Document:

Exhibit 10.1

 

 

AGREEMENT

 

CONCERNING THE EXCHANGE OF SECURITIES

 

BY AND AMONG

 

MAUNA KEA ENTERPRISES, INC.

 

AND

 

FAIRGROUND MEDIA, LLC

 

AND

 

THE
SECURITY HOLDERS OF FAIRGROUND MEDIA, LLC

 

 

 

INDEX

	
   

  	
   

  	
   

  	
  Page

  
	
  ARTICLE I — Exchange of Securities

  	
  1

  
	
   

  	
   

  
	
   

  	
  1.1

  	
  Issuance of Securities

  	
  1

  
	
   

  	
  1.2

  	
  Exemption from Registration

  	
  1

  
	
   

  	
  1.3

  	
  Corporate Action

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II — Representations and Warranties of Fairground

  	
  2

  
	
   

  	
   

  
	
   

  	
  2.1

  	
  Organization

  	
  2

  
	
   

  	
  2.2

  	
  Capital

  	
  2

  
	
   

  	
  2.3

  	
  Subsidiaries

  	
  2

  
	
   

  	
  2.4

  	
  Directors and Officers

  	
  2

  
	
   

  	
  2.5

  	
  Financial Statements

  	
  2

  
	
   

  	
  2.6

  	
  Absence of Changes

  	
  2

  
	
   

  	
  2.7

  	
  Absence of
  Undisclosed Liabilities

  	
  3

  
	
   

  	
  2.8

  	
  Tax Returns

  	
  3

  
	
   

  	
  2.9

  	
  Investigation of Financial Condition

  	
  3

  
	
   

  	
  2.10

  	
  Intellectual Property Rights

  	
  3

  
	
   

  	
  2.11

  	
  Compliance with Laws

  	
  3

  
	
   

  	
  2.12

  	
  Litigation

  	
  3

  
	
   

  	
  2.13

  	
  Authority

  	
  3

  
	
   

  	
  2.14

  	
  Ability to Carry Out Obligations

  	
  4

  
	
   

  	
  2.15

  	
  Full Disclosure

  	
  4

  
	
   

  	
  2.16

  	
  Assets

  	
  4

  
	
   

  	
  2.17

  	
  Material Contracts

  	
  4

  
	
   

  	
  2.18

  	
  Indemnification

  	
  4

  
	
   

  	
  2.19

  	
  Criminal or Civil Acts

  	
  4

  
	
   

  	
  2.20

  	
  Restricted Securities

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III — Representations and Warranties of Mauna Kea

  	
  4

  
	
   

  	
   

  
	
   

  	
  3.1

  	
  Organization

  	
  5

  
	
   

  	
  3.2

  	
  Capital

  	
  5

  
	
   

  	
  3.3

  	
  Subsidiaries

  	
  5

  
	
   

  	
  3.4

  	
  Directors
  and Officers

  	
  5

  
	
   

  	
  3.5

  	
  Financial Statements

  	
  5

  
	
   

  	
  3.6

  	
  Absence of
  Changes

  	
  5

  
	
   

  	
  3.7

  	
  Absence of Undisclosed Liabilities

  	
  5

  
	
   

  	
  3.8

  	
  Tax Returns

  	
  5

  
	
   

  	
  3.9

  	
  Investigation of Financial
  Condition

  	
  6

  
	
   

  	
  3.10

  	
  Intellectual Property Rights

  	
  6

  
	
   

  	
  3.11

  	
  Compliance with Laws

  	
  6

  
	
   

  	
  3.12

  	
  Litigation

  	
  6

  
	
   

  	
  3.13

  	
  Authority

  	
  6

  
						

 

 

i

 

 

	
   

  	
  3.14

  	
  Ability to Carry Out
  Obligations

  	
  6

  
	
   

  	
  3.15

  	
  Full Disclosure

  	
  6

  
	
   

  	
  3.16

  	
  Assets

  	
  6

  
	
   

  	
  3.17

  	
  Material Contracts

  	
  6

  
	
   

  	
  3.18

  	
  Indemnification

  	
  7

  
	
   

  	
  3.19

  	
  Criminal or Civil Acts

  	
  7

  
	
   

  	
  3.20

  	
  Trading Status

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV — Covenants Prior to the Closing Date

  	
  7

  
	
   

  	
   

  
	
   

  	
  4.1

  	
  Investigative
  Rights

  	
  7

  
	
   

  	
  4.2

  	
  Conduct of Business

  	
  7

  
	
   

  	
  4.3

  	
  Confidential Information

  	
  7

  
	
   

  	
  4.4

  	
  Notice of Non-Compliance

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V — Conditions Precedent to Mauna Kea’s Performance

  	
  8

  
	
   

  	
   

  
	
   

  	
  5.1

  	
  Conditions

  	
  8

  
	
   

  	
  5.2

  	
  Accuracy of Representations

  	
  8

  
	
   

  	
  5.3

  	
  Performance

  	
  8

  
	
   

  	
  5.4

  	
  Absence of Litigation

  	
  8

  
	
   

  	
  5.5

  	
  Officer’s Certificate

  	
  8

  
	
   

  	
  5.6

  	
  Corporate Action

  	
  8

  
	
   

  	
  5.7

  	
  Execution of the Investor Rights Agreement

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI — Conditions Precedent to Fairground’s Performance

  	
  9

  
	
   

  	
   

  
	
   

  	
  6.1

  	
  Conditions

  	
  9

  
	
   

  	
  6.2

  	
  Accuracy of Representations

  	
  9

  
	
   

  	
  6.3

  	
  Performance

  	
  9

  
	
   

  	
  6.4

  	
  Absence of Litigation

  	
  9

  
	
   

  	
  6.5

  	
  Officer’s Certificate

  	
  9

  
	
   

  	
  6.6

  	
  Payment of Liabilities

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII — Closing

  	
  10

  
	
   

  	
   

  
	
   

  	
  7.1

  	
  Closing

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII — Covenants Subsequent to the Closing Date

  	
  10

  
	
   

  	
   

  
	
   

  	
  8.1

  	
  Registration of Certain Shares of Mauna Kea

  	
  10

  
	
   

  	
  8.2

  	
  Registration and Listing

  	
  10

  
	
   

  	
  8.3

  	
  Directors of Mauna Kea

  	
  10

  
	
   

  	
  8.4

  	
  Officers of Mauna Kea

  	
  10

  
	
   

  	
  8.5

  	
  Other Actions

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX — Miscellaneous

  	
  11

  

 

ii

 

	
   

  	
  9.1

  	
  Captions and Headings

  	
  11

  
	
   

  	
  9.2

  	
  No Oral Change

  	
  11

  
	
   

  	
  9.3

  	
  Non-Waiver

  	
  11

  
	
   

  	
  9.4

  	
  Time of Essence

  	
  11

  
	
   

  	
  9.5

  	
  Entire Agreement

  	
  11

  
	
   

  	
  9.6

  	
  Choice of Law

  	
  11

  
	
   

  	
  9.7

  	
  Counterparts

  	
  11

  
	
   

  	
  9.8

  	
  Notices

  	
  11

  
	
   

  	
  9.9

  	
  Binding Effect

  	
  12

  
	
   

  	
  9.10

  	
  Mutual Cooperation

  	
  12

  
	
   

  	
  9.11

  	
  Finders

  	
  12

  
	
   

  	
  9.12

  	
  Announcements

  	
  12

  
	
   

  	
  9.13

  	
  Survival of Representations and
  Warranties

  	
  12

  
	
   

  	
  9.14

  	
  Exhibits

  	
  12

  
	
   

  	
  9.15

  	
  Termination, Amendment and Waiver

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Allocation
  of Securities

  	
  Exhibit 1.1

  
	
   

  	
   

  	
  Subscription
  Agreement

  	
  Exhibit 1.2

  
	
   

  	
   

  	
  Financial
  Statements of Fairground

  	
  Exhibit 2.5

  
	
   

  	
   

  	
  Investment
  Agreement

  	
  Exhibit 3.2

  
	
   

  	
   

  	
  Financial
  Statements of Mauna Kea

  	
  Exhibit 3.5

  
	
   

  	
   

  	
  Investor
  Rights Agreement

  	
  Exhibit 5.7

  
	
   

  	
   

  	
  Officers
  to be Appointed

  	
  Exhibit 8.4

  
					

 

 

iii

AGREEMENT CONCERNING

THE EXCHANGE OF SECURITIES

 

                THIS AGREEMENT CONCERNING THE
EXCHANGE OF SECURITIES (“Agreement”) is made this 24th
day of July, 2007, by and between Mauna Kea Enterprises, Inc., a Colorado
corporation (“Mauna Kea”), Fairground Media, LLC, a Colorado limited liability
company (“Fairground”), and the security holders of Fairground (the “Fairground
Security Holders”) who are listed on Exhibit 1.1 hereto and have executed
Subscription Agreements in the form attached in Exhibit 1.2, hereto.

 

                WHEREAS, Mauna Kea desires to
acquire all of the issued and outstanding limited liability company membership
interests (“Interests”) of Fairground from the Fairground Security Holders in
exchange for newly issued unregistered shares of common stock of Mauna Kea;

 

                WHEREAS, Fairground desires to
assist Mauna Kea in acquiring all of the issued and outstanding Interests of
Fairground pursuant to the terms of this Agreement; and

 

                WHEREAS, all of the Fairground
Security Holders, by execution of Exhibit 1.2 hereto, agree to exchange all of
the Interests they hold in Fairground for 8,100,000 shares of Common Stock of
Mauna Kea.

