ACQUISITION AGREEMENT
Acquisition Agreement, made this ____ day of March, 2002 among:
PIPELINE DATA INC.
000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx 00
Xxxxxxxxx, Xxx Xxxx
a Delaware corporation
(the "Buyer")
and
XXXXXXXXX.XXX, INCORPORATED
0000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
a Delaware corporation
(the "Company")
and
XxxXxxxxxxx Xxxxx
Xxxx Xxxxxxxxx
Xxxxxx Xxxxx
Xxxxxxx Xxxxxxx Xxxxxxxx
Xxxx Xxxxxxx
Xxxxxxxxxxx Xxxxx
Xxxxxxx Xxxxx
Xxxxxxxxx Xxxxxxx
XxxxXxxxxx.xxx, Inc.
(the "Sellers")
WHEREAS;
A. Buyer is engaged in the development of a web-site for the purpose of
disseminating health and other useful information to the public.
B. Company has developed a system to provide authorization routing and data
capture transfer in connection with transactions involving credit cards,
proprietary electronic database shopping cart technologies and Internet
gateway solutions, Web hosting and Web design products in accordance with
certain specifications and standards adopted by Company.
C. The parties hereto deem it to be in the best interest of each of them that
Buyer purchase 100 percent of the issued and outstanding capital stock of
the Company, and succeed to the business of the Company, all pursuant to
such terms, provisions and conditions as the parties hereto shall agree.
NOW, THEREFORE, WITNESSETH, that for and in consideration of the premises
and of the mutual promises and covenants hereinafter set forth, the parties
hereto agree as follows:
A. PURCHASE AND PAYMENT
1. PURCHASE AND SALE OF STOCK.
1.1 Buyer agrees to purchase from Sellers and Sellers agrees to sell,
assign, transfer and deliver to Buyer 100 percent of the issued and
outstanding stock of the Sellers owned by Sellers as described in
Schedule A annexed hereto and made a part hereof (collectively, the
"Stock").
1.2 The purchase and payment for the Stock by Buyer shall take place at
the time and in the manner hereinafter provided, and the sale,
assignment, transfer and delivery of the Stock by Sellers, shall take
place on the Closing Date at the Closing as those terms are
hereinafter defined, subject to the fulfillment of the conditions
hereinafter provided.
2. PURCHASE PRICE.
2.1 The aggregate purchase price of the Stock (the "Purchase Price"),
shall be fifteen million two hundred thousand (15,200,000) common
shares of the Buyer.
2.2 The shares comprising of seven million six hundred thousand
(7,6000,000) common shares of the Buyer of the Purchase Price shall be
transferred to the Sellers at closing.
2.3 The remaining shares comprising of seven million six hundred thousand
(7,600,000) common shares of the buyer of the Purchase Price shall be
held in escrow by the Buyer's attorney Xxxxxx Xxxxxxx on behalf of the
Sellers (as set forth in the "Escrow Agreement" attached as Schedule A
hereto), and shall be transferred to the Sellers subject to the
Company's ability to meet the following projected revenue targets:
2.3.1If and when the Company's gross revenue run rate reaches $100,000 per
month as determined by the most recent Form 10Q or Form 10K filed by
the Buyer, then within 10 days after the applicable filing, the board
of directors of Buyer shall review and determine if revenue target was
met and if met, the Buyer shall, within 30 days thereafter, direct
Xxxxxx Xxxxxxx to promptly deliver 3,800,000 common shares of the
Buyer to the Sellers.
2.3.2If and when the Company's gross revenue run rate reaches $200,000 per
month as determined by the most recent Form 10Q or Form 10K filed by
the Buyer, then within 10 days after the applicable filing, the board
of directors of Buyer shall review and determine if revenue target was
met and if met, the Buyer shall, within 30 days thereafter, direct
Xxxxxx Xxxxxxx to promptly deliver 3,850,000 common shares of the
Buyer to the Sellers.
2.4 The Parties acknowledge and agree that the remaining common shares
distributable pursuant to paragraph 2.3 above shall be issued to
officers, directors, employees, or advisors of Pipeline in accordance
with the contribution their efforts have made to the Company.
2.5 In the event the Company does not meet the revenue targets as set
forth in 2.3.1 and 2.3.2) prior to March 31, 2005, then any
non-transferred remaining shares of the seven million six hundred
thousand (7,600,000) common shares of the Buyer of the Purchase price
shall be returned to the treasury of the Buyer by the Buyer's
attorney, Xxxxxx Xxxxxxx, on behalf of the Sellers, and any further
rights associated with said remaining common shares of the Buyer by
the Sellers shall forever terminate.
B. REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer hereby warrants and represents to Sellers and the Company that, as of
the date hereof, the following statements are true and correct.
1. CORPORATE STATUS.
The Buyer is (a) duly organized, validly existing and in good standing
under the laws of the State of Delaware; (b) has full corporate power
to own all of its properties and carry on its business as it is now
being conducted; and (c) is qualified to do business as a foreign
corporation in each of the jurisdictions in which it operates and the
character of the properties owned by the Buyer or the nature of the
business transacted by the Buyer does not make qualification necessary
in any other jurisdiction or jurisdictions.
2. AUTHORITY TO BUYER.
Buyer has full right, power and authority to issue and deliver its
common shares to the Sellers in accordance with the terms of this
Agreement, and otherwise to consummate and close the transaction
provided for in this Agreement in the manner and upon the terms herein
specified.
3. FINANCIAL STATEMENTS.
The Buyer has made available through public record its public
financial filings on form 10K and 10Q through September 30, 2001.
