AGREEMENT AND
PLAN OF REORGANIZATION
DATED OCTOBER 2,1996
BY AND AMONG
ANERINET FINANCIAL SYSTEMS, INC.,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ENTERTAINMENT, INC.,
REAL ESTATE TELEVISION NETWORK INC.
AND
ANFS, INC.
TABLE OF CONTENTS
Page
1. Certain Definitions 1
1.1 "Affiliate" 1
1.2 "AMERINET Financial Statements " 1
1.3 "AMERINET Products/Services" 2
1.4 "AMERINET Series A Stock" 2
1.5 "Closing " 2
1.6 "Closing Date " 2
1.7 "Code " 2
1.8 "Commission " 2
1.9 "Effective Time " 2
1.10 "GAAP " 2
1.11 "JNE Lock-up Shares " 2
1.12 "Material Adverse Effect" 2
1.13 "Notice of Claim " 2
1.14 "Notice of Objection " 2
1.15 "RETN Common Stock " 2
1.16 "RETN Disclosure Schedule" 2
1.17 "RETN Financial Statements" 2
1.18 "RETN' Products/Services " 3
1.19 Securities Act " 3
1.20 "Transaction Documents " 3
1.21 "AMERINET Disclosure Schedule" 3
2. Plan of Reorganization 3
2.1 The Merger 3
2.2 AMERINET Series A Stock 4
2.3 Conversion of Shares 4
2.4 Fractional Shares 4
2.5 Lock-up Arrangement 4
2.6 Contingent Shares 4
2.7 The Closing 5
2.8 Effective Time 5
2.9 Tax Free Reorganization 5
3. Representations and Warranties of JNE and RETN 5
3.1 Organization 5
3.2 Capitalization of RETN 6
3.3 Power, Authority and Validity 6
3.4 Financial Statements 7
3.5 Tax Matters 7
3.6 Tax-Free Reorganization 8
3.7 Absence of Certain Changes or Events 8
3.8 Title and Related Matters 10
3.9 Proprietary Rights 10
3.10 Employee Benefit Plans 11
3.11 Bank Accounts 11
3.12 Contracts 11
3.13 Insider Transactions 13
3.14 Insurance 13
3.15 Disputes and Litigation 13
3.16 Compliance with Laws 14
3.17 Subsidiaries 14
3.18 Environmental Matters 14
3.19 Corporate Documents 15
3.20 No Brokers 15
3.21 Disclosure 15
4. Representations and Warranties of AMERINET and ANFS 16
4.1 Corporate Existence and Authority of AMERINET 16
4.2 Capitalization of AMERINET 16
4.3 Subsidiaries 17
4.4 Execution of Agreement 17
4.5 Taxes 17
4.6 Disputes and Litigation 17
4.7 Compliance with Laws 18
4.8 Guaranties 18
4.9 Financial Statements 18
4.10 Tax-Free Reorganization 19
4.11 Title and Related Matters 19
4.12 Proprietary Rights 19
4.13 Environmental Matters 20
4.14 No Brokers 21
4.15 Disclosure 21
5. Preclosing Covenants of RETN and JNE 21
5.1 Notices and Approvals 21
5.2 Employment Agreements, Other Commitments Terminated 21
5.3 Advice of Changes 21
5.4 Information for AMERINET's Statements and Applications 22
5.5 Conduct of Business by RETN 22
6. Mutual Covenants 23
6.1 No Public Announcement 23
6.2 Other Negotiations 23
6.3 Due Diligence Investigation, and Audits 24
6.4 Regulatory Filings; Consents; Reasonable Efforts 24
6.5 Further Assurances 24
7. Closing Matters 24
7.1 Filing of Certificate of Merger 24
7.2 Exchange of Certificates 25
7.3 Delivery of Contingent Shares 25
7.4 Delivery of Documents 25
8. Conditions to RETN's Obligations 25
8.1 Accuracy of Representations and Warranties 25
8.2 Covenants 25
8.3 No Litigation 25
8.4 No Adverse Development 26
8.5 Authorizations 26
8.6 Government Consents 26
8.7 Filing of Certificate of Merger 26
8.8 Registration Rights Agreement 26
9. Conditions to AMERINET's and ANFS' Obligations 27
9.1 Accuracy of Representations and Warranties 27
9.2 Covenants 27
9.3 No Litigation 27
9.4 Authorizations 28
9.5 No Adverse Development 28
9.6 Government Consents 28
9.7 Filing of Certificate of Merger 28
