PURCHASE AND SALE OPTION AGREEMENT

Exhibit 2.1

PURCHASE AND SALE OPTION AGREEMENT MADE AS OF FEBRUARY 2, 2009.

BETWEEN:

OPTIMAL PAYMENTS CORP. , a corporation governed by the laws of the State of Delaware

(“ OPC ”)

- and -

UNITED BANK CARD, INC. , a corporation governed by the laws of the State of New Jersey

(together with its successors and permitted assigns, “ UBC ”)

- and -

JARED ISAACMAN , an individual residing at 12 Tow Line Drive, Washington, New Jersey 07882

(“ Guarantor ”)

 

WHEREAS OPC, UBC and Guarantor have entered into a services agreement (the “ Services Agreement ”) dated as of the date hereof pursuant to which UBC agreed to assume and perform all of the servicing obligations relating to the Purchased Rights (as such expression defined below) on terms set forth in such agreement;

WHEREAS UBC has expressed its interest in purchasing from OPC, and OPC has expressed its interest in selling to UBC, all of OPC’s right, entitlement and interest in the Purchased Rights, on terms and conditions set forth in the form of purchase agreement attached hereto as Schedule A (the “ Purchase Agreement ”);

WHEREAS OPC wishes to grant to UBC an option to purchase from OPC, and UBC wishes to grant to OPC an option to sell to UBC, all of OPC’s right, entitlement and interest in the Purchased Rights, subject to and in accordance with the terms and conditions of this Agreement;

NOW THEREFORE in consideration of mutual covenants and agreements herein contained, and for other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged by each), the Parties hereto agree as follows:

 

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ARTICLE 1
INTERPRETATION

1.1	Defined Terms

 

(a)

Unless otherwise specifically defined in this Agreement, all capitalized terms used in this Agreement shall have the meanings given to them in the Services Agreement;

 

(b)

“ Affiliate ” means, with respect to any person or entity, any other person or entity who directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such person or entity. The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person or entity, whether through the ownership of voting securities, by contract, or otherwise, and the terms “controlled” and “controlling” have meanings correlative thereto.

 

(c)

“ Agreement ” means this purchase and sale option agreement, as amended, supplemented, restated, replaced or otherwise modified from time to time in accordance with the terms hereof;

 

(d)

“ Anticipated Closing Time ” means 10:00 a.m. on the 30 th Business Day following the receipt of the Call Notice by OPC or the receipt of the Put Notice by UBC, as applicable, or such other date as may be agreed upon in writing between the Parties;

 

(e)

“ Business Day ” means any day, other than a Saturday, Sunday or public holiday, on which banks are open for business in Montréal, Québec and in the State of New Jersey;

 

(f)

“ Call Notice ” has the meaning given in Section 2.2;

 

(g)

“ Call Right ” has the meaning given in Section 2.1;

 

(h)

“ Closing Date ” means the date of closing of the purchase and sale transaction contemplated in the Call Notice or the Put Notice, as the case may be, as determined in accordance with Section 2.2 or Section 3.2, respectively.

 

(i)

“ Initial Purchase Price ” means $11,000,000;

 

(j)

“ Notice ” has the meaning given in Section 6.3;

 

(k)

“ Purchase Agreement ” has the meaning given in the preamble;

 

(l)

“ Purchase Price ” has the meaning given in Section 4.1;

 

(m)

“ Purchased Rights ” has the meaning given in the Purchase Agreement;

 

(n)

“ Put Notice ” has the meaning given in Section 3.2;

 

 

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(o)

“ Put Right ” has the meaning given in Section 3.1;

 

(p)

“ Sale of UBC ” shall mean either: (a) one or more transactions during a period of 12 months in which one or more persons acquires, directly or indirectly, from the Guarantor shares in UBC for cash consideration of not less than the Initial Purchase Price at the time of the last transaction; (b) one or more transactions during a period of 12 months in which one or more persons acquires, directly or indirectly, from UBC or any of its Affiliates shares in UBC or any of its Affiliates for cash consideration of $20,000,000 or more; (c) a merger or consolidation of UBC with or into another person following which Guarantor owns less than a majority of the voting power or equity of the merged or consolidated entity; or (c) one or more transactions during a period of 12 months in which one or more persons acquires, directly or indirectly, assets of UBC or any of its Affiliates for cash consideration of not less than $20,000,000; and

 

(q)

“ Services Agreement ” has the meaning given in the preamble.