4. PERIOD SINCE MOST RECENT FINANCIALS.
From the date of the most recent reviewed quarterly report, the Buyer
has:
4.1 Not suffered any material adverse change in its financial condition,
assets, liabilities or business.
4.2 Not affirmatively waived, canceled or compromised any of its rights,
debts or claims of substantial value.
4.3 Not made any distribution to its shareholders, as shareholders, of any
assets, by way of dividends, purchase of shares or otherwise, except
as disclosed hereto.
4.4 Not mortgaged, pledged or granted a lien or encumbrance on any of its
properties or assets.
4.5 Not sold or transferred any of its assets, tangible or intangible
except inventory and other assets sold or disposed of in the ordinary
and usual course of business.
4.6 Not incurred any extraordinary losses, within the meaning of generally
accepted accounting principles, and/or incurred or become liable for
any obligations or liabilities except current liabilities, within the
meaning of generally accepted accounting principles, incurred in the
ordinary and usual course of business, or made any extraordinary
expenditures, within the meaning of generally accepted accounting
principles.
4.7 Other than option issuances as discussed in paragraph 5 below, not
increased the rate of compensation for any of its officers or
directors nor for any executive employees, except as may be in accord
with past practices and in the usual and ordinary course of business
of the Buyer.
4.8 Not experienced any material adverse effect on its business,
properties and assets as the result of any fire, explosion,
earthquake, flood, drought, windstorm, accident, strike, embargo,
confiscation of vital equipment, material or inventory, cancellation
of contracts by any domestic or foreign government, or any agency
thereof, or customer whose business with seller represents 5% or more
of sellers gross revenue, riot, activities of armed forces, or acts of
God or the public enemy.
4.9 To the best knowledge of Buyer and other than a $25,000 loan for the
benefit of National Preplanning, Inc., it has not incurred any
liabilities, contingent or otherwise, except those stated in the
balance sheet of the Buyer as of September 30, 2001, and current
liabilities incurred in the ordinary and usual course of business
since the date of the report.
5. CAPITAL STRUCTURE.
The Buyer (a) is authorized by its charter and applicable law to issue
capital stock of the type and having par values as set forth in its
registration statement, exhibits and subsequent reports, which are
publicly available; (b) has 3,400,000 issued and outstanding shares of
its capital stock, all of which such shares are fully paid and
non-assessable; (c) has allocated or has the right to allocate, in the
sole discretion the Chairman of the Board, up to 1,400,000 options
pursuant to the Buyers option plan to be registered on the Buyer's
Form S-8 after the acquisition; (d) has all voting rights vested
exclusively in the presently issued and outstanding capital stock.
The Buyer acknowledges and agrees to the prompt filing of Form 8-A and
to the future use of the Buyer's option plan to reward the Sellers and
members of the Buyer for the valuable services they have agreed to
provide the Buyer. The parties to this agreement acknowledge and agree
that the Form S-8 registering all holders' options and underlying
common stock shall be filed within a reasonable period of time after
the effective date of the acquisition, as determined by the Buyer's
Chairman of the Board, Xxxx Xxxxxxxxxx.
6. TITLE TO ASSETS, CONTRACTUAL RIGHTS.
The Buyer has good and marketable title to all of its assets,
including its intellectual property and trade secrets.
7. PEACEABLE POSSESSION OF ASSETS.
The ownership and possession of all of the assets of the Buyer have
been peaceable and undisturbed and the title thereto has never been
disputed or questioned to the knowledge of the Buyer; nor does the
Buyer know of any facts by reason of which the possession or title
thereof by the Buyer might be disturbed or questioned or by reason of
which any claim to its assets might arise or be set up adverse to the
Buyer.
8. REGULATORY GOOD STANDING.
The Buyer has all material rights, certificates, authorities, permits,
licenses, franchises and other authorizations necessary to and has
complied in material respects with all laws applicable to, the conduct
of its business in the manner and in the areas in which such business
is presently being conducted and all such certificates, authorities,
rights, permits, licenses, franchises and authorizations are valid, in
good standing, in full force and effect, under no orders of suspension
or restraints, and subject to no disciplinary, probationary or other
orders. To the best of its knowledge, the Buyer has engaged in no
activity whatever which would cause or lead to proceedings involving
revocation, suspension, restraint, disciplinary action or any other
action whereby any of such certificates, authorities, rights, permits,
licenses, franchises or authorizations, or any part thereof, might be
canceled, terminated, suspended, impaired, lost or otherwise adversely
affected, and no action or proceeding looking to or contemplating any
of the foregoing is pending or to the Buyer's knowledge threatened.
The foregoing shall not be deemed to constitute a warranty or
representation that the Buyer has not heretofore or shall not
hereafter suffer to be committed minor and unintentional violations of
any governmental regulations of such nature as not to cause either
suspension or revocation of the Buyer's operating authority.
9. LITIGATION.
The Buyer is not a party to any pending or to its knowledge threatened
suit, action, proceeding, prosecution or litigation which might
materially adversely affect the financial condition, business, assets,
properties, certificates, rights, authorities, franchises or
authorizations of the Buyer, or materially interfere therewith, nor to
the knowledge of the Buyer is there any threatened or pending
governmental investigation involving the Buyer or any of its
operations, including inquiries, citations or complaints by any
federal, state or local administration or agency, which would
materially adversely affect the financial condition, business, assets
or properties of the Buyer; and there are no outstanding, existing or
pending judgments, orders, decrees, rulings, directives, stipulations
or other mandates of any court or any public or quasi-public agency,
body or official which have been in any way violated as they relate to
or affect the Buyer or any of the Buyer's properties, businesses,
operations, affairs or activities.
