Form 8-K
Exhibit 10.3
Buyers United, Inc., File No. 0-26917
RECONCILLIATION AND RELEASE AGREEMENT
THIS RECONCILLIATION AND RELEASE AGREEMENT is entered into this 9th day of
March 2004 by and between
Buyers United Inc., a Delaware corporation ("Buyers")
And
Counsel Corporation, an Ontario corporation
Counsel Communications LLC, (formerly known as Counsel
Springwell Communications LLC) a Delaware limited liability
company
I-Link Incorporated, (now known as Acceris Communications Inc.)
a Florida corporation ("I-Link")
I-Link Communications, Inc., a Utah corporation ("ILC")
(collectively the "Counsel Group")
R E C I T A L S
WHEREAS, Buyers, I-Link and ILC entered into an Asset Purchase Agreement
dated December 6, 2002 (the "Asset Purchase Agreement") pursuant to which Buyers
purchased certain assets of I-Link and ILC, and Software License Agreement dated
December 6, 2002 ("License Agreement") pursuant to which Buyers acquired a
paid-up, non-exclusive, perpetual, non-transferable, worldwide license to make,
have made, and use the intellectual property set forth therein.
WHEREAS, Buyers, I-Link, and ILC entered into the Closing Memorandum dated
April 30, 2003 ("Closing Memorandum") providing for the closing of the
transactions contemplated by the Asset Purchase Agreement and containing
additional terms relating to the transition of the assets acquired by Buyers and
resolution of open accounts;
WHEREAS, Buyers, I-Link, and ILC entered into the Escrow Agreement dated
April 30, 2003 ("I-Link Escrow Agreement") pursuant to Section 8.1 of the Asset
Purchase Agreement that provides for the escrow of 25,000 shares of Series B
Preferred Stock for the satisfaction of indemnification claims of Buyers;
WHEREAS, Buyers, I-Link, and ILC desire to resolve the final outstanding
accounts and offsets arising from the transition of the assets acquired under
the Asset Purchase Agreement to Buyers, Buyers and the Counsel Group desire to
release each other from any further claims and effect a release of the I-Link
Escrow Agreement, and the parties have reached additional agreements regarding
the stock ownership of I-Link in Buyers;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
1. Reconciliation of Accounts.
(a) I-Link acknowledges that Buyers has paid and reimbursed to ILC the rent
deposit for the office space located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇.
(b) Within five days following the date of this Agreement Buyers will pay
to ILC $3,600 cash in reimbursement for the credit amounts issued on the
November and December 2002 invoices paid by I-Link to Level 3 Communications.
(c) I-Link will pursue resolution of the dispute with Compaq under Lease
Equipment Schedule 546328, which is part of the Master Lease Agreement No.
537982. Upon achieving an agreement for resolving this dispute satisfactory to
I-Link, I-Link will send a written notice to Buyers containing a copy of the
letter, agreement, or other document between I-Link and Compaq that memorializes
the terms of the agreement ("Compaq Agreement"). Within five days following the
receipt of the notice, Buyers shall pay to I-Link one-half of the settlement
amount set forth in the Compaq Agreement in cash; provided, however, that the
total amount paid by Buyers to I-Link shall not exceed $47,132.13.
(d) All other accounts, charges, and offsets (other than those set forth
above), including, but not limited to, those items identified in the letter
dated October 24, 2003, from ▇▇▇▇ ▇▇▇▇▇▇ to ▇▇▇ ▇▇▇▇▇, shall be satisfied by the
payment from Buyers to I-Link of $87,828 in cash. Payment of this amount shall
be paid in cash by Buyers to I-Link by March 31, 2004.
(e) Concurrently with the execution of this Agreement, I-Link is delivering
to Buyers three original copies of a duly executed Consent to Assignment
(attached hereto) that authorizes and effects transfer of $110,000 of deposits
currently held by Level 3 Communications to and for the account of Buyers, and
I-Link shall thereby acknowledge that it has no further claim to or interest
therein.
2. Series B Preferred Stock.
(a) Upon the execution and delivery of this Agreement the I-Link Escrow
Agreement shall terminate, and Buyers shall issue instructions to the escrow
agent under those agreements to release and deliver out of escrow all shares of
Series B Preferred Stock held in escrow under the I-Link Escrow Agreement.
