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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
August 20, 1999
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Date of Report (date of earliest event reported)
SILVERTHORNE PRODUCTION COMPANY
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Exact name of Registrant as Specified in its Charter
Colorado 0-11730 84-0189377
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State or Other Jurisdiction Commission File IRS Employer Identification
of Incorporation Number Number
3220 South Higuera Street, Suite 304, San Luis Obispo, CA 93401
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Address of Principal Executive Offices, Including Zip Code
(805) 786-2640
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Registrant's Telephone Number, Including Area Code
16053 Via Viajera, Rancho Santa Fe, California 92091
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Former Name or Former Address, if Changed Since Last Report
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
On August 20, 1999, Silverthorne Production Company (the "Company")
completed the first closing of the acquisition of all of the assets of Inter-
American Telecommunications Holding Corporation ("ITHC") in exchange for
29,242,953 shares of the Company's Common stock. Concurrently, ITHC purchased
12,602,431 shares of the Company's Common Stock from four shareholders for
$190,000 in cash. As a result, ITHC owns 41,845,384 shares of the Company's
Common Stock or approximately 83.7% of the shares outstanding.
The stock issuances were made pursuant to a Stock Purchase and Asset
Acquisition Agreement ("Agreement") between the Company and ITHC. The terms
of the Agreement were the result of negotiations between the managements of
the Company and ITHC. However, the Board of Directors did not obtain any
independent "fairness" opinion or other evaluation regarding the terms of the
Agreement, due to the cost of obtaining such opinion or evaluation.
Pursuant to the terms of the Agreement, the Company intends to call a
special shareholders' meeting in the very near future for the purpose of (a)
approving a one for four reverse split of the Company's outstanding Common
Stock; (b) approving a change of the Company's name to a name designated by
ITHC; (c) approving an amendment to the Articles of Incorporation to authorize
the issuance of preferred stock; (d) electing a slate of directors designated
by ITHC; and (e) approving a stock option plan.
After the effective date of the reverse stock split, a second closing
will be held on the transaction with ITHC, and an additional 4,949,611 post-
split shares will be issued to ITHC as final payment for the assets purchased.
The foregoing summary of the Agreement is qualified by reference to the
complete text of the Agreement, together with the schedules thereto, which is
filed as Exhibit 10 hereto, and is incorporated herein by this reference.
As a result of the transaction with ITHC and the issuance of the
29,242,952 shares of the Company's Common Stock and the sale of 12,602,431
shares of the Company's Common Stock, following are those persons known by the
Company to own 5% or more of the Company's Voting Stock:
PERCENT OF
NUMBER OF OUTSTANDING
NAME AND ADDRESS VOTING SHARES VOTING SHARES
----------------------- ------------- -------------
Inter-American Tele- 41,845,384 83.7%
communications Holding
Corporation
Suite 304
3220 S. Higuera Street
San Luis Obispo, CA 93401
Jim L. Boswell 41,845,384(1) 83.7%
Suite 304
3220 S. Higuera Street
San Luis Obispo, CA 93401
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Anderson Family Trust No. 2 41,845,384(1) 83.7%
Suite 108
2608 Second Avenue
Seattle, WA 98121
All directors and Officers 41,865,384(1)(2) 83.7%
as a Group (2 Persons)
______________
(1) Represents the shares held in the name of ITHC. Mr. Boswell is
President, a director and shareholder of ITHC and the Anderson
Family Trust No. 2 is a majority shareholder of ITHC.
(2) Includes 41,845,384 shares held by ITHC and 20,000 shares held
beneficially by David L. Jackson.
Effective on the closing of the acquisition, the Company's officers and
directors were as follows:
Jim L. Boswell - President and Director
David L. Jackson - Vice President, Secretary and Director
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
As described in Item 1 of this Report, on August 20, 1999, the Company
acquired all of the assets of ITHC in exchange for shares of the Company's
Common stock.
ITHC, through Cognigen, its e-commerce division, is a major marketer of
long-distance telecommunications services. Operating on the Internet via
thousands of Web sites, Cognigen markets both domestic and international long-
distance telephone service as well as prepaid calling cards through a network
of 33,000 independent agents to 150,000 subscribers worldwide. ITHC/Cognigen
sells over $3 million per month of discount long-distance service and prepaid
calling cards provisioned by several major carriers.
Since 1997, the Cognigen division has experienced significant growth in
the retail revenue it has generated in the size of its corps of agents, and in
the number of subscribers it has acquired and maintained. ITHC/Cognigen's
Internet presence operates through proprietary programs that provide for a
very high volume of visits with user friendly procedures that allow on-line
fulfillment of service applications. Typically, a Cognigen subscriber is able
to apply for, and obtain discount long-distance service within a matter of
hours rather than days.