10. DEFAULTS.
There are no material defaults on the part of the Buyer under any
contract, lease, mortgage, pledge, credit agreement, title retention
agreement, security agreement, lien, encumbrance or any other
commitment, contract, agreement or undertaking to which the Buyer is a
party.
11. TAX RETURNS.
All returns for federal, state and other governmental income taxes,
surtaxes, excess profits taxes, franchise taxes, sales and use taxes,
real and personal property taxes and any and all other taxes to which
the Buyer, or its assets, operations or income may be subject, due as
of the date hereof, have been duly prepared and filed in good faith
and all taxes shown thereon have been paid or are accrued on the books
of the Buyer.
12. COMPLIANCE WITH LAW.
All of the properties, assets and business operations of the Buyer
conform in material respects with all applicable ordinances,
regulations, laws and statutes, including but not limited to building,
zoning, safety, highway and other such laws, rules, regulations and
ordinances.
13. INFRINGEMENTS.
The Buyer has never been charged with infringement or violation of any
adversely held patent, trademark, trade name, or copyright, with
claims reading on operations of the Buyer or on apparatus or methods
employed by the Buyer in effecting the same, which would materially
adversely affect any operation of the Buyer, nor is the Buyer using or
in any way making use of any confidential information or trade
secrets, of any former employer or any present or past employee of the
Buyer except as a result of the acquisition of the business of such
former employer.
14. TRUTH OF REPRESENTATION.
No representation by the Buyer made in this Agreement and no statement
made in any certificate or schedule furnished in connection with the
transaction herein contemplated contains or will contain any knowingly
untrue statement of a material fact or knowingly omits or will omit to
state any material fact reasonably necessary to make any such
representation or any such statement not misleading to a prospective
purchaser of its common shares.
15. LOAN FACILITATED BY XXXX XXXXXXXXXX.
Xxxx Xxxxxxxxxx shall loan or facilitate a loan to the Buyer within
seven days after the Closing Date. The loan shall be in the amount of
$100,000. It shall be for a term of one year. It shall bear interest
at the annual rate of 8%. The loan may be converted by Xx. Xxxxxxxxxx
into common shares of the Buyer at the per share as of the date of his
agreement to make the loan facilitation, March 8, 2001. As an equity
incentive to make this loan, the Buyer shall issue to Xx. Xxxxxxxxxx
100,000 warrants to purchase common shares of the Buyer at an exercise
price of the per share market price as of the date of his agreement to
make the loan facilitation, March 8, 2001. The warrants shall have a
term of three years. All shares shall be subject to piggy back
registration rights equal to the Sellers. This transaction shall serve
as a template for other private debt financing sought by the Buyer.
C. REPRESENTATIONS AND WARRANTIES OF SELLERS AND THE COMPANY
Sellers and the Company hereby warrant and represent to Buyer that, as of
the date hereof, the following statements are true and correct.
1. CORPORATE STATUS.
The Company is (a) duly organized, validly existing and in good
standing under the laws of the State of Delaware; (b) has full
corporate power to own all of its properties and carry on its business
as it is now being conducted; and (c) is qualified to do business as a
foreign corporation in each of the jurisdictions in which it operates
and the character of the properties owned by the Company or the nature
of the business transacted by the Company does not make qualification
necessary in any other jurisdiction or jurisdictions.
2. AUTHORITY TO SELL.
Sellers have full right, power and authority to sell, transfer and
deliver the Stock owned by such Seller to Buyer in accordance with the
terms of this Agreement, and otherwise to consummate and close the
transaction provided for in this Agreement in the manner and upon the
terms herein specified.
3. FINANCIAL STATEMENTS.
At or prior to the date of this Agreement, the Company has delivered
to Buyer internal financial statements as of December 31, 2001, and
said internal financial statements, including the related notes and
explanatory notes, present fairly the financial position of the
Company at the date thereof and the results of its operations for the
periods therein indicated, in conformity with generally accepted
accounting principals applied on a basis consistent in each case with
that of the preceding year. The Sellers and Company warrant and agree
that promptly upon execution of this Agreement, they shall provide the
Buyer with audited financial statements as of December 31, 2001.
4. PERIOD SINCE MOST RECENT FINANCIALS.
From the date of the most recent reviewed internal balance sheet
included in the Company's Financials, the Company has:
4.1 Not suffered any material adverse change in its financial
condition, assets, liabilities or business.
4.2 Not affirmatively waived, canceled or compromised any of its
rights, debts or claims of substantial value.
4.3 Not issued any additional shares of stock, rights or options to
purchase or convert into such stock, or other securities.
4.4 Not made any distribution to its shareholders, as shareholders,
of any assets, by way of dividends, purchase of shares or
otherwise, except as disclosed hereto.
4.5 Not mortgaged, pledged or granted a lien or encumbrance on any of
its properties or assets, except with respect to equipment
purchased by the Company during such period.
4.6 Not sold or transferred any of its assets, tangible or intangible
except inventory and other assets sold or disposed of in the
ordinary and usual course of business.
4.7 Not incurred any extraordinary losses, within the meaning of
generally accepted accounting principles, and/or incurred or
become liable for any obligations or liabilities except current
liabilities, within the meaning of generally accepted accounting
principles, incurred in the ordinary and usual course of
business, or made any extraordinary expenditures, within the
meaning of generally accepted accounting principles, and for
additions and betterments to existing plant, equipment and
facilities.