 

                NOW, THEREFORE, in consideration
of the mutual promises, covenants and representations contained herein, the
parties hereto agree as follows:

 

ARTICLE I

 

Exchange of Securities

 

                1.1           Issuance
of Securities.  Subject to the
terms and conditions of this Agreement, Mauna Kea agrees to issue and exchange
8,100,000 fully paid and non-assessable unregistered shares of Mauna Kea’s no
par value common stock (the “Mauna Kea Shares”) for all issued and outstanding
Interests of Fairground (the “Fairground Interests”) held by the Fairground
Security Holders.  All Mauna Kea Shares
will be issued directly to the Fairground Security Holders on the Closing Date
(as hereinafter defined), pursuant to the schedule set forth in Exhibit 1.1.

 

                1.2           Exemption
from Registration.  The
parties hereto intend that all Mauna Kea common stock to be issued to the
Fairground Security Holders shall be exempt from the registration requirements
of the Securities Act of 1933, as amended (the “Act”), pursuant to Section 4(2)
and/or Regulation D of the Act and rules and regulations promulgated
thereunder.  In furtherance thereof, each
of the Fairground Security Holders will execute and deliver to Mauna Kea on the
closing date of this Agreement (the “Closing Date”) a copy of the Subscription
Agreement set forth in Exhibit 1.2 hereto.

 

                1.3           Corporate Action.  After the Closing Date, Mauna Kea shall adopt
a Stock Option Plan a providing for the issuance of options to acquire up to
900,000 shares of Common Stock of Mauna Kea.

 

 

 

ARTICLE II

 

Representations and Warranties of Fairground

 

                Fairground hereby
represents and warrants to Mauna Kea that:

 

                2.1           Organization.  Fairground is a limited liability company
duly organized, validly existing and in good standing under the laws of
Colorado, has all necessary corporate powers to own its properties and to carry
on its business as now owned and operated by it, and is duly qualified to do business
and is in good standing in each of the states where its business requires
qualification.

 

                2.2           Capital.  The members of the Company are Mark Kreloff,
Andrew Brandt, Dave Rogers, Bret Orton, Luke Miller,  Kevin Kerndt and Waveland Colorado Ventures,
LLC, with each such member owning a percentage of the Interests (“Sharing Ratio”)
as set forth on Exhibit 1.1.  All of the
outstanding Interests of Fairground are duly and validly issued, fully paid and
non-assessable.  There are no
outstanding subscriptions, options, rights, warrants, debentures, instruments,
convertible securities or other agreements or commitments obligating Fairground
to issue any additional Interests.

 

                2.3           Subsidiaries.  Fairground does not have any subsidiaries or
own any interest in any other enterprise.

 

                2.4           Managers.  The name and title of the manager of
Fairground as of the date of this Agreement is as follows:

 

	
  Name

  	
   

  	
  Position

  
	
  Mark Kreloff

  	
   

  	
  Manager

  

 

                2.5           Financial
Statements.  Exhibit 2.5
hereto consists of the unaudited financial statements of Fairground for the
period from inception (July 20, 2006) through December 31, 2006 and the
unaudited financial statements of Fairground for the six months ended June 30,
2007 (the “Fairground Financial Statements”). 
The Fairground Financial Statements have been prepared in accordance
with generally accepted accounting principles and practices consistently
followed by Fairground throughout the period indicated, and fairly present the
financial position of Fairground as of the date of the balance sheet included
in the Fairground Financial Statements and the results of operations for the
period indicated.  There are no material
omissions or non-disclosures in the Fairground Financial Statements.

 

                2.6           Absence
of Changes.  Since June 30,
2007, there has not been any material change in the financial condition or
operations of Fairground, except as contemplated by this Agreement.  As used throughout this Agreement, “material”
means:  Any change or effect (or
development that, insofar as can be reasonably foreseen, is likely to result in
any change or effect) that causes substantial increase or diminution in the
business, properties, assets, condition (financial or otherwise) or results of
operations of a party.  Taken as a whole,
material change 

 

 

2

 

 

shall not include changes in national or international economic
conditions or industry conditions generally; changes or possible changes in
statutes and regulations applicable to a party; or the loss of employees,
customers or suppliers by a party as a direct or indirect consequence of any
announcement relating to this transaction.

 

                2.7           Absence
of Undisclosed Liabilities. 
As of June 30, 2007, Fairground did not have any material debt,
liability or obligation of any nature, whether accrued, absolute, contingent or
otherwise, and whether due or to become due, that is not reflected in the
Fairground Financial Statements.

 

                2.8           Tax
Returns.  Fairground has filed
all federal, state and local tax returns required by law and has paid all
taxes, assessments and penalties due and payable.  The provisions for taxes, if any, reflected
in Exhibit 2.5 are adequate for the periods indicated.  There are no present disputes as to taxes of
any nature payable by Fairground.

 

                2.9           Investigation
of Financial Condition. 
Without in any manner reducing or otherwise mitigating the
representations contained herein, Mauna Kea, its legal counsel and accountants
shall have the opportunity to meet with Fairground’s accountants and attorneys
to discuss the financial condition of Fairground during reasonable business
hours and in a manner that does not interfere with the normal operation of
Fairground’s business.  Fairground shall
make available to Mauna Kea all books and records of Fairground, provided,
however, that Fairground will be under no obligation to provide any information
subject to confidentiality provisions or waive any privilege associated with
any such information.

 

                2.10         Intellectual
Property Rights.  Fairground
owns or has the right to use all trademarks, service marks, trade names,
copyrights and patents material to its business.

 

                2.11         Compliance
with Laws.  To the best of
Fairground’s knowledge, Fairground has complied with, and is not in violation
of, applicable federal, state or local statutes, laws and regulations,
including federal and state securities laws, except where such non-compliance
would not have a material adverse impact upon its business or properties.

 

                2.12         Litigation.  Fairground is not a defendant in any suit,
action, arbitration or legal, administrative or other proceeding, or
governmental investigation which is pending or, to the best knowledge of
Fairground, threatened against or affecting Fairground or its business, assets
or financial condition.  Fairground 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
applicable to it.  Fairground is not
engaged in any material litigation to recover monies due to it.

 

                2.13         Authority.  The Manager of Fairground has authorized the
execution of this Agreement and the consummation of the transactions
contemplated herein, and Fairground has full power and authority to execute,
deliver and perform this Agreement, and this Agreement is a legal, valid and
binding obligation of Fairground and is enforceable in accordance with its
terms and conditions.  By execution of
Exhibit 1.2, all of the Fairground Security Holders have agreed to and have
approved the terms of this Agreement.

 

 

3

 

 

                2.14         Ability
to Carry Out Obligations.  To
the best of Fairground’s knowledge, the execution and delivery of this
Agreement by Fairground and the performance by Fairground of its obligations
hereunder in the time and manner contemplated will not cause, constitute or
conflict with or result in (a) any breach or violation of any of the provisions
of or constitute a default under any license, indenture, mortgage, instrument,
operating agreement, or other agreement or instrument to which Fairground is a
party, or by which it may be bound, nor will any consents or authorizations of
any party other than those hereto be required, (b) an event that would permit
any party to any agreement or instrument to terminate it or to accelerate the
maturity of any indebtedness or other obligation of Fairground, or (c) an event
that would result in the creation or imposition of any lien, charge or
encumbrance on any asset of Fairground.

 

                2.15         Full
Disclosure.  None of the
representations and warranties made by Fairground herein or in any exhibit,
certificate or memorandum furnished or to be furnished by Fairground, or on its
behalf, contains or will contain any untrue statement of material fact or omit any
material fact the omission of which would be misleading.

 

                2.16         Assets.  Fairground assets are fully included in
Exhibit 2.5 and are not subject to any claims or encumbrances except as
indicated in Exhibit 2.5.

 

                2.17         Material
Contracts.  Fairground does
not have any material contracts.

 

                2.18         Indemnification.  Fairground agrees to indemnify, defend and
hold Mauna Kea harmless against and in respect of any and all claims, demands,
losses, costs, expenses, obligations, liabilities, damages, recoveries and
deficiencies, including interest, penalties and reasonable attorney fees
asserted by third parties against Mauna Kea which arise out of, or result from
(i) any breach by Fairground in performing any of its covenants or agreements
under this Agreement or in any schedule, certificate, exhibit or other
instrument furnished or to be furnished by Fairground under this Agreement,
(ii) a failure of any representation or warranty in this Article II or (iii)
any untrue statement made by Fairground in this Agreement.

 

                2.19         Criminal
or Civil Acts.  For the period
of five years prior to the execution of this Agreement, no executive officer,
director or principal stockholder of Fairground has been convicted of a felony
crime, filed for personal bankruptcy, been the subject of a Commission or NASD
judgment or decree, or is currently the subject to any investigation in
connection with a felony crime or Commission or NASD proceeding.

 

                2.20         Restricted Securities.  Fairground and the Fairground Security
Holders, by execution of this Agreement and of Exhibit 1.2, acknowledge that
all of the Mauna Kea Shares issued by Mauna Kea are restricted securities and
none of such securities may be sold or publicly traded except in accordance
with the provisions of the Act.

 

ARTICLE III

 

Representations and Warranties of Mauna Kea

 

                Mauna Kea
represents and warrants to Fairground that:

 

 

4

 

 

                3.1           Organization.  Mauna Kea is a corporation duly organized,
validly existing and in good standing under the laws of Colorado, has all
necessary corporate powers to carry on its business, and is duly qualified to
do business and is in good standing in each of the states where its business
requires qualification.

 

                3.2           Capital.  The authorized capital stock of Mauna Kea
currently consists of 25,000,000 shares of no par value common stock, of which
1,000,000 shares of common stock are issued and outstanding, and 10,000,000
shares of no par value preferred stock, none of which are outstanding.  There shall be 9,100,000 shares of common
stock outstanding on the Closing Date and 900,000 shares of common stock
reserved for issuance pursuant to a stock option plan to be adopted by Mauna
Kea immediately after the Closing.  All
of Mauna Kea’s outstanding securities are duly and validly issued, fully paid
and non-assessable.  Except for the
warrant to be issued to Waveland Colorado Ventures, LLC (“Waveland”) pursuant
to the terms of that certain Investment Agreement dated as of even date
herewith between Fairground and Waveland (the “Investment Agreement”) in the
form attached hereto as Exhibit 3.2, there are no outstanding subscriptions,
options, rights, warrants, debentures, instruments, convertible securities or
other agreements or commitments obligating Mauna Kea to issue any additional
shares of its capital stock of any class.

