EXHIBIT 10.1 Stock for Stock Acquisition Agreement
STOCK FOR STOCK ACQUISITION AGREEMENT
This agreement ("The Agreement") is effective as August 20, 2002, by and between
the following two parties:
Bentley Communications Corp., a Florida Corporation with its principal place of
business at 00000 Xxxxxxx Xxxx, Xxxxx #000 Xxx Xxxxxxx, Xxxxxxxxxx 00000
("Bentley")
Kryptosima LLC, a Georgia Limited Liability Company with its principal place of
business at 00 Xxxxxxxxx Xxx Xxxxxxx, Xxxxxxx 00000 ("Kryptosima").
1.0 GENERAL:
WHEREAS, Bentley plans to engage in the business of marketing services that
enable monetary Internet transactions that include, but are not limited to the
payment of funds into brokerage accounts, using existing ATM cards, and;
WHEREAS, Kryptosima is engaged in the business of providing software and
transaction services that enable payment transactions as described above, and;
NOW THEREFORE, for their mutual benefit, the parties hereby enter into The
Agreement for the Acquisition of 100% of Kryptosima by Bentley ("The
Acquisition"), via a "stock swap". Guardian will provide certain financing for
the venture.
The terms of The Agreement are as set forth below.
2.0 ACQUISITION DEADLINE AND EXTENSIONS:
The Acquisition will occur on or before September 30, 2002 (the "Acquisition
Deadline"), provided that all of the conditions set forth herein have been met
by the parties. At that time, the parties will sign a simple one-page memo
indicating that the acquisition has taken place according to all of the terms
set forth herein. This event is referred to below as "The Closing".
If as of The Acquisition Deadline any party has failed to meet any condition or
performance set forth herein, the other parties shall not be required to proceed
with The Closing. In that case, the parties may by their mutual written consent
choose a new date. If The Acquisition does not occur by the original Acquisition
Deadline and the parties do not mutually agree in writing to a new Acquisition
Deadline, then this agreement will expire without either party having any
obligation to the other regarding the matters in this agreement, and any cash,
stock or assets received by Kryptosima prior to that time shall be retained as
liquidated damages.
3.0 ACQUISITIONS, ACQUISITION PRICE, AND FINDERS FEE:
Bentley will acquire 100% of Kryptosima by swapping 30 Million (30,000,000)
restricted shares of Bentley common stock ("The Stock") for 100% of Kryptosima's
outstanding membership units, approximately 5,200,000 units.
These shares shall be paid to Kryptosima's shareholders on a pro rata basis
depending on their % ownership of Kryptosima at the time of The Closing. Prior
to The Closing, Kryptosima will provide to Bentley a list of Kryptosima's
current shareholders and their respective % ownership of Kryptosima. Bentley
will bring to The Closing certificates for each Kryptosima member/shareholder
signifying the appropriate number of shares.
Bentley and its signatory to this agreement, personally and as an officer of the
corporation, hereby warrant and represent that Bentley has the right to sell,
transfer and exchange the BTLY shares described above for the purchase of
Kryptosima as described above, and that Bentley's signatory to this agreement
has any and all necessary authority to execute this agreement on behalf of
Bentley.
The restricted stock referenced above will be restricted for 12 months from the
date of this agreement, after which it will immediately become free trading.
Bentley shall take any and all necessary actions, including but not limited to
any needed SEC registration, to ensure that the restriction is lifted and The
Stock becomes free trading as of that date.
3.1 TERMS OF THE ACQUISITION THAT ARE EFFECTIVE IMMEDIATELY UPON THE CLOSING:
3.1.1 Xxxxxx Xxx will resign his position as President and CEO of Bentley, and
Xxxxx Xxxxxxx, President of Kryptosima, will also assume the position of
President and CEO of Bentley.
Xxx will remain Chairman of Bentley only long enough to sign off on the SEC
filings and associated financial statements for the 3rd quarter of 2002 (i.e.
until approx. November 15, 2002), and then step down from that post, at which
time the board will elect a new chairman. The board shall be free to re-elect
Xxx if it so chooses.
Xxx will step back from involvement in day-to-day management, but continue to
act as an advisor to the company's management for the next 12 months. Any and
all previous compensation agreements between Bentley and Xxx are hereby
cancelled, and any past due amounts whether cash or stock are hereby cancelled,
in favor of the management consulting contract for Xxx as set forth in Schedule
D.
3.1.2 Bentley's board will consist of Xxxxxx Xxx, Xxxxx Xxxxxxx, and Xxxx
Xxxxxxxx. Two outside directors will be added as soon as possible, one to be
selected by Guardian, and one by Xxxxxxx. This board will serve until the next
regular annual board election occurs at the annual meeting in 2003.
