EXHIBIT 2.4
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement"), entered into this 1st
day of December 2000, by, between, and among PayStar Communications
Corporation, a Nevada corporation (hereinafter "PayStar Communications"),
PayStar Financial Services, Inc., a Nevada corporation (hereinafter "PayStar
Financial"), and Xxxxxxxx.xxx, Inc., a Nevada corporation (hereinafter
"Paidcard").
RECITALS:
WHEREAS, PayStar Financial is a wholly owned subsidiary of PayStar
Communications; and
WHEREAS, PayStar Communications, through PayStar Financial, wishes to
purchase substantially all of the assets of Paidcard in return for stock and
warrants of PayStar Communications and other consideration;
NOW, THEREFORE, based upon the stated premises, which are incorporated
herein by reference, and for and in consideration of the mutual covenants and
agreements set forth herein, the mutual benefits to the parties to be derived
herefrom, and other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, PayStar Communications, PayStar Financial,
and Paidcard agree as follows:
1. Definitions.
1.1 "Acquired Assets" means all right, title, and interest
in and to all of the assets of Paidcard set forth in Exhibit "A," including,
if any, all of its (a) tangible personal property (such as inventories of raw
materials, supplies, packaging goods, and finished goods, equipment,
manufactured and purchased parts, machinery, goods in process, furniture,
automobiles, trucks, tractors, trailers, tools, jigs, and dies, if any); (b)
agreements, contracts, indentures, mortgages, instruments, Security Interests,
guaranties, other similar arrangements, and rights thereunder; (c) franchises,
approvals, permits, licenses, orders, registrations, certificates, variances,
exemptions, and similar rights obtained from governments and governmental
agencies (the "Permits"); (d) Intellectual Property, goodwill associated
therewith, licenses and sublicenses granted and obtained with respect thereto,
and rights thereunder, remedies against infringements thereof, and rights to
protection of interests therein under the laws of all jurisdictions; (e) real
property, fixtures, improvements, and fittings thereon, leaseholds and
subleaseholds therein, and easements, rights-of-way, ant other appurtenants
thereto (such appurtenant rights in and to public streets); (f) leases,
subleases, and rights thereunder; (g) prepayments, prepaid expenses, and
deferred items, claims, deposits, refunds, causes of action, chooses in
action, rights of recovery, rights of set off, and rights of recoupment
(including any such item relating to the payment of taxes); (h) accounts,
notes, and other receivables; (i) securities (such as the capital stock in any
other entity); (j) books, records, ledgers, files, documents, correspondence,
lists, plats, architectural plans, drawings, and specifications, creative
materials, advertising and promotional materials, studies, reports, and other
printed or written materials; and (k) cash; provided, however, that the
Acquired Assets shall not include (i) the items set forth in Exhibit "B"
attached hereto (the "Excluded Assets"); (ii) the corporate charter,
qualifications to conduct business as a foreign corporation, arrangements with
registered agents relating to foreign qualifications, taxpayer, and other
identification numbers, seals, minute books, stock transfer books, blank stock
certificates, and other documents relating to the organization, maintenance,
and existence of Paidcard as a corporation; and (iii) any of the rights of
Paidcard under this Agreement.
1.2 "Assumed Liabilities" means (a) all trade account payables
and accrued expenses of Paidcard which arose in the ordinary course of
business and are set forth in Exhibit "C" attached hereto, and (b) all
obligations of Paidcard under the agreements, contracts, leases, licenses, and
other arrangements referred to in the definition of Acquired Assets, either
(i) to furnish goods, services, and other non-Cash benefits to another party
after the Closing or (ii) to pay for goods, services, and other non-Cash
benefits that another party will furnish to it after the Closing; provided,
however, that the Assumed Liabilities shall not include, unless expressly
provided for in this Agreement, (i) any Liability of Paidcard for unpaid taxes
or for income, transfer, sales, use, and other taxes arising in connection
with the consummation of the transactions contemplated hereby; (ii) any
obligation of Paidcard to indemnify any Person (including any of the
Stockholders) by reason of the fact that such Person was a director, officer,
employee, or agent of Paidcard and any of its subsidiaries or was serving at
the request of any such entity as a partner, trustee, director, officer,
employee, or agent of another entity (whether such indemnification is for
judgments, damages, penalties, fines, costs, amounts paid in settlement,
losses, expenses, or otherwise and whether such indemnification is pursuant to
any statute, charter document, bylaw, agreement, or otherwise); (iii) all
Liabilities and obligations of Paidcard relating to the Excluded Assets
(including accounts payable and accrued expenses); (iv) all liabilities and
obligations relating to funded indebtedness of Paidcard or its subsidiaries;
(v) any Liability of Paidcard for costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby; or (vi) any
Liability or obligation of Paidcard under this Agreement.
1.3 "Cash" means cash and cash equivalents (including marketable
securities and short term investments) calculated in accordance with GAAP
applied on a basis consistent with the preparation of the financial statements
of Paidcard.
1.4 "GAAP" means United States generally accepted accounting
principles as in effect from time to time.
1.5 "Intellectual Property" means (a) all trade secrets and
confidential business information (including customer and supplier lists,
ideas, research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical data,
designs, drawings, specifications, pricing and cost information, and business
and marketing plans and proposals); (b) all trademarks, service marks, trade
dress, logos, trade names, and corporate names, together with all
translations, adaptations, derivations, and combinations thereof and including
all goodwill associated therewith, and all applications, registrations, and
renewals in connection therewith; (c) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures,
together with all reissuances, continuations, continuations-in-part,
revisions, extensions, and reexaminations thereof; (d) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in
connection therewith; (e) all mask works and all applications, registrations,
and renewals in connection therewith; (f) all computer software (including
data, source codes, and related documentation); (g) all other proprietary
rights; and (h) all copies and tangible embodiments thereof (in whatever form
or medium).
1.6 "Liability" means any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, and whether due or
to become due), including any liability for taxes.
1.7 "Person" means an individual, a partnership, a corporation,
an association, a joint venture, a limited liability company ro partnership, a
trust, a joint stock company, an unincorporated organization, or a
governmental entity (or any department, agency, or political subdivision
thereof).
1.8 "Security Interest" means any lien, encumbrance, mortgage,
pledge, charge, or other security interest.
1.9 "Stockholder" means any person who or which holds any shares
of capital stock of Paidcard.
2.Asset Purchase Transaction.
2.1 Purchase and Sale of Assets. On and subject to the terms
and conditions of this Agreement, PayStar Financial agrees to purchase from
Paidcard, and Paidcard agrees to sell, transfer, convey, and deliver to
PayStar Financial, all of the Acquired Assets at the Closing free and clear of
any Security Interests for the consideration with respect to the Acquired
Assets.
2.2 Assumption of Liabilities. On and subject to the terms and
conditions of this Agreement, PayStar Financial agrees to assume and become
responsible for all of the Assumed Liabilities at the closing. PayStar
Financial will not assume or have any responsibility, however, with respect to
any other obligation or Liability of Paidcard not included within the
definition of Assumed Liabilities.
2.3 Securities to be Issued. At closing PayStar Communications
shall deliver to Paidcard 400,000 units, each of which shall consist of one
share of common stock of PayStar Communications and one two-year Class A
Warrant to purchase another share of common stock at an exercise price of
$2.00 per share. Such units shall be offered and sold to Paidcard pursuant to
this Agreement and in accordance with the terms of the current private
offering of PayStar Communications as set forth in the private offering
memorandum of PayStar Communications dated August 1, 2000, as amended August
17, 2000 (the "PayStar Communications Private Offering"). The delivery of the
400,000 units shall constitute the full purchase price of the Assets.
2.4 Employment and Consultant Agreements. Prior to closing
PayStar Financial shall negotiate an employment contract with Xxxx Xxxxxx to
serve in a similar position with PayStar Financial that he currently holds
with Paidcard. Also prior to closing PayStar Financial shall negotiate a
consulting agreement with Xxxxxxxx Xxxxxx. On or before the closing, and as a
condition of closing, PayStar Financial shall enter into an employment
agreement with Xx. Xxxxxx and a consulting agreement with Xx. Xxxxxx to be
effective as of the closing date.