 

                3.3           Subsidiaries.  Mauna Kea does not have any subsidiaries or
own any interest in any other enterprise.

 

                3.4           Directors
and Officers.  The names and
titles of the directors and officers of Mauna Kea are:  Earnest Mathis, Jr., Chief Executive Officer
and sole Director.

 

                3.5           Financial
Statements.  Exhibit 3.5
hereto consists of the unaudited financial statements of Mauna Kea for the year
ended December 31, 2006 and the unaudited financial statements of Mauna Kea for
the six months ended June 30, 2007 (the “Mauna Kea Financial Statements”).  The Mauna Kea Financial Statements have been
prepared in accordance with generally accepted accounting principles and
practices consistently followed by Mauna Kea throughout the periods indicated,
and fairly present the financial position of Mauna Kea as of the date of the
balance sheets included in the Mauna Kea Financial Statements and the results
of operations for the periods indicated. 
There are no material omissions or non-disclosures in the Mauna Kea
Financial Statements.

 

                3.6           Absence
of Changes.  Since June 30, 2007, there has not been any material change in the
financial condition or operations of Mauna Kea, except as contemplated by this
Agreement.

 

                3.7           Absence
of Undisclosed Liabilities.  As of June 30, 2007, Mauna Kea did not have any
material debt, liability or obligation of any nature, whether accrued,
absolute, contingent or otherwise, and whether due or to become due, that is
not reflected in the Mauna Kea Financial Statements.

 

                3.8           Taxes.  Mauna Kea has paid all taxes, assessments and
penalties due and payable.

 

 

5

 

 

                3.9           Investigation
of Financial Condition.  Without in any manner reducing or otherwise
mitigating the representations contained herein, Fairground, its legal counsel
and accountants shall have the opportunity to meet with Mauna Kea’s accountants
and attorneys to discuss the financial condition of Mauna Kea.  Mauna Kea shall make available to Fairground
all books and records of Mauna Kea.

 

                3.10         Intellectual
Property Rights.  Mauna Kea
does not have any patents, trademarks, service marks, trade names, copyrights
or other intellectual property rights.

 

                3.11         Compliance
with Laws.  Mauna Kea has
complied with, and is not in violation of, applicable federal, state or local
statutes, laws or regulations including federal and state securities laws.

 

                3.12         Litigation.  Mauna Kea is not a defendant in any suit,
action, arbitration, or legal, administrative or other proceeding, or
governmental investigation which is pending or, to the best knowledge of Mauna
Kea, threatened against or affecting Mauna Kea or its business, assets or
financial condition.  Mauna Kea 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 applicable
to it.  Mauna Kea is not engaged in any
material litigation to recover monies due to it.

 

                3.13         Authority.  The Board of Directors of Mauna Kea has
authorized the execution of this Agreement and the transactions contemplated
herein, and Mauna Kea has full power and authority to execute, deliver and
perform this Agreement, and this Agreement is the legal, valid and binding
obligation of Mauna Kea, and is enforceable in accordance with its terms and
conditions.

 

                3.14         Ability
to Carry Out Obligations.  The
execution and delivery of this Agreement by Mauna Kea and the performance by
Mauna Kea of its obligations hereunder will not cause, constitute or conflict
with or result in (a) any breach or violation of any of the provisions of or
constitute a default under any license, indenture, mortgage, instrument,
article of incorporation, bylaw or other agreement or instrument to which Mauna
Kea is a party, or by which it may be bound, nor will any consents or
authorization of any party other than those hereto be required, (b) an event
that would permit any party to any agreement or instrument to terminate it or
to accelerate the maturity of any indebtedness or other obligation of Mauna
Kea, or (c) an event that would result in the creation or imposition of any
lien, charge or encumbrance on any asset of Mauna Kea.

 

                3.15         Full
Disclosure.  None of the
representations and warranties made by Mauna Kea herein, or in any exhibit,
certificate or memorandum furnished or to be furnished by Mauna Kea or on its
behalf, contains or will contain any untrue statement of material fact or omit
any material fact the omission of which would be misleading.

 

                3.16         Assets. 
Mauna Kea has no assets or liabilities.

                3.17         Material
Contracts.  Mauna Kea has no
material contracts.

 

 

6

 

 

                3.18         Indemnification.  Mauna Kea agrees to indemnify, defend and
hold Fairground harmless against and in respect of any and all claims, demands,
losses, costs, expenses, obligations, liabilities, damages, recoveries and
deficiencies, including interest, penalties and reasonable attorney fees
asserted by third parties against Fairground, which arise out of, or result
from (i) any breach by Mauna Kea in performing any of its covenants or
agreements in this Agreement or in any schedule, certificate, exhibit or other
instrument furnished or to be furnished by Mauna Kea under this Agreement,  (ii) a failure of any representation or
warranty in this Article III, or (iii) any untrue statement made by Mauna Kea
in this Agreement.

 

                3.19         Criminal
or Civil Acts.  For a period
of five years prior to the execution of this Agreement, no executive officer,
director or principal stockholder of Mauna Kea has been convicted of a felony
crime, filed for personal bankruptcy, been the subject of a Securities and
Exchange Commission (“Commission”) or NASD judgment or decree, or is currently
the subject to an investigation in connection with any felony crime or
Commission or NASD proceeding.

 

                3.20         Trading Status.  The common stock of Mauna Kea is not listed
for quotation nor does it trade on any exchange or listing service.

 

ARTICLE IV

 

Covenants Prior to the Closing Date

 

                4.1           Investigative
Rights.  Prior to the Closing
Date, each party shall provide to the other party, and such other party’s
counsel, 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 during the investigative period one party
learns that a representation of the other party was not accurate, no such claim
may be asserted by the party so learning that a representation of the other
party was not accurate.

 

                4.2           Conduct
of Business.  Prior to the
Closing Date, each party shall 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 normal course of business.  Neither party shall amend its Operating
Agreement, Articles of Incorporation or Bylaws (except as may be described in
this Agreement), declare dividends, redeem or sell stock or other securities.  Neither party shall enter into negotiations with
any third party or complete any transaction with a third party involving the
sale of any of its assets or the exchange of any of its common stock.

 

                4.3           Confidential Information.  Each party will treat all non-public,
confidential and trade secret information received from the other party as
confidential, and such party shall not disclose or use such information in a
manner contrary to the purposes of this Agreement.  Moreover, all such information shall be returned
to the other party in the event this Agreement is terminated.

 

                4.4           Notice of Non-Compliance.  Each party shall give prompt notice to the
other party of any representation or warranty made by it in this Agreement
becoming untrue or inaccurate in 

 

 

7

 

any respect or the failure by it to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement.

 

ARTICLE V

 

Conditions Precedent to Mauna Kea’s Performance

 

                5.1           Conditions.  Mauna Kea’s obligations hereunder shall be
subject to the satisfaction at or before the Closing Date of all the conditions
set forth in this Article V.  Mauna Kea
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 Mauna Kea of any other condition of or any of Mauna Kea’s other
rights or remedies, at law or in equity, if Fairground shall be in default of
any of its representations, warranties or covenants under this Agreement.

 

                5.2           Accuracy
of Representations.  Except as
otherwise permitted by this Agreement, all representations and warranties by
Fairground in this Agreement or in any written statement that shall be
delivered to Mauna Kea by Fairground under this Agreement shall be true and
accurate on and as of the Closing Date as though made at that time.

 

                5.3           Performance.  Fairground 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 Closing Date.

 

                5.4           Absence
of Litigation.  No action,
suit or proceeding, including injunctive actions, 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 Fairground on or before the Closing Date.

 

                5.5           Officer’s
Certificate.  Fairground shall
have delivered to Mauna Kea a certificate dated the Closing Date signed by the
Manager of Fairground certifying that each of the conditions specified in this
Article has been fulfilled and that all of the representations set forth in
Article II are true and correct as of the Closing Date.

 

                5.6           Corporate
Action.  Fairground shall have obtained the approval
of the Fairground Security Holders for the transaction contemplated by this
Agreement as evidenced by the Fairground Security Holders holding all of
Fairground’s outstanding common stock executing Exhibit 1.2.

 

                5.7           Execution of the Investor
Rights Agreement.  Fairground
shall have executed the Investor Rights Agreement attached as Exhibit 5.7
hereto.

 

                5.8           Closing of Transactions
Pursuant to Investment Agreement. The transactions contemplated by
the Investment Agreement shall have been consummated.

 

8

 

 

 

ARTICLE VI

 

Conditions Precedent to Fairground’s Performance

 

                6.1           Conditions.  Fairground’s obligations hereunder shall be
subject to the satisfaction at or before the Closing Date of all the conditions
set forth in this Article VI.  Fairground
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 Fairground of any other condition of or any of Fairground’s rights
or remedies, at law or in equity, if Mauna Kea shall be in default of any of
its representations, warranties or covenants under this Agreement.

 

                6.2           Accuracy
of Representations.  Except as
otherwise permitted by this Agreement, all representations and warranties by
Mauna Kea in this Agreement or in any written statement that shall be delivered
to Fairground by Mauna Kea under this Agreement shall be true and accurate on
and as of the Closing Date as though made at that time.

 

                6.3           Performance.  Mauna Kea 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 Closing Date.

 

                6.4           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 Mauna Kea on or
before the Closing Date.

 

                6.5           Officer’s
Certificate.  Mauna Kea shall
have delivered to Fairground a certificate dated the Closing Date signed by the
Chief Executive Officer and sole Director of Mauna Kea certifying that each of
the conditions specified in this Article has been fulfilled and that all of the
representations set forth in Article III are true and correct as of the Closing
Date.