(b) Concurrently with the execution of this Agreement by the parties,
I-Link is tendering to Buyers for conversion to common stock of Buyers all
shares of Series B Preferred Stock registered in the name of I-Link, and Buyers
agrees and acknowledges that effective on the date of such conversion it is
obligated to pay to I-Link all dividends accrued through that date in accordance
with the terms of the Series B Convertible Preferred Stock. By virtue of such
conversion, Buyers shall issue and deliver to I-Link a certificate for 750,000
shares of common stock, and shall issue and deliver the remaining 750,000 shares
of common stock issuable on conversion in accordance with paragraph 2(c), below.
(c) Concurrently with the execution and delivery of this Agreement by the
parties, I-Link is signing and delivering the Securities Purchase Agreement
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dated March 10, 2004, to which Buyers, I-Link, and the Investors named therein
are all parties (the "Purchase Agreement"). Pursuant to the terms of the
Purchase Agreement, I-Link authorizes and instructs Buyers and its transfer
agent to issue and deliver 750,000 shares of common stock issuable on conversion
of I-Link's Series B Preferred Stock (the "Selling Stockholder Shares") to the
Investors pursuant to the sale of such shares to the Investors as provided
therein, and to that end I-link is delivering to Buyers with this Agreement a
duly executed stock power, with Medallion signature guarantee, for purposes of
effecting such sale. Buyers covenants and agrees that it will not authorize or
permit the distribution of any of the proceeds from the sale of the Selling
Stockholder Shares nor the delivery of any of the Selling Stockholder Shares to
the purchasers unless the purchase price for the Selling Stockholder Shares
(less the amount of any sales commission payable by I-link on sale of the
Selling Stockholder Shares) is sent from escrow by wire transfer to an account
designated by I-Link at the same time any funds are sent from escrow to the
Company from the sale of any of its shares of common stock to the Investors.
I-Link acknowledges and agrees that it is obligated to pay to ▇▇▇▇ Capital
Partners, LLC a sales commission equal to 5.5% of the gross proceeds derived
from the sale of the Selling Stockholder Shares.
(d) [Reserved]
(e) With respect to the 750,000 shares of common stock issued to I-Link
under paragraph 2(b), above, and 58,546 shares of common stock issued to I-Link
as dividends on its shares of Series B Preferred Stock (collectively the
"Registrable Shares"), Buyers grants to I-Link the right to register the
Registrable Securities for sale under the Securities Act of 1933 on the terms
set forth in the Registration Rights Agreement attached as Exhibit A to the
Purchase Agreement (the "Registration Agreement"). Concurrently with the
execution and delivery of this Agreement by the parties, I-Link is signing and
delivering to Buyers the Registration Agreement, and Buyers will sign and
deliver to I-Link, and will be bound by the terms of, the Registration Agreement
on the Closing Date under the Purchase Agreement at the same time Buyers
delivers the Registration Agreement to each of the Investors that are a party to
the Purchase Agreement.
(f) All shares of Buyers common stock issued under this Agreement currently
are "restricted securities" with the meaning of Rule 144 adopted under the
Securities Act of 1933. Buyers acknowledges that the Rule 144 restriction period
for the common stock issued under this Agreement began on May 1, 2003. I-Link
represents that it is an accredited investor within the meaning of Rule
501(a)(3) of Regulation D promulgated under the Securities Act of 1933, and is
acquiring Buyers common stock for its own account for investment purposes only
and not with a view to or for sale in connection with the distribution thereof.
3. Mutual Release.
(a) In exchange for the consideration stated herein, that being good and
valuable consideration, the Counsel Group, jointly and severally, and on behalf
of each of their respective affiliates, successors, and assigns, agrees to fully
and forever release and discharge Buyers and its subsidiaries, affiliates,
divisions, predecessors, successors, assigns and all former, current or future
officers, directors, agents, employees, managers, or shareholders, and each of
them, from any and all claims, charges, demands, actions, suits, causes of
action, liabilities, damages, assessments, or penalties of whatsoever kind or
nature, in tort, contract, law, equity or by statute or otherwise, including,
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but not limited to, claims arising out of or in any way related to the Asset
Purchase Agreement, the Closing Memorandum, the I-Link Escrow Agreement, and the
Counsel Escrow Agreement. Notwithstanding the foregoing, the above release and
waiver shall not apply to any rights, obligations, or claims arising under this
Agreement, Section 5.1 or 5.2 of the Asset Purchase Agreement, or the License
Agreement.
