Article V
CONDUCT PRIOR TO THE EFFECTIVE TIME
During the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement pursuant to its terms or the
Closing, Seller shall cause the Company, except to the extent that the Buyer
shall otherwise consent in writing, to carry on its business in the usual,
regular and ordinary course consistent with past practices, in substantially the
same manner as heretofore conducted and in compliance with all applicable laws
and regulations, pay its debts and taxes when due subject to good faith disputes
over such debts or taxes, pay or perform other material obligations when due,
and use its commercially reasonable efforts consistent with past practices and
policies to preserve substantially intact its present business organization.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Cooperation. Following the Closing, Seller agrees to cooperate with
the Company and Buyer, and provide any information and documentation reasonably
requested by the Company, the Buyer or their advisors, to allow the Company to
continue to file its Company Reports (or any amendments thereto) in a timely
manner, to allow the Company to comply with the reporting requirements of the
Exchange Act, to allow the Company to provide market makers with the information
required to file a Form 211 to obtain or maintain a quotation on the
over-the-counter market, and to allow the Company to prepare and file any U.S.,
state and local income tax returns.
6.2 Other Actions. Seller and Buyer shall cooperate with each other and
use their respective reasonable best efforts to take or cause to be taken all
actions, and do or cause to be done all things, necessary, proper or advisable
on their part under this Agreement and applicable laws to consummate the
Transaction and the other transactions contemplated hereby as soon as
practicable, including completing the due diligence investigation, preparing and
filing as soon as practicable all documentation to effect all necessary notices,
reports and other filings, and obtaining as soon as practicable all consents,
registrations, approvals, permits and authorizations necessary or advisable to
be obtained from any third party and/or any Governmental Entity in order to
consummate the Transaction or any of the other transactions contemplated hereby.
6.3 Confidentiality; Access to Information.
(a) Each party agrees to maintain and hold in strict
confidence any material, non-public information provided by the other party in
connection with transactions contemplated hereunder.
(b) Seller shall afford Buyer and its financial advisors,
accountants, counsel and other representatives reasonable access during normal
business hours, upon reasonable notice, to the properties, books, records and
personnel of Company during the period prior to the Closing to obtain all
information concerning the business, including financial condition, properties,
12
results of operations and personnel of Company, as Buyer may reasonably request.
No information or knowledge obtained by Buyer in any investigation pursuant to
this Section 6.3 will affect or be deemed to modify any representation or
warranty contained herein or the conditions to the obligations of the parties to
consummate the Transaction.
6.4 No Solicitation. Other than with respect to the Transaction, the
Seller agrees that he shall not, and shall direct and use his reasonable best
efforts to cause his agents and other representatives (including any investment
banker, attorney or accountant retained by the Company) not to, directly or
indirectly, initiate, solicit, encourage or otherwise facilitate any inquiries
or the making of any proposal or offer relating to a "going public" or reverse
merger transaction, the sale or transfer of the Shares whether by sale, merger,
share exchange or otherwise, or any recapitalization of the Company.
6.5 Public Disclosure. Buyer and Seller will consult with each other
and agree in writing before issuing any press release or otherwise making any
public statement with respect to the Transaction or this Agreement and will not
issue any such press release or make any such public statement prior to such
consultation. The Seller shall be responsible for the timely filing of Schedule
13D or 13G with the SEC, with respect to Seller's holding in the Company, in
connection with the execution of this Agreement and the consummation of the
transactions hereunder.
Article VII
CONDITIONS TO THE TRANSACTION
7.1 Conditions to Obligations of Each Party to Effect the Transaction.
The respective obligations of each party to this Agreement to effect the
Transaction shall be subject to the satisfaction at or prior to the Closing Date
of the following conditions:
(a) No Order. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of making
the Transaction illegal or otherwise prohibiting consummation of the
Transaction, substantially on the terms contemplated by this Agreement. All
waiting periods, if any, under any law in any jurisdiction in which the Company
has material operations relating to the transactions contemplated hereby will
have expired or terminated.
(b) 14f-1 Stockholder Notice. At Closing, the Company shall
have filed an information statement, in form acceptable to Buyer, with the SEC
and shall have mailed the same to each of the stockholders of Company, all in
compliance with the provisions under Rule 14f-1 under the Exchange Act
("Information Statement").
