DELTA MUTUAL, INCORPORATED
0000 Xxxxx Xxxxxx Xxx., X.X. - Suite 812
Washington, D.C. 20036
April 23, 2001
Enterprises Solutions, Inc.
000 Xxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxx, President and CEO
Re: Agreement in Principle--Purchase of Assets of Enterprises
Solutions, Inc. by Data Mutual, Inc.
Dear Xx. Xxxxxxx:
This letter is intended to confirm as an agreement in principle the
various discussions that have been held between Delta Mutual, Inc., a Delaware
corporation ("DMI"), and Enterprises Solutions, Inc., a Nevada corporation
("ESI"), and with respect to the purchase of all of the assets of ESI by DMI
(the "Acquisition"). ESI and DMI are sometimes referred to herein as the
"parties".
This Agreement in Principle (the "Agreement") shall become effective
when signed by both parties (the "Effective Date of this Agreement"). On and
after the Effective Date of this Agreement, each party shall clear with the
other party's management and counsel the public announcements made regarding the
Acquisition and shall make all required filings with the Securities and Exchange
Commission ("SEC") in this regard simultaneously with the release of such public
announcements.
These discussions are subject to and conditioned upon (a) any
governmental consents or approvals that are necessary, and (b) the negotiation,
execution and delivery of formal and definitive agreements (the "Definitive
Agreements") mutually agreeable to both parties and containing customary
representations and warranties and closing conditions, that would provide for
the following:
1. Acquisition
(a) On the effective date of the Acquisition (the "Acquisition
Effective Date"), DMI will acquire all of the assets of ESI in
exchange for 10,583,000 shares of its Common Stock ("DMI Common
Stock"), or as is equal to 1.2676 shares of DMI Common Stock for
each outstanding share (the "Exchange Ratio") of Common Stock of
ESI ("ESI Common Stock").
(b) DMI will assume no liabilities of ESI, except as agreed in the
Definitive Agreements, and except that DMI will assume
outstanding options and warrants to purchase ESI Common Stock,
the holders of which options and warrants shall, upon the
Acquisition Effective Date, be entitled to purchase, in
accordance with the
terms of the particular option or warrant, such number of
shares of DMI Common Stock as is calculated by application of
the Exchange Ratio with respect to each share of ESI Common
Stock subject to the option or warrant.
(c) Prior to the Acquisition Effective Date, DMI will not issue
additional shares of DMI Common Stock. In connection with the
acquisition DMI may issue up to an additional 11,000,000 shares
of its common stock to equity investors in DMI.
(d) It is intended that the Acquisition will qualify as a tax-free
reorganization under the Internal Revenue Code of 1986, as
amended.
(e) The obligations of the parties under the Definitive Agreements
shall be subject to all required filings by the parties with
the SEC, the approval by the stockholders of DMI of an
increase in DMI's authorized Common Stock, and the approval of
the Acquisition by the stockholders of ESI at a special
meeting of stockholders to be convened following clearance of
the proxy materials by the SEC and the effectiveness of the
registration statement filed in this regard. It is the
intention of the parties that the necessary filings with the
SEC would be made not later than May 31, 2001, and that the
special meeting of ESI stockholders would be held no later
than August 31, 2001.
(f) The obligations of ESI under the Definitive Agreements shall be
subject to DMI's maintaining its OTC Bulletin Board listing for
the DMI Common Stock through the Acquisition Effective Date.
2. Due Diligence
(a) From the date hereof, each party shall make available to the
other party for review their respective financial statements,
books, records, corporate documents and other information as the
other party may reasonably request, and each party shall have the
opportunity to meet with the attorneys, accountants, and key
personnel of the other party to discuss the financial and
business conditions of the respective parties and to make
whatever further independent investigations are deemed necessary
and prudent by both parties. The parties shall cooperate in the
exchange of information and preparation of documents necessary to
file a registration statement and proxy statement with the SEC.
It is intended that the preparation of such documents will be
begun prior to the execution of the Definitive Agreements, but
will not be filed until the Boards of Directors of each party
approve said Definitive Agreements, and prior thereto shall be
held in confidence as stated below.
(b) Each party represents and agrees that all confidential and/or
proprietary information which each party or any of its officers,
employees, agents, consultants, or representatives may possess or
may receive in the future, from the date of this Agreement
forward, pertaining to the financial or any other condition of
the other party, shall not be disclosed or made available to any
other person or entity other than current shareholders or the
Board of Directors, officers, employees, agents, consultants or
representatives of the
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parties, at any time hereafter without the express prior written
consent of the party to which the confidential and/or proprietary
information belongs and applies.