10. Termination of Agreement 28
10.1 Termination 28
10.2 Liability for Termination 28
10.3 Certain Effects of Termination 29
10.4 Remedies 29
11. Indemnification 29
11.1 Survival of Representations, Warranties, Covenants
and Agreements 29
11.2 Indemnification by JNE 30
11.3 Indemnification ion by AMERINET and ANFS 30
11.4 Claims for Indemnification 30
11.5 Arbitration 31
11.6 Limitation on Indemnification 32
11.7 Lock-up 32
12. Miscellaneous 33
12.1 Governing Laws 33
12.2 Binding upon Successors and Assigns 33
12.3 Severability 33
12.4 Entire Agreement 33
12.5 Counterparts 33
12.6 Expenses 33
12.7 Amendment and Waivers 34
12.8 Survival of Agreements 34
12.9 No Waiver 34
12.10 Attorneys' Fees 34
12.11 Notices 34
12.12 Time 35
12.13 Construction of Agreement 35
12.14 No Joint Venture 35
12.15 Pronouns 35
12.16 Further Assurances 35
12.17 Absence of Third-Party Beneficiary Rights 36
Exhibits and Schedules
Exhibit A Certificate of Merger
Exhibit B Certificate of Incorporation
Exhibit C Form of Legal Opinion to be Delivered by Counsel to RETN
Exhibit D Form of Legal . Opinion to be Delivered by Counsel to ANFS
ANFS Schedule
RETN Schedule
1
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is entered into
effective as of October 1, 1996, by and among AMERINET FINANCIAL SYSTEMS, INC.,
a Florida corporation ("AMERINET"), ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ENTERTAINMENT, INC., a
Colorado corporation ("JNE"), REAL ESTATE TELEVISION NETWORK, INC., a Nevada
corporation ("RETN"), and ANFS, INC., a Delaware corporation ("ANFS" and
"Surviving Corporation").
RECITALS
--------
A. RETN is a wholly-owned subsidiary of JNE and ANFS is a wholly-owned
subsidiary of AMERINET.
B. Subject to and in accordance with the terms and conditions of this
Agreement and pursuant to the Certificate of Merger attached hereto as Exhibit A
("Certificate of Merger"), the parties intend that RETN will merge with and into
ANFS (the "Merger"), whereby at the Effective Time, all of the RETN Common Stock
will be converted into One Million (1,000,000) AMERINET Series A Preferred Stock
Shares.
C. An additional Four Hundred Thousand (400,000) shares of AMERINET. Series
A. Preferred Stock may be issued to JNE upon the occurrence of certain
contingencies.
D. For federal income tax purposes, it is intended that the Merger shall
qualify as a tax free reorganization within the meaning of 368(a)(2)(D) of the
Code.
E. The parties hereto desire to set forth certain representations,
warranties and covenants made by each to the other as an inducement to the
consummation of the Merger.
AGREEMENT
---------
NOW, THEREFORE in reliance on the foregoing recitals and in and for the
consideration and mutual covenants set forth herein, the parties agree as
follows:
1. Certain Definitions.
---------------------
1.1 "Affiliate" shall have the meaning set forth in the rules and
regulations promulgated by the Commission pursuant to the Securities Act.
1.2 "AMERINET Financial Statements" shall mean AMERINET's audited
balance sheet as of June 30, 1996, and statements of operations, stockholders'
equity and cash flow for the three (3) month period then-ended, and the audited
balance sheet as of March 31, 1996, and statements of operations, stockholders
equity and cash flow for the twelve (12) month period then ended.