 

1.2	Certain Rules of Interpretation

 

(a)

Consent - Whenever a provision of this Agreement requires an approval or consent and the approval or consent is not delivered within the applicable time limit, then, unless otherwise specified, the Party whose consent or approval is required shall be conclusively deemed to have withheld its approval or consent.

 

(b)

Currency - Unless otherwise specified, all references to money amounts are to the lawful currency of the United States of America.

 

(c)

Governing Law - This Agreement is a contract made under and shall be governed by and construed in accordance with the laws of the State of New Jersey, without giving effect to the conflict of laws rules of New Jersey or any other jurisdiction.

 

(d)

Headings - Headings and Sections are inserted for convenience of reference only and shall not affect the construction or interpretation of this Agreement.

 

(e)

Including - Where the word “including” or “includes” is used in this Agreement, it means “including (or includes) without limitation”.

 

(f)

No Strict Construction - The language used in this Agreement is the language chosen by the Parties to express their mutual intent, and no rule of strict construction shall be applied against any Party.

 

(g)

Number and Gender - Unless the context otherwise requires, words importing the singular include the plural and vice versa and words importing gender include all genders.

 

(h)

Severability - If, in any jurisdiction, any provision of this Agreement or its application to any Party or circumstance is restricted, prohibited or unenforceable, the provision shall, as to that jurisdiction, be ineffective only to the extent of the

 

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restriction, prohibition or unenforceability without: invalidating the remaining provisions of this Agreement, affecting the validity or enforceability of such provision in any other jurisdiction, or affecting its application to other parties or circumstances.

(i)

Statutory references - A reference to a statute includes all regulations and rules made pursuant to the statute and, unless otherwise specified, the provisions of any statute or regulation which amends, supplements or supersedes the statute or the regulation.

 

(j)

Time - Time is of the essence in the performance of the Parties’ respective obligations.

 

ARTICLE 2

OPTION TO PURCHASE

2.1	Call Right

OPC hereby grants to UBC and Guarantor the right to purchase the Purchased Rights from OPC (the “ Call Right ”) at the Purchase Price at any time during the Term.

2.2	Exercise of Call Right

UBC or Guarantor shall exercise its Call Right by delivering to OPC notice in writing (the “ Call Notice ”) offering to buy the Purchased Rights at the Purchase Price on the terms and conditions contained in the Purchase Agreement. The offer contained in the Call Notice shall be irrevocable and the Parties shall complete the purchase and sale transaction contemplated in the Call Notice, in accordance with and subject to the terms and conditions set forth in the Purchase Agreement at the Anticipated Closing Time.

ARTICLE 3

OPTION TO SELL

3.1

Put Right

UBC hereby grants to OPC the right to sell the Purchased Rights to UBC (the “ Put Right ”) at the Purchase Price at any time on or following the earlier of (i) February 2, 2011, and (ii) the closing of a Sale of UBC.

3.2	Exercise of Put Right

OPC shall exercise its Put Right by delivering to UBC notice in writing (the “ Put Notice ”) offering to sell the Purchased Rights at the Purchase Price on the terms and contained in the Purchase Agreement. The offer contained in the Put Notice shall be irrevocable and the Parties shall complete the purchase and sale transaction contemplated by the Put Notice in accordance with and subject to the terms and conditions set forth in the Purchase Agreement at the Anticipated Closing Time.

 

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ARTICLE 4

PURCHASE PRICE

4.1	Purchase Price

The Parties agree that the purchase price (the “ Purchase Price ”) for the purchase and sale of the Purchased Rights pursuant to the exercise at any time of the Call Right and Put Right shall be equal to the Initial Purchase Price as adjusted in accordance with Section 4.2.

