EXHIBIT 99.1
MERGER AGREEMENT
This Merger Agreement (this "Agreement") is entered into as of July 23, 2004 by
and among K2 Digital, Inc. a Delaware corporation ("K2"), K2 Acquisition
Corporation, a Delaware corporation which is a wholly-owned subsidiary of K2
("Acquisition"), and SunriseUSA, Inc., a Delaware corporation ("Sunrise").
RECITALS
A. Sunrise and K2 desire to consummate a merger (the "Merger"), wherein
the shareholders of Sunrise will exchange all of the issued and outstanding
common stock of Sunrise for newly issued shares of common and preferred stock of
K2, Acquisition will merge with and into Sunrise, and Sunrise will become a
wholly-owned subsidiary of K2.
B. The parties desire to structure the transactions contemplated herein
so that, after the Merger as provided herein, Sunrise and/or K2 shall have been
able pursue and complete the acquisitions of certain cable television companies,
as provided in Section 5.7 below, and shall have completed the Recapitalization
(defined in Section 5.7 below), the current shareholders of Sunrise and the
Cable Acquisition Shareholders (defined in Section 5.7 below) will hold
9,750,000 shares of the common stock of K2, constituting 97.5% of the issued and
outstanding shares of K2, and the current shareholders of K2 will hold 250,000
shares of K2, constituting 2.5% of the issued and outstanding of K2 under the
valuation provision.
C. In connection with the Merger, the parties likewise wish to provide,
as set forth herein, that the Sunrise shareholders will obtain options to obtain
K2 stock as herein provided;
D. It is the intent of the parties that the Merger qualify as a
corporate reorganization under Section 368(a)(2)(E) of the Internal Revenue Code
of 1986, as amended (the "Code").
AGREEMENT
IN CONSIDERATION of the mutual promises and covenants herein, including
the recitals, which form a part of this Agreement, the parties hereby agree as
follows:
1. MERGER AND EXCHANGE OF SECURITIES.
1.1 CONSUMMATION OF MERGER. If this Agreement is duly adopted by
the holders of the requisite number of shares, in accordance with the applicable
laws and subject to the provisions hereof, and the conditions set forth in
Sections 6 and 7 are met or waived, Sunrise and Acquisition shall promptly enter
into and file Articles of Merger, under which Acquisition shall merge with and
into Sunrise, and Sunrise shall be the surviving corporation. The Merger shall
be consummated at the time of filing the Articles of Merger ("the Effective
Time"). For accounting purposes, the Merger shall be effective at the conclusion
of the last day of the month preceding the Effective Time.
1.2 EXCHANGE OF SHARES. At the Effective Time:
1.2.1 EXCHANGE OF CERTIFICATES. Each holder of a certificate
or certificates representing shares of Sunrise Class A Common Stock ("Class A
Common") and Class B Common Stock ("Class B Common"), upon presentation and
surrender of such certificate or certificates to K2, shall be entitled to
receive the consideration set forth herein. Upon such presentation, surrender,
and exchange as provided in this Section 1.2, certificates representing shares
of Sunrise previously held shall be canceled. Until so presented and
surrendered, each certificate which represented issued and outstanding shares of
Sunrise at the Effective Time shall be deemed for all purposes to evidence the
right to receive the consideration set forth in Section 1.2.2. If a certificate
representing shares of Sunrise common stock has been lost, stolen, mutilated or
destroyed, K2 shall require the submission of an indemnity agreement and may
require the submission of a bond in lieu of such certificate.
1.2.2 CONSIDERATION FOR SHARES. The holders of the Class A
Common (the "Class A Holders," each a "Class A Holder") shall receive in
exchange for each share of Class A Common 13,344.8673 shares of K2 common stock.
The holders of the Class B Common (the "Class B Holders," each a "Class B
Holder") shall receive in exchange for each share of Class B Common. a share of
K2 preferred stock, designated as the K2 Class A Convertible Preferred Stock
(the "K2 Preferred"), as set forth in the form of the Certificate of
Designations, Rights and Preferences attached hereto as Exhibit A.
1.2.3 FRACTIONAL SHARES. If the number of common shares
determined for a Class A Holder as provided in Section 1.2.2 results in a
fractional share, the number of common shares to be received shall be rounded to
the next whole number of shares.
1.2.4 REGISTRATION OF SHARES. The offer and sale of the K2
common stock and K2 Preferred hereunder shall be issued pursuant to an exemption
from registration under the Securities Act of 1933 (the "Securities Act") and
applicable state securities laws. However, the Merger shall be consummated only
upon satisfaction of the requirements, imposed by the United States Securities
and Exchange Commission (the "SEC") by regulation or policy, under which as a
condition thereof, K2 must register its capital stock under the Securities
Exchange Act of 1934.
1.3 COMMON STOCK OPTIONS OF SUNRISE SHAREHOLDERS. At the Effective
Time:
1.3.1 EXCHANGE OF OPTIONS. The present holders of options to
purchase Sunrise common stock, as set forth on Schedule 1.3 hereto, upon
presentation and surrender of such options to K2, shall be entitled to receive
the consideration set forth herein; provided, however, that such holders may
transfer said options to any other person in whole or in part in their sole
discretion consistent with the provisions of the applicable Sunrise option plan
as it now exists or may exist in the future. Upon such presentation, surrender,
and exchange as provided in this Section 1.3, the Sunrise options previously
held shall be canceled. Until so presented and surrendered, each option which
represented the right to purchase Sunrise common stock at the Effective Time
shall be deemed for all purposes to evidence the right to receive the
consideration set forth in Section 1.3.2. If an option to purchase shares of
Sunrise common stock has been lost, stolen, mutilated or destroyed, K2 shall
require the submission of an indemnity agreement and may require the submission
of a bond in lieu of such option or warrant.
1.3.2 CONSIDERATION FOR OPTIONS. The holders of Sunrise
options shall receive, in exchange for their options, options to purchase shares
of K2 common stock as set forth on Schedule 1.3. The K2 options delivered to the
holders of the Sunrise options shall be subject to a plan and, with respect to
each holder, represented by an option agreement, substantially equivalent to the
terms of the present Sunrise option plan and agreement, including, without
limitation, the terms, vesting and exercise price of such options.