ITHC/Cognigen's significant rate of growth can be seen by comparing its
performance for all of 1998 and for the first six months of 1999. In 1998,
based on unaudited results, the Cognigen Division realized net income of
$375,252 on retail revenues of $6,186,698. For the first six months of 1999,
based on unaudited results, Cognigen realized net income of $302,149 on retail
revenues of $9,624,661.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED. The financial
statements required by Rule 3-05(b) of Regulation S-X for ITHC are not yet
available, and will be filed by amendment on or before November 3, 1999.
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(b) PROFORMA FINANCIAL INFORMATION. The pro forma financial information
required by Article 11 of Regulation S-X is not yet available, and will be
filed by amendment on or before November 3, 1999.
(c) Exhibits.
Exhibit 10 Stock Purchase and Asset Acquisition Agreement
by and among Inter-American Telecommunications
Holding Corporation, Silverthorne Production
Company, et al.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, hereunto duly authorized.
SILVERTHORNE PRODUCTION COMPANY
Dated: September 17, 1999 By:/s/ Jim L. Boswell
Jim L. Boswell, President
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STOCK PURCHASE AND
ASSET ACQUISITION AGREEMENT
This Stock Purchase and Asset Acquisition Agreement (the "Agreement") is
entered into as of this 20th day of August 1999, by and among Silverthorne
Production Company, a Colorado corporation ("Silverthorne"), Inter-American
Telecommunications Holding Corporation, a Delaware corporation ("ITHC"), and
David L. Jackson, Patricia A. Jackson, Eric J. Sundsvold, and Karrie R.
Jackson, C/F W.R. Jackson (the "Selling Shareholders").
RECITALS
WHEREAS, Silverthorne is a publicly-traded company which has evaluated
and wishes to acquire all of the assets owned by ITHC in order to maximize
Silverthorne's business development for the benefit of Silverthorne and its
shareholders;
WHEREAS, ITHC is a privately held marketing service provider of long
distance communications services which desires to enter into a transaction in
which all of its assets would be transferred to Silverthorne and would result
in ITHC ultimately holding approximately 84.59% of the shares of Silverthorne
outstanding; and
WHEREAS, Selling Shareholders desire to sell an aggregate of 12,602,431
shares of Silverthorne common stock held by them to ITHC;
NOW, THEREFORE, in consideration of the mutual promises, covenants and
representations set forth below and other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereby agree
as follows:
ARTICLE 1
TRANSFER OF SECURITIES AND ASSETS
1.1 Transfer of Shares by Selling Shareholders. Subject to the terms
and conditions of this Agreement, Selling Shareholders agree to sell and ITHC
agrees to purchase an aggregate of 12,602,431 shares of Silverthorne common
stock in exchange for $190,000 in cash and 300 shares of ITHC's common stock.
The number of shares being sold by each Selling Shareholder is set forth in
the signature block to this Agreement. This sale shall occur at the First
Closing, as described herein.
1.2 Issuance of Shares. Subject to the terms and conditions of this
Agreement, Silverthorne hereby agrees to issue to ITHC at the First Closing,
29,242,953 restricted shares of Common Stock of Silverthorne; provided,
however, if Silverthorne has not been able to cancel the 75,000 shares held
in the name of David M. Anderson by the First Closing, the number issued to
ITHC will be reduced by 75,000, and Silverthorne agrees to use its best
efforts to have the 75,000 shares canceled as soon as possible at which time
the remaining 75,00 shares will be issued to ITHC. After the First Closing,
Silverthorne shall call a meeting of its shareholders for the purposes
described in this Agreement including the consideration of a 1 for 4 reverse
split of the outstanding shares of Silverthorne Common Stock. After the
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effective date of such reverse stock split, a Second Closing shall be held at
which an additional 4,949,611 post-split shares of Common Stock of
Silverthorne shall be issued to ITHC as final payment for the assets purchased
hereby. All of the shares of Silverthorne Common Stock to be issued to ITHC
shall be fully restricted under Rule 144 but shall be free and clear of any
and all encumbrances.
1.3 Transfer of Assets. In exchange for the shares of Silverthorne
Common Stock to be issued to ITHC, ITHC hereby agrees to transfer and assign
to Silverthorne, at the First Closing, fully and absolutely, all right, title
and interest of all of the assets of ITHC set forth on Schedule A which is
attached hereto and incorporated herein by reference, and ITHC agrees that
Silverthorne shall be the sole owner of such assets.
1.4 Exemption from Registration. The parties hereto intend that the
Common Stock to be issued by Silverthorne to ITHC shall be exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Act"), pursuant to Section 4(2) of the Act and the rules and regulations
promulgated thereunder, and the Common Stock to be transferred by Selling
Shareholders to ITHC shall be exempt from the registration requirements in
reliance upon Section 4(1) of the Act.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SILVERTHORNE
Except as disclosed in Schedule 2 which is attached hereto and
incorporated herein by reference, Silverthorne represents and warrants to ITHC
that:
2.1 Organization. Silverthorne is a corporation duly organized,
validly existing, and in good standing under the laws of Colorado, has all
necessary corporate powers to own properties and to carry on business, and it
is not now conducting any business, except to the extent to which the
effecting of the transaction contemplated by this Agreement constitutes doing
business.