4.2	Adjustments to Initial Purchase Price

The Initial Purchase Price shall be adjusted following the end of each month until the Closing Date:

(i)

by subtracting the amount retained by OPC under Section 3.1 of the Services Agreement during the last month; and

 

(ii)

by adding a notional interest rate of 12% per annum to the Initial Purchase Price as adjusted pursuant to (i).

As an illustration, if the Initial Purchase Price was $13,500,000 and the amount retained by OPC under Section 3.1 of the Services Agreement for each of the first two months of the Term is $250,000:

(i)

after the first month the adjusted Initial Purchase Price would equal $13,382,500 based on the following calculation:

 

(A)

($13,500,000 - $250,000) x 1% = $132,500

 

(B)

($13,500,000 - $250,000) + $132,500 = $13,382,500

 

(ii)

after the second month the adjusted Initial Purchase Price would equal $13,263,825 based on the following calculation:

 

(A)

($13,382,500- $250,000) x 1% = $131,325

 

(B)

($13,382,500 - $250,000) +131,325 = $13,263,825

ARTICLE 5

GUARANTEE

5.1

Guarantee

Guarantor guarantees and covenants that UBC shall duly and punctually perform all of its obligations under this Agreement and shall be jointly and severally liable with UBC and be regarded as in the same position as UBC. Guarantor expressly waives demand, presentment, protest and notice thereof and of default and expressly subordinates to OPC the benefits of subrogation.

 

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ARTICLE 6

GENERAL

6.1	Remedies; Specific Performance

 

(a)

Each Party understands and agrees that money damages would not be a sufficient remedy for any breach of this Agreement and that the other Parties shall be entitled, without any bond or other security being required, to specific performance and injunctive relief as remedies for any such breach without proof of actual damages. Such remedies shall not be exclusive remedies, however, but shall be in addition to all other remedies available to each Party at law or in equity.

 

(b)

The Parties hereby expressly acknowledge and agree that UBC and Guarantor shall have the ability to exercise its Call Right pursuant to Section 2.2 above at any time prior to the termination of the Services Agreement and this Agreement in accordance with Section 3.1(c) of the Services Agreement notwithstanding any failure by UBC or Guarantor prior to such exercise to complete a purchase and sale transaction following an exercise by OPC of its Put Right pursuant to Section 3.2 above.

 

6.2	Public Notices

The Parties shall jointly plan and co-ordinate any public notices, press releases, and any other publicity concerning the transactions contemplated by this Agreement and no Party shall act in this regard without the prior approval of the other, such approval not to be unreasonably withheld, unless such disclosure is required to meet timely disclosure obligations of any Party or the parent company of such Party under Laws or stock exchange rules in circumstances where prior consultation with the other Party is not practicable and a copy of such disclosure is provided to the other Party at such time as it is made to the regulatory authority.

6.3

Notice

Any notice, consent, approval, or demand, required or permitted to be given in connection with this Agreement (in this Section referred to as a “Notice” ) shall be in writing and shall be sufficiently given if delivered (whether in person, by courier service or other personal method of delivery) or transmitted by facsimile or e-mail:

(a)

in the case of a Notice to OPC, at:

Optimal Payments Corp.

c/o Optimal Group Inc.

2 Place Alexis Nihon

3500 De Maisonneuve Blvd. West, #800

Montreal, Quebec, Canada

H3Z 3C1

Attn: General Counsel

Facsimile: (514) 738-8355

 

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with a copy to (which shall not constitute notice):

 

Osler, Hoskin & Harcourt LLP

1000 De La Gauchetière Street West

Montreal, Quebec, Canada

H3B 4W5

Attn: Warren M. Katz

Facsimile: (514) 904-8101

(b)

in the case of a Notice to UBC or to Guarantor, at:

United Bank Card, Inc

53 Frontage Road

Perryville Corporate Park, Bld. III

Hampton, NJ 08827

Attn: Chief Executive Officer

Facsimile: (908) 847-0218

with a copy to:

United Bank Card, Inc

53 Frontage Road

Perryville Corporate Park, Bld. III

Hampton, NJ 08827

Attn: General Counsel

Facsimile: (908) 235-4815

with a copy to (which shall not constitute notice):

Lowenstein Sandler PC

65 Livingston Avenue

Roseland, NJ 07094

Attn: Allen Levithan

Facsimile: (973) 597-2407

Any Notice delivered or transmitted as provided above shall be deemed to have been given and received on the day it is delivered or transmitted, provided that it is delivered or transmitted on a Business Day prior to 5:00 p.m. local time in the place of delivery or receipt. However, if the Notice is delivered or transmitted after 5:00 p.m. local time or if such day is not a Business Day, then the Notice shall be deemed to have been given and received on the next Business Day.