(b) In exchange for the consideration stated herein, that being good and
valuable consideration, Buyers, and each of its subsidiaries, affiliates,
successors, and assigns, agrees to fully and forever release and discharge each
of the Counsel Group and their respective subsidiaries, affiliates, divisions,
predecessors, successors, assigns and all former, current or future officers,
directors, agents, employees, managers, or shareholders, and each of them, from
any and all claims, charges, demands, actions, suits, causes of action,
liabilities, damages, assessments, or penalties of whatsoever kind or nature, in
tort, contract, law, equity or by statute or otherwise, including, but not
limited to, claims arising out of or in any way related to the Asset Purchase
Agreement, the Closing Memorandum, the I-Link Escrow Agreement, and the Counsel
Escrow Agreement. Notwithstanding the foregoing, the above release and waiver
shall not apply to any rights, obligations, or claims arising under this
Agreement or the License Agreement.
4. Entire Agreement; Amendments and Waivers. This Agreement, including the
exhibit hereto, represents the entire understanding and agreement between the
parties hereto with respect to the subject matter hereof and can be amended,
supplemented or changed only by written instrument signed by the parties hereto.
Except to the extent expressly set forth herein, the Asset Purchase Agreement
shall continue in full force and effect.
5. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of Utah applicable to contracts made and
performed in such state and without regard to conflicts of law doctrines.
6. Severability. If any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, it being intended that all
of the rights and privileges of the parties hereto shall be enforceable to the
fullest extent permitted by law.
7. Binding Effect; Assignment. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and permitted
assigns.
8. Notice. Any notice required or permitted under this Agreement shall be in
writing and shall be deemed given: (a) on the date delivered in person; (b) on
the date transmitted by telex, telefax or telecommunications mechanism, provided
that any notice so given is also mailed as provided in clause (d); (c) the
business day following the date deposited with a courier service that guarantees
next day delivery, or (d) three days following the date sent by registered or
certified mail, return receipt requested (postage prepaid). Any notice to Buyers
shall be sufficiently given if sent to it at its address or fax number set forth
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on the signature page to this Agreement, and any notice to one or more members
of the Counsel Group shall be sufficiently given if sent to the Counsel Group
Representative at its address or fax number set forth on the signature page to
this Agreement.
9. Counterparts. This Agreement may be executed in any number of counterparts
and by the parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
10. No offsets. All amounts required to be paid in cash hereunder by Buyers
shall be paid in full without offset or deduction.
IN WITNESS WHEREOF, the parties hereto have executed, or have caused this
Indemnification Agreement to be executed by their respective authorized
representatives, as of the date first written above.
BUYERS UNITED INC.
Address:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Fax No. 866/▇▇▇-▇▇▇▇
Title: Chief Executive Officer Designated person:
▇▇▇▇ ▇▇▇▇▇▇, President
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THE COUNSEL GROUP
COUNSEL CORPORATION, an Ontario corporation
Address:
▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇ Fax No. ▇▇▇-▇▇▇-▇▇▇▇
Title: Chairman & CEO Designated person: ▇▇▇▇▇ ▇▇▇▇▇▇
COUNSEL COMMUNICATIONS LLC
a Delaware limited liability company
Address:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇ Designated person: ▇▇▇▇▇
▇▇▇▇▇▇
Title: President
ACCERIS COMMUNICATIONS INC. (formerly I-Link Incorporated),
a Florida corporation
Address:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇ Designated person: ▇▇▇▇▇
▇▇▇▇▇▇
Title: Chairman & CEO
I-LINK COMMUNICATIONS, INC.,
a Utah corporation
Address:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇ Designated person: ▇▇▇▇▇
▇▇▇▇▇▇
Title: Chief Executive Officer
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CONSENT TO ASSIGNMENT
THIS CONSENT TO ASSIGNMENT (this "Consent") is entered into as of the 9th
day of March, 2004 (the "Effective Date"), by and among Level 3 Communications,
LLC, a Delaware limited liability company ("Level 3"), I-Link Incorporated, a
Florida corporation and I-Link Communications, Inc., a Utah corporation
(collectively, "Assignor"), and Buyers United, Inc. a Delaware corporation
("Assignee").