 

                6.6           Payment
of Liabilities.  On or before the Closing Date, Mauna Kea
shall have paid any outstanding obligations and liabilities of Mauna Kea
through the Closing Date, including obligations created subsequent to the
execution of this Agreement.

 

                6.7           Closing of Transactions Pursuant
to Investment Agreement. The transactions contemplated by the
Investment Agreement shall have been consummated.

 

 

9

 

ARTICLE VII

 

Closing

 

                7.1           Closing.  The closing of this Agreement shall be held
at the offices of Mauna Kea at any mutually agreeable time and date prior to
July 25, 2007, unless extended by mutual agreement.  At the closing:

 

(a)                                  Fairground shall deliver to Mauna Kea (i)
copies of Exhibit 1.2 executed by all of the Fairground Security Holders, and
(ii) the officer’s certificate described in
Section 5.5, and (iii) a signed action by its Manager approving this Agreement;

 

(b)                                 Mauna Kea shall
deliver to the Fairground Security Holders (i) certificates representing an
aggregate of 8,100,000 shares of Mauna Kea’s common stock (ii) the officer’s
certificate described in Section 6.5, and (iii) signed minutes of its director
approving this Agreement.

 

ARTICLE VIII

 

Covenants Subsequent to the Closing Date

 

                8.1           Registration of Certain Shares of Mauna Kea.  Mauna Kea shall file a
Registration Statement on Form SB-2, within 60 days following the Closing Date,
registering for public resale all shares required to be registered under the
Investor Rights Agreement.  Mauna Kea
shall use its best efforts to obtain effectiveness of the Registration Statement
within 90 days therefrom.

 

                8.2           Registration
and Listing.  Following the
Closing Date, Mauna Kea shall use its best efforts to:

 

(a)                                  Obtain a listing of Mauna Kea’s common
stock quotation on the Electronic Over-the-Counter Bulletin Board system; and

(b)                                 List Mauna Kea’s securities in Standard
& Poor’s OTC or Corporate Manual.

 

                8.3           Directors
of Mauna Kea.  On the Closing
Date, the sole Director of Mauna Kea shall appoint Mark Kreloff as a director
of Mauna Kea to fill an existing vacancy and shall thereafter resign from Mauna
Kea’s Board of Directors.

 

                8.4           Officers
of Mauna Kea.  On the Closing
Date, the Board of Directors of Mauna Kea shall elect the officers of Mauna Kea
as set forth in Exhibit 8.4 and Mauna Kea’s existing executive officers shall
resign.

 

                8.5           Other
Actions.  Following the Closing Date, Mauna Kea shall
adopt the Stock Option Plan described in Section 1.3, above.

 

 

10

 

ARTICLE IX

 

Miscellaneous

 

                9.1           Captions
and Headings.  The article and
Section headings throughout this Agreement are for convenience and reference
only and shall not 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 only by an agreement in writing signed by the party against whom
enforcement of any such waiver, change, modification or discharge is sought.

 

                9.3           Non-Waiver.  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.  No
waiver by any party of one breach by another party shall be construed as a
waiver with respect to any other subsequent breach.

 

                9.4           Time
of Essence.  Time is of the
essence of this Agreement and of each and every provision hereof.

 

                9.5           Entire
Agreement.  This Agreement
contains the entire Agreement and understanding between the parties hereto and
supersedes all prior agreements and understandings.

 

                9.6           Choice
of Law.  This Agreement and
its application shall be governed by the laws of the state of Colorado.

 

                9.7           Counterparts.
 This Agreement may be
executed simultaneously in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

 

                9.8           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:

 

	
   

  	
  Mauna
  Kea:

  	
  Mauna Kea Enterprises, Inc.

  
	
   

  	
   

  	
  2560 W. Main Street, Suite 200

  
	
   

  	
   

  	
  Littleton, CO 80120

  
	
   

  	
   

  	
   

  
	
   

  	
  Fairground:

  	
  Fairground Media, LLC

  
	
   

  	
   

  	
  1701 Pearl Street

  
	
   

  	
   

  	
  Boulder, CO 80302

  

 

 

 

11

 

                9.9           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.

 

                9.10         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.

 

                9.11         Finders.  There are no finders in connection with this
transaction.

 

                9.12         Announcements.  The parties will consult and cooperate with
each other as to the timing and content of any public announcements regarding
this Agreement.

 

                9.13         Survival
of Representations and Warranties. 
The representations, warranties, covenants and agreements of the parties
set forth in this Agreement or in any instrument, certificate, opinion or other
writing providing for in it, shall survive the Closing Date.

 

                9.14         Exhibits.  As of the execution hereof, the parties have
provided each other with the exhibits described herein.  Any material changes to the exhibits shall be
immediately disclosed to the other party.

 

                9.15         Termination, Amendment and
Waiver.

 

                (a)           Termination.  This Agreement may be terminated at any time
prior to the Closing Date, whether before or after approval of matters
presented in connection with the share exchange by the stockholders of Mauna
Kea or by the stockholders of Fairground:

 

                                (1)           By mutual written consent of
Fairground and Mauna Kea;

 

                                (2)           By either Fairground or Mauna Kea;

 

(i)                                     If any court of
competent jurisdiction or any governmental, administrative or regulatory
authority, agency or body shall have issued an order, decree or ruling or taken
any other action permanently enjoining, restraining or otherwise prohibiting
the transactions contemplated by this Agreement; or

 

(ii)                                  If the
transaction shall not have been consummated on or before August 31, 2007,
unless the failure to consummate the transaction is the result of a material
breach of this Agreement by the party seeking to terminate this Agreement.

 

                                (3)           By Fairground, if Mauna Kea breaches
any of its representations or warranties hereof or fails to perform in any
material respect any of its covenants, agreements or obligations under this
Agreement; and

 

 

12

 

 

                                (4)           By Mauna Kea, if Fairground breaches
any of its representations or warranties hereof or fails to perform in any
material respect any of its covenants, agreements or obligations under this
Agreement.

 

                (b)           Effect
of Termination.  In the event of
termination of this Agreement by either Mauna Kea or Fairground, as provided
herein, this Agreement shall forthwith become void and have no effect, without
any liability or obligation on the part of Fairground or Mauna Kea, and such
termination shall not relieve any party hereto for any intentional breach prior
to such termination by a party hereto of any of its representations or
warranties or any of its covenants or agreements set forth in this Agreement.

 

                (c)           Extension;
Waiver.  At any time prior to the
Closing Date, the parties may, to the extent legally allowed, mutually (a)
extend the time for the performance of any of the obligation of the other acts
of the other parties, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto or
waive compliance with any of the agreements or conditions contained
herein.  Any agreement on the part of a
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.  The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights.

 

                (d)           Procedure for Termination,
Amendment, Extension or Waiver.  A
termination of this Agreement, an amendment of this Agreement or an extension
or waiver shall, in order to be effective, require in the case of Fairground or
Mauna Kea, action by its respective Manager or Board of Directors or the duly
authorized designee of such person or Board of Directors.

 

                In witness whereof, the parties have executed this
Agreement Concerning the Exchange of Securities on the date indicated above.

 

	
  MAUNA
  KEA ENTERPRISES, INC.

  	
   

  	
  FAIRGROUND
  MEDIA, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Earnest Mathis, Jr.

  	
   

  	
  By:

  	
  /s/
  Mark Kreloff

  
	
   

  	
  Earnest
  Mathis, Jr.

  	
   

  	
   

  	
  Mark
  Kreloff

  
	
   

  	
  Chief
  Executive Officer

  	
   

  	
   

  	
  Chief Executive Officer

  

 

 

13

 

EXHIBIT 1.1

 

SCHEDULE OF
FAIRGROUND MEMBERSHIP INTERESTS

AND

ALLOCATION
OF MAUNA KEA COMMON SHARES

 

	
  Name of Fairground 

  Interest Holder

  	
   

  	
  Sharing Ratio

  	
   

  	
  Number of Mauna Kea Common

  Shares to be Issued

  	
   

  
	
  Mark Kreloff

  	
   

  	
  26.3589

  	
  %

  	
  2,135,070

  	
   

  
	
  Andrew Brandt

  	
   

  	
  18.8278

  	
  %

  	
  1,525,050

  	
   

  
	
  Dave Rogers

  	
   

  	
  6.778

  	
  %

  	
  549,018

  	
   

  
	
  Bret Orton

  	
   

  	
  6.778

  	
  %

  	
  549,018

  	
   

  
	
  Luke Miller

  	
   

  	
  6.778

  	
  %

  	
  549,018

  	
   

  
	
  Kevin Kerndt

  	
   

  	
  3.7656

  	
  %

  	
  305,010

  	
   

  
	
  Joe Pezzillo

  	
   

  	
  3.7656

  	
  %

  	
  305,010

  	
   

  
	
  Brad Buikema

  	
   

  	
  2.2593

  	
  %

  	
  183,006

  	
   

  
	
  Waveland
  Colorado Ventures, LLC

  	
   

  	
  24.6889

  	
  %

  	
  1,999,800

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Totals

  	
   

  	
  100

  	
  %

  	
  8,100,000

  	
   

  

 

 

 

EXHIBIT 1.2

 

SUBSCRIPTION
AGREEMENT

 

                In connection with
my exchange of my Interests in Fairground Media, LLC (“Fairground”), for the no
par value common stock of Mauna Kea Enterprises, Inc. (“Mauna Kea”), pursuant
to the Agreement Concerning The Exchange of Securities by and among Mauna Kea
Enterprises, Inc. and Fairground Media, LLC and the Security Holders of
Fairground Media, LLC (the “Exchange Agreement”), I acknowledge the matters set
forth below and promise that the statements made herein are true.  I understand that Mauna Kea is relying on my
truthfulness in issuing its securities to me.

