1
STOCK PURCHASE AGREEMENT
BY AND AMONG
NETWORK INVESTOR COMMUNICATIONS, INC.,
a Nevada corporation,
ePENZIO, INC.,
a Utah corporation,
AND
the Shareholders of
ePenzio, Inc.
May 16, 2001
2
TABLE OF CONTENTS
Page
1. PURCHASE OF EPENZIO SHARES 1
(a) Purchase 1
(b) Cash Payment 1
2. DELIVERY 1
(a) Delivery of ePenzio Shares 1
(b) Delivery of Cash Payment 1
(c) Liabilities 2
3. REPRESENTATIONS AND WARRANTIES OF THE SELLERS 2
(a) Ownership of ePenzio Shares 2
(b) Authority 2
(c) Compliance with Law 2
(d) No Litigation 2
(e) Solvency 2
(f) Securities Laws Compliance 3
(g) No Material Misstatements 4
(h) Representations and Warranties Concerning ePenzio 4
(i) Organization, Standing and Qualification 4
(j) Capitalization 4
(k) Subsidiaries 4
(l) Stock Transfer Books 4
(m) Corporate Records 5
(n) No Defaults 5
(o) No Conflict 5
(p) Consents and Approvals 5
(q) Related-Party Transactions 5
(r) Safety Laws 6
(s) Environmental Compliance 6
(t) Compliance With Law 7
(u) Financial Statements 7
(v) Properties and Assets 7
(w) Accounts Receivable 8
(x) Leases 8
(y) Intellectual Property 8
(z) Material Contracts 9
(aa) No Undisclosed Liabilities 9
(bb) Litigation 10
(cc) Taxes 10
(dd) Employment Contracts 10
(ee) Personnel Matters 10
(ff) Employee Restrictions 10
(gg) Employee Benefit Plans 11
(hh) No Adverse Change 11
(ii) Discrimination 11
(jj) Disputes and Charges 12
(kk) Accuracy of Information Furnished 12
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF BUYER 12
(a) Organization; Authority; Validity 12
(b) Compliance with Law 12
(c) Legal Proceedings 12
(d) Contracts 13
(e) Ordinary Course 13
(f) Capitalization of Buyer 13
(g) Subsidiaries 13
(h) Offering 13
(i) Financial Statements 13
(j) Filing of Reports 14
(k) Condition of Business 14
(l) Employee Matters 14
(m) Plans 14
(n) Permits; Authorizations 15
(o) Other Obligations 15
(p) Accuracy of Information 15
(q) Availability of Documents 15
(r) Shares Purchased for Investment 16
(s) Buyer's Shares 16
(t) Employment Contracts and Options 16
(u) Consents and Approvals 16
5. THE CLOSING 16
6. CONDITIONS OF BUYER'S AND SELLERS' PERFORMANCE 17
(a) Buyer's Conditions 17
(b) Sellers' Conditions 18
7. INDEMNIFICATION 20
(a) General Indemnification Obligation of Each Seller 20
(b) General Indemnification Obligation of Buyer 20
(c) Limitation of Indemnity 20
(d) Several Liability 21
(e) Method of Asserting Claims, Etc 21
(f) Payment 22
(g) Other Rights and Remedies Not Affected 22
8. NON-DISCLOSURE AND NON-COMPETE COVENANTS 23
(a) Proprietary Information 23
(b) Publicity 23
9. OTHER MATTERS 23
(a) No Share Purchases 23
(b) Resignation of Directors 23
(c) Further Actions 24
10. TERMINATION AND AMENDMENT 24
(a) Pre-Closing 24
(b) Waiver 24
11. DISPUTE RESOLUTION 24
(a) Mediation 24
(b) Arbitration 25
12. MISCELLANEOUS 25
(a) Attorneys' Fees 25
(b) Brokers and Finders 25
(c) Expenses 25
(d) Survival 26
(e) Severability 26
(f) Notices 26
(g) Entire Agreement 26
(h) Counterparts 27
(i) Binding Effect 27
(j) Governing Law 27
(k) Gender and Number, etc. 27
(l) Successors and Assigns 27
(m) No Third Party Beneficiaries 27
(n) No Partnership or Joint Venture 27
EXHIBITS
Exhibit A Shareholder List of ePenzio, Inc.
Exhibit B Kings Peak Capital, L.L.C. Advisory Agreement
SCHEDULES
Schedule 4(c) Subsidiaries
Schedule 4(m) ePenzio Financial Statements
Schedule 4(r) Material Contracts
Schedule 4(t) Litigation
Schedule 4(v) Employment Contracts
Schedule 4(y) Employee Benefit Plans
Schedule 5(d) Buyer Contracts
Schedule 5(f) Capitalization of Buyer
Schedule 5(i) Form 10-K of Buyer
Schedule 5(t) Employment Contracts and Options
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is executed as of this 7th day of
May, 2001, by and between Network Investor Communications, Inc., a Nevada
corporation ("Buyer"), ePenzio, Inc., a Utah corporation ("ePenzio"), and the
shareholders of ePenzio, Inc., all of whom are identified on Exhibit A (the
"Sellers").
WHEREAS, Buyer is a publicly-held Nevada corporation;
WHEREAS, ePenzio is a Utah corporation which is in the business of marketing
and providing merchant services;
WHEREAS, the parties intend by this Agreement to provide for the acquisition
by Buyer of all the issued and outstanding capital stock of ePenzio.
NOW, THEREFORE, in consideration of the mutual covenants and obligations set
forth herein, it is agreed as follows:
1. Purchase of ePenzio Shares.
(a) Purchase. Subject to the terms and conditions contained herein, Buyer
agrees to purchase from each Seller, and each Seller agrees to sell to Buyer,
for the consideration set forth below, the number of shares of common stock of
ePenzio (the "ePenzio Shares") listed beside such Seller's name in Exhibit A
hereto.
(b) Payment. In consideration for the ePenzio Shares, Buyer shall issue to
Sellers an aggregate amount of nine million (9,000,000) shares of common stock
of Buyer.
2. Delivery.
(a) Delivery of ePenzio Shares. At Closing, each Seller shall deliver to
Buyer certificates evidencing the ePenzio Shares owned by Sellers immediately
prior to Closing, endorsed in blank, together with all necessary stock powers
and otherwise in proper form for transfer. Buyer shall not be obligated to
purchase any of the ePenzio Shares unless ALL such Shares are delivered at
Closing.
(b) Delivery of Buyer Shares. At Closing, Buyer shall deliver to Sellers an
aggregate of nine million (9,000,000) shares of Buyer's Common Stock
registered in the names of Sellers ("Buyer Shares"), in proportion to their
ownership of ePenzio Shares immediately prior to Closing.
(c) Liabilities. Buyer shall not assume any state or federal tax liability of
any Seller. All shareholder notes payable or other amounts owed by ePenzio to
any of the Sellers shall be canceled prior to or at Closing.
3. Representations and Warranties of the Sellers. To induce Buyer to enter
into this Agreement, each Seller individually represents and warrants to
Buyer, with respect to himself, that the following statements are true,
correct and complete as of the date hereof:
(a) Ownership of ePenzio Shares. Such Seller owns, beneficially and of
record, the number of ePenzio Shares shown beside such Seller's name in
Exhibit A hereto, free and clear of any lien, security interest, pledge,
claim, demand or encumbrance or restriction of any kind or character
whatsoever, and the ePenzio Shares represent all of the issued and outstanding
shares of capital stock and equity securities of ePenzio. All ePenzio Shares
are duly authorized, validly issued, fully paid and nonassessable and have, in
the hands of the Sellers, and will have in the hands of Buyer, all the rights,
privileges and preferences ordinarily accorded to owners of the ePenzio common
stock.
(b) Authority. Such Seller now has and will have, at the Closing, full power,
authority and legal right to sell such Seller's ePenzio Shares to Buyer
pursuant to this Agreement. This Agreement has been duly and validly
authorized, executed and delivered by, and is the valid and binding obligation
of, such Seller, subject to the effect of applicable bankruptcy, insolvency,
reorganization, moratorium, arrangement, preference, fraudulent conveyance or
other similar laws and regulations now or hereafter in effect relating to or
limiting creditors' rights generally or the enforcement of specific rights
provided for in agreements, general principles of equity and/or the
discretion of the court governing or limiting the availability of specific
performance, injunctive relief and other equitable remedies (regardless of
whether such enforceability is considered in a proceeding in equity or at
law), and the application of principles of public policy underlying any such
laws and regulations.
(c) Compliance with Law. The consummation of the transactions contemplated
hereby will be in compliance with all applicable laws, rules, regulations and
requirements of all Federal, state and local governmental authorities without
the necessity for any license or permit or other action or permission in the
nature thereof, or any registration with, or consent of, any such governmental
authority as such affect the obligations of Sellers to this transaction.
(d) No Litigation. There are no suits or proceedings at law or in equity, or
before or by any governmental agency or arbitrator, pending, or to the
knowledge of such Seller, threatened, which in any way affect the consummation
of the transactions contemplated hereby or, if valid, would constitute or
result in a breach of any representation, warranty or agreement of such Seller
set forth herein.