1.4 COMMON STOCK OPTIONS OF K2 SHAREHOLDERS. The holders of
existing K2 options, as set forth on Schedule 1.4 hereto, shall after the
Effective Time, continue to hold such options, subject to the existing K2 option
plan.
2. CLOSING AND CLOSING DOCUMENTS.
2.1 CLOSING. The transactions contemplated by this Agreement shall
be completed at a closing ("xxx Xxxxxxx") on a closing date ("the Closing Date")
which shall be as soon as possible after all shareholder approvals are obtained
in accordance with law and as set forth in this Agreement, with the consummation
of the Merger, as provided in Section 1.1, to take place as soon as practicable
thereafter.
2.2 DOCUMENT DELIVERIES AND PROCEDURES FOR CLOSING. On the Closing
Date, all of the documents to be furnished to Sunrise and K2, including the
documents to be furnished pursuant to Article VII of this Agreement, shall be
delivered to Xxxxx & Xxxxxx, P.C., counsel to Sunrise, to be held in escrow
until the Effective Time or the date of termination of this Agreement, whichever
first occurs, and thereafter shall be promptly distributed to the parties as
their interests may appear.
2.3 SUNRISE CLOSING DOCUMENTS. Sunrise shall deliver the following
documents (collectively, the "Sunrise Closing Documents"):
2.3.1 ARTICLES OF MERGER. The Articles of Merger to be filed
with the State of Delaware, executed by Sunrise;
2.3.2 SUNRISE SHARE CERTIFICATES. Certificates representing
all of the outstanding shares of Sunrise common stock or indemnity agreements or
bonds as provided in Section 1.2.1;
2.3.3 SUNRISE OPTIONS. All outstanding options or indemnity
agreements or bonds as provided in Section 1.3.1.
2.3.4 GOOD STANDING CERTIFICATE. A certificate issued by the
Delaware Secretary of State indicating that Sunrise is qualified and in good
standing within such jurisdiction;
2.3.5 CERTIFICATE OF SECRETARY OF SUNRISE. A certificate
executed by the secretary of Sunrise and attaching the resolutions of the
Sunrise Board of Directors and the resolutions of the shareholders of Sunrise
authorizing the transactions herein contemplated.
2.3.6 SUNRISE OFFICER'S CERTIFICATE. A certificate dated as of
the Closing Date executed by a duly authorized officer of Sunrise certifying
that all necessary actions have been taken by Sunrise's shareholders and
directors to authorize the transactions contemplated by this
Agreement and that all representation and warranties made by Sunrise in the
Agreement are complete and correct in all material respects as of the Closing
Date as if made on the Closing Date;
2.3.7 OTHER DOCUMENTS AND INSTRUMENTS. Such other documents
and instruments as may be reasonably required to effect the transactions
contemplated by this Agreement.
2.4 K2 AND ACQUISITION CLOSING DOCUMENTS. At the Closing, K2 shall
deliver or cause to be delivered the following documents (collectively, the "K2
Closing Documents"):
2.4.1 ARTICLES OF MERGER. The Articles of Merger to be filed
with the State of Delaware, executed by Acquisition;
2.4.2 K2 SHARE CERTIFICATES. The certificates representing the
shares of K2 stock to be delivered to the Sunrise shareholders at the Effective
Time in exchange for their Sunrise stock as provided herein;
2.4.3 GOOD STANDING CERTIFICATES. Certificates issued by the
Delaware Secretary of State indicating that K2 and Acquisition are each
qualified and in good standing within such jurisdiction;
2.4.4 CERTIFICATE OF SECRETARY OF K2. A certificate executed
by the secretary of K2 and attaching the resolutions of the K2 Board of
Directors the transactions herein contemplated.
2.4.5 K2 OFFICER'S CERTIFICATE. A certificate dated as of the
Closing Date executed by a duly authorized officer of K2 certifying that all
necessary actions have been taken by K2's shareholders and directors to
authorize the transactions contemplated by this Agreement and that all
representations and warranties made by K2 in the Agreement are complete and
correct in all material respects as of the Closing Date as if made on the
Closing Date;
2.3.6 LEGAL OPINION. A legal opinion letter (the "Legal
Opinion") signed by Xxxxxx & Amon, LLP 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000,
regarding the total amount of stock of K2 that will be "freely-tradable" by
virtue of having been registered pursuant to the Securities Act and the total
amount of stock of K2 that shall be "freely-tradable" subsequent to the Closing
Date pursuant to an exemption from the Securities Act and such other opinions as
are customary in transactions of this nature; and
2.3.7 OTHER DOCUMENTS AND INSTRUMENTS. Such other documents
and instruments as may be reasonably required to effect the transactions
contemplated by this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF SUNRISE.
Sunrise represents and warrants to K2 that the statements contained in
this Section 3 are correct and complete as of the date of this Agreement.
3.1 ORGANIZATION OF SUNRISE. Sunrise is a corporation duly
organized, validly existing,
and in good standing under the laws of the State of Delaware. Sunrise has all
the requisite power and authority to own, lease and operate all of its
properties and assets and to carry on its business as currently conducted and as
proposed to be conducted. Sunrise is duly licensed or qualified to do business
and is in good standing in each jurisdiction in which the nature of the business
conducted by it makes such licensing or qualification necessary and where the
failure to be so qualified would, individually or in the aggregate, have a
Material Adverse Effect upon it. As used in this Agreement, the term "Material
Adverse Effect" with respect to any party, shall mean any change or effect that
is reasonably likely to be materially adverse to the business, operations,
properties, condition (financial or otherwise), assets or liabilities of such
party and such party's subsidiaries taken as a whole.
3.2 AUTHORIZATION. Subject to the approval of its shareholders,
Sunrise has full power and authority (including full corporate power and
authority) to execute and deliver this Agreement and the Sunrise Closing
Documents and to perform its obligations hereunder and thereunder. This
Agreement constitutes, and the Sunrise Closing Documents will constitute, valid
and legally binding obligations of Sunrise, enforceable in accordance with their
respective terms and conditions.
