Search the web
Welcome, Guest
[Sign Out, My Account]
EDGAR_Online

Quotes & Info
Enter Symbol(s):
e.g. YHOO, ^DJI
Symbol Lookup | Financial Search
NETE > SEC Filings for NETE > Form 8-K on 17-Apr-2013All Recent SEC Filings

Show all filings for NET ELEMENT INTERNATIONAL, INC. | Request a Trial to NEW EDGAR Online Pro

Form 8-K for NET ELEMENT INTERNATIONAL, INC.


17-Apr-2013

Entry into a Material Definitive Agreement, Termination of a Mate


Item 1.01 Entry into a Material Definitive Agreement.

Contribution Agreement and Acquisition of Assets of Unified Payments

On April 16, 2013, Net Element International, Inc. (the "Company") entered into a Contribution Agreement (the "Contribution Agreement") with Unified Payments, LLC, a Delaware limited liability company ("Unified Payments"), TOT Group, Inc., a Delaware corporation (formerly known as TOT, Inc.), which is a direct subsidiary of the Company ("TOT Group"), Oleg Firer, individually, and Georgia Notes 18 LLC, a Florida limited liability company. Pursuant to the Contribution Agreement, on April 16, 2013, certain subsidiaries of TOT Group, which were formed for the purpose of effectuating the transactions contemplated by the Contribution Agreement, acquired substantially all of the business assets of Unified Payments pursuant to the contribution of its business assets as further described below.

Pursuant to the Contribution Agreement, Unified Payments and certain of its subsidiaries contributed to certain subsidiaries of TOT Group all of their business, assets, properties, operations and rights, including, without limitation, all assets related to their business, all contracts and rights relating thereto, all rights and documents incident to their business, all rights to insurance proceeds, all intellectual property and other intangible assets related to their business, all real property leases, all accounts, cash, cash equivalents, accounts receivable, prepaid expenses and deposits and all goodwill associated with their business.

As consideration for Unified Payments' and its subsidiaries' contribution of their assets to TOT Group subsidiaries, (a) the Company agreed to contribute to a subsidiary of TOT Group 70% of the equity interests in the Company's subsidiary, OOO TOT Money (through which the Company operates its mobile commerce payment processing business); (b) TOT Group issued to Unified Payments 10% of TOT Group's issued and outstanding common stock; and (c) TOT Group assumed the following liabilities of Unified Payments and its subsidiaries:

(i) Unified Payments' long-term indebtedness, including liabilities related to the outstanding preferred membership interest in Unified Payments, the net amount of which was approximately $23.4 million as of March 31, 2013.

(ii) All other liabilities of Unified Payments and its subsidiaries reflected or reserved against on Unified Payments' balance sheet as of the closing date, except that bonus, deferred and other compensation obligations will be payable only from available cash of TOT Group from its future net profits, if any. These other liabilities that were assumed total approximately $1.2 million (including approximately $900,000 of compensation obligations).

(iii) All obligations of Unified Payments and its subsidiaries under real property leases arising and to be performed on or after the closing date. These assumed obligations include, among other things, obligations under leases for the properties described under "Business of Unified Payments-Properties" below.

(iv) All obligations of Unified Payments and its subsidiaries under personal property leases arising and to be performed on or after the closing date, except that no lease obligations were assumed relating to any vehicles other than one car lease that expires on August 4, 2013.

(v) All obligations of Unified Payments and its subsidiaries under other contracts and governmental licenses and permits arising and to be performed on or after the closing date.

Business of Unified Payments

Following is a description of Unified Payments' business. While the following description refers to Unified Payments, the Company plans to eventually change the name under which Unified Payments' business is operated to TOT Payments.

Unified Payments provides comprehensive turnkey, payment-processing solutions to small and medium size business owners (merchants) and independent sales organizations across the United States. Unified Payments was formed as a Delaware limited liability company on December 20, 2010 under the name Star Acquisition Vehicle, LLC for the purpose of acquiring certain assets of Star Capital Management, LLC (formed on June 9, 2008 as a Florida limited liability company).

On January 11, 2011, a majority of the payment processing assets of Star Capital Management, LLC and certain of its subsidiaries were acquired by Unified Payments. In connection with the acquisition, several subsidiaries of Unified Payments assumed approximately $27.4 million of notes payable. Simultaneous with this acquisition, PC Acquisition, LLC, a participating lender in certain of the . . .



Item 1.02 Termination of a Material Definitive Agreement.

On April 15, 2013, the Company and Bond Street Management LLC entered into an agreement terminating that certain Management and Consulting Agreement, dated October 24, 2012 (the "Consulting Agreement"), pursuant to which Bond Street Management LLC was providing certain management and consulting services, as well as other services, to the Company and its subsidiaries. The parties agreed to terminate the Consulting Agreement because the Company no longer needed the services of Bond Street Management LLC. The Company did not incur any early termination penalties in connection with the termination of the Consulting Agreement.