(e) Solvency. Such Seller is not bankrupt or insolvent and has not assigned
Seller's estate for the benefit of creditors, entered into any arrangement
with creditors, and does not have any present intention to file a petition in
bankruptcy, to assign Seller's estate for the benefit of creditors, or to
enter into any arrangement with creditors. Such Seller has no knowledge of
any basis for the filing by any other person of an involuntary petition in
bankruptcy with respect to Seller or ePenzio.
(f) Securities Laws Compliance. Such Seller:
(i) has been represented by such legal counsel who has been personally
selected by such Seller, as such Seller has found necessary to consult
concerning this transaction, and such representation has included an
examination of applicable documents, and an analysis of all tax, financial,
and securities law aspects. Such Seller and his/her counsel and other
advisors have sufficient knowledge and experience in business and financial
matters to evaluate the above information, and the merits and risks of the
transactions contemplated by this Agreement, and to make an informed
investment decision with respect thereto.
(ii) Buyer has made available to such Seller, his/her counsel and advisors,
prior to the date hereof, the opportunity to ask questions of, and to receive
answers from, Buyer and its representatives, concerning the terms and
conditions of the acquisition of Buyer's Shares and access to obtain any
information, documents, financial statements, records and books (A) relative
to Buyer, the business and an investment in Buyer, and (B) necessary to verify
the accuracy of any information furnished to each Seller. All materials and
information requested by such Seller, his/her counsel and advisors, or others
representing such Seller, including any information requested to verify any
information furnished to such Seller, have been made available and examined.
(iii) Such Seller is acquiring Buyer's Shares for Seller's own account and not
as a fiduciary for any other person. Such Seller is acquiring the Buyer's
Shares for investment purposes only and not with a view to or for the
transfer, assignment, resale, or distribution thereof, in whole or in part.
Such Seller understands the meaning and legal consequences of the foregoing
representations and warranties. Such Seller is not an "underwriter" of the
securities, as that term is defined in Section 2(11) of the Securities Act of
1933 ("Securities Act"), and such Seller will not take or cause to be taken
any action that would cause such Seller or Buyer to be deemed an "underwriter"
of the securities.
(iv) Such Seller understands that the Buyer's Shares have not been registered
under the Securities Act nor pursuant to the provisions of the securities or
other laws of any applicable jurisdictions. Such Seller further understands
that the Buyer's Shares cannot be sold, assigned, pledged, transformed or
otherwise disposed of unless such Shares are registered or an exemption from
registration is available, and that the Buyer's Shares will bear a restrictive
legend to that effect.
(g) No Material Misstatements. To Seller's knowledge, such Seller has not
made any material misstatement of fact or omitted to state any material fact
necessary or desirable to make complete, accurate and not misleading every
representation, warranty and agreement set forth herein.
4. Representations and Warranties Concerning ePenzio. To further induce Buyer
to enter into this Agreement, ePenzio and the Sellers represent and warrant to
Buyer, severally but not jointly, that the following statements concerning the
affairs of ePenzio are true, correct and complete as of the date hereof:
(a) Organization, Standing and Qualification. ePenzio is duly organized,
validly existing and in good standing under the laws of the State of Utah and
is authorized and qualified to own and operate its properties and assets and
conduct its business in all jurisdictions where such properties and assets are
owned and operated and such business conducted. ePenzio has duly filed any
and all certificates and reports required to be filed to date by the laws of
Utah and any other applicable law. ePenzio has all franchises, permits,
licenses, and any similar authority necessary for the conduct of its business
as now being conducted by it, the lack of which would have a material adverse
effect on the business, properties, prospects, or its financial condition
("Material Adverse Effect") on ePenzio. ePenzio is not in default in any
material respect under any of such franchises, permits, licenses or other
similar authority.
(b) Capitalization. As of the date of Closing, the authorized capital stock
of ePenzio consists of 1,000,000 shares of common stock, of which 1,000,000
shares are issued and outstanding. All of the outstanding shares of common
stock of ePenzio were duly authorized and validly issued and are fully paid
and nonassessable. ePenzio has no treasury shares. There are no outstanding
subscriptions, options, warrants, calls, contracts, demands, commitments,
convertible securities or other rights, agreements or arrangements of any
character or nature whatsoever relating to the issuance of ePenzio common
stock or other securities. No holder of any ePenzio security is entitled to
any preemptive or similar rights to purchase any ePenzio securities.
(c) Subsidiaries. Except as set forth on Schedule 4(c), ePenzio has no
subsidiaries and no other investment in any entity. ePenzio is not a
participant in any joint venture, partnership or other similar arrangement.
(d) Stock Transfer Books. The stock transfer books and stock ledgers of
ePenzio are in good order, complete, accurate and up to date, and with all
necessary signatures, and set forth all stock and securities issued,
transferred and surrendered. No duplicate certificate has been issued at any
time heretofore. Except as noted above, no transfer has been made without
surrender of the proper certificate duly endorsed. All certificates so
surrendered have been duly canceled and are attached to the proper stubs with
all necessary stock powers attached thereto.
(e) Corporate Records. The minute books and other corporate record books of
ePenzio are in good order, substantially complete, accurate, up to date, with
all necessary signatures and set forth all meetings and actions taken by the
stockholders and directors, including all actions set forth in all
certificates of votes of stockholders or directors furnished to anyone at any
time. The copies of ePenzio's Articles of Incorporation and Bylaws which have
been delivered to Buyer are complete and correct, as amended, to the date of
execution of this Agreement.
(f) No Defaults. ePenzio is not in default under or in violation of any
provisions of their corporate organizational documents or any restriction,
lien, encumbrance, indenture, contract, lease, sublease, loan agreement, note
or other obligation or liability relating to their business.
(g) No Conflict. Neither the execution and delivery of this Agreement nor
consummation of the transactions contemplated hereby will conflict with or
result in a breach of or constitute a default under any provision of the
Articles of Incorporation or Bylaws of ePenzio or any law, rule, regulation,
judgment, decree, order or other such requirement, or under any material
restriction, lien, encumbrance, indenture, contract, lease, sublease, loan
agreement, note or other material obligation or liability to which ePenzio is
a party or by which it is bound, or to which its assets are subject, or result
in the creation of any lien or encumbrance upon such assets.
(h) Consents and Approvals. The execution, delivery and performance of this
Agreement by Sellers and the consummation of the transactions contemplated
hereby do not require ePenzio or Sellers to obtain any consent, approval or
action of, or make any filing with or give notice to any corporation, person
or firm or any public, governmental or judicial authority except: (i) such as
have been duly obtained or made, as the case may be, and are in full force and
effect on the date hereof, (ii) those which the failure to obtain or make
would have no Material Adverse Effect on the transactions contemplated hereby
or on ePenzio, and (iii) any filings required under the Securities Act, or any
applicable state securities laws.
(i) Related-Party Transactions. No employee, officer, or director of ePenzio
or member of his or her immediate family is indebted to ePenzio, nor is
ePenzio indebted (or committed to make loans or extend or guarantee credit) to
any of such individuals. To the best of the Sellers' knowledge, none of such
individuals has any direct or indirect ownership interest in any firm or
corporation with which ePenzio is affiliated or with which ePenzio has a
business relationship, or any firm or corporation that competes with ePenzio,
except that employees, officers, or directors of ePenzio and members of their
immediate families may own stock in publicly traded companies that may compete
with ePenzio. No member of the immediate family of any officer or director of
ePenzio is directly or indirectly interested in any material contract with
ePenzio, except as disclosed herein.
(j) Safety Laws. ePenzio is not in violation of any applicable statute, law
or regulation relating to occupational health and safety (including, but not
limited to OSHA and any similar state laws), and to the best of Sellers'
knowledge, no material expenditures are or will be required in order to comply
with any such existing statute, law or regulation.
(k) Environmental Compliance.
(i) No notice, notification, demand, request for information, citation,
summons or order has been issued, no complaint has been filed, no penalty has
been assessed and no investigation or review is pending, or to Seller's
knowledge, threatened by any governmental or other entity (A) with respect to
any alleged violation by Seller of any Environmental Law in connection with
the conduct of ePenzio's business, (B) with respect to any alleged failure by
Seller to have any environmental permit, certificate, license, approval,
registration or authorization required in connection with the conduct of
ePenzio's business or (C) with respect to any generation, treatment, storage,
recycling, transportation or disposal or Release of any hazardous substance
generated by ePenzio's business.
(ii) In connection with the operation of ePenzio's business, (A) Seller has
not handled any Hazardous Substance, other than as a user of such Hazardous
Substances, on the property leased by ePenzio to conduct its business (the
"Leased Property"); (B) no polychlorinated biphenyls or urea formaldehyde is
or has been present at the Leased Property during ePenzio's tenancy; (C) to
the best of Seller's knowledge, no asbestos is or has been present at the
Leased Property; (D) to the best of Sellers' knowledge, there are no
underground storage tanks for Hazardous Substances, active or abandoned, at
the Leased Property; (E) to the best of Sellers' knowledge, no Hazardous
Substance has been Released at, or under the Leased Property during ePenzio's
tenancy, and (F) to the best of Sellers' knowledge, no Hazardous Substance has
been released or is present, in a reportable or threshold planning quantity,
where such a quantity has been established by statute, ordinance, rule,
regulation or order, at, on or under the Leased Property during ePenzio's
tenancy.