 

                I hereby represent
and warrant to Mauna Kea that I have the full power and authority to execute,
deliver and perform this Subscription Agreement and to consummate the
transactions contemplated hereby.  This
Subscription Agreement is a legal, valid and binding obligation of mine,
enforceable against me in accordance with its terms.  I own the Interests that I am exchanging for
securities of Mauna Kea free and clear of all pledges, liens, encumbrances,
security interests, equities, claims, options, preemptive rights, rights of
first refusal, or any other limitation on my ability to vote such securities or
to transfer such securities to Mauna Kea. 
I have full right, title and interest in and to the Interests that I am
exchanging.

 

                I
understand that Mauna Kea’s common stock (the “Securities) is being issued to
me in a private transaction in exchange for my securities in Fairground and in
reliance upon the exemption provided in section 4(2) and/or Regulation D under
the Securities Act of 1933, as amended (the ”Act”) for non-public
offerings and pursuant to the Exchange Agreement.  I understand that the Securities are “restricted”
under applicable securities laws and may not be sold by me except in a
registered offering (which may not ever occur) or in a private transaction like
this one.  I know this is an illiquid
investment and that therefore I may be required to hold the Securities for an
indefinite period of time, but under no circumstances less than one year from
the date of their issuance.

 

                I am acquiring the
Securities solely for my own account, for long-term investment purposes only
and not with a view to sale or other distribution.  I agree not to dispose of any Securities
unless and until counsel for Mauna Kea shall have determined that the intended
disposition is permissible and does not violate the Act, any applicable state
securities laws or rules and regulations promulgated thereunder.

 

                All information,
financial and otherwise, or documentation pertaining to all aspects of my
acquisition of the Securities and the activities and financial information of
Mauna Kea has been made available to me and my representatives, if any, and I
have had ample opportunity to meet with and ask questions of senior officers of
Mauna Kea, and I have received satisfactory answers to any questions I asked.

 

 

 

 

                In acquiring the
Securities, I have been afforded access to the Exchange Agreement and have made
such independent investigations of Mauna Kea as I deemed appropriate.  I am an “accredited investor” as that term is
defined in Regulation D, Rule 501 of the Act and am an experienced investor,
have made speculative investments in the past and am capable of analyzing the
merits of an investment in the Securities.

 

                I understand that
the Securities are highly speculative, involve a great degree of risk and
should only be acquired by individuals who can afford to lose their entire
investment.  Nevertheless, I consider
this a suitable investment for me because I have adequate financial resources
and income to maintain my current standard of living even after my acquisition
of the Securities.  I know that Mauna Kea
currently has only negligible assets and liabilities, and that although I could
lose my entire investment, I am acquiring the Securities because I believe the
potential rewards are commensurate with the risk.  Even if the Securities became worthless, I
could still maintain my standard of living without significant hardship to me
or my family.

 

                By signing this
Subscription Agreement, I also accept and agree to be bound by and to abide by
the terms and conditions of the Exchange Agreement as if I had executed the
Exchange Agreement itself.

 

                Dated as of this                
day of                ,
2007.

 

 

	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name,
  Please Print

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Residence
  Address

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  City,
  State and Zip Code

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Area
  Code and Telephone Number

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Social
  Security Number

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Number
  of Fairground Shares exchanged

  

 

 

2

 

 

EXHIBIT 2.5

 

FINANCIAL STATEMENTS OF FAIRGROUND

 

Fairground Media, LLC d/b/a www.crowdfunder.com

Balance Sheet

As of 7/15/2007

UNAUDITED

 

	
  ASSETS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Cash

  	
   

  	
  $

  	
  250

  	
   

  
	
  Pre-Paid Legal

  	
   

  	
  $

  	
  3,000

  	
   

  
	
  Pre-Paid Rent

  	
   

  	
  $

  	
  6,000

  	
   

  
	
  Web Site
  Development

  	
   

  	
  $

  	
  52,860

  	
   

  
	
  Equipment

  	
   

  	
  $

  	
  19,779

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TOTAL ASSETS

  	
   

  	
  $

  	
  81,889

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  LIABILITIES

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Deferred Legal
  Expenses

  	
   

  	
  $

  	
  2,000

  	
   

  
	
  Note Payable
  (Kreloff)

  	
   

  	
  $

  	
  29,849

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EQUITY

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  A Round 

  	
   

  	
  $

  	
  10,050

  	
   

  
	
  A Round In-Kind
  Contributions

  	
   

  	
  $

  	
  40,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TOTAL
  LIABILITIES PLUS EQUITY

  	
   

  	
  $

  	
  81,889 

  	
   

  

 

 

EXHIBIT 3.2

 

INVESTMENT AGREEMENT

 

[See Exhibit 10.2 to this Registration Statement on Form SB-2]

 

 

EXHIBIT 3.5

 

FINANCIAL STATEMENTS OF MAUNA KEA

 

 

MAUNA KEA ENTERPRISES, INC.

 

(A DEVELOPMENT STAGE COMPANY)

FINANCIAL STATEMENT

DECEMBER 31, 2006 (Unaudited)

AND JUNE 30, 2007 (Unaudited)

 

 

MAUNA KEA ENTERPRISES, INC.

(A DEVELOPMENT STAGE COMPANY)

 

BALANCE SHEETS

DECEMBER 31, 2006 AND JUNE 30
2007

(Unaudited)

 

	
   

  	
   

  	
  June 30 2007

  	
   

  	
  December 31 2006

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL ASSETS

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIABILITIES

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Accounts payable

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  STOCKHOLDERS’
  (DEFICIT):

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Preferred stock,
  no stated value; authorized 10,000,000 shares issued and 0 outstanding.

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
  Common stock,
  $.0001 par value; authorized 25,000,000 shares; issued and 1,000,000 outstanding

  	
   

  	
  90

  	
   

  	
  90

  	
   

  
	
  Additional
  paid-in capital

  	
   

  	
  1,161

  	
   

  	
  1,161

  	
   

  
	
  Deficit
  accumulated during the development stage

  	
   

  	
  (1,251

  	
  )

  	
  (1,251

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  stockholders’ (deficit)

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL
  LIABILITIES AND STOCKHOLDERS’ (DEFICIT)

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  

 

See accompanying notes.

 

 

MAUNA KEA ENTERPRISES, INC.

(A DEVELOPMENT STAGE COMPANY)

 

STATEMENTS OF OPERATIONS

FOR THE PERIOD FROM NOVEMBER 1996
(DATE OF INCEPTION)

TO JUNE 30, 2007

(Unaudited)

 

	
   

  	
   

  	
  Six Months ended 

  June 30, 2007

  	
   

  	
  November 1996 

  (Date of Inception)

  to Dec 31, 2006

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  REVENUES

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OPERATING
  EXPENSES

  	
   

  	
  —

  	
   

  	
  1,251

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NET
  (LOSS)

  	
   

  	
  $

  	
  (0

  	
  )

  	
  $

  	
  (1,251

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NET
  (LOSS) PER COMMON SHARE

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Basic and
  Diluted

  	
   

  	
  $

  	
  nil

  	
   

  	
  $

  	
  nil

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  WEIGHTED
  AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Basic and
  Diluted

  	
   

  	
  1,000,000

  	
   

  	
  1,000,000

  	
   

  

 

See accompanying notes

 

 

MAUNA KEA ENTERPRISES, INC.

(A DEVELOPMENT STAGE COMPANY)

 

STATEMENTS OF STOCKHOLDERS’
(DEFICIT)

FOR THE PERIOD FROM NOVEMBER,
1996 (DATE OF INCEPTION)

TO JUNE 30, 2007

(Unaudited)

 

	
   

  	
   

  	
  Preferred Stock

  	
   

  	
  Common Stock

  	
   

  	
  Additional

  	
   

  	
  Deficit 

  Accumulated 

  During

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Shares

  	
   

  	
  Amount

  	
   

  	
  Shares

  	
   

  	
  Amount

  	
   

  	
  Paid-in Capital

  	
   

  	
  Development Stage

  	
   

  	
  Total

  	
   

  
	
  BALANCE, Nov
  1996

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  1,000,000

  	
   

  	
  $

  	
  90

  	
   

  	
  $

  	
  1,161

  	
   

  	
  $

  	
  (1,251

  	
  )

  	
  $

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXPENSES PAID BY
  STOCKHOLDER AND DONATED TO THE COMPANY

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NET (LOSS) FOR
  THE YEAR ENDED Dec 31 2006

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  —

  	
   

  	
  $

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BALANCE
  DECEMBER 31, Dec 31 2006

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  1,000,000

  	
   

  	
  $

  	
  90

  	
   

  	
  $

  	
  1,161

  	
   

  	
  $

  	
  (1,251

  	
  )

  	
  $

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXPENSES PAID BY
  STOCKHOLDERS AND DONATED TO THE COMPANY

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NET (LOSS) FOR
  THE PERIOD ENDED JUNE 30, 2007

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  $

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BALANCE,
  JUNE 30, 2007

  	
   

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  1,000,000

  	
   

  	
  $

  	
  90

  	
   

  	
  $

  	
  1,161

  	
   

  	
  $

  	
  (1,251

  	
  )

  	
  $

  	
  0

  	
   

  
																					

 

 

MAUNA KEA ENTERPRISES, INC.

(A DEVELOPMENT STAGE COMPANY)

 

STATEMENTS OF CASH FLOWS

FOR THE PERIOD FROM NOVEMBER,
1996 (DATE OF INCEPTION) TO JUNE 30, 2007

(Unaudited)

 

	
   

  	
   

  	
  June 30 2007

  	
   

  	
  November 1996 

  (Date of Inception) 

  to 

  December 31, 2006

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CASH FLOWS FROM
  OPERATING ACTIVITIES:

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  (1,251

  	
  )

  
	
  Net (loss)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Adjustments to
  reconcile net (loss) to net cash used by operating activities:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Expenses paid by
  stockholders And donated to the company

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
  Changes in
  operating liabilities:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Accounts payable

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NET CASH USED BY
  OPERATING ACTIVITIES

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CASH FLOWS FROM
  INVESTING ACTIVITIES:

  	
   

  	
  —

  	
   

  	
  1,251

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CASH FLOWS FROM
  FINANCING ACTIVITIES:

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NET INCREASE IN
  CASH AND CASH EQUIVALENTS 

  	
   

  	
  — 

  	
    

  	
  — 

  	
    

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CASH AND CASH
  EQUIVALENTS, AT BEGINNING OF YEAR 

  	
   

  	
  — 

  	
    

  	
  — 

  	
    

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CASH AND CASH
  EQUIVALENTS, AT END OF YEAR

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  

 

 

MAUNA KEA ENTERPRISES, INC.