7.2 Additional Conditions to Obligations of Seller. The obligations of
Seller to consummate and effect the Transaction shall be subject to the
13
satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by Seller:
(a) Representations and Warranties. Each representation and
warranty of Buyer contained in this Agreement (i) shall have been true and
correct as of the date of this Agreement and (ii) shall be true and correct on
and as of the Closing Date with the same force and effect as if made on the
Closing Date. Seller shall have received a certificate with respect to the
foregoing signed by Buyer ("Buyer Closing Certificate").
(b) Agreements and Covenants. Buyer shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by them on or prior to the
Closing Date, except to the extent that any failure to perform or comply (other
than a willful failure to perform or comply or failure to perform or comply with
an agreement or covenant reasonably within the control of Buyer) does not, or
will not, constitute a Material Adverse Effect with respect to Buyer taken as a
whole, and Seller has received Buyer Closing Certificate to such effect.
(c) Other Deliveries. At or prior to Closing, Buyer shall
have delivered: (i) the Purchase Price to the Escrow Agent, (ii) copies of
resolutions and actions taken Buyer's board of managers in connection with the
approval of this Agreement and the transactions contemplated hereunder to
Seller, and (iii) such other documents or certificates as shall reasonably be
required by Seller and their counsel in order to consummate the transactions
contemplated hereunder.
7.3 Additional Conditions to the Obligations of Buyer. The obligations
of Buyer to consummate and effect the Transaction shall be subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by Buyer:
(a) Representations and Warranties. Each representation and
warranty of Seller contained in this Agreement (i) shall have been true and
correct as of the date of this Agreement and (ii) shall be true and correct on
and as of the Closing Date with the same force and effect as if made on and as
of the Closing. Buyer shall have received a certificate with respect to the
foregoing signed on behalf of Seller with respect to the warranties and
representations made by Seller under this Agreement ("Seller Closing
Certificate").
(b) Agreements and Covenants. Seller shall have performed or
complied in all material respects, caused the Company to satisfy or comply, with
all agreements and covenants required by this Agreement to be performed or
complied with by them at or prior to the Closing Date except to the extent that
any failure to perform or comply (other than a willful failure to perform or
comply or failure to perform or comply with an agreement or covenant reasonably
within the control of Company or Seller) does not, or will not, constitute a
Material Adverse Effect on Company, and Buyer shall have received the Seller
Closing Certificate to such effect.
(c) Absence of Liabilities. At Closing, Company shall have no
debts, liabilities, obligations, contracts, guaranties or commitments (absolute,
accrued, known or unknown, contingent or otherwise) of any kind or nature.
14
Seller shall have delivered to Buyer all documentation reasonably requested by
Buyer with respect to the payment, settlement, release or cancellation of any
obligation, liability, debt, contract, commitment or guaranty of the Company.
(d) Assumption Agreement. Prior to Closing, Seller and the
Company shall have executed and delivered an agreement, duly authorized and
approved by the Company's board of directors and stockholders (if required),
under which the Company shall transfer all of its interests in each of the
Subsidiaries to Seller in exchange for Seller's assumption of all known and
unknown liabilities and obligations of the Company and Seller's release of all
claims of any kind that Seller may have against the Company (other than with
respect to the Notes) ("Assumption Agreement"). The Assumption Agreement shall
be reasonably acceptable to Buyer.
(e) Opinion of Company's Counsel. Prior to or at Closing, the
Company's legal counsel shall deliver to Buyer its opinion with respect to due
authorization, approval, validity and compliance with applicable laws of all
actions taken by the Company in connection with the transactions contemplated
under this Agreement (including the Assumption Agreement) including compliance
with all laws, regulations and rules applicable to such actions, in a form
acceptable to Buyer.
(f) Business Records. At or prior to Closing, the Company
shall have delivered to Buyer all records and documents relating to the Company,
wherever located, including, without limitation, books, records, Annual Reports,
Company Reports, Charter Documents, Corporate Records, Stock Records, Returns,
consent decrees, orders, and correspondence, financial information and records,
electronic files containing any financial information and records, and other
documents used in or associated with the Company (collectively, "Business
Records"), all of which Business Records shall be acceptable to Buyer in their
sole discretion.
(g) Returns and Annual Reports. At or prior to Closing, the
Company shall have filed any and all Returns for all periods ended on or before
December 31, 2004 and all Annual Reports for any period prior to Closing, with
copies of the such Returns and Annual Reports being delivered to Buyer at or
prior to Closing.
(h) Termination of Stock Plans. At Closing, the Company shall
have terminated any existing stock plan and shall have filed a post-effective
amendment with the SEC withdrawing any S-8 registration statement currently
effective.