(iii) In connection with the operation of the Business, Seller has not
transported or arranged for the transportation (directly or indirectly) of any
Hazardous Substance to any location which is listed or proposed for listing on
the National Priorities List promulgated under CERCLA, or on any similar state
list or which is the subject of Federal, state or local enforcement actions or
other investigations which may lead to claims against Buyer for clean-up
costs, remedial work, damages to natural resources or for personal injury
claims, including, but not limited to, claims under CERCLA.
(iv) No oral or written notification of a Release of a Hazardous Substance has
been filed by or on behalf of ePenzio with respect to ePenzio's business and
no property now or previously owned or leased by ePenzio with respect to
ePenzio's business is listed or, to Seller's knowledge, proposed for listing,
on the National Priorities List promulgated pursuant to CERCLA or on any
similar state list of sites requiring investigation or clean-up.
(v) To the best of Sellers' knowledge, there are no environmental Liens on any
of ePenzio's assets, and no governmental actions have been taken or are in
process that could subject any of such Purchased Assets to such Liens. Seller
would not be required to place any notice or restriction relating to the
presence of Hazardous Substances at any property used in connection with the
operation of the Business in any deed to such property.
(vi) There have been no environmental investigations, studies, audits, tests,
reviews or other analyses conducted by or which are in the possession of
Seller in relation to the Leased Property in connection with the operation of
ePenzio's business which have not been delivered to Buyer prior to the date
hereof.
(l) Compliance With Law. To the best of Sellers' knowledge, none of the
directors, officers, fiduciaries, agents or employees of ePenzio is in
material violation of any applicable law, rule, regulation or requirement of
any governmental authority in any way relating to the business of ePenzio.
Consummation of the transactions contemplated hereby will not violate laws,
rules, regulations or requirements applicable to ePenzio of any governmental
authorities, nor will consummation of such transactions require any license or
permit or other action or permission in the nature thereof, or any
registration with, or consent of, any governmental authority.
(m) Financial Statements. The audited financial statements of ePenzio for the
periods ending December 31, 2000 and December 31, 1999, attached hereto as
Schedule 4(m) and the Profit and Loss Statements for January through April
2001 (collectively the "Financial Statements"), are correct and complete and
fairly present in all material respects the financial condition and the
results of operations, changes in stockholders' equity, and cash flow of
ePenzio as of the dates described therein, all in accordance with GAAP
consistently applied. The books and records of ePenzio are complete in all
material respects and are in an auditable condition such that a complete audit
of ePenzio can be performed as of the Closing without unreasonable cost or
expense.
(n) Properties and Assets. Unless under Five Thousand Dollars ($5,000), the
properties and assets presently owned by ePenzio and shown on the respective
books and records include all properties and assets of every kind, class and
description, real and personal, tangible and intangible, used in the business
of ePenzio and necessary to the conduct of its business as presently
conducted. ePenzio has good and indefeasible title to and possession of all
such known properties and assets, free and clear of all liens, claims,
security interests, encumbrances, restrictions and rights, title and interests
in others, and there are no existing agreements, options or commitments or
rights with, to or in any third party to acquire any of the properties or
assets of ePenzio or any interest therein, except for those entered into in
the ordinary course of business and the existence of which would have a
Material Adverse Effect on ePenzio. The assets of ePenzio on the Closing date
shall include all of the assets described hereinabove or otherwise reflected
on the Financial Statements, adjusted only for inventory and other assets
acquired or disposed of in the ordinary course of business after December 31,
2000, and before the Closing date.
(o) Accounts Receivable. All accounts receivable of ePenzio that are
reflected on the latest Financial Statements or on the accounting records of
ePenzio as of Closing (collectively, the "Accounts Receivable") represent or
will represent valid obligations arising from sales actually made or services
actually performed in the ordinary course of business of ePenzio. Unless paid
prior to Closing, the Accounts Receivable are or will be as of the Closing
date current and collectible net of the respective reserves shown on the
latest Financial Statements or on the accounting records of ePenzio, provided
to Buyer as of the Closing (which reserves are adequate and calculated
consistent with past practice and, in the case of the reserve as of Closing,
will not represent a greater percentage of the Accounts Receivable as of the
Closing than the reserve reflected in the latest Financial Statements and will
not represent a material adverse change in the composition of such Accounts
Receivable in terms of aging). Subject to such reserves, one hundred percent
(100%) of the Accounts Receivable either have been or will be collected in
full, without any set-off, not later than one hundred fifty (150) days after
the day on which they first become due and payable. There is no contest,
claim, or right of set-off, other than returns in the ordinary course of
business, under any contract with any obligor of an Accounts Receivable
relating to the amount or validity of such Accounts Receivable. In the event
a claim is made for indemnity based on this Section 4(o), upon payment by
Sellers for such claim, Buyer and ePenzio shall immediately assign all rights
to Sellers in and to the accounts which are the basis for the claim with the
rights to xxx or otherwise act to collect such accounts.
(p) Leases. ePenzio enjoys exclusive, peaceful and undisturbed possession
under all equipment, real property, personal property, or other leases to
which it is a party. All such leases are identified in the books and
schedules of ePenzio, are valid and enforceable against ePenzio in accordance
with their terms, and no party thereto is in default thereunder.
(q) Intellectual Property. ePenzio owns all copyrights, rights of
reproduction, trademarks, trade names, trademark applications, service marks,
patent applications, patents, and patent license rights necessary to the
operation of its business, although ePenzio has not acquired by license or
registration any of the foregoing. To the best of Sellers' knowledge, ePenzio
has full rights of use for all unregistered trademarks and service marks in
connection with the goods and services identified by such marks and the use of
such marks in connection with its goods and services does not infringe on any
third party rights in any market area where ePenzio has conducted business.
ePenzio also owns or has acquired by license or otherwise all U.S. or foreign,
inventions, franchises, discoveries, ideas, research, engineering, methods,
practices, processes, systems, formulae, designs, drawings, products,
projects, improvements, developments, know-how, and trade secrets which are
used in or necessary for the conduct of its business as presently conducted
(collectively the "Proprietary Rights"), without conflict or infringement in
any material respect of any patent, copyright, trade secret or other lawful
proprietary right of any other party, and subject to no restriction, lien,
encumbrance, right, title or interest in others, and no claim is pending or,
to the best knowledge of the Sellers and ePenzio, threatened to the effect
that the operations of ePenzio infringe upon or conflict with the asserted
rights of any other person under any Proprietary Right, and there is no
reasonable basis for any such claim (whether or not pending or threatened).
No claim is pending or, to the best knowledge of Seller and ePenzio,
threatened to the effect that any such Proprietary Rights owned or licensed by
ePenzio, or which ePenzio otherwise has the right to use, is invalid or
unenforceable by ePenzio, and there is no reasonable basis for any such claim
(whether or not pending or threatened). All of the foregoing Proprietary
Rights that are not in the public domain stand solely in the name of ePenzio
and not in the name of any stockholder, director, officer, agent, partner or
employee or anyone else known to Seller, and none of the same have any right,
title, interest, restriction, lien or encumbrance therein or thereon or
thereto. ePenzio has not granted or assigned to any other person or entity
any right to manufacture, have manufactured, assemble or sell the products or
proposed products or to provide the services or proposed services of ePenzio.
(r) Material Contracts. Except as disclosed on Schedule 4(r), or as reflected
in the Financial Statements for the periods such were in effect, ePenzio has
no material obligations, contracts, commitments and agreements, whether oral
or written, to which ePenzio is a party or by which any of its assets are
bound that are in existence as of the date hereof and are material to ePenzio
or the operation of its business (the "Material Contracts"). As used in this
Agreement, the term "Material Contracts" shall include, but not be limited to,
whether oral or written, all (i) contracts or commitments entered into out of
the ordinary course of business; (ii) bonus, incentive compensation, pension,
profit sharing, stock option, group insurance, medical reimbursement or
employee welfare or benefit plans of any nature whatsoever; (iii) collective
bargaining agreements or other contracts or commitments to or with labor
unions or other employee groups; (iv) leases, contracts, or commitments
affecting ownership of, title to, use of or any interest in real property, or
any leases or similar arrangements for use by ePenzio of personal property
involving payments in excess of $15,000 per annum; (v) bank credit, factoring
and loan agreements, promissory notes and other documents representing
indebtedness for borrowed money, together with any other agreements or
instruments securing or otherwise pertaining to the obligations evidenced
thereby; (vi) guarantees by ePenzio of the obligations of any other person;
and (vii) covenants not to compete given or received by ePenzio, any
shareholders of ePenzio which in any way related to the business of ePenzio.
(s) No Undisclosed Liabilities. There are no material liabilities or
obligations of ePenzio, including, without limitation, contingent liabilities
for the performance of any obligation, except for (i) liabilities or
obligations which are disclosed or fully provided for in the Financial
Statements, (ii) liabilities or obligations disclosed in this Agreement or in
any exhibit or schedule to this Agreement, and (iii) liabilities not in excess
of $5,000 individually or $25,000 in the aggregate.
