EXHIBIT 10.1
SHARE EXCHANGE AND PLAN OF MERGER
EXHIBIT 10.1
SHARE EXCHANGE AND PLAN OF MERGER
BY AND BETWEEN
Y-TEL INTERNATIONAL, INC.,
SUNRISE BROADBAND GROUP, INC.
SUNRISE TELEVISION NETWORKS, INC.,
and
SUNRISE ACQUISITIONS, INC.
October 1, 2006
TABLE OF CONTENTS
ARTICLE I Definitions...................................................................1
ARTICLE II Transactions; Terms of Merger; Manner of Converting Shares....................5
2.1 Merger........................................................................5
2.2 Time and Place of Closing.....................................................5
2.3 Effective Time................................................................5
2.4 Charter.......................................................................5
2.5 Bylaws........................................................................5
2.6 Directors and Officers........................................................5
2.7 Conversion of Shares..........................................................5
2.8 Exchange of Shares............................................................6
2.9 Rights of Former STN Stockholders.............................................6
2.10 Legending of Shares...........................................................7
2.11 Fractional Shares.............................................................7
2.12 Lost, Stolen or Destroyed Certificates........................................7
ARTICLE III Representations and Warranties of YTI AND PURCHASER.......................7
3.1 Organization; Standing and Power..............................................7
3.2 Authorization; Enforceability.................................................8
3.3 No Violation or Conflict......................................................8
3.4 Consents of Governmental Authorities and Others...............................8
3.5 Conduct of Business...........................................................8
3.6 Litigation....................................................................9
3.7 Brokers.......................................................................9
3.8 Compliance....................................................................9
3.9 Charter, Bylaws and Corporate Records........................................10
3.10 Subsidiaries and Investments.................................................10
3.11 Capitalization...............................................................10
3.12 Rights, Warrants, Options....................................................10
3.13 Commission Filings and Financial Statements..................................11
3.14 Absence of Undisclosed Liabilities...........................................11
3.15 Real Property................................................................11
3.16 List of Accounts and Proxies.................................................11
3.17 Personnel....................................................................11
3.18 Employment Agreements and Employee Benefit Plans.............................12
3.19 Tax Matters..................................................................12
3.20 Material Agreements..........................................................14
3.21 Guaranties...................................................................15
3.22 Absence of Certain Business Practices........................................15
3.23 Disclosure...................................................................15
ARTICLE IV Representations and Warranties of STN....................................15
4.1 Organization.................................................................15
4.2 Authorization; Enforceability................................................16
4.3 No Violation or Conflict.....................................................16
4.4 Consents of Governmental Authorities and Others..............................16
4.5 Brokers......................................................................16
4.6 Charter, Bylaws and Corporate Records........................................16
4.7 Subsidiaries and Investments.................................................16
4.8 Capitalization...............................................................17
4.9 Rights, Warrants, Options....................................................17
ARTICLE V Additional Agreements....................................................17
5.1 Survival of the Representations and Warranties...............................17
5.2 Investigation................................................................17
5.3 Indemnification..............................................................18
5.4 Indemnity Procedure..........................................................18
ARTICLE VI Closing; Deliveries; Conditions Precedent................................19
6.1 Closing; Effective Date......................................................19
6.2 Deliveries...................................................................19
6.3 Conditions Precedent to the Obligations of STN...............................21
6.4 Conditions Precedent to the Obligations of YTI...............................22
6.5 Best Efforts.................................................................22
6.6 Termination..................................................................22
ARTICLE VII Covenants................................................................23
7.1 General Confidentiality......................................................23
7.2 Continuing Obligations.......................................................24
7.3 Satisfaction of Certain Outstanding Payables.................................24
7.4 Tax Matters..................................................................24
ARTICLE VIII Miscellaneous............................................................25
8.1 Notices......................................................................25
8.2 Entire Agreement; Incorporation..............................................25
8.3 Binding Effect...............................................................25
8.4 Assignment...................................................................26
8.5 Waiver and Amendment.........................................................26
8.6 No Third Party Beneficiary...................................................26
8.7 Severability.................................................................26
8.8 Expenses.....................................................................26
8.9 Headings.....................................................................26
8.10 Other Remedies; Injunctive Relief............................................27
8.11 Counterparts.................................................................27
8.12 Remedies Exclusive...........................................................27
8.13 Jurisdiction and Venue.......................................................27
8.14 Participation of Parties.....................................................27
8.15 Further Assurances...........................................................28
8.16 Publicity....................................................................28
8.17................................................................................. 28
8.18 ................................................................................ 28
SHARE EXCHANGE AND PLAN OF MERGER
SHARE EXCHANGE AND PLAN OF MERGER (the "Agreement"), dated as of October 1,
2006, by and among SUNRISE BROADBAND GROUP, INC. ("SBG") SUNRISE TELEVISION
NETWORKS, INC., ("STN") a Colorado corporation; Y-TEL INTERNATIONAL, INC., a
Delaware corporation ("YTI"); and SUNRISE ACQUISITIONS, INC., a Colorado
corporation (the "Purchaser").
W I T N E S S E T H:
Preamble
The respective Boards of Directors of YTI, SBG and Purchaser and STN
are of the opinion that the transactions described herein are in the best
interests of the parties to this Agreement and their respective shareholders.
This Agreement provides for the acquisition of STN by YTI pursuant to the merger
of Purchaser with STN. At the effective time of such merger, the outstanding
shares of the capital stock of STN shall be converted into the right to receive
shares of YTI as set forth herein. As a result, the shareholder of STN, SBG,
shall become a shareholder of YTI and STN shall merge its business and
operations with the wholly owned subsidiary of YTI, the Purchaser. The
transactions described in this Agreement are subject to the satisfaction of
certain other conditions described in this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants, and agreements set forth herein, the
parties agree as follows:
ARTICLE I
Definitions
In addition to terms defined elsewhere in this Agreement, the following
terms when used in this Agreement shall have the meanings indicated below:
"Affiliate" shall mean with respect to a specified Person, any other
Person which, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with such Person, and
without limiting the generality of the foregoing, includes, with respect to a
Person (a) any other Person which beneficially owns or holds ten percent (10%)
or more of any Series of voting securities or other securities convertible into
voting securities of such Person or beneficially owns or holds ten percent (10%)
or more of any other equity interests in such Person, (b) any other Person with
respect to which such Person beneficially owns or holds ten percent (10%) or
more of any Series of voting securities or other securities convertible into
voting securities of such Person, or owns or holds ten percent (10%) or more of
the equity interests of the other Person, and (c) any director or senior officer
of such Person. For purposes of this definition, the term "control" (including,
with correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities or
by contract or otherwise.
"Agreement" shall mean this SHARE EXCHANGE AND PLAN OF MERGER together
with all exhibits and schedules referred to herein, which exhibits and schedules
are incorporated herein and made a part hereof.
"Certificates" shall have the meaning set forth in Section 2.8.
"Closing" shall have the meaning set forth in Section 2.2.
"Closing Date" shall mean the date that the Closing takes place.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the United States Securities and Exchange
Commission.
"Consideration Shares" shall have the meaning set forth in Section
2.7(c).
"Effective Time" shall have the meaning set forth in Section 2.3.
"Employee Benefit Plans" shall have the meaning set forth in Section
3.18.
"Environmental Laws" shall have the meaning set forth in Section 3.22.
"ERISA" shall have the meaning set forth in Section 3.18.
"Financial Statements of YTI" shall mean (i) the unaudited balance
sheet and the unaudited statements of income, cash flow and retained earnings of
YTI for the six (6) month period ended June 30, 2006, and (ii) the audited
balance sheet and the audited statements of income, cash flow and retained
earnings of YTI for the fiscal year ended December 31, 2005, including in each
such case any related notes, each prepared according to GAAP consistently
applied with prior periods, except as set forth on Schedule 3.13.
"GAAP" shall have the meaning set forth in Section 3.13.
"Guaranty" shall mean, as to any Person, all liabilities or obligations
of such Person, with respect to any indebtedness or other obligations of any
other Person, which have been guaranteed, directly or indirectly, in any manner
by such Person, through an agreement, contingent or otherwise, to purchase such
indebtedness or obligation, or to purchase or sell property or services,
primarily for the purpose of enabling the debtor to make payment of such
indebtedness or obligation or to guarantee the payment to the owner of such
indebtedness or obligation against loss, or to supply funds to or in any manner
invest in the debtor.
"Indemnified Party" shall have the meaning set forth in Section 5.4.
"Intellectual Property" shall mean the rights to any patent, trademark,
copyright, service ▇▇▇▇, invention, software, software code, trade secret,
technology, product, composition, formula, method or process.
"Investments" shall mean, with respect to any Person, all advances,
loans or extensions of credit to any other Person (except for extensions of
credit to customers in the ordinary course of business), all purchases or
commitments to purchase any stock, bonds, notes, debentures or other securities
of any other Person, and any other investment in any other Person, including
partnerships or joint ventures (whether by capital contribution or otherwise) or
other similar arrangement (whether written or oral) with any Person, including,
but not limited to, arrangements in which (i) the first Person shares profits
and losses of the other Person, (ii) any such other Person has the right to
obligate or bind the first Person to any third party, or (iii) the first Person
may be wholly or partially liable for the debts or obligations of such
partnership, joint venture or other entity.
