Exhibit 10.1
 
PORTFOLIO PURCHASE AGREEMENT
 
THIS PORTFOLIO PURCHASE AGREEMENT (this “Agreement”) is made and entered into as
of June 30, 2014 (the “Effective Date”), between Payprotec Oregon, LLC d/b/a
Securus Payments, an Oregon limited liability company (“Seller”), and BlueAcre
Ventures LLC, a Delaware limited liability company (“Purchaser”).
 
WITNESSETH:
 
WHEREAS, Seller is in the business of providing credit card terminals,
processing and related services;
 
WHEREAS, Seller has merchant portfolios (collectively, the “Portfolios”) with
First Data Corporation (the “Processor”), pursuant to processing agreements by
and between Seller and Processor (collectively, the “Processing Agreements”);
 
WHEREAS, Seller has a monthly residual income stream related to the Portfolios
that is payable from Processor to Seller as set forth in Exhibit A (the
“Portfolio Residual”); also attached hereto as Exhibit B is a list of all
merchants that account for the Portfolio Residual (the “Portfolio Merchants”);
 
WHEREAS, Seller desires to sell a portion of the Portfolio Residual to Purchaser
and Purchaser desires to purchase a portion of the Portfolio Residual, all upon
the terms and conditions of this Agreement (the “Portfolio Purchase”);
 
NOW, THEREFORE, in consideration of the foregoing recitals and the following
covenants, the parties agree as follows:
 
1.             Assignment, Purchase and Sale of Portfolio Residual.
 
                1.1           Purchase of Portfolio Residual.     Seller hereby
agrees to sell, convey, transfer and assign to Purchaser, and Purchaser hereby
agrees to purchase from Seller, upon the terms and conditions of this Agreement,
and effective as of the Closing Date, as hereinafter defined in Section 2.1, all
of the Seller’s right, title and interest in the first one hundred thousand
dollars ($100,000.00) of each month’s Portfolio Residual (the “Purchased
Assets”) including, but not limited to all rights or claims of every type and
nature and wherever situated, real, personal, tangible, intangible or contingent
(including all refunds, deposits, rights, claims or payments, whether now
existing or ascertainable, or existing or ascertainable after the Closing Date)
to the Purchased Assets and owned by Seller or in which Seller has any interest
of any type or nature.  The Seller shall also redirect the remaining Portfolio
Residual to Purchaser to allow for all the Portfolio Residual to be paid
directly to Purchaser.  Purchaser shall be entitled to receive the payments due
from Processor for the entire Portfolio Residual for the thirty-six (36) month
period commencing on the Closing Date (the “Payment Period”).  Purchaser shall
retain the Purchased Assets from each month’s Portfolio Residual and remit the
remaining Portfolio Residual for such month promptly to Seller, but in no event
later than three (3) business days after receipt.  Upon the earlier of (i) the
conclusion of the Payment Period or (ii) a breach by Seller of this Agreement,
Seller shall permanently assign to Purchaser certain merchants that Purchaser
shall select, in its sole discretion, from the Portfolio Merchants whose prior
twelve (12) month average monthly residual income streams in aggregate equal not
less than $100,000.00, but not more than $100,500.  Upon the conclusion of the
Payment Period, Seller shall use its best efforts to facilitate the assignment
in the preceding sentence in favor of Purchaser and agrees to take such
reasonable actions and execute such documents and agreements as reasonably
necessary to permit Purchaser to own and operate said merchants as contemplated
hereby, and in the manner in which it has been operated in the past, including,
without limitation, any assignment, bill of sale or related
agreements.  Purchaser shall have no duty to fulfill any of the obligations of
Seller under the Processing Agreements unless otherwise specifically agreed to
in writing by Purchaser.
 
 
 

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1.2           Purchase Price.
 
(a)           The “Purchase Price” shall equal $2,800,000.00 based on an initial
reference residual amount of $250,000.00 per month in accordance with residual
reports provided by Seller.
 
(b)           Subject to the satisfaction all of the conditions to Closing set
forth in Section 9, $1,028,049.41 of the Purchase Price (adjusted by the amount
of the payment made for the benefit of E-Cig in Section 1.2(c) below) shall be
paid directly to E-Cig Ventures LLC, a Delaware limited liability company
(“E-Cig”), to the account set forth in Schedule 1.2 attached hereto, for the
benefit of Seller in connection with Seller exercising, concurrently with the
execution of this Agreement, its Right to Repurchase as defined in that certain
Option Agreement between E-Cig and Seller dated January 27, 2014 (the “Option
Agreement”).
 
(c)            Subject to the satisfaction all of the conditions to Closing set
forth in Section 9, $1,371,950.59 shall be paid directly to Shadow Tree Income
Fund A LP, a Delaware limited liability company (“Shadow”), to the account set
forth in Schedule 1.2 attached hereto, for the benefit of E-Cig in connection
with E-Cig prepaying and satisfying all outstanding amounts owed to Shadow,
concurrently with the execution of this Agreement, pursuant to that certain Loan
and Security Agreement between E-Cig and Shadow dated April 21, 2014 (the “E-Cig
Loan Agreement”).
 
1.3           Consulting Arrangement.  Concurrent with the execution of this
Agreement, Seller shall enter into a non-exclusive reseller agreement with
BlueSquare Resolutions, LLC, a Delaware limited liability company (“BlueSquare”)
for a term of three (3) years (the “Independent Contractor Agreement”).
 