(i) Resignations and Appointments of Company's Officers and
Directors. At or prior to Closing, the Company shall have delivered to Buyer
resignations, in a form and substance acceptable to Buyer, providing for the
resignation of all of the current officers at Closing and the current directors
of the Company effective as of the tenth (10th) day following the Company's
filing and mailing of the Information Statement (the "Resignations"), and
further providing for the appointment of Xxxxx X. Xxxxxxx to serve as director,
President, Treasurer and Secretary of the Company, effective as of the Closing
(the "Appointments").
(j) Undertaking by Accountants. At or prior to Closing,
Xxxxxxx Xxxxxxx & Co., LLC ("Accountant") shall have delivered to Buyer and the
Company, an undertaking, in a form and substance satisfactory to Buyer, provid-
15
ing that: (i) the Accountant agrees to an engagement with Company to serve as
its certified public accountants following the Closing for purposes of the
Company's ongoing reporting requirements under the Exchange Act including, with-
out limitation, the filing of Forms 10-Q and 10-K, at the rates and charges
acceptable to the Company and Accountant, (ii) the Accountant is duly registered
with PCAOB, (iii) the Accountant and the Company have obtained the consent of
any prior accountants of the Company to the use of their audited financial state
-ments and accompanying report in any regulatory filing by the Company prior to
or following the Closing, and (iv) the Accountant has reviewed the previously
filed financials statements of the Company and do not express any concern as the
compliance thereof with U.S. GAAP or its ability to audit the Company's
financial statements for any period after Closing ("Undertaking").
(k) Form 8-K at Closing. Prior to or at Closing, the Company
shall have prepared, a current report on Form 8-K announcing the Closing
together with allrequired pro forma financial information and other information
("Transaction 8-K"), which shall be in a form acceptable to Buyer and in a
format acceptable for XXXXX filing.
(l) Other Deliveries. At Closing, Seller shall have delivered,
or caused the Company to have delivered to Buyer or Escrow Agent: (i)
certificate(s) representing the Shares and the Escrow Shares, duly endorsed in
blank or accompanied by stock powers duly endorsed in blank, with a medallion
signature guarantee, (ii) the original Notes together with an assignment thereof
duly executed by Seller, (iii) any and all resolutions or minutes with respect
to any actions taken by the Company's board of directors or stockholders in
connection with the transactions contemplated by and under this Agreement, and
(iv) such other documents or certificates as shall reasonably be required by
Buyer and its counsel in order to consummate the transactions contemplated
hereunder.
ARTICLE VII
SURVIVAL; INDEMNIFICATION
8.1 Survival. All representations, warranties, agreements and covenants
contained in or made pursuant to this Agreement, or any Exhibit or Schedule
hereto or thereto or any certificate delivered at the Closing, shall survive
(and not be affected by) the Closing, but all claims made by virtue of such
representations, warranties, agreements and covenants shall only be made under,
and subject to the limitations set forth in, this Article VIII.
8.2 Indemnification by Seller. The Seller hereby indemnifies and holds
harmless, and agrees to indemnify and hold harmless, Company and Buyer (from and
after the Closing) (collectively, the "Buyer Indemnified Parties") against (i)
any and all liabilities, obligations, losses, damages, claims, actions, Liens
and deficiencies that exist, or that may be imposed on, incurred by or asserted
against any one or more of the Buyer Indemnified Parties, (1) based upon,
resulting from or arising out of, or as to which there was, any breach or
16
inaccuracy of any representation or warranty by Seller under this Agreement or
the Assumption Agreement, or any statement, agreement or covenant made by Seller
in or pursuant to this Agreement or the Assumption Agreement, or (2) based upon,
resulting from or arising out of any present or future claim, action, suit or
proceeding relating to or arising from the ownership, operation, conduct or
control of the Company or its business, or any state of facts from events
occurring, prior to the Closing, which is brought or asserted against any Buyer
Indemnified Party by or on behalf of any Person (including any Person who had or
purports to have had any interest in the Shares or in the Company's securities),
and (ii) any cost or expense (including reasonable attorneys' fees and court
costs) incurred by the Buyer Indemnified Parties or any of them in connection
with the foregoing (including, without limitation, any cost or expense incurred
by the Buyer Indemnified Parties in enforcing their rights pursuant to this
Section 8.2). No demand or claim for indemnification under this Section 8.2 may
be made after 11:59 p.m., Denver time, on the date two (2) years following the
Closing Date.