"Knowledge" shall mean, in the case of any Person who is an individual,
knowledge that a reasonable individual under similar circumstances would have
after such investigation and inquiry as such reasonable individual would under
such similar circumstances make, and in the case of a Person other than an
individual, the knowledge that a senior officer or director of such Person, or
any other Person having responsibility for the particular subject matter at
issue of such Person, would have after such investigation and inquiry as such
senior officer, director or responsible Person would under such similar
circumstances make.
"Law" and "Laws" shall have the meaning set forth in Section 3.19.
"Liabilities" shall have the meaning set forth in Section 3.14.
"Litigation" shall have the meaning set forth in Section 3.6.
"Material Adverse Effect" shall mean any event or condition of any
character which has had or could reasonably be expected to have a material
adverse effect on the condition (financial or otherwise), results of operations,
assets, liabilities, properties, business or prospects of YTI or STN, as
applicable.
"Material YTI Agreements" shall have the meaning set forth in Section
3.20.
"Merger" shall have the meaning set forth in Section 2.1.
"Merger Consideration" shall have the meaning set forth in Section
2.7(c).
"Outstanding YTI Shares" shall have the meaning set forth in Section
3.11.
"Outstanding STN Shares" shall have the meaning set forth in Section
4.8.
"Periodic Reports" shall have the meaning set forth in Section 3.13.
"Person" shall mean any natural person, corporation, unincorporated
organization, partnership, association, limited liability company, joint stock
company, joint venture, trust or government, or any agency or political
subdivision of any government or any other entity.
"Purchaser" shall mean SUNRISE ACQUISITIONS, INC, a Colorado corpora-
tion
"Purchaser Documents" SUNRISE ACQUISITIONS, INC. shall have the meaning
set forth in Section 3.2.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"SBG" shall mean SUNRISE BROADBAND GROUP, INC., a Nevada corporation.
"STN" shall mean SUNRISE TELEVISION NETWORKS, INC. a Colorado corpora-
tion
"Subsidiary" of any Person shall mean any Person, whether or not
capitalized, in which such Person owns, directly or indirectly, an equity share
of more than fifty percent (50%), or which may effectively be controlled,
directly or indirectly, by such Person.
"Surviving Corporation" shall mean Purchaser as the surviving
corporation resulting from the Merger with Purchaser
"Tax" and "Taxes" shall have the meaning set forth in Section 3.19.
"Tax Returns" shall have the meaning set forth in Section 3.19.
"Transaction" shall have the meaning set forth in Section 2.1.
"YTI" shall mean Y-TEL INTERNATIONAL, INC., a Delaware corporation.
"YTI Shares" shall mean the shares of shares, $.0001 par value, of YTI,
as further described in Section 3.11.
The words "hereof," "herein" and "hereunder" and the words of similar
import shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. The terms defined in the singular shall have a
comparable meaning when used in the plural and vice versa.
ARTICLE II
Transactions; Terms of Merger; Manner of Converting Shares
2.1 Merger. Subject to the terms and conditions of this Agreement, at
the Effective Time, Purchaser shall merge with STN in accordance with the
provisions of the Laws of the State of Colorado and with the effect provided for
therein (the "Merger"). As a result of the Merger, the separate corporate
existence of Purchaser and STN shall cease and SUNRISE TELEVISION NETWORKS, INC.
shall be the Surviving Corporation resulting from the Merger and shall and
remain a wholly owned Subsidiary of YTI and shall continue to be governed by the
laws of the State of Colorado,. The Merger shall be consummated pursuant to the
terms of this Agreement, which has been approved and adopted by the respective
Boards of Directors of Purchaser and STN and, by YTI, as the sole shareholder of
Purchaser, and by the shareholders of STN. After merger SUNRISE TELEVISION
NETWORKS, Inc. (Purchaser) shall be a wholly-owned subsidiary of YTI.
2.2 Time and Place of Closing. The closing of the transactions
contemplated hereby (the "Closing") will take place at 10:00 A.M. on the date
that the Effective Time occurs or at such other time as the parties, acting
through their authorized officers, may mutually agree. The Closing shall be held
at the offices of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or at
such other location as may be mutually agreed upon by the parties. Closing will
occur through exchange of documents by Federal Express, disbursement of cash
delivery of certificates and filing of a Certificate of Merger in Colorado, with
Secretary of State.
2.3 Merger Effective Time. The Merger contemplated by this Agreement
shall become effective on the date and at the time the Certificate of Merger
reflecting the Merger shall become effective with the Secretary of State of the
State of Colorado (the "Effective Time"). The other transactions contemplated
herein shall be effective as soon as the consideration required hereby has been
delivered.
2.4 Charter. The Certificate of Incorporation of STN in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation until duly amended or repealed.
2.5 Bylaws. The Bylaws of STN in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation until duly
amended or repealed.
2.6 Directors and Officers. The officers of STN in office immediately
prior to the Effective Time, together with such additional Persons as may
thereafter be appointed, shall serve as the officers and directors of the
Surviving Corporation (Sunrise Television Networks, Inc.) from and after the
Effective Time in accordance with the Bylaws of the Surviving Corporation.
2.7 Conversion Shares. Subject to the provisions of this Article II, at
the Effective Time, by virtue of the Merger and without any action on the part
of YTI, STN or Purchaser or Shareholder or the shareholders of any of the
foregoing, the interests and shares of the constituent entities shall be
converted or exchanged as follows:
(a) Each share of capital stock of YTI issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding from
and after the Effective Time. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ shall
purchase for $100 and YTI shall issue 2,550,000 shares of Series A Preferred
Convertible Stock with a super majority common voting right convertible to
common on a post reverse split basis, according to the Designation of Rights &
Privileges for Series A Preferred subject to registration rights to ▇▇▇ ▇▇▇▇▇
and ▇▇▇▇▇▇ ▇▇▇▇▇▇, 1,800,000 shares of Series B Preferred Stock to a trustee for
shareholders of SURNRISE BROADBAND GROUP, INC. and 650,000 shares of Series C
Preferred Stock of YTI shall be sold and issued to ▇▇▇▇ ▇▇▇▇▇▇ in order to
effectuate the transactions contemplated herein.
(b) All of Purchaser's Shares issued and outstanding immediate
-ly prior to the Effective Time shall be converted into shares of the Surviving
Corporation, SUNRISE TELEVISION NETWORKS, INC., by virtue of the merger with
SUNRISE ACQUISITIONS, INC. (Purchaser).
(c) YTI and Purchaser hereby agree that at the time of the
Merger of STN and Purchaser, YTI shall issue 1,800,000 shares of Series B
Preferred Convertible Stock to SUNRISE BROADBAND GROUP, INC. in consideration of
the delivery of 100% of STN shares to Purchaser with the rights and privileges
for Series B Preferred Convertible Stock as agreed by the parties.
(d) 100% of STN's shares issued and outstanding immediately
prior to the Effective Time shall be exchanged for the right to receive the
shares of stock of YTI in the aggregate as set forth in (c) above, (the
"Exchange Ratio") (hereinafter such YTI shares shall be referred to as the
"Consideration Shares" or the "Merger Consideration"). The Consideration Shares
shall, be issued and delivered at closing, ratably based upon the shareholders
proportionate ownership of STN prior to the merger, to the shareholders of STN
in accordance with the terms hereof, and will be fully paid, validly issued and
non-assessable, but shall not be registered securities under the Securities Act
of 1933, as amended, (the "Securities Act") pursuant to a valid exemption
thereunder.
(e) YTI shall own, after completion of the transactions contem
-plated herein, 100% of the issued and outstanding shares of surviving corpora-
tion. (SUNRISE ACQUISITIONS, INC. or Purchaser) with which STN shall have
merged.
(f) Series B Preferred shares of YTI issued in exchange shall
be restricted and held in trust by an independent trustee pending Registration
on form SB-2 of the conversion shares of common for Series B Preferred, with the
Securities & Exchange Commission, after effectiveness of which the shares shall
be distributed pro rata to shareholders of record of Sunrise Broadband, Inc. as
of October 30, 2006, as a dividend.
2.8 Exchange of Shares. At the Closing, the shareholder of STN shall
surrender each certificate or certificates which represented STN's shares
immediately prior to the Effective Time (the "Certificates") and shall promptly
upon surrender thereof receive in exchange therefore the number of whole
Consideration Shares issuable in respect of all shares of STN's shares held by
such STN shareholder as set forth in 2.7 (d) above. YTI shall not be obligated
to deliver the consideration to which a STN shareholder is entitled as a result
of the Merger until such Person surrenders its Certificate or Certificates for
exchange as provided in this Section 2.8. Any other provision of this Agreement
notwithstanding, neither YTI nor the Surviving Corporation shall be liable to
any shareholder of STN for any amounts paid or property delivered in good faith
to a public official pursuant to any applicable abandoned property, escheat or
similar law.