Prior to The Closing, Bentley will make any needed changes in its bylaws, and
secure in writing any needed approvals from its shareholders, for this change in
board structure. Bentley shall provide Guardian and Kryptosima with
documentation to this effect no later than 5 business days before The Closing.
3.1.3 Within 10 days of The Closing, Bentley's corporate counsel will file all
needed papers to change Bentley's name to payENKRYPT Inc.
3.1.4 Within 30 days of The closing, Xxxxxxx shall arrange for Kryptosima's
current management team and programmers (Xxxxx Xxxxxxx, Xxxxx Xxx, Xxxxxx
Xxxxxxx, Xxxxxx Xxxxx, and Xxxx Xxxxxxxxx) to each sign 24-month employment
contracts, which shall include protection for Bentley in the form of
"no-compete" clauses in the case that these key employees leave the company, and
protection for the employees in the form of no-termination clauses and/or
clauses specifying severance packages in case of termination.
3.1.4 Immediately upon completion of The Closing, Lee, Serafino, and Xxxxxxx
will together visit the bank branch(es) where Bentley maintains its account(s),
to update the bank's records to show Xxxxxxxx and Xxxxxxx as officers, add
Xxxxxxxx and Xxxxxxx to the signature cards, delete Xxx from the signature
cards, and have the mailing address for statements changed to Hargen's office
address.
3.1.5 Immediately upon completion of The Closing, Xxx will provide copies of all
corporate records in his possession to Xxxxxxx and Xxxxxxxx. As a director, Xxx
will be entitled to retain a copy of these records.
3.1.6 Bentley's auditors and any and all legal counsel (internal or external)
will be notified by Bentley in writing of the contemplated change in Bentley
management at least 5 business days prior to The Closing, and invited to attend
The Closing. Immediately upon completion of The Closing, Xxx, Xxxxxxx and
Xxxxxxxx will place a joint call to any such parties that do not attend The
Closing, to ensure that they are aware of the change in corporate management.
3.1.7 Bentley has opportunities before it for several other strategic
acquisitions that could help take the company to the next level. To balance
growth versus resources, it will be required that all future acquisitions must
be approved by a majority vote of the board, and any acquisition of an entity
that has negative cash flow, a purchase price that includes cash exceeding 10%
of Bentley's current cash on hand, or a purchase price in Bentley stock
exceeding 10% of the current outstanding, must be approved by a 2/3 majority of
the board.
3.2 CONDITIONS TO BE MET PRIOR TO THE CLOSING:
3.2.1 No later than 7 business days before The Closing, Bentley shall provide
Kryptosima with an audited copy of its financial records as of a date no less
than 45 days preceding The Closing, and an unaudited copy of its financial
records as of a date no more than 10 days preceding the closing. The records
provided shall include a list of all creditors and any other parties to any
liabilities or contingent liabilities (including loans), the amount due or
contingent amount due to each party in cash and/or stock, a copy of any
contract(s) between the party(s) and Bentley, and a copy of all correspondence
between the party(s) and Bentley.
3.2.2 No later than 7 business days before The Closing, Kryptosima and Bentley
shall provide each other with an unaudited copy of their current financial
records.
3.2.3 No later than August 30th, Bentley shall deliver at least five thousand
($5,000) to Kryptosima as xxxxxxx money. No later than September 10, Bentley
shall deliver an additional fifteen thousand ($15,000) to Kryptosima as xxxxxxx
money. No later than September 15th or 7 business days prior to The Closing,
whichever occurs first, Bentley shall deliver an additional two hundred thousand
($200,000) to Kryptosima as xxxxxxx money. Kryptosima shall be free to use these
funds as it sees fit without limit, except that $30,000 of the $200,000 shall be
used to pay Guardian's September Mgt. Consulting fee.
3.2.4 Bentley shall provide no later than 7 business days before the closing, a
written opinion of counsel to the effect that: (1) Bentley is duly organized and
validly existing under the laws of the State of Florida and has the power and
authority to own its properties and to carry on its respective business wherever
the same shall be located and operated as of the Closing Date; (2) the
execution, delivery and performance of this Agreement by Bentley has been duly
authorized by any and all necessary corporate action and constitutes a legal,
valid and binding obligation of Bentley , enforceable in accordance with its
terms; (3) Bentley is not under investigation by the SEC, the NASD or any state
securities commission, and has committed no act likely to result in such
investigation; (4) There are no known securities violations; (5) all shares
issued by Bentley have been validly issued in accordance with State and Federal
law, are fully paid and non-assessable; (6) there are no outstanding options,
rights, warrants, conversion privileges or other agreements which would require
issuance of additional shares; (7) All of Bentley's representations and
warranties herein are complete and correct; (8) Bentley's signatory hereto has
all requisite authority to execute this agreement on behalf of Bentley; (9)
Bentley has been and remains in compliance with all applicable State & Federal
securities regulations, including any filings necessary regarding this
agreement; (10) The total number of shares of Bentley issued and outstanding,
prior to payment of the 30 Million shares for Kryptosima, but including all
shares paid to acquire Gibraltar or designated for use in fundraising by
Guardian, is approx. 138 Million shares.
