Exhibit 10.1
ACQUISITION AND FINANCING AGREEMENT
This Acquisition and Financing Agreement (the "Agreement"), dated November 7,
2003 is by and between PayCard Solutions, Inc., a Nevada Corporation.
("PayCard") having its principal address at 000 Xxxxx Xxxxxxx Xxxx, Xxxxx 000X,
Xxx Xxxxx, Xxxxxx 00000 and C.E.C. Industries, Corp. ("CECC") having its
principal address at 000 Xxxxx Xxx, Xxxxxxxxx, XX 00000, (collectively
the"Parties").
WHEREAS CECC is a Nevada corporation whose shares are currently quoted in the
over the counter market and;
WHEREAS PayCard is a Nevada corporation that is in the business of providing
payroll debit cards to employers and individuals and;
WHEREAS CECC desires to acquire businesses in this field and can offer financing
opportunities and;
WHEREAS PayCard desires additional capital to expand its business and wishes to
become part of CECC;
THEREFORE the Parties agree as follows:
1. Acquisition. CECC shall establish a wholly owned subsidiary.
PayCard Unlimited, Inc (the "Subsidiary"). The Subsidiary
shall be capitalized with 1,000 shares of common stock. At the
closing of the transaction herein described, the Subsidiary
shall acquire all of PayCard's assets, liabilities and
contracts, subject to the terms and conditions herein. Upon
the closing of the acquisition as herein described, PayCard
will receive the following:
(a) 200 shares of the common stock of the Subsidiary
or 20% of the shares of the common stock of the
Subsidiary, which is ever is greater, all of which
shall be non-dilutable. (Issued to the shareholders
of PayCard)
(b) CECC shall issue to the shareholders of PayCard
$300,000 of the restricted common shares of CECC, all
of which shall be non-dilutable. For purpose of this
Agreement, the Parties agree that CECC common stock
shall have a stated value of $.10 per share. CECC
shall cause a SB-2 registration request to be filed
with respect to said common stock.
(c) CECC agrees that if the price of CECC's common
stock is not sufficient to generate a value of at
least $250,000 at the earlier of 24 months or upon
liquidation, CECC shall issue additional shares to
PayCard such that this value is at least equal to
$250,000.
(d) Upon the twelve month anniversary of the Closing
of the transaction described herein, PayCard shall
exchange, subject to PayCard meeting its performance
goals and valuation measure(s) to be mutually agreed
to by the Parties and attached hereto as exhibit `A',
the 200 shares of common stock of the Subsidiary for
common shares of CECC in an amount to be calculated
pursuant to the formula given on Exhibit `A'.
2. Financing. CECC shall lend, or cause to be loaned to PayCard,
$250,000 (the "Loan"), subject to a mutually agreed upon
disbursement and use of proceed schedule attached hereto as Exhibit
'B'. PayCard hereby acknowledges receipt of $50,000 received to date
and has a rate of 8% interest. The Loan shall be payable interest
only, on a monthly basis with principal due in full at maturity. The
loan shall carry a one year extension, provided that PayCard's
revenues meet or exceed 50% of those projected on Schedule `A', for
the 12 month period beginning with the first disbursement under the
Loan. The Loan shall be secured by the Company's assets and
subsequent to the closing of the transaction contemplated by this
Agreement, PayCard's 200 shares of Common Stock in the Subsidiary.
These assets shall include but not limited to cash, accounts
receivables, assignment of contracts, property, plant and equipment.
The Loan and Security Agreement shall be attached hereto as Exhibit
'C'.
3. Management and Independent Contractor Agreements:.
Employment Agreements. Certain officers and independent contractors
have entered into Management Agreements with PayCard, which
agreements shall be ratified by Subsidiary and are attached hereto
as Exhibit `D'. The names of the officers and independent
contractors with Management Agreements are:
Xxxx Xxxxx
Xxxx Xxxxxxx
Xxxxxxx Xxxxxxxx
Xxxxxx Xxxx
Independent Contractor Agreement. PayCard has existing
override/royalty agreements with certain independent contractors in
the form of persons and entities who are listed in the attached
Exhibit E to this Agreement. The royalty rates and/or payments owed
are set forth therein. In addition thereto, PayCard has disclosed
that it has a override/royalty agreement with TSO Corporation which
is also attached hereto as Exhibit F. PayCard represents that it has
no other agreements for royalties and/or overrides other than those
disclosed herein. Subsidiary agrees to ratify the existing
Independent Contractor Agreements; and, to the extent necessary
and/or desirable, will negotiate with such independent contractors
for stock options and other compensation to retire said obligations.
4. Due Diligence: The Parties agree to supply each other with all the
documentation that either party will need to complete its due
diligence in anticipation of a closing including but not limited to
financial statements, statements of condition, disclosure of
ownership and full disclosure of any legal or other matters which
might materially effect the merger. PayCard has been provided with a
copy of CECC's due diligence checklist.
