AGREEMENT CONCERNING ISSUANCE OF SHARES
AND RELATED CORPORATE TRANSACTIONS
THIS AGREEMENT is made and entered into as of this 13th day of March,
2000, by and among BRUNSWICK CAPITAL PARTNERS, INC. ("Brunswick"), SHANECY, INC.
("Shanecy"), ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇"), ▇▇▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇"), ▇▇▇▇▇ ▇.
▇▇▇▇▇▇ ("▇▇▇▇▇▇"), and ▇▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇").
R E C I T A L S
Shanecy, as successor to Thesseus International Asset Fund, N.V.
("Thesseus"), is currently the holder of 400 preferred shares issued by
Brunswick, and ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇") are currently the
owners of 255 shares each of the common capital stock of Brunswick. The parties
desire to enter into this Agreement for the purpose of evidencing their
agreement concerning (i) the reclassification of the preferred shares of
Brunswick currently owned by Shanecy to Series A Preferred Shares of Brunswick,
(ii) the sale of Series B Preferred Shares by Brunswick to Shanecy, (iii) the
repurchase by Brunswick of Brunswick common shares previously issued to ▇▇▇▇▇,
(iv) the sale of common shares by Brunswick to Kuiper, Andera, and ▇▇▇▇▇, and
(v) certain other transactions as set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby conclusively acknowledged, the parties agree as
follows:
1. Definitions.
(a) "▇▇▇▇▇▇" shall have the meaning set forth in the introductory
paragraph of this Agreement.
(b) "Articles of Amendment" shall mean that certain Articles of
Amendment to the Articles of Incorporation of Brunswick as
described in Section 3 below and substantially in the form set
forth in Exhibit A hereto.
(c) "Brunswick" shall have the meaning set forth in the introductory
paragraph of this Agreement.
(d) "Closing" shall have the meaning set forth in Section 18 below.
(e) "Closing Date" shall mean the date of the Closing.
(f) "Common Shares" shall mean the common shares of Brunswick with a
par value of $1.00 per share, of which 255 shares are currently
held by ▇▇▇▇▇ and 255 shares by ▇▇▇▇▇▇▇.
(g) "Confidential Information" shall have the meaning set forth in
Section 22 below.
(h) "Employment Agreements" shall mean those Employment Agreements
described in Section 9 below and in the form substantially set
forth as Exhibits B, C, D, and E hereto.
(i) "Equity Exchange Agreement" shall mean that certain Equity
Exchange Agreement dated as of December 1, 1998, among Thesseus,
Brunswick, ▇▇▇▇▇, and ▇▇▇▇▇▇▇.
(j) "Existing Preferred Shares" shall mean the 400 preferred shares
initially issued by Brunswick to Thesseus pursuant to the Equity
Exchange Agreement and currently held by Shanecy as evidenced by
that certain stock certificate no. P-2 issued by Brunswick to
Shanecy dated as of ___________, ____.
(k) "▇▇▇▇▇" shall have the meaning set forth in the recitals to this
Agreement.
(l) "▇▇▇▇▇ Agreement" shall have the meaning set forth in section 8
below, substantially in the form attached as Exhibit F hereto.
(m) "Individual Shareholders" shall mean Ticknor, Kuiper, ▇▇▇▇▇▇, and
▇▇▇▇▇.
(n) "▇▇▇▇▇▇" shall have the meaning set forth in the introductory
paragraph of this Agreement.
(o) "Litigation" shall mean an action, lawsuit, investigation, audit,
or other proceeding before or by any Regulatory Authority.
(p) "Loan and Security Agreement" shall mean that certain Loan and
Security Agreement dated as of May 14, 1999, among Brunswick,
Thesseus, and TIC.
(q) "Order" shall mean any judgment, order, writ, decree, award,
ruling, or decision of any Regulatory Authority.
(r) "Regulatory Authority" shall mean any federal, state, local, or
foreign government or governmental authority, agency, or
instrumentality; any court of competent jurisdiction; or any
arbitrator or arbitration panel.
(s) "Series A Preferred Shares" shall mean the shares to be issued
upon the reclassification of the Existing Preferred Shares.
(t) "Series B Preferred Shares" shall mean the Series B preferred
shares of Brunswick with a par value of $1.00 per share as
authorized by Article IV of the Articles of Incorporation of
Brunswick as the same is amended by the Articles of Amendment.
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(u) "Shanecy" shall have the meaning set forth in the introductory
paragraph of this Agreement.
(v) "Shareholders" shall mean Shanecy and the Individual Shareholders.
(w) "▇▇▇▇▇" shall have the meaning set forth in the introductory
paragraph of this Agreement.
(x) "Thesseus" shall have the meaning set forth in the recitals to
this Agreement.
(y) "TIC" shall mean ▇▇▇▇▇▇▇ Investment Corporation.
(z) "TIC Agreement" shall have the meaning set forth in section 7
below, substantially in the form attached as Exhibit G hereto.
(aa) TIC Note" shall mean that certain Promissory Note dated as of May
14, 1999, in the principal amount of $200,000 issued by Brunswick
and made payable to TIC.
(bb) "▇▇▇▇▇▇▇" shall have the meaning set forth in the introductory
paragraph of this Agreement.
(cc) "Transaction Documents" shall mean this Agreement, the Articles of
Amendment, the Employment Agreements, the ▇▇▇▇▇ Agreement, the TIC
Agreement, and the Writing in Lieu of Special Meeting of
Directors, the Escrow Agreement described in Section 5 hereof and
the Writing in Lieu of Special Meeting of Shareholders as
described in section 10 below and substantially as set forth in
Exhibits H and I, respectively, hereto.