2.2 Capitalization. The authorized capital stock of Silverthorne
consists of 50,000,000 shares of $.001 par value Common Stock of which
15,832,047 shares of Common Stock are currently issued and outstanding, and
75,000 of these shares are in the process of being cancelled. All of the
issued and outstanding shares of Common Stock are duly authorized, validly
issued, fully paid and nonassessable. There are no outstanding subscriptions,
options, rights, warrants, convertible securities, or other agreements or
commitments obligating Silverthorne to issue or to transfer from treasury any
additional shares of its capital stock of any class.
2.3 Subsidiaries. Silverthorne does not presently have any
subsidiaries or own any interest in any other enterprise (whether or not such
enterprise is a corporation).
2.4 Directors and Officers. Schedule 2 contains the names and titles
of all directors and officers of Silverthorne as of the date of this
Agreement.
2.5 Financial Statements. Silverthorne has delivered to ITHC its
audited balance sheet and statements of operations and cash flows as of and
for the period ended June 30, 1999 (the "Financial Statements"). The
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Financial Statements are complete and correct in all material respects and
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods indicated. The Financial
Statements accurately set out and describe the financial condition and
operating results of Silverthorne as of the dates, and for the periods,
indicated therein. As of the First Closing, there shall be no more than
$10,000 in liabilities.
2.6 Absence of Changes. Since June 30, 1999, except for changes in
the ordinary course of business which have not in the aggregate been
materially adverse, to the best of Silverthorne's knowledge, Silverthorne has
not experienced or suffered any material adverse change in its condition
(financial or otherwise), results of operations, properties, business or
prospects or waived or surrendered any claim or right of material value.
2.7 Absence of Undisclosed Liabilities. To the best of
Silverthorne's knowledge, neither Silverthorne nor any of its assets are
subject to any liabilities or obligations of any nature, whether absolute,
accrued, contingent or otherwise and whether due or to become due, that are
not reflected in the Financial Statements.
2.8 Tax Returns. Within the times and in the manner prescribed by
law, Silverthorne has filed all federal, state and local tax returns required
by law and has paid all taxes, assessments and penalties due and payable.
2.9 Investigation of Financial Condition. Without in any manner
reducing or otherwise mitigating the representations contained herein, ITHC
shall have the opportunity to meet with Silverthorne's accountants and
attorneys to discuss the financial condition of Silverthorne. Silverthorne
shall make available to ITHC all books and records of Silverthorne.
2.10 Trade Names and Rights. Silverthorne does not use any
trademark, service mark, trade name, or copyright in its business, or own any
trademarks, trademark registrations or applications, trade names, service
marks, copyrights, copyright registrations or applications.
2.11 Compliance with Laws. To the best of Silverthorne's knowledge,
Silverthorne has complied with, and is not in violation of, applicable
federal, state or local statutes, laws and regulations (including, without
limitation, any applicable building, zoning, or other law, ordinance, or
regulation) affecting its properties or the operation of its business.
2.12 Litigation. Silverthorne is not a party to any suit, action,
arbitration, or legal, administrative, or other proceeding, or governmental
investigation pending or, to the best knowledge of Silverthorne, threatened
against or affecting Silverthorne or its business, assets, or financial
condition. Silverthorne is not in default with respect to any order, writ,
injunction, or decree of any federal, state, local, or foreign court,
department agency, or instrumentality. Silverthorne is not engaged in any
legal action to recover moneys due to it.
2.13 No Pending Investigation. Silverthorne is not aware of any
pending investigations or legal proceedings by the SEC, any state securities
regulatory agency, or any other governmental agency regarding Silverthorne or
any officers or directors of Silverthorne or any shareholders or controlling
persons of such shareholders.
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2.14 Authority. Silverthorne has full corporate power and authority
to enter into this Agreement and to consummate the transactions contemplated
by this Agreement. The Board of Directors of Silverthorne has taken all
action required to authorize the execution and delivery of this Agreement by
or on behalf of Silverthorne, the performance of the obligations of
Silverthorne under this Agreement and the consummation by Silverthorne of the
transactions contemplated under this Agreement. No other corporate
proceedings on the part of Silverthorne are necessary to authorize the
execution and delivery of this Agreement by Silverthorne in the performance of
its obligations under this Agreement. This Agreement is, and when executed
and delivered by Silverthorne, will be a valid and binding agreement of
Silverthorne, enforceable against Silverthorne in accordance with its terms,
except as such enforceability may be limited by general principles of equity,
bankruptcy, insolvency, moratorium and similar laws relating to creditors
rights generally.