(A DEVELOPMENT STAGE COMPANY)

 

STATEMENTS OF CASH FLOWS
(Continued)

FOR THE PERIOD FROM NOVEMBER,
1996 (DATE OF INCEPTION) TO JUNE 30, 2007

(Unaudited)

 

 

	
   

  	
   

  	
   

  	
   

  	
  September 19, 2001

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (Date of Inception)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  to

  	
   

  
	
   

  	
   

  	
  June 30, 2007

  	
   

  	
  December 31, 2005

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SUPPLEMENTAL
  DISCLOSURE OF CASH FLOW INFORMATION

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CASH PAID DURING
  THE YEAR FOR:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Interest

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
  Taxes

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NON-CASH OPERATING
  ACTIVITIES:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Expenses paid by
  stockholders and donated to the company

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  

 

See accompanying notes.

 

 

MAUNA KEA ENTERPRISES, INC.

(A DEVELOPMENT STAGE COMPANY)

 

NOTES TO FINANCIAL STATEMENTS

 

	
  1.

  	
   

  	
  NATURE OF BUSINESS AND HISTORY OF COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Mauna Kea Enterprises, Inc. (the “Company”) was
  incorporated on November 27, 1996 in the state of Colorado to make a
  distribution of the Shares to the Distributees. The purpose of the
  Distribution is to cause the Company to become widely-held, thereby allowing
  it the opportunity to merge in the future with a privately-held company
  seeking a larger stockholder base.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Basis of Presentation – The Company’s financial statements
  have been prepared on an accrual basis of accounting, in conformity with
  accounting principles generally accepted in the United States of America.
  These principles contemplate the realization of assets and liquidation of
  liabilities in the normal course of business.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Net (Loss) Per Share – The Company adopted Statement of
  Financial Accounting Standards No. 128 that requires the reporting of both
  basic and diluted earnings (loss) per share. Basic earnings (loss) per share
  is computed by dividing net income (loss) available to common stockholders by
  the weighted average number of common shares outstanding for the period.
  Diluted earnings (loss) per share reflects the potential dilution that could
  occur if securities or other contracts to issue common stock were exercised
  or converted into common stock. In accordance with FASB 128, any
  anti-dilutive effects on net income (loss) per share are excluded.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Use of Estimates – The preparation of financial statements in
  conformity with accounting principles generally accepted in the United States
  of America requires management to make estimates and assumptions that affect
  the reported amounts of assets and liabilities and disclosure of contingent
  assets and liabilities at the date of the financial statements and the
  reported amounts of revenues and expenses during the reporting period. Actual
  results could differ from those estimates.

  

 

 

	
   

  	
   

  	
  Recently Issued Accounting Standards Not Yet Adopted
  - There currently are no recently issued accounting standards with pending
  adoptions that have any applicability to the Company.

  
	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  GOING CONCERN

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The accompanying financial statements have been
  prepared assuming that the Company will continue as a going concern, which
  contemplates the recoverability of assets and the satisfaction of liabilities
  in the normal course of business.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The ability of the Company to continue as a going
  concern is dependent upon its ability to find a suitable acquisition/merger
  candidate, raise additional capital from the sale of common stock and,
  ultimately, the achievement of significant operation revenues. The
  accompanying financial statements do not include any adjustments that might
  be required should the Company be unable to recover the value of its assets or
  satisfy its liabilities.

  
	
   

  	
   

  	
   

  
	
  3. 

  	
   

  	
  PREFERRED STOCK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Company has not assigned any preference rights
  to the preferred stock.

  
	
   

  	
   

  	
   

  
	
  4. 

  	
   

  	
  EXPENSES PAID BY STOCKHOLDER AND DONATED TO THE
  COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Company is using office space on a rent-free basis
  from the Company’s President at 2560 W. Main Street, Suite 200, Littleton, CO
  80120.

  

 

 

EXHIBIT 5.7

 

INVESTOR RIGHTS AGREEMENT

 

[See Exhibit 4.1 to this Registration Statement on Form SB-2]

 

 

EXHIBIT 8.4

 

OFFICERS TO BE APPOINTED

 

President/Chief
Executive Officer, Treasurer and Secretary – Mark H. KreloffExhibit 10.2

 

INVESTMENT
AGREEMENT

This Investment Agreement
(this “Agreement”) is made and entered into as of July 24, 2007 (the “Effective
Date”), by and between Fairground Media, LLC, a Colorado limited liability
company (the “Company”) and Waveland Colorado Ventures, LLC, a Colorado
limited liability company and Colorado Certified Capital Company (the “Investor”).  Capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in the Company’s Operating
Agreement dated January 16, 2007 (the “Operating Agreement”).

For good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the
parties agree as follows:

1.             Terms of
Purchase.

 

                1.1           Purchase and Sale of Membership
Interest.

 

(a)           As of the Effective
Date, subject to the prior or simultaneous satisfaction of the conditions
stated in Section 1.1(c) below, (i) the Company shall issue and sell to the
Investor, and the Investor shall purchase from the Company, a limited liability
company membership interest with a Sharing Ratio of 24.6889% (the “Membership
Interest”) for an aggregate purchase price of $375,000 (the “ Purchase
Price”); and (ii) the Investor is hereby admitted as a member of the
Company (the “ Closing”).

(b)            On the Effective
Date, (i) the Investor shall pay the Purchase Price by wire transfer of
immediately available funds to an account designated by the Company, (ii) the
Investor shall execute and deliver counterparts of the Operating Agreement of
the Company (as amended) in the form attached as Exhibit 1.1(b)(ii) (the
“Amended Operating Agreement”), (iii) the Investor and the Company shall
execute and deliver counterparts of the Investor Rights Agreement in the form
attached as Exhibit 1.1(b)(iii) (the “Investor Rights Agreement”);
and (iv) the Company shall transfer at least $75,000 of the proceeds of the
Purchase Price into the segregated account which Investor has established
pursuant to the terms of the Investor Rights Agreement and from which
disbursements shall be made solely for the purpose of funding Company
registration expenses until such time as all such expenses have been paid in
full, at which time any surplus shall be made available to the Company for
general working capital purposes.

(c)           The
obligations of the Company and the Investor to consummate the transactions
contemplated by this Section 1.1 are subject to the satisfaction of the
following conditions:

 

                                                (i)            Representations and Warranties
True; Performance of Obligations. 
The representations and warranties made by the Company in Section 2
hereof shall be true and correct, and the Company shall have performed all
obligations and conditions herein required to be performed or observed by it on
or prior to the Closing.

                                                (ii)           Consents, Permits, and Waivers.  The Company shall have obtained any and all
consents, permits and waivers necessary or appropriate for consummation of the
transactions contemplated by this Agreement and the Investor Rights Agreement.

 

 

                                                (iii)          Authorization of Additional Capital
Contributions.  The issuance of the
Membership Interest and the acceptance of the Purchase Price as an additional
capital contribution shall have been duly authorized by the Manager of the
Company pursuant to Section 3.2(C) of the Operating Agreement and the Company
shall deliver to the Investor a Certificate of the Manager of the Company
attesting as to (i) the signatures and titles of the officers of the Company
executing this Agreement or any of the other agreements to be executed and
delivered by the Company at the Closing; and (ii) resolutions of the Members or
Manager of the Company, authorizing and approving all matters in connection
with this Agreement and the transactions contemplated hereby.

                                                (iv)          Operating Agreement.  The members of the Company other than the
Investor shall have executed and delivered the Amended Operating Agreement.

                                                (v)           Investor Rights Agreement.  The and the Original Members (as defined
below) shall have executed and delivered the Investor Rights Agreement.

                                                (vi)          Share Exchange Agreement.  Each of the Original Members shall have
executed and delivered the Agreement Concerning the Exchange of Securities by
and among Mauna Kea Enterprises, Inc., a Colorado corporation (“MK”),
the Company, the Original Members and the Investor (the “Share Exchange Agreement”),
providing for the exchange of 100% of the membership interest of the Company
for 8,100,000 shares of common stock of MK;

                                                (vii)
        Nondisclosure and Assignment of
Inventions Agreements.   Each
employee of the Company shall have executed and delivered a Nondisclosure and
Assignment of Inventions Agreement the in the form attached hereto as Exhibit
1.1(c)(vii); and

                                                (viii)        Warrant.  MK shall have issued Investor a warrant to
purchase up to 1,000,000 shares of Common Stock of MK, in the form attached
hereto as Exhibit 1.1(c)(viii).

1.2           Terms of the Membership Interest.  The Membership Interest is issued in
accordance with and subject to the terms of the Amended Operating Agreement and
shall have the rights designated in the Amended Operating Agreement and, to the
extent applicable, the Investor Rights Agreement.

 

1.3           Use of Proceeds. 
The Company will use the proceeds from the sale of the Membership
Interest to support website development and business development expenses, and
for general working capital purposes. 
Notwithstanding the above, up to $30,000 of the proceeds from the sale
of the Membership Interest may be used to repay loans payable to the Manager of
the Company.