6.4	Further Assurances

The Parties shall with reasonable diligence do all things and provide all reasonable assurances as may be required to consummate the transactions contemplated by this Agreement, and each Party shall provide further documents or instruments required by any other Party as may be reasonably necessary or desirable to effect the purpose of this Agreement and carry out its provisions.

 

6.5	Assignment

 

(a)

Neither UBC nor Guarantor may assign this Agreement or any rights or obligations under this Agreement without the prior written consent of OPC, provided that UBC may, without the consent of OPC, assign this Agreement and all of its rights and obligations hereunder to an Affiliate as part of a sale or transfer of all or substantially all of UBC’s assets.

 

(b)

OPC may not assign this Agreement or any rights or obligations under this Agreement without the prior written consent of UBC and Guarantor, provided that OPC may, without the consent of UBC, assign this Agreement and all of its rights and obligations hereunder to a direct or indirect subsidiary of Optimal Group Inc. incorporated in the United States.

 

6.6	Enforcement

All rights and remedies granted to UBC under this Agreement are deemed to be granted to Jared Isaacman and UBC jointly and severally. Without limiting the foregoing, Jared Isaacman may, without further action of UBC, exercise and enforce any and all rights and remedies granted, or available, to UBC or him under, or with respect to, this Agreement, for his own benefit and/or for the benefit of UBC, and the rights and remedies of Jared Isaacman shall not be dependent or conditioned upon the enforceability of this Agreement against UBC. Notwithstanding the foregoing, in no event shall Jared Isaacman be entitled to any greater remedies, claims, damages or other rights than would have been available to UBC.

6.7

Enurement

This Agreement shall enure to the benefit of and be binding upon the Parties and their respective successors (including any successor by reason of amalgamation of any Party) and permitted assigns.

6.8

Amendment

No amendment, supplement, modification or waiver or termination of this Agreement and, unless otherwise specified, no consent or approval by any Party, is binding unless executed in writing by the Party to be bound thereby.

6.9	Execution and Delivery

This Agreement may be executed by the Parties in counterparts and may be executed and delivered by facsimile and all such counterparts and facsimiles shall together constitute one and the same agreement.

- signature page follows -

 

 

IN WITNESS OF WHICH the Parties have executed this Agreement as of the date first written above.

 

		OPTIMAL PAYMENTS CORP.
		By:	/s/ DAVID SCHWARTZ
			Name: David Schwartz
			Title     President

 

		UNITED BANK CARD, INC.
		By:	/s/ JARED ISAACMAN
			Name: Jared Isaacman
			Title:   Chief Executive Officer

 

SIGNED, SEALED & DELIVERED In the presence of: /s/ JORDAN FRANKEL			/s/ JARED ISAACMAN
Witness			Jared Isaacman

 

 

 

 

SCHEDULE A

 

FORM OF PURCHASE AGREEMENT

 

[See attached]

 

______________________________________________________________________________

PURCHASE AGREEMENT

by and between

[OPTIMAL PAYMENTS CORP.,]

as Seller

 

and

 

[UNITED BANK CARD, INC.,]

 

as Purchaser

 

Dated as of  • , •

________________________________________________________________________

 

 

PURCHASE AGREEMENT

This is a Purchase Agreement (the “ Agreement ”), dated as of • , 2009, by and between OPTIMAL PAYMENTS CORP. (“ Seller ”) and UNITED BANK CARD, INC. (“ Purchaser ”).