1.4           Additional Payments.
 
(a)            If (i) the entire Portfolio Residual, in a form satisfactory to
Purchaser, is successfully redirected to Purchaser’s bank account, (ii) Seller
has executed the Independent Contractor Agreement, (iii) Seller is not then and
at any time before has not been in breach of this Agreement, the Independent
Contractor Agreement or that certain Secured Residual Loan Agreement between
Purchaser and Seller on even date herewith (the “Loan Agreement”) and (iv)
Seller has not otherwise defaulted in any obligation to Purchaser or to
Processors, then Seller shall be eligible to receive additional payments
pursuant to the following table:
 
Term
 
Additional Payment
 
Benchmark I has been achieved
  $ 66,666.66  
Benchmark II has been achieved
  $ 66,666.67  
Benchmark III has been achieved
  $ 66,666.67  

 
As used in this Agreement:
 
“Benchmark I” means the Portfolio Residual received by Purchaser each month for
the twelve (12) month period following the Closing Date is equal to or greater
than $100,000.00 and Seller submits to BlueSquare, and BlueSquare accepts, a
minimum monthly average of: (i) twenty-five (25) new merchant processing
applications for the first three (3) months of such period and (ii) seventy-five
(75) new merchant processing applications for the remaining nine (9) months of
such period pursuant to the Independent Contractor Agreement.
 
 
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“Benchmark II” means the Portfolio Residual received by Purchaser each month for
the twelve (12) month period following the first anniversary of the Closing Date
is equal to or greater than $100,000.00 and Seller submits to BlueSquare, and
BlueSquare accepts, a minimum monthly average of seventy-five (75) new merchant
processing applications for such period pursuant to the Independent Contractor
Agreement.
 
“Benchmark III” means the Portfolio Residual received by Purchaser each month
for the twelve (12) month period following the second anniversary of the Closing
Date is equal to or greater than $100,000.00 and Seller submits to BlueSquare,
and BlueSquare accepts, a minimum monthly average of seventy-five (75) new
merchant processing applications for such period pursuant to the Independent
Contractor Agreement.
 
(b)           If Seller (i) is not then and at any time before has not been in
breach of this Agreement, the Independent Contractor Agreement or the Loan
Agreement, (ii) has not otherwise defaulted in any obligation to Purchaser or to
Processors, (iii) has delivered, and BlueSquare has accepted, a minimum monthly
average of seventy-five (75) new merchant processing applications pursuant to
the Independent Contractor Agreement for each of the three successive twelve
(12) month periods following the Closing Date and (iv) no later than fifteen
(15) days following the conclusion of the Payment Period, has successfully
permanently assigned to Purchaser those certain merchants agreed upon by
Purchaser and Seller in accordance with Section 1.1, then Purchaser shall
promptly pay Seller an additional sum equal to $200,000.00.
 
2.            Closing.
 
2.1           Date of Closing.  Subject to the terms and conditions of
this Agreement, the closing of the Portfolio Purchase contemplated by
this Agreement (the “Closing”) shall take place remotely with the exchange of
electronic signatures on or prior to 1:30 PM pacific standard time on the day
that all of the conditions to Closing set forth in Section 9 below are either
satisfied or waived (other than conditions which, by their nature, are to be
satisfied on the Closing Date), or at such other time, date or place as Seller
and Purchaser may mutually agree upon in writing. The date on which the Closing
is to occur is herein referred to as the “Closing Date”.
 
3.            Liabilities.
 
3.1           Assumption of Liabilities by Purchaser.  Purchaser shall not
assume or perform, pay or discharge any obligations or liabilities relating to
the Portfolio Residual.  Further, Purchaser shall not indemnify Seller for or
hold Seller harmless from and against any liabilities relating to the Portfolio
Residual.  All liabilities shall remain with Seller and Seller shall indemnify
and hold Purchaser harmless from or against any claims in respect of liabilities
arising or relating to events prior to the conclusion of the Payment Period,
including all Retained Liabilities (as defined below).
 
3.2           Retained Liabilities.  Seller agrees that Purchaser shall not be
obligated to assume or perform, and Purchaser is not assuming, and that Seller
shall be responsible for performing and satisfying, or otherwise discharging, at
its sole expense, and without liability, cost, loss or expense to Purchaser, all
liabilities and obligations of Seller that arise before the conclusion of the
Payment Period, including liabilities and obligations arising out of the
Processing Agreements (the “Retained Liabilities”), whether such Retained
Liabilities are known or unknown, fixed or contingent, or certain or uncertain;
provided, further, to the extent any amounts remain due and payable to Seller
after the payment of the initial Purchase Price, Purchaser may offset any
amounts for which it becomes liable in respect to the Retained Liabilities
against such amounts that would otherwise be due and payable to Seller.  The
Retained Liabilities shall include, without limitation, any and all of the
following obligations and liabilities of Seller:
 
(a)           Employee Compensation and Benefits.  Any liabilities to employees
of Seller arising out of employee’s compensation claims or other claims not
specifically assumed by Purchaser pursuant to Section 3.1, as well as
liabilities to employees of Seller due under any management profit sharing or
bonus plan.
 
 
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(b)           Taxes.  All federal, state, local, foreign or other taxes that
(i) have arisen or may arise thereafter out of any business or other operations
conducted by Seller either prior to or after the Closing Date, including the
operations of the Portfolio Residual, (ii) have become payable by Seller as a
result of the transactions contemplated by this Agreement or (iii) for which
Seller is or, at any time hereafter, may become liable.
 