2. Agreement to Reclassify Existing Preferred Shares. Upon execution of
this Agreement, Brunswick shall file with the South Dakota Secretary of State an
Amendment to its Articles of Incorporation, to reclassify the Existing Preferred
Shares as Series A Preferred Shares. At Closing, Shanecy shall endorse and
deliver to Brunswick, for cancellation upon the books and records of Brunswick,
the original stock certificate evidencing the Existing Preferred Shares and
Brunswick shall issue to Shanecy stock certificates representing 400 Series A
Preferred Shares.
3. Adoption of Articles of Amendment to the Articles of Incorporation.
Subject to receipt of all necessary director and shareholder approvals thereof,
Brunswick agrees to (i) adopt the Articles of Amendment to the Articles of
Incorporation, which provides for a change in the name of Brunswick to eCard
Solutions, Inc., and an amendment to Article IV of Brunswick's Articles of
Incorporation concerning the rights and privileges of the Series A Preferred
Shares and Series B Preferred Shares; and (ii) to execute the Articles of
Amendment and deliver the original and a duplicate copy thereof together with
the appropriate filing fee to the South Dakota Secretary of State for filing
pursuant to SDCL 47-2-15 and 16.
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4. Sale of Additional Common Shares. At Closing Brunswick agrees to
sell 255 Common Shares to each of ▇▇▇▇▇▇, ▇▇▇▇▇▇ and ▇▇▇▇▇, and Kuiper, Andera,
and ▇▇▇▇▇ agree to purchase such Common Shares, all at a price of $1.00 per
share. After such sales each of Ticknor, Kuiper, ▇▇▇▇▇▇ and ▇▇▇▇▇ will own 25%
(255 shares) of the Common Shares of Brunswick.
5. Sale of Series B Preferred Shares to Shanecy.
(a) Shanecy agrees to purchase 1,000,000 Series B Preferred Shares
from Brunswick and agrees to pay to Brunswick $1.00 per share
therefor, for an aggregate sum of One Million Dollars
($1,000,000), in four equal installments of $250,000 each. The
first installment shall be paid on the date hereof and the three
subsequent installments shall be paid on April 13, May 12 and
June 12, respectively. In consideration therefor, at Closing
Brunswick shall issue to Shanecy a stock certificate evidencing
the 1,000,000 Series B Preferred Shares purchased by Shanecy.
Such stock certificate shall be held in escrow pursuant to an
Escrow Agreement in substantially the form attached hereto as
Exhibit K.
(b) Failure of Shanecy to make either of the first two installments
shall result in forfeiture of such installments and the Series B
Preferred Shares as specified in the Escrow Agreement. If
Shanecy has made the first two installments but fails to pay all
or part of the third or fourth installment, then (i) Shanecy
shall forfeit the first two installments and 500,000 Series B
Preferred Shares, (ii) Brunswick shall repay in cash any amounts
paid by Shanecy in excess of the first two installments, and
(iii) if Brunwick is unable, in the reasonable determination of
its Board of Directors, to repay such amounts in cash within ten
business days, then Shanecy shall be entitled to the portion of
the Series B Preferred Stock for which it has paid Brunswick. If
Shanecy is entitled to a portion of the Series B Preferred
Shares pursuant to the foregoing provision, then upon release of
the certificate representing 1,000,000 shares of Series B
Preferred Shares from the Escrow Agreement, Brunswick shall,
within five business days, issue to Shanecy a certificate for
the number of shares of Series B Preferred Shares to which it is
entitled. For example, if Shanecy pays the first, second third
installments but fails to pay the fourth installment, Shanecy
would forfeit the first two installments and 500,000 Series B
Preferred Shares, Brunswick shall either repay Shanecy $250,000,
if the Board of Directors reasonably determines it is able to
pay such amount, or issue to Shanecy 250,000 Series B Preferred
Shares, and the remaining 250,000 shares associated with the
fourth installment would be cancelled).
6. [Intentionally omitted - Reserved]
7. Repayment of TIC Note and Cancellation of Contingent Interest. The
parties agree that at the Closing, and from the proceeds received from the sale
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of Common Shares and Series B Preferred Shares as set forth herein, Brunswick
shall repayto TIC one-half of the outstanding principal balance of $200,000 and
all accrued interest due on such amount under the TIC Note and shall in addition
pay to TIC the sum of Twenty-Five Thousand Dollars ($25,000) as one-half of the
consideration for an agreement by TIC (the "TIC Agreement") to cancel its
Contingent Interest in Net Proceeds received from the sale or securitization of
Receivables, as such terms are defined in the Loan and Security Agreement. On
April 13, upon receipt of the second installment due from Shanecy for the Series
B Preferred Shares, Brunswick shall repay the remaining principal and accrued
interest on the TIC Note and the second half ($25,000) of the consideration for
the cancellation of the Contingent Interest described above. Upon receipt of all
of such payments, ▇▇▇▇▇▇▇ agrees to cause TIC to execute and deliver to
Brunswick (i) the TIC Agreement; (ii) the original of the TIC Note stamped "Paid
in Full;" and (iii) an appropriate termination statement releasing the financing
statement filed in favor of TIC and against Brunswick with the South Dakota
Secretary of State.