2.15 Ability to Carry Out Obligations. Neither the execution and
delivery of this Agreement, the performance by Silverthorne of its obligations
under this Agreement, nor the consummation of the transactions contemplated
under this Agreement will, to the best of Silverthorne's knowledge: (a)
violate any provision of Silverthorne's articles of incorporation or bylaws;
(b) with or without the giving of notice or the passage of time, or both,
violate, or be in conflict with, or constitute a default under, or cause or
permit the termination or the acceleration of the maturity of, any debt,
contract, agreement or obligation of Silverthorne, or require the payment of
any prepayment or other penalties; (c) require notice to, or the consent of,
any party to any agreement or commitment, lease or license, to which
Silverthorne is bound; (d) result in the creation or imposition of any
security interest, lien or other encumbrance upon any property or assets of
Silverthorne; or (e) violate any statute or law or any judgment, decree,
order, regulation or rule of any court or governmental authority to which
Silverthorne is bound or subject.
2.16 Validity of Silverthorne Shares. The shares of Silverthorne
Common Stock to be delivered pursuant to this Agreement, when issued in
accordance with the provisions of this Agreement, will be duly authorized,
validly issued, fully paid and nonassessable.
2.17 Full Disclosure. None of the representations and warranties
made by Silverthorne herein, or in any exhibit, certificate or memorandum
furnished or to be furnished by Silverthorne, or on its behalf, contains or
will contain any untrue statement of material fact, or omit any material fact
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading.
2.18 Assets. Silverthorne does not have any assets.
2.19 Material Contracts and Obligations. Silverthorne has no
material contracts to which it is a party or by which it is bound.
2.20 Consents and Approvals. No consent, approval or authorization
of, or declaration, filing or registration with, any governmental or
regulatory authority is required to be made or obtained by Silverthorne in
connection with: (a) the execution and delivery by Silverthorne of its
obligations under this Agreement; (b) the performance by Silverthorne of its
obligations under this Agreement; or (c) the consummation by Silverthorne of
the transactions contemplated by this Agreement.
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2.21 Real Property. Silverthorne does not own, use or claim any
interest in any real property, including without limitation any license,
leasehold or any similar interest in real property.
2.22 Articles of Incorporation and Bylaws. The Articles of
Incorporation of Silverthorne and all amendments thereto to date, certified by
the Secretary of State of the State of Colorado, and the by-laws of
Silverthorne, as amended to date, certified by Silverthorne's Secretary or
Assistant Secretary, (1) shall be delivered to ITHC at the First Closing, (2)
are true, complete and correct and (3) have not been further amended
subsequent to the date of delivery of such documents. The minute book of
Silverthorne (or a true and correct copy thereof, certified by the Secretary
or Assistant Secretary of Silverthorne) (1) shall be delivered to legal
counsel to ITHC at the First Closing and (2) correctly reflects all actions
taken and resolutions adopted by Silverthorne, the board of directors and all
committees of the board of directors of Silverthorne.
2.23 Termination of Pricenet.com Transaction. The transaction
between Silverthorne and Pricenet.com which was executed on March 11, 1999,
was terminated on March 30, 1999, and Silverthorne has no liabilities or
obligations with respect thereto.
2.24 SEC Filings. Silverthorne is current in its filings with the
SEC required under the Securities Exchange Act of 1934, as amended (the "SEC
Filings"). The SEC filings, as of their respective filing dates, complied in
all material respects with all applicable requirements of the Exchange Act and
the SEC Filings, as of their filing dates, did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements and information
therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ITHC
Except as disclosed in Schedule 3 which is incorporated herein by
reference, ITHC represents, warrants and covenants to the Silverthorne that:
3.1 Authority of ITHC. ITHC is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. ITHC
has full corporate power and authority to enter into this Agreement, to
consummate these transactions and to comply with its terms, conditions and
provisions. This Agreement constitutes, and each other agreement and
instrument to be executed and delivered pursuant to the terms of this
Agreement (collectively, the "ITHC Transaction Documents") by ITHC will
constitute, the legal, valid and binding obligation of the ITHC enforceable in
accordance with such ITHC Transaction Document's terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally or by
general equitable principles. Neither the execution and delivery of this
Agreement or other ITHC Transaction Documents, nor the consummation of the
transactions contemplated by it or them will conflict with or result in any
violation of or constitute a default under any term of the Articles of
Incorporation or Bylaws of the ITHC or any agreement, mortgage, debt
instrument, indenture or other instrument, judgment, decree, order, award, law
or regulation by which ITHC is bound.
