Form 8-K
Exhibit 10.3
Buyers United, Inc., File No. 0-26917
RECONCILLIATION AND RELEASE AGREEMENT
THIS
RECONCILLIATION AND
RELEASE AGREEMENT is entered into this 9th day of
March 2004 by and between
Buyers United Inc., a Delaware corporation ("Buyers")
And
Counsel Corporation, an Ontario corporation
Counsel Communications LLC, (formerly known as Counsel
Springwell Communications LLC) a Delaware limited liability
company
I-Link Incorporated, (now known as Acceris Communications Inc.)
a Florida corporation ("I-Link")
I-Link Communications, Inc., a Utah corporation ("ILC")
(collectively the "Counsel Group")
R E C I T A L S
WHEREAS,
Buyers, I-Link and ILC entered into an
Asset Purchase
Agreement
dated December 6, 2002 (the "Asset Purchase
Agreement") pursuant to which Buyers
purchased certain assets of I-Link and ILC,
and Software License Agreement dated
December 6, 2002 ("License Agreement") pursuant to which Buyers acquired a
paid-up, non-exclusive, perpetual,
non-transferable,
worldwide license to make,
have made, and use the intellectual
property set forth therein.
WHEREAS,
Buyers, I-Link, and
ILC entered into the Closing Memorandum dated
April 30, 2003 ("Closing Memorandum") providing for the closing of the
transactions contemplated by the Asset Purchase Agreement and containing
additional terms relating to the transition
of the assets acquired by Buyers and
resolution of open accounts;
WHEREAS,
Buyers, I-Link, and ILC entered into the Escrow
Agreement dated
April 30, 2003 ("I-Link Escrow Agreement")
pursuant to Section
8.1 of the Asset
Purchase Agreement that provides for the escrow of 25,000
shares of Series B
Preferred Stock for the satisfaction of
indemnification claims of Buyers;
WHEREAS,
Buyers, I-Link, and ILC desire to resolve the
final outstanding
accounts and offsets arising from the transition of the assets
acquired under
the Asset Purchase Agreement to Buyers, Buyers and the Counsel Group
desire to
release each other from any further claims and effect a release of the
I-Link
Escrow Agreement, and the parties have reached
additional agreements
regarding
the stock ownership of I-Link in
Buyers;
NOW,
THEREFORE,
in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements
contained herein, the
parties hereto hereby agree as follows:
<PAGE>
1. Reconciliation of
Accounts.
(a) I-Link
acknowledges that Buyers has paid and reimbursed to ILC the
rent
deposit for the office space located at
13751 South Wadsworth Park Drive, Suite
200, Draper, Utah.
(b) Within five
days following the date of this Agreement Buyers will pay
to ILC $3,600 cash in reimbursement for the credit amounts issued on the
November and December 2002 invoices paid by
I-Link to Level 3 Communications.
(c) I-Link will
pursue resolution
of the dispute
with Compaq under
Lease
Equipment Schedule 546328, which is part of the Master
Lease Agreement No.
537982. Upon achieving an agreement for
resolving this dispute
satisfactory to
I-Link, I-Link will send a written
notice to Buyers
containing
a copy of the
letter, agreement, or other document
between I-Link and Compaq that memorializes
the terms of the agreement ("Compaq
Agreement"). Within
five days following the
receipt of the notice, Buyers shall pay to I-Link one-half of the settlement
amount set forth in the Compaq Agreement in
cash; provided,
however, that the
total amount paid by Buyers to I-Link shall
not exceed $47,132.13.
(d) All other
accounts, charges, and offsets (other than those set
forth
above), including, but not limited to, those items identified in the letter
dated October 24, 2003, from Paul Jarman to
Ted Stern, shall be satisfied by the
payment from Buyers to I-Link of $87,828
in cash. Payment of
this amount shall
be paid in cash by Buyers to I-Link by
March 31, 2004.
(e) Concurrently
with the execution of this Agreement, I-Link is delivering
to Buyers three original copies of a duly executed Consent to Assignment
(attached hereto) that authorizes and
effects transfer of
$110,000 of deposits
currently held by Level 3 Communications
to and for the account
of Buyers, and
I-Link shall thereby acknowledge that it has no further
claim to or
interest
therein.
2. Series B Preferred
Stock.
(a) Upon the
execution and delivery of this Agreement the I-Link Escrow
Agreement shall terminate, and Buyers shall issue
instructions to the
escrow
agent under those agreements to release and deliver
out of escrow all shares of
Series B Preferred Stock held in escrow
under the I-Link Escrow Agreement.
(b) Concurrently with the execution of this Agreement by the parties,
I-Link is tendering to Buyers for conversion to common stock of Buyers all
shares of Series B Preferred Stock
registered in the name of I-Link, and Buyers
agrees and acknowledges that effective on the date of such
conversion
it is
obligated to pay to I-Link all dividends
accrued through that date in accordance
with the terms of the Series B Convertible
Preferred Stock. By virtue of such
conversion, Buyers shall issue and deliver to
I-Link a certificate
for 750,000
shares of common stock, and shall issue and
deliver the remaining 750,000 shares
of common stock issuable on conversion in
accordance with paragraph 2(c), below.
(c) Concurrently with the execution and delivery of
this Agreement by the
parties, I-Link is signing and delivering the Securities Purchase Agreement
2
<PAGE>
dated March 10, 2004, to which Buyers,
I-Link, and the Investors named
therein
are all parties (the "Purchase Agreement"). Pursuant to the terms of the
Purchase Agreement, I-Link authorizes and instructs Buyers and its transfer
agent to issue and deliver 750,000 shares
of common stock issuable on conversion
of I-Link's Series B Preferred Stock (the
"Selling Stockholder
Shares") to the
Investors pursuant to the sale of such shares to the Investors as provided
therein, and to that end I-link is
delivering to Buyers
with this Agreement
a
duly executed stock power, with Medallion
signature guarantee,
for purposes of
effecting such sale. Buyers covenants and agrees that it will
not authorize or
permit the distribution of any of the proceeds from the sale of the Selling
Stockholder Shares nor the delivery of any
of the Selling
Stockholder Shares to
the purchasers unless the purchase price for the Selling Stockholder Shares
(less the amount of any sales commission payable by I-link on sale of the
Selling Stockholder Shares) is sent from escrow by
wire transfer to an account
designated by I-Link at the same time any funds are sent from escrow to the
Company from the sale of any of its
shares of common
stock to the
Investors.
I-Link acknowledges and agrees that it is obligated to pay to Roth Capital
Partners, LLC a sales commission equal to 5.5% of the gross
proceeds derived
from the sale of the Selling Stockholder
Shares.
(d)
[Reserved]
(e) With
respect to the 750,000
shares of common
stock issued to I-Link
under paragraph 2(b), above, and 58,546 shares of common
stock issued to I-Link
as dividends on its shares of Series B Preferred Stock (collectively the
"Registrable Shares"), Buyers grants to I-Link the right to register the
Registrable Securities for sale under the Securities Act of 1933 on the
terms
set forth in the Registration Rights Agreement attached as Exhibit A to the
Purchase Agreement (the "Registration Agreement"). Concurrently with the
execution and delivery of this Agreement by the parties,
I-Link is signing
and
delivering to Buyers the Registration Agreement, and Buyers will sign and
deliver to I-Link, and will be bound by the
terms of, the Registration Agreement
on the Closing Date under the Purchase Agreement at the same time Buyers
delivers the Registration Agreement to each
of the Investors that are a party to
the Purchase Agreement.
(f) All shares
of Buyers common stock issued under this