4.8 Not increased the rate of compensation for any of its officers or
directors nor for any executive employees, except as may be in
accord with past practices and in the usual and ordinary course
of business of the Company.
4.9 Not experienced any material adverse effect on its business,
properties and assets as the result of any fire, explosion,
earthquake, flood, drought, windstorm, accident, strike, embargo,
confiscation of vital equipment, material or inventory,
cancellation of contracts by any domestic or foreign government,
or any agency thereof, or customer whose business with seller
represents 5% or more of sellers gross revenue, riot, activities
of armed forces, or acts of God or the public enemy.
4.10 To the best knowledge of Seller, it not incurred any liabilities,
contingent or otherwise, except those stated in the balance sheet
of the Company as of December 31, 2001, and current liabilities
incurred in the ordinary and usual course of business since the
date of the said balance sheet.
5. CAPITAL STRUCTURE.
The Company (a) is authorized by its charter and applicable law to
issue capital stock of the type and having par values as set forth in
Schedule A hereto; (b) has no issued and outstanding shares of its
capital stock whatever, except as specifically indicated in Schedule A
hereto, all of which such shares are fully paid and non-assessable;
(c) does not have authorized, issued or outstanding any subscription,
option, warrant, conversion or other rights to the issuance or receipt
of shares of its capital stock except as set forth in Schedule A
hereto; (d) has all voting rights vested exclusively in the presently
issued and outstanding capital stock; and (e) has outstanding no
bonds, debentures or other similar evidences of indebtedness except as
specifically disclosed in its balance sheet as of December 31, 2001,
(and related notes thereto).
The Buyer acknowledges and agrees to the prompt filing of Form 8-A and
to the future use of the Buyer's option plan to reward the Sellers and
members of the Buyer for the valuable services they have agreed to
provide the Buyer. The parties acknowledge and agree that the Form S-8
registering all holders' options and underlying common stock shall be
filed within a reasonable period of time after the effective date of
the acquisition, as determined by the Buyer's Chairman of the Board,
Xxxx Xxxxxxxxxx.
6. OWNERSHIP OF STOCK.
All of the issued and outstanding shares of capital stock of the
Company are owned by XxxXxxxxxxx Xxxxx, Xxxxxxx Xxxxxxx Xxxxxxxx, Xxxx
Xxxxxxxxx, Xxxxxx Xxxxx, Xxxx Xxxxxxx, Xxxxxxxxxxx Xxxxx,
Xxxxxxxxxx.xxx, Inc. Sellers own beneficially and of record the number
of shares set forth in Schedule A hereto opposite Seller's name.
Sellers hold such stock free and clear of all liens, claims, debts,
encumbrances and assessments, and any and all restrictions as to sale,
assignment or transferability thereof. Sellers have full right, power
and authority to sell, transfer and deliver all of the shares of Stock
owned by said Seller and the certificates therefor, sold hereunder, to
Buyer in accordance with the terms of this Agreement, and otherwise to
consummate and close the transaction provided for in this Agreement in
the manner and upon the terms herein specified.
7. TITLE TO ASSETS, CONTRACTUAL RIGHTS.
Subject to Section B(9), the Company has good and marketable title to
all of its assets, including its intellectual property, trade secrets
and the rights evidenced by those contracts listed on Schedule C
thereto.
8. PEACEABLE POSSESSION OF ASSETS.
The ownership and possession of all of the assets of the Company have
been peaceable and undisturbed and the title thereto has never been
disputed or questioned to the knowledge of the Company; nor does the
Company know of any facts by reason of which the possession or title
thereof by the Company might be disturbed or questioned or by reason
of which any claim to its assets might arise or be set up adverse to
the Company.
9. REGULATORY GOOD STANDING.
The Company has all material rights, certificates, authorities,
permits, licenses, franchises and other authorizations necessary to
and has complied in material respects with all laws applicable to, the
conduct of its business in the manner and in the areas in which such
business is presently being conducted and all such certificates,
authorities, rights, permits, licenses, franchises and authorizations
are valid, in good standing, in full force and effect, under no orders
of suspension or restraints, and subject to no disciplinary,
probationary or other orders. To the best of its knowledge, the
Company has engaged in no activity whatever which would cause or lead
to proceedings involving revocation, suspension, restraint,
disciplinary action or any other action whereby any of such
certificates, authorities, rights, permits, licenses, franchises or
authorizations, or any part thereof, might be canceled, terminated,
suspended, impaired, lost or otherwise adversely affected, and no
action or proceeding looking to or contemplating any of the foregoing
is pending or to the Company's knowledge threatened. The foregoing
shall not be deemed to constitute a warranty or representation that
the Company has not heretofore or shall not hereafter suffer to be
committed minor and unintentional violations of any governmental
regulations of such nature as not to cause either suspension or
revocation of the Company's operating authority.
10. LITIGATION.
Except for that certain suit in the United States District Court of
Arizona by Net MoneyIN, Inc. (plaintiff) vs. Mellon Financial Corp.,
et al (defendants) (Cause No. CV-01-441-TUC-RCC), the Company is not a
party to any pending or to its knowledge threatened suit, action,
proceeding, prosecution or litigation which might materially adversely
affect the financial condition, business, assets, properties,
certificates, rights, authorities, franchises or authorizations of the
Company, or materially interfere therewith, nor to the knowledge of
the Company is there any threatened or pending governmental
investigation involving the Company or any of its operations,
including inquiries, citations or complaints by any federal, state or
local administration or agency, which would materially adversely
affect the financial condition, business, assets or properties of the
Company; and there are no outstanding, existing or pending judgments,
orders, decrees, rulings, directives, stipulations or other mandates
of any court or any public or quasi-public agency, body or official
which have been in any way violated as they relate to or affect the
Company or any of the Company's properties, businesses, operations,
affairs or activities.