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3.2 Consents. No consent, approval, authorization or other action
by, or filing or registration with, any federal, state or local governmental
authority or any other person or entity, is required in connection with the
execution and delivery by ITHC of this Agreement, the consummation by ITHC of
the transactions contemplated hereby or the performance of ITHC's obligations
hereunder.
3.3 Investment Intent. ITHC is acquiring the shares of Silverthorne
Common Stock pursuant to this Agreement from Silverthorne and the Selling
Shareholders for investment purposes and not with a view to public
distribution, provided that such shares may be distributed by ITHC to its
shareholders. ITHC understands that the shares of Silverthorne Common Stock
to be acquired constitute "restricted securities" as that term is defined
under Rule 144 under the Securities Act of 1933, as amended.
3.4 Title to Assets. ITHC is the owner of its assets with the full
right to sell or dispose of such assets. Excepting only the lien of property
taxes not delinquent and the security interests disclosed in Schedule 3, ITHC
has title to the assets, free and clear of any interest to secure payment or
performance of an obligation, or which retains or reserves such an interest
for such purpose.
3.5 Material Contracts. There are no contracts (including written
employment contracts), permits or agreements of any kind which materially
affect the assets other than those which have been disclosed in Schedule 3
attached hereto; and ITHC will not enter into any new contracts or agreements
which would materially affect such asset without the prior written consent of
Silverthorne.
3.6 Tax Returns. Within the times and in the manner prescribed by
law, ITHC has filed all federal, state and local tax returns required by law
and has paid all taxes, assessments and penalties due and payable.
3.7 Compliance with Laws. To the best of ITHC's knowledge, ITHC has
complied with, and is not in violation of, applicable federal, state or local
statutes, laws and regulations (including, without limitation, any applicable
building, zoning, or other law, ordinance, or regulation) affecting its
properties or the operation of its business.
3.8 Litigation. ITHC is not a party to any suit, action,
arbitration, or legal, administrative, or other proceeding, or governmental
investigation pending or, to the best knowledge of ITHC, threatened against or
affecting ITHC or its business, assets, or financial condition. ITHC is not
in default with respect to any order, writ, injunction, or decree of any
federal, state, local, or foreign court, department, agency, or
instrumentality. ITHC is not engaged in any legal action to recover monies
due to it.
3.9 No Pending Investigation. ITHC is not aware of any pending
investigations or legal proceedings by the SEC, any state securities
regulatory agency, or any other governmental agency regarding ITHC or any
officers or directors of ITHC or any shareholders or controlling persons of
such shareholders.
3.10 Disclosures. No representation or warranty by ITHC in this
Agreement or any Schedule or Exhibit, or any statement, list or certificate
furnished or to be furnished by the ITHC pursuant to this Agreement, or in
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connection with these transactions, contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
required to be stated herein or therein or necessary to make the statements
contained herein or therein not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLING SHAREHOLDERS
The Selling Shareholders hold at least the number of shares set forth
next to their names on the signature page hereof, and the shares to be sold
by the Selling Shareholders hereunder are owned of record and beneficially by
the respective Selling Shareholders and are not subject to any claim, lien,
encumbrance or pledge. Each Selling Shareholder has authority to sell such
shares pursuant to this Agreement.
ARTICLE 5
COVENANTS
5.1 Investigative Rights. From the date of this Agreement until the
First Closing, each party shall provide to the other party, and such other
party's counsels, accountants, auditors, and other authorized representatives,
full access during normal business hours and upon reasonable advance written
notice to all of each party's properties, books, contracts, commitments, and
records for the purpose of examining the same. Each party shall furnish the
other party with all information concerning each party's affairs as the other
party may reasonably request. If the transaction contemplated hereby is not
completed, all documents received by each party and/or its attorneys and
accountants, auditors or other authorized representatives shall be returned to
the other party who provided same upon request. The parties hereto, their
directors, employees, agents and representatives shall not disclose any of the
information described above unless such information is already disclosed to
the public, without the prior written consent of the party to which the
confidential information pertains. Each party shall take such steps as are
necessary to prevent disclosure of such information to unauthorized third
parties.
5.2 Conduct of Business. Prior to the First Closing, Silverthorne
and ITHC shall each conduct its business in the normal course, and shall not
sell, pledge, or assign any assets, without the prior written approval of the
other party, except in the regular course of business. Neither Silverthorne
nor ITHC shall amend its Articles of Incorporation or Bylaws, declare
dividends, redeem or sell stock or other securities, incur additional or
newly-funded liabilities, acquire or dispose of fixed assets, change
employment terms, enter into any material or long-term contract, guarantee
obligations of any third party, settle or discharge any balance sheet
receivable for less than its stated amount, pay more on any liability than its
stated amount, or enter into any other transaction other than in the regular
course of business except as otherwise contemplated herein. The parties do
contemplate that ITHC may incur additional debt prior to the date of the First
Closing.