2.9 Rights of Former STN Shareholders. At the Effective Time, the share
transfer books of STN shall be closed as to holders of STN Shares immediately
prior to the Effective Time and no transfer of STN Shares by any such holder
shall thereafter be made or recognized. Until surrendered for exchange in
accordance with the provisions of Section 2.8, each Certificate theretofore
representing shares of STN Shares shall from and after the Effective Time
represent for all purposes only the right to receive the consideration provided
in Section 2.7 (d) in exchange therefore. Whenever a dividend or other
distribution is declared by YTI on the YTI stock, the record date for which is
at or after the Effective Time, the declaration shall include dividends or other
distributions on all shares of YTI stock issuable pursuant to this Agreement,
but no dividend or other distribution payable to the holders of record of YTI
shares as of any time subsequent to the Effective Time shall be delivered to the
holder of any Certificate until such holder surrenders such Certificate for
exchange as provided in Section 2.8. However, upon surrender of such
Certificate, both the YTI stock certificate (together with all such undelivered
dividends or other distributions without shares) and any undelivered dividends
payable in respect thereof (without shares) shall be delivered and paid with
respect to each share represented by such Certificate.
2.10 Legending of Securities. Each certificate for YTI shares to be
issued to the STN shareholders in trust as part of the Merger Consideration
shall bear substantially the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, OR ANY STATE SECURITIES LAWS. THESE SHARES
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED. OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT OR LAWS, OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT, IN THE CIRCUMSTANCES,
REQUIRED UNDER SAID ACT."
2.11 Fractional Shares. Notwithstanding any other provision of this
Agreement, if the Sellers would otherwise have been entitled to receive a
fraction of a share of YTI shares (after taking into account all certificates
delivered by the STN shareholders), the number of shares issuable to the STN
shareholder shall be rounded up to the next whole number.
2.12 Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by such STN shareholder (setting forth the STN shares
represented by such lost, stolen or destroyed Certificates), YTI shall issue to
such STN shareholder the Consideration Shares to which such STN shareholder is
entitled.
ARTICLE III
Representations and Warranties of YTI, and Purchaser
In order to induce STN to enter into this Agreement and to consummate
the transactions contemplated hereby, YTI, Purchaser (as defined in Article I
above), jointly and severally, make the representations and warranties set forth
below to STN.
3.1 Organization; Standing and Power. YTI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Colorado. YTI and Purchaser have
all requisite right, power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby. YTI and
Purchaser have all corporate right, power and authority to own or lease and
operate their assets, and to conduct their business as presently conducted. YTI
and Purchaser are duly qualified to transact business as a foreign corporation
in all jurisdictions where the ownership or leasing of their properties or the
conduct of its business requires such qualification.
3.2 Authorization; Enforceability. The execution, delivery and
performance of this Agreement by YTI and Purchaser and all other agreements to
be executed, delivered and performed by YTI and Purchaser pursuant to this
Agreement (collectively, the "Purchaser Documents") and the consummation by YTI,
Purchaser of the transactions contemplated hereby and thereby have been duly
authorized by all requisite corporate or individual action on the part of YTI
and Purchaser as applicable. This Agreement and the Purchaser Documents have
been duly executed and delivered by YTI and Purchaser and constitute the legal,
valid and binding obligation of YTI and Purchaser enforceable in accordance with
their respective terms, except to the extent that their enforcement is limited
by bankruptcy, insolvency, reorganization or other laws relating to or affecting
the enforcement of creditors' rights generally and by general principles of
equity.
3.3 No Violation or Conflict. The execution, delivery and performance
of this Agreement and the Purchaser Documents by YTI and Purchaser, and the
consummation by YTI, and Purchaser of the transactions contemplated hereby and
thereby: (a) do not violate or conflict with any provision of law or regulation
(whether federal, state or local), or any writ, order or decree of any court or
governmental or regulatory authority, or any provision of YTI or Purchaser's
Articles or Certificate of Incorporation or Bylaws; and (b) do not and will not,
with or without the passage of time or the giving of notice, result in the
breach of, or constitute a default (or an event that with notice or lapse of
time or both would become a default), cause the acceleration of performance,
give to others any right of termination, amendment, acceleration or cancellation
of or require any consent under, or result in the creation of any lien, charge
or encumbrance upon any property or assets of YTI or Purchaser pursuant to any
instrument or agreement to which YTI or Purchaser is a party or by which YTI or
Purchaser or their respective properties may be bound or affected.
3.4 Consents of Governmental Authorities and Others. No consent,
approval, order or authorization of, or registration, declaration, qualification
or filing with any federal, state or local governmental or regulatory authority,
or any other Person, is required to be made by YTI, and Purchaser in connection
with the execution, delivery or performance of this Agreement by YTI, and
Purchaser or the consummation by YTI, and of the transactions contemplated
hereby.
3.5 Conduct of Business. Except as disclosed on Schedule 3.5 hereto,
since June 30, 2006, YTI has conducted no active businesses in the ordinary and
usual course consistent with past practices and there has not occurred any
adverse change in the condition (financial or otherwise), results of operations,
properties, assets, liabilities, business or prospects of YTI, and no such
change is threatened. Without limiting the generality of the foregoing, since
June 30, 2006, except as provided in this Agreement, YTI has not: (a) amended
its Articles of Incorporation or Bylaws (b) issued, sold or authorized for
issuance or sale, shares of any Series of its securities (including, but not
limited to, by way of stock split or dividend) or any subscriptions, options,
warrants, rights or convertible securities or entered into any agreements or
commitments of any character obligating it to issue or sell any such securities;
(c) redeemed, purchased or otherwise acquired, directly or indirectly, any
shares of its capital stock or any option, warrant or other right to purchase or
acquire any such capital stock; (d) suffered any damage, destruction or loss,
whether or not covered by insurance, which has had or could reasonably be
expected to have a Material Adverse Effect on any of its properties, assets,
business or prospects; (e) granted or made any mortgage or pledge or subjected
itself or any of its properties or assets to any lien, charge or encumbrance of
any kind; (f) made or committed to make any capital expenditures in excess of
$10,000; (g) become subject to any Guaranty; (h) granted any increase in the
compensation payable or to become payable to directors, officers or employees
(including, without limitation, any such increase pursuant to any severance
package, bonus, pension, profit-sharing or other plan or commitment); (i)
entered into any agreement which would be a Material Agreement, or amended or
terminated any existing Material Agreement; (j) been named as a party in any
Litigation, or become the focus of any investigation by any government or
regulatory agency or authority; (k) declared or paid any dividend or other
distribution with respect to its capital stock; or (l) experienced any other
event or condition of any character which has had or to YTI's could reasonably
be expected to have a Material Adverse Effect on YTI.
3.6 Litigation. Except as disclosed on Schedule 3.6 hereto, there are
no actions, suits, investigations, claims or proceedings ("Litigation") pending
or, to the Knowledge of YTI, and Purchaser threatened before any court or by or
before any governmental or regulatory authority or arbitrator, (a) affecting YTI
or Purchaser (as plaintiff or defendant) or (b) against YTI, and Purchaser
relating to YTI's Shares or the transactions contemplated by this Agreement and
there exist no facts or circumstances to the Knowledge of YTI, and Purchaser
creating any reasonable basis for the institution of any Litigation against YTI,
and Purchaser.
3.7 Brokers. Neither YTI or Purchaser has employed any broker or
finder, and none of them has incurred or will incur, directly or indirectly, any
broker's, finder's, investment banking or similar fees, commissions or expenses
in connection with the transactions contemplated by this Agreement or the
Purchaser Documents, except for a certain Consulting Agreements with ▇▇▇▇ ▇▇▇▇▇.
3.8 Compliance. YTI and Purchaser are in compliance with all federal,
state, local and foreign laws, ordinances, regulations, judgments, rulings,
orders and other requirements applicable to YTI and Purchaser and their
respective assets and properties, including, without limitation, those relating
to (a) the registration and sale of the YTI Shares, (b) the establishment of a
public trading market for the YTI Shares, and (c) the public trading of the YTI
Shares. YTI and Purchaser are not subject to any judicial, governmental or
administrative inquiry, investigation, order, judgment or decree.
3.9 Charter, Bylaws and Corporate Records. A true, correct and complete
copy of (a) the Articles of Incorporation of YTI and Purchaser, as amended and
in effect on the date hereof, (b) the Bylaws of YTI and Purchaser, as amended
and in effect on the date hereof, and (c) the minute books of YTI and Purchaser
(containing all corporate proceedings from the date of incorporation) have been
furnished to STN. Such minute books contain accurate records of all meetings and
other corporate actions of the board of directors, committees of the board of
directors, incorporators and shareholders of YTI and Purchaser from the date of
its incorporation to the date hereof which were memorialized in writing. No
actions have been taken since the date of YTI or Purchaser's incorporation that
are not memorialized in writing.