3.3 NONCONTRAVENTION. Neither the execution and the delivery of
this Agreement or the Sunrise Closing Documents, nor the consummation of the
transactions contemplated hereby or thereby by Sunrise, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which Sunrise is subject or any provision of its certificate of
incorporation or bylaws, or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which Sunrise is a party or by which it is bound or to which any of its
assets is subject. Sunrise does not need to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government or
governmental agency in order for the parties to consummate the transactions
contemplated by this Agreement.
3.4 DISCLOSURES. The representations and warrants contained in
this Section 3 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 3 not misleading.
3.5 CAPITALIZATION. The authorized capital stock of Sunrise
consists of 1,500 shares of common stock, no par value, of which 1,500 shares
are issued and outstanding, and the shareholders and numbers of shares of common
stock held by each shareholder are as set forth on Schedule 3.5(a). All of the
outstanding shares of Sunrise common stock have been duly and validly issued.
Before the closing, Sunrise's certificate of incorporation shall be amended to
provide that the authorized capital stock of Sunrise shall consist of 1,500
shares of the Class A Common and 750,000 shares of the Class B Common, with the
existing Sunrise shareholders having exchanged their shares of common stock for
Class A Common and Class B Common, and shares of Class B Common having been
issued to additional shareholders, with all issued and outstanding shares of
Sunrise Common Stock, and the numbers of shares held by the shareholders, to be
as set forth on Schedule 3.5(b) hereto. At Closing, all such outstanding shares
of Sunrise common stock shall have been duly and validly issued, and all Sunrise
shareholders shall have agreed to the merger herein provided.
4. REPRESENTATIONS AND WARRANTIES OF K2 AND ACQUISITION.
K2 and Acquisition represent and warrant to Sunrise that the statements
contained in this Section 4 are correct and complete as of the date of this
Agreement.
4.1 ORGANIZATION. Each of K2 and Acquisition is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware, K2 and Acquisition has all the requisite power and authority to own,
lease and operate all of its properties and assets ant to carry on its business
as currently conducted and as proposed to be conducted. Each of K2 and
Acquisition is duly licensed or qualified to do business and is in good standing
in each jurisdiction in which the nature of the business conducted by it makes
such licensing or qualification necessary and where the failure to be so
qualified would, individually or in the aggregate, have a Material Adverse
Effect upon it.
4.2 AUTHORIZATION OF TRANSACTIONS. Each of K2 and Acquisition has
full power and authority to execute and deliver this Agreement and the K2
Closing Documents to which any K2 shareholder is a party and to perform all
obligations hereunder and thereunder. This Agreement constitutes, and the K2
Closing Documents will constitute, the valid and legally binding obligation of
K2, enforceable in accordance with their respective terms and conditions.
4.3 CAPITALIZATION. The authorized capital stock of K2 consists of
25,000,000 shares of common stock, no par value, of which 4,982,699 are issued
and outstanding, and 1,000,000 shares of preferred stock, par value $0.01 per
share, of which no shares are issued and outstanding. All issued and outstanding
shares of K2 stock have been duly authorized and validly issued, and are fully
paid and nonassessable. All of the outstanding shares of common stock (and
options to purchase common stock and other outstanding securities of K2 have
been duly and validly issued in compliance with federal and state securities
laws. Except as set forth herein and on Schedule 1.4 hereto, and as set forth in
this Agreement, there are no outstanding or authorized subscriptions, options,
warrants, agreements, obligations, understandings or rights of any kind giving
the holder the right to purchase or otherwise receive or have issued to such
holder any common stock or other securities or K2 or any securities or
obligations convertible into, any shares of capital stock or other securities of
K2, and there are no dividends which have accrued or been declared but are
unpaid on the capital stock of K2. There are no outstanding or authorized stock
appreciation, phantom stock or similar rights with respect to K2.
4.4 SUBSIDIARIES. Except for Acquisition, K2 does not own,
directly or indirectly, any capital stock or other equity interest in any
corporation, partnership or other entity.
4.5 OWNERSHIP OF K2 SHARES. Each K2 shareholder owns and holds of
record that number of K2 Shares shown on Schedule 4.5. As of the date hereof,
all of the shares of the issued and outstanding stock of K2 are "free-trading"
by virtue of either (i) an exemption from the Securities Act, or (ii) having
been registered pursuant to the Securities Act.
4.6 NONCONTRAVENTION. Neither the execution and the delivery of
this Agreement or the K2 Closing Documents, nor the consummation of the
transactions contemplated hereby or thereby, by K2 or Acquisition will (i)
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which K2 Acquisition is subject, or (ii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which agreement, contract, lease, license,
instrument, or other arrangement to which K2 or such K2 shareholder is a party
or by which K2 or such Acquisition is bound or to which K2 or Acquisition assets
is subject. Neither K2 nor any Acquisition needs to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any government
or governmental agency in order for the parties to consummate the transactions
contemplated by this Agreement.
4.7 SEC REPORTS AND FINANCIAL STATEMENTS. K2 has filed with the
SEC, and has heretofore made available to Sunrise, complete and correct copies
of all forms, reports, schedules, statements and other documents required to be
filed by K2 under the Securities Act, and the Exchange Act (as such documents
have been amended or supplemented since the time of their filing) (collectively,
the "SEC Reports"). As of their respective dates, the SEC Reports (including
without limitation, any financial statements or schedules included therein) (a)
did not contain any untrue statement of a material fact required to be stated
therein or necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading, and (b) complied
in all material respects with the applicable requirements of the Securities Act
and Exchange Act (as the case may be) and all applicable rules and regulations
of the SEC promulgated thereunder. Each of the financial statements included in
the SEC Reports has been prepared from, and is in accordance with, the books and
records of K2, complies with all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, has been prepared in accordance with U.S. generally accepted
accounting principles ("U.S. GAAP") applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly
presents in all material respects the consolidated results of operations and
cash flows (and changes in financial position, if any) of K2, as at the date(s)
thereof or for the period(s) presented therein.