2.5 Conversion of Loans. Prior to the date of this Agreement,
Paidcard has borrowed an aggregate of $170,000 for operating funds from four
Persons, each of whom has agreed to convert such loans into an equity
investment in PayStar Communications. As a condition of closing, these
outstanding loans by Paidcard in the principal amount of $170,000 shall be
converted into 85,000 units in the PayStar Communications Private Offering.
2.6 Raising Private Offering Funds. As a condition of closing
PCH Partners shall raise a minimum of $230,000 in the PayStar Communications
Private Offering on or before the closing date. Such funds shall be delivered
to and held in trust in the client trust account of counsel for PayStar
Communications and shall be delivered to PayStar Communications at closing.
PCH Partners shall raise an additional $270,000 within sixty days following
closing.
2.7 Non-Exclusive ISO Agency Agreement. Prior to closing
PayStar Financial shall negotiate a non-exclusive, transferrable independent
sales organization agency agreement with Compass Bank. PayStar Financial
shall remain the owner of the merchant base. On or before the closing, and as
a condition of closing, PayStar Financial shall enter into such agreement to
be effective as of the closing date.
2.8 Use of Paidcard Name. On or before the closing date
Paidcard shall authorize a change of its corporate name such that PayStar
Financial shall be able to use the name "Xxxxxxxx.xxx, Inc." Immediately
following the closing, Paidcard shall amend its articles of incorporation, and
its qualification as a foreign corporation, to change its corporate name so
that this name will be available for use by PayStar Financial.
3. Representations and Warranties of Paidcard. Paidcard represents
and warrants to PayStar Communications and PayStar Financial as set forth
below. These representations and warranties are made as an inducement for
PayStar Communications and PayStar Financial to enter into this Agreement and,
but for the making of such representations and warranties and their accuracy,
PayStar Communications and PayStar Financial would not be parties hereto.
3.1 Organization and Authority. Paidcard is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Nevada with full power and authority to enter into and perform the
transactions contemplated by this Agreement. Paidcard has no subsidiary and
owns no interest in any other entity. Paidcard is duly qualified as a foreign
corporation to transaction business in the State of California and in each
jurisdiction in which the operations of Paidcard would require such
qualification.
3.2 Performance of This Agreement. The execution and
performance of this Agreement and the transaction contemplated hereby have
been authorized by the board of directors of Paidcard.
3.3 Financials. The financial statements of Paidcard for the
six months ended September 30, 2000, and the years ended March 31, 2000 and
1999, copies of which have been furnished to PayStar Communications and
PayStar Financial, are true and correct in all material respects. The
year-end financial statements have been examined and certified by M.A. Xxxxxxx
Intl., Certified Public Accountant. Said interim and year-end financial
statements are true and correct in all material respects and present an
accurate and complete disclosure of the financial condition of Paidcard as of
September 30, 2000, and the earnings for the periods covered, in accordance
with GAAP applied on a consistent basis.
3.4 Title to Assets. Paidcard has good and marketable title to,
or a valid leasehold interest in, the properties and assets used by it,
located on its premises, or shown on the most recent balance sheet of Paidcard
or acquired after the date thereof, free and clear of all Security Interests,
except for properties and assets disposed of in the ordinary course of business
since the date of the most recent balance sheet. Without limiting the
generality of the foregoing, Paidcard has good and marketable title to all of
the Acquired Assets, free and clear of any Security Interest or restriction on
transfer, except as disclosed in writing to PayStar Communications and PayStar
Financial prior to closing.
3.5 Liabilities. There are no material Liabilities of Paidcard
which arose or relate to any transaction of Paidcard, its agents or servants
occurring prior to September 30, 2000, which are not disclosed by or reflected
in said financial statements. As of the date hereof, there are no known
circumstances, conditions, happenings, events or arrangements, contractual or
otherwise, which may hereafter give rise to Liabilities, except in the normal
course of business of Paidcard.
3.6 Absence of Certain Changes or Events. Except as set forth
in this Agreement, since September 30, 2000, there has not been (i) any
material adverse change in the business, operations, properties, level of
inventory, assets, or condition of Paidcard, or (ii) any damage, destruction,
or loss to Paidcard (whether or not covered by insurance) materially and
adversely affecting the business, operations, properties, assets, or
conditions of Paidcard.
3.7 Litigation. There are no legal, administrative or other
proceedings, investigations or inquiries, product liability or other claims,
judgments, injunctions or restrictions, either threatened, pending, or
outstanding against or involving Paidcard, or its assets, properties, or
business, nor does Paidcard know, or have reasonable grounds to know, of any
basis for any such proceedings, investigations or inquiries, product liability
or other claims, judgments, injunctions or restrictions. In addition, there
are no material proceedings existing, pending or reasonably contemplated to
which any officer, director, or affiliate of Paidcard is a party adverse to
Paidcard or has a material interest adverse to Paidcard.
3.8 Taxes. All federal, state, foreign, county and local
income, profits, franchise, occupation, property, sales, use, gross receipts
and other taxes (including any interest or penalties relating thereto) and
assessments which are due and payable have been duly reported, fully paid and
discharged as reported by Paidcard, and there are no unpaid taxes which are,
or could become a lien on the properties and assets of Paidcard, except as
provided for in the financial statements of Paidcard, or have been incurred in
the normal course of business of Paidcard since that date. All tax returns of
any kind required to be filed have been filed and the taxes paid or accrued.
3.9 Accuracy of All Statements Made by Paidcard. No
representation or warranty by Paidcard in this Agreement, nor any statement,
certificate, schedule, or exhibit hereto furnished or to be furnished by or on
behalf of Paidcard pursuant to this Agreement, nor any document or certificate
delivered to PayStar Communications or PayStar Financial by Paidcard pursuant
to this Agreement or in connection with actions contemplated hereby, contains
or shall contain any untrue statement of material fact or omits or shall omit
a material fact necessary to make the statement contained therein not
misleading.
4. Representations and Warranties of PayStar Communications and
PayStar Financial. PayStar Communications and PayStar Financial, jointly and
severally, represent and warrant to Paidcard as set forth below. These
representations and warranties are made as an inducement for Paidcard to enter
into this Agreement and, but for the making of such representations and
warranties and their accuracy, Paidcard would not be a party hereto.
4.1 Organization and Good Standing. PayStar Communications and
PayStar Financial are corporations duly organized, validly existing and in
good standing under the laws of the State of Nevada with full power and
authority to enter into and perform the transactions contemplated by this
Agreement.
4.2 Performance of This Agreement. The execution and
performance of this Agreement and the transaction contemplated hereby have
been authorized by the boards of directors of PayStar Communications and
PayStar Financial.
4.3 Financials. True copies of the consolidated financial
statements of PayStar Communications for the nine months ended September 30,
2000, and the years ended December 31, 1999 and 1998, have been delivered by
PayStar Communications to Paidcard. The year-end financial statements for
1999 have been examined and certified by Xxxxxxxx Xxxxxxxx & Strong, Certified
Public Accountants; the year-end financial statements for 1998 have been
examined and certified by Xxxxxxxxxxxx and Company, Certified Public
Accountants. Said financial statements are true and correct in all material
respects and present an accurate and complete disclosure of the financial
condition of PayStar Communications as of September 30, 2000, and the earnings
for the periods covered, in accordance with GAAP applied on a consistent
basis. These financial statements are set forth in the registration statement
filed with the U.S. Securities and Exchange Commission by PayStar
Communications under the Securities Act of 1933 and periodic reports filed
with the U.S. Securities and Exchange Commission by PayStar Communications
pursuant to Section 15(d) of the Securities Exchange Act of 1934 (collectively
the "SEC Periodic Reports").
4.4 Liabilities. There are no material Liabilities of PayStar
Communications which arose or relate to any transaction of PayStar
Communications, its agents or servants which are not disclosed by or reflected
in said financial statements. As of the date hereof, there are no known
circumstances, conditions, happenings, events or arrangements, contractual or
otherwise, which may hereafter give rise to Liabilities, except in the normal
course of business of PayStar Communications.
4.5 Litigation. Except as set forth in the SEC Periodic
Reports, there are no legal, administrative or other proceedings,
investigations or inquiries, product liability or other claims, judgments,
injunctions or restrictions, either threatened, pending, or outstanding
against or involving PayStar Communications or its subsidiaries, or their
assets, properties, or business, nor does PayStar Communications or its
subsidiaries know, or have reasonable grounds to know, of any basis for any
such proceedings, investigations or inquiries, product liability or other
claims, judgments, injunctions or restrictions. In addition, there are no
material proceedings existing, pending or reasonably contemplated to which any
officer, director, or affiliate of PayStar Communications, or its
subsidiaries, is a party adverse to PayStar Communications or any of its
subsidiaries or has a material interest adverse to PayStar Communications or
any of its subsidiaries.