3.3 POST-CLOSING OPERATING PLAN AGREED TO BY THE PARTIES
3.3.1 Kryptosima has a contractual relationship with one ATM network, working
relationships with other entities in the payments industry, and expects to
establish more such relationships. The payments industry is extremely sensitive
in its desire to do business with people and companies that it knows and is
comfortable with. Kryptosima, both the company and the individuals, have worked
hard to establish positive relationships and reputations in the payments
industry. In order to protect those relationships, and satisfy any control or
financial security concerns on the part of ATM Networks, Banks, etc., Kryptosima
will continue to operate with its own management, Board, and bank accounts, as a
wholly owned subsidiary of Bentley. Xxxxx Xxxxxxx shall remain President & CEO
of Kryptosima, until he steps down or is replaced by Kryptosima's board. Since
Kryptosima is in the business of handling funds belonging to customers
(merchants), which must be kept isolated from other funds, it is understood that
the account(s) in which these funds are kept will not be accessible by Bentley.
3.3.2 Effective upon The Closing, Bentley's management organization chart shall
be as shown in the organization chart in Schedule A, and its planned operating
budget and use of funds shall be as shown in the spread sheet in Schedule B.
3.3.3 The parties believe that this acquisition via stock swap is a non-taxable
event. If it is subsequently determined that the acquisition/swap was a taxable
event for Kryptosima's former owners, then they shall so notify Bentley, and
Bentley shall then be required within 10 business days of such notice to file an
SB-2 and/or other filing(s) as required by the SEC, in order to remove the
restrictions on a sufficient number of the restricted shares to allow the former
owners of Kryptosima to sell sufficient shares to raise cash to pay their tax
liability. In lieu of filing the XX-0, Xxxxxxx may elect to provide Kryptosima's
owners with interest-free loans sufficient to pay their respective tax
liabilities in this matter. If Bentley is for any reason unable to immediately
remove the restriction on the shares, or if the immediate sale of the shares is
impractical due to market conditions or any other reason, then Bentley shall be
required to provide such interest-free loans.
3.3.5 Deleted.
3.3.6 From The Closing through December 31, 2003, Kryptosima's former owners
shall have dilution protection in the form of a first right of refusal on any
newly issued shares to be sold into the market. Kryptosima's former owners shall
be notified in writing of any planned sale or issuance, and given 15 business
days to participate by purchasing part or all of any such offering.
3.3.7 As of The Closing, it is estimated that Kryptosima will have significant
accounts payable, and will have a need to immediately purchase additional
equipment and telecomm lines. The agreed-to plan of action is for Kryptosima to
receive sufficient operating funds from Bentley each month beginning October 1
to meet its monthly operating expenses, plus pay off 1/8 of this debt each month
as shown in Schedule B. If Bentley is for any reason unwilling or unable to
transfer this amount of cash to Kryptosima on the 1st of any month during the
first 12 months following The Closing, and becomes more than 30 days past due,
then the former owners of Kryptosima shall have a right to, and Bentley shall
immediately take all necessary steps to affect, a registration by Bentley to
lift the trading restriction on their stock.
3.4 CONDITIONS TO THE OBLIGATIONS OF KRYPTOSIMA
The obligations of Kryptosima hereunder shall be subject to the following
conditions:
3.4.1 Kryptosima shall not have discovered any material error or misstatement in
any of the representations and warranties by Bentley, and all the terms and
conditions of this Agreement to be performed and complied with shall have been
performed and complied with.
3.4.2 There shall have been no substantial adverse changes in the conditions,
financial, business or otherwise of Bentley from the date of this Agreement, and
until the date of closing, except for changes resulting from those operations in
the usual and ordinary course of business, and between such dates the business
and assets of Bentley shall not have been materially adversely affected as the
result of any fire, explosion, earthquake, flood, accident, strike, lockout,
combination of workmen, taking over of any such assets by any governmental
authorities, riot, activities of armed forces, or acts of God or of the public
enemies.
3.4.3 Bentley shall provide at the time of closing, a written opinion of counsel
as outlined in section 3.2 above.
3.4.4 Bentley does not now have, nor will it have on the date of closing, any
known or unknown liabilities or contingent liabilities, except as specifically
set forth on SCHEDULE C, attached hereto.