Article IX
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination. This Agreement may be terminated at any time prior
to the Closing:
(a) by mutual written agreement of Buyer and Seller; or
(b) by either Buyer or Seller if a Governmental Entity shall
have issued an order, decree or ruling or taken any other action, in any case
having the effect of permanently restraining, enjoining or otherwise prohibiting
the Transaction, which order, decree, ruling or other action is final and
nonappealable.
9.2 Notice of Termination; Effect of Termination. Any termination of
this Agreement under Section 9.1 above will be effective immediately upon the
delivery of written notice of the terminating party to the other party hereto.
In the event of the termination of this Agreement as provided in Section 9.1,
this Agreement shall be of no further force or effect and the Transaction shall
be abandoned, except (i) as set forth in this Section 9.2, Section 9.3 and
Article X (General Provisions), each of which shall survive the termination of
this Agreement, (ii) the provisions of Section 1.6(d) shall continue in effect
and shall govern the payment and disposition of the Deposit, and (iii) nothing
herein shall relieve any party from liability for any intentional or willful
breach of this Agreement.
9.3 Fees and Expenses. Except as set forth herein, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses whether
or not the Transaction is consummated. Without limiting the foregoing sentence,
the Seller shall pay, or cause the Company to pay, at or prior to Closing, all
costs incurred by the Company and Seller in connection with this Agreement and
the transactions contemplated hereunder including, without limitation, all costs
associated with the preparation, filing and mailing of the Information
Statement. .
9.4 Amendment. This Agreement may be amended by the parties hereto at
any time by execution of an instrument in writing signed on behalf of Buyer and
Seller.
9.5 Extension; Waiver. At any time prior to the Closing, any party
hereto may, to the extent legally allowed, (i) extend the time for the
17
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
ARTICLE X
GENERAL PROVISIONS
10.1 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
(a) if to Buyer, to:
Xxxxxxx X. Xxxxxxx, Manager
KI Equity Partners I, LLC
0000 XXX Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
(000) 000-0000 fax
(b) if to Seller, to:
Xxxxx X. Xxxxxx
0000 Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
(000) 000-0000 fax
10.2 Interpretation.
(a) When a reference is made in this Agreement to Exhibits,
such reference shall be to an Exhibit to this Agreement unless otherwise
indicated. When a reference is made in this Agreement to Sections, such
reference shall be to a Section of this Agreement. Unless otherwise indicated
the words "include," "includes" and "including" when used herein shall be deemed
in each case to be followed by the words "without limitation." The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. When reference is made herein to "the business of" an entity, such
reference shall be deemed to include the business of all direct and indirect
subsidiaries of such entity. Reference to the Company shall be deemed to include
all current and former subsidiaries of the Company.
(b) For purposes of this Agreement, the term "Material Adverse
Effect" when used in connection with an entity means any change, event,
violation, inaccuracy, circumstance or effect, individually or when aggregated
18
with other changes, events, violations, inaccuracies, circumstances or effects,
that is materially adverse to the business, assets (including intangible
assets), revenues, financial condition or results of operations of such entity
and its Subsidiaries, if any, taken as a whole (it being understood that neither
of the following alone or in combination shall be deemed, in and of itself, to
constitute a Material Adverse Effect: (a) changes attributable to the public
announcement or pendency of the transactions contemplated hereby, (b) changes in
general national or regional economic conditions or (c) changes affecting the
industry generally in which Company or Buyer operates).
(c) For purposes of this Agreement, the term "Person" shall
mean any individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), firm or other enterprise, association, organization, entity or
Governmental Entity.
(b) For purposes of this Agreement, all monetary amounts set forth herein are
referenced in United States dollars, unless otherwise noted.
10.3 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
10.4 Entire Agreement; Third Party Beneficiaries. This Agreement and
the documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the Schedules hereto (a)
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof,
it being understood that the Escrow Agreement shall continue in full force and
effect until the Closing and shall survive any termination of this Agreement;
and (b) are not intended to confer upon any other person any rights or remedies
hereunder (except as specifically provided in this Agreement).
10.5 Severability. In the event that any provision of this Agreement,
or the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
10.6 Other Remedies; Specific Performance. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
19
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
10.7 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Colorado, USA, regardless of the
laws that might otherwise govern under applicable principles of conflicts of law
thereof.
10.8 Rules of Construction. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
10.9 Assignment. No party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
approval of the other parties. Subject to the first sentence of this Section
10.9, this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
10.10 Arbitration. Any disputes or claims arising under or in
connection with this Agreement or the transactions contemplated hereunder shall
be resolved by binding arbitration. Notice of a demand to arbitrate a dispute by
either party shall be given in writing to the other at their last known address.