(c)           Liens and Encumbrances.  Any liens, claims or encumbrances on any
of the assets of the Portfolio Residual including, but not limited to, those
that are or may be asserted by Processor.
 
(d)           Administrative Actions, Claims and Legal Proceedings.  Any claims
(including counter-claims or cross-claims), demands, actions, suits,
administrative actions or legal proceedings that have been asserted or, to the
knowledge of Seller, threatened against Seller, the Portfolio Residual or
Purchaser, whether prior to or after the Closing Date that arises in any way
from or in connection with (i) the conduct or operation of the Portfolio
Residual, or (ii) any other business or non-business activities of Seller
conducted prior hereto or hereafter, including the legal actions or other
proceedings set forth in Schedule 4.8 hereto.
 
(e)            Indemnity Obligations.  Any liabilities of Seller arising under
Seller’s indemnity obligations pursuant to this Agreement.
 
(f)            Operational Liabilities.  Any liabilities or obligations with
respect to chargebacks, ACH rejects, brand registration fees, card Association
(as defined below) fines and other related losses relating to transactions and
any amounts due under the Processing Agreement arising at any time before the
conclusion of the Payment Period.
 
4.             Representations and Warranties of Seller.  Seller hereby
represents and warrants to Purchaser, as of the date hereof and as of the
Closing Date, the following:
 
4.1           Authorization.  Seller has all the necessary capacity and
authority to enter into and perform its obligations under this Agreement.  This
Agreement and the performance by Seller of its obligations hereunder have been
duly authorized by all necessary action of Seller.  This Agreement has been duly
executed, and upon execution and delivery by Seller will constitute a valid and
binding agreement enforceable against Seller in accordance with its terms,
except as such enforceability may be limited by (i) bankruptcy, insolvency,
moratorium or other similar laws affecting creditors’ rights, and (ii) general
principles of equity relating to the availability of equitable remedies
(regardless of whether any such agreement is sought to be enforced in a
proceeding at law or in equity).
 
4.2           Financial Statements. Seller has delivered to Purchaser  Seller’s
residual reports for the Portfolio Residual and all other relevant financial
information relating to the Portfolio Residual (the “Financial
Information”).  The Financial Information presents fairly, in all material
respects, the finances relating to the Portfolio Residual.  No material events
or circumstances have occurred or, to the knowledge of Seller have been
threatened, which, whether immediately or with the passage of time would result
in any material adverse change to the Portfolio Residual from that disclosed in
the Financial Information.
 
 
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4.3           Brokers’ Fees.  Seller has no liability or obligation to pay any
fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which Purchaser could become
liable or obligated or for which Seller, after the Closing Date, will have any
continuing obligation.
 
4.4           Full Disclosure.  No written representation, warranty or other
statement of Seller in any agreement, certificate or written statement given to
Purchaser, as of the date such representation, warranty, or other statement was
made, taken together with all such written agreements, certificates and written
statements given to Purchaser, contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements contained in
the certificates or statements not misleading.
 
4.5           Compliance with Laws.  Seller has complied in all material
respects with all applicable U.S. federal, state, municipal and other political
subdivision or governmental agency statutes, ordinances and regulations, with
all applicable foreign statutes, ordinances and regulations as they apply to the
operation of its business and the Portfolio Residual in the United States.
 
4.6           Title to and Adequacy.  At the Closing, Seller will convey and
transfer to Purchaser good, complete and marketable title to all of the
Portfolio Residual, free and clear of any and all restrictions and conditions on
transfer or assignment, and free and clear of all mortgages, liens, security
interests, encumbrances, pledges, leases, equities, claims, charges, conditions,
conditional sale contracts and any other adverse interests.  No actions,
proceedings or transactions have been commenced or undertaken by Seller which
give or would give rights to any person, other than Purchaser, in any of the
Portfolio Residual or interfere with the consummation of the transactions
contemplated by this Agreement.
 
4.7           No Conflict.  The execution and delivery of this Agreement by
Seller and the performance of its obligations hereunder:
 
(a)           are not in violation or breach of, and will not conflict with or
constitute a default under, any of the terms of any note, debt instrument,
security instrument or other contract, agreement or commitment binding upon
Seller or its assets or properties;
 
(b)           will not result in the creation or imposition of any lien,
encumbrance, equity or restriction in favor of any third party upon any of the
assets or properties of Seller except as contemplated by this Agreement; and
 
                                                (c)           will not conflict
with or violate any applicable law, rule, regulation, judgment, order or decree
of any government, governmental instrumentality or court having jurisdiction
over Seller or its assets or properties.
 
4.8           Litigation and Proceedings.  Except as set forth in Schedule 4.8
hereto, there is no action, suit, proceeding or investigation, or any counter or
cross-claim in an action brought by or on behalf of Seller, whether at law or in
equity, or before or by any governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, or before any arbitrator of any
kind, that is pending or, to the best knowledge of Seller, threatened, against
Seller, which (i) could reasonably be expected to have a material adverse effect
on Seller’s ability to perform its obligations under this Agreement, the
Independent Contractor Agreement or any other agreement entered into in
connection with this Agreement or complete any of the transactions contemplated
hereby or thereby, or (ii) involves the reasonable possibility of any judgment
or liability, or which may become a claim, against Purchaser or the Portfolio
Residual, whether prior or subsequent to the Closing Date.  Except as set forth
in Schedule 4.8, Seller is not subject to any judgment, order, writ, injunction,
decree or award of any court, arbitrator or governmental department, commission,
board, bureau, agency or instrumentality having jurisdiction over Seller or the
Portfolio Residual.
 