(c) Each Party shall make appropriate representations in the
Definitive Agreements that it has fully and independently
satisfied itself on all aspects of the other Party's business,
including but not limited to financial statements, books and
records.
3. Conditions Precedent and Effective Date of Agreement
This Agreement shall be subject to the performance of due
diligence investigations by the parties of each other, deemed to
be satisfactory and favorable by each party, its legal counsel,
financial advisors, accountants and agents on all matters
pertaining to the transactions contemplated hereby. Unless either
this Agreement or the Definitive Agreements are terminated prior
to the closing under the Definitive Agreements, neither ESI nor
DMI, nor any of their respective affiliates or advisors, shall,
directly or indirectly, enter into any agreement, commitment, or
understanding with respect to, or engage in any discussions or
negotiations with, or encourage or respond to any solicitations
from any third party with respect to a merger, sale, or
acquisition of either party or the sale of a material portion of
either party's assets.
4. Representations of ESI
(a) ESI is a corporation duly organized, validly existing, and in
good standing under the laws of Nevada, and has the authority to
execute this Agreement and to be bound by the terms and
conditions hereof and to enter into and to be bound by the terms
and conditions of the Definitive Agreements.
(b) The Board of Directors of ESI has approved this Agreement. ESI
has or will obtain, prior to the execution of and closing under
the Definitive Agreements, all necessary corporate actions
required for the execution of the Definitive Agreements.
(c) ESI represents that on and after the Effective Date of this
Agreement it will conduct its business as presently conducted and
not enter into transactions not in the ordinary course of
business provided that ESI may raise equity capital or make
acquisitions for stock or cash, in each case as approved by its
Board of Directors.
(d) ESI represents that it will have good and marketable title to
all of the assets and properties set forth in its financial
statements and that any and all liens, mortgages, or other
encumbrances against said assets and properties will be duly and
completely set forth in its financial statements. None of such
assets or properties is the subject of any adverse claim by a
third party, and all of such technology and intellectual property
assets will be transferred to DMI on the Acquisition Effective
Date.
(e) ESI is not involved in any pending or threatened litigation
against it, except as may be disclosed to DMI prior to the
execution of the Definitive Agreements.
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5. Representations of DMI
(a) DMI is a corporation duly organized, validly existing, and in
good standing under the laws of Delaware, and has the authority
to execute this Agreement and to be bound by the terms and
conditions hereof and to enter into and to be bound by the terms
and conditions of the Definitive Agreements.
(b) The Board of Directors of DMI has approved this Agreement. DMI
has or will obtain, prior to the execution of and closing under
the Definitive Agreements, all necessary corporate actions
required for the execution of the Definitive Agreements.
(c) DMI represents that, on and after the Effective Date of this
Agreement, it will conduct its business as presently conducted
and not enter into transactions not in the ordinary course of
business.
(d) DMI is not involved in any pending or threatened litigation
against it, except as may be disclosed to ESI prior to the
execution of the Definitive Agreements.
6. Governing Law
The validity and interpretation of this Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware.
7. Amendment
This Agreement shall be amended only with the written consent of
both parties hereto.
8. Miscellaneous
(a) The parties shall cooperate in the exchange of information and
preparation of documents necessary to file a registration statement and proxy
statement with the SEC.
(b) It is agreed that the Definitive Agreements will not be executed
until the Boards of Directors of each party approve said Definitive Agreements,
and prior thereto such Definitive Agreements shall be held in confidence.
(c) The Definitive Agreements will be subject to and conditioned upon
any necessary governmental consents or approvals.
(d) Whenever any notice is required hereunder, it shall be given in
writing addressed as follows:
To DMI: Delta Mutual, Inc.
0000 Xxxxx Xxxxxx Xxx., XX
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
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To ESI: Enterprises Solutions Inc.
Corporate Headquarters
000 Xxxx Xxxx - Xxxxx 000
Xxxxxxxxx, XX 00000
(000) 000-0000
9. Counterparts
This Agreement may be executed in any number of counterparts, by
original or facsimile signature, and each such counterpart shall be deemed to be
an original instrument, but all such counterparts together shall constitute but
one Agreement.
10. Expenses
If the foregoing accurately represents your agreement with respect to
the matters set forth herein, please so indicate by executing an original of
this Agreement in Principle where indicated and return such executed copy to the
undersigned.
Very truly yours,
DELTA MUTUAL, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Xxxxxxx X. Xxxxxx, President
ACCEPTED AND AGREED TO
THIS 23rd DAY OF APRIL, 2001:
ENTERPRISES SOLUTIONS, INC.
By: /s/ Xxxx X. Xxxxxxx
---------------------------------
Xxxx X. Xxxxxxx, President & CEO
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