4.6 Taxes. All federal, state, foreign, county and local
income, profits, franchise, occupation, property, sales, use, gross receipts
and other taxes (including any interest or penalties relating thereto) and
assessments which are due and payable have been duly reported, fully paid and
discharged as reported by PayStar Communications, and there are no unpaid
taxes which are, or could become a lien on the properties and assets of
PayStar Communications, except as provided for in the financial statements of
PayStar Communications, or have been incurred in the normal course of business
of PayStar Communications since that date. All tax returns of any kind
required to be filed have been filed and the taxes paid or accrued. As a
newly formed corporation, PayStar Financial has incurred no tax liabilities
and has filed no tax returns.
4.7 Legality of Securities to be Issued. The shares of common
stock, the warrants, and the shares of common stock underlying the warrants,
of PayStar Communications to be issued by PayStar Communications pursuant to
this Agreement, when so issued and delivered, will have been duly and validly
authorized and issued by PayStar Communications and will be fully paid and
nonassessable.
4.8 Accuracy of All Statements Made by PayStar Communications
and PayStar Financial. No representation or warranty by PayStar
Communications or PayStar Financial in this Agreement, nor any statement,
certificate, schedule, or exhibit hereto furnished or to be furnished by
PayStar Communications or PayStar Financial pursuant to this Agreement, nor
any document or certificate delivered to Paidcard pursuant to this Agreement
or in connection with actions contemplated hereby, contains or shall contain
any untrue statement of material fact or omits to state or shall omit to state
a material fact necessary to make the statement contained therein not
misleading.
5. Covenants of the Parties.
5.1 Corporate Records.
a. Simultaneous with the execution of this Agreement by
Paidcard, such entity shall deliver to PayStar Communications and PayStar
Financial copies of the articles of incorporation, as amended, and the current
bylaws of Paidcard, and copies of the resolutions duly adopted by the board of
directors of Paidcard approving this Agreement and the transactions herein
contemplated.
b. Simultaneous with the execution of this Agreement by
PayStar Communications and PayStar Financial, such entities shall deliver to
Paidcard copies of the articles of incorporation, as amended, and the current
bylaws of each entity, and copies of the resolutions duly adopted by the
boards of directors of PayStar Communications and PayStar Financial approving
this Agreement and the transactions herein contemplated.
5.2 Access to Information.
a. PayStar Communications and PayStar Financial and their
authorized representatives shall have full access during normal business hours
to all properties, books, records, contracts, and documents of Paidcard, and
Paidcard shall furnish or cause to be furnished to PayStar Communications and
PayStar Financial and their authorized representatives all information with
respect to its affairs and business as PayStar Communications or PayStar
Financial may reasonably request. PayStar Communications and PayStar
Financial shall hold, and shall cause its representatives to hold
confidential, all such information and documents, other than information that
(i) is in the public domain at the time of its disclosure to PayStar
Communications or PayStar Financial; (ii) becomes part of the public domain
after disclosure through no fault of PayStar Communications or PayStar
Financial; (iii) is known to PayStar Communications or PayStar Financial or
any of their officers or directors prior to disclosure; or (iv) is disclosed
in accordance with the written consent of Paidcard. In the event this
Agreement is terminated prior to closing, PayStar Communications and PayStar
Financial shall, upon the written request of Paidcard, promptly return all
copies of all documentation and information provided by Paidcard hereunder.
b. Paidcard and its authorized representatives shall have
full access during normal business hours to all properties, books, records,
contracts, and documents of PayStar Communications and PayStar Financial, and
PayStar Communications and PayStar Financial shall furnish or cause to be
furnished to Paidcard and its authorized representatives all information with
respect to their affairs and business as Paidcard may reasonably request.
Paidcard shall hold, and shall cause its representatives to hold confidential,
all such information and documents, other than information that (i) is in the
public domain at the time of its disclosure to Paidcard; (ii) becomes part of
the public domain after disclosure through no fault of Paidcard; (iii) is
known to Paidcard or any of its officers or directors prior to disclosure; or
(iv) is disclosed in accordance with the written consent of PayStar
Communications or PayStar Financial, as applicable. In the event this
Agreement is terminated prior to closing, Paidcard shall, upon the written
request of PayStar Communications or PayStar Financial, promptly return all
copies of all documentation and information provided by PayStar Communications
or PayStar Financial hereunder.
5.3 Actions Prior to Closing. From and after the date of this
Agreement and until the closing date:
a. Paidcard shall carry on its business diligently and
substantially in the same manner as heretofore, and shall not make or
institute any unusual or novel methods of purchase, sale, management,
accounting or operation.
b. Paidcard shall not enter into any contract or
commitment, or engage in any transaction not in the usual and ordinary course
of business and consistent with its business practices.
c. Paidcard shall not amend its articles of incorporation
or bylaws or make any changes in authorized or issued capital stock, except as
provided in this Agreement.
d. Paidcard shall use its best efforts to preserve its
business organization intact.
e. Paidcard shall not do any act or omit to do any act, or
permit any act or omission to act, which will cause a material breach of any
material contract, commitment, or obligation of Paidcard.
f. Paidcard shall duly comply with all applicable laws as
may be required for the valid and effective transfer of assets contemplated by
this Agreement.
g. Paidcard shall not sell or dispose of any property or
assets, except products sold in the ordinary course of business.
h. Paidcard shall promptly notify PayStar Communications of
any lawsuits, claims, proceedings, or investigations that may be threatened,
brought, asserted, or commenced against it, its officers or directors
involving in any way the business, properties, or assets of Paidcard.
5.4 Shareholders' Meeting or Consent. Paidcard shall promptly
submit this Agreement and the transactions contemplated hereby for the
approval of its Stockholders at a meeting of Stockholders or by consent of
Stockholders owning a majority of the outstanding stock, and, subject to the
fiduciary duties of the Board of Directors of Paidcard under applicable law,
shall use its best efforts to obtain Stockholder approval and adoption of this
Agreement and the transactions contemplated hereby. In connection with such
meeting of Stockholders, or in obtaining such majority consent, Paidcard shall
prepare a proxy or information statement to be furnished to its Stockholders
setting forth information about this Agreement and the transactions
contemplated hereby. PayStar Communications shall promptly furnish to
Paidcard all information, and take such other actions, as may reasonably be
requested in connection with any action to be taken in connection with the
immediately preceding sentence. PayStar Communications shall have the right
to review and provide comments to the proxy or information statement furnished
to the Stockholders prior to mailing.
5.5 No Covenant as to Tax or Accounting Consequences. It is
expressly understood and agreed that neither PayStar Communications, nor
PayStar Financial, nor their officers, agents, or legal counsel has made any
warranty or agreement, expressed or implied, as to the tax or accounting
consequences of the transactions contemplated by this Agreement or the tax or
accounting consequences of any action pursuant to or growing out of this
Agreement.
5.6 Bulk Transfer Laws. Prior to closing the parties shall
comply with the provisions of any bulk transfer laws of any jurisdiction in
connection with the transactions contemplated by this Agreement.
5.7 Indemnification. Paidcard shall indemnify PayStar
Communications and PayStar Financial for any loss, cost, expense, or other
damage (including, without limitation, attorneys' fees and expenses) suffered
by PayStar Communications or PayStar Financial resulting from, arising out of,
or incurred with respect to, or alleged to result from, arise out of or have
been incurred with respect to, the falsity or the breach of any
representation, warranty, or covenant made by Paidcard herein, and any claims
arising from the operations of Paidcard prior to the closing date. PayStar
Communications and PayStar Financial, jointly and severally, shall indemnify
and hold Paidcard harmless from and against any loss, cost, expense, or other
damage (including, without limitation, attorneys' fees and expenses) resulting
from, arising out of, or incurred with respect to, or alleged to result from,
arise out of or have been incurred with respect to, the falsity or the breach
of any representation, covenant, warranty, or agreement made by PayStar
Communications or PayStar Financial herein, and any claims arising from the
operations of PayStar Communications or PayStar Financial prior to the closing
date. The indemnity agreement contained herein shall remain operative and in
full force and effect, regardless of any investigation made by or on behalf of
any party and shall survive the consummation of the transactions contemplated
by this Agreement.