8. Repurchase of ▇▇▇▇▇ Common Shares and Severance Payment to ▇▇▇▇▇.
The parties agree that at Closing Brunswick shall enter into an agreement with
▇▇▇▇▇ (the "▇▇▇▇▇ Agreement") pursuant to which Brunswick shall purchase the 255
Common Shares currently owned by ▇▇▇▇▇ at a price of $1.00 per share and shall
agree to pay to ▇▇▇▇▇ the sum of Fifty Thousand Dollars ($50,000) as a severance
payment, which shall be payable in four installments of $12,500 on the date
hereof, April 13, May 12 and June 12, respectively, subject to all amounts which
Brunswick is required to withhold by law, in connection with the termination of
▇▇▇▇▇' employment with Brunswick. The parties acknowledge and agree that such
amount shall be paid to ▇▇▇▇▇ from the proceeds received by Brunswick from the
sale of Common Shares and Series B Preferred Shares as provided herein.
9. Employment Agreements. The parties agree that at Closing Brunswick
and Ticknor, Kuiper, ▇▇▇▇▇▇, and ▇▇▇▇▇ shall enter into Employment Agreements
substantially in the form set forth as Exhibits B, C, D, and E hereto,
respectively.
10. Management Agreement. Brunswick shall, and Shanecy shall cause its
wholly-owned subsidiary CASA@Home, Inc. to enter into a credit card management
agreement on terms to be mutually agreed to by the parties following good faith
negotiations.
11. Amendment to By-Laws and Election of Directors. At Closing,
Brunswick shall amend its By-Laws pursuant to a Writing in Lieu of Special
Meeting of Directors substantially in the form attached as Exhibit G hereto to
provide that the number of directors of Brunswick shall initially be six (6) and
commencing with Brunswick's annual meeting of shareholders for the year 2001
shall thereafter be that number established by the shareholders each year at the
annual meeting of shareholders but not less than three (3) and not more than
seven (7). In addition, at Closing, and following the purchase by Brunswick of
the Common Shares owned by ▇▇▇▇▇ pursuant to the ▇▇▇▇▇ Agreement and the sale of
Common Shares and Series B Preferred Shares pursuant to this Agreement, the
Shareholders shall execute and deliver to Brunswick that certain Writing in Lieu
of Special Meeting of Shareholders substantially in the form attached as Exhibit
H hereto pursuant to which the Shareholders shall elect the following as the
board of directors of Brunswick until the next annual meeting of the
shareholders of Brunswick: Ticknor, Kuiper, Andera, Swain, ▇▇▇▇▇ ▇▇▇▇▇▇▇, and
▇▇▇▇▇ ▇▇▇▇▇▇▇. So long as any Series A Preferred Shares or Series B Preferred
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Shares remain outstanding, Kuiper, Andera, ▇▇▇▇▇ and ▇▇▇▇▇▇▇ agree to elect 2
nominees of the Series A and Series B Preferred Shareholders to the Board.
12. Cancellation of Equity Exchange Agreement. The parties agree that
effective as of Closing hereunder and the reclassification of the Existing
Preferred Shares to Series A Preferred Shares, the Equity Exchange Agreement
shall be cancelled (which Thesseus shall consent to) and shall be of no further
effect; provided, however, that Section 5.5 ("Confidentiality"), Section 9.6
("Participation in Proceeds from Credit Card Receivables"), and Article X
("Indemnification") shall remain in full force and effect in accordance with
their terms. In connection therewith, Shanecy warrants that it is the successor
to all right, title, and interest of Thesseus in and to the Equity Exchange
Agreement and that as a result of the assignment of all of its rights thereunder
by Thesseus to Shanecy, Thesseus has no right to enforce any interest in the
Equity Exchange Agreement.
13. Representations and Warranties of Brunswick. Brunswick hereby
represents and warrants to the other parties hereto as follows:
(a) Brunswick is a corporation duly organized, validly existing,
and in good standing under the laws of the State of South
Dakota and has the full power and authority to own its assets
and carry on its business in the manner and places where such
assets are now owned and such business is now being conducted.
(b) Brunswick has full power and authority to execute and deliver
this Agreement and each other Transaction Document to which it
is a party and to perform its obligations hereunder and
thereunder. This Agreement has been, and on the Closing Date
each other Transaction Document to which Brunswick is a party
will be, duly executed and delivered and when so executed and
delivered shall constitute a legally valid and binding
obligation of Brunswick enforceable against it in accordance
with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium, or similar laws now or hereafter in
effect relating to creditors' rights generally and subject also
to equitable principles limiting the enforceability of certain
remedies.
(c) The execution and delivery of this Agreement does not, and the
execution and delivery of each other Transaction Document to
which it is a party and the performance by Brunswick of its
obligations hereunder and thereunder will not, violate any
provision of Brunswick's Articles of Incorporation (as amended)
or By-Laws and do not and will not conflict with or result in
any breach of any condition or provision of, or constitute a
default under, or create or give rise to any adverse right of
termination or cancellation by, or excuse the performance of,
any other person, or result in the creation or imposition of
any lien upon Brunswick or any of its assets or the
acceleration of the maturity or date of payment or other
performance of any other obligation of Brunswick by reason of
the terms of any agreement, indenture, instrument, license,
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lease, lien, or Order to which Brunswick is a party or which it
is or purports to be binding upon Brunswick or to which the
assets of Brunswick are subject.