3.4.5 Bentley shall secure a release from any creditor that would be in a
position to bring bankruptcy proceedings against Bentley, stating that such
action will not be brought without first negotiating in good faith with
Bentley's incoming management
4.0 INDEMNIFICATIONS, REPRESENTATIONS AND WARRANTIES
4.1 Kryptosima and its signatory to this agreement hereby warrant that; (1) The
information that they have provided to the other parties is correct and
complete; (2) Kryptosima has clear ownership of all of its assets, free of any
liens; (3) Kryptosima is not currently party to any pending or threatened
litigation.
4.2 Bentley and its signatory to this agreement hereby warrant that; (1) All
information provided to the other parties is correct and complete; (2) Bentley
has clear ownership of all of its assets, free of any liens, except as set forth
in Schedule A; (3) Bentley is not currently party to any pending or threatened
litigation; (4) All previous audits and SEC filings are in order, and no
material negative events have occurred since the most recent 10Q was filed.
4.3 Bentley, and Xxxxxx Xxx personally, hereby indemnify the incoming Bentley
directors (Xxxxxxxx and Xxxxxxx) from any personal liability or loss that might
arise due to any past acts or omissions by Bentley or its management, officers
or directors, intentional or unintentional.
4.4 Bentley and its signatory to this agreement hereby warrant that there are no
creditors of Bentley in a position to initiate bankruptcy proceedings, except
for any creditors that have provided a release as required in section 3.4.5.
4.5 Between the date hereof and the Closing Date, Bentley will conduct its
business in the same manner in which it has heretofore been conducted and will
not: (1) Enter into any contract; (2) Incur any new liability, or; (3) Declare
or make any distribution of any kind to its shareholders.
4.6 Between the date hereof and the Closing Date, Bentley has not engaged in any
transaction other than those required in the normal course of their business.
4.7 Bentley and its signatory to this agreement hereby warrant that Bentley does
not now have, nor will it have on the Closing Date, any contracts except as
disclosed in Schedule C.
4.8 Bentley and its signatory to this agreement hereby warrant that Bentley does
not now have, nor will it have on the Closing Date any pension plan,
profit-sharing plan, or stock purchase plan for any of its employees.
5.0 OTHER:
5.1 Breach & Remedies: Each party acknowledges and agrees that, if there is any
breach of this agreement, the non-breaching party will suffer irreparable injury
that cannot be compensated by monetary damages and therefore will not have an
adequate remedy at law. Accordingly, if any party institutes an action or
proceeding to enforce the provisions of this agreement, such party will be
entitled to obtain such injunctive relief, specific performance, or other
equitable remedy from a court of competent jurisdiction as may be necessary or
appropriate to prevent or curtail any such breach, threatened or actual. This
will be in addition to and without prejudice to such other rights as such party
may have in law or in equity.
5.2 Entire Agreement: The parties acknowledge that this document and the
appendices hereto expresses their entire understanding and agreement, and that
there have been no warranties, representations, covenants or understandings made
by either party to the other except such as are expressly set forth in this
section. The parties further acknowledge that this agreement supersedes,
terminates and otherwise renders null and void any and all prior or
contemporaneous agreements or contracts, whether written or oral, with respect
to the acquisition of Kryptosima by Bentley. This agreement does NOT in any way
modify, supercede or terminate the Gateway Services Agreement between Bentley
and Kryptosima parties executed July 16, 2002, EXCEPT THAT the minimum monthly
fees set forth in that agreement are waived so long as Bentley provides monthly
operating funds to Kryptosima as set forth in this agreement.
5.3 This agreement shall be controlled, construed, and enforced according to the
laws of Georgia, and any action brought by either party against the other shall
be in Georgia.
5.4 This agreement may be executed in any number of counterparts and each
counterpart hereof shall be deemed to be an original instrument, but all such
counterparts together shall constitute one agreement. A signed faxed agreement,
all or in part, shall be deemed legal and binding.
5.5 This agreement shall be binding upon and shall inure to the benefit of the
heirs, executors, administrators and assigns of Kryptosima and its former
owners/members, and the successors and assigns of Bentley. Provided however that
no party shall have the right to assign any portion of its obligations under
this agreement, during the period before The Closing and for 13 months
thereafter, except upon the express written consent of all of the other parties.
5.6 All notices, requests, instructions, or other documents to be given
hereunder shall be in writing and sent by registered mail:
If to Bentley: Xxxxxx Xxx
0000 00xx Xxxxxx #0
Xxxxx Xxxxxx, XX 00000
If to Kryptosima: Xxxxx Xxxxxxx
00 Xxxxxxxxx Xxx
Xxxxxxx, XX 00000
FOR BENTLEY AND HIMSELF: FOR KRYPTOSIMA:
________________________ ________________________
Xxxxxx Xxx Xxxxx Xxxxxxx
President/CEO President
Bentley Communications, Corp. Kryptosima LLC
[Schedules Omitted]