Arbitration shall be commenced by the filing by a party of an arbitration demand
with the American Arbitration Association ("AAA") in its office in Denver,
Colorado USA. The arbitration and resolution of the dispute shall be resolved by
a single arbitrator appointed by the AAA pursuant to AAA rules. The arbitration
shall in all respects be governed and conducted by applicable AAA rules, and any
award and/or decision shall be conclusive and binding on the parties. The
arbitration shall be conducted in Denver, Colorado. The arbitrator shall supply
a written opinion supporting any award, and judgment may be entered on the award
in any court of competent jurisdiction. Each party shall pay its own fees and
expenses for the arbitration, except that any costs and charges imposed by the
AAA and any fees of the arbitrator for his services shall be assessed against
the losing party by the arbitrator. In the event that preliminary or permanent
injunctive relief is necessary or desirable in order to prevent a party from
acting contrary to this Agreement or to prevent irreparable harm prior to a
confirmation of an arbitration award, then either party is authorized and
entitled to commence a lawsuit solely to obtain equitable relief against the
other pending the completion of the arbitration in a court having jurisdiction
over the parties. All rights and remedies of the parties shall be cumulative and
in addition to any other rights and remedies obtainable from arbitration.
[Remainder of this page intentionally left blank.]
20
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above.
BUYER:
KI Equity Partners I, LLC
-----------------------------------------
Xxxxxxx X. Xxxxxxx, Manager
SELLER:
----------------------------------------
Xxxxx X. Xxxxxx, Individually
21
Index of Exhibits
Exhibit A - Escrow Agreement
22
Schedule 3.1
The Company is duly qualified to conduct its business in each state, province
and/or jurisdiction listed below:
Colorado
23
Schedule 3.2
The Company's subsidiaries are as follows:
(i) Multi-Link Communications, Inc., a Colorado corporation
(FEIN 00-0000000),
(ii) Xxxxxxx Communication Services, Inc., a Colorado corporation (FEIN
00-0000000),
(iii) Multi-Link Communications, LLC, an Indiana limited liability company
(FEIN 00-0000000),
(iv) One Touch Communications, Inc., a North Carolina corporation
(FEIN 00-0000000),
(v) Voicelink, Inc., a Georgia corporation (FEIN 00-0000000), and
(vi) Voicelink of Florida, Inc., a Florida corporation (FEIN 00-0000000)
The foregoing subsidiaries are hereinafter referred to individually as
"Subsidiary" or collectively as "Subsidiaries").
Prior to Closing, the Company shall transfer all of its interests in each of the
Subsidiaries to Seller in exchange for Seller's assumption of all known and
unknown liabilities and obligations of the Company and Seller's release of all
claims of any kind that Seller may have against the Company pursuant to the
Assumption Agreement.
24
SCHEDULE 3.3
Registration rights, voting trust, proxy, rights plan, anti-takeover plan or
other agreement or understanding to which Company is a party or by which Company
is bound with respect to any equity or debt security of any class of the
Company:
None.
25
SCHEDULE 3.6
Company's debts, liabilities, obligations, contracts, guaranties or commitments
(absolute, accrued, known or unknown, contingent or otherwise) of any kind or
nature.
Business Financial Systems, Inc 1,710.00
Xxxxxxx Xxx & Xxxxxxxx, LLC 1,112.34
Xxxxx X Xxxxxxxxx & Associates PC 7,000.00
Xxxx X Xxxxxx 3,122.18
Xxxxxxx Xxxxxxx & Co LLC 2,000.00
Xxxxxxx Xxxxxxx 50,000.00
Multi-Link Acquisitions, LLC 7,175.74
-------------
72,120.26
=============
All of the above liabilities to be paid by Seller out of the proceeds of the
Purchase Price received at Closing.
Notes payable - $147,153.25 - note to be transferred by Seller to Buyer at
Closing (which note is convertible to 6,628,978 shares of the Company's common
stock).
Contracts - month to month contract with Public Storage for 300 sq. feet of
storage @ $187.00 per month.
26
SCHEDULE 3.7
Certain Changes or Events since December 31, 2004:
None
27
Schedule 3.8
Litigation:
None
28
Schedule 3.10
Liabilities in respect of tax returns and audits:
None.
29
Schedule 3.14
Agreements, Contracts and Commitments:
Month to month contract with Public Storage for 300 sq. feet of storage @
$187.00 per month.
30
Schedule 3.15
Interested Party Transactions
None.
31