 
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4.9           Seller.  Except for E-Cig’s ownership of the first two hundred
thousand dollars ($200,000) of each month’s Portfolio Residual, Seller owns one
hundred percent (100%) of the Portfolio Residual and there exist no options or
other agreements or arrangements to obtain any ownership interest in the
Portfolio Residual by any other person or entity other than Purchaser.
 
4.10         Cash Flow of Portfolio Residual. Attached hereto as Schedule 4.10
is Seller’s most recent of residual reports for the Portfolio Residual (the
“Settlement Reports”).  Since the date of the Settlement Reports, there has not
been a material change in the aggregate cash flow generated by Portfolio
Merchants nor does Seller have any reason to believe there will be in the
future.
 
4.11         Portfolio Information.  All information disclosed to Purchaser in
this Agreement or previously provided to Purchaser relating to the Portfolio
Residual, the sales agents being paid a portion of the Portfolio Residual, the
agreements with Seller’s sales agents, including, without limitation, the
residual reports provided by Seller to Purchaser relating to the Portfolio
Residual and also the residuals payable to Seller’s sales agents (collectively
the “Portfolio Information”) is true, accurate and complete and presents fairly,
in all material aspects, the transactions and cash flows of the Portfolio
Residual and the amounts payable to the sales agents.  Seller does not maintain
or control a reserve account or other funds related to the Portfolio
Residual.  Seller has not received any notice of default or termination in
relation to any Portfolio Merchants in the Portfolio Residual nor knows of any
bankruptcy for any such Portfolio Merchant.  No material events or circumstances
have occurred or, to the knowledge of Seller, have been threatened which,
whether immediately or with the passage of time, could be reasonably expected to
result in any material adverse change in the Portfolio Residual from the results
reflected in the Portfolio Information.  Seller has provided Purchaser with an
accurate and complete copy of the Processing Agreements (including any
amendments thereto).  Seller is currently in compliance in all material respects
with the provisions of the Processing Agreements.  Neither Seller, nor to
Seller’s knowledge, the Processor, is in breach or default under the terms of
the Processing Agreements and to the Seller’s knowledge, no event has occurred
which, with due notice or the passage of time or both, would constitute a breach
or default.
 
4.12         Compliance with VISA/MasterCard Rules.  Seller has operated and
conducted its business, in all material respects, in accordance with any and all
applicable VISA/MasterCard rules and regulations, including, but not limited to
the privacy and security requirements under the Payment Card Industry Data
Security Standard (the “Association Requirements”) with regards to Seller’s use,
access, and storage of certain credit card non-public personal information
(“Cardholder Information”).  Visa, MasterCard, Discover, American Express, any
ATM or Debit Networks, and the other financial service card organizations shall
be collectively known herein as “Associations.” Seller has complied with its
obligations under any applicable state or federal law or regulations as may be
in effect or as have been enacted, adopted or determined regarding the
confidentiality, use, and disclosure of Cardholder Information.  Seller has
ensured that that any agent, including a subcontractor, to whom it provides
Cardholder Information received from, or created or received by, Seller has
agreed to the same restrictions and conditions that apply to Seller with respect
to such information.  Seller has complied with all applicable laws, Association
Requirements and industry standards in connection with the operation of its
business as it relates to the Portfolio Residual.
 
4.13         Contracts, Agreements and Commitments.  Seller has supplied
Purchaser with a true and correct copy of each merchant agreement and
application relating to the Portfolio Residual and all agreements relating to
any sales agents or other entities or persons paid a portion of the Portfolio
Residuals (collectively, the “Contracts”).  All agreements relating to any sales
agents or other entities or persons paid a portion of the Portfolio Residuals
are attached hereto as Schedule 4.13.   Each of the Contracts is a valid and
binding obligation of the parties thereto.  Seller has performed in all material
respects the obligations required to be performed by it under each Contract, no
material defaults or claims of defaults have been made or threatened under any
Contract, and there are no facts or conditions which have occurred or are
anticipated to occur which, through the passage of time or the giving of notice,
or both, would constitute a default under or would cause the acceleration of any
obligation of any party to any Contract.  Seller has not waived any material
right that it has under any Contract.
 
 
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4.14         Undisclosed Liabilities.   Seller has no Liabilities with respect
to the Portfolio Residual, except (i) those which are adequately reflected or
reserved against in the financial statements provided as of the Closing Date,
and (ii) those which have been incurred in the ordinary course of business
consistent with past practice prior to the Closing Date and which are not,
individually or in the aggregate, material in amount.
 
5.           Representations and Warranties of Purchaser.  Purchaser hereby
represents and warrants to Seller, as of the date hereof and as of the Closing
Date, the following:
 
5.1           Due Organization of Purchaser. Purchaser is a limited liability
company duly organized, validly existing and in good standing under the laws of
the state of Delaware
 
5.2           Authorization of Purchaser.  This Agreement has been duly
authorized, adopted and approved by the Purchaser.  Purchaser has full power and
authority to enter into and to perform its obligations under this
Agreement.  The execution and delivery of this Agreement by Purchaser and the
performance of the transactions contemplated hereby have been duly and validly
authorized by and on behalf of Purchaser, and this Agreement is binding upon and
enforceable against Purchaser in accordance with its terms.
 