WHEREAS, Seller had purchased all of Purchaser's rights, entitlements and interests in respect of a portfolio of (i) residual payments under the ISO Agreement (as defined below) and (ii) residual payments and direct revenues that are ancillary to the servicing of merchants, as more fully described in the residual purchase agreement by and between the Purchaser and Seller dated May 6, 2005 (the “ 2005 Purchase Agreement ” and the transaction contemplated thereby, the “ 2005 Transaction ”);

WHEREAS, Seller, Purchaser and Jared Isaacman have entered into a services agreement dated January o , 2009 pursuant to which Purchaser agreed to perform the Servicing Obligations (as defined below) (the “ Services Agreement ”);

WHEREAS, Seller, Purchaser and Jared Isaacman have entered into purchase and sale option agreement dated January o , 2009 (the “ Option Agreement ”), pursuant to which Seller has granted to Purchaser an option to purchase from Seller, and Purchaser has granted to Seller an option to sell to Purchaser, the Purchased Rights;

WHEREAS, [ Purchaser/Seller ] has sent notice of exercise of its [ Put/Call ] Right (as such expression is defined in the Option Agreement) on __________ in accordance with the terms of the Option Agreement.

WHEREAS, Seller wishes to sell and assign to Purchaser and Purchaser wishes to purchase and assume from Seller, all of Seller’s right, entitlement and interest in the Purchased Rights subject to and in accordance with the terms and conditions of this Agreement;

NOW THEREFORE in consideration of mutual covenants and agreements herein contained, and for other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged by each), the Parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1

Definitions.

“ Adverse Claim ” means a claim, lien (other than a statutory lien or deemed trust securing or in respect of, taxes which are not yet due and payable), security interest, prior claim, charge, hypothec, encumbrance, order, debt, liability, expense, cost, pledge, restriction, easement, option, ownership, interest, conditional sale or other title retention agreement, defect in title, profit or revenue sharing arrangement, or other right or claim of any kind or character whatsoever of any Person. [ LS: Adverse Claim remains an open issue. ]

“ Affiliate ” of any Person means any other Person controlling or controlled by or under common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies

 

 

of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“ Assumed Obligations ” means the Merchant Loss Amounts and the Servicing Obligations.

“ Agreement ” shall mean this Purchase Agreement as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof.

“ Business Day ” means any day, other than a Saturday, Sunday or public holiday, on which banks are open for business in Montreal, Quebec and in the State of New Jersey.

“ Claims ” includes claims, demands, complaints, grievances, actions, suits, causes of action, Orders, charges, indictments, prosecutions, information or other similar process, assessments or reassessments, judgments, debts, liabilities, expenses, costs, damages or losses, contingent or otherwise, including loss of value, professional fees, including fees of legal counsel, and all costs reasonably incurred in investigating or pursuing any of the foregoing or any proceeding relating to any of the foregoing.

“ Closing ” means the completion of the Sale contemplated under this Agreement.

“ Closing Date ” means the date first written above.

“ Closing Time ” means 4:30 p.m. (New York time) on the Closing Date.

“ Direct Revenue Rights ” shall have the meaning ascribed thereto in Section 2.1(a)(iii).

“ EDGAR ” means the Electronic Data Gathering, Analysis, and Retrieval system of the United States Securities and Exchange Commission;

“ Governmental Authority ” means the government of any sovereign state or any political subdivision thereof, or of any political subdivision of a political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory, administrative or other function of or pertaining to government.

“ ISO ” means an independent sales organization.

“ ISO Agreement ” means that certain agreement dated September 3, 2002, as amended, by and between Purchaser and MSI, pursuant to which Purchaser acts as a sub-ISO to MSI and is entitled to receive a percentage of the residual payments payable to MSI in respect of merchants that are referred by Purchaser.

“ Knowledge ” means, (i) in the case of Seller, information the Chief Financial Officer of OGOP Payments Inc. (if OGOP Payments Inc. continues to have one) or the General Counsel of Optimal Group Inc. or if there is no General Counsel an executive officer of Optimal Group Inc. knew or should have known, after due inquiry within Seller by such individual and (ii) in the case of Purchaser, information Jared Isaacman knew or should have known, after due inquiry

 

 

within Purchaser by such individual.

“ Law ” means any applicable foreign or domestic law, code, treaty, rule, ruling, regulation, tariff, order or determination of a court, arbitrator or Governmental Authority.