3.10 Subsidiaries and Investments. YTI has four Subsidiaries or
Investments. YTI owns one hundred percent (100%) of the issued and outstanding
capital stock of all Subsidiaries including SUNRISE ACQUISITIONS, INC..
3.11 Capitalization. The authorized capital stock of YTI consists of
50,000,000 shares of stock, of which 18,799,791 shares are issued and
outstanding (the "Outstanding YTI Shares"). All shares of Outstanding YTI common
stock have been duly authorized, are validly issued and outstanding, and are
fully paid and non-assessable. No securities issued by YTI from the date of its
incorporation to the date hereof were issued in violation of any statutory,
contractual or common law preemptive rights. There are no dividends which have
accrued or been declared but are unpaid on the capital stock of YTI. All taxes
required to be paid in connection with the issuance and any transfers of YTI's
capital stock have been paid. The Consideration Shares shall, upon issuance and
delivery to the STN shareholders in accordance with the terms hereof, be fully
paid, validly issued and non-assessable, but shall not be registered securities
under the Securities Act of 1933. There are no registration rights outstanding
which relate to the Outstanding YTI shares and, to the Knowledge of YTI, there
are no voting trusts, proxies or other agreements or understandings with respect
to any equity security of any Series of YTI or with respect to any equity
security, partnership shares or similar ownership shares of any Series of any of
its Subsidiaries, except as provided herein.
3.12 Rights, Warrants, Options. There are two million five hundred
thousand (2,500,000) options to purchase common stock, and One Hundred Four
Thousand (104,000) warrants issued and outstanding and no shares of preferred
stock issued or outstanding of YTI. There are no outstanding (a) securities or
instruments convertible into or exercisable for any of the capital stock or
other equity interests of YTI or Purchaser (b) subscriptions, puts, calls, or
other rights to acquire capital stock or other equity interests of YTI or
Purchaser; or (c) commitments, agreements or understandings of any kind,
including employee benefit arrangements, relating to the issuance or repurchase
by YTI or Purchaser of any capital stock or other equity interests of YTI or
Purchaser..
3.13 Commission Filings and Financial Statements. All of the Periodic
Reports of YTI required to satisfy the information requirements of Section 13 of
the Exchange Act have been filed with the Commission, and have been true,
accurate and complete in all material respects and have been filed in compliance
with the requirements of the Exchange Act. The Financial Statements of YTI: (a)
have been prepared in accordance with the books of account and records of YTI;
(b) fairly present, and are true, correct and complete statements in all
material respects of YTI's financial condition and the results of its operations
at the dates and for the periods specified in those statements; and (c) have
been prepared in accordance with United States generally accepted accounting
principles ("GAAP") consistently applied with prior periods.
3.14 Absence of Undisclosed Liabilities. Other than as disclosed by the
Periodic Reports, the Financial Statements of YTI or as disclosed on Schedule
3.20, YTI and Purchaser do not have any direct or indirect indebtedness,
liability, claim, loss, damage, deficiency, obligation or responsibility, known
or unknown, fixed or unfixed, ▇▇▇▇▇▇ or inchoate, liquidated or unliquidated,
secured or unsecured, accrued, absolute, contingent or otherwise, including,
without limitation, liabilities on account of taxes, other governmental charges
or Litigation, whether or not of a kind required by GAAP to be set forth on a
financial statement ("Liabilities YTI and Purchaser do not have any Liabilities
other than Liabilities fully and adequately reflected in the Periodic Reports or
the Financial Statements of YTI or as listed on Schedule 3.20 which shall all be
paid at closing. YTI and Purchaser have no Knowledge of any circumstances,
conditions, events or arrangements which may hereafter give rise to any
Liabilities of YTI or Purchaser, except as set forth on Schedule 3.20.
3.15 Real Property and Mineral Leases. YTI and Purchaser do not own any
fee simple shares in real property nor any mineral leases. YTI and Purchaser do
not lease, sublease, or have any other contractual shares in any real property.
3.16 List of Accounts. Set forth on Schedule 3.16 is: (a) the name and
address of each bank or other institution in which YTI or Purchaser maintains an
account (cash, securities or other) or safe deposit box; (b) the name and phone
number of YTI or Purchaser's contact person at such bank or institution; (c) the
account number of the relevant account and a description of the type of account;
(d) the name of each person authorized by YTI or Purchaser to effect
transactions therewith or to have access to any safe deposit box or vault;
3.17 Personnel. Except as disclosed in Exhibit 3.6, there is no
incurred or accrued compensation of any officers, directors, consultants and
employees of YTI or Purchaser (including compensation paid or payable by YTI
under any employee benefit or option plans). There are no employee policies,
employee manuals or other written statements of rules or policies as to working
conditions, vacation and sick leave.
3.18 Employment Agreements and Employee Benefit Plans. YTI has not had
any and does not have any defined contribution plan and it is not (and was
never) part of a controlled group contributing to any defined contribution plan
and is not and was never a party to any collective bargaining agreement. YTI has
not, nor does it now contribute to any pension, profit-sharing, option, other
incentive plan, or any other type of Employee Benefit Plan (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), or any , dental, vision, long term disability, short term
disability, life insurance or other welfare benefits plan, or have any
obligation to or customary arrangement with employees for bonuses, incentive
compensation, , and it is not now (and was never) a part of a controlled group
with regard to any of the foregoing.
Except as disclosed in Schedule 3.6. there are no complaints,
charges, claims, allegations, grievances, or litigations pending or threatened
which reflect or pertain to: (i) any federal, state or local labor, employment,
anti-discrimination, workers compensation, disability or unemployment law,
regulation or ordinance; (ii) any claim for wrongful discharge, harassment,
discrimination, breach of employment contract or employment-related tort; or
(iii) any employment agreement, restrictive covenant, non-competition agreement
or employee confidentiality agreement, which, in any such case, if adversely
determined, could reasonably be expected to have a Material Adverse Effect on
YTI.
3.19 Taxes.
(a) YTI has properly prepared and timely filed all Tax Returns (as
defined below), except the FY2005 Return, relating to any and all Taxes (as
defined below) concerning or attributable to it or its operations for any period
ending on or before the Closing Date and such Tax Returns are true, correct and
complete in all material respects and have been completed in accordance with
applicable Laws (as defined below).
(b) All Taxes due (whether or not shown on any Tax Return) payable by
YTI have been fully and timely paid. The cash reserves or accruals for Taxes
provided in the books and records of YTI with respect to any period for which
Tax Returns have not yet been filed or for which Taxes are not yet due and owing
have been established in accordance with GAAP and are, or prior to the Closing
Date, will be, sufficient for all unpaid Taxes of YTI through and including the
Closing Date (including, without limitation, with respect to any Taxes resulting
from the transactions contemplated by this Agreement).
(c) Neither YTI nor any Person on behalf of or with respect to YTI has
executed or filed any agreements or waivers extending any statute of limitations
on or extending the period for the assessment or collection of any Tax. No power
of attorney on behalf of YTI with respect to any Tax matter is currently in
force.
(d) YTI is not a party to any Tax-sharing agreement or similar
arrangement with any other party (whether or not written), and YTI has not
assumed any Tax obligations of, or with respect to any transaction relating to,
any other Person or agreed to indemnify any other Person with respect to any
Tax.
(e) No Tax Return concerning or relating to YTI or its operations has
ever been audited by a government or taxing authority, nor is any such audit in
process or pending, and YTI has not been notified of any request for such an
audit or other examination. No claim has been made by a taxing authority in a
jurisdiction where Tax Returns concerning or relating to YTI or its operations
have not been filed that it is or may be subject to taxation by that
jurisdiction.
(f) YTI has never been included in any consolidated, combined, or
unitary Tax Return.
(g) YTI has complied in all material respects with all applicable Laws
relating to the payment and withholding of Taxes and has duly and timely
withheld from employee salaries, wages and other compensation and has paid over
to the appropriate taxing authorities all amounts required to be so withheld and
paid over for all periods under all applicable laws.
(h) Neither YTI nor any other Person on behalf of and with respect to
YTI has (i) agreed to or is required to make any adjustments pursuant to Section
481(a) of the Internal Revenue Code of 1986 ("Code") or any similar provision of
state, local or foreign law by reason of a change in accounting method initiated
by YTI and Purchaser have no Knowledge that the Internal Revenue Service ("IRS")
has proposed any such adjustment or change in accounting method, or has any
application pending with any taxing authority requesting permission for any
changes in accounting methods that relate to the business or operations of YTI,
(ii) executed or entered into a closing agreement pursuant to Section 7121 of
the Code or any predecessor provision thereof or any similar provision of state,
local or foreign law with respect to YTI or (iii) requested any extension of
time within which to file any Tax Return concerning or relating to YTI or its
operations, which Tax Return has since not been filed.
(i) No property owned by YTI is (i) property required to be treated as
being owned by another Person pursuant to the provisions of Section 168(f)(8) of
the Internal Revenue Code of 1954, as amended and in effect immediately prior to
the enactment of the Tax Reform Act of 1986, (ii) constitutes "tax-exempt use
property" within the meaning of Section 168(h)(1) of the Code or (iii) is
"tax-exempt bond financed property" within the meaning of Section 168(g) of the
Code.