5.3           Brokers’ Fees.  Purchaser has no liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which Seller could become liable
or obligated.
 
5.4           Purchaser’s Representations and Warranties. The representations
and warranties of Purchaser contained herein do not contain any statement of a
material fact that was untrue when made or omits any material fact necessary to
make the information contained therein not misleading.
 
6.           Covenants and Other Agreements.  From the date hereof, except as
otherwise provided in this Agreement or the Independent Contractor Agreement, or
consented to in writing by Purchaser (which consent shall not be unreasonably
withheld or delayed), Seller shall (i) manage the Portfolio Residual in the
ordinary course of business consistent with past practice; and (ii) use its best
efforts to maintain and preserve intact its current Portfolio Residual,
operations and franchise and to preserve the rights, franchises, goodwill and
relationships of its employees, customers, lenders, suppliers, regulators and
others having relationships with the Seller. Without limiting the foregoing,
from the date hereof:
 
6.1           Fulfillment of Conditions and Covenants.  No party shall take any
course of action inconsistent with satisfaction of the requirements or
conditions applicable to it set forth in this Agreement.
 
6.2           Further Assurances.  Each of parties hereto shall, and shall cause
their respective affiliates to, perform all reasonable acts, execute all
documents and do all things reasonably requested by the other party or that are
reasonably necessary to carry out the provisions hereof and give effect to the
transactions contemplated by this Agreement and the other documents contemplated
hereby.
 
6.3           Press Releases.  No party will issue or authorize to be issued any
press release, statement to the public or to its employees generally or similar
announcement concerning this Agreement or any of the transactions contemplated
hereby without the prior approval of the other party, which approval shall be
given in order to allow compliance with the disclosure requirements of
applicable securities laws.
 
 
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6.4           Expenses.  Except as provided in Section 11.8, each party shall
bear its own expenses related to the transactions contemplated by this Agreement
(including legal, accounting or other professional expenses), whether or not
such transactions are consummated.
 
6.5           Confidential Information.  The parties agree that as a result of
entering into this Agreement, they will have access to certain “Confidential
Information”, which for purposes of this Agreement shall include: (i) the terms
and conditions of this Agreement; (ii) trade secrets, business plans,
strategies, pricing, customer lists, know-how, business methods and/or
practices; and (iii) other information relating to the disclosing party or its
affiliates that is not generally known to the public.  Notwithstanding the
foregoing, the term Confidential Information specifically excludes (i)
information that is now in the public domain or subsequently enters the public
domain by publication or otherwise through no action or fault of the receiving
party; (ii) information that is known to the receiving party without restriction
prior to receipt from the disclosing party, from its own independent sources as
evidenced by such receiving party's written records, and which was not acquired,
directly or indirectly, from the other party; (iii) information that a receiving
party receives from any third party having a legal right to transmit such
information, and not under any obligation to keep such information confidential;
and (iv) information independently developed by a receiving party or their
employees or agents.  As a condition to the receipt of the Confidential
Information from the disclosing party, the receiving party shall:  (i) not
disclose in any manner, directly or indirectly, to any third party any portion
of the disclosing party's Confidential Information; (ii) not use the disclosing
party's Confidential Information in any fashion except to perform its duties
hereunder or with the disclosing party's express prior written consent; (iii)
disclose the disclosing party's Confidential Information, in whole or in part,
only to employees and agents who need to have access thereto for the receiving
party's internal business purposes; (iv) take all necessary steps to ensure that
its employees and agents are informed of and comply with the confidentiality
restrictions contained in this Agreement; and (v) take all necessary precautions
to protect the confidentiality of the Confidential Information received
hereunder and exercise at least the same degree of care in safeguarding the
Confidential Information as it would with its own confidential information, and
in no event shall apply less than a reasonable standard of care to prevent
disclosure.  The receiving party shall promptly notify the disclosing party of
any unauthorized disclosure or use of the Confidential Information.  The
receiving party shall cooperate and assist the disclosing party in preventing or
remedying any such unauthorized use or disclosure.  Notwithstanding the
foregoing, it shall not be a breach of this Agreement for a receiving party to
disclose Confidential Information if required to do so under law, in a judicial
or other governmental investigation or proceeding or pursuant to the rules of
the Securities and Exchange Commission or any stock exchange or listing system;
provided, that the other party has been given prior notice and the party
disclosing such information has sought all reasonable safeguards against
widespread dissemination prior to such disclosure.
 
6.6           Purchaser acknowledges and understands that with respect to Seller
and its affiliates and owners, even the potential existence of the this
transaction may constitute material, non-public information (as further defined
herein below) and that any dissemination, use or disclosure in any way of the
information herein to any outside person, firm or business, including, but not
limited to, any stockholder of Seller and its affiliates and owners or a third
party, by the Purchaser related to this Agreement may result in violations of
federal securities laws, including but not limited to Sections 10(b) and 16(b)
of the Securities Exchange Act of 1934, as amended, Regulation FD, and
Securities and Exchange Commission Rules 10(b)5-1 and 10(b)5-2.  Purchaser
hereby unconditionally agrees that it shall not intentionally and willfully
purchase or sell securities related to Seller, including without limitation
Excel Corporation trading as EXCC or the securities of any transaction related
entity, directly or indirectly, while in the possession of material, non-public
information concerning the issuer of those securities. Purchaser also agrees not
to disclose or communicate such material non-public information regarding Seller
or Excel Corporation to any other person under circumstances in which it is
reasonably foreseeable that such person is likely to purchase or sell the
securities of Excel Corporation. Purchaser further agrees to advise its
representatives who are informed of the matters which are the subject of this
Agreement of the foregoing obligation. Purchaser further acknowledges and agrees
that it and its representatives remain directly and individually responsible for
compliance with any and all U.S. federal and state securities laws.  As used
herein, “material, non-public information” is any “non-public” information,
which a reasonable investor might consider important in deciding whether to buy,
sell or hold securities or that could affect the market price of the securities.
Information is considered to be “non-public” unless it has been publicly
disclosed, and adequate time must have passed for the securities markets to
digest the information.
 