“ Letter of Instruction ” means that certain letter of instruction executed by MSI and acknowledged by Merrick and Seller, pursuant to which, in connection with the 2005 Transaction, MSI directed Merrick to remit all amounts owed to Purchaser under the ISO Agreement directly to Seller.

“ Marketing Residual Rights ” shall have the meaning ascribed thereto in Section 2.1(a)(i).

“ Member ” means that member of Visa and MasterCard to whom the rights and obligations under the ISO Agreement may be assigned by MSI.

“ Merchant ” means a customer of MSI having executed a Merchant Agreement as a merchant in accordance with the terms of the ISO Agreement or a customer that has executed such other agreement that would bind such Person to pay certain fees to Seller in connection with Third Party Residual Rights.

“ Merchant Agreements ” means the written processing services agreements required by MSI to be entered into by Merchants to enable such Merchant to participate in the Merchant Program.

“ Merchant Loss Amount ” means as of any date of determination, the aggregate amount of all Merchant transactions for which payment has been refused or reversed as a result of any events, transactions, facts, acts, omissions or conditions occurring or that existed on or prior to the Closing Date, or has otherwise resulted in a fee, fine, penalty, liability, payment or loss of any kind by Purchaser or Purchaser’s Affiliates.

“ Merchant Program ” means the package of services offered by MSI which enables a Merchant to make sales to persons representing credit cards and which permits the Merchant to present Sales Drafts to Member for payment and processing.

“ Merrick ” means Merrick Bank Corporation.

“ MSI ” means Credit Card Processing USA, Inc., d/b/a MSI Merchant Services, Inc.

“ Net Residual Payments ” means the net residual payments (i.e. gross revenue less interchange, assessments, bank fees and third party processing fees) in relation to the Portfolio.

“ Order ” means any order, injunction, judgment, administrative complaint, decree, ruling, award, assessment, direction, instruction, penalty or sanction issued, filed or imposed by any Governmental Authority or arbitrator.

“ Party ” or “ Parties ” means individually or collectively, Seller and Purchaser.

“ Person ” means an individual, partnership, corporation, trust unincorporated organization

 

 

or a Governmental Authority.

“ Portfolio ” means the identifiable portfolio of Merchants in respect of which Seller is currently receiving the revenue stream under the 2005 Transaction.

“ Processing Data ” means data mutually agreed to by Purchaser and Seller, including merchant number, transaction volumes, transaction (revenue) fees, transaction costs, and other fees and costs.

“ Purchase Price ” has the meaning ascribed thereto in the Option Agreement.

“ Purchased Rights ” means collectively, the Marketing Residual Rights, the Third Party Residual Rights, and the Direct Revenue Rights.

“ Residual Generating Agreements ” means agreements with American Express, Discover Card, CrossCheck, Comstar, US Wireless, Wright Express and Authorize.net.

“ Sale ” shall have the meaning ascribed thereto in Section 2.1(a).

“ Sales Drafts ” means the written form or electronic format supplied or approved by MSI used in consummating credit card sales transactions charged to the account of a Merchant’s customer.

“ SEDAR ” means the System for Electronic Document Analysis and Retrieval.

“ Servicing Obligations ” has the meaning ascribed thereto in the Services Agreement;

“ Taxes ” includes taxes, duties, fees, premiums, assessments, imposts, levies and other charges of any kind whatsoever imposed by any Governmental Authority, including all interest, penalties, fines, additions to tax or other additional amounts imposed by any Governmental Authority in respect thereof, and including those levied on, or measured by, or referred to as, income, gross receipts, profits, capital, transfer, land transfer, sales, goods and services, harmonized sales, use, value-added, excise, stamp, withholding, business, franchising, property, development, occupancy, employer health, payroll, employment, health, social services, education and social security taxes, all surtaxes, all customs duties and import and export taxes, countervail and anti-dumping, all license, franchise and registration fees and all employment insurance, health insurance government pension plan premiums or contributions.

“ Third Party Residual Rights ” shall have the meaning ascribed thereto in Section 2.1(a)(ii).

“ Tripartite Agreeme