(t) Litigation. Except as set forth in Schedule 4(t), there are no suits or
proceedings at law or in equity, or before or by any governmental agency or
arbitrator of which a Seller has received notice, pending, or to Sellers'
knowledge, threatened, anticipated or contemplated, which, if decided against
ePenzio, would have a Material Adverse Effect on ePenzio, and there are no
unsatisfied or outstanding judgments, orders, decrees or stipulations which in
any way affect ePenzio or its properties or assets or to which it is or may
become a party. There are no claims against ePenzio of which a Seller or
ePenzio has received notice, pending, or to Sellers' knowledge threatened,
anticipated, or contemplated which, if valid, would constitute or result in a
breach of any representation, warranty or agreement set forth herein.
(u) Taxes. (i) ePenzio has duly filed all United States federal, state, local
and other tax returns and reports required to be filed by it or them on or
prior to the date hereof with respect to all taxes withheld by or imposed upon
it or them; (ii) all such returns or reports reflect in all material respects
the liability for such taxes of ePenzio as computed therein for the periods
indicated, and all taxes shown on such returns or reports and all assessments
received by ePenzio have been paid, or fully reserved for, to the extent that
such taxes have become due; (iii) there are no waivers or agreements by
ePenzio for the extension of time for the assessment of such taxes; and (iv)
there are no material questions of taxation which are, as at the date hereof,
the subject of dispute with any taxing authority. With respect to any period
through the date hereof for which tax returns have not yet been filed, or for
which taxes are not yet due or owing, ePenzio has made adequate reserves,
determined in accordance with GAAP, for all liabilities for taxes as set forth
in the Financial Statements. ePenzio is not presently the subject of any tax
audit by any taxing authority.
(v) Employment Contracts. ePenzio has no written contracts of employment with
any of its shareholders, employees or sales representatives, and no verbal
contracts of employment which cannot be terminated without default by ePenzio
on thirty (30) days notice.
(w) Personnel Matters. As of the date of Closing, the employees of ePenzio
shall only include the individuals listed in the documents made available to
Buyer in its due diligence at their respective salary and benefits.
(x) Employee Restrictions. To Sellers' knowledge, no employee of ePenzio is
subject to any secrecy or non-competition agreement or any other agreement or
restriction of any kind that would impede in any way the ability of such
employee to carry out fully all activities of such employee in furtherance of
the business of ePenzio. Employees may be subject to trade secret
confidentiality agreements.
(y) Employee Benefit Plans. Set forth in Schedule 4(y) is a list of all
employer benefit plans of ePenzio. Except as set forth on Schedule 4(y),
ePenzio is not subject to and does not maintain any "employee benefit plan"
within the meaning of Section 3(3) of the Employee Retirement Income and
Security Act of 1974, as amended ("ERISA"), or any other plan or arrangement
for the benefit of its employees which provides for pension, profit sharing,
deferred compensation, bonuses, employee insurance coverage or any similar
benefits.
(z) No Adverse Change. Since April 30, 2001, there has not been:
(i) any material adverse change in the properties, assets, business, affairs,
material contracts or prospects of ePenzio and, to Sellers' knowledge, no such
changes currently are threatened, anticipated or contemplated;
(ii) any actual or, to Sellers' knowledge, threatened, anticipated or
contemplated damage, destruction, loss, conversion, termination, cancellation,
default or taking by eminent domain or other action by governmental authority,
which has affected or may hereafter affect the properties, assets, business,
affairs, contracts or prospects of ePenzio;
(iii) any material and adverse dispute pending or, to Sellers' knowledge,
threatened, anticipated or contemplated, of any kind with any customer,
supplier, source of financing, employee, landlord, subtenant or licensee of
ePenzio, or any pending or, to Sellers' knowledge, threatened, anticipated or
contemplated occurrence or situation of any kind, nature or description which
is reasonably likely to result in any material reduction in the amount, or any
change in the terms or conditions, of business with any substantial customer,
supplier or source of financing;
(iv) any pending or, to Sellers' knowledge, threatened, anticipated or
contemplated occurrence or situation of any kind, nature or description
peculiar to the business of ePenzio and materially and adversely affecting its
properties, assets, business, affairs or prospects; or
(v) other than the bonuses paid to Xxxx Xxxxxxxx and Xxxx Xxxxxxxx on May 16,
2001 in the aggregate amount of $350,000, any material reduction of capital,
or any redemption of stock or dividend or distribution by ePenzio.
(aa) Discrimination. ePenzio has not received any written claim of any unfair
labor practice or illegal discrimination on the basis of race, color,
religion, sex, national origin, age or handicap in its employment conditions
or practices. To Sellers' knowledge, ePenzio has not engaged in any unfair
labor practice or illegal discrimination on the basis of race, color,
religion, sex, national origin, age or handicap in its employment conditions
or practices.
(bb) Disputes and Charges. There are no existing or, to Sellers' knowledge,
threatened disputes, grievances, harassment charges, controversies or other
employment or labor troubles affecting ePenzio.
(cc) Accuracy of Information Furnished. Sellers have not made any material
misstatement of fact or omitted to state any material fact necessary or
desirable to make complete, accurate and not misleading the representations,
warranties and agreements set forth herein, or in any Exhibit hereto or
certificate or other document furnished in connection herewith.
5. Representations, Warranties and Agreements of Buyer. Buyer represents and
warrants to and agrees with the Sellers that the following statements
concerning the affairs of Buyer are true, correct and complete as of the date
hereof and as of Closing:
(a) Organization; Authority; Validity. Buyer is a corporation duly organized,
validly existing, and in good standing in the State of Nevada and is qualified
to do business and is in good standing in each other state where the nature of
its business so requires it to be qualified. Buyer is duly authorized and has
all requisite power to execute and deliver this Agreement and the other
documents to be delivered pursuant to this Agreement, perform the covenants on
their part herein and therein contained and consummate the transactions
contemplated hereby and thereby. Buyer is not subject to any Agreement, law,
judgment or decree which would prohibit, or be violated with or without the
giving of notice or the passage of time by, the execution, delivery and
performance of this Agreement or any other document to be delivered by Buyer
pursuant to this Agreement, nor does the execution, delivery and performance
thereof by Buyer require the consent, waiver, approval, license or
authorization of any person or public authority, other than previously
obtained or as will be obtained prior to Closing. This Agreement and the
other documents to be delivered by Buyer pursuant to this Agreement will each
constitute the valid and binding obligations of Buyer as of Closing,
enforceable in accordance with their respective terms.
(b) Compliance with Law. Buyer has not received any notice from any federal,
state or local governmental authority that the Buyer's business, and the
premises where the business is located, as currently operated, do not comply,
in all material respects, with any applicable codes, laws, ordinances, rules,
and regulations (including, but not limited to such as relate to employment
discrimination, hazardous substances, OSHA and fair labor practices), and no
proceedings in respect thereto are pending or, to the knowledge of Buyer,
threatened. Buyer has all permits and licenses necessary for the current
operation of its business.
(c) Legal Proceedings. There are no judgments, nor any litigation proceedings
pending or complaints received, or to the knowledge of Buyer any complaints
received or litigation proceedings threatened, against or relating to Buyer,
which would have a material adverse affect on Buyer's ability to perform its
obligations under this Agreement or operate the business of ePenzio following
Closing.
(d) Contracts. The contracts listed on Schedule 5(d) hereto constitute all
material contracts to which Buyer is a party and are in full force and effect,
and except as set forth on such Schedule 5(d), neither Buyer nor the other
parties thereto are in default, nor has any event occurred, to Buyer's
knowledge, that with the passage of time or giving of notice, or both, would
constitute a default.
(e) Ordinary Course. Buyer has conducted its business only in the ordinary
course consistent with past practices since March 31, 2001.
(f) Capitalization of Buyer. The authorized capital stock of Buyer consists
of fifty million (50,000,000) shares of Common Stock, par value $0.001, of
which two million five hundred (2,500,000) are issued and outstanding. All
of the outstanding shares of common stock of Buyer immediately prior to
Closing were duly authorized and validly issued, are fully paid and
non-assessable, and were issued in accordance with applicable Federal and
state securities laws. Except as set forth on Schedule 5(f), there are no
outstanding subscriptions, warrants, options, or other agreements or rights of
any kind to purchase or otherwise receive or be issued, or securities or
obligations of any kind convertible into, any shares of capital stock of
Buyer. Schedule 5(f) lists the shares of Common Stock outstanding or reserved
for issuance as of the date hereof and as of immediately after the Closing and
the names of record owners thereof, as well as the shares subject to issuance
pursuant to warrants or any employee stock option plan.
(g) Subsidiaries. Buyer has no subsidiaries and no other investment in any
person or entity. Buyer is not a participant in a joint venture, partnership
or other similar arrangement.
(h) Offering. Based on the representations and warranties of Sellers herein,
the offer and sale of the Stock constitute transactions exempt from the
registration requirements of Section 5 of the Securities Act of 1933, as
amended.