5.3 Meeting of Silverthorne Shareholders. Following the First
Closing, Silverthorne shall, as soon as reasonably possible, call a meeting of
the Shareholders of Silverthorne for the purposes of (a) approving a 1 for 4
reverse split of the outstanding Common Stock of Silverthorne; (b) a change of
Silverthorne's name to a name designated by ITHC; (c) approving an amendment
to the Articles of Incorporation of Silverthorne to authorize the issuance of
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preferred stock in series in a number designated by ITHC; (d) electing a slate
of Directors designated by ITHC; (e) approving a stock option plan designated
by ITHC; and (f) approving any other amendments to the Articles of
Incorporation reasonably requested by ITHC.
ARTICLE 6
CONDITIONS PRECEDENT TO SILVERTHORNE'S PERFORMANCE
6.1 Conditions. The obligations of Silverthorne hereunder shall be
subject to the satisfaction, at or before the First Closing, of all the
conditions set forth in this Article 6. Silverthorne may waive any or all of
these conditions in whole or in part without prior notice; provided, however,
that no such waiver of a condition shall constitute a waiver by Silverthorne
of any other condition of or any of Silverthorne's other rights or remedies,
at law or in equity, if ITHC shall be in default of any of their
representations, warranties, or covenants under this Agreement.
6.2 Accuracy of Representations. Except as otherwise permitted by
this Agreement, all representations and warranties by ITHC in this Agreement
or in any written statement that shall be delivered to Silverthorne by ITHC
under this Agreement shall be true and accurate on and as of the First Closing
as though made at that time.
6.3 Approval of Shareholders of ITHC. The shareholders of ITHC shall
have approved the transfer of all of the assets of ITHC in the manner
prescribed by the Delaware Business Corporation Act.
6.4 Performance. ITHC shall have performed, satisfied, and complied
with all covenants, agreements, and conditions required by this Agreement to
be performed or complied with by it, on or before the First Closing.
6.5 Delivery of Assignment. ITHC shall have delivered an assignment
of all of its assets to Silverthorne.
6.6 Auditor's Letter. Prior to the First Closing, ITHC shall have
obtained a letter from its auditors that states that they will be able to
complete an audit of ITHC for its last two fiscal years within 75 days of the
date of the First Closing.
6.7 Absence of Litigation. No action, suit, or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened against ITHC on or before the First Closing.
ARTICLE 7
CONDITIONS PRECEDENT TO ITHC'S PERFORMANCE
7.1 Conditions. ITHC's obligations hereunder shall be subject to the
satisfaction, at or before the Closing, of all the conditions set forth in
this Article 7. ITHC may waive any or all of these conditions in whole or in
part without prior notice; provided, however, that no such waiver of a
condition shall constitute a waiver by ITHC of any other condition of or any
of ITHC's rights or remedies, at law or in equity, if Silverthorne shall be in
default of any of its representations, warranties, or covenants under this
Agreement.
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7.2 Accuracy of Representations. Except as otherwise permitted by
this Agreement, all representations and warranties by Silverthorne in this
Agreement or in any written statement that shall be delivered to ITHC by
Silverthorne under this Agreement shall be true and accurate on and as of the
Closing Date as though made at that time.
7.3 Performance. Silverthorne shall have performed, satisfied, and
complied with all covenants, agreements, and conditions required by this
Agreement to be performed or complied with by them, on or before the Closing
Date.
7.4 Absence of Litigation. No action, suit or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened against Silverthorne on or before the Closing Date.
7.5 Directors of Silverthorne. Effective on the First Closing,
Patricia A. Jackson shall have submitted her resignation as a Director of
Silverthorne, and one person designated by ITHC shall have been elected as a
Director effective on the Closing of this transaction.
ARTICLE 8
CLOSING
8.1 First Closing. The First Closing of this transaction shall be
held at the offices of Krys Boyle Freedman & Sawyer, P.C., or such other place
as shall be mutually agreed upon, on August 23, 1999, or as soon thereafter as
practicable. At the First Closing:
(a) Selling Shareholders shall deliver to ITHC stock
certificates aggregating 12,602,431 shares of Common Stock of Silverthorne
together with duly executed stock powers with Medallion Guarantees.
(b) ITHC shall deliver to Selling Shareholders cashiers checks
totaling $190,000 payable to Selling Shareholders and stock certificates
representing an aggregate of 300 shares of ITHC common stock.
(c) Silverthorne shall deliver to ITHC a stock certificate
representing 29,242,953 shares of Silverthorne restricted Common Stock
registered in the name of ITHC; or this number may be reduced by 75,000
pursuant to the provisions of Section 1.2 above.
(d) ITHC shall deliver to Silverthorne an assignment of all of
its assets in a form or forms approved by counsel for Silverthorne.