11. DEFAULTS.
There are no material defaults on the part of the Company under any
contract, lease, mortgage, pledge, credit agreement, title retention
agreement, security agreement, lien, encumbrance or any other
commitment, contract, agreement or undertaking to which the Company is
a party.
12. TAX RETURNS.
All returns for federal, state and other governmental income taxes,
surtaxes, excess profits taxes, franchise taxes, sales and use taxes,
real and personal property taxes and any and all other taxes to which
the Company, or its assets, operations or income may be subject, due
as of the date hereof, have been duly prepared and filed in good faith
and all taxes shown thereon have been paid or are accrued on the books
of the Company.
13. COMPLIANCE WITH LAW.
All of the properties, assets and business operations of the Company
conform in material respects with all applicable ordinances,
regulations, laws and statutes, including but not limited to building,
zoning, safety, highway and other such laws, rules, regulations and
ordinances.
14. INFRINGEMENTS.
The Company has never been charged with infringement or violation of
any adversely held patent, trademark, trade name, or copyright, with
claims reading on operations of the Company or on apparatus or methods
employed by the Company in effecting the same, which would materially
adversely affect any operation of the Company, nor is the Company
using or in any way making use of any confidential information or
trade secrets, of any former employer or any present or past employee
of the Company except as a result of the acquisition of the business
of such former employer.
15. TRUTH OF REPRESENTATION.
No representation by the Company made in this Agreement and no
statement made in any certificate or schedule furnished in connection
with the transaction herein contemplated contains or will contain any
knowingly untrue statement of a material fact or knowingly omits or
will omit to state any material fact reasonably necessary to make any
such representation or any such statement not misleading to a
prospective purchaser of the Stock.
16. UTILIZATION OF WORKING CAPITAL.
The Company and the Sellers represent, warrant and agree that it shall
utilize all working capital toward the establishment of the business
of the Company, and not towards personal fees or expenses of the
Sellers. Such fees and expenses shall be drawn from revenues earned.
D. COVENANTS OF THE SELLERS AND THE COMPANY
Sellers hereby covenant and agrees as follows:
1. INSPECTION OF RECORDS.
During the period from the date hereof through the Closing Date as
that term is hereinafter defined (the "Contract Period"), the Buyer
shall have the right and opportunity at its own expense to make such
examination and investigation of the Company's business, properties
and affairs as the Buyer may deem reasonably necessary or desirable
for all purposes relating to this Agreement and to that end,
throughout the Contract Period, the Company will allow and grant the
Buyer, its officers, counsel, accountants, auditors and executive
employees full, free and continuous access, during normal business
hours and without interference with the conduct of the Company's
business, to all of the premises, properties, contracts, commitments,
leases, books, papers, documents, instruments, books of account,
minutes and other records of the Company and will furnish and provide
the Buyer with all such financial and other statements and all such
additional information and particulars in respect of the business,
properties and affairs of the Company as the Buyer may, from time to
time during the Contract Period, reasonably request or require.
2. CONDUCT OF BUSINESS.
During the period from the date hereof to the Closing Date as that
term is hereinafter defined, the Company shall:
2.1 Conduct its business and operations solely in the usual, normal
and ordinary course;
2.2 Issue no additional shares of stock, options, calls or other
rights to purchase such stock, or any other securities of any
kind whatever;
2.3 Make no distributions to its shareholders, as shareholders, of
any of its assets or properties by way of dividends, purchase of
shares, redemption or otherwise.
2.4 Not transfer to any person, firm or corporation any customers,
customer lists or customer accounts of the Company;
2.5 Make no increase of any kind in any salary, wages, bonus or
compensation of any officer, employee, representative or agent of
the Company or pay any extra compensation of any kind whatever to
any of such persons, except with respect to such increases in or
additions to compensation as may be required to be paid in
accordance with existing firm and binding contracts and
commitments of the Company and except as may be in accordance
with past practices and in the usual and ordinary course of
business of the Company;
2.6 Not sell, transfer or dispose of any of the Stock;
2.7 Not sell, transfer or dispose of any of its business, properties
or assets, tangible or intangible, except for a full and fair
consideration in the usual and ordinary course of business;
2.8 Make no purchases or acquisitions of any real or personal
property nor increase or decrease inventory, except in the usual
and ordinary course of its business;
2.9 Not subject any of its business, property or assets whatever,
tangible or intangible, to any mortgage, lien, pledge,
hypothecation or encumbrance in any manner except for a full and
fair consideration in the usual and ordinary course of business;
2.10 Not borrow any money, make any unusual or extraordinary
expenditures or incur or become liable for any obligations or
liabilities except current liabilities in the usual and ordinary
course of its business;
2.11 Not make any loans or advances or extend any credit except in the
usual and ordinary course of its business.
3. Publicity.
All notices to third parties other than Sellers and all other
publicity concerning the transactions contemplated by this Agreement
shall be planned and coordinated jointly by Buyer and by the Company.