5.8 Publicity. The parties agree that no publicity, release, or
other public announcement concerning this Agreement or the transactions
contemplated by this Agreement shall be issued by any party hereto without the
advance approval of both the form and substance of the same by the other
parties and their counsel, which approval, in the case of any publicity,
release, or other public announcement required by applicable law, shall not be
unreasonably withheld or delayed.
5.9 Expenses. Each party to this Agreement shall bear its own
respective expenses incurred in connection with the negotiation and
preparation of this Agreement, in the consummation of the transactions
contemplated hereby, and in connection with all duties and obligations
required to be performed by each of them under this Agreement.
5.10 No Finders' Fees. No broker, finder, or similar agent has
been employed by or on behalf of PaidCard, PayStar Communications, or PayStar
Financial in connection with this Agreement or the transactions contemplated
hereby, and such parties have not entered into any agreement or understanding
of any kind with any Person for the payment of any brokerage commisssion,
finder's fee, or any similar compensation in connection with this Agreement or
the transactions contemplated hereby.
5.11 Further Actions. Each of the parties hereto shall take all
such further action, and execute and deliver such further documents, as may be
necessary to carry out the transactions contemplated by this Agreement.
6. Conditions Precedent to PayStar Communications's and PayStar
Financial's Obligations. Each and every obligation of PayStar Communications
and PayStar Financial to be performed on the closing date shall be subject to
the satisfaction prior thereto of the following conditions:
6.1 Truth of Representations and Warranties. The
representations and warranties made by Paidcard in this Agreement or given on
its behalf hereunder shall be substantially accurate in all material respects
on and as of the closing date with the same effect as though such
representations and warranties had been made or given on and as of the closing
date.
6.2 Performance of Obligations and Covenants. Paidcard shall
have performed and complied with all obligations and covenants required by
this Agreement to be performed or complied with by it prior to or at the
closing.
6.3 Officer's Certificate. PayStar Communications and PayStar
Financial shall have been furnished with a certificate (dated as of the
closing date and in form and substance reasonably satisfactory to PayStar
Communications and PayStar Financial), executed by an executive officer of
Paidcard, certifying to the fulfillment of the conditions specified in
subsections 6.1 and 6.2 hereof.
6.4 No Litigation or Proceedings. There shall be no litigation
or any proceeding by or before any governmental agency or instrumentality
pending or threatened against any party hereto that seeks to restrain or
enjoin or otherwise questions the legality or validity of the transactions
contemplated by this Agreement or which seeks substantial damages in respect
thereof.
6.5 No Material Adverse Change. As of the closing date there
shall not have occurred any material adverse change, financially or otherwise,
which materially impairs the ability of Paidcard to conduct its business or
the earning power thereof on the same basis as in the past.
6.6 Shareholders' Approval. The holders of not less than a
majority of the outstanding common stock of Paidcard shall have voted for
authorization and approval of this Agreement and the transactions contemplated
hereby.
7. Conditions Precedent to Obligations of Paidcard. Each and every
obligation of Paidcard to be performed on the closing date shall be subject to
the satisfaction prior thereto of the following conditions:
7.1 Truth of Representations and Warranties. The
representations and warranties made by PayStar Communications and PayStar
Financial in this Agreement or given on their behalf hereunder shall be
substantially accurate in all material respects on and as of the closing date
with the same effect as though such representations and warranties had been
made or given on and as of the closing date.
7.2 Performance of Obligations and Covenants. PayStar
Communications and PayStar Financial shall have performed and complied with
all obligations and covenants required by this Agreement to be performed or
complied with by them prior to or at the closing.
7.3 Officer's Certificates. Paidcard shall have been furnished
with certificates (dated as of the closing date and in form and substance
reasonably satisfactory to Paidcard), executed by an executive officer of
PayStar Communications and by an executive officer of PayStar Financial,
certifying to the fulfillment of the conditions specified in subsections 7.1
and 7.2 hereof.
7.4 No Litigation or Proceedings. There shall be no litigation
or any proceeding by or before any governmental agency or instrumentality
pending or threatened against any party hereto that seeks to restrain or
enjoin or otherwise questions the legality or validity of the transactions
contemplated by this Agreement or which seeks substantial damages in respect
thereof.
7.5 No Material Adverse Change. As of the closing date there
shall not have occurred any material adverse change, financially or otherwise,
which materially impairs the ability of either PayStar Communications or
PayStar Financial to conduct its business.
8. Securities Law Provisions. At closing Paidcard and the lenders
set forth in subsection 2.5 above shall deliver to PayStar Communications
subscription agreements, as provided by PayStar Communications, containing
appropriate representations concerning the restricted nature of the securities
to be issued to them, the non-distributive intent of the recipients of the
securities, and other provisions to reasonably satisfy the non-public,
unregistered nature of the transaction.
9. Closing.
9.1 Time and Place. The closing of this transaction ("closing")
shall take place at the offices of PayStar Communications, 0000 Xxxx Xxxxxxxxx
Xxxx, Xxxxx 00, Xxxx, XX 00000, at 3:00 p.m., December 11, 2000, or at such
other time and place as the parties hereto shall agree upon. Such date is
referred to in this Agreement as the "closing date."
9.2 Documents To Be Delivered by Paidcard. At the closing
Paidcard shall deliver to PayStar Communications and PayStar Financial the
following documents:
a. Assignments and such other instruments of sale,
transfer, conveyance, and assignment of the Acquired Assets to PayStar
Financial as PayStar Financial and its counsel may request.
b. The subscription agreements described in Section 8
hereof.
c. The certificate required pursuant to subsection 6.3
hereof.
d. A certified copy of the duly adopted resolutions of
Paidcard's shareholders authorizing this Agreement and the transactions
contemplated hereby.
e. If applicable, proof of compliance with bulk transfer
laws.
f. Such other documents of transfer, certificates of
authority, and other documents as PayStar Communications or PayStar Financial
may reasonably request.
9.3 Documents To Be Delivered by PayStar Communications and
PayStar Financial. At the closing PayStar Communications and PayStar
Financial shall deliver to Paidcard the following documents:
a. An assumption document and such other instruments of
assumption by PayStar Financial as set forth in subsection 2.2 hereof and as
Paidcard and its counsel may reasonably request.
b. A certificate for 400,000 shares and a certificate for
400,000 warrants of PayStar Communications issued to Paidcard as set forth in
subsection 2.3 hereof.
c. Copies of employment and consulting contracts entered
into by PayStar Financial with Xxxx Xxxxxx and Xxxxxxxx Xxxxxx as set forth in
subsection 2.4 hereof.
d. Certificates for an aggregate of 85,000 shares and
85,000 warrants of PayStar Communications issued to the lenders as set forth
in subsection 2.5 hereof.
e. A certificate from counsel for PayStar Communications
evidencing receipt of $230,000 held in the client trust account of counsel for
PayStar Communications which was received for the sale of units in the PayStar
Communications Private Offering as set forth in subsection 2.6 hereof. Such
funds shall be delivered to PayStar Communications immediately following
closing.
f. A copy of the non-exclusive ISO agency agreement entered
into by PayStar Financial with Compass Bank as set forth in subsection 2.7
hereof.
g. The certificate required pursuant to subsection 7.3
hereof.
h. If applicable, proof of compliance with bulk transfer
laws.
i. Such other documents of transfer, certificates of
authority, and other documents as Paidcard may reasonably request.
10. Termination. This Agreement may be terminated by PayStar
Communications, PayStar Financial, or Paidcard by notice to the others if, (i)
at any time prior to the closing date any event shall have occurred or any
state of facts shall exist that renders any of the conditions to its or their
obligations to consummate the transactions contemplated by this Agreement incapa
ble of fulfillment, or (ii) on January 31, 2001, if the closing shall not have
occurred. Following termination of this Agreement no party shall have
liability to another party relating to such termination, other than any
liability resulting from the breach of this Agreement by a party prior to the
date of termination.