(d) No consent of or notice to any other party is required as to
Brunswick in connection with the execution and delivery by
Brunswick of this Agreement or any other Transaction Document
to which it is a party or the performance of the obligations of
Brunswick hereunder or thereunder, other than the approval as
required by law by Brunswick's directors and shareholders of
the amendments to Brunswick's Articles of Incorporation as set
forth in the Articles of Amendment, the approval by Brunswick's
directors of the amendment to Brunswick's By-Laws as described
in section 10 above, and the approval by the Shareholders of
the election of new directors of Brunswick as provided in
section 10 above.
(e) No Litigation is pending or, to the best of Brunswick's
knowledge, threatened against Brunswick which could materially
affect the assets, operations, or financial or other condition
of Brunswick or, in the event of an unfavorable outcome, would
prohibit, invalidate or make unlawful, in whole or in part,
this Agreement or any other Transaction Document or the
carrying out of the provisions hereof or thereof. Brunswick is
not in default under any Order enjoining Brunswick in respect
of, or the effect of which is to prohibit or curtail
Brunswick's performance of, its obligations hereunder or under
any other Transaction Document.
(f) As of the date hereof, the entire authorized capital of
Brunswick consists of 100,000 Common Shares and 400 shares of
the Existing Preferred Shares of a par value of $1.00 per
share. Upon the adoption of the Articles of Amendment and the
filing thereof with the South Dakota Secretary of State, the
entire authorized capital of Brunswick shall consist of 100,000
Common Shares, and 2,000,000 Preferred Shares of which 400
Shares are classified Series A Preferred Shares and 1,000,000
are classified Series B Preferred Shares. Currently, Brunswick
has outstanding 510 Common Shares and 400 Existing Preferred
Shares, all of which are validly issued, fully paid, and
non-assessable. The Series A Preferred Shares and Series B
Preferred Shares will be, at the time of issuance and subject
to receipt of the payment due hereunder from Shanecy (with
respect to the Series B Preferred Shares), validly issued,
fully paid, and non-assessable and free and clear of any liens,
claims, or encumbrances. Other than as set forth in this
Agreement, there are no agreements, commitments, or
arrangements providing for the issuance or sale of capital
stock or other interest of Brunswick or any issued or
outstanding options, warrants, or rights to purchase, or any
security or instrument convertible into or exchangeable for,
any capital stock or other interest of Brunswick.
14. Representations and Warranties of Shanecy. Shanecy hereby
represents and warrants to the other parties hereto as follows:
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(a) Shanecy is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Delaware and
has the full power and authority to own its assets and carry on
its business in the manner and places where such assets are now
owned and such business is now being conducted.
(b) Shanecy has full power and authority to execute and deliver
this Agreement and each other Transaction Document to which it
is a party and to perform its obligations hereunder and
thereunder. This Agreement has been, and on the Closing Date
each other Transaction Document to which Shanecy is a party
will be, duly executed and delivered and when so executed and
delivered shall constitute a legally valid and binding
obligation of Shanecy enforceable against it in accordance with
its terms, subject to bankruptcy, insolvency, reorganization,
moratorium, or similar laws now or hereafter in effect relating
to creditors' rights generally and subject also to equitable
principles limiting the enforceability of certain remedies.
(c) The execution and delivery of this Agreement do not, and the
execution and delivery of each other Transaction Document to
which it is a party and the performance by Shanecy of its
obligations hereunder and thereunder will not, violate any
provision of Shanecy's Articles of Incorporation or By-Laws and
do not and will not conflict with or result in any breach of
any condition or provision of, or constitute a default under,
or create or give rise to any adverse right of termination or
cancellation by, or excuse the performance of, any other
person, or result in the creation or imposition of any lien
upon Shanecy or any of its assets or the acceleration of the
maturity or date of payment or other performance of any other
obligation of Shanecy by reason of the terms of any agreement,
indenture, instrument, license, lease, lien, or Order to which
Shanecy is a party or which is or purports to be binding upon
Shanecy or to which the assets of Shanecy are subject.
(d) No consent of or notice to any other party is required as to
Shanecy in connection with the execution and delivery by
Shanecy of this Agreement or any other Transaction Document to
which it is a party or the performance of the obligations of
Shanecy hereunder or thereunder.
(e) No Litigation is pending or, to the best of Shanecy's
knowledge, threatened against Shanecy which will materially
affect the assets, operations, or financial or other condition
of Shanecy or, in the event of an unfavorable outcome, would
prohibit, invalidate or make unlawful, in whole or in part,
this Agreement or any other Transaction Document or the
carrying out of the provisions hereof or thereof. Shanecy is
not in default under any Order enjoining Shanecy in respect of,
or the effect of which is to prohibit or curtail Shanecy's
performance of, its obligations hereunder or under any other
Transaction Document.
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(f) Shanecy is the legal and beneficial owner of, and has good and
marketable title to, the Existing Preferred Shares.
15. Representations and Warranties of Individual Shareholders. Each of
the Individual Shareholders hereby represents and warrants, as to himself but
not concerning any other party, to the other parties hereto as follows:
(a) Such Individual Shareholder has full legal capacity, power, and
authority to execute and deliver this Agreement and each other
Transaction Document to which he is a party and to perform his
obligations hereunder and thereunder. This Agreement has been,
and on the Closing Date, each other Transaction Document to
which he is a party will be, duly executed and delivered, and
this Agreement is, and each other Transaction Document to which
such Individual Shareholder is a party when so executed and
delivered on the Closing Date will be, a legally valid and
binding obligation of the Individual Shareholder in accordance
with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium, or other similar laws now or
hereafter in effect relating to creditors' rights generally and
equitable principles limiting the availability of certain
remedies.