(j) YTI is not subject to any private letter ruling of the IRS or
comparable rulings of other taxing authorities.
(k) NOTE: Ytel owns 100% of Y-Tel International, LLC, a subsidiary,
which owns 100% of International Telekom, LLC and Y-Tel International Panama,
SA.
(l) YTI has not constituted either a "distributing corporation" or a
"controlled corporation" within the meaning of Section 355(a)(1)(A) of the Code
in a distribution qualifying for tax-free treatment under Section 355 of the
Code (i) in the two years prior to the date of this Agreement or (ii) in a
distribution that could otherwise constitute part of a "plan" or "series of
transactions" (within the meaning of Section 355(e) of the Code) in conjunction
with this Agreement.
(m) YTI has no elections in effect for U.S. federal income Tax
purposes under Sections 108, 168, 441, 472, 1017, 1033 or 4977 of the Code.
The term "Law" or "Laws" as used in this Agreement shall mean
any federal, state, local or foreign statue, law, ordinance, regulation, rule,
code, order or other requirement or rule of law.
The term "Tax" or "Taxes" as used in this Agreement shall mean
(i) all income, excise, gross receipts, ad valorem, sales, use, employment,
franchise, profits, gains, property, transfer, payroll, withholding, severance,
occupation, social security, unemployment compensation, alternative minimum,
value added, intangibles or other taxes, fees, stamp taxes, duties, charges,
levies or assessments of any kind whatsoever (whether payable directly or by
withholding), together with any shares and any penalties, fines, additions to
tax or additional amounts imposed by any Governmental Authority with respect
thereto, (ii) any liability for the payment of any amounts of the type described
in (i) as a result of being a member of a consolidated, combined, unitary or
aggregate group for any Taxable period, and (3) any liability for the payment of
any amounts of the type described in (i) or (ii) as a result of being a
transferee or successor to any person or as a result of any express or implied
obligation to indemnify any other Person.
The term "Tax Returns" as used in this Agreement shall mean returns,
declarations, reports, claims for refund, information returns or other documents
(including any related or supporting schedules, statements or information) filed
or required to be filed in connection with the determination, assessment or
collection of any Taxes of any party or the administration of any laws,
regulations or administrative requirements relating to any Taxes.
3.20 Material Agreements. Schedule 3.20 sets forth a list of all
material written and oral contracts or agreements relating to YTI or Purchaser,
including without limitation any: (i) contract resulting in a commitment or
potential commitment for expenditure or other obligation or potential
obligation, or which provides for the receipt or potential receipt, involving in
excess of Ten Thousand Dollars ($10,000.00) in any instance, or series of
related contracts that in the aggregate give rise to rights or obligations
exceeding such amount; (ii) indenture, mortgage, promissory note, loan
agreement, guarantee or other agreement or commitment for the borrowing or
lending of money or encumbrance of assets involving more than Ten Thousand
Dollars ($10,000.00) in each instance; (iii) agreement which restricts YTI or
Purchaser from engaging in any line of business or from competing with any other
Person; or (iv) any other contract, agreement, instrument, arrangement or
commitment that is material to the condition (financial or otherwise), results
of operation, assets, properties, liabilities, business or prospects of YTI or
Purchaser (collectively, and together with the YTI Leases, employment
agreements, Employee Benefit Plans and all other agreements required to be
disclosed on any Schedule to this Agreement, the "Material YTI Agreements").
Neither YTI nor Purchaser has received notice of any pending or threatened
Litigation relating to any of the Material YTI Agreements.
3.21 Guaranties. YTI and Purchaser are not a party to any Guaranty,
and no Person is a party to any Guaranty for the benefit of YTI or Purchaser.
3.22 Absence of Certain Business Practices. None of Purchaser, nor YTI,
nor any Affiliates thereof nor, to the Knowledge of each, any other Person
acting on behalf of YTI, has with respect to the business or activities of YTI:
(a) received, directly or indirectly, any rebates, payments, commissions,
promotional allowances or any other economic benefits, regardless of their
nature or type, from any customer, supplier, trading company, shipping company,
governmental employee or other Person with whom YTI has done business directly
or indirectly; or (b) directly or indirectly, given or agreed to give any gift
or similar benefit to any customer, supplier, trading company, shipping company,
governmental employee or other Person who is or may be in a position to help or
hinder the business of YTI (or assist YTI in connection with any actual or
proposed transaction) which (i) may subject YTI to any material damage or any
penalty in any Litigation, (ii) if not given in the past, may have had a
Material Adverse Effect on the assets, business or operations of YTI as
reflected in the Periodic Reports or Financial Statements of YTI or (iii) if not
continued in the future, may materially adversely affect the assets, business or
operations of YTI or subject YTI to suit or penalty in any private or
governmental litigation or proceeding.
3.23 Disclosure. No representation or warranty of YTI and Purchaser
contained in this Agreement, and no statement, report, or certificate furnished
by or on behalf of YTI, Purchaser to STN or its agents pursuant hereto or in
connection with the transactions contemplated hereby, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading or omits
or will omit to state a material fact necessary in order to provide STN with
full and proper information as to the business, financial condition, assets,
liabilities, results of operation or prospects of YTI or Purchaser and the value
of their properties or the ownership of YTI or Purchaser.
ARTICLE IV
Representations and Warranties of STN
In order to induce YTI and Purchaser to enter into this Agreement and
to consummate the transactions contemplated hereby, STN makes the
representations and warranties set forth below to YTI and Purchaser.
4.1 Organization. STN is a Colorado Corporation duly organized, validly
existing and in good standing under the laws of the State of Colorado. STN is
duly qualified to transact business as a foreign corporation in all
jurisdictions where the ownership or leasing of its properties or the conduct of
its business requires such qualification, except where the failure to so qualify
would not have a Material Adverse Effect on STN. STN has the requisite power and
authority to (a) own or lease and operate its properties and (b) conduct its
business as presently conducted.
4.2 Authorization; Enforceability. STN has the capacity to execute,
deliver and perform this Agreement. This Agreement and all other documents
executed and delivered by STN pursuant to this Agreement have been duly executed
and delivered and constitute the legal, valid and binding obligations of STN,
assuming the due authorization, execution and delivery of this Agreement by YTI,
and Purchaser enforceable in accordance with their respective terms, except to
the extent that their enforcement is limited by bankruptcy, insolvency,
reorganization or other laws relating to or affecting the enforcement of
creditors' rights generally and by general principals of equity.
4.3 No Violation or Conflict. The execution, delivery and performance
of this Agreement and the other documents contemplated hereby by STN, and the
consummation by STN of the transactions contemplated hereby: (a) do not violate
or conflict with any provision of law or regulation (whether federal, state or
local), or any writ, order or decree of any court or governmental or regulatory
authority, or any provision of STN's Certificate of Organization or Bylaws; and
(b) do not, with or without the passage of time or the giving of notice, result
in the breach of, or constitute a default, cause the acceleration of performance
or require any consent under, or result in the creation of any lien, charge or
encumbrance upon any property or assets of STN pursuant to any instrument or
agreement to which STN is a party or by which STN or its properties may be bound
or affected.
4.4 Consents of Governmental Authorities and Others. No consent,
approval or authorization of, or registration, qualification or filing with any
federal, state or local governmental or regulatory authority, or any other
Person, is required to be made by STN in connection with the execution, delivery
or performance of this Agreement by STN or the consummation by them of the
transactions contemplated hereby, excluding the execution, delivery and
performance of this Agreement by the STN.
4.5 Brokers. STN has not employed any broker or finder, and has not
incurred and will not incur any broker's, finder's, investment banking or
similar fees, commissions or expenses in connection with the transactions
contemplated by this Agreement.
4.6 Charter Records. A true, correct and complete copy of (a) the
Certificate of Incorporation of STN, as amended and in effect on the date
hereof, and (b) the Bylaws Agreement of STN, as amended and in effect on the
date hereof, have been furnished.
4.7 Subsidiaries and Investments. The Parent of STN has one other Sub
-sidiary or Investment named Sunrise Broadband of Colorado, Inc. a Colorado corp
-oration. STN does not have any subsidiaries.
4.8 Capitalization. STN will have issued and outstanding one common
share (the "Outstanding STN Shares") and one share is authorized. The
Outstanding STN Shares shall constitute one hundred percent (100%) of the issued
and outstanding capital of STN. The Outstanding Shares are owned by its
shareholders will be in the amounts set forth on Schedule A. All of the
Outstanding STN Shares will have been duly authorized, are validly issued and
outstanding, and are fully paid and non-assessable. No securities issued by STN
from the date of its incorporation to the date hereof were issued in violation
of any statutory or common law preemptive rights. All taxes required to be paid
in connection with the issuance and any transfers of STN's capital have been
paid. All permits or authorizations required to be obtained from or
registrations required to be effected with any Person in connection with any and
all issuances of securities of STN from the date of its incorporation to the
date hereof have been obtained or effected and all securities of STN have been
issued and are held in accordance with the provisions of all applicable
securities or other laws.