4. WARRANTIES AND REPRESENTATIONS.
The Company will promptly furnish to Buyer (but no later than April 1,
2002) audited financial statements for the year ended December 31,
2001 as well as copies of any and all financial statements of the
Company prepared by or for the Company subsequent to the date hereof,
and will promptly furnish to and advise the Buyer of any and all
material information, details, facts and circumstances concerning the
Company's financial condition, or business arising subsequent to the
date of this Agreement by reason of which any changes, modifications,
amendments, additions or deletions from any Schedule annexed hereto or
any warranty, representation, covenant or condition recited herein
would be necessary to render the same true and correct in material
respects and not materially false or misleading, as of the date such
information, details, facts and circumstances are furnished to the
Buyer.
E. CONDITIONS PRECEDENT TO CLOSING
All obligations of the Buyer under this Agreement are subject to the
fulfillment of each of the following conditions, in addition to the
fulfillment of any and all other conditions set forth in this Agreement:
1. EFFECTIVENESS OF WARRANTIES.
Each and every one of the warranties and representations of Sellers
and the Company as hereinbefore set forth in Paragraph C hereof, shall
be true at and as of the Closing Date as though such representations
were made at and as of such time.
2. PERFORMANCE OF COVENANTS.
Each and every covenant herein made by Sellers and the Company, as set
forth in Paragraph D, which are to be performed at or prior to the
Closing Date, shall have been duly performed by such times.
3. NON-COMPETE AGREEMENTS.
The Sellers will sign a non-competition agreement, which shall bind
themselves and their affiliates, satisfactory to the Buyer.
4. CORPORATE ACTION.
Prior to the Closing Date, the Board of Directors of the Company shall
have duly adopted resolutions to the same effect with respect to the
aforesaid matters.
5. TERMINATION.
In the event any of the foregoing conditions shall not be fulfilled
prior to the Closing, unless caused by any action or failure to act on
the part of Buyer, Buyer shall have the right to terminate the
Agreement by notice thereof in writing to the Company, and the parties
hereto shall be restored as far as possible to status quo, whereupon
the parties hereto shall have no further obligations or liabilities
hereunder, one against the other, except for the obligation of Buyer
under Section H hereof which shall survive a termination of this
Agreement.
F. LOCK-UP AGREEMENTS
1. As to the Sellers and Xxxx Xxxxxxxxxx.
The Sellers and Xxxx Xxxxxxxxxx shall execute lock-up agreements
restricting any sales of their shares to the following volume
limitations during the stated time periods commencing from the Closing
Date.
Until 90 days after the Closing Date - 0%
Upon 90 days after the Closing Date - 15%
Upon 180 days after the Closing Date - 25%
For each of the 6 months commencing
on the 361st day after the
Closing Date - 10% per month.
2. As to 1/2 of the shares of Unifund Financial Group and R. Xxxxx
Xxxxxx.
Unifund Financial Group and R. Xxxxx Xxxxxx shall execute lock-up
agreements restricting any sales of one-half of their shares to the
following volume limitations during the stated time periods commencing
from the Closing Date.
Until 90 days after the Closing Date - 0%
Upon 90 days after the Closing Date - 15%
Upon 180 days after the Closing Date - 25%
For each of the 6 months commencing
on the 7th month after the
Closing Date - 10% per month.
G. BOARD COMPOSITION
The parties to this Agreement agree that after the Closing Date, the board
of directors of the Buyer will consist of Xxxx Xxxxxxxxxx, XxxXxxxxxxx
Xxxxx and two board member to be chosen at the discretion of XxxXxxxxxxx
Xxxxx and one board member to be chosen at the discretion of Xxxx
Xxxxxxxxxx. The parties to this Agreement agree that the aforementioned
directors shall be voted on to the board of directors of Pipeline and the
Company, subject to their right of resignation, for a period not less than
24 months from the Closing Date. The board shall obtain directors' and
officers' liability insurance as soon as it is fiscally responsible to do
so.
H. OFFICERS
The parties to this Agreement agree that the officers of the Buyer shall be
as follows: Xxxx Xxxxxxxxxx - Chairman of the Board and XxxXxxxxxxx Xxxxx -
President and Chief Executive Officer. The parties to this Agreement agree
that the officers of the Company shall be as follows: and of the Company
shall be as follows: Xxxx Xxxxxxxxxx - Chairman of the Board, XxxXxxxxxxx
Xxxxx - President and Chief Executive Officer Xxxxxxx Xxxx - Chief
Operating Officer and Xxxxxxx Xxxxxxx Xxxxxxxx - Chief Technology Officer .
I. INVESTMENT BANKERS
It is agreed that Investec Ernst and Public Securities shall be appointed
as exclusive solicitation agents pursuant to those terms as negotiated by
Xxxx Xxxxxxxxxx.
J. INDEMNIFICATION
1. Buyer shall be indemnified by Sellers and the Company as follows:
Sellers and the Company shall indemnify and hold harmless the Buyer
from and against any losses, damages or expenses which may be suffered
or incurred by Buyer arising from or by reason of the inaccuracy of
any statement, representation or warranty of Sellers or the Company
made herein or, in any schedule hereto or certificate delivered in
connection herewith, or the failure of Sellers or the Company to
perform any agreement made by them herein. Buyer shall give Seller
prior written notice of any claim, demand, suit or action with respect
to which indemnity may be sought pursuant to this Section. Sellers, in
every such case, shall have the right at his sole expense and cost to
participate in contesting the validity or the amount of any such
claim, demand, suit or action. Notwithstanding anything herein to the
contrary, Sellers shall have no liability under this Section for any
loss, damage, expense or amount suffered or incurred by Buyer or the
Company which is covered by insurance maintained by the Company on the
Closing Date.