(i) Financial Statements. Attached as Schedule 5(i) to this Agreement is the
Annual Report of Buyer on Form 10-K for the period ended June 30, 2000, and
Buyer's quarterly reports on Form 10-Q for the periods ending September 30,
2000, December 31, 2000 and March 31, 2001 (the "Financial Statements"). The
Financial Statements (i) were prepared in accordance with the books and
records of Buyer; (ii) were prepared in accordance with GAAP, consistently
applied, and all applicable regulations of the Securities and Exchange
Commission; (iii) reflect all necessary adjustments and accruals and otherwise
fairly present Buyer's financial condition and the results of its operations
at the relevant dates thereof and for the periods covered thereby in
accordance with GAAP; (iv) contain and reflect adequate provisions for all
reasonably anticipated liabilities for all taxes, federal, state, local or
foreign, with respect to the periods then ended; and (v) with respect to
contracts and commitments for the sale of goods or the provision of services
by Buyer, contain and reflect adequate reserves for all reasonably anticipated
material losses and costs and expenses in excess of expected receipts. Any
additional unaudited financial statements of Buyer delivered to Buyer have
been or will have been prepared in accordance with GAAP applied on a
consistent basis and will contain all adjustments necessary for a fair
presentation.
(j) Filing of Reports. Buyer files reports pursuant to Section 13 of the
Securities Act of 1933, and since December 31, 1999, has filed all such
reports, including, but not limited to, all reports required to be filed on
Forms 10-K, 10-Q and 8-K, and has heretofore provided to ePenzio complete and
correct copies of all such reports. Such reports were prepared in accordance
with all applicable regulations of the Securities and Exchange Commission and
contain all information required to be reported therein and such reports, and
the information contained therein, are accurate in all material respects.
(k) Condition of Business. Since December 31, 2000, there has not been (i)
any material adverse change in the condition (financial or otherwise), assets,
liabilities (whether absolute, accrued, contingent or otherwise), business or
prospects of the business of Buyer; (ii) any damage, destruction or loss,
whether or not covered by insurance, which has had or may have a material and
adverse effect on the business of Buyer; (iii) any sale or transfer of any of
Buyer's assets or any cancellation of any debts or claims, except in the
ordinary course of business; (iv) any mortgage, pledge or subjection to lien,
charge or encumbrance of any kind, of any of Buyer's properties or assets; (v)
any material amendment or termination of any material contract or agreement to
which Buyer is a party; (vi) any increase in, or commitment to increase, the
compensation payable to any officer, director, shareholder, employee or agent;
(vii) any transaction not in the ordinary course of business; or (viii) any
other event or condition of any character which is not reflected in the
Financial Statements which has had or may have a material and adverse effect
on the condition (financial or otherwise), assets, properties, business or
prospects of Buyer.
(l) Employee Matters. Except as disclosed in the financial statements (i)
there are no controversies between Buyer and any present or former employee of
Buyer, (ii) there is no unfair labor practice charge or similar charge,
complaint, allegation or other process or claim pending or threatened against
Buyer before the National Labor Relations Board (the "NRLB") or the Equal
Employment Opportunity Commission (the "EEOC") or any other federal,
territorial, state or local governmental agency or other entity, and (iii)
there is no labor dispute, strike, slowdown, work stoppage or other job action
pending or, to the best knowledge of Buyer, threatened against or otherwise
affecting Buyer. Buyer is not a party to any collective bargaining
agreements, and to the best knowledge of Buyer, no organizing campaign is
underway or threatened by any labor organization.
(m) Plans. There are no employment, profit sharing, deferred compensation,
bonus, stock option, stock purchase, pension, retainer, consulting,
retirement, health, welfare, or incentive plans or contracts to which Buyer is
a party. Buyer is not required to contribute to, nor during any period prior
to the Closing has been required to contribute to, any multiemployer plan
(within the meaning of Section 3(37) of ERISA).
(n) Permits; Authorizations. No permits, licenses or other authorizations
have been, or are required to be, obtained or maintained, and no governmental
authority or agency with jurisdiction over Buyer has asserted or, to the best
of Seller's or Buyer's knowledge, is likely to assert that any permits,
licenses or other authorizations have been, or are required to be, obtained or
maintained by Buyer, with respect to the operation of Buyer's business under
United States or any state, local and other laws in effect on the date hereof
relating to pollution or protection of the environment, including laws
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial or hazardous substances or
wastes into the environment (including, without limitation, ambient air,
surface water, ground water, land surfaces or subsurface strata) or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants,
chemicals or industrial toxic or hazardous substances or wastes (collectively,
the "Environmental Laws"). To the best of Seller's and Buyer's knowledge,
Buyer is in substantial compliance with all material limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in the Environmental Laws or contained in
any regulation, code, plan, order, decree, judgment, injunction, notice or
demand letter issued, entered, promulgated or approved thereunder. No events,
conditions, activities, practices, incidents, actions or plans of action taken
or to be taken by Buyer or, to the best of Buyer's knowledge, any predecessor
in interest are reasonably likely to interfere with or prevent substantial
compliance or continued compliance with, to the extent any are applicable, the
Environmental Laws or with any regulation, code, plan, order, decree,
judgment, injunction, notice or demand letter issued, entered, promulgated or
approved thereunder.
(o) Other Obligations. Except as and to the extent specifically reflected or
reserved against the Financial Statements, and non-material items arising in
the ordinary course of business thereafter, Buyer has no liabilities or
obligations, whether absolute, accrued, contingent or otherwise, whether due
or to become due (including, without limitation, any liability for taxes).
(p) Accuracy of Information. No statement herein or other information
delivered herewith by or on behalf of Buyer in connection with this Agreement
or in connection with any transaction contemplated hereby contains any untrue
statement of a material fact or omits to state any material fact known to
Buyer or its agents necessary to make the statements contained herein or
therein not misleading as of the date hereof.
(q) Availability of Documents. Buyer has made available to Seller copies of
all documents, including without limitation all agreements, contracts,
commitments, insurance policies, leases, plans, instruments, undertakings,
authorizations, permits and licenses, referred to herein. Such copies are
true and complete and include all amendments, supplements and modifications
thereto or waivers currently in effect thereunder.
(r) Shares Purchased for Investment. Buyer is acquiring the ePenzio Shares
for its own account for investment purposes and not with a view to or in
connection with, any distribution thereof within the meaning of the Securities
Act.
(s) Buyer's Shares. The Buyer's Shares distributed to Sellers will be duly
authorized, validly issued, fully paid and non-assessable, will not have been
issued in violation of the preemptive rights of any shareholder, will be
identical to all other shares of Buyer's common stock, and, in the hands of
Sellers, will have all the rights, privileges and preferences accorded to all
other holders of shares of common stock.
(t) Employment Contracts and Options. Buyer has full right, power and
authority to execute and deliver, and to perform its obligations under, each
of the employment contracts set forth on Schedule 5(t) hereto (the "Employment
Contracts"). Each of the Employment Contracts has been duly authorized by
Buyer and, upon its execution thereof, will constitute a valid and binding
obligation of Buyer, enforceable against it in accordance with its terms,
subject to the effect of applicable bankruptcy, insolvency, reorganization,
moratorium, arrangement, preference, fraudulent conveyance or other similar
laws and regulations now or hereafter in effect relating to or limiting
creditors' rights generally or the enforcement of specific rights provided for
in agreements, general principles of equity and/or the discretion of the
court governing or limiting the availability of specific performance,
injunctive relief and other equitable remedies (regardless of whether such
enforceability is considered in a proceeding in equity or at law), and the
application of principles of public policy underlying any such laws and
regulations.
(u) Consents and Approvals. The execution, delivery and performance of this
Agreement by Buyer and the consummation of the transactions contemplated
hereby do not require Buyer to obtain any consent, approval or action of, or
make any filing with or give notice to any corporation, person or firm or any
public, governmental or judicial authority except: (i) such as have been duly
obtained or made, as the case may be, and are in full force and effect on the
date hereof, or (ii) those which the failure to obtain or make would not have
a material adverse effect on the transactions contemplated hereby or on
Buyer's business.
6. The Closing. The closing of the purchase and sale of the ePenzio Shares
shall take place at the offices of Buyer on the later to occur of June 15,
2001, or at such other time or place as shall be fixed by the mutual consent
of the parties (the "Closing").