4.9 Rights, Warrants, Options. There are no outstanding (a) securities
or instruments convertible into or exercisable for any of the capital stock or
other equity interests of STN, (b) options, warrants, subscriptions or other
rights to acquire capital stock or other equity interests of STN; or (c)
Commitments, agreements or understandings of any kind, including employee
benefit arrangements, relating to the issuance or repurchase by STN of any
capital stock or other equity interests of STN, or any instruments convertible
or exercisable for any such securities or any options, warrants or rights to
acquire such securities.
ARTICLE V
Additional Agreements
5.1 Survival of the Representations and Warranties. The representations
and warranties contained in Sections 3.1, 3.2, 3.12, 3.13 and 3.14 and the
covenants in Section 7.1 and 7.3 shall survive the Closing and remain in effect
indefinitely. The representations and warranties contained in Section 3.23
(relating to environmental matters) shall survive the Closing until the
expiration of three (3) years from the Closing Date. The representations and
warranties contained in Section 3.19 (relating to taxes) shall survive the
Closing until the later of the expiration of twenty four months from the Closing
Date or the expiration of the last day of the statute of limitations applicable
to any action against YTI based upon the non-payment of taxes, or other
violation of the Code, which occurred prior to the Closing Date. Except as set
forth above, the representations and warranties and covenants of YTI and
Purchaser, contained in this Agreement shall survive the Closing until the
expiration of twenty-four months from the Closing Date. No claim for indemnity
with respect to breaches of representations and warranties may be brought by any
party hereto, other than a claim for fraud or intentional misrepresentation,
after expiration of the applicable survival period therefore as set forth in
this Section 5.1
5.2 Investigation. The representations, warranties, covenants and
agreements set forth in this Agreement shall not be affected or diminished in
any way by any investigation (or failure to investigate) at any time by or on
behalf of the party for whose benefit such representations, warranties,
covenants and agreements were made. All statements contained herein or in any
schedule, certificate, exhibit, list or other document required to be delivered
pursuant hereto, shall be deemed to be representations and warranties for
purposes of this Agreement; provided, that any knowledge or materiality
qualifications contained herein shall be applicable to such other documents.
5.3 Indemnification. YTI agrees to indemnify and hold harmless STN, and
each of STN's directors, officers and employees, from and against any losses,
damages, costs or expenses (including reasonable legal fees and expenses) which
are caused by or arise out of (i) any breach or default in the performance by
any of YTI and Purchaser of any covenant or agreement made by any of them in
this Agreement; (ii) any breach of any Representation or Warranty made by any of
YTI and Purchaser in this Agreement;
5.4 Indemnity Procedure. A party or parties hereto agreeing to be
responsible for or to indemnify against any matter pursuant to this Agreement is
referred to herein as the "Indemnifying Party" and the other party or parties
claiming indemnity is referred to as the "Indemnified Party."
(a) An Indemnified Party under this Agreement shall, with respect to claims
asserted against such party by any third party, give written notice to the
Indemnifying Party of any liability which might give rise to a claim for
indemnity under this Agreement within sixty (60) business days of the receipt of
any written claim from any such third party, but not later than twenty (20) days
prior to the date any answer or responsive pleading is due, and with respect to
other matters for which the Indemnified Party may seek indemnification, give
prompt written notice to the Indemnifying Party of any liability which might
give rise to a claim for indemnity; provided, however, that any failure to give
such notice will not waive any rights of the Indemnified Party except to the
extent the rights of the Indemnifying Party are materially prejudiced.
(b) The Indemnifying Party shall have the right, at its election, to take
over the defense or settlement of such claim by giving written notice to the
Indemnified Party at least fifteen (15) days prior to the time when an answer or
other responsive pleading or notice with respect thereto is required. If the
Indemnifying Party makes such election, it may conduct the defense of such claim
through counsel of its choosing (subject to the Indemnified Party's approval of
such counsel, which approval shall not be unreasonably withheld), shall be
solely responsible for the expenses of such defense and shall be bound by the
results of its defense or settlement of the claim. The Indemnifying Party shall
not settle any such claim without prior notice to and consultation with the
Indemnified Party, and no such settlement involving any equitable relief or
which might have an adverse effect on the Indemnified Party may be agreed to
without the written consent of the Indemnified Party (which consent shall not be
unreasonably withheld). So long as the Indemnifying Party is diligently
contesting any such claim in good faith, the Indemnified Party may pay or settle
such claim only at its own expense and the Indemnifying Party will not be
responsible for the fees of separate legal counsel to the Indemnified Party,
unless the named parties to any proceeding include both parties and
representation of both parties by the same counsel would be inappropriate. If
the Indemnifying Party does not make such election, or having made such election
does not, in the reasonable opinion of the Indemnified Party proceed diligently
to defend such claim, then the Indemnified Party may (after written notice to
the Indemnifying Party), at the expense of the Indemnifying Party, elect to take
over the defense of and proceed to handle such claim in its discretion and the
Indemnifying Party shall be bound by any defense or settlement that the
Indemnified Party may make in good faith with respect to such claim. In
connection therewith, the Indemnifying Party will fully cooperate with the
Indemnified Party should the Indemnified Party elect to take over the defense of
any such claim.
(c) The parties agree to cooperate in defending such third party claims and
the Indemnified Party shall provide such cooperation and such access to its
books, records and properties as the Indemnifying Party shall reasonably request
with respect to any matter for which indemnification is sought hereunder; and
the parties hereto agree to cooperate with each other in order to ensure the
proper and adequate defense thereof.
With regard to claims of third parties for which indemnification is
payable hereunder, such indemnification shall be paid by the Indemnifying Party
upon the earlier to occur of: (i) the entry of a judgment against the
Indemnified Party and the expiration of any applicable appeal period, or if
earlier, five (5) days prior to the date that the judgment creditor has the
right to execute the judgment; (ii) the entry of an unappealable judgment or
final appellate decision against the Indemnified Party; or (iii) a settlement of
the claim. Notwithstanding the foregoing, provided that there is no dispute as
to the applicability of indemnification, the reasonable expenses of counsel to
the Indemnified Party shall be reimbursed on a current basis by the Indemnifying
Party if such expenses are a liability of the Indemnifying Party. With regard to
other claims for which indemnification is payable hereunder, such
indemnification shall be paid promptly by the Indemnifying Party upon demand by
the Indemnified Party.
ARTICLE VI
Closing; Deliveries; Conditions Precedent
6.1 Closing; Effective Date. All proceedings taken and all documents
executed at the Closing shall be deemed to have been taken, delivered and
executed simultaneously, and no proceeding shall be deemed taken nor documents
deemed executed or delivered until all have been taken, delivered and executed.
6.2 Deliveries
(a) At Closing, YTI shall deliver the following documents to STN:
(1) the certificates representing the Consideration
Shares;
(2) certificates issued by the Secretary of State of
Delaware, as of a recent date, as to the good stand-
ing of YTI in its jurisdiction of incorporation.
(3) certificates issued by the Secretary of State of
Colorado, as of a recent date, as to the good
standing of Purchaser in its jurisdiction of
incorporation.
(4) a certificate, dated the Closing Date, of an officer
of YTI setting forth that authorizing resolutions
were adopted by YTI and Purchaser's Boards of
Directors, approving the terms and conditions of this
Agreement and the other documents contemplated hereby
and the transactions contemplated hereby and thereby;
(5) the consents of any third party including, but not
limited to, parties to any of the Material Agreements
whose consent is required under the terms of any such
Material Agreement or otherwise;
(6) the certificates referred to in Section 6.3(d);
such other documents and instruments as STN may
reasonably request.
(7) Board resolution approving and adopting the Series A,
B and C Preferred Stock Designations of Rights and
Privileges.
(8) Forgiveness of all accrued salaries and vacation
expenses by ▇▇▇▇ ▇▇▇▇▇▇.
(9) Delivery for purchase for $100 of a certificate of
Series C Preferred Shares totaling 650,000 Convert-
ible to common with piggy back registration rights.
(b) At Closing, STN shall deliver the following documents to YTI:
(1) the Assignments of STN Shares to be delivered to YTI;
(2) a Certificate of Incorporation the Secretary of State
of the State of Colorado, dated in 2006;
(3) a certificate, dated the Closing Date, of manager of
STN setting forth that authorizing resolutions were
adopted by STN's shareholder, approving the terms and
conditions of this Agreement and the other documents
contemplated hereby and the transactions contemplated
hereby and thereby;
(4) the certificates referred to in Section 6.4(d); and
(5) such other documents and instruments as YTI may
reasonably request.
(6) Listing of all assets and liabilities included in the
acquisition.
6.3 Conditions Precedent to the Obligations of STN. Each and every
obligation of STN to consummate the transactions described in this Agreement and
any and all liability of STN to YTI shall be subject to the fulfillment on or
before the Closing Date of the following conditions precedent:
(a) Representations and Warranties True. Each of the
representations and warranties of YTI and Purchaser contained herein or in any
certificate or other document delivered pursuant to this Agreement or in
connection with the transactions contemplated hereby shall be true and correct
in all material respects as of the Closing Date with the same force and effect
as though made on and as of such date.