2. Seller and the Company shall be indemnified by the Buyer as follows:
The Buyer shall indemnify the Company and Sellers and shall hold the
Company and Sellers harmless, on demand, from and against any losses,
damages or expenses which may be suffered or incurred by the Company
or Seller arising from or by reason of the inaccuracy of any
statement, representation or warranty of the Buyer made herein or in
any document or instrument delivered by Buyer to Sellers or the
Company in connection with the transactions herein contemplated, or
the failure of Buyer to perform any agreement or covenant made by it
herein or in any document or instrument delivered by Buyer to Sellers
or the Company in connection with the transactions herein
contemplated.
K. PIGGY-BACK REGISTRATION
Sellers shall be entitled to "piggy-back" registration rights on
registrations of the Buyer, subject to the right of the Buyer and its
underwriters to reduce in view of market conditions the number of
shares of the Sellers proposed to be registered to not less than
one-third of the total number of shares in the offering. A
registration rights agreement shall be executed by the parties at
Closing.
L. CLOSING
1. TIME AND PLACE.
The closing under this Agreement (the "Closing") and all deliveries
hereunder shall take place at the office of the Buyer on March __,
2002 or such other date as shall be agreed upon by all the parties
("the Closing date").
2. DELIVERY OF DOCUMENTS.
At the Closing, the Company will deliver to the Buyer the following
documents:
2.1 A written opinion, dated on the Closing Date, of counsel
representing the Company, to the effect that the Company has been
duly incorporated and is on the closing date validly existing as
a corporation in good standing under the laws of the state of its
incorporation; that the Company is duly qualified or licensed as
a foreign corporation in all other states in which it does
business; that the shares of capital stock delivered by Sellers
to Buyer at the closing have been validly issued and are
outstanding, fully paid, and non-assessable, and constitute all
of the issued and outstanding shares of capital stock of the
Company; that such counsel knows of no litigation, proceeding or
investigation pending or threatened against the Company or
Sellers which might result in any material adverse change in the
business, properties or financial condition of the Company or
which questions the validity of this Agreement or of any action
taken or to be taken pursuant to or in connection with the
provisions of this Agreement, other than as represented elsewhere
in this Agreement; and that to the knowledge of such counsel the
sale, transfer, assignment and delivery by Sellers to Buyer of
the Stock pursuant to this Agreement will vest in Buyer all
rights, title and interest in and to such Stock free and clear of
all liens, encumbrances, and equities.
2.2 Such additional copies or duplicate originals of the above
described documents and such other documents, undertakings and
assurances as Buyer shall reasonably require, all of which
documents, undertakings and assurances shall be delivered to
Buyer sufficiently in advance of the Closing Date, as Buyer shall
reasonably require, so as to permit adequate inspection and
examination thereof, all of which documents, undertakings and
assurances shall be in form satisfactory to counsel to Buyer.
M. CONFIDENTIALITY
All information and documentation provided or to be provided by the Company
or Sellers to Buyer in connection with this Agreement and the transactions
contemplated hereby has been and shall be provided in the strictest
confidence. Pending the Closing, Buyer covenants and agrees not to use any
of such information or documentation in or for the benefit of any business
engaged in directly or indirectly by Buyer and not to furnish or disclose
any of such information or documentation to any person or company. If the
transactions contemplated by this Agreement are not consummated, Buyer
covenants and agrees to return all such information and documentation to
the Company and not retain any copies thereof, and Buyer further covenants
and agrees to maintain the confidentiality of such information and
documentation and to neither use any of it in or for the benefit of any
business engaged in directly or indirectly by the Buyer nor furnish or
disclose any of it to any person or company.
N. INTENTION TO PURCHASE THE SHARES OF MUNICIPAL PAYMENT CENTER, INC.
It is acknowledged and agreed that it is the intention of the Buyer to
purchase 100% of the shares of Municipal Payment Center, Inc. This
transaction is subject to the terms and conditions referenced in the Letter
of Intent between the Buyer and Municipal Payment Center, Inc. attached as
Exhibit F hereto.
O. WEBTRANZ, CHASM HOLDINGS NOTE AND SECURITY.
The execution of this Agreement and the issuance of Pipeline stock to Chasm
Holdings as indicated on Schedule A hereto shall terminate and extinguish
that certain promissory note for $1,200,000 and related security, copies of
which are attached hereto as Exhibit G.
P. GENERAL PROVISIONS
1. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
Unless otherwise expressly provided herein, the representations,
warranties, covenants, indemnities and other agreements herein
contained shall be deemed to be continuing and shall survive the
consummation of the transactions contemplated by this Agreement.
2. DILIGENCE.
The parties hereto agree that each shall with reasonable diligence
proceed to take all action which may be reasonably required to
consummate the transaction herein contemplated.
3. WAIVERS.
Each party hereto may:
3.1 Extend the time for performance of any of the obligations of the
other party;
3.2 Waive in writing any inaccuracies in representations and
warranties made to it contained in this Agreement or any schedule
hereto or any certificate or certificates delivered by any of the
other parties pursuant to this Agreement; and
3.3 Waive in writing the failure of performance of any of the
agreements, covenants, obligations or conditions of the other
parties herein set forth, or alternatively terminate this
Agreement for such failure.
4. NON-WAIVER.
The waiver by any party hereto of any breach, default, inaccuracy or
failure by another party with respect to any provision in this
Agreement or any schedule hereto shall not operate or be construed as
a waiver of any other provision thereof or of any subsequent breach
thereof.
5. FURTHER ASSURANCES.
Each party hereto agrees to execute such further documents or
instruments, requested by the other party, as may be reasonably
necessary or desirable to effect the purposes of this Agreement and to
carry out its provisions, at the expense of the party requesting the
same.