11. Miscellaneous.
11.1 Notices. All communications provided for herein shall be
in writing and shall be deemed to be given or made when served personally or
when deposited in the United States mail, certified return receipt requested,
addressed as follows, or at such other address as shall be designated by any
party hereto in written notice to the other party hereto delivered pursuant to
this subsection:
Paidcard: Xxxxxxxx Xxxxxx, President
0000-X Xxxxx Xxxxxx
Xxxxxx Xxxxx, XX 00000
PayStar Communications
& PayStar Financial: Xxxxxxx X. Xxxxx, Chairman
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 00
Xxxx, XX 00000
with copy to: Xxxxxx X. Xxxxx
Attorney at Law
00 Xxxx 000 Xxxxx
Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
11.2 Default. Should any party to this Agreement default in any
of the covenants, conditions, or promises contained herein, the defaulting
party shall pay all costs and expenses, including a reasonable attorney's fee,
which may arise or accrue from enforcing this Agreement, or in pursuing any
remedy provided hereunder or by statute.
11.3 Assignment. This Agreement may not be assigned in whole or
in part by the parties hereto without the prior written consent of the other
party or parties, which consent shall not be unreasonably withheld.
11.4 Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto, their heirs,
executors, administrators, successors and assigns.
11.5 Partial Invalidity. If any term, covenant, condition, or
provision of this Agreement or the application thereof to any person or
circumstance shall to any extent be invalid or unenforceable, the remainder of
this Agreement or application of such term or provision to persons or
circumstances other than those as to which it is held to be invalid or
unenforceable shall not be affected thereby and each term, covenant,
condition, or provision of this Agreement shall be valid and shall be
enforceable to the fullest extent permitted by law.
11.6 Entire Agreement. This Agreement constitutes the entire
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all negotiations, representations, prior discussions,
and preliminary agreements between the parties hereto relating to the subject
matter of this Agreement.
11.7 Incorporation of Exhibits. The exhibits identified in this
Agreement are incorporated herein by reference and made a part hereof.
11.8 Interpretation of Agreement. This Agreement shall be
interpreted and construed as if equally drafted by all parties hereto.
11.9 Survival of Covenants, Etc. All covenants,
representations, and warranties made herein to any party, or in any statement
or document delivered to any party hereto, shall survive the making of this
Agreement and shall remain in full force and effect until the obligations of
such party hereunder have been fully satisfied.
11.10 Further Action. The parties hereto agree to execute and
deliver such additional documents and to take such other and further action as
may be required to carry out fully the transactions contemplated herein.
11.11 Amendment. This Agreement or any provision hereof may not
be changed, waived, terminated, or discharged except by means of a written
supplemental instrument signed by the party or parties against whom
enforcement of the change, waiver, termination, or discharge is sought.
11.12 Full Knowledge. By their signatures, the parties
acknowledge that they have carefully read and fully understand the terms and
conditions of this Agreement, that each party has had the benefit of counsel,
or has been advised to obtain counsel, and that each party has freely agreed
to be bound by the terms and conditions of this Agreement.
11.13 Headings. The descriptive headings of the various
sections or parts of this Agreement are for convenience only and shall not
affect the meaning or construction of any of the provisions hereof.
11.14 Counterparts. This Agreement may be executed in two or
more partially or fully executed counterparts, each of which shall be deemed
an original and shall bind the signatory, but all of which together shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto executed the foregoing Asset
Purchase Agreement as of the day and year first above written.
PAYSTAR COMMUNICATIONS: PayStar Communications Corporation
By/s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx, Chairman
PAYSTAR FINANCIAL: PayStar Financial Services, Inc.
By/s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx, Chairman
PAIDCARD: Xxxxxxxx.xxx, Inc.
By/s/ Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxxxx, President
EXHIBIT "A"
LIST OF ASSETS
EXHIBIT "B"
EXCLUDED ASSETS
EXHIBIT "C"
ASSUMED TRADE ACCOUNT PAYABLES AND ACCRUED EXPENSES
EXHIBIT 2.5
STOCK-FOR-STOCK EXCHANGE AGREEMENT
This Stock-for-Stock Exchange Agreement (the "Agreement"), entered into
effective the 1st day of March 2001, is by, between, and among PayStar
Communications Corporation, a Nevada corporation (hereinafter the
"Purchaser"), SHS Communications, Inc. and Position Industries, Inc.,
California corporations (hereinafter referred to individually as "SHS
Industries" or "Position Industries," as applicable, or collectively as the
"Sellers"), and the shareholders of the Sellers who are listed on Schedule "A"
hereto and have executed Subscription Agreements in the form attached in
Exhibit 1 hereto (the "Shareholders").
RECITALS:
WHEREAS, Sellers are full service telecommunications providers with
extensive experience in engineering, software development, hardware final
assembly and provisioning, equipment installation, and maintenance services of
telephones;
WHEREAS, the Purchaser desires to integrate the operations of the Sellers
into its own communications business;
WHEREAS, the Purchaser wishes to acquire, and the Shareholders, by
executing Schedule "B" hereto, are willing to sell, all of the outstanding
stock of the Sellers in exchange solely for a part of the voting stock of the
Purchaser such that at Closing the Sellers would become wholly owned
subsidiaries of the Purchaser; and
WHEREAS, the parties hereto intend to qualify such transaction as a
tax-free reorganization pursuant to Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended;
NOW, THEREFORE, based upon the stated premises, which are incorporated
herein by reference, and for and in consideration of the mutual covenants and
agreements set forth herein, the mutual benefits to the parties to be derived
herefrom, and other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto approve and adopt this
Stock-for-Stock Exchange Agreement and mutually covenant and agree with each
other as follows:
1. Shares to be Transferred and Shares to be Issued; Employment
Agreements.
1.1 Shares to be Transferred to Purchaser. On the Closing Date
the Shareholders shall transfer to the Purchaser certificates for the number
of shares of the common stock of the Sellers described in Schedule "A,"
attached hereto and incorporated herein, which in the aggregate shall
represent all of the issued and outstanding shares of the common stock of the
Sellers.
1.2 Shares to be Issued to Shareholders. In exchange for the
transfer of the common stock of the Sellers pursuant to subsection 1.1.
hereof, the Purchaser shall on the Closing Date and contemporaneously with
such transfer of the common stock of the Sellers to it by the Shareholders
issue and deliver to the Shareholders the number of shares of common stock of
the Purchaser specified on Schedule "A."
1.3 Employment Agreements. Contemporaneous with the effective
date of this Agreement, the Purchaser shall enter into employment agreements
with Xxxxx XxXxxxxx and Xxxx Xxxxxx, in the forms attached hereto as Exhibit 2
and Exhibit 3, respectively.
1.4 Loan Repayments. On or before May 15, 2001, Purchaser
shall cause SHS Industries to repay the outstanding loan in the approximate
amount of $55,773 at December 31, 2000, to Xxxxx Xxxx; the outstanding loan in
the approximate amount of $55,773 at December 31, 2000, to Xxxxxxxxx XxXxxxxx;
and the credit card debt in the approximate amount of $58,000, but not to
exceed $60,000.
2. Representations and Warranties of the Sellers. The Sellers,
jointly and severally, represent and warrant to the Purchaser as set forth
below. These representations and warranties are made as an inducement for the
Purchaser to enter into this Agreement and, but for the making of such
representations and warranties and their accuracy, the Purchaser would not be
a party hereto.
2.1 Organization and Authority. Each of the Sellers is a
corporation duly organized, validly existing and in good standing under the
laws of the State of California with full power and authority to enter into
and perform the transactions contemplated by this Agreement. Neither of the
Sellers has any subsidiaries or owns any interest in any other entity.
2.2 Capitalization. As of the date of the Closing, SHS
Industries will have a total of no more than 5,000 shares of common stock
issued and outstanding and Position Industries will have a total of no more
than 10,000 shares of common stock issued and outstanding. All of the shares
will have been duly authorized and validly issued and will be fully paid and
nonassessable. There are no options, warrants, debentures, conversion
privileges, or other rights, agreements, or commitments obligating the Sellers
to issue or to transfer from treasury any additional shares of capital stock
of any class. Schedule "A" currently sets forth, or as of Closing will set
forth, all of the shareholders of record of the Sellers and the number of
shares held of record by each Shareholder.