(e) Silverthorne shall deliver a signed Consent and/or Minutes
of the Directors approving this transaction.
(f) ITHC shall deliver a signed Consent and/or Minutes of the
Directors and Shareholders of ITHC approving this Agreement and each matter to
be approved by the Directors and Shareholders of ITHC.
(g) Silverthorne shall deliver a certificate of its President,
dated the closing date, certifying that all of the representations and
warranties by Silverthorne are true and accurate as of the closing date, and
that all of the conditions to be performed or complied with by it, including
the conditions set forth in Sections 7.2 through 7.6 hereof, have been met.
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(h) ITHC shall deliver a certificate of its President, dated the
closing date, certifying that all of the representations and warranties by
ITHC are true and accurate as of the closing date, and that all of the
conditions to be performed or complied with by it, including the conditions
set forth in Sections 6.2 through 6.7 hereof, have been met.
(i) Silverthorne shall deliver to Mike Underwood and Andy Ungar
certificates aggregating 5,000,000 shares of Silverthorne restricted Common
Stock as partial payment of finders' fees.
8.2 Second Closing. The Second Closing of this transaction shall be
held at the offices of Krys Boyle Freedman & Sawyer, P.C., or such other place
as shall be mutually agreed upon at such date and time as the parties shall
agree upon, which date shall be after the effective date of a 1 for 4 reverse
split of the outstanding Common Stock of Silverthorne. At the Second Closing:
(a) Silverthorne shall deliver to ITHC a stock certificate
representing 4,949,611 post-split shares of Silverthorne's Common Stock
registered in the name of ITHC.
(b) Silverthorne shall deliver to ITHC signed Minutes of a
meeting of the Shareholders of Silverthorne at which the matters set forth in
paragraph 5.3 shall have been approved.
(c) Silverthorne shall deliver to Mike Underwood and Andy Ungar
certificates representing a total of 550,000 post-split shares of Silverthorne
Common Stock as final payment of finders' fees.
ARTICLE 9
MISCELLANEOUS
9.1 Captions and Headings. The Article and paragraph headings
throughout this Agreement are for convenience and reference only, and shall in
no way be deemed to define, limit, or add to the meaning of any provision of
this Agreement.
9.2 No Oral Change. This Agreement and any provision hereof, may not
be waived, changed, modified, or discharged orally, but it can be changed by
an agreement in writing signed by the party against whom enforcement of any
waiver, change, modification, or discharge is sought.
9.3 Non-Waiver. Except as otherwise expressly provided herein, no
waiver of any covenant, condition, or provision of this Agreement shall be
deemed to have been made unless expressly in writing and signed by the party
against whom such waiver is charged; and (i) the failure of any party to
insist in any one or more cases upon the performance of any of the provisions,
covenants, or conditions of this Agreement or to exercise any option herein
contained shall not be construed as a waiver or relinquishment for the future
of any such provisions, covenants, or conditions, (ii) the acceptance of
performance of anything required by this Agreement to be performed with
knowledge of the breach or failure of a covenant, condition, or provision
hereof shall not be deemed a waiver of such breach or failure, and (iii) no
waiver by any party of one breach by another party shall be construed as a
waiver with respect to any other or subsequent breach.
9.4 Time of Essence. Time is of the essence of this Agreement and of
each and every provision hereof.
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9.5 Entire Agreement. This Agreement contains the entire Agreement
and understanding between the parties hereto, and supersedes all prior
agreements and understandings. There are and have in fact been no
restrictions, promises, warranties or undertakings other than those set forth
herein. Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated except by a subsequent amendment in writing signed by
all parties hereto.
9.6 Choice of Law. This Agreement and its application shall be
governed by the laws of the State of Colorado, except to the extent its
conflict of laws provisions would apply the laws of another jurisdiction, and
Colorado will be the proper venue for jurisdictional purposes for any actions
brought to enforce this Agreement.
9.7 Notices. All notices, requests, demands, and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of service if served personally on the party
to whom notice is to be given, or on the third day after mailing if mailed to
the party to whom notice is to be given, by first class mail, registered or
certified, postage prepaid, and properly addressed as follows:
Silverthorne and Selling Shareholders:
David L. Jackson, President
Silverthorne Production Company
16053 Via Viajera
Rancho Santa Fe, California 92091
Telecopy: (619) 759-9123
with a copy to:
Jon D. Sawyer, Esq.
Krys Boyle Freedman Scott & Sawyer, P.C.
600 Seventeenth Street, Suite 2700 South Tower
Denver, Colorado 80202
Telecopy: (303) 893-2882
ITHC:
Peter Tilyou
Inter-American Telecommunications Holding Corporation
2608 Second Avenue, Suite 108
Seattle, Washington 98121
Telecopy: (___) ___-____
with a copy to:
Thomas S. Smith
Smith McCullough, P.C.