(b) The execution and delivery of this Agreement does not, and the
execution and delivery of each other Transaction Document to
which he is a party and the performance by such Individual
Shareholder of his obligations hereunder and thereunder will
not, conflict with or result in any breach of any condition or
provision of, or constitute a default under, or create or give
rise to any adverse right of termination or cancellation by, or
excuse the performance of, any other person, or result in the
creation or imposition of any lien upon such Individual
Shareholder or any of his assets or the acceleration of the
maturity or date of payment or other performance of any other
obligation of such Individual Shareholder by reason of the
terms of any agreement, indenture, instrument, license, lease,
lien, or Order to which such Individual Shareholder is a party
or which is or purports to be binding upon such Individual
Shareholder or to which the assets of such Individual
Shareholder are subject.
(c) No consent of or notice to any other party is required as to
such Individual Shareholder in connection with the execution
and delivery by such Individual Shareholder of this Agreement
or any other Transaction Document to which he is a party or the
performance of the obligations of such Individual Shareholder
hereunder or thereunder.
(d) No Litigation is pending or, to the best of such Individual
Shareholder's knowledge, threatened against such Individual
Shareholder which will materially affect the assets,
operations, or financial or other condition of such Individual
Shareholder or, in the event of an unfavorable outcome, would
prohibit, invalidate or make unlawful, in whole or in part,
this Agreement or any other Transaction Document or the
carrying out of the provisions hereof or thereof. Such
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Individual Shareholder is not in default under any Order
enjoining such Individual Shareholder in respect of, or the
effect of which is to prohibit or curtail such Individual
Shareholder's performance of, his obligations hereunder or
under any other Transaction Document.
16. Investment Representations of the Shareholders. Each of the
Shareholders, as to himself or itself but not concerning any other party, makes
the following covenants, warranties and representations to Brunswick:
(a) Such Shareholder is acquiring Common Shares or Series B
Preferred Shares, as the case may be, for his or its own
account for investment and not with a view to the distribution
or resale thereof; has not offered or sold all or any portion
of such Common Shares or Series B Preferred Shares and has no
present intention of doing so or any present intention to
otherwise dispose of all or any portion of the Common Shares or
Series B Preferred Shares acquired by him or it.
(b) Such Shareholder understands and acknowledges that the Common
Shares or Series B Preferred Shares to be acquired by him or
it, as the case may be, have not been registered with the
Federal Securities and Exchange Commission nor with any state
securities commission or division and that Brunswick has no
intention of so registering the Common Shares or Series B
Preferred Shares.
(c) The Common Shares or Series B Preferred Shares, as the case may
be, constitute a suitable investment for such Shareholder, and
such Shareholder is fully aware of the limitations on resale of
the Common Shares and Series B Preferred Shares, as the case
may be, and that the same constitute an illiquid investment for
which there currently is no secondary market and for which
there may be no secondary market in the future.
(d) Such Shareholder agrees to not sell, transfer, pledge,
hypothecate, or otherwise dispose of the Common Shares or
Series B Preferred Shares, as the case may be, acquired by him
or it unless (i) a registration statement as required by the
Securities Act of 1933 and any applicable state securities
statutes shall be in effect with respect thereto, or (ii) such
sale, transfer, pledge, hypothecation, or other disposition is
exempt from registration under state and federal securities
laws. Further, such Shareholder warrants and represents that
any such disposition of the Common Shares or Series B Preferred
Shares owned by him or it shall be in full compliance with all
applicable state and federal securities laws. In the event
Brunswick requests an opinion of counsel that such disposition
is exempt from state or federal registration requirements, such
Shareholder agrees to provide such an opinion of counsel
satisfactory to Brunswick.
(e) Such Shareholder has had adequate opportunity to conduct such
investigations and due diligence concerning Brunswick and its
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business, financial condition, operations, and future prospects
as he or it deems prudent under the circumstances and
acknowledges that Brunswick makes no representation or warranty
concerning the Common Shares, the Series B Preferred Shares, or
Brunswick's business, financial condition, operations, or
future prospects except as expressly set forth herein.
(f) Such Shareholder acknowledges that Brunswick is entering into
this Agreement in reliance upon the representations and
covenants set forth in this section and would not enter into
this Agreement if there were any inaccuracy in any of such
representations.
(g) Such Shareholder is an "Accredited Investor" and has executed
the certificate attached as Exhibit I hereto.
17. Conditions to Obligations to Close. The obligation of each party
hereto to consummate the transactions set forth herein is subject to the
satisfaction (or waiver (except for Sections 17(a), (b), (c) and (d) which
cannot be waived)) prior to or at Closing of each of the following conditions:
(a) Approval of the amendments to the Articles of Incorporation of
Brunswick as set forth in the Articles of Amendment by the
directors and shareholders of Brunswick as required by
applicable South Dakota corporate law.
(b) Execution by all of the existing directors of Brunswick of the
Writing in Lieu of Special Meeting of Directors as described in
section 10 above and substantially in the form attached as
Exhibit H hereto concerning an amendment to the By-Laws of
Brunswick.
(c) Execution by the Shareholders of the Writing in Lieu of a
Special Meeting of Shareholders as described in section 10
above and substantially in the form attached as Exhibit I
hereto concerning the election of new directors of Brunswick.
(d) The approval of the amendments to the Articles of Incorporation
of Brunswick set forth in the Articles of Amendment by a
majority of the holders of the Existing Preferred Shares.