7. Conditions of Buyer's and Sellers' Performance.
(a) Buyer's Conditions. The obligation of Buyer to consummate this Agreement
is subject to the satisfaction at the Closing, or waiver by Buyer in writing,
of each of the following conditions:
(i) All the Sellers shall have executed this Agreement;
(ii) Sellers shall have delivered to the Buyer the ePenzio Shares;
(iii) Buyer, Seller and ePenzio shall be in compliance with all applicable
laws, including without limitation, federal and state security laws;
(iv) No action or proceeding against ePenzio shall have been instituted before
a court or other governmental body, or shall have been threatened which, if
successful, will prohibit the consummation or require substantial rescission
of the transactions contemplated by this Agreement;
(v) Buyer shall have received copies of any necessary consents and approvals
of governmental agencies, lenders, lessors and other third parties;
(vi) There shall have been no material change in the financial condition,
business or properties of ePenzio which adversely affects the conduct of its
business as presently being conducted or the condition, financial or
otherwise, of ePenzio and no additional substantial liabilities of ePenzio
shall have been incurred except as noted herein;
(vii) Buyer, Seller, and ePenzio shall have taken all corporate and
shareholder action necessary to authorize and consummate the transactions
contemplated by this Agreement;
(viii) Buyer and Seller shall have received assurances satisfactory to each
regarding the tax, accounting and legal aspects of the proposed transaction;
(ix) All notes or other debts of Sellers or their affiliates owed to ePenzio
shall be paid contemporaneously with the Closing and Buyer shall be furnished
with written evidence thereof;
(x) Buyer shall have received from Xxxxx Xxxxxxx and Xxxxxxx X. Xxxxx fully
executed Employment Contracts in a form acceptable to the parties;
(xi) Sellers shall deliver to Buyer at Closing certificates of search of the
Uniform Commercial Code for filings against ePenzio in standard form. Such
certificates shall show searches of filings with respect to ePenzio and all
names under which ePenzio has conducted its business, including any
subsidiaries thereof;
(xii) The representations and warranties of the Sellers contained in this
Agreement or in any certificate or document delivered to Buyer pursuant hereto
shall be deemed to have been made on the date of this Agreement and again at
the Closing and shall then be true in all material respects; Sellers shall
have performed and complied in all material respects with all agreements and
conditions required by this Agreement to be performed or complied with by them
prior to or at the Closing; Sellers shall not be in default under any of the
provisions of this Agreement; and Buyer shall have been furnished with one or
more closing certificates of Sellers dated as of the Closing date, certifying
(A) to the fulfillment of the foregoing conditions and the due performance of
such covenants and agreements, (B) that no material change has occurred in
ePenzio's Financial Statements since December 31, 2000, except as noted
herein, (C) that the representations and warranties set forth in this
Agreement are true and correct as of the date of this Agreement and as of
Closing, and (D) that neither ePenzio nor any of the Sellers is a party to any
litigation or has knowledge of any claim, brought or threatened, seeking to
recover damages from ePenzio or to prevent ePenzio or Sellers from continuing
to use ePenzio assets or to conduct business in the manner as the same were
used or conducted prior thereto, except as provided herein and in 4(t);
(xiii) Buyer shall have received a certificate, issued by the office of the
Secretary of State of the State of Utah as of a date not more than five (5)
business days before the Closing, stating that ePenzio is in good standing in
the State of Utah;
(xiv) Sellers shall have executed and delivered such other documents,
instruments, certificates or agreements as shall be reasonably necessary to
consummate this transaction; and
(xv) Buyer and Kings Peak Capital, L.L.C. shall have entered into an Advisory
agreement in substantially the form of Exhibit "B".
(b) Sellers' Conditions. The obligation of Sellers to consummate this
Agreement is subject to the satisfaction at the Closing, or waiver by Sellers
in writing, of each of the following conditions:
(i) Buyer shall have executed this Agreement;
(ii) Buyer shall have delivered to the Sellers the Buyer Shares;
(iii) Buyer, Seller and ePenzio shall be in compliance with all applicable
laws, including without limitation, federal and state security laws;
(iv) No action or proceeding against Buyer shall have been instituted before a
court or other governmental body, or shall have been threatened which, if
successful, will prohibit the consummation or require substantial rescission
of the transactions contemplated by this Agreement;
(v) There shall have been no material change in the financial condition,
capitalization, business or properties of Buyer which adversely affects
Sellers' relative ownership rights in Buyer following Closing, the conduct of
its business as presently being conducted, or the condition, financial or
otherwise, of Buyer and no additional substantial liabilities of Buyer shall
have been incurred except as noted herein;
(vi) Buyer, Seller, and ePenzio shall have taken all corporate and shareholder
action necessary to authorize and consummate the transactions contemplated by
this Agreement;
(vii) Buyer and Seller shall have received assurances satisfactory to each
regarding the tax, accounting and legal aspects of the proposed transaction;
(viii) ePenzio and Xxxx Xxxxxxxx, Xxxx Xxxxxxxx, Xxxxxxx X. Xxxxxx and Xxxx X.
Xxxxxxxxxx shall have executed Employment Contracts in a form acceptable to
the parties;
(ix) Buyer shall not be in default under any of the provisions of this
Agreement; and Sellers shall have been furnished with one or more closing
certificates of Buyer dated as of the Closing date, certifying (A) to the
fulfillment of the foregoing conditions and the due performance of such
covenants and agreements, and (B) that the representations and warranties set
forth in this Agreement are true and correct as of the date hereof and as of
the Closing.
(x) The representations and warranties of Buyer contained in this Agreement or
in any closing certificate or document delivered to Sellers pursuant hereto
shall be deemed to have been made on the date of this Agreement and again at
the Closing and shall then be true in all material respects; Buyer shall have
performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by it prior to or at the Closing;
and
(xi) Buyer shall have executed and delivered such other documents,
instruments, certificates or agreements and shall have taken such other
actions as, in the opinion of legal counsel to Sellers, shall be reasonably
necessary to consummate this transaction.
8. Indemnification.
(a) General Indemnification Obligation of Each Seller. From and after the
Closing, each Seller will indemnify and hold harmless Buyer and its successors
and assigns (an "Indemnified Buyer Party") against and in respect of:
(i) Damages. Any and all damages, losses, deficiencies, liabilities, costs
and expenses (the "Damages") incurred or suffered by any Indemnified Buyer
Party that result from, relate to or arise out of any misrepresentation,
breach of warranty or non-fulfillment of any agreement or covenant on the part
of Seller under this Agreement or any other document delivered by Seller
pursuant to this Agreement, or from any misrepresentation in or omission from
any certificate, schedule, statement, document or instrument furnished to
Buyer pursuant hereto or thereto; and
(ii) Actions. Any and all actions, suits, claims, proceedings,
investigations, demands, assessments, fines, judgments, costs and other
expenses (including, without limitation, reasonable legal fees and expenses)
(collectively, "Actions") incident to any of the foregoing.
(b) General Indemnification Obligation of Buyer. From and after the Closing,
Buyer will reimburse, indemnify and hold harmless Sellers and their successors
and assigns (an "Indemnified Seller Party") against and in respect of:
(i) Damages. Any and all Damages incurred or suffered by any Indemnified
Seller Party that result from, relate to or arise out of any
misrepresentation, breach of warranty or non-fulfillment of any agreement or
covenant on the part of Buyer under this Agreement or any other document
delivered by Buyer pursuant to this Agreement, or from any misrepresentation
in or omission from any certificate, schedule, statement, document or
instrument furnished to Sellers pursuant hereto or thereto; and
(ii) Actions. Any and all Actions incident to any of the foregoing or to the
enforcement of this Section 8(b).
(c) Limitation of Indemnity. Notwithstanding any provision in this Agreement
to the contrary, Buyer shall be liable to the Seller under this Section 8 for:
(i) Dollar Amounts. Damages or Actions in an amount less than $10,000 in
connection with any claim hereunder relating to a single occurrence or event,
or for Damages or Actions in an aggregate amount less than $100,000 in
connection with all claims hereunder or in excess of $8,500,000;
(ii) Failure of Notice. Any claim for which either party has not received a
Claim Notice (as defined below) from the other on or before a date eighteen
(18) months following the Closing.
(d) Several Liability. Notwithstanding anything in this Agreement to the
contrary, in case of any liability hereunder, each Seller shall be liable in
proportion to the respective share of each Seller to the total purchase price
and only to the extent of consideration actually received by each such Seller.
(e) Method of Asserting Claims, Etc. In the event that any claim or demand is
asserted against or sought to be collected from any party hereto (an
"Indemnified Party") by a third party, the Indemnified Party shall promptly
notify the party from which indemnification is sought pursuant to Sections
8(a) or 8(b) above (the "Indemnifying Party") of such claim or demand,
specifying the nature of such claim or demand and the amount or the estimated
amount thereof to the extent then feasible (which estimate shall not be
conclusive of the final amount of such claim and demand) (the "Claim Notice").
The Indemnifying Party shall have twenty (20) days from its receipt of the
Claim Notice (the "Notice Period") to notify the Indemnified Party, (i)
whether or not the Indemnifying Party disputes its liability to the
Indemnified Party hereunder with respect to such claim or demand and (ii)
notwithstanding any such dispute, whether or not the Indemnifying Party
desires, at its sole cost and expense, to defend the Indemnified Party against
such claim or demand.
(i) Dispute of Liability. If the Indemnifying Party disputes its liability
with respect to such claim or demand or the amount thereof (whether or not the
Indemnifying Party desires to defend the Indemnified Party against such claim
or demand as provided herein), such dispute shall be resolved in accordance
with Section 8(g) hereof. Pending the resolution of any dispute by the
Indemnifying Party of its liability with respect to any claim or demand, such
claim or demand shall not be settled without the prior written consent of the
Indemnified Party.