 
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6.7           Conduct of Business.  Seller shall: (i) reserve and maintain all
permits required for the conduct of the Seller’s business as currently conducted
or the ownership and use of the Portfolio Residual; (ii) pay the debts, taxes
and other obligations of the Seller’s business when due; (iii) continue to
collect amounts due under the Portfolio Residual in a manner consistent with
past practice, without discounting such amounts; (iv) defend and protect the
assets included in the Portfolio Residual from infringement or usurpation; (v)
maintain its books and records in accordance with past practice and make such
available to Purchaser at Purchaser’s request; (vi) notify Purchaser within
seventy-two (72) hours of becoming aware of any changes related to the Portfolio
Residual; and (vii) comply in all material respects with all laws applicable to
the conduct of its business or the ownership of the Portfolio Residual.
 
7.             Indemnification.
 
7.1           Seller.  Seller hereby agrees to indemnify and hold Purchaser
harmless from and against, and to promptly defend Purchaser from and reimburse
Purchaser for, any and all losses, damages, costs, expenses, liabilities,
obligations and claims of any kind (including without limitation, reasonable
attorneys’ fees and other legal costs and expenses) which Purchaser may at any
time suffer or incur, or become subject to, as a result or by reason of (i) any
breach of this Agreement by Seller; (ii) the untruth or inaccuracy of any
representation or warranty of Seller set forth herein; (iii) any issue arising
out of, concerning, or affecting, whether directly or indirectly, the Portfolio
Residual; (iv) any claim or lawsuit, pending or threatened, by Processors
against Purchaser; or (v) any breach of the Processing Agreements by Seller
(collectively, the “Claims”).
 
7.2           Claims.  If a Claim is made against Purchaser, Purchaser shall
promptly give notice of such Claim to Seller.  If Seller promptly notifies
Purchaser that the claim is to be contested and provides Purchaser written
assurance of the full indemnification of Purchaser, Seller shall have the right
to control all settlements (unless Purchaser agrees to assume the costs of
settlement) and to select legal counsel (reasonably satisfactory to Purchaser)
to defend any and all such claims at the sole cost and expense of
Seller.  Purchaser may select counsel to participate in any defense, in which
event the fees and expenses of Purchaser’s counsel shall be entirely borne by
Purchaser.  The parties shall cooperate with each other and provide each other
with access to relevant books and records in their possession as may be
reasonably necessary or appropriate with respect to any claim made pursuant to
this Section 7. Purchaser agrees that no Claim will be made against Seller for
amounts less than $25,000.
 
8.             Non-Competition.  All merchants listed on the attached Exhibit C
shall collectively be referred to as the “Protected Merchants”.  For a period of
five (5) years commencing on the Closing Date, the parties shall not, directly
or indirectly, knowingly cause or permit any of its employees, agents,
principals, affiliates, subsidiaries or any other person or entity with whom it
has the right by contract to control or otherwise direct, to interfere with,
disrupt, or attempt to interfere with or disrupt, any business relationship of
the other party with respect to the Protected Merchants.
 
 
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9.             Conditions Precedent to Purchaser’s Obligation to Close.  The
obligations of Purchaser to enter into and complete the Closing under this
Agreement are subject, at its option, to the fulfillment at or prior to the
Closing Date, and in any event on or before the date three (3) days from the
Effective Date, of each of the following conditions, any one or more of which
may be waived by Purchaser:
 
9.1           Representations and Warranties.  The representations and
warranties of Seller contained in this Agreement, or in any writing delivered
pursuant hereto, shall be true and correct in all material respects on and as of
the Closing Date as if made on and as of the Closing Date, except to the extent
that any of such representations and warranties shall be incorrect as of the
Closing Date because of events or changes occurring or arising after the date
hereof in the ordinary course of business, none of which shall be, individually
or in the aggregate, materially adverse.
 
9.2           Consent of Processor; Other Consents and Approvals.  The Processor
shall consent to the transactions contemplated hereby, and shall enter into
Purchaser’s standard form of estoppel certificate, acknowledging and agreeing
to, among other things, the form of agreement between Processor and Seller, as
well as the good standing and absence of events of default by Seller under such
agreement, and the purchase and sale of the Portfolio Residual as contemplated
hereby. All consents and approvals required for the consummation of the
transactions contemplated by this Agreement and to permit Purchaser to acquire
all of the assets pursuant hereto, without thereby violating any laws,
government regulations or contracts, shall have been obtained.
 