6. ENTIRE AGREEMENT.
This Agreement constitutes a complete statement of all the
arrangements, understandings and agreements between the parties, and
all prior memoranda and oral understandings with respect thereto are
merged in this Agreement. There are no representations, warranties,
covenants, conditions or other agreements among the parties except as
herein specifically set forth, and none of the parties hereto shall
rely on any statement by or on behalf of the other parties which is
not contained in this Agreement.
7. GOVERNING LAW.
Irrespective of the place of execution or performance of this
Agreement, it shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts made and to
be performed in the State of New York, and cannot be changed,
modified, amended or terminated except in writing, signed by the
parties hereto.
8. BENEFIT AND ASSIGNABILITY.
This Agreement shall bind and inure to the benefit of the parties
hereto and their respective legal representatives, successors and
assigns, provided, however, that this Agreement cannot be assigned by
any party except by or with the written consent of the others. Nothing
herein expressed or implied is intended or shall be construed to
confer upon or to give any person, firm or corporation other than the
parties hereto and their respective legal representatives, successors
and assigns any rights or benefits under or by reason of this
Agreement.
9. APPROVAL OF COUNSEL.
The form of all legal proceedings and of all papers and documents used
or delivered hereunder, shall be subject to the approval of counsels
to Buyer and Sellers.
10. COSTS.
The Buyer shall bear its own costs and expenses of the transaction.
The costs and expenses of Sellers in connection with this Agreement
and the transactions contemplated hereby shall be borne and paid by
the Seller.
11. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same Agreement.
12. NOTICES.
Any notices and other communications under this Agreement shall be in
writing and shall be considered given if delivered personally or
mailed by certified mail to the party, for whom such notice is
intended, at the address indicated at the outset hereof (or at such
other address as such party may specify by notice to the other parties
hereto).
13. HEADINGS.
The headings in this Agreement are intended solely for convenience of
reference and shall be given no effect in the construction or
interpretation of this Agreement.
14. FURTHER ACTION.
Any further action required or permitted to be taken under this
Agreement, including giving notices, executing documents, waiving
conditions, and agreeing to amendments or modifications, may be taken
on behalf of a party by its Board of Directors, its President or any
other person designated by its Board of Directors, and when so taken
shall be deemed the action of such party.
IN WITNESS WHEREOF, the parties hereto have respectively executed this
Agreement the day and year first above written.
BUYER
PIPELINE DATA INC.
By: _____________________________
Xxxx Xxxxxxxxxx, Chairman
Witness:_________________________
SELLERS
By:_____________________________
XxxXxxxxxxx X. Xxxxx
Witness:_________________________
By:_____________________________
Xxxx Xxxxxxxxx
Witness:_________________________
By:_____________________________
Xxxxxx Xxxxx
Witness:_________________________
By:_____________________________
Xxxx Xxxxxxx
Witness:_________________________
By:_____________________________
Xxxxxxxxxxx Xxxxx
Witness:_________________________
By:_____________________________
Xxxxxxx Xxxxx
Witness:_________________________
By:_____________________________
Xxxxxxxxx Xxxxxxx
Witness:_________________________
By: ____________________________
Xxxxxxx Xxxxxxx Xxxxxxxx
Witness: _______________________
THE COMPANY
SECUREPAY CORPORATION.
By:________________________________
Its: _______________________________
Witness:___________________________
SCHEDULE A
Paragraph C5 and 6
CAPITAL STRUCTURE and OWNERSHIP OF STOCK
SECUREPAY, INCORPORATED, a Delaware corporation, located at 0000 Xxxxxxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000 (the "Company") has an 50,000 shares of
authorized and issued common stock , and the Shareholders own shares of the
Company's Common Stock as follows:
Buyer's Shares Buyer's Shares
Of 7,600,000 of 7,600,000 remaining
Company's Shares to be received to be received
Name Owned at closing from projected profits
---- ------------------------ ---------- ----------------------
XxxXxxxxxxx Xxxxx 1,100,000
Xxxxxxx Xxxxxxx Xxxxxxxx 1,100,000 1,000,000
Xxxx Xxxxxxxxx 1,100,000
Xxxx Xxxxxxx
Xxxxx Xxxxx
XxxxXxxxxx.xxx 1,281,455* 4,400,000**
Chasm Holdings 4,118,545 1,100,000
Xxxxxxx Xxxxx
Xxxxxxxxx Xxxxxxx
------- ------------- -------------
Total 7,600,000 7,600,000
*XxxxXxxxxx.xxx front end distributes:
Xxxx Xxxxxxx 46,233
Xxx Xxxxxxxx 46,233
Xxxx Xxxxxxx 184,200
Xxxxx Xxxxx 247,750
Xxxxxx Xxxxxxx 2,694
Xxxxx Xxxxxx 2,694
Xxxxx Xxxxxx 2,155
XxxXxxxxxxx Xxxxx 749,496
**XxxxXxxxxx.xxx back end distributes:
Xxxx Xxxxxxx 201,256
Xxx Xxxxxxxx 201,256
Xxxxx Xxxxx 988,504
Xxxxxx Xxxxxxx 10,736
Xxxxx Xxxxxx 10,736
XxxXxxxxxxx Xxxxx 2,987,512
SCHEDULE B
Paragraph 2.3
ESCROW AGREEMENT
SCHEDULE C
Material Contracts
SCHEDULE D
Intentionally deleted.
SCHEDULE E
Registration Rights Agreements
SCHEDULE F
Letter of Intent with Municipal Payment Center, Inc.
