PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "AGREEMENT"), dated as of May 17, 2005,
is among BHDH Family Partnership, L.P., Rea Brothers Limited, JAAVBR, L.P., J2
Family, L.P., Bajjer, LLC, AND Copano Bay Associates, L.P. (collectively, the
"SELLERS"), and Local Telecom Systems, Inc., a Nevada corporation ("PURCHASER").
RECITALS
A. The Purchaser is seeking to purchase all of the stock, debt and
claims held by Sellers in MBI Mortgage, Inc., a Texas corporation (the
"COMPANY").
B. The Sellers are willing to sell to Purchaser all of their interests
in the Company,
NOW, THEREFORE, Sellers and Purchaser hereby covenant and agree as
follows:
1. SALE OF INTERESTS
1.1. SALE OF INTERESTS IN THE COMPANY. Sellers each hereby
agree to sell to the Purchaser on the Closing Date all of their
securities of the Company (including all promissory notes and stock) as
well any and all other claims, rights, titles and interests in the
Company to Purchaser in exchange for shares and warrants of Local
Telecom Systems, Inc.( LTSI) as listed in Exhibit "A", attached. The
shares and warrants issued to Sellers by LTSI shall have "piggy back"
registration rights. The Closing Date shall be May 17, 2005.
Subject to all of the terms and conditions of this Agreement, the
Sellers will sell and deliver to Purchaser all promissory notes of the Company
held by Sellers, all stock of the Company held by Sellers (duly endorsed for
transfer in blank), and a fully executed assignment of all claims against the
Company held by Sellers (collectively, the "INTERESTS") and Purchaser will
purchase from Sellers the Interests from the Sellers on the Closing Date at the
principal offices of the Purchaser, or such other place as they mutually agree.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
As an inducement to Purchaser to enter into this Agreement, each Seller
separately represents and warrants that:
2.1 AUTHORITY FOR AGREEMENT. This Agreement has been duly authorized by
all necessary corporate action of the Seller and, when executed and delivered by
the Seller, will be a legal, valid, and binding obligation of the Seller,
enforceable in accordance with its terms, except to the extent that the
enforceability hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally or by general
principles of equity.
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2.2 ENTIRETY OF INTERESTS BEING SOLD. Each Seller hereby represents and
warrants that it is transferring all of the Interests it has in the Company to
Purchaser (whether directly or indirectly owned, beneficially or otherwise) in
exchange for the Purchase Price.
2.3 NO DEFAULTS. Neither of the Sellers is in default under any
agreements (i) between the Sellers and third parties or (ii) among the Sellers,
third parties, and others and is not in default under any notes, mortgages, or
other financing documents. No event has occurred that, with the giving of
notice, the passage of time, or both, would cause the Sellers to be in default
under any of the foregoing.
3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS BY PURCHASER
Purchaser hereby represents, warrants and agrees that:
3.1. Purchaser and its advisors have received such information
and documents from the Company, and have had a reasonable opportunity
to ask questions of and receive answers from its executive officers,
with respect to the business, affairs, financial condition, and
prospects of the Company and with respect to the Interests as Purchaser
has requested, and all such questions have been answered to Purchaser's
full satisfaction.
3.2. All information which Sellers have provided concerning
the Company and its financial position and Purchaser's knowledge of
financial and business matters is correct and complete as of the date
hereof, and if there should be any material change in such information
prior to the acceptance of the subscription, Sellers will immediately
provide the Purchasers with such information.
4. FURTHER AGREEMENTS
4.1. COVENANTS OF THE SELLERS. The Sellers agree to execute any and all
instruments and documents necessary to vest title to the Interests
in Purchaser.
4.2. COVENANTS OF THE PURCHASER GOVERNING LAWS. This Agreement shall be
governed by and construed under the laws of the State of Texas.
5. GENERAL
5.1. SURVIVAL OF WARRANTIES. The warranties, representations
and covenants of the parties contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement
and the Closing.
5.2. GOVERNING LAWS. This Agreement shall be governed by and
construed under the laws of the State of Texas.
5.3. SEVERABILITY. If one or more provision of this Agreement
are held to be unenforceable under applicable law, such provision shall
be excluded from this Agreement and the balance of the Agreement shall
remain in full force and effect and shall be interpreted as if such
provision were so excluded.
[REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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SELLERS:
/s/ XXXXXXXX X. XXXX
-----------------------------------------
BHDH Family Partnership, L.P.
/S/ XXXX X. (XXX) XXX
-----------------------------------------
Rea Brothers Limited
/S/ XXXX X. (XXX) XXX
-----------------------------------------
JAAVBR, L.P.
/S/ XXXX X. (XXX) XXX
-----------------------------------------
Bajjer, LLC
/S/ XXXX X. (XXX) XXX
-----------------------------------------
J2 Family, L.P.
/S/ XXXXX X. XXXXXX
-----------------------------------------
Copano Bay Associates, L.P.
PURCHASER:
Local Telecom Systems, Inc.
By: /S/ XXXXXXX X. XXXXXXXXXX
------------------------------------------
Xxxxxxx Xxxxxxxxxx, President
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Exhibit "A"
1) 3, 940,000 shares of Local Telecom System, Inc.(LTSI), post 50:1 reverse
split approved by LTSI shareholders May 4, 2005.
2) 1,050,000 warrants (post reverse) to purchase shares at $0.20 per share
for a period of three (3) years until May 16, 2008.
3) 350,000 warrants (post reverse) to purchase shares at $0.35 per share for
a period of three (3) years until May 16, 2008.
4) A consulting fee of $48,000 payable $2,000 per month beginning June 5,
2005 and ending May 5, 2007.
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