2.3 Directors and Officers. The names and titles of all
directors and officers of the Sellers as of the date of this Agreement are as
follows:
SHS Industries: Name Position(s)
Xxxxx XxXxxxxx President, COO, & Secretary
Xxxxx Xxxx Director & CFO
Xxxxxxxxx XxXxxxxx Director
Position Industries: Name Position(s)
Xxxxx XxXxxxxx Director, President & Treasurer
Xxxx Xxxxxx Xxxxx Director & Secretary
Xxxxxxxxx XxXxxxxx Director
2.4 Performance of This Agreement. The execution and
performance of this Agreement and the transfer of stock contemplated hereby
have been authorized by the boards of directors of the Sellers.
2.5 Financials. True copies of the financial statements of
each of the Sellers for the year ended December 31, 2000, including operating
statements for the two years then ended, and the two month period ended
February 28, 2001, (unaudited) have been furnished to the Purchaser. Said
financial statements are true and correct in all material respects and present
an accurate and complete disclosure of the financial condition of the Sellers
as of February 28, 2001, and the earnings for the periods covered, in
accordance with generally accepted accounting principles applied on a
consistent basis. The financial records of the Sellers are in a condition
such that the companies can reasonably comply with the financial statement
requirements of Item 7 of Form 8-K promulgated by the U.S. Securities and
Exchange Commission within the filing period and for the periods required as
set forth therein.
2.6 Liabilities. There are no material liabilities of the
Sellers, whether accrued, absolute, contingent or otherwise, which arose or
relate to any transaction of either company, its agents or servants occurring
prior to February 28, 2001, which are not disclosed by or reflected in said
financial statements. As of the date hereof, there are no known
circumstances, conditions, happenings, events or arrangements, contractual or
otherwise, which may hereafter give rise to liabilities, except in the normal
course of business of the Sellers. Notwithstanding the foregoing, the Sellers
specifically disclose the liabilities to Lucent in the amounts of $130,000 for
software and maintenance and $870,000 for equipment.
2.7 Absence of Certain Changes or Events. Except as set forth
in this Agreement, since February 28, 2001, there has not been (i) any
material adverse change in the business, operations, properties, level of
inventory, assets, or condition of either of the Sellers, or (ii) any damage,
destruction, or loss to either of the Sellers (whether or not covered by
insurance) materially and adversely affecting the business, operations,
properties, assets, or conditions of either of the Sellers.
2.8 Litigation. To the best knowledge and reasonable belief of
each of the Sellers, there are no legal, administrative or other proceedings,
investigations or inquiries, product liability or other claims, judgments,
injunctions or restrictions, either threatened, pending, or outstanding
against or involving either of the Sellers, or their assets, properties, or
business, nor do the Sellers know, or have reasonable grounds to know, of any
basis for any such proceedings, investigations or inquiries, product liability
or other claims, judgments, injunctions or restrictions. In addition, there
are no material proceedings existing, pending or reasonably contemplated to
which any officer, director, or affiliate of either of the Sellers or as to
which any of the Shareholders is a party adverse to either of the Sellers or
has a material interest adverse to either of the Sellers.
2.9 Taxes. All federal, state, foreign, county and local
income, profits, franchise, occupation, property, sales, use, gross receipts
and other taxes (including any interest or penalties relating thereto) and
assessments which are due and payable have been duly reported, fully paid and
discharged as reported by each of the Sellers, and there are no unpaid taxes
which are, or could become a lien on the properties and assets of the Sellers,
except as provided for in the financial statements of the Sellers, as
applicable, or have been incurred in the normal course of business of the
Sellers since that date. All tax returns of any kind required to be filed
have been filed and the taxes paid or accrued. There are no disputes as to
taxes of any nature payable by the Sellers.
2.10 Labor Agreements and Disputes. Neither Seller is a party
to, nor otherwise subject to any collective bargaining or other agreement
governing the wages, hours, and terms of employment of its employees. Neither
Seller is aware of any labor dispute or labor trouble involving its employees,
nor has there been any such dispute or trouble during the three years
proceeding the date of this Agreement.
2.11 Noncancellable Contracts. At the time of Closing, there
will be no material leases, employment contracts, contracts for services or
maintenance, or other similar contracts existing or relating to or connected
with the operation of either Seller's business not cancellable within 30 days.
2.12 Hazardous Materials. No hazardous material has been
released, placed, stored, generated, used, manufactured, treated, deposited,
spilled, discharged, released, or disposed of on or under any real property
currently or previously owned or leased by either of the Sellers.
2.13 Accuracy of All Statements Made by the Sellers. No
representation or warranty by the Sellers in this Agreement, nor any
statement, certificate, schedule, or exhibit hereto furnished or to be
furnished by or on behalf of the Sellers pursuant to this Agreement, nor any
document or certificate delivered to the Purchaser by the Sellers pursuant to
this Agreement or in connection with actions contemplated hereby, contains or
shall contain any untrue statement of material fact or omits or shall omit a
material fact necessary to make the statements contained therein not
misleading.
3. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Sellers jointly as set forth below. These
representations and warranties are made as an inducement for the Sellers to
enter into this Agreement and, but for the making of such representations and
warranties and their accuracy, the Sellers would not be parties hereto.
3.1 Organization and Good Standing. The Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada with full power and authority to enter into and
perform the transactions contemplated by this Agreement.
3.2 Capitalization. As of the date of this Agreement, the
Purchaser has a total of 7,952,060 shares of common stock issued and
outstanding. All of the shares have been duly authorized and validly issued
and are fully paid and nonassessable. In addition to the Purchaser's
obligations hereunder with respect to the shares to be issued pursuant to
subsections 1.2 and 1.3 hereof, there are outstanding options to purchase
976,000 shares of common stock under the Purchaser's 1998 Employee Stock
Option Plan and outstanding two-year warrants to purchase 890,860 shares of
common stock at $2.00 per share. The Purchaser has no other outstanding
options, warrants, debentures, conversion privileges, or other rights,
agreements, or commitments obligating the Purchaser to issue or to transfer
from treasury any additional shares of capital stock of any class.
3.3 Performance of This Agreement. The execution and
performance of this Agreement and the issuance of stock contemplated hereby
have been authorized by the board of directors of the Purchaser.
3.4 Financials. True copies of the financial statements of the
Purchaser consisting of the balance sheets as of the fiscal year ended
December 31, 1999 (audited) and the period ended September 30, 2000
(unaudited), and statements of income, cash flow and changes in stockholder's
equity for each of the periods then ended, have been delivered by the
Purchaser to the Sellers. These statements have been examined and certified
by Xxxxxxxx Xxxxxxxx & Strong, Certified Public Accountants. Said financial
statements are true and correct in all material respects and present an
accurate and complete disclosure of the financial condition of the Purchaser
as of September 30, 2000, and the earnings for the periods covered, in
accordance with generally accepted accounting principles applied on a
consistent basis.
3.5 Litigation. To the best knowledge and reasonable belief of
each of the Sellers, and except as disclosed in the registration statement and
reports filed by the Purchaser with the Securities and Exchange Commission,
there are no legal, administrative or other proceedings, investigations or
inquiries, product liability or other claims, judgments, injunctions or
restrictions, either threatened, pending, or outstanding against or involving
either the Purchaser or any subsidiary, or their assets, properties, or
business, nor does the Purchaser know, or have reasonable grounds to know, of
any basis for any such proceedings, investigations or inquiries, product
liability or other claims, judgments, injunctions or restrictions. In
addition, there are no material proceedings existing, pending or reasonably
contemplated to which any officer, director, or affiliate of the Purchaser, or
any of its subsidiaries, or as to which any of their shareholders is a party
adverse to the Purchaser or any of its subsidiaries or has a material interest
adverse to the Purchaser or any of its subsidiaries.
3.6 Legality of Shares to be Issued. The shares of common
stock of the Purchaser to be issued by the Purchaser pursuant to this
Agreement, when so issued and delivered, will have been duly and validly
authorized and issued by the Purchaser and will be fully paid and
nonassessable.
3.7 Accuracy of All Statements Made by the Purchaser. No
representation or warranty by the Purchaser in this Agreement, nor any
statement, certificate, schedule, or exhibit hereto furnished or to be
furnished by the Purchaser pursuant to this Agreement, nor any document or
certificate delivered to the Sellers pursuant to this Agreement or in
connection with actions contemplated hereby, contains or shall contain any
untrue statement of material fact or omits to state or shall omit to state a
material fact necessary to make the statements contained therein not
misleading.