9.3           Miscellaneous.  Seller shall have also complied with the following
conditions:
 
(a)            Seller shall have duly performed and complied in all material
respects with all agreements, covenants and conditions required by this
Agreement and each of the other documents to be performed or complied with by it
prior to or on the Closing Date.
 
(b)            No action shall have been commenced against Purchaser or Seller,
which would prevent the Closing.  No injunction or restraining order shall have
been issued by any governmental authority, and be in effect, which restrains or
prohibits any transaction contemplated hereby.
 
(c)            Prior to the Closing Date, there shall not have occurred any
material adverse change, effect, fact, development or event, nor shall any event
or events have occurred that, individually or in the aggregate, with or without
the lapse of time, could reasonably be expected to result in such a material
adverse change, effect, fact, development or event.
 
(d)            All encumbrances relating to the Portfolio Residual shall have
been released in full, and Seller shall have delivered to Purchaser written
evidence, in form satisfactory to Purchaser in its sole discretion, of the
release of such encumbrances.
 
(e)            Purchaser shall have received a certificate, dated the Closing
Date and signed by a duly authorized officer of Seller, that each of the
conditions set forth in this Section 9 have been satisfied.
 
(f)            Purchaser shall have received a certificate of the Secretary or
an Assistant Secretary (or equivalent officer) of Seller certifying that
attached thereto are true and complete copies of all resolutions adopted by
Seller authorizing the execution, delivery and performance of this Agreement and
the other documents contemplated herein and the consummation of the transactions
contemplated hereby and thereby, and that all such resolutions are in full force
and effect and are all the resolutions adopted in connection with the
transactions contemplated hereby and thereby.
 
(g)           Purchaser shall have received a certificate of the Secretary or an
Assistant Secretary (or equivalent officer) of Seller certifying the names and
signatures of the officers of Seller authorized to sign this Agreement, and the
other documents to be delivered hereunder and thereunder.
 
 
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(h)            Seller shall have delivered to Purchaser the executed Independent
Contractor Agreement, executed Loan Agreement and such other documents or
instruments Purchaser reasonably requests and are reasonably necessary to
consummate the transactions contemplated herein including but not limited to
bills of sale, assignments, consents, certificates of title, Seller’s tax
returns for the last three (3) years, background checks, credit checks, and
Financial Information.
 
(i)             Seller shall have delivered to Purchaser executed agreements and
instruments between Seller and E-Cig, in forms acceptable to Purchaser,
memorializing the exercise of the Right to Repurchase as defined in the Option
Agreement, including but not limited to a bill of sale, release, assignment and
assumption agreement and any other documents necessary to consummate said Right
to Repurchase.
 
(j)            Purchaser shall have received executed agreements and instruments
between Shadow and E-Cig, in forms acceptable to Purchaser, memorializing
E-Cig’s prepayment of the loan and Shadow no longer having a security interest
in the Portfolio Residual pursuant to the E-Cig Loan Agreement, including but
not limited to a release, payment letter and any other documents necessary to
consummate the matters stated herein.
 
(k)           Purchaser shall have received (i) a fully executed operating
agreement for Seller, naming Thomas A. Hyde and Robert Winspear as Managing
Members and reflecting the 100% ownership of all equity securities of Seller by
Excel Corporation, (ii) a certificate of designation of preferred stock by and
between Seller and each of Steven Lemma and Mychol Robirds, (iii) a fully
executed Exchange Agreement between Seller and each of Steven Lemma, Mychol
Robirds and E-Cig (and all amendments), and (iv) a fully executed Option
Agreement and Residual Purchase Agreement between E-Cig and Seller including all
completed and signed exhibits and ancillary documents.
 
10.           Conditions Precedent to Seller’s Obligations to Close.  The
obligations of Seller to complete the Closing under this Agreement are subject,
at their option, to the fulfillment at or prior to the Closing Date of each of
the following conditions, any one or more of which may be waived by Seller:
 
10.1         Representations and Warranties.  The representations and warranties
of Purchaser contained in this Agreement, or in any writing delivered pursuant
hereto, shall be true and correct in all material respects on and as of the
Closing Date.
 
10.2         Consents and Approvals.  All consents and approvals required for
the consummation of the transactions contemplated by this Agreement and to
permit Purchaser to acquire all of the assets pursuant hereto, without thereby
violating any laws, government regulations or agreements, shall have been
obtained.
 
11.           Miscellaneous Provisions.
 
11.1         Survival.  All representations, warranties, covenants, conditions,
commitments, undertakings and agreements of any of the parties hereto made in
this Agreement or in any certificate or document delivered pursuant hereto shall
survive the execution and delivery hereof and the Closing hereunder and any
investigation made by any party.
 
 
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11.2         Notices.  Any notice or other document to be given hereunder by any
of the parties hereto to the other parties hereto shall be in writing and
delivered personally or sent for overnight delivery with a nationally known
overnight carrier (such as Federal Express) or by certified or registered mail,
postage prepaid, as follows:
 
Seller:
 
Payprotec Oregon, LLC d/b/a Securus Payments
7724 SE Aspen Summit Drive – Suite 300
Portland, Oregon 97266
 
Purchaser:
 
BlueAcre Ventures LLC
15950 North 76th Street, Suite 100
Scottsdale, Arizona 85260
 
or to such other address as hereafter shall be furnished in writing by any of
the parties hereto to the other parties hereto.  Any notice so given shall be
deemed received when personally delivered or confirmed delivered.
 