(b) Performance. YTI and Purchaser shall have performed and
complied in all material respects with all of the agreements, covenants and
obligations required under this Agreement to be performed or complied with by
them on or prior to the Closing Date.
(c) No Material Adverse Change. Except as expressly permitted or
contemplated by this Agreement, no event or condition shall have occurred which
has adversely affected or may adversely affect in any respect the condition
(financial or otherwise) of YTI or Purchaser.
(d) YTI's Certificate. YTI shall have delivered to STN a
certificate dated the Closing Date, certifying that the conditions specified in
Section 6.3(a), (b) and (c) above have been fulfilled and as to such other
matters as STN may reasonably request.
(e) No Litigation. No litigation, arbitration or other legal or
administrative proceeding shall have been commenced or be pending by or before
any court, arbitration panel or governmental authority or official, and no
statute, rule or regulation of any foreign or domestic, national or local
government or agency thereof shall have been enacted after the date of this
Agreement, and no judicial or administrative decision shall have been rendered
which enjoins or prohibits, or seeks to enjoin or prohibit, the consummation of
all or any of the transactions contemplated by this Agreement.
(f) Appointment. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ shall
have been appointed to the Board of Directors and the Executive Committee of YTI
effective at the Closing. ▇▇▇▇ ▇▇▇▇▇▇ shall resign as Acting
President/CEO/CFO/Chairman, effective immediately, and shall remain as a
Director on the Board and Executive Committee. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. shall be
appointed as CEO/ President/ Director/Chairman, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ shall be
appointed as Secretary/Treasurer/CFO/Director.
(g) Consents. YTI shall have obtained all authorizations, consents,
waivers and approvals as may be required to consummate the transactions
contemplated by this Agreement including, but not limited to, those with respect
to any Material YTI Agreement.
(h) Opinion of Counsel. YTI shall have obtained an opinion letter
from counsel to YTI addressed to STN in form and substance reasonably acceptable
to STN, and such opinion shall not have been withdrawn.
6.4 Conditions Precedent to the Obligations of YTI. Each and every
obligation of YTI to consummate the transactions described in this Agreement and
any and all liability of YTI and Purchaser to STN shall be subject to the
fulfillment on or before the Closing Date of the following conditions precedent:
(a) Representations and Warranties True. Each of the
representations and warranties of STN contained herein or in any certificate or
other document delivered pursuant to this Agreement or in connection with the
transactions contemplated hereby shall be true and correct in all material
respects as of the Closing Date with the same force and effect as though made on
and as of such date.
(b) Performance. STN shall have performed and complied in all
material respects with all of the agreements, covenants and obligations required
under this Agreement to be performed or complied with by it on or prior to the
Closing Date.
(c) STN's Certificate. STN shall have delivered to YTI, a
certificate addressed to YTI, dated the Closing Date, certifying that the
conditions specified in Sections 6.4(a), and (b) above have been fulfilled.
(d) No Litigation. No litigation, arbitration or other legal or
administrative proceeding shall have been commenced or be pending by or before
any court, arbitration panel or governmental authority or official, and no
statute, rule or regulation of any foreign or domestic, national or local
government or agency thereof shall have been enacted after the date of this
Agreement, and no judicial or administrative decision shall have been rendered
which enjoins or prohibits, or seeks to enjoin or prohibit, the consummation of
all or any of the transactions contemplated by this Agreement.
(e) Consents. STN shall have obtained all authorizations, consents,
waivers and approvals as may be required to consummate the transactions
contemplated by this Agreement, including but not limited to, those with respect
to any Material Agreement of STN.
(f) STN's parent (Sunrise Broadband Group, Inc.) shall have
furnished audited financial statements in accordance with SEC Regulations for
period 2004 through December 31, 2005 and unaudited financial statements through
June 30, 2006.
6.5 Best Efforts. Subject to the terms and conditions provided in this
Agreement, each of the parties shall use their respective best efforts in good
faith to take or cause to be taken as promptly as practicable all reasonable
actions that are within its power to cause to be fulfilled those of the
conditions precedent to its obligations or the obligations of the other parties
to consummate the transactions contemplated by this Agreement that are dependent
upon its actions, including obtaining all necessary consents, authorizations,
orders, approvals and waivers.
6.6 Termination. This Agreement and the transactions contemplated
hereby may be terminated (i) at any time by the mutual consent of the parties
hereto; (ii) by STN, or by YTI, if the Closing has not occurred on or prior to
November 1, 2006 (such date of termination being referred to herein as the
"Termination Date"), provided the failure of the Closing to occur by such date
is not the result of the failure of the party seeking to terminate this
Agreement to perform or fulfill any of its obligations hereunder; (iii) by STN
at any time at or prior to Closing in its sole discretion if (1) any of the
representations or warranties of YTI, and Purchaser in this Agreement are not in
all material respects true, accurate and complete or if YTI, and Purchaser
breach in any material respect any covenant contained in this Agreement,
provided that such misrepresentation or breach is not cured within ten (10)
business days after notice thereof, but in any event prior to the Termination
Date or (2) any of the conditions precedent to STN's obligations to conduct the
Closing have not been satisfied by the date required thereof; (iv) by YTI at any
time at or prior to Closing in its sole discretion if (1) any of the
representations or warranties of STN in this Agreement are not in all material
respects true, accurate and complete or if STN breaches in any material respect
any covenant contained in this Agreement, provided that such misrepresentation
or breach is not cured within ten (10) business days after notice thereof, but
in any event prior to the Termination Date or (2) any of the conditions
precedent to STN's obligations to conduct the Closing have not been satisfied by
the date required thereof. If this Agreement is terminated pursuant to this
Section 6.6, written notice thereof shall promptly be given by the party
electing such termination to the other party and, subject to the expiration of
the cure periods provided in clauses (iii) and (iv) above, if any, this
Agreement shall terminate without further actions by the parties and no party
shall have any further obligations under this Agreement. Notwithstanding the
preceding sentence, the respective obligations of the parties under Sections 7.1
shall survive the termination of this Agreement. Notwithstanding anything to the
contrary contained herein, if the termination of this Agreement is a result of
the willful misrepresentation, willful inaccuracy or omission in a
representation, willful breach of warranty, fraud or any willful failure to
perform or comply with any covenant or agreement contained herein, the aggrieved
party shall be entitled to recover from the non-performing party all
out-of-pocket expenses which such aggrieved party has incurred and the
termination of this Agreement shall not be deemed or construed as limiting or
denying any other legal or equitable right or remedy of such party.
ARTICLE VII
Covenants
7.1 General Confidentiality. YTI, and Purchaser acknowledge that the
Intellectual Property and all other confidential or proprietary information with
respect to the business and operations of STN are valuable, special and unique
assets of STN. YTI, and Purchaser shall not, at any time either before or after
the Closing Date, disclose, directly or indirectly, to any Person, or use or
purport to authorize any Person to use any confidential or proprietary
information with respect to STN, whether or not for YTI, and Purchaser own
benefit, without the prior written consent of STN or unless required by law,
including without limitation, (i) any of STN's trade secrets, designs, formulae,
drawings, Intellectual Property, diagrams, techniques, research and development,
specifications, data, know-how, formats, marketing plans, business plans,
budgets, strategies, forecasts or client data; (ii) information relating to the
products developed by STN, (iii) the names of STN's customers and contacts, (iv)
STN's marketing strategies, (v) the names of STN's vendors and suppliers, (vi)
the cost of materials and labor, and the prices obtained for products or
services sold (including the methods used in price determination, manufacturing
and sales costs), (vii) the lists or other written records used in STN's
business, including compensation paid to employees and consultants and other
terms of employment, production operation techniques or any other confidential
information of, about or pertaining to the business of STN, and, (viii) all
tangible material that embodies any such confidential and proprietary
information as well as all records, files, memoranda, reports, price lists,
drawings, plans, sketches and other written and graphic records, documents,
equipment, and the like, relating to the business of STN, and (ix) any other
confidential information or trade secrets relating to the business or affairs of
STN which YTI and Purchaser may acquire or develop in connection with or as a
result of their performance of the terms and conditions of this Agreement,
excepting only such information as is already known to the public or which may
become known to the public without any fault of YTI and Purchaser or in
violation of any confidentiality restrictions; provided, however, that the
restrictions of this Section 7.1 shall not be applicable to YTI and Purchaser in
connection with such Parties' enforcement of its rights under this Agreement.
YTI and Purchaser acknowledge that STN would not enter into this Agreement
without the assurance that all such confidential and proprietary information
will be used for the exclusive benefit of STN.