Francesco Piovanetti is Chief Executive Officer and President of Bond Street Management LLC, and a trust of which Mr. Piovanetti is a beneficiary owns a 25% ownership interest in Bond Street Management LLC. Mr. Piovanetti provided services as Chief Executive Officer of the Company pursuant to the Consulting Agreement. For the services provided under the Consulting Agreement (including Mr. Piovanetti's compensation as Chief Executive Officer of the Company), the Company paid Bond Street Management LLC a service fee of $50,000 per month and reimbursed Bond Street Management LLC for all of its documented business expenses incurred directly on behalf of the Company. In addition, the Company was responsible for all costs and expenses directly attributable to the salaries, bonuses and fringe benefits payable to accounting and operations employees of Bond Street Management LLC to the extent of the accounting, operating and other administrative services provided by Bond Street Management LLC on behalf of the Company pursuant to the Consulting Agreement.



Item 2.01 Completion of Acquisition or Disposition of Assets.

The disclosures contained under Item 1.01 are incorporated herein by this reference.



Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On April 16, 2013, Francesco Piovanetti resigned as Chief Executive Officer and as a director of the Company, and the Company appointed Oleg Firer as its new Chief Executive Officer and as a director to fill the vacancy created by Mr. Piovanetti's resignation. Mr. Firer was selected as Chief Executive Officer and a director of the Company in connection with TOT Group's acquisition of the business assets of Unified Payments as described in Item 1.01 above. As previously reported, on March 8, 2013, in connection with the term sheet entered into for the Company's acquisition of Unified Payments' business assets, the Company provided to Unified Payments a bridge loan in the amount of up to $750,000. As security for the bridge loan, Mr. Firer, as a guarantor, entered into the loan agreement, and entered into a non-recourse guaranty and a pledge agreement, pursuant to which he pledged his common membership interest in Unified Payments as security for his obligations under the non-recourse guaranty. Except as it relates to the foregoing bridge loan, there have been no transactions and there are no currently proposed transactions in which the Company was or is to be a participant and in which Mr. Firer had or will have a direct or indirect material interest that requires disclosure pursuant to Item 404(a) of Regulation S-K. Mr. Firer has not been, and he is not at the time of this disclosure expected to be, named to any committee of the Board of Directors of the Company.

Oleg Firer, age 35, served as Executive Chairman of Unified Payments from January 2011 until its acquisition by TOT Group on April 16, 2013. From July 2004 until December 2012, Mr. Firer served as President, Chief Executive Officer and Secretary (and from May 2006 until December 2012 as Treasurer and from May 2008 until December 2012 as Chief Financial Officer) of Acies Corporation, a provider of payment processing solutions to small and medium size merchants across the United States. Mr. Firer also served as a director of Acies Corporation from May 2005 until December 2012. Mr. Firer served as the President of GM Merchant Solution, Inc. (from August 2002) and Managing Partner of GMS Worldwide, LLC (from August 2003) until their assets were acquired by Acies Corporation in June 2004. From November 2002 to December 2003, Mr. Firer served as the Chief Operating Officer of Digital Wireless Universe, Inc. From December 2001 to November 2002, Mr. Firer served as the Managing Partner of CELLCELLCELL,
LLC. From March 1998 to December 2001, Mr. Firer served as Vice President of SpeedUS Corp. Mr. Firer studied Computer Science at New York Technical College from 1993 to 1995. The Company believes that Mr. Firer's leadership roles in various payment processing companies makes him qualified to serve as a director of the Company.

There has been no definitive plan, contract or arrangement to which Mr. Firer is a party or in which he participates that was entered into, or any amendment to such a plan, contract or arrangement, in connection with Mr. Firer's appointment as Chief Executive Officer or a director of the Company and there was no grant or award to Mr. Firer, or modification thereto, under any such plan, contract or arrangement in connection with his appointment as Chief Executive Officer or a director of the Company.



Item 8.01 Other Events.

On April 16, 2013, the Company issued a press release announcing the completion of its acquisition of Unified Payments. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by this reference.

In connection with TOT Group's acquisition of substantially all of the business assets of Unified Payments as described in Item 1.01 above, on April 16, 2013, Steven Wolberg was appointed Chief Legal Officer and Secretary of the Company and Tim Greenfield's position with the Company is contemplated to be changed from President of Mobile Commerce and Payment Processing to President of Corporate Development of TOT Group.



Item 9.01 Financial Statements and Exhibits.

(a) Financial statements of businesses acquired.

To be filed by amendment not later than 71 calendar days after April 22, 2013.

(b) Pro forma financial information

To be filed by amendment not later than 71 calendar days after April 22, 2013.

(d) Exhibits.

Exhibit No.      Description
2.1              Contribution Agreement, dated as of April 16, 2013, among Net
                 Element International, Inc., Unified Payments, LLC, TOT Group,
                 Inc., Oleg Firer and Georgia Notes 18 LLC
10.1             Termination Agreement for Management and Consulting Agreement,
                 dated April 15, 2013, between Net Element International, Inc.
                 and Bond Street Management LLC
99.1             Press Release dated April 16, 2013

  Add NETE to Portfolio     Set Alert         Email to a Friend  
Get SEC Filings for Another Symbol: Symbol Lookup
Quotes & Info for NETE - All Recent SEC Filings
Sign Up for a Free Trial to the NEW EDGAR Online Pro
Detailed SEC, Financial, Ownership and Offering Data on over 12,000 U.S. Public Companies.
Actionable and easy-to-use with searching, alerting, downloading and more.
Request a Trial      Sign Up Now


Copyright © 2014 Yahoo! Inc. All rights reserved. Privacy Policy - Terms of Service
SEC Filing data and information provided by EDGAR Online, Inc. (1-800-416-6651). All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.