11.3         Entire Agreement.  This Agreement and any ancillary documents,
including any schedules and exhibits, contains the entire agreement among the
parties with respect to the transactions contemplated hereunder and supersedes
all prior negotiations, agreements and undertakings, if any, including any
previous e-mails and letters of intent relating to the transactions
contemplated  (which shall be of no force or effect whatsoever).
 
11.4         Amendment; Waiver.  This Agreement may be amended only by written
agreement of all of the parties hereto.  The failure of any of the parties to
this Agreement to require the performance of term or obligation under this
Agreement or the waiver by any of the parties to this Agreement of any breach
hereunder shall not prevent subsequent enforcement of such term or obligation or
be deemed a waiver of any subsequent breach hereunder.
 
11.5         Injunctive Relief.Seller acknowledges and agrees that (i) a breach
or threatened breach by Seller of any of its obligations under this Agreement
would give rise to irreparable harm to Purchaser for which monetary damages
would not be an adequate remedy and (ii) in the event of a breach or a
threatened breach by Seller of any such obligations, Purchaser will, in addition
to any and all other rights and remedies that may be available to Purchaser at
law, at equity or otherwise in respect of such breach, be entitled to equitable
relief, including a temporary restraining order, an injunction, specific
performance and any other relief that may be available from a court of competent
jurisdiction, without any requirement to post a bond or other security, and
without any requirement to prove actual damages or that monetary damages will
not afford an adequate remedy. Seller agrees that it shall not oppose or
otherwise challenge the appropriateness of equitable relief or the entry by a
court of competent jurisdiction of an order granting equitable relief, in either
case, consistent with the terms of this Section 11.5.
 
11.6         Enforceability.  If any term or provision of this Agreement or of
any other ancillary document, or the application thereof to any circumstance,
shall be invalid, illegal or unenforceable to any extent, such term or provision
shall not invalidate or render unenforceable any other term or provision of this
Agreement or any other ancillary document, or the application of such term or
provision to any other circumstance. To the extent permitted by law, the parties
hereto hereby waive any provision of law that renders any term or provision
hereof invalid or unenforceable in any respect.
 
11.7         Counterparts/Facsimile Signatures. This Agreement may be executed
in one or more counterparts, each of which shall be deemed to be an original,
and such counterparts shall together constitute one and the same instrument. The
signatures to this Agreement may be evidenced electronically or by facsimile
copies reflecting the party’s signature hereto, and any such electronic or
facsimile copy shall be sufficient to evidence the signature of such party as if
it were an original signature.
 
 
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11.8         Attorneys’ Fees.  In any action, litigation or proceeding between
the parties arising out of or in relation to this Agreement, the prevailing
party in such action shall be awarded, in addition to any damages, injunctions
or other relief, and without regard to whether or not such action will be
prosecuted to final judgment, such party’s costs and expenses, including
reasonable attorneys’ fees.
 
11.9         Governing Law & Arbitration.  This Agreement shall be governed by
and interpreted in accordance with the laws of the State of Arizona, including
all matters of construction, validity, performance and enforcement, without
giving effect to principles of conflict of laws.  Any dispute, action,
litigation or other proceeding concerning this Agreement shall be instituted,
maintained, heard and decided in in Scottsdale, Arizona. The parties further
agree that any dispute hereunder shall be brought before a single arbitrator
under the rules of the American Arbitration Association (“AAA”).  The parties
shall agree upon an arbitrator, but if no agreement can be made, the AAA will
select the arbitrator. The parties irrevocably and unconditionally consent to
the personal and subject matter jurisdiction of the AAA in connection with any
dispute arising hereunder or directly or indirectly related hereto.
 
11.10      Assignment.  Neither this Agreement nor any interest herein shall be
assignable (voluntarily, involuntarily, by judicial process or otherwise) by any
party to any person or entity without the prior written consent of the other
party.  Any attempt to assign this Agreement without such consent shall be void
and, at the option of the party whose consent is required, shall be an incurable
breach of this Agreement resulting in the termination of this Agreement.
 
11.11      Successors.  Subject to Section 11.10, this Agreement shall be
binding upon and inure to the benefit of the parties and their respective heirs,
legatees, legal representatives, personal representatives, successors and
permitted assigns.
 
11.12      Miscellaneous.  The recitals and all exhibits, schedules and other
attachments to this Agreement are fully incorporated into this Agreement by
reference.  Unless expressly set forth otherwise, all references herein to a
“day”, “month” or “year” shall be deemed to be a reference to a calendar day,
month or year, as the case may be.  All cross-references herein shall refer to
provisions within this Agreement and shall not be deemed to be references to the
overall transaction or to any other agreement or document.  Time is of the
essence in the performance of this Agreement.
 
[remainder of page intentionally left blank; signatures follow]
 
 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
 

“SELLER”   “PURCHASER”           PAYPROTEC OREGON, LLC D/B/A SECURUS PAYMENTS  
BLUEACRE VENTURES LLC                 By:
TBWOIWKM LLC
       
Its Managing Member
          By:     By:   Name/Title:     Name/Title: Nick Glimcher, Managing
Member

 
 
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Schedule 4.8
 
Litigation and Proceedings
 
There is a current inquiry by the North Dakota Attorney General regarding
Seller’s activities in North Dakota.  The inquiry is in its beginning stages –
document review – and Seller is confident the inquiry and any actions arising
from the inquiry will not have, individually or in the aggregate, a material
adverse effect on Seller or the Portfolio Residual.
 
 
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