4.8. ABSENCE OF MATERIAL CHANGE. Since March 31, 2004 there has
been no change in the business, operations, financial condition or liabilities
of K2 as stated in the Form 10-QSB filed by K2 on May 20, 2004 with the SEC that
would result in a Material Adverse Effect on K2.
4.9 LITIGATION. There are no actions, suits, claims, inquiries,
proceedings or investigations before any court, tribunal, commission, bureau,
regulatory, administrative or governmental agency, arbitrator, body or authority
pending or, to the knowledge of K2, threatened against K2 which would reasonably
be expected to result in any liabilities, including defense costs, in excess of
$1,000 in the aggregate. K2 is not the named subject of any order, judgment or
decree and is not in default with respect to any such order, judgment or decree.
4.10 TAXES AND TAX RETURNS. K2 has timely and correctly filed tax
returns and reports (collectively, "Returns") required by applicable law to be
filed (including, without limitation, estimated tax returns, income tax returns,
excise tax returns, sales tax returns, use tax returns, property tax returns,
franchise tax returns, information returns and withholding, employment and
payroll tax returns) and all Returns were (at the time they were filed) correct
in all material respects, and have paid all taxes, levies, license and
registration fees, charges or withholdings of any nature whatsoever reflected on
Returns to be owed and which have become due and payable except as set forth on
Schedule 4.10. Any unpaid U.S. Federal income taxes, interest and penalties of
K2 do not exceed $5,000 in the aggregate.
4.11 EMPLOYEES. K2 has no employees who are salaried or full-time
or who are entitled to wages in respect of hours worked.
4.12 COMPLIANCE WITH APPLICABLE LAW.
4.12.1 K2 holds all licenses, certificates, franchises,
permits and other governmental authorizations ("Permits") necessary for the
lawful conduct of its business and the Permits are in full force and effect, and
K2 is in all material respects complying therewith, except where the failure to
possess or comply with the Permits would not have, in the aggregate, a Material
Adverse Effect on K2.
4.12.2 K2 is and for the past five years has been in
compliance with all foreign, federal, state and local laws, statutes,
ordinances, rules, regulations and orders applicable to the operation, conduct
or ownership of its business or properties except for any noncompliance which is
not reasonably likely to have, in the aggregate, a Material Adverse Effect on
K2.
4.13 CONTRACTS AND AGREEMENTS. K2 is not a party to or bound by any
commitment, contract, agreement or other instrument which involves or could
involve aggregate future payments by K2 of more than $1,000, (ii) K2 is not a
party to or bound by any commitment, contract, agreement or other instrument
which is material to the business, operations, properties, assets or financial
condition of K2, and (iii) no commitment, contract, agreement or other
instrument, other than charter documents, to which K2 is a party or by which K2
is bound, limits the freedom of K2 to compete in any line of business or with
any person. K2 is not in default on any contract, agreement or other
instruments.
4.14 AFFILIATE TRANSACTIONS.
4.14.1 Except as set forth on Schedule 4.14 hereto, K2 has not
engaged in, and is not currently obligated to engage in (whether in writing or
orally), any transaction with any Affiliated Person (as defined below) involving
aggregate payments by or to K2 of $10,000 U.S. or more.
4.14.2 For purposes of this Section 4.14, "Affiliated Person"
means:
a. a director, executive officer or Controlling Person (as
defined below) of K2;
b. a spouse of a director, executive officer or Controlling
Person of K2;
c. a member of the immediate family of a director, executive
officer, or Controlling Person of K2 who has the same home as such person;
d. any corporation or organization (other than K2) of which a
director, executive officer, chief financial officer, or a person performing
similar functions or is a Controlling Person of such other corporation or
organization;
e. any trust or estate in which a director, executive officer,
or Controlling Person of K2 or the spouse of such person has a substantial
beneficial interest or as to which such person or his spouse serves as trustee
or in a similar fiduciary capacity, and for purposes of this Section 4.14,
"Controlling Person" means any person or entity which, either directly or
indirectly, or acting in concert with one or more other persons or entities
owns, controls or holds with power to vote, or holds proxies representing ten
percent or more of the outstanding common stock or equity securities.
4.15 LIMITED REPRESENTATIONS AND WARRANTIES. Except for the
representations and warranties of the Sunrise expressly set forth in Section 3,
K2 has not relied upon any representation and warranty made by or on behalf of
Sunrise in making its determination to enter into this Agreement and consummate
the transactions contemplated by this Agreement.
4.16 DISCLOSURE. No representation or warranty made by K2
shareholder contained in this Agreement, and no statement contained in the
Schedules delivered by K2 hereunder, contains any untrue statement of a material
fact or omits any material fact necessary in order to make a statement herein or
therein, in light of the circumstances under which it is made, not misleading.
4.17 REAL PROPERTY. K2 does not own or lease, directly or
indirectly, any real property.
4.18 ENVIRONMENTAL MATTERS. K2 does not have any financial
liability under any environmental laws.
4.19 PERSONAL PROPERTY. K2 does not own any personal property the
current fair market value of which is more than $1,000.
4.20 INTELLECTUAL PROPERTY. K2 does not own or lease, directly or
indirectly, any Intellectual Property. "Intellectual Property", for purposes of
this agreement, shall mean: patents, patent applications, trademarks, trademark
registrations, applications for trademark registration, trade names, service
marks, registered Internet domain names, licenses and other agreements with
respect to any of the foregoing to which K2 is licensor or licensee. In
addition, there are no pending or, to such Warranting Shareholder's knowledge,
threatened, claims against K2 by any person as to any of the Intellectual
Property, or their use, or claims of infringement by K2 on the rights of any
person and no valid basis exists for any such claims.
4.21 INSURANCE. K2 does not own, directly or indirectly, any
insurance policies with respect to the business and assets of K2.
4.22 POWERS OF ATTORNEY. K2 has not issued any powers of attorney
to any other person except for such powers of attorney as are granted in
connection with filings required under securities laws.