4643 South Ulster Street, Suite 900
Denver, CO 80237
Telecopy: (303) 221-6001
9.8 Binding Effect. This Agreement shall inure to and be binding
upon the heirs, executors, personal representatives, successors and assigns of
each of the parties to this Agreement.
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9.9 Mutual Cooperation. The parties hereto shall cooperate with each
other to achieve the purpose of this Agreement, and shall execute such other
and further documents and take such other and further actions as may be
necessary or convenient to effect the transaction described herein.
9.10 Brokers. Other than as set forth herein, the parties hereto
represent and agree that no broker has brought about the aforementioned
transaction. Each of the parties hereto shall indemnify and hold the other
harmless against any and all claims, losses, liabilities or expenses which may
be asserted against it as a result of its dealings, arrangements or agreements
with any broker or person, except as described in this paragraph.
9.11 Announcements. Silverthorne and ITHC will consult and cooperate
with each other as to the timing and content of any announcements of the
transactions contemplated hereby to the general public or to employees,
customers or suppliers.
9.12 Expenses. Silverthorne and ITHC will pay their own legal,
accounting and any other out-of-pocket expenses reasonably incurred in
connection with this transaction, whether or not the transaction contemplated
hereby is consummated.
9.13 Exhibits. As of the execution hereof, the parties hereto have
provided each other with the Exhibits provided for herein above, including any
items referenced therein or required to be attached thereto. Any material
changes to the Exhibits shall be immediately disclosed to the other party.
9.14 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be considered an original instrument and all
of which together will be considered one and the same agreement, and will
become effective when counterparts, which together contain the signatures of
each party, will have been delivered to Silverthorne and to ITHC. Delivery of
executed signature pages by facsimile transmission will constitute effective
and binding execution and delivery of this Agreement.
AGREED TO AND ACCEPTED as of the date first above written.
SILVERTHORNE PRODUCTION INTER-AMERICAN
COMPANY TELECOMMUNICATIONS HOLDING
CORPORATION
By:/s/ David L. Jackson By:/s/ Jim L. Boswell
David L. Jackson, President Jim L. Boswell, President
SELLING SHAREHOLDERS:
/s/ David L. Jackson
David L. Jackson (10,536,720 shares)
/s/ Eric J. Sundsvold
Eric J. Sundsvold (1,715,280 shares)
/s/ Patricia A. Jackson
Patricia A. Jackson (175,231 shares)
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/s/ Karrie R. Jackson
Karrie R. Jackson, C/F W.R. Jackson
(175,200 shares)
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SCHEDULE 1
1. TELKIOSK-PERIMEX ASSETS ITHC WILL DELIVER AT TIME OF CLOSING:
1.1 An electronically archived customer database consisting of no less
than 54,034 individual residential and business long distance
telephone service subscriber accounts.
2. CTC ASSETS ITHC WILL DELIVER AT TIME OF CLOSING:
2.1 An electronically archived customer database consisting of no less
than 41,415 individual residential and business long-distance
telephone service subscriber accounts.
3. COGNIGEN ASSETS ITHC WILL DELIVER AT TIME OF CLOSING:
3.1 All of its agency, reseller and other agreements and contracts
Seller has with carriers, switched resellers, unswitched resellers,
consolidators or other providers of long distance and local
telephone service.
3.2 All accounts receivable, commissions receivable, future commis-
sions that are and may be payable from any of the carriers,
switched resellers, unswitched resellers, consolidators or other
providers of long distance and local telephone service.
3.3 All computer software, proprietary programs and applications,
computers, monitors, peripherals, printers, copiers, telephone
PABX systems, office furniture and fixtures, office leases,
belonging to and used by the Seller in the conduct of its business.
3.4 All of the ITHC/Cognigen's customer databases, customer lists,
print and electronic records relating to customers.
3.5 Inventories and orders for prepaid telephone cards.
3.6 All new accounts generated via Cognigen's web sites or through
direct sales.
3.7 All web sites, pages, links and agreements related to the conduct
of its core telecommunications business as well as all Internet
domains, and e-mail addresses.
3.8 All of the ITHC/Cognigen's agreements with agents and their sub-
agents within or without its multilevel marketing system.
3.9 Exclusive use and control of the name "Cognigen" and its attendant
copyright, trade name, trademark and service mark registrations
both federal and state that may exist.
3.10 All other intellectual property of the Seller owned and used in
connection with the conduct of its core telecommunications business.
3.11 All its lines of credit with carriers, prepaid card providers,
switched resellers, switchless resellers and other providers of
local and long distance phone service.
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SCHEDULE 2
SILVERTHORNE PRODUCTION COMPANY
("Silverthorne")
2.4 The officers and directors of Silverthorne are as follows:
Name Position
David L. Jackson President, CEO and Director
Patricia A. Jackson Secretary and Director