(e) Receipt of a Certificate of Amendment from the South Dakota
Secretary of State evidencing the effectiveness of the
Amendments to Articles of Incorporation.
(f) Execution by ▇▇▇▇▇ and receipt by Brunswick of the ▇▇▇▇▇
Agreement.
(g) Execution by TIC and receipt by Brunswick of the TIC Agreement.
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(h) The Escrow Agreement shall have been executed in accordance
with Section 5 hereof.
(i) Each of the representations and warranties of all other parties
set forth in this Agreement shall be true in all material
respects on and as of the Closing Date.
(j) Each of the other parties hereto shall have performed and
complied with all obligations and conditions to be performed or
complied with by him or it hereunder.
(k) Each of the other parties thereto shall have executed and
delivered all other Transaction Documents.
(l) No statute, rule, or regulation of any Regulatory Authority or
any Order shall be in effect which prohibits any party hereto
or to the other Transaction Documents from consummating the
transactions contemplated hereby or thereby.
18. Closing. The Closing of the transactions contemplated hereby (the
"Closing") shall be held at the offices of Brunswick at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, and shall be held at such date and time as
the parties hereto may agree, except that if Closing has not occurred on or
before March __, 2000, this Agreement shall be of no further force or effect
whatsoever unless all of the parties hereto agree to a closing after such date.
The execution and/or delivery of each document to be executed and/or delivered
at the Closing and each other action to be taken at the Closing shall be subject
to the condition that every other document to be executed and/or delivered at
the Closing is so executed and/or delivered and that every other action to be
taken at the Closing is so taken. Except as otherwise specifically provided for
herein, all such documents and actions shall be deemed to be executed and/or
delivered or taken, as the case may be, simultaneously. When all such documents
are so executed and/or delivered and all such actions are so taken, the Closing
of the transactions provided for herein shall be effective as of the opening of
business on the Closing Date. The provisions of Sections 22 and 23 shall survive
Closing.
19. Deliveries at Closing. At the Closing (i) all parties hereto shall
execute and deliver to all other parties all of the Transaction Documents to
which they are a party; (ii) Shanecy shall pay the purchase price due from it
pursuant to section 5 above for the Series B Preferred Shares; (iii) Brunswick
shall issue to Shanecy certificates representing the Series A and Series B
Preferred Shares; (iv) each of the Individual Shareholders shall pay the
purchase price due from him pursuant to section 4 above for Common Shares
purchased by him; (v) Brunswick shall execute and deliver to each of the
Individual Shareholders stock certificates representing the Common Shares
purchased by each such Individual Shareholder; (vi) Brunswick shall make the
payments due to ▇▇▇▇▇ under the ▇▇▇▇▇ Agreement; (vii) Brunswick shall make the
payments to TIC required by section 7 of this Agreement and the TIC Agreement;
and (viii) each party shall execute and deliver such other documents and take
such other actions as may be required of him or it under this Agreement or as
may be reasonably necessary in order to effectuate the transactions contemplated
hereby or by the other Transaction Documents. Any payments due hereunder shall
be paid in collected funds or by any other means agreed upon by the party
entitled to such payment.
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20. Termination of Agreement. This Agreement may be terminated at any
time prior to the Closing:
(a) By the mutual agreement of all the parties hereto;
(b) By any party hereto, if such party is not in breach or default
under this Agreement, by giving written notice to such effect
to the other parties hereto if the Closing shall not have
occurred on or before March __, 2000, or such later date as the
parties may have mutually agreed upon; or
(c) By any party hereto in the event of a material breach by or
default of a party under this Agreement.
21. Effect of Termination. Upon termination of this Agreement, all of
the obligations of the parties hereto, save and except those set forth in
sections 22 and 23 hereof, shall terminate and be of no further force or effect;
provided, however, that no such termination shall relieve a party of any
liability to the other parties hereto by reason of any breach of or default by
such party under this Agreement.
22. Confidentiality. In performing his or its obligations pursuant to
this Agreement or any other transaction document, each party hereto acknowledges
that he or it may have access to or receive disclosure of certain confidential
information about another party or the other parties hereto, including without
limitation financial information about another party hereto, the names and/or
addresses of another party's customers or suppliers, the marketing or business
plans and objectives, research, and test results of a party, and other
information which is confidential or constitutes a trade secret under applicable
law ("Confidential Information"). Notwithstanding the foregoing, however,
Confidential Information shall not include information (i) that was or becomes
generally available to the public or than as a result of disclosure by a party
hereto; (ii) that a party can demonstrate through written records was known to
such party prior to being furnished to it by another party hereto; or (iii) that
a party can demonstrate through written records was or becomes available to it
on a non-confidential basis from a source other than any other party hereto,
provided that such source was not known by such party to be bound by a
confidentiality agreement.
Each party hereto agrees that the Confidential Information will be kept
confidential and will be used solely for the purpose of consummating the
transactions contemplated by this Agreement and the other Transaction Documents
and performing the obligations of such party under this Agreement and any other
Transaction Documents to which it or he is a party; provided, however, that (i)
a party may make any disclosure of Confidential Information of another party to
which such other party has given its prior written consent; (ii) a party may
disclose Confidential Information to its attorneys, consultants, or financial
advisors who may need to know such information for the purpose of providing
professional services to such party; and (iii) a party may disclose Confidential
Information to the extent required by any subpoena, Order, or legal process
-13-
provided that such party, if permitted by law, acts promptly to inform the party
who is the owner of such Confidential Information of the existence and
requirements of such subpoena, Order, or other legal process in order to permit
the party to whom such Confidential Information belongs to seek an appropriate
protective order or other confidential treatment of such Confidential
Information.