 

2.             Representations
and Warranties of the Company.  In
order to induce the Investor to enter into the Agreement, the Company
represents and warrants to the Investor that:

 

(a)           The
Company has been duly formed and is validly existing as a limited liability
company and is in good standing under the laws of Colorado.  The Company is qualified to do business in
each jurisdiction in which such qualification is required.  The Company has all requisite organizational
power and authority to conduct its business as currently conducted and

 

 

2

 

to
enter into, execute, deliver and perform all of its duties and obligations
under this Agreement and all related instruments and agreements executed in
connection herewith.

(b)           This Agreement is the valid and
binding obligation of the Company, enforceable in accordance with its terms,
except as the enforcement may be limited by bankruptcy and other laws of
general application relating to creditor’s rights or general principles of
equity.  The execution, delivery and
performance of this Agreement and the issuance of the Membership Interest have
been duly authorized by all necessary action on the part of the Company.  No consent, approval or authorization of, or
designation, declaration or filing with, any governmental authority or other
person is required to be obtained in connection with the execution, delivery
and performance of this Agreement or the issuance of the Membership Interest.

(c)           The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby do not and will not: 
(i) conflict with or result in any default under any contract,
obligation or commitment of the Company or any provision of the Company’s
Articles of Organization or the Operating Agreement; (ii) result in the
creation of any lien, charge or encumbrance of any nature upon any of the
properties or assets of the Company; or (iii) violate any instrument,
agreement, judgment, decree or order, or any statute, rule or regulation of any
federal, state or local government or agency, applicable to the Company or to
which the Company is a party.

(d)           Immediately prior to the consummation
of the transactions contemplated by this Agreement, the members of the Company
are Mark Kreloff, Andrew Brandt, Dave Rogers, Bret Orton, Luke Miller and Kevin
Kerndt (collectively, the “Original Members”), having made, in the aggregate,
capital contributions in the amount of $10,050. 
Upon consummation of the transactions contemplated by Section 1.1,
including satisfaction of the conditions stated in Section 1.1(c), the Investor
and the Original Members are all of the members of the Company and their
respective ownership interests in the Company are set forth in Exhibit A of the
Amended Operating Agreement.  There are
no outstanding warrants, options, preemptive rights, or other rights to acquire
or cause the Company to issue any Membership Interests or admit any other
person as a Member of the Company. 
Except as provided in the Investor Rights Agreement, the Company is not
under any obligation, and has not granted any rights, to register any of the
Company’s outstanding securities or any of its securities that hereafter may be
issued by the Company.

(e)           The Company has no subsidiaries and
does not own or control, directly or indirectly, any shares of capital stock of
any other corporation or any interest in any partnership, limited liability
company, joint venture or other non-corporate business enterprise.

(f)             The conduct by the Company of its activities as
currently conducted does not violate or infringe in any material respect any
applicable statute, rule, regulation, order or restriction of any domestic or
foreign government or any instrumentality or agency thereof, and the Company
has received no notice of any violation by the Company of any applicable statute,
rule, regulation or restriction.  The
Company has all franchises, permits, licenses and any similar authority
necessary for the conduct of its business as now being conducted by it.  The Company is not in default under any of
such franchises, permits, licenses or other similar authority.

 

3

 

(g)           Schedule 2(g) lists all
material agreements to which the Company is a party or by which it is bound (“Material
Contracts”), copies of which have been provided by the Company to the
Investor.  There has not occurred any
material breach or default of any obligations under any Material Contracts (or
any event that, with the passage of time or giving of notice, or both, could become
a breach or default) of the Company or, to the Company’s knowledge, any other
party thereto, nor has any party given notice to the Company of its intention
nor, to the knowledge of the Company, except as disclosed on Schedule 2(g)
does any such party otherwise intend, to terminate or cancel any Material
Contract.

(h)           There is no action, suit, or
proceeding pending against, or to the Company’s knowledge, threatened against
or affecting the Company or any member of the Company before any court, any
arbitrator, or any governmental department, agency, official or
instrumentality.  There is no litigation
pending, or, to the best of the Company’s knowledge, any basis therefor or
threat thereof, against the Company, any of the Members, or any of its
employees by reason of the past employment relationships of any of the Members
or employees, the proposed activities of the Company, or negotiations by the
Company with possible investors in the Company. 
The Company is not subject to any outstanding judgment, order or decree.

(i)            For purposes of this Section 2(i),
the term “Intellectual Property” shall mean all: (A) patents, patent
applications, patent disclosures and all related continuation,
continuation-in-part, divisional, reissue, reexamination, utility model,
certificate of invention and design patents, patent applications, registrations
and applications for registrations; (B) trademarks, service marks, trade dress,
Internet domain names, logos, trade names and corporate names and registrations
and applications for registration thereof; (C) copyrights and registrations and
applications for registration thereof; (D) mask works and registrations and
applications for registration thereof; (E) computer software, data and
documentation; (F) inventions, trade secrets and confidential business
information, whether patentable or nonpatentable and whether or not reduced to
practice, know-how, manufacturing and product processes and techniques,
research and development information, copyrightable works, financial, marketing
and business data, pricing and cost information, business and marketing plans
and customer and supplier lists and information; (G) other proprietary rights
relating to any of the foregoing (including remedies against infringements
thereof and rights of protection of interest therein under the laws of all
jurisdictions); and (H) copies and tangible embodiments thereof.

(i)
           Schedule 2(i)(i) lists each
patent, patent application, copyright registration or application therefor,
mask work registration or application therefor, and trademark, service mark and
domain name registration or application therefor of the Company.

                (ii)           The Company owns or has the right to use all Intellectual
Property necessary to conduct its business as presently conducted and proposed.
The Company has taken all reasonable measures to protect the proprietary nature
of each item of Company Intellectual Property, and to maintain in confidence
all trade secrets and confidential information, that it owns or uses.  No other person or entity has any rights to
any of the Intellectual Property owned by the Company, and, to the best of the
Company’s knowledge, no other person or entity is infringing, violating or
misappropriating any of the Company Intellectual Property.

 

4

 

                (iii)          None of the Company’s products or services, or the
marketing, distribution, provision or use thereof, infringes or violates, or
constitutes a misappropriation of, any Intellectual Property rights of any
person or entity, and, to the best of the Company’s knowledge,  neither the provision or use of any Company
product or service currently under development by the Company will, when such
are commercially released by the Company, infringe or violate, or constitute a
misappropriation of, any Intellectual Property rights of any person or entity
that exist today.  Schedule 2(i)(iii)
lists any complaint, claim or notice, or written threat thereof, received by
the Company alleging any such infringement, violation or misappropriation; and
the Company has provided to the Investor complete and accurate copies of all
written documentation in the possession of the Company relating to any such
complaint, claim, notice or threat. The Company has provided to the Investor
complete and accurate copies of all written documentation in the Company’s
possession relating to claims or disputes known to the Company concerning any
Company Intellectual Property.

                (iv)          The Company has not agreed to indemnify any person or
entity against any infringement, violation or misappropriation of any Intellectual
Property rights with respect to any Company Intellectual Property.

                (v)           Schedule 2(i)(v) identifies each item of Company
Intellectual Property that is owned by a party other than the Company, and the
license or agreement pursuant to which the Company uses it (excluding off the
shelf software programs licensed by the Company pursuant to “shrink wrap” or “click
through” licenses).

                (vi)          The Company has not disclosed the source code for any
software developed by it, or other confidential information constituting,
embodied in or pertaining to such software, to any person or entity, and the
Company has taken reasonable measures to prevent disclosure of such source
code.

                (vii)         All of the copyrightable materials incorporated in or
bundled with the Company’s products or services have been created by employees
of the Company within the scope of their employment by the Company or by
independent contractors of the Company who have executed agreements expressly
assigning all right, title and interest in such copyrightable materials to the
Company.  No portion of such
copyrightable materials was jointly developed with any third party.

(j)            The Company qualifies as a “Qualified
Business” as defined in Section 10-3.5-103(11) of the Colorado Certified
Capital Company Act (C.R.S. 10-3.5-101 et. seq.).  The chief place of business from which
Company policies are made and Company orders are issued is 1701 Pearl Street,
Boulder, Colorado.

(k)           Attached as Exhibit 2(k) is a
complete and correct copy of the Company’s unaudited balance sheet as of June
30, 2007 (the “Balance Sheet”). 
The Balance Sheet is in accordance with the books and records of the
Company, and presents fairly the financial condition and position of the
Company as of the date thereof, and there has been no material adverse change
in the financial condition of the Company since such date.

 

5

 

(l)            Except (i) as described on the Balance Sheet and (ii) for
liabilities incurred since the date of the Balance Sheet in the ordinary course
of business, the Company has no material non-contingent liabilities, and the
Company is not aware of any material contingent liabilities not disclosed on
the Balance Sheet.

 

(m)          Except for the Material Contracts and the Operating Agreement,
there are no agreements, understandings or proposed transactions between the
Company and any of its officers, directors or affiliates, or any affiliate
thereof.

 

(n)           The Company holds marketable title to its properties and
assets free and clear of all mortgages, liens and encumbrances, except such
encumbrances and liens which arise in the ordinary course of business and do
not materially impair the Company’s ownership or use of such property or assets
(“Permitted Encumbrances”).  With respect
to the properties and assets it leases, the Company is in compliance in all
material respects with such leases and, to its knowledge, holds a valid
leasehold interest free of any liens, claims or encumbrances except Permitted
Encumbrances.  All of the Company’s
properties and assets are, in all material respects, in good operating and
usable condition subject to normal wear and tear.

 

(o)           The Company has timely filed all federal, state and local
tax returns and reports within the times and in the manner prescribed by law
and has paid all taxes shown due on such returns, as well as all other
assessments and penalties which have become due and payable.  The Company’s federal income and other tax
returns have not been audited by the Internal Revenue Service or any other
taxing authority and no notice of audit has been received.  The Company has received no notice of any
disputes, deficiency assessments, or proposed adjustments to taxes payable by
the Company.

 

(p)           At least 50% of the Company’s total assets are physically
present in the State of Colorado and at least 50% of the Company’s net income
is allocable or apportionable to Colorado in accordance with Colorado income
tax law.