(ii) Defense. In the event that the Indemnifying Party notifies the
Indemnified Party within the Notice Period that it desires to defend the
Indemnified Party against such claims or demand, then, provided: (i) that the
Indemnifying Party acknowledges that it is liable to indemnify the Indemnified
Party with respect to a particular claim; and (ii) the Indemnifying Party has
financial resources which are reasonably adequate to pay the amount of the
claim, except as hereinafter provided, the Indemnifying Party shall have the
right to defend the Indemnified Party by appropriate proceedings, which
proceedings shall be promptly settled or prosecuted by the Indemnifying Party
to a final conclusion in such a manner as to avoid any risk of the Indemnified
Party becoming subject to liability for any other matter. If any Indemnified
Party desires to participate in, but not control, any such defense or
settlement, it may do so at its sole cost and expense.
(iii) Indemnifying Party Liability. (1) If the Indemnifying Party elects not
to defend the Indemnified Party against such claim or demand, whether by not
giving the Indemnified Party timely notice as provided above or otherwise,
then the amount of any such claim or demand, or if the same be defended by the
Indemnifying Party or by the Indemnified Party (but no Indemnified Party shall
have any obligation to defend any such claim or demand), then that portion
thereof as to which such defense is unsuccessful, in each case shall be
conclusively deemed to be a liability of the Indemnifying Party hereunder,
unless the Indemnifying Party shall have disputed its liability to the
Indemnified Party hereunder, as provided herein, in which event such dispute
shall be resolved as provided in Section 8(g) hereof; (2) In the event an
Indemnified Party should have a claim against the Indemnifying Party hereunder
that does not involve a claim or demand being asserted against or sought to be
collected from it by a third party, the Indemnified Party shall promptly send
a Claim Notice with respect to such claim to the Indemnifying Party. If the
Indemnifying Party disputes its liability with respect to such claim or
demand, such dispute shall be resolved in accordance with Section 8(g) hereof;
if the Indemnifying Party does not notify the Indemnified Party within the
Notice Period that it disputes such claim, the amount of such claim shall be
conclusively deemed a liability of the Indemnifying Party hereunder.
(f) Payment.
(i) Upon determination of liability hereunder, the appropriate party shall pay
to the other, as the case may be, within twenty (20) days after such
determination, the amount of any claim for indemnification made hereunder.
Upon the payment in full of any claim hereunder, the entity making payment
shall be subrogated to the right of the indemnified party against any person,
firm or corporation with respect to the subject matter of such claim.
(ii) In case of any payment obligation by a Seller party hereunder at the
election of such Seller Party, such obligation may be satisfied by the payment
of cash or using such party's common stock of the Company. The value of the
stock for purposes of this paragraph shall be calculated at the greater of
$1.50 per share or the average closing price of the Company's stock for the
thirty (30) days preceding the date of payment.
(g) Other Rights and Remedies Not Affected. The indemnification rights of the
parties under this Section 8 are the sole remedy for a breach of the
representations and warranties hereunder, but are independent of and in
addition to the rights and remedies as the parties may have at law or in
equity or otherwise for any failure to fulfill any agreement or covenant under
any other section of this Agreement, including, but not limited to, Sections
9, 10, 11 and 12 hereunder, on the part of any party hereto, including without
limitation the right to seek specific performance, none of which rights or
remedies shall be affected or diminished hereby.
9. Non-Disclosure.
(a) Proprietary Information. Each Seller acknowledges that Seller's
relationship with ePenzio may have created or may hereafter create a
relationship of confidence and trust with respect to information of a
confidential or secret nature that may be disclosed to him by ePenzio that
relates to the business of ePenzio or to the business of any affiliate,
customer, or supplier of ePenzio ("Proprietary Information"). Such
Proprietary Information includes, but is not limited to, any information
regarding inventions, marketing plans, product plans, business strategies,
financial information, forecasts, personnel information, customer lists,
software, hardware, processes, formulas, development or experimental work,
work in process, business, trade secrets, or any other secret or confidential
matter relating to the products, projects, programs, sales, customer lists,
price lists, or data, or business of ePenzio which is not generally known to
the public. Each Seller agrees that Seller will keep all such Proprietary
Information in confidence and trust, and will not use or disclose any of such
Proprietary Information without the prior written consent of ePenzio, except
as may be necessary to perform any duties Seller may now or hereafter have as
an employee of ePenzio. Each Seller further agrees that at the Closing
hereunder, and subsequently upon request of ePenzio or at the time of the
termination of the Seller's employment (if any) with ePenzio, Seller will
deliver to ePenzio only, and shall not retain for Seller's own or others' use,
any and all software programs, documents, and any other material and all
copies thereof relating to Seller's work or ePenzio's products, projects,
programs, or business of which the Seller had knowledge, or which contain any
Proprietary Information.
(b) Publicity. Buyer and each Seller agrees not to disclose to any person or
entity, without the prior written consent of the other, any of the terms of
this Agreement at any time prior to Closing and for a period of ninety (90)
days thereafter, except as may be necessary for the performance of their
obligations hereunder or the operation of ePenzio in the ordinary course of
business. ePenzio and Buyer shall jointly disclose and publicize this
transaction in a press release as and when agreed upon between them or as
required by law.
10. Other Matters.
(a) No Share Purchases. Each of the Sellers agree to not purchase any of the
shares of the Buyer from any source whatsoever at any time after the date
hereof and prior to Closing or as set forth on Schedule 5(f).
(b) Resignation of Directors. At Closing, the size of the Board of Directors
shall be set at five (5), and Xxxx Xxxxx shall then appoint Xxxxxx Xxxxxx,
Xxxx Xxxxxxxx, Xxxxxxx X. Xxxxx, Xxxxx Xxxxxxx and Xxxxxx Xxxxxx to the board
to fulfill the vacancies created. Xxxxxx Xxxxxx shall then resign from the
Board.
(c) Further Actions. Each of the Sellers warrants and agrees that, from time
to time, Seller will use Seller's best efforts to cause any present or
previous shareholder, director or officer of ePenzio to execute such minutes
of meetings or other instruments and take whatever actions as shall be
reasonably necessary or desirable to effect, or to carry out the intent and
purposes of, the transactions contemplated hereby.
11. Termination and Amendment.
(a) Pre-Closing. This Agreement may be terminated by Buyer or Sellers at any
time prior to the Closing upon written notice to the other parties:
(i) If the representations, warranties and agreements or conditions of this
Agreement to be complied with or performed by ePenzio or the Sellers (in the
case of Buyer) or Buyer (in the case of Sellers) on or before the Closing
shall not have then been complied with or performed in some material respect
and such material noncompliance or nonperformance shall not have been waived
by the party giving notice of termination or shall not have been cured by the
defaulting party, or cure thereof commenced and diligently prosecuted
thereafter by such party within three (3) business days after written notice
of such material noncompliance or nonperformance is given by the
non-defaulting party;
(ii) If any governmental action is commenced to prevent the consummation of
the transactions contemplated hereby;
(iii) By mutual written agreement of the parties;
(iv) If the Closing has not occurred by May 31, 2001.
(b) Waiver. Any representations, warranties, agreements or conditions of this
Agreement may be waived at any time by the party entitled to the benefit
thereof by action taken and evidenced by a written waiver executed by any such
party.
12. Dispute Resolution.
(a) Mediation. Any claim, dispute, or controversy between the parties arising
in connection with or relating to this Agreement or the making, performance or
interpretation thereof shall, if not settled by negotiation, be submitted to
non-binding mediation under the Commercial Mediation Rules of the American
Arbitration Association then in effect. Any demand for mediation shall be
made in writing and served upon the other party in the same manner as
otherwise provided for notice in this Agreement. The demand shall set forth
with reasonable specificity the basis of the dispute and the performance or
relief sought. The parties shall, within thirty (30) days of receipt of a
demand to mediate, confer and select a mediator. The mediation shall take
place at a time and location in Salt Lake City, Utah mutually agreeable to the
parties and the mediator, but not later than sixty (60) days after a demand
for mediation is received.
(b) Arbitration. All disputes under this Agreement shall be settled by
arbitration in Salt Lake City, Utah pursuant to the rules of the American
Arbitration Association. Arbitration may be commenced at any time by any
party hereto giving written notice to each other party to a dispute that such
dispute has been referred to arbitration under this Agreement. The
arbitrator(s) shall be selected by the joint agreement of Seller and Buyer,
but if they do not so agree within twenty (20) days after the date of the
notice referred to above, the selection shall be made pursuant to the rules
from the panels of arbitrators maintained by such Association. Any award
rendered by the arbitrator shall be conclusive and binding upon the parties
hereto; provided, however, that any such award shall be accompanied by a
written opinion of the arbitrator giving the reasons for the award. This
provision for arbitration shall be specifically enforceable by the parties and
the decision of the arbitrator in accordance herewith shall be final and
binding and there shall be no right of appeal therefrom. Each party shall pay
its own expenses of arbitration and the expenses of the arbitrator shall be
equally shared; provided, however, that if in the opinion of the arbitrator
any claim or any defense or objection thereto was unreasonable, the arbitrator
may assess, as part of his award, all or any part of the arbitration expenses
of the other party (including reasonable attorneys' fees) and of the
arbitrator against the party raising such unreasonable claim, defense or
objection. Nothing contained in this paragraph shall prevent the parties from
settling any dispute by mutual agreement at any time.