4.23 BANK ACCOUNTS. Schedule 4.22 is a true and complete list of
all bank accounts, safe deposit boxes and lock boxes of K2, including, with
respect to each such account and lock box: (a) identification of all authorized
signatories; (b) identification of the business purpose of such account or lock
box, including identification of any accounts or lock boxes representing
escrow funds or otherwise subject to restriction; and (c) identification of the
amount on deposit on the date indicated.
4.24 PRODUCT CLAIMS. No product or service liability claim is
pending against K2 or against any other party with respect to the products or
services of K2.
4.25 CURRENT ASSETS OF K2 SHALL BE USED TO SATISFY CURRENT
LIABILITIES. Prior to or simultaneously with the Closing, (i) the current assets
of K2 as disclosed in the unaudited financial statements for June 30, 2004,
attached hereto as Schedule 4.25 (the "June 30, 2004 FS") shall be used to
satisfy all current liabilities of K2 as disclosed in the June 30, 2004 FS and
(ii) K2 shall have no liabilities, except for the Office Lease Liability as
described on Schedule 4.25.
5. COVENANTS OF THE PARTIES.
5.1 CONDUCT OF THE BUSINESS OF K2. During the period from the date
of this Agreement to the Closing Date, K2 will conduct its business and engage
in transactions only in the ordinary course consistent with past practice.
During such period, K2 will use its best efforts to (a) preserve its business
organization intact, and (b) maintain its current status as a company whose
shares are traded on the Over The Counter Bulletin Board. In addition, without
limiting the generality of the foregoing, K2 agrees that from the date of this
Agreement to the Closing Date, except as otherwise consented to or approved by
Sunrise in writing (which consent or approval shall not be unreasonably
withheld, delayed or conditioned) or as permitted or required by this Agreement
or as required by law, K2 will not:
5.1.1 grant any severance or termination pay to or enter into
or amend any employment agreement with, or increase the amount of payments or
fees to, any of its employees, officers or directors other than salary increases
to employees consistent with past increases;
5.1.2 make any capital expenditures in excess of $1,000;
5.1.3 guarantee the obligations of any person;
5.1.4 acquire assets other than those necessary in the conduct
of its business in the ordinary course;
5.1.5 sell, transfer, assign, encumber or otherwise dispose of
assets with a value in excess of $1,000;
5.1.6 enter into or amend or terminate any long term (one year
or more) contract (including real property leases);
5.1.7 enter into any contract that calls for the payment by K2
of $1,000 or more, or enter into any amendment to any contract that increases
K2's obligation to pay any sum or sums by $1,000 or more, after the date of this
Agreement;
5.1.8 engage or participate in any material transaction or
incur or sustain any material obligation otherwise than in the ordinary course
of business;
5.1.9 contribute to any benefit plans on behalf of employees
or service providers of K2;
5.1.10 hire any full-time employees or enter into any
employment contracts that provide other than an "at will" employer-employee
relationship;
5.1.11 acquire any real property; or
5.1.12 agree to do any of the foregoing.
5.2 NO SOLICITATION. During the period beginning on the date of
this Agreement and ending on the Closing Date, neither K2 nor any of its
directors, officers, shareholders, representatives, agents or other persons
controlled by any of them, shall, directly or indirectly encourage or solicit,
or hold discussions or negotiations with, or provide any information to, any
persons, entity or group other than Sunrise concerning any merger, sale of
substantial assets not in the ordinary course of business, sale of shares of
capital stock or similar transactions involving K2. K2 will promptly communicate
to Sunrise the identity of any interested or inquiring party, all relevant
information surrounding the interest or inquiry, as well as the terms of any
proposal that K2 may receive in respect of any such transaction.
5.3 ACCESS TO PROPERTIES AND RECORDS; CONFIDENTIALITY.
5.3.1 ACCESS TO K2 RECORDS; CONFIDENTIALITY OF K2 RECORDS.
(a) K2 shall permit Sunrise and its representatives reasonable
access to its properties and shall disclose and make available to
Sunrise all books, papers and records relating to the assets, stock,
ownership, properties, obligations, operations and liabilities of K2,
including but not limited to, all books of account (including the
general ledger), tax records, minute books of directors and
stockholders meetings, organizational documents, bylaws, material
contracts and agreements, filings with any regulatory authority,
accountants work papers, litigation files, plans affecting employees,
and any other business activities or prospects in which Sunrise may
have a reasonable interest, in each case during normal business hours
and upon reasonable notice. K2 shall not be required to provide access
to or disclose information where such access or disclosure: (a) would
jeopardize the attorney-client privilege with respect to the
negotiation of the transactions contemplated herein or any other
similar transaction within the past year involving a merger of K2 or
sale of substantially all of its assets; or (b) would contravene any
law, rule, regulation, order, judgment, decree or binding agreement
entered into prior to the date of the Agreement. The parties will use
all reasonable efforts to make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the
preceding sentence apply.
(b) All information furnished by K2 to Sunrise or the
representatives or affiliates of Sunrise pursuant to, or in any
negotiation in connection with, this Agreement shall be treated as the
sole property of K2 until consummation of the Merger and, if the Merger
shall not occur, Sunrise and its affiliates, agents and advisors shall
upon written request return to K2 all documents or other materials
containing, reflecting, referring to
such information, and shall keep confidential all such information and
shall not disclose or use such information for competitive purposes.
The obligation to keep such information confidential shall not apply to
(a) any information which (i) Sunrise can establish by evidence was
already in its possession (subject to no obligation of confidentiality)
prior to the disclosure thereof to K2; (ii) was then generally known to
the public; (iii) becomes known to the public other than as a result of
actions by Sunrise or by the directors, officers, employees, agents or
representatives of Sunrise; or (iv) was disclosed to Sunrise, or to the
directors, officers, employees or representatives of Sunrise, solely by
a third party not bound by any obligation of confidentiality; or (b)
disclosure in accordance with the federal securities laws, a federal
banking laws, or pursuant to an order of a court or agency of competent
jurisdiction.
5.3.1 ACCESS TO SUNRISE RECORDS; CONFIDENTIALITY OF SUNRISE
RECORDS.