RECITALS:
WHEREAS, ▇▇▇▇▇ ▇ and I-Link Communications, Inc. previously entered into a
Terms and Conditions For Delivery of Service, signed by I-Link Communications,
Inc. on March 2, 1999 and a Terms and Conditions For Delivery of Service (3
Voice), signed by I-Link Communications, Inc. on March 22, 2000 (collectively
the "Prior Agreements");
WHEREAS, I-Link Incorporated and Level 3 have entered into (i) that certain
Terms For Delivery of Service and related Addendum each dated as of August 7,
2001 (together, the "Terms") intending to replace the Prior Agreements and (ii)
various orders for ▇▇▇▇▇ ▇ provided services submitted under such Terms or under
the terms or the Prior Agreements; and
WHEREAS, Assignor desires to assign and Assignee desires to assume all
obligations and all of its rights, title and interest in, to and under the Terms
and the Customer Orders (relative only to the following accounts of Assignor:
account #41506 and account #838 (such accounts collectively referred to herein
as the "Applicable Customer Accounts")) to Assignee (the "Assignment"); and
WHEREAS, ▇▇▇▇▇ ▇ consents to the Assignment on the terms and conditions
hereof.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Incorporation of Recitals. The recitals set forth above shall be deemed to
be a part of this Consent and are incorporated herein.
2. Representations. Assignor and Assignee each represent and warrant to Level
3 that with respect to the Applicable Customer Accounts only (i) the Terms
and Customer Orders have been assigned (and liabilities assumed) as further
described in the attached fully executed copies of the ▇▇▇▇ of Sale,
Assignment and General Conveyance and related Assumption of Liabilities
each as between Assignor and Assignee and dated as of December 6, 2002.
Assignee represents and warrant to Level 3 that (i) Assignee has assumed
and agreed to comply with all the obligations of the Terms and Customer
Orders as further described in the attached fully executed copies of the
▇▇▇▇ of Sale, Assignment and General Conveyance and related Assumption of
Liabilities each as between Assignor and Assignee and dated as of December
6, 2002.
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3. Consent and Agreement. Level 3 hereby (x) consents to the Assignment by
Assignor to Assignee of Assignor's right, title and interest in, to and
under the Terms and the Customer Orders (with respect to the Applicable
Customer Accounts only) and the assumption and agreement by Assignee to
comply with all the obligations undertaken by Assignor thereunder and (y)
agrees that in conjunction with such assignment and assumption $110,000 of
the current deposit held by Level 3 as security for Assignor's account
shall be transferred as a deposit securing the account of Assignee (any and
all remaining amounts shall remain a deposit in favor of Assignor's
account). This Consent is made expressly contingent upon the closing of the
Assignment.
4. Amendment to Terms Not Needed. Assignor and Level 3 hereby acknowledge and
agree that by virtue of the Assignment the agreement to execute a guaranty
and amendment to the Terms described in that certain Settlement and Release
Agreement by and among Assignor, WorldXchange Corp. and Level 3 and dated
as of July 31, 2002 is no longer necessary and such requirement is deemed
satisfied.
5. Counterparts. This Consent may be executed in separate counterparts, each
of which when executed and delivered shall be an original, but all of which
counterparts shall together constitute the same instrument. Signatures
exchanged by facsimile are effective for all purposes hereunder to the same
extent as original signatures
6. Governing Law. This Consent shall be governed by and construed in
accordance with the laws of the State of Colorado, without reference to its
conflicts of laws principles.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Consent to be
executed as of the date first written above.
ASSIGNOR:
I-LINK INCORPORATED
By: _______________________________________
Name:
Title:
I-LINK COMMINUCATIONS, INC.
By: _______________________________________
Name:
Title:
ASSIGNEE:
BUYERS UNITED, INC.
By: _______________________________________
Name:
Title:
CONSENT GRANTED BY:
▇▇▇▇▇ ▇ COMMUNICATIONS, LLC
By: _______________________________________
Name:
Title:
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EXHIBIT A
[Attach fully executed copies of ▇▇▇▇ of Sale, Assignment and General Conveyance
and related Assumption of Liabilities dated as of December 6, 2002]
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