5. Disclosure: During the period prior to closing, except as required
by SEC rules of Fair Disclosure, the parties agree to keep specific
details of this letter of intent confidential except to the parties
hereto and authorized representatives including not limited to
attorney's, accountants, and consultants.
6. Assignment: No party may assign this letter of intent without the
prior written approval of all parties hereto.
7. Termination: This letter of intent may be terminated by: (a) mutual
written consent of the parties hereto, providing however that any
principal and interest balance of the Loan as referenced above in
Item 2, shall become due and payable within thirty days of the date
of termination if terminated by PayCard, or by either party if a
closing has not occurred on or before the Closing Date as defined
herein.
8. Closing Date: Provided the Parties are satisfied with each other's
due diligence, the Parties shall executed definitive documents and
the closing date shall be on or before November 30, 2003.
9. Miscellaneous Provisions:
Construction/Arbitration: This Agreement shall be construed and
enforced under the laws of the State of Nevada, Xxxxx County. Any
controversy arising out of or relating to the performance or
interpretation of this Agreement shall be subject to arbitration,
under the laws of the State of Nevada and in Las Vegas, Nevada.
Notwithstanding the preceding paragraph, the designation of venue
and choice of law is for the sole convenience of the parties hereto,
and any such party may be represented during said arbitration by
their corporate counsel or other such counsel of their choosing,
regardless of whether they are a member of the State Bar of Nevada.
Arbitration shall be conducted by a retired Nevada District Court
Judge with experience in trying issues and disputes of similar kind
to the dispute at issue herein, who may award any remedy that is
just and equitable in his/her opinion and such judgement may be
entered in a court of competent jurisdiction on any award rendered
hereunder. If the parties cannot mutually agree on an arbitrator,
then any court of competent jurisdiction, shall on upon application
appoint an arbitrator consistent with qualifications required in
this paragraph. Evidence presented at the arbitration shall be
admitted or excluded in accordance with the NEVADA EVIDENCE CODE. If
any party refuses or neglects to appear at or to participate in
arbitration proceedings after reasonable notice, the arbitrator is
empowered to decide the controversy in accordance with whatever
evidence is presented by the party or parties who do participate.
The arbitrator will award to the prevailing party or parties such
sums as are proper to compensate for the time, expense and trouble
of arbitration, including arbitrations fees plus attorney fees,
which attorney's fee award shall not exceed ten percent (10%) of the
arbitration award. The arbitrator will retain the jurisdiction of a
controversy even if a party or parties to dispute will not or cannot
be joined in the arbitration proceedings.
B. Entire Agreement. This Agreement supersedes and cancels any and
all other contracts referring to the subject matter herein. No
modifications, alteration or waiver of this Agreement shall be
effective unless in writing, executed by the parties hereto.
C. Assign ability. This Agreement shall inure to the benefit of the
parties, their successors and assigns.
D. Counterparts: This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of
which counterparts collectively shall constitute one instrument
representing the Agreement between the Parties hereto.
E. Captions: Captions of the various contained in this Agreement are
intended to be used solely for convenience of the Parties and are
not intended, nor are they deemed to modify, or explain or to be
used as an aid in the construction of any of the provisions of this
Agreement.
AGREED AND ACKNOWLEDGED this 7th day of November 2003.
CEC INDUSTRIES, CORP.
/s/ Xxxxx Xxxxxx
---------------------------
Xxxxx Xxxxxx, President/CEO
PAYCARD SOLUTIONS, INC.
/s/ Xxxx Xxxxx, President
---------------------------
Xxxx Xxxxx, President/CEO
Exhibit A
1. The valuation shall be by mutual agreement. In the event the parties
cannot mutually agree, the party shall mutually agree on an
arbitrator/mediator. In the event the parties cannot agree on such
arbitrator, each party shall be entitled to pick one arbitrator, both
of whom shall pick a third arbitrator. The arbitrator and/or
arbitrators shall make the final determination of the value of the
company for purposed of valuing the Subsidiary/PayCard Solutions.
2. The Subsidiary/PayCard Solutions shall be valuated on a formula to be
determined and agreed upon by both parties.
EXHIBIT B
Disbursements
The disbursement schedule for the balance of the loan to PayCard Solutions, Inc.
is as follows:
$25,000 upon closing
$25,000 on or before November 30, 2003
Between $12,500 and $25,000 by December 12, 2003
Between $12,500 and $25,000 by December 26, 2003
Between $12,500 and $25,000 by January 9, 2004
Between $12,500 and $25,000 by January 23, 2004
Between $12,500 and $25,000 by February 6, 2004
Between $12,500 and $25,000 by March 13, 2004
Any remaining balance due to be paid within 30 days of last payment on schedule.