(a) Sunrise shall permit K2 and its representatives reasonable
access to its properties and shall disclose and make available to K2
all books, papers and records relating to the assets, stock, ownership,
properties, obligations, operations and liabilities of Sunrise,
including but not limited to, all books of account (including the
general ledger), tax records, minute books of directors and
stockholders meetings, organizational documents, bylaws, material
contracts and agreements, filings with any regulatory authority,
accountants work papers, litigation files, plans affecting employees,
and any other business activities or prospects in which K2 may have a
reasonable interest, in each case during normal business hours and upon
reasonable notice. Sunrise shall not be required to provide access to
or disclose information where such access or disclosure: (a) would
jeopardize the attorney-client privilege with respect to the
negotiation of the transactions contemplated herein or any other
similar transaction within the past year involving a merger of Sunrise
or sale of substantially all of its assets; or (b) would contravene any
law, rule, regulation, order, judgment, decree or binding agreement
entered into prior to the date of the Agreement. The parties will use
all reasonable efforts to make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the
preceding sentence apply.
(b) All information furnished by Sunrise to K2 or the
representatives or affiliates of Sunrise pursuant to, or in any
negotiation in connection with, this Agreement shall be treated as the
sole property of Sunrise until consummation of the Merger and, if the
Merger shall not occur, K2 and its affiliates, agents and advisors
shall upon written request return to Sunrise all documents or other
materials containing, reflecting, referring to such information, and
shall keep confidential all such information and shall not disclose or
use such information for competitive purposes. The obligation to keep
such information confidential shall not apply to (a) any information
which (i) K2 can establish by evidence was already in its possession
(subject to no obligation of confidentiality) prior to the disclosure
thereof to Sunrise; (ii) was then generally known to the public; (iii)
becomes known to the public other than as a result of actions by K2 or
by the directors, officers, employees, agents or representatives of K2;
or (iv) was disclosed to K2, or to the directors, officers, employees
or representatives of K2, solely by a third party not bound by any
obligation of confidentiality; or (b) disclosure in accordance with the
federal securities laws, a federal banking laws, or pursuant to an
order of a court or agency of competent jurisdiction.
5.4 REGULATORY MATTERS.
5.4.1 The parties will cooperate with each other and use all
reasonable efforts to prepare all necessary documentation, to effect all
necessary filings and to obtain all necessary permits, consents, approvals, and
authorizations of all third parties and governmental bodies necessary to
consummate the transactions contemplated by this Agreement including, without
limitation, those that may be required from the SEC, other regulatory
authorities, or K2's shareholders. K2 and Sunrise shall each have the right to
review reasonably in advance all information relating to K2 or Sunrise, as the
case may be, and any of their respective subsidiaries, together with any other
information reasonably requested, which appears in any filing made with or
written material submitted to any governmental body in connection with the
transactions contemplated by this Agreement. Sunrise shall bear all expenses
associated with SEC filings.
5.4.2 K2 and Sunrise will promptly furnish each other with
copies of written communications received by K2 and Sunrise or any of their
respective subsidiaries from, or delivered by any of the foregoing to, any
governmental body in respect of the transactions contemplated by this Agreement.
5.5 FURTHER ASSURANCES. Subject to the terms and conditions of
this Agreement, each of the parties agrees to use all commercially reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement.
5.6 PUBLIC ANNOUNCEMENTS. Prior to the Closing, no party will
issue or distribute any information to its shareholders or employees, any news
releases or any other public information disclosures with respect to this
Agreement or any of the transactions contemplated by this Agreement without the
consent of the other parties or their designated representative, except as may
be otherwise required by law.
5.7 POST-CLOSING COVENANTS.
5.7.1 CABLE COMPANY ACQUISITIONS. After the Effective Time, K2
shall use its reasonable business efforts to consummate the acquisitions of the
stock or assets of certain cable television companies, with the shareholders of
such companies (in the case of stock acquisitions) or the companies (in the case
of asset acquisitions) (such shareholders and companies, the "Cable Acquisition
Shareholders") to receive in consideration therefore such shares of K2 stock as
K2 may determine.
5.7.2 RECAPITALIZATION OF K2. It is anticipated that the
holders of K2's common stock will, after the Effective Time, on one or more
occasions, vote to amend, and will amend, K2's certificate of incorporation to
(a) increase the authorized capital stock of K2 sufficiently
to permit the conversion of the K2 Preferred, which they receive in
conjunction with the Merger, into shares of K2 common stock;
(b) adjust the numbers of shares of K2 common stock
outstanding as described in Section 5.7.3 below; and
(c) take such other actions with respect to amending the K2
certificate of incorporation as may be necessary to effect the
post-Effective Time capital structure contemplated herein,
(such actions together, the "Recapitalization").
5.7.3 ADJUSTMENT OF EXISTING K2 SHAREHOLDERS' SHARES. As a
condition to Closing, the current shareholders of Sunrise shall have entered
into the Agreement to Amend Capital Structure, in the form attached as Exhibit
B, under which the holders of a sufficient number of shares of K2 stock shall
agree to amend K2's certificate of incorporation such that, as provided therein,
not later than January 22, 2004, the number of shares of presently outstanding
K2 common stock presently held by the K2 shareholders shall be adjusted such
that the adjusted number of shares will comprise 2.5% of 10,000,000 shares of
common stock, as provided in Schedule 3.5(b); provided, however, that the
numbers of shares allocated among the persons as set forth on allocations may be
adjusted as provided herein, as may be warranted in view of the manner in which
the cable television acquisitions and issuances of preferred stock to new
shareholders, as contemplated by the parties, may transpire. comprised of the
sum of (i) the total shares of K2 common stock outstanding at that time plus
(ii) the number of shares of common stock into which any outstanding shares of
K2 Preferred may be converted, excluding any shares of common stock underlying
options or issued upon exercise of any options. However, the 2.5% will be
adjusted upward by 1.0%, to a total of 3.5%, if, by December 31, 2004 (the
"Valuation Date"), a sufficient amount of funds have not been closed in
connection with the Equity Financing (as defined in Section 7.6), such that the
Minimum Valuation, as defined below, shall be at least $533,000.
