Contribution Agreement (2003)Full Document 

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                             CONTRIBUTION AGREEMENT



                                     DATED

                                FEBRUARY 9, 2000








                                TABLE OF CONTENTS
Page ---- INTRODUCTION...................................................................1 SECTION 1 GENERAL..............................................................1 SECTION 2 CONTRIBUTION OF SMARTGATE FOR PUBCO STOCK............................2 2.1 Issuance and Delivery of Pubco Stock...............................2 2.2 Issuance of Pubco Options..........................................2 2.3 No Lien or Encumbrances on Pubco Stock.............................2 2.4 Fractional Shares..................................................2 2.5 No Registration of the Pubco Stock; Legend.........................2 SECTION 3 CLOSING..............................................................3 3.1 Closing of Transaction.............................................3 3.2 Deliveries at Signing of Agreement.................................3 3.3 Deliveries at Closing by SmartGate.................................3 3.4 Deliveries at Closing by Pubco.....................................3 3.5 Deliveries at Closing by SmartGate Shareholders....................4 3.6 Filings; Cooperation...............................................4 SECTION 4 REPRESENTATIONS AND WARRANTIES BY SMARTGATE..........................4 4.1 Organization and Good Standing of SmartGate........................4 4.2 Capitalization.....................................................4 4.3 Subsidiaries.......................................................4 4.4 Financial Statements...............................................4 4.5 Absence of Undisclosed Liabilities.................................5 4.6 Litigation.........................................................5 4.7 Compliance with Laws...............................................5 4.8 Absence of Certain Changes.........................................5 4.9 Assets.............................................................6 4.10 Tax Matters........................................................6 4.11 Contracts..........................................................6 4.12 Insurance..........................................................7 4.13 Permits............................................................7 4.14 Books and Records..................................................7 4.15 Authority to Execute Agreement.....................................7 4.16 Finder's, Broker's Fees............................................7 4.17 Disclosure.........................................................7
Page ---- SECTION 5 REPRESENTATIONS AND WARRANTIES BY PUBCO..............................8 5.1 Organization and Good Standing.....................................8 5.2 Capitalization.....................................................8 5.3 Authority to Execute Agreement.....................................8 5.4 Subsidiaries.......................................................8 5.5 Financial Statements...............................................8 5.6 Absence of Financial Changes.......................................8 5.7 Absence of Certain Changes.........................................9 5.8 Assets.............................................................9 5.9 Absence of Undisclosed Liabilities................................10 5.10 Litigation........................................................10 5.11 Compliance with Laws..............................................10 5.12 Contracts.........................................................10 5.13 Tax Matters.......................................................10 5.14 To the Best of Pubco's Knowledge, Pubco...........................11 5.15 Books and Records.................................................11 5.16 Investment Intent.................................................11 5.17 Finder's Fee......................................................11 5.18 Disclosure........................................................11 SECTION 6 ACCESS AND INFORMATION..............................................11 6.1 As to SmartGate...................................................11 6.2 As to Pubco.......................................................12 SECTION 7 CONDUCT OF PARTIES PENDING CLOSING..................................12 7.1 Conduct of SmartGate Business Pending Closing.....................12 7.2 Conduct of Pubco Pending Closing..................................12 SECTION 8 CONTRIBUTION OF CAPITAL FOR PUBCO SHARES............................13 8.1 Contribution of Pubco Shares......................................13 8.2 Pubco's Private Placement.........................................13 8.3 Expenses for Transaction..........................................13 8.4 Private Offering Memorandum.......................................13 8.5 Recipient of Pubco Stock..........................................14 8.6 Indemnification...................................................14 SECTION 9 CONDITIONS PRECEDENT TO CLOSING.....................................15 9.1 Conditions Precedent to Pubco's Obligations.......................15 9.2 Conditions Precedent to SmartGate's and the SmartGate Shareholder Obligations...........................................16
Page ---- SECTION 10 ADDITIONAL COVENANTS OF THE PARTIES................................18 10.1 Cooperation.......................................................18 10.2 Expenses..........................................................18 10.3 Confidential Information..........................................18 10.4 Publicity.........................................................19 10.5 Name Change.......................................................19 10.6 Post-Closing Covenants............................................19 10.7 Registration Rights...............................................20 10.8 Budget and Approved Expenditures..................................20 10.9 Insurance.........................................................20 10.10 Amendment of Articles.............................................20 10.11 Loan in Recognition of Tax Liability..............................20 SECTION 11 REMEDIES...........................................................21 11.1 Mutual Termination................................................21 11.2 Defaults Permitting Termination...................................21 11.3 Post-Closing Covenants Benefit Third Parties......................21 11.4 Arbitration.......................................................21 SECTION 12 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS..............21 12.1 As to SmartGate...................................................21 12.2 As to Pubco.......................................................21 SECTION 13 MISCELLANEOUS......................................................22 13.1 Entire Agreement; Amendments......................................22 13.2 Binding Agreement.................................................22 13.3 Attorney's Fees...................................................22 13.4 Severability......................................................22 13.5 Governing Law.....................................................22 13.6 Notices...........................................................22 13.7 Counterparts......................................................23 EXHIBIT LIST..................................................................25 SCHEDULE LIST.................................................................25
CONTRIBUTION AGREEMENT This CONTRIBUTION AGREEMENT ("Agreement") is entered into on this 9th day of February 2000 by and between SmartGate, Inc., a Nevada corporation ("Pubco"), SmartGate, L.C., a Florida Limited Liability Company ("SmartGate"), and shareholders of SmartGate listed on the signature pages hereto, being the only shareholders of SmartGate (the "SmartGate Shareholders, SmartGate Stockholders or SmartGate Members") and who are joining this Agreement only for purposes of Section 1, 2, 3, 9.2 and 10.7 as of the date this Agreement is executed. INTRODUCTION The transaction contemplated by this Agreement is intended to be an integral part of a "tax free" contribution of property under Section 351 of the Internal Revenue Code of 1986 as amended. As a single consolidated transaction, Pubco will simultaneously exchange shares of its stock (the "Pubco Stock") for
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