4. Covenants of the Parties.
4.1 Corporate Records.
a. Simultaneous with the execution of this Agreement by the
Sellers, if not previously furnished, such entities shall deliver to the
Purchaser copies of the articles of incorporation, as amended, and the current
bylaws of the Sellers, and copies of the resolutions duly adopted by the
boards of directors of the Sellers approving this Agreement and the
transactions herein contemplated.
b. Simultaneous with the execution of this Agreement by the
Purchaser, if not previously furnished, such entity shall deliver to the
Sellers copies of the articles of incorporation, as amended, and the current
bylaws of the Purchaser, and copies of the resolutions duly adopted by the
board of directors of the Purchaser approving this Agreement and the
transactions herein contemplated.
4.2 Access to Information.
a. The Purchaser and its authorized representatives shall
have full access during normal business hours to all properties, books,
records, contracts, and documents of each of the Sellers, and each of the
Sellers shall furnish or cause to be furnished to the Purchaser and its
authorized representatives all information with respect to its affairs and
business as the Purchaser may reasonably request. The Purchaser shall hold,
and shall cause its representatives to hold confidential, all such information
and documents, other than information that (i) is in the public domain at the
time of its disclosure to the Purchaser; (ii) becomes part of the public
domain after disclosure through no fault of the Purchaser; (iii) is known to
the Purchaser or any of its officers or directors prior to disclosure; or (iv)
is disclosed in accordance with the written consent of the applicable Seller.
In the event this Agreement is terminated prior to Closing, the Purchaser
shall, upon the written request of the applicable Seller, promptly return all
copies of all documentation and information provided by such entity hereunder.
b. Each of the Sellers and its authorized representatives
shall have full access during normal business hours to all properties, books,
records, contracts, and documents of the Purchaser, and the Purchaser shall
furnish or cause to be furnished to the applicable Seller and its authorized
representatives all information with respect to its affairs and business such
entity may reasonably request. Each of the Sellers shall hold, and shall
cause its representatives to hold confidential, all such information and
documents, other than information that (i) is in the public domain at the time
of its disclosure to the applicable Seller; (ii) becomes part of the public
domain after disclosure through no fault of such entity; (iii) is known to the
applicable Seller or any of its officers or directors prior to disclosure; or
(iv) is disclosed in accordance with the written consent of the Purchaser. In
the event this Agreement is terminated prior to Closing, each of the Sellers
shall, upon the written request of the Purchaser, promptly return all copies
of all documentation and information provided by the Purchaser hereunder.
4.3 Actions Prior to Closing. From and after the date of this
Agreement and until the Closing Date:
a. The Sellers shall each carry on its business diligently
and substantially in the same manner as heretofore, and neither party shall
make or institute any unusual or novel methods of purchase, sale, management,
accounting or operation.
b. Neither of the Sellers shall enter into any contract or
commitment, or engage in any transaction not in the usual and ordinary course
of business and consistent with its business practices.
c. Neither of the Sellers shall amend its articles of
incorporation or bylaws or make any changes in authorized or issued capital
stock.
d. The Purchaser and the Sellers shall each use its best
efforts (without making any commitments on behalf of the company) to preserve
its business organization intact.
e. Neither the Purchaser nor the Sellers shall do any act
or omit to do any act, or permit any act or omission to act, which will cause
a material breach of any material contract, commitment, or obligation of such
party.
f. The Purchaser and the Sellers shall each duly comply
with all applicable laws as may be required for the valid and effective
issuance or transfer of stock contemplated by this Agreement.
g. Neither of the Sellers shall sell or dispose of any
property or assets, except products sold in the ordinary course of business.
h. The Purchaser and the Sellers shall each promptly notify
the other of any lawsuits, claims, proceedings, or investigations that may be
threatened, brought, asserted, or commenced against it, its officers or
directors involving in any way the business, properties, or assets of such
party.
4.4 No Covenant as to Tax or Accounting Consequences. It is
expressly understood and agreed that neither the Purchaser nor its officers or
agents has made any warranty or agreement, expressed or implied, as to the tax
or accounting consequences of the transactions contemplated by this Agreement
or the tax or accounting consequences of any action pursuant to or growing out
of this Agreement.
4.5 Indemnification. The Sellers, jointly and severally, shall
indemnify Purchaser for any loss, cost, expense, or other damage (including,
without limitation, attorneys' fees and expenses) suffered by Purchaser
resulting from, arising out of, or incurred with respect to the falsity or the
breach of any representation, warranty, or covenant made by either of the
Sellers herein, and any claims arising from the operations of either of the
Sellers prior to the Closing Date. Purchaser shall indemnify and hold the
Sellers harmless from and against any loss, cost, expense, or other damage
(including, without limitation, attorneys' fees and expenses) resulting from,
arising out of, or incurred with respect to, or alleged to result from, arise
out of or have been incurred with respect to, the falsity or the breach of any
representation, covenant, warranty, or agreement made by Purchaser herein, and
any claims arising from the operations of Purchaser prior to the Closing
Date. The indemnity agreement contained herein shall remain operative and in
full force and effect, regardless of any investigation made by or on behalf of
any party and shall survive the consummation of the transactions contemplated
by this Agreement.
4.6 Publicity. The parties agree that no publicity, release,
or other public announcement concerning this Agreement or the transactions
contemplated by this Agreement shall be issued by any party hereto without the
advance approval of both the form and substance of the same by the other
parties and their counsel, which approval, in the case of any publicity,
release, or other public announcement required by applicable law, shall not be
unreasonably withheld or delayed.
4.7 Expenses. Each party to this Agreement shall bear its own
respective expenses incurred in connection with the negotiation and
preparation of this Agreement, in the consummation of the transactions
contemplated hereby, and in connection with all duties and obligations
required to be performed by each of them under this Agreement.
4.8 Further Actions. Each of the parties hereto shall take all
such further action, and execute and deliver such further documents, as may be
necessary to carry out the transactions contemplated by this Agreement.
5. Conditions Precedent to the Purchaser's Obligations. Each and
every obligation of the Purchaser to be performed on the Closing Date shall be
subject to the satisfaction prior thereto of the following conditions:
5.1 Truth of Representations and Warranties. The
representations and warranties made by each of the Sellers in this Agreement
or given on its behalf hereunder shall be substantially accurate in all
material respects on and as of the Closing Date with the same effect as though
such representations and warranties had been made or given on and as of the
Closing Date.
5.2 Performance of Obligations and Covenants. Each of the
Sellers shall have performed and complied with all obligations and covenants
required by this Agreement to be performed or complied with by it prior to or
at the Closing.
5.3 Officer's Certificate. The Purchaser shall have been
furnished with a certificate (dated as of the Closing Date and in form and
substance reasonably satisfactory to the Purchaser), executed by an executive
officer of each of the Sellers, certifying to the fulfillment of the
conditions specified in subsections 5.1 and 5.2 hereof.
5.4 No Litigation or Proceedings. There shall be no litigation
or any proceeding by or before any governmental agency or instrumentality
pending or threatened against any party hereto that seeks to restrain or
enjoin or otherwise questions the legality or validity of the transactions
contemplated by this Agreement or which seeks substantial damages in respect
thereof.
5.5 No Material Adverse Change. As of the Closing Date there
shall not have occurred any material adverse change, financially or otherwise,
which materially impairs the ability of either of the Sellers to conduct its
business or the earning power thereof on the same basis as in the past.
5.6 Shareholders' Execution of Subscription Agreement. Each of
the Shareholders shall have duly executed and delivered a Subscription
Agreement in the form as set forth in Exhibit 1 as of the Closing Date.
6. Conditions Precedent to Obligations of the Sellers. Each and
every obligation of the Sellers to be performed on the Closing Date shall be
subject to the satisfaction prior thereto of the following conditions:
6.1 Truth of Representations and Warranties. The
representations and warranties made by the Purchaser in this Agreement or
given on its behalf hereunder shall be substantially accurate in all material
respects on and as of the Closing Date with the same effect as though such
representations and warranties had been made or given on and as of the Closing
Date.
6.2 Performance of Obligations and Covenants. The Purchaser
shall have performed and complied with all obligations and covenants required
by this Agreement to be performed or complied with by it prior to or at the
Closing.
6.3 Officer's Certificate. The Sellers shall have been
furnished with a certificate (dated as of the Closing Date and in form and
substance reasonably satisfactory to the Sellers), executed by an executive
officer of the Purchaser, certifying to the fulfillment of the conditions
specified in subsections 6.1 and 6.2 hereof.