 

(q)           At least 75% of the Company’s existing total salaries,
wages and/or other compensation are paid to employees located in the State of
Colorado (calculated on a full- time equivalent basis).

 

(r)            The Company is predominantly engaged in the creation and
maintenance of an online community auction business, including the creation and
ownership of all related intellectual property.

 

(s)           The Company business intends to preserve its corporate
headquarters and principal place of business in Colorado for at least three
years after the Closing.

 

(t)            The Company intends to expend at least 80% of the
proceeds of the Purchase Price within the State of Colorado in furtherance of
its business objectives.

 

(u)           The Company (i) has less than $500,000 in total revenues
for the fiscal year immediately preceding the Closing; (ii) prior to the
Closing, has received no investment from a professional venture capital firm
with funds raised from institutional investors; and (iii) 

 

 

6

 

does not have positive operational cash flow for the fiscal year
immediately preceding the Closing.

 

 

3.             Representation
and Warranties of the Investor.  In
order to induce the Company to enter into this Agreement, the Investor hereby
represents and warrants to the Company that:

 

(a)           The execution of the Agreement has been duly authorized by
all necessary action on the part of such Investor, and this Agreement has been
duly executed and delivered, and constitutes a valid, legal and binding
agreement of the Investor enforceable in accordance with its terms, except as
the enforcement thereof may be limited by bankruptcy and other laws of general
application relating to creditor’s rights or general principles of equity.

(b)           The Investor is acquiring the Membership Interest for its
own account, for investment, and not with a view to “distribution” thereof
within the meaning of the Securities Act of 1933, as amended (the “Securities
Act”).  The Investor is an “accredited
investor” as defined under the Securities Act and the regulations promulgated
thereunder.

(c)           The Investor understands that because the Membership
Interest has not been registered under the Securities Act, it cannot dispose of
any portion of its Membership Interest unless it is subsequently registered
under the Securities Act or exemptions from such registration are available.

(d)           The Investor is knowledgeable and experienced in the
making of investments in private enterprises, is able to bear the economic risk
of loss of its investment in the Company, has been granted the opportunity to
investigate the affairs of the Company, and has availed itself of such
opportunity either directly or through its authorized representative.

(e)           The  Investor has
had access to or been supplied with all material information regarding the
Company, its financial condition and historical results of operations, and all
questions concerning the Company have been answered to its satisfaction.

4.             General.

 

4.1           Amendments, Waivers and Consents.  No covenant or other provision hereof or
thereof may be waived otherwise than by a written instrument signed by the
party so waiving such covenant or other provision.  This Agreement may be amended only by written
agreement executed by the Company and the Investor.

4.2           Governing Law; Jurisdiction;
Venue.  This agreement shall be
deemed to be a contract made under, and shall be construed in accordance with,
the laws of the State of Colorado.  The
Company and the Investors hereby agree that the state and federal courts of the
State of Colorado shall have jurisdiction to hear and determine any claims or
disputes between the Investor and the Company pertaining directly or indirectly
to this Agreement.

4.3           Counterparts.  This Agreement may be executed simultaneously
in any number of counterparts, each of which when so executed and delivered
shall be taken to be an original; but such counterparts shall together
constitute but one and the same document.

 

7

 

4.4           Integration.  This Agreement, including the exhibits,
documents and instruments referred to herein or therein and any other
instruments, documents or agreements executed or delivered herewith on the date
hereof, constitutes the entire agreement, and supersedes all other prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof.

4.5           Definition of Knowledge.  The Company will be deemed to have “knowledge”
of a particular fact or other matter if any individual who is serving as a
director or full-time employee of the Company has, or at any time had knowledge
of such fact or other matter.  An
individual shall be deemed to have “knowledge” of a particular fact or other
matter if such individual is actually aware of such fact or other matter.

 

4.6           Survival. 
The representations, warranties, covenants and agreements made herein
shall survive any investigation made by the Investor, the execution and
delivery of this Agreement, and the closing of the transactions contemplated
hereby.  All statements as to factual
matters contained in any certificate or other instrument delivered by or on
behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.

 

4.7           Successors and Assigns.  Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Membership Interest from time to time.

 

4.8           Severability. 
In case any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby and such
invalid, illegal or unenforceable provision shall be reformed to render valid
and enforceable and so as to give effect to the intent manifested by such
provision.

 

4.9           Delays or Omissions.  It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement or the Investor
Rights Agreement shall impair any such right, power or remedy, nor shall it be
construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of or in any similar breach, default or noncompliance
thereafter occurring.  It is further
agreed that any waiver, permit, consent or approval of any kind or character on
either party’s part of any breach, default or noncompliance under this
Agreement or  the Investor Rights
Agreement or any waiver of any provisions or conditions of this Agreement must
be in writing and shall be effective only to the extent specifically set forth
in such writing.  All remedies, either
under this Agreement, the Investor Rights Agreement, the Amended Operating
Agreement, or otherwise afforded to any party, shall be cumulative and not
alternative.

 

4.10         Notices.  All
notices required or permitted hereunder shall be in writing and shall be deemed
effectively given: (i) upon personal delivery to the party to be notified,
(ii) upon delivery by confirmed facsimile transmission if received by the
recipient before 5:00 p.m. local 

 

 

8

 

time on a business day, and if not, then the
next business day, (iii) upon receipt, if deposited with the United States
Post Office, by registered or certified mail, postage prepaid or (iv) upon
receipt, if delivered by a nationally recognized overnight courier
service.  All communications shall be
sent to the party at the address as set forth on the signature page hereof or
at such other address as the Company or the Investor may designate by ten (10)
days advance written notice to the other party hereto.

 

4.11         Expenses.  The
Company shall reimburse the Investor for their documented out-of-pocket legal
and accounting expenses incurred in connection with the transactions contemplated
by this Agreement, including all expenses incurred in connection with its due
diligence examination of the Company, and the preparation, negotiation and
execution of this Agreement, the Investor Rights Agreement, and the Amended
Operating Agreement, provided, however, that the maximum amount of such
reimbursement obligation shall be $15,000.

 

4.12         Attorneys’ Fees. 
In the event that any dispute among the parties to this Agreement should
result in litigation, the prevailing party in such dispute shall be entitled to
recover from the losing party all fees, costs and expenses of enforcing any
right of such prevailing party under or with respect to this Agreement,
including without limitation, such reasonable fees and expenses of attorneys
and accountants, which shall include, without limitation, all fees, costs and
expenses of appeals.

 

4.13         Titles and Subtitles. 
The titles of the sections and subsections of this Agreement are for
convenience of reference only and are not to be considered in construing this
Agreement.

 

4.14         Broker’s Fees.  Each party hereto represents and warrants
that no agent, broker, investment banker, person or firm acting on behalf of or
under the authority of such party hereto is or will be entitled to any broker’s
or finder’s fee or any other commission directly or indirectly in connection
with the transactions contemplated herein. 
Each party hereto further agrees to indemnify each other party for any
claims, losses or expenses incurred by such other party as a result of the representation
in this Section 4.14 being untrue.

[End of Text]

 

 

 

9

 

The parties hereto have
executed this Agreement as of the day and year first above written.

	
   

  	
  WAVELAND COLORADO VENTURES, LLC  

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Chester P. Schwartz

  
	
   

  	
  Name:

  	
  Chester P. Schwartz

  
	
   

  	
  Title:

  	
  Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FAIRGROUND MEDIA, LLC

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Mark Kreloff

  
	
   

  	
  Name:

  	
  Mark Kreloff

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  

 

 

10

 

EXHIBIT
2 (k)

 

Fairground Media, LLC d/b/a www.crowdfunder.com

Balance Sheet

As of 7/15/2007

UNAUDITED

 

	
  ASSETS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Cash

  	
   

  	
  $

  	
  250

  	
   

  
	
  Pre-Paid Legal

  	
   

  	
  $

  	
  3,000

  	
   

  
	
  Pre-Paid Rent

  	
   

  	
  $

  	
  6,000

  	
   

  
	
  Web Site Development

  	
   

  	
  $

  	
  52,860

  	
   

  
	
  Equipment

  	
   

  	
  $

  	
  19,779

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TOTAL ASSETS

  	
   

  	
  $

  	
  81,889

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  LIABILITIES

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Deferred Legal Expenses

  	
   

  	
  $

  	
  2,000

  	
   

  
	
  Note Payable (Kreloff)

  	
   

  	
  $

  	
  29,849

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EQUITY

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  A Round 

  	
   

  	
  $

  	
  10,050

  	
   

  
	
  A Round In-Kind Contributions

  	
   

  	
  $

  	
  40,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TOTAL LIABILITIES PLUS EQUITY

  	
   

  	
  $

  	
  81,889
  

  	
   

  

 

 

SCHEDULE
OF EXCEPTIONS

OF

FAIRGROUNDS MEDIA, LLC

 

Section 2.1 (a) 

 

None

 

Section 2.1 (b) 

 

None

 

Section 2.1 (c) 

 

None

 

Section 2.1 (d) 

 

None

 

Section 2.1 (e) 

 

None

 

Section 2.1 (f) 

 

None

 

Section 2.1 (g) 

 

None

 

Section 2.1 (h) 

 

None

 

Section 2.1 (i) 

 

The Company owns the domain name www.crowdfunder.com.

 

Section 2.1 (j) 

 

None

 

Section 2.1 (k) 

 

None

 

 

Section 2.1 (l) 

 

None

 

Section 2.1 (m) 

 

None

 

Section 2.1 (n) 

 

None

 

Section 2.1 (o) 

 

None

 

Section 2.1 (p) 

 

None

 

Section 2.1 (q) 

 

None

 

Section 2.1 (r) 

 

None

 

Section 2.1 (s) 

 

None

 

Section 2.1 (t) 

 

None

 

Section 2.1 (u) 

 

None

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