13. Miscellaneous.
(a) Attorneys' Fees. In any action, arbitration or proceeding arising out of
or related to this Agreement, the prevailing party shall be entitled to its
reasonable attorney fees and related costs, including fees and costs incurred
prior to formal initiation of an action or proceeding, and including fees and
costs incurred for collecting or attempting to collect any judgment or award.
(b) Brokers and Finders. Each of the parties hereto represents and warrants
that it has dealt with no broker or finder in connection with any of the
transactions contemplated by this Agreement. In the event that any finder's
fee or broker's commission shall become payable by any party hereto as a
result of another party's actions which constitute a misrepresentation or
breach of warranty under this Section 13(b), such fee and commission shall be
the sole and exclusive responsibility and liability of such breaching party
with no right of contribution and the breaching party shall indemnify, defend
and hold all other parties harmless in respect of all claims, losses, expenses
and obligations (including reasonable attorneys' fees) to the extent that the
same arise or result from such finder's fee or broker's commission.
(c) Expenses. Each of the parties hereto will bear its own legal fees and
other expenses in connection with the transactions contemplated by this
Agreement.
(d) Survival. Except as specified below, all parties agree that the
representations, warranties and agreements contained in this Agreement shall
survive and remain in full force and effect following the Closing for a period
of eighteen (18) months.
(e) Severability. If any term or provision of this Agreement, including the
exhibits hereto, or the application thereof to any person, property or
circumstances, shall to any extent be invalid or unenforceable, the remainder
of this Agreement, including the exhibits or the application of such term or
provision to persons, property or circumstances other than those as to which
it is invalid and unenforceable, shall not be affected thereby, and each term
and provision of this Agreement and the exhibits shall be valid and enforced
to the fullest extent permitted by law.
(f) Notices. Any notices, requests or consents hereunder shall be deemed
given, and any instrument delivered, two days after they have been mailed by
first class mail, postage prepaid, or twelve hours after such notice has been
sent by telecopier or straight telegram, telegraphic charges prepaid, or by
facsimile if confirmed receipt, or upon receipt if delivered personally, as
follows:
To Sellers: At the addresses set forth in Exhibit A hereto
To Buyer: Network Investor Communications, Inc.
0000 Xxxxxxx Xxxxx, Xxxxx X
Xxxx, Xxxxxx 00000
Attn: Xxxxxx Xxxxxx
except that any of the foregoing may from time to time by written notice to
the others designate another address which shall thereupon become its
effective address for the purposes of this Section.
(g) Entire Agreement. This Agreement, including the exhibits, schedules and
documents referred to herein which are a part hereof, contains the entire
understanding of the parties hereto with respect to the subject matter
contained herein and may be amended only by a written instrument executed by
the Buyer, and by those of the Sellers who are affected by any proposed
amendment, or their respective successors or assigns. There are no
restrictions, promises, warranties, covenants, or undertakings other than
those expressly set forth or referred to herein. Any section headings or
table of contents contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this
Agreement. Buyer acknowledges that no person is authorized by Sellers, or any
of them, to have made any representation or warranty about any matter, fact or
thing except as set forth in the documents referenced herein.
(h) Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(i) Binding Effect. This Agreement shall inure to the benefit of and be
binding upon Sellers and Buyer and their respective successors, but shall not
inure to the benefit of anyone other than the parties signing this Agreement
and their respective successors.
(j) Governing Law. This Agreement shall be governed by the laws of the State
of Utah.
(k) Gender and Number, etc. All words or terms used in this Agreement,
regardless of the number or gender in which they are used, shall be deemed to
include any other number and any other gender as the context may require.
"Hereof," "herein," and "hereunder" and words of similar import shall be
construed to refer to this Agreement as a whole, and not to any particular
paragraph or provisions, unless expressly so stated.
(l) Successors and Assigns. This Agreement shall not be assignable by any
party without the prior written consent of all other parties hereto; provided,
however, any Seller may assign for any purposes such Seller's right to receive
consideration, provided such assignment is subject to any defenses of Buyer.
Subject to the foregoing, this Agreement shall be binding upon and inure to
the benefit of the respective successors and assigns of the parties hereto.
(m) No Third Party Beneficiaries. Nothing herein expressed or implied is
intended to confer upon any person, other than the parties hereto or their
respective permitted assigns, successors, heirs and legal representatives, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
(n) No Partnership or Joint Venture. Notwithstanding anything to the contrary
contained herein, nothing contained herein shall be construed as creating a
partnership or joint venture relationship between the parties hereto, and the
parties hereto shall be deemed to have made any elections necessary under any
applicable law, rule or regulation to prevent their being considered or deemed
to be a partnership or joint venture.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the date first above written.
BUYER:
NETWORK INVESTOR COMMUNICATIONS, INC., a Nevada corporation
By: /s/
Xxxxxx Xxxxxx
Its: President
SELLERS:
/s/
----------------
Xxxx Xxxxxxxx
/s/
----------------
Xxxx Xxxxxxxx
/s/
------------------
Xxxxxxx X. Xxxxxx
/s/
------------------
Xxxx X. Xxxxxxxxxx
EXHIBIT A
ePenzio, Inc. Shareholders
Name Number of Shares Shares to Be Issued*
Xxxx Xxxxxxxx 430,000 Shares 3,483,000 Shares
0000 X Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
Xxxx Xxxxxxxx 430,000 Shares 3,483,000 Shares
0000 X Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
Xxxxxxx Xxxxxx 70,000 Shares 567,000 Shares
0000 X Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
Xxxx Xxxxxxxxxx 70,000 shares 567,000 shares
0000 X Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
Crescent Advisors 0 Shares 900,000 Shares*
*Crescent Advisors will be issued 900,000 shares pursuant to an agreement
between Crescent Advisors and Xxxx Xxxxxxxx, Xxxx Xxxxxxxx and ePenzio, Inc.\
EXHIBIT B
Kings Peak Capital, L.L.C. Advisory Agreement
SCHEDULE 4(c)
Subsidiaries
Olympus Financial, Inc., a Utah corporation
Bring it Home, Inc., a Utah corporation
SCHEDULE 4(m)
ePenzio, Inc. Financial Statements
SCHEDULE 4(r)
Material Contracts
Resellers
---------
1. Home, Inc.
2. Family Health Network
3. Bring It Home
4. Xxxxx Xxxxxxx
5. SBBA
6. Step Up, Inc.
7. Xxx Xxxxxx
8. Sylver Enterprises
9. Xxxx Xxxx
Financing Companies
-------------------
1. Fair Finance
2. Montery Financial
3. Travelers
4. Leasecomm
5. Olympus Financial
6. Ladco Leasing
7. Bond Finance
Product
-------
1. Plug'nPay
2. Xxxxxxxxx.xxx
3. Lipmann USA
4. TASQ
5. Pacific Webworks
Processing Banks
----------------
1. BridgeviewBank
2. CPS
3. 1st National
4. First Bank of Xxxxxxx Hills
5. First Bank of the Redwoods
Lease
-----
1. Sonic
SCHEDULE 4(t)
Litigation
Xxxxxxx X. Xxxxxxx v. Executive Credit Services, L.C., Xxxx X. Xxxxxxxx, Xxxx
X. Xxxxxxxx, Xxxxxxx X. Xxxxxx, Third District Court, Salt Lake County, State
of Utah, Civil No. 990910847. Xx. Xxxxxxx was an employee of Executive Credit
Services who filed suit against ESC claiming that he was owed compensation for
developing strategic alliances. ECS counter sued claiming that Xx. Xxxxxxx
owed ECS for wages and compensation paid to Xx. Xxxxxxx that was never earned.
Sadleir last offer to settle was for $30,000. ECS's counterclaim is for
$35,000.
ePenzio, Inc. v. Global Web. Global Web failed to reimburse ePenzio for
outstanding chargebacks on funded amounts based on an agreement signed in July
2000. The amount of the claim is $67,000. Global Web has threatened a
counter suit.
ePenzio, Inc. v. Online Exchange. Online failed to reimburse ePenzio for
outstanding chargebacks on funded accounts based on an agreement signed in
November 1999. The agreement states that the company found to be in default
will pay attorneys fees. The agreement between Online and ePenzio
specifically states that all legal action must be filed in Utah. However,
Online Exchange filed a lawsuit of their own in Missouri in an attempt to try
and avoid having the case heard in Utah. The amount of the claim is $190,000.
ePenzio v. Xxxxxx Xxxxxxx and N.E.S.A. This is an outstanding small claims
action.
There is one employee that represents a potential risk of litigation:
Xxxxxx Xxxxxxxxx. Xxxxxx was a temporary employee hired through Express
Personnel Services. She received a copy of ECS's employee manual and made
claims of sexual harassment. Xxxxxx signed a release letter and her last day
of work was September 11, 2000.
SCHEDULE 4(y)
Employee Benefit Plans
Manulife Financial 401(k) Plan
Regence BlueCross BlueShield of Utah Health Insurance Plan
SCHEDULE 5(d)
Buyer's Contracts
SCHEDULE 5(f)
Capitalization of Buyer
SCHEDULE 5(i)
Form 10-K of Buyer
SCHEDULE 5(t)
Employment Contracts and Options
Employment Agreement between Buyer and Xxxxxxx X. Xxxxx
Employment Agreement between Buyer and Xxxxx Xxxxxxx