6.4 No Litigation or Proceedings. There shall be no litigation
or any proceeding by or before any governmental agency or instrumentality
pending or threatened against any party hereto that seeks to restrain or
enjoin or otherwise questions the legality or validity of the transactions
contemplated by this Agreement or which seeks substantial damages in respect
thereof.
6.5 No Material Adverse Change. As of the Closing Date there
shall not have occurred any material adverse change, financially or otherwise,
which materially impairs the ability of the Purchaser to conduct its business.
7. Closing.
7.1 Time and Place. The Closing of this transaction
("Closing") shall take place at the offices of the Purchaser, 0000 X.
Xxxxxxxxx Xxxx, Xxxxx 00, Xxxx, Xxxxxxxxxx, at 10:00 am, on March 30, 2001, or
at such other time and place as the parties hereto shall agree upon. Such
date is referred to in this Agreement as the "Closing Date."
7.2 Documents To Be Delivered by the Sellers. At the Closing
the Sellers shall deliver to the Purchaser the following documents:
a. Executed copies of Exhibit 1 executed by all of the
shareholders of each of the Sellers and the certificates for the number of
shares of common stock of the Sellers in the manner and form required by
subsection 1.1 hereof.
b. A stock certificate in the name of the Purchaser
representing all of the outstanding shares of stock of each of the Sellers.
c. The certificate required pursuant to subsection 5.3
hereof.
d. Certificates of good standing from the State of
California for each of the Sellers dated not more than twenty days prior to
Closing.
e. Such other documents of transfer, certificates of
authority, and other documents as the Purchaser may reasonably request.
7.3 Documents To Be Delivered by the Purchaser. At the Closing
the Purchaser shall deliver to the Sellers the following documents:
a. Certificates for the number of shares of common stock of
the Purchaser as determined in subsection 1.2 hereof.
b. The certificate required pursuant to subsection 6.3
hereof.
c. Such other documents of transfer, certificates of
authority, and other documents as the Sellers may reasonably request.
8. Termination; Rescission. This Agreement may be terminated by the
Purchaser or the Sellers by notice to the other if, (i) at any time prior to
the Closing Date any event shall have occurred or any state of facts shall
exist that renders any of the conditions to its or their obligations to
consummate the transactions contemplated by this Agreement incapable of
fulfillment, or (ii) on April 30, 2001, if the Closing shall not have
occurred. Following termination of this Agreement no party shall have
liability to another party relating to such termination, other than any
liability resulting from the breach of this Agreement by a party prior to the
date of termination. If for any reason the Sellers are unable to provide the
financial statements required by Item 7 of Form 8-K within the filing periods
set forth therein, the Purchaser may rescind this agreement upon written
notice to the Sellers. The date of rescission shall be deemed the date of
termination of this agreement for purposes of the employment agreements set
forth in subsection 1.3 above.
9. Miscellaneous.
9.1 Notices. All communications provided for herein shall be
in writing and shall be deemed to be given or made when served personally or
when deposited in the United States mail, certified return receipt requested,
addressed as follows, or at such other address as shall be designated by any
party hereto in written notice to the other party hereto delivered pursuant to
this subsection:
Purchaser:
0000 X. Xxxxxxxxx Xxxx, Xxxxx 00
Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, CFO
With Copy to:
Xxxxxx X. Xxxxx
Attorney at Law
00 Xxxx 000 Xxxxx
Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
Sellers:
00 Xxxxxxxxxx Xxxxxx
Xxxxx X
Xxxxxxxxxx, XX 00000
Attention: Xxxxx XxXxxxxx
With Copy to:
Xxxx Xxxxxx
00 Xxxxxxxxxx Xxxxxx
Xxxxx X
Xxxxxxxxxx, XX 00000
9.2 Default. Should any party to this Agreement default in any
of the covenants, conditions, or promises contained herein, the defaulting
party shall pay all costs and expenses, including a reasonable attorney's fee,
which may arise or accrue from enforcing this Agreement, or in pursuing any
remedy provided hereunder or by the statutes of the State of California.
9.3 Assignment. This Agreement may not be assigned in whole or
in part by the parties hereto without the prior written consent of the other
party or parties, which consent shall not be unreasonably withheld.
9.4 Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto, their heirs,
executors, administrators, successors and assigns.
9.5 Partial Invalidity. If any term, covenant, condition, or
provision of this Agreement or the application thereof to any person or
circumstance shall to any extent be invalid or unenforceable, the remainder of
this Agreement or application of such term or provision to persons or
circumstances other than those as to which it is held to be invalid or
unenforceable shall not be affected thereby and each term, covenant,
condition, or provision of this Agreement shall be valid and shall be
enforceable to the fullest extent permitted by law.
9.6 Entire Agreement. This Agreement constitutes the entire
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all negotiations, representations, prior discussions,
letters of intent, and preliminary agreements between the parties hereto
relating to the subject matter of this Agreement.
9.7 Brokers and Finders. Neither of the Sellers has employed a
broker or finder in connection with the transactions contemplated by this
Agreement, or taken any action that would give rise to a valid claim against
any party for a brokerage commission, finder's fee, or other like payment.
9.8 Interpretation of Agreement. This Agreement shall be
interpreted and construed as if equally drafted by all parties hereto.
9.9 Survival of Covenants, Etc. All covenants,
representations, and warranties made herein to any party, or in any statement
or document delivered to any party hereto, shall survive the making of this
Agreement and shall remain in full force and effect until the obligations of
such party hereunder have been fully satisfied. Notwithstanding the
foregoing, the representations and warranties in this Agreement shall
terminate one year from the Closing Date, and such representations or
warranties shall thereafter be without force or effect, except any claim with
respect to which notice has been given to the party to be charged prior to
such expiration date.
9.10 Governing Law. This Agreement shall be construed under
and in accordance with and governed in all respects by, the laws of the State
of California (without giving effect to principles of conflicts of law). If
any action or proceeding is initiated with respect to this Agreement the venue
thereof shall be in San Xxxxxxx County, California, which is deemed to be a
convenient forum.
9.11 Further Action. The parties hereto agree to execute and
deliver such additional documents and to take such other and further action as
may be required to carry out fully the transactions contemplated herein.
9.12 Amendment. This Agreement or any provision hereof may not
be changed, waived, terminated, or discharged except by means of a written
supplemental instrument signed by the party or parties against whom enforcement
of the change, waiver, termination, or discharge is sought.
9.13 Full Knowledge. By their signatures, the parties
acknowledge that they have carefully read and fully understand the terms and
conditions of this Agreement, that each party has had the benefit of counsel,
or has been advised to obtain counsel, and that each party has freely agreed
to be bound by the terms and conditions of this Agreement.
9.14 Headings. The descriptive headings of the various
sections or parts of this Agreement are for convenience only and shall not
affect the meaning or construction of any of the provisions hereof.
9.15 Counterparts. This Agreement may be executed in two or
more partially or fully executed counterparts, each of which shall be deemed
an original and shall bind the signatory, but all of which together shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto executed the foregoing
Stock-for-Stock Exchange Agreement as of the day and year first above written.
PURCHASER: PayStar Communications Corporation
By /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx, Chairman
SELLERS: SHS Communications, Inc.
By /s/ Xxxxx XxXxxxxx
Xxxxx XxXxxxxx, President
Position Industries, Inc.
By /s/ Xxxxx XxXxxxxx
Xxxxx XxXxxxxx, President
SCHEDULE "A"
TO THE
STOCK-FOR-STOCK EXCHANGE AGREEMENT
NO. OF SHARES OF NO. OF SHARES OF
NAME OF SHS INDUSTRIES THE PURCHASER
SHAREHOLDER TO BE TRANSFERRED TO BE ISSUED
Xxxxx Xxxx 1,250 250,000
Xxxxxxxxx XxXxxxxx 1,250 250,000
Xxxx Xxxxxx 2,500 500,000
TOTAL 5,000 1,000,000
NO. OF SHARES OF NO. OF SHARES OF
NAME OF POSITION INDUSTRIES THE PURCHASER
SHAREHOLDER TO BE TRANSFERRED TO BE ISSUED
Xxxxx XxXxxxxx 9,000 9
Xxxx Xxxxxx Xxxxx 1,000 1
TOTAL 10,000 10