The "Minimum Valuation" shall be equal to (D / E) x 2.5%, where D is the total
dollar amount of the equity financing closed, with such amount, less selling
expenses, made available to K2, by the Valuation Date, and E is the percentage
which the number of shares sold in the Equity Financing as of the Valuation Date
is of the 10,000,000 total shares to be outstanding on or about the Valuation
Date.
5.8 APPROVAL OF MERGER BY SUNRISE SHAREHOLDERS. The Class B
Holders of Sunrise, as a condition to receiving such stock, shall approve of the
Merger, thus relinquishing any appraisal rights under Delaware law. The Class A
Holders, concurrently with the execution hereof, shall have executed a consent
to the Merger, as set forth in the Agreement to Amend Capital Structure,
likewise waiving any appraisal rights under Delaware law, as set forth in the
Agreement to Amend Capital Structure.
6. CONDITIONS PRECEDENT TO SUNRISE'S OBLIGATIONS.
The obligations of Sunrise to consummate the transactions contemplated
by this Agreement are subject to satisfaction of the following conditions at or
before the Closing Date and may be waived only in writing by Sunrise.
6.1 K2'S COVENANTS, REPRESENTATIONS AND WARRANTIES. All the
covenants, terms and conditions of the Agreement to be complied with or
performed by K2 at or before the Closing Date shall have been complied with and
performed in all respects. The representations and warranties made by K2 in this
Agreement shall be complete and correct at and as of the Closing Date with the
same force and effect as though such representations and warranties had been
made at and as of the Closing Date.
6.2 DELIVERY OF DOCUMENTS BY K2. K2 shall have duly executed and
delivered, or caused to be executed and delivered the K2 Closing Documents.
6.3 OTHER APPROVALS. All authorizations, consents, orders or
approvals of any United States federal or state governmental agency necessary
for the consummation of the Merger or the transactions contemplated by this
Agreement (other than such actions, approvals of filings which, pursuant to the
terms of this Agreement, are to take place on or after the Closing) shall have
been filed, occurred or been obtained.
6.4 NO LITIGATION. No administrative investigation, action, suit
or proceeding seeking to enjoin the consummation of the transactions
contemplated by this Agreement shall be pending or threatened.
6.5 NO CURRENT LIABILITIES. K2 shall have no current liabilities.
6.6 ABSENCE OF MATERIAL CHANGE. There shall have been no change in
the business, operations, financial condition or liabilities of K2 as stated in
the Form 10-QSB filed by K2 on May 20, 2004 for the quarter ending March 31,
2004 with the SEC that has or can reasonably be expected to result in a Material
Adverse Effect on K2.
6.7 FINANCIAL STATEMENTS. There shall have been no material change
in the financial condition of K2 from that represented in the unaudited
financial statements as of June 30, 2004 attached hereto as Schedule 4.25.
6.8 LEGAL OPINION. The Legal Opinion shall have been delivered to
Sunrise.
6.9 CERTIFICATES OF GOOD STANDING. A certificate issued by the
Delaware Secretary of State indicating that K2 is qualified and in good standing
within such jurisdiction shall have been delivered to Sunrise.
6.10 DUE DILIGENCE AND COUNSEL'S SATISFACTION. Sunrise shall have
completed its due diligence of K2 to Sunrise's satisfaction. Sunrise's
conditions to closing shall have been satisfied, and the form and substance of
the Merger shall be, reasonably acceptable to Sunrise's counsel.
6.11 REGISTRATION OF K2 CAPITAL STOCK. Such registration of K2's
capital stock as shall be necessary in order to consummate the Merger shall have
been completed under the Exchange Act, with the registration statement having
been declared effective by the SEC.
7. CONDITIONS PRECEDENT TO K2'S OBLIGATIONS.
The obligations of K2 to consummate the transactions contemplated by
this Agreement are subject to satisfaction of the following conditions at or
before the Closing Date and may be waived only in writing by K2.
7.1 SUNRISE'S COVENANTS, REPRESENTATIONS AND WARRANTIES. All the
covenants, terms and conditions of this Agreement to be complied with or
performed by Sunrise on or before the Closing Date shall have been complied with
and performed in all respects. The representations and warranties made by
Sunrise in this Agreement shall be complete and correct at and as of the Closing
Date with the same force and effect as though such representations and
warranties had been made at and as of the Closing Date.
7.2 DELIVERY OF DOCUMENTS BY SUNRISE. Sunrise shall have duly
executed and delivered, or caused to be executed and delivered, to K2, or at its
direction, this Agreement, the Sunrise Shares and the Sunrise Closing Documents.
7.3 OTHER APPROVALS. All authorizations, consents, orders or
approvals of any United States federal or state governmental agency necessary
for the consummation of the Merger or the transactions contemplated by this
Agreement (other than such actions, approvals or filings which, pursuant to the
terms of this Agreement, are to take place on or after the Closing) shall have
been filed, occurred or been obtained.
7.4 SUNRISE SHAREHOLDER APPROVAL. This Agreement shall have been
approved and adopted by the affirmative votes of that amount of Sunrise's
outstanding capital stock necessary for the consummation of the Merger pursuant
to Delaware law.
7.5 NO LITIGATION. No administrative investigation, action, suit
or proceeding seeking to enjoin the consummation of the transactions
contemplated by this Agreement shall be pending or threatened.
7.6 FINANCING COMMITMENT. Sunrise shall have commenced a private
placement of K2 stock (the "Equity Financing"), subject to the commitment of a
reputable investment banking firm to act as placement agents on a best efforts
basis, to raise a maximum of at least $5,000,000 and a minimum of not less than
$3,000,000.
7.7 AGREEMENT TO AMEND CAPITAL STRUCTURE. The holders of a
sufficient number of shares of Sunrise common stock shall have entered into the
Agreement to Amend Capital Structure as provided in Section 5.7.3.