23. Indemnification.
(a) Each party hereto shall indemnify and hold the other parties
hereto harmless against and in respect of all actions, suits,
demands, judgments, costs and expenses (including reasonable
attorneys' fees) relating to any damage or deficiency resulting
from any misrepresentation, breach of warranty, or
non-fulfillment of any agreement on the part of such party
under this Agreement.
(b) A party will have forty-five (45) days after the party becomes
aware of a claim, demand or other event for which it may be
entitled to indemnity hereunder within which to notify the
party from whom indemnification is or will be sought. The party
from whom indemnification is sought will have a reasonable
opportunity to defend the matter and will bear the cost of that
defense. The party claiming a right to indemnity may also fully
participate in the defense of the matter and will fully bear
the cost of that participation. If the party receiving notice
of the matter to which a right of indemnification applies fails
to defend, the party claiming the right to receive
indemnification will have the right, but not the obligation, to
exercise reasonable business judgment in the defense,
compromise, or settlement of the matter for the account and at
the risk of the party bearing the obligation of
indemnification. If the proper defense of a matter reasonably
requires the assistance of the party claiming a right to
indemnity, then the party claiming indemnity must make
available to the defending party such information (including
records) and assistance as the defending party reasonably
requests. The failure of a party to timely provide notice of a
claim of indemnity as required by the first sentence of this
subsection (b) shall not relieve the other party of its
indemnity obligations hereunder unless, and in such case only
to the extent that, such failure to give timely notice has
prejudiced the ability of the indemnifying party to defend
against such claim.
(c) In addition to the rights of indemnity set forth herein, the
parties hereto shall be entitled to such other rights of
indemnity as may be available under any other agreement,
arrangement, or applicable law.
24. No Brokers. Each party hereto represents that it has not retained
any broker, finder, or other intermediary in connection with the transactions
contemplated by the Transaction Documents and that such party has not committed
to pay any broker's fee, finder fee, commission, or similar compensation to any
third party relating to such transactions.
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25. Fees and Expenses. Each party hereto shall bear all such costs,
fees, and expenses as may be incurred by it in connection with the Transaction
Documents and the transactions contemplated thereby.
26. Relationship of the Parties. Nothing in the Transaction Documents
shall be deemed to create any partnership, joint venture, joint enterprise,
association, or similar relationship between or among any of the parties hereto
or to authorize or empower any party hereto to act on behalf of, obligate, or
bind any other party hereto.
27. Governing Law. This Agreement shall be governed by, and interpreted
and enforced in accordance with, the internal laws of the State of South Dakota
without regard to its conflict of law rules.
28. Notices. All notices, requests and approvals required by this
Agreement (i) shall be in writing, (ii) shall be addressed to the parties as
indicated below unless notified in writing of a change in address, and (iii)
shall be deemed to have been given either when personally delivered or when sent
by regular United States mail, in which event it shall be sent postage prepaid
upon delivery thereof, or, if sent by telegram, facsimile or telex, upon
delivery thereof, as follows:
To Brunswick: Brunswick Capital Partners, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
To Shanecy: Shanecy, Inc.
▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
To ▇▇▇▇▇▇▇: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
To ▇▇▇▇▇▇: ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
To ▇▇▇▇▇▇: ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
To ▇▇▇▇▇: ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-15-
A party may change its address for purposes of receiving notices hereunder by
providing written notice thereof to the other parties hereto.
29. Arbitration. If any disputes or controversies arise between the
parties in connection with this Agreement or their acts or duties hereunder such
disputes or controversies shall be submitted to and resolved by binding
arbitration in accordance with the laws of the state of South Dakota and the
rules of the American Arbitration Association. All arbitration proceedings shall
be conducted at such place in South Dakota as the parties may agree upon, and in
the absence of an agreement concerning the place of arbitration all arbitration
proceedings shall be conducted in Sioux Falls, South Dakota. The decision or
award of the arbitrator shall be final and binding, and judgment thereon may be
entered in a state or federal court with jurisdiction over the parties. It is
understood that the arbitrator shall have no authority to add to, subtract from,
or modify any provision of this Agreement.
30. General Matters.
(a) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective
successors and assigns; provided, however, that no party
hereto may assign this Agreement or its rights or
privileges hereunder to any other party without the
express prior written consent of all other parties hereto.
(b) If any particular provision of this Agreement shall be
determined to be void or unenforceable such determination
shall not terminate the remainder of this Agreement, and
this Agreement shall remain in full force and effect and
shall be reformed to the greatest extent legally
permissible in order to effectuate the original intent of
the parties.
(c) This Agreement expresses the entire agreement of the
parties with respect to the matters addressed herein and
may not be amended or modified except pursuant to a
written amendment signed by all the parties hereto. No
course of dealing or omission or delay on the party of any
party hereto in asserting or exercising any right
hereunder shall constitute or operate as a waiver of such
right and no waiver of any provision hereof shall be
effected unless in writing and signed by or on behalf of
the party against whom the waiver is asserted. No waiver
shall be deemed a continuing waiver or a waiver in respect
of any other or subsequent breach or default or
performance due hereunder, unless expressly so stated in
writing.
31. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which shall be deemed to be an original, but all of which taken together shall
constitute one and the same agreement.
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[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-17-
IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the date set forth above.