7.2 Continuing Obligations. The restrictions set forth in Section 7.1
are considered by the parties to be reasonable for the purposes of protecting
the value of the business and goodwill of STN. YTI and Purchaser acknowledge
that STN would be irreparably harmed and that monetary damages would not provide
an adequate remedy to STN in the event the covenants contained in Section 7.1
were not complied with in accordance with their terms. Accordingly, YTI and
Purchaser agree that any breach or threatened breach by any of them of any
provision of Section 7.1 shall entitle STN to injunctive and other equitable
relief to secure the enforcement of these provisions, in addition to any other
remedies (including damages) which may be available to STN. It is the desire and
intent of the parties that the provisions of Section 7.1 be enforced to the
fullest extent permissible under the laws and public policies of each
jurisdiction in which enforcement is sought. If any provision of Section 7.1 are
adjudicated to be invalid or unenforceable, the invalid or unenforceable
provisions shall be deemed amended (with respect only to the jurisdiction in
which such adjudication is made) in such manner as to render them enforceable
and to effectuate as nearly as possible the original intentions and agreement of
the parties. In addition, if any party brings an action to enforce Section 7.1
hereof or to obtain damages for a breach thereof, the prevailing party in such
action shall be entitled to recover from the non-prevailing party all reasonable
attorney's fees and expenses incurred by the prevailing party in such action.
7.3 Satisfaction of Certain Debts. Prior to closing, STN shall arrange
forgiveness or conversion of debts of STN to equity where possible so that its
balance sheet only contains current operating expenses. Such conversion shall be
through a Stock Subscription for Stock to be issued. All such debts shall be
satisfied and released at closing.
ARTICLE VIII
Miscellaneous
8.1 Notices. Any notice, demand, claim or other communication under
this Agreement shall be in writing and delivered personally or sent by certified
mail, return receipt requested, postage prepaid, or sent by facsimile or prepaid
overnight courier to the parties at the addresses as follows (or at such other
addresses as shall be specified by the parties by like notice):
If to YTI or Purchaser: Y-TEL INTERNATIONAL, INC.
Name ▇▇▇ ▇'▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Address
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
If to STN: SUNRISE TELEVISION NETWORKS, INC.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
and
Such notice shall be deemed delivered upon receipt against
acknowledgment thereof if delivered personally, on the third business day
following mailing if sent by certified mail, upon transmission against
confirmation if sent by facsimile and on the next business day if sent by
overnight courier.
8.2 Entire Agreement; Incorporation. This Agreement and the documents
and instruments and other agreements among the parties hereto as contemplated by
or referred to herein contain every obligation and understanding between the
parties relating to the subject matter hereof and merges all prior discussions,
negotiations, agreements and understandings, both written and oral, if any,
between them, and none of the parties shall be bound by any conditions,
definitions, understandings, warranties or representations other than as
expressly provided or referred to herein. All schedules, exhibits and other
documents and agreements executed and delivered pursuant hereto are incorporated
herein as if set forth in their entirety herein.
8.3 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors, heirs,
personal representatives, legal representatives, and permitted assigns.
8.4 Assignment. This Agreement may not be assigned by any party without
the written prior consent of the other parties. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
8.5 Waiver and Amendment. Any representation, warranty, covenant, term
or condition of this Agreement which may legally be waived, may be waived, or
the time of performance thereof extended, at any time by the party hereto
entitled to the benefit thereof, and any term, condition or covenant hereof
(including, without limitation, the period during which any condition is to be
satisfied or any obligation performed) may be amended by the parties thereto at
any time. Any such waiver, extension or amendment shall be evidenced by an
instrument in writing executed on behalf of the party against whom such waiver,
extension or amendment is sought to be charged. No waiver by any party hereto,
whether express or implied, of its rights under any provision of this Agreement
shall constitute a waiver of such party's rights under such provisions at any
other time or a waiver of such party's rights under any other provision of this
Agreement. No failure by any party thereof to take any action against any breach
of this Agreement or default by another party shall constitute a waiver of the
former party's right to enforce any provision of this Agreement or to take
action against such breach or default or any subsequent breach or default by
such other party.
8.6 No Third Party Beneficiary. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any Person
other than the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and permitted assigns, any
rights or remedies under or by reason of this Agreement, except as otherwise
provided herein.
8.7 Severability. In the event that any one or more of the provisions
contained in this Agreement, or the application thereof, shall be declared
invalid, void or unenforceable by a court of competent jurisdiction, the
remainder of this Agreement shall remain 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 invalid, void or unenforceable provision
with a valid and enforceable provision that will achieve, to the extent
possible, the economic, business and other purposes of such invalid, void or
unenforceable provision.
8.8 Expenses. Except as otherwise provided herein, each party agrees to
pay, without right of reimbursement from the other party, the costs incurred by
it incident to the performance of its obligations under this Agreement and the
consummation of the transactions contemplated hereby, including, without
limitation, costs incident to the preparation of this Agreement, and the fees
and disbursements of counsel, accountants and consultants employed by such party
in connection herewith.
8.9 Headings. The table of contents and the section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of any provisions of this Agreement.
8.10 Other Remedies; Injunctive Relief. 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
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. In any action at law or suit in equity to enforce this Agreement or the
rights of the parties hereunder, the prevailing party in any such action or suit
shall be entitled to receive a reasonable sum for its attorneys' fees and all
other reasonable costs and expenses incurred in such action or suit.
8.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. Facsimile signatures
shall be deemed valid and binding.
8.12 Remedies Exclusive. Except in the case of fraud or equitable
remedies expressly provided for herein, the parties acknowledge and agree that
the indemnification provisions set forth in Article V of this Agreement
constitute the parties' sole and exclusive remedy with respect to any and all
claims relating to the transactions contemplated by this Agreement. Governing
Law. This Agreement has been entered into and shall be construed and enforced in
accordance with the laws of the State of Colorado, without reference to the
choice of law principles thereof.
8.13 Jurisdiction and Venue. This Agreement shall be subject to the
exclusive jurisdiction of the courts of Jefferson County Colorado. The parties
to this Agreement agree that any breach of any term or condition of this
Agreement shall be deemed to be a breach occurring in the State of Colorado by
virtue of a failure to perform an act required to be performed in the State of
Colorado and irrevocably and expressly agree to submit to the jurisdiction of
the courts of the State of Colorado for the purpose of resolving any disputes
among the parties relating to this Agreement or the transactions contemplated
hereby. The parties irrevocably waive, to the fullest extent permitted by law,
any objection which they may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement, or any
judgment entered by any court in respect hereof brought in Jefferson County,
Colorado, and further irrevocably waive any claim that any suit, action or
proceeding brought in Jefferson County, Colorado has been brought in an
inconvenient forum.
8.14 Participation of Parties. The parties hereby 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.
8.15 Further Assurances. The parties hereto shall deliver any and all
other instruments or documents reasonably required to be delivered pursuant to,
or necessary or proper in order to give effect to, all of the terms and
provisions of this Agreement including, without limitation, all necessary stock
powers and such other instruments of transfer as may be necessary or desirable
to transfer ownership of the STN Stock.
8.16 Publicity. No public announcement or other publicity concerning
this Agreement or the transactions contemplated hereby shall be made without the
prior written consent of both STN and YTI as to form, content, timing and manner
of distribution. Nothing contained herein shall prevent any party from making
any filing required by federal or state securities laws or stock exchange rules.
8.17 ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. shall be retained as CEO, President,
Director and Chairman for $20,833 per month plus a performance based stock
option. (Subject to anti-dilution terms.)
8.18 ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ shall be retained as Secretary, Treasurer, CFO and
Director at a rate of $18,750 per month plus a performance based stock option.
(Subject to anti-dilution terms.).
8.19 ▇▇▇▇ ▇▇▇▇▇▇ shall be retained as Vice President of Strategic
Acquisitions and Director for $16,677 month plus a performance based stock
option. (Subject to anti-dilution terms.)
IN WITNESS WHEREOF, the parties hereto have each executed and
delivered this Agreement as of the day and year first above written.
Y-TEL INTERNATIONAL, INC.
By:______________________________________
Name:
Title: President
SUNRISE TELEVISION NETWORKS, INC.
By:______________________________________
Name:
Title: Manager
SUNRISE ACQUISITIONS, INC.
By:_______________________________________
Name:
Title: President
SUNRISE BROADBAND GROUP, INC.
By: ______________________________________
Name:
Title
SCHEDULE 3.6
Litigation
While the Company is not formally engaged in any litigation, legal proceedings
or claims, it is involved in resolving the following issues:
Y-Tel has agreed to the settlement offer of $15,000 from creditor's council
related to the Company's failure to complete the acquisition of SunGlobe. The
Company did not follow through on the purchase of SunGlobe because of
misrepresentations made by Seller. Such amount is included in accrued expenses
in the accompanying condensed consolidated balance sheet.
Y-Tel is currently in negotiations with the former CEO regarding final
settlement of unpaid wages and claims. The Company has included approximately
$50,000 in accrued expenses in the accompanying condensed consolidated balance
sheet related to these claims.
SCHEDULE 3.16
Bank Accounts:
Y-Tel International, LLC - Capital One
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone ▇▇▇-▇▇▇-▇▇▇▇
Acct number - 2080221951
International Telekom, LLC - Capital One
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone ▇▇▇-▇▇▇-▇▇▇▇
Acct number - 2038845910