7.8 REGISTRATION OF K2 CAPITAL STOCK. Such registration of K2's
capital stock as shall be necessary in order to consummate the Merger shall have
been completed under the Exchange Act, with the registration statement having
been declared effective by the SEC.
8. TERMINATION
8.1 TERMINATION OF AGREEMENT. Anything contained in this Agreement
to the contrary notwithstanding, the Agreement may be terminated and abandoned
at any time (whether before or after the approval and adoption thereof by the
shareholders of Sunrise) prior to the Effective Time:
8.1.1 By mutual consent of K2 and Sunrise;
8.1.2 By Sunrise if any condition set forth in Section 6 has
not been met and has not been waived;
8.1.3 By K2 if any condition set forth in Section 7 has not
been met and has not been waived;
8.1.4 By K2 or Sunrise, if any suit, action or other
proceeding shall be pending or threatened by the federal or a state government
before any court or governmental agency, in which it is sought to restrain,
prohibit or otherwise affect the consummation of the transactions contemplated
hereby;
8.1.5 By Sunrise if there is discovered any material error,
misstatement or omission in the representations and warranties of K2 and
Acquisition;
8.1.6 By K2 if there is discovered any material error,
misstatement or omission in the representations and warranties of Sunrise; and
8.1.7 by either K2 or Sunrise if the Effective Time shall have
not occurred by December 31, 2004; provided, however, such termination shall not
be available to any party whose failure to fulfill any obligation of this
Agreement has been the cause of, or resulted in, the failure of the Closing to
have been effected on or prior to such date.
8.2 Any of the terms or conditions of this Agreement may be waived
at any time by the party which is entitled to the benefit thereof, by action
taken by its Board of Directors; provided, however, that such action shall be
taken only if, in the judgment of the Board of Directors taking the action, such
waiver will not have a materially adverse effect on the benefits intended under
this Agreement to the party waiving such term or condition.
9 MISCELLANEOUS.
9.1 TAX TREATMENT BY THE PARTIES. Unless otherwise required by
law, the parties shall treat the Merger as a reorganization under Section
368(a)(2)(E) of the Code for all tax reporting purposes; furthermore, the
parties shall not take, and have not taken, any action that is inconsistent with
reorganization treatment under Section 368(a)(2)(E) of the Code.
9.2 NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer
any rights or remedies upon any person or entity other than the parties and
their respective successors and assigns.
9.3 SUCCESSORS AND ASSIGNS. No party may assign either this
Agreement or any of its rights, interests, or obligations under this Agreement
without the prior written consent of all other parties. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of the
parties and their respective permitted successors and assigns.
9.4 NOTICES. All notices, requests, demands, claims, consents and
other communications required or permitted under this Agreement shall be in
writing. Any notice, request, demand, claim, communication or consent under this
Agreement shall be deemed duly given if (and shall be effective two business
days after) it is sent by certified mail, return receipt requested, postage
prepaid, and addressed to the intended recipient as set forth below:
If to Sunrise: SunriseUSA, Inc.
00000 Xxxx 000xx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, CEO
With a copy (which shall not Xxxxx & Xxxxxx
constitute notice) to: Attorneys at Law
World Trade Center
0000 Xxxxxxxx, Xxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxx
If to K2 or Acquisition: K2 Digital, Inc
c/x Xxxxxx & Amon, LLP
000 Xxxxxxxxx Xxxxxx
Xxxxx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxx
9.5 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Delaware without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Delaware.
9.6 AMENDMENTS AND WAIVERS. This Agreement may be amended or
waived only in a writing signed by the party against which enforcement of the
amendment or waiver is sought.
9.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties set forth in Sections 3 and 4 of this Agreement
shall survive the Closing and continue in full force and effect for a period of
one year after the Closing.
9.8 CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
9.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same document. This Agreement may be
executed by facsimile.
9.10 ENTIRE AGREEMENT. This Agreement (including the Schedules
referred to in and/or attached to this Agreement) constitutes the entire
agreement among the parties and supersedes any prior understandings, agreements,
or representations by or among the parties, written or oral to the extent they
relate in any way to the subject matter of this Agreement.
9.11 ARBITRATION. Any controversies or claims arising out of or
relating to this Agreement shall be fully and finally settled by arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association (the "AAA Rules"), conducted by three arbitrators (one to be chosen
by K2, one to be chosen by Sunrise, and the third to be chosen by the first two
arbitrators, or otherwise chosen in accordance with the AAA Rules) in Denver,
Colorado, except that the parties shall have any right to discovery as would be
permitted by the Federal Rules of Civil Procedure for a period of 90 days
following the commencement of such arbitration, and the arbitrator shall resolve
any dispute which arises in connection with such discovery. The prevailing party
or parties, as determined by the arbitrators, shall be entitled to costs,
expenses and attorneys' fees from the non-prevailing party or parties, and
judgment upon the award rendered by the arbitrator may be entered in any court
of competent jurisdiction.
9.15 COSTS AND EXPENSES OF TRANSACTION.
9.15.1 Sunrise has previously advanced $14,000 to K2, and
concurrently herewith, has paid an additional $11,000. The parties agree that
this sum of $25,000 constitutes a deposit paid to K2 in consideration of the
execution of this Agreement and is non-refundable.
9.15.2 Sunrise shall be responsible for payment of all
expenses associated with this transaction, including the legal fees and expenses
not to exceed $25,000, with all such expenses to be itemized by Xxxxxx & Amon
and any expenses, except for legal fees and costs, of over $500 to be approved
in advance, including without limitation accounting, SEC and Blue Sky filing
expenses and costs. K2 acknowledges the receipt prior to the date hereof of
$14,000 to be applied to the payment of such expenses.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed as of the date first listed above.
K2 DIGITAL, INC. SUNRISEUSA, INC.
By: /s/ Xxxx Xxxxx By: /s/ Xxxxxx X. Xxxxxx
--------------------------------- -----------------------------------
Xxxx Xxxxx, President Xxxxxx X. Xxxxxx, Chairman and CEO
K2 ACQUISITION, INC.
By: /s/ Xxxx Xxxxx
---------------------------------
Name: Xxxx Xxxxx
and Title: President