BRUNSWICK CAPITAL PARTNERS INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its President
----------------------------------
SHANECY, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its Chief Executive Officer
----------------------------------
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
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ADDENDUM TO AGREEMENT
CONCERNING ISSUANCE OF SHARES
AND RELATED CORPORATE TRANSACTIONS
DATED MARCH 13, 2000
This Addendum is made and entered into by and among eCard Solutions,
Inc. f/k/a Brunswick Capital Partners, Inc. ("Brunswick"), Shanecy, Inc.
("Shanecy"), Shanecy Holdings, Inc. ("Shanecy Holdings"), ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇"), ▇▇▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇"), ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇") and ▇▇▇▇▇
▇▇▇▇▇ ("▇▇▇▇▇").
The parties hereto have entered into an Agreement Concerning Issuance
of Shares and Related Corporate Transactions dated March 13, 2000 (hereinafter
the "Master Agreement"), and wish to amend and modify such Master Agreement as
set forth herein.
Capitalized terms not otherwise defined herein shall have the meanings
set forth in the Master Agreement.
1. The Master Agreement provides that the Existing Preferred
Shares are currently held by Shanecy as evidenced by that
certain Stock Certificate No. P-2 with the date of such
issuance left blank. The parties hereby acknowledge and agree
that the Existing Preferred Shares are currently held by
Shanecy Holdings, a Nevada corporation and wholly-owned
subsidiary of Shanecy, as evidenced by that certain Stock
Certificate No. P-2 issued by Brunswick to Shanecy Holdings
dated as of January 18, 2000.
2. The Master Agreement provides that upon its execution
Brunswick shall issue to Shanecy stock certificates
representing 400 Series A Preferred Shares. The parties hereby
acknowledge and agree that Brunswick shall issue to Shanecy
Holdings stock certificates representing 400 Series A
Preferred Shares. All rights and privileges of Series A
Preferred Shares provided in the Master Agreement belong to
Shanecy Holdings.
3. Shanecy Holdings and Shanecy jointly and severally agree to be
bound by the obligations of Shanecy in the Master Agreement.
4. Representations and Warranties of Shanecy Holdings. Shanecy
Holdings hereby represents and warrants to the other parties
hereto as follows:
(a) Shanecy Holdings is a corporation duly organized,
validly existing, and in good standing under the laws
of the State of Nevada and has the full power and
authority to own its assets and carry on its business
in the manner and places where such assets are now
owned and such business is now being conducted.
(b) Shanecy Holdings has full power and authority to
execute and deliver this Agreement and each other
Transaction Document to which it is a party and to
perform its obligations hereunder and thereunder.
This Agreement has been, and as of the Closing Date
each other Transaction Document to which Shanecy
Holdings is a party is, duly executed and delivered
and when so executed and delivered shall constitute a
legally valid and binding obligation of Shanecy
Holdings enforceable against it in accordance with
its terms, subject to bankruptcy, insolvency,
reorganization, moratorium, or similar laws now or
hereafter in effect relating to creditors' rights
generally and subject also to equitable principles
limiting the enforceability of certain remedies.
(c) The execution and delivery of this Agreement do not,
and the execution and delivery of each other
Transaction Document to which it is a party and the
performance by Shanecy Holdings of its obligations
hereunder and thereunder will not, violate any
provision of Shanecy Holdings' Articles of
Incorporation or By-Laws and do not and will not
conflict with or result in any breach of any
condition or provision of, or constitute a default
under, or create or give rise to any adverse right of
termination or cancellation by, or excuse the
performance of, any other person, or result in the
creation or imposition of any lien upon Shanecy
Holdings or any of its assets or the acceleration of
the maturity or date of payment or other performance
of any other obligation of Shanecy Holdings by reason
of the terms of any agreement, indenture, instrument,
license, lease, lien, or Order to which Shanecy
Holdings is a party or which is or purports to be
binding upon Shanecy Holdings or to which the assets
of Shanecy Holdings are subject.
(d) No consent of or notice to any other party is
required as to Shanecy Holdings in connection with
the execution and delivery by Shanecy Holdings of
this Agreement or any other Transaction Document to
which it is a party or the performance of the
obligations of Shanecy Holdings hereunder or
thereunder.
(e) No Litigation is pending or, to the best of Shanecy
Holdings' knowledge, threatened against Shanecy
Holdings which will materially affect the assets,
operations, or financial or other condition of
Shanecy Holdings or, in the event of an unfavorable
outcome, would prohibit, invalidate or make unlawful,
-2-
in whole or in part, this Agreement or any other
Transaction Document or the carrying out of the
provisions hereof or thereof. Shanecy Holdings is not
in default under any Order enjoining Shanecy Holdings
in respect of, or the effect of which is to prohibit
or curtail Shanecy Holdings performance of, its
obligations hereunder or under any other Transaction
Document.
(f) Shanecy Holdings is the legal and beneficial owner
of, and has good and marketable title to, the
Existing Preferred Shares.
5. The parties hereby acknowledge and agree that Sections 18 and
20 of the Master Agreement shall be modified to provide that
the Agreement shall be of no further force or effect if
Closing has not occurred on or before March 13, 2000.
6. Except as modified hereunder, all of the terms and conditions
set forth in the Master Agreement are hereby ratified and
confirmed.
IN WITNESS WHEREOF, the parties have executed this Addendum as of the
13th day of March, 2000.
BRUNSWICK CAPITAL PARTNERS INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its President
--------------------------------
SHANECY, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its Chief Executive Officer
--------------------------------
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
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/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
-4-