1.3 "AMERINET Products/Services" shall mean all products or services
which have been, or are being, marketed by ANFS or arc currently under
development, and all trade secrets, copyrights, trademarks, trade names and
other proprietary rights related to such products or services.
1.4 "AMERINET Series A Stock" shall mean the Series A Preferred Stock
of AMERINET issued to JNE in the Merger, the rights of which are described in
Section 2.2.
1.5 "Closing" shall mean the closing of the transactions contemplated
by this Agreement.
1.6 "Closing Date" shall mean the date of the Closing.
1.7 "Code" shall mean the United States Internal Revenue Code of 1986,
as amended.
1.8 "Commission" shall mean the United States Securities and Exchange
Commission.
2
1.9 "Effective Time" shall mean the date and time of the effectiveness
of the Merger under Delaware law.
1.10 "GAAP" shall mean generally accepted accounting principles.
1.11 "JNE Lock-up Shares" shall mean the shares of AMERINET Series A
Stock issued to JNE in the Merger pursuant to Section 2.5.
1.12 "Material Adverse Effect" shall mean a material adverse effect on
the business, properties, prospects, condition (financial or otherwise) or
results of operations of an entity taken as a whole.
1.13 "Notice of Claim" shall mean a notice of a claim of
indemnification arising under Section 11.
1.14 "Notice of Objection" shall mean a notice of an objection to a
claim of indemnification arising under Section 11.
1.15 "RETN Common Stock" shall mean all of the outstanding shares of
Common Stock of RETN.
1.16 "RETN Disclosure Schedule" shall mean the disclosure schedule
attached hereto and provided to AMERINET and ANFS by JNE and RETN disclosing
such items and matters as arc required to be disclosed under this Agreement.
1.17 "RETN Financial Statements" shall mean RETN's 'compiled' balance
sheet as of June 30, 1996, and statements of operations, stockholders' equity
and cash flow for the six (6) month period then-ended, and the audited balance
sheet as of December 31, 1995, and statements of operations, stockholder's
equity and cash flow for the twelve (12) month period then ended.
1.18 "RETN Products/Services" shall mean all products or services which
have been, or are being, marketed by RETN, or are currently under development,
and all patents, patent applications, trade secrets, copyrights, trademarks,
trade names and other proprietary rights related to such products or services.
1.19 "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations
thereunder, all as the same shall be in effect at the time.
1.20 "Transaction Documents" shall mean all documents or agreements
attached as an exhibit or schedule hereto, and set forth on the Table of
Contents.
1.21 "AMERINET Disclosure Schedule" shall mean the disclosure schedule
attached hereto and provided to JNE and RETN by AMERINET and ANFS disclosing
such items and matters as are required to be disclosed under this Agreement.
2. Plan of Reorganization.
2.1 The Merger. Subject to the terms and conditions of this Agreement
and the Certificate of Merger, RETN shall be merged with and into ANFS in
accordance with the applicable provisions of the laws of the State of Delaware,
and with the terms and conditions of this Agreement and the Certificate of
Merger, so that:
(a) At the Effective Time (as defined in Section 2.7 (below)), RETN shall
be merged with and into ANFS. As a result of the Merger, the separate corporate
existence of RETN shall cease, and ANFS shall continue as the surviving
corporation, and shall succeed to and assume all of the rights and obligations
of RETN in accordance with the laws of Delaware.
3
(b) The Certificate of Incorporation and Bylaws of ANFS in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation and Bylaws, respectively, of the Surviving Corporation after the
Effective Time unless and until further amended as provided by law.
(c) Subject to the terms of this Agreement, the directors and officers of
ANFS immediately prior to the Effective Time shall be the directors and officers
of the Surviving Corporation after the Effective Time. Such directors and
officers shall hold their position until the election and qualification of their
respective successors or until their tenure is otherwise terminated in
accordance with the Bylaws of the Surviving Corporation.
2.2 AMERINET Series A Stock. The AMERINET Series A Stock Shall have the
following preferred rights:
(a) The AMERINET Series A Stock shall have no voting rights except as
required by law and as provided in ANFS' Certificate of Incorporation attached
hereto as Exhibit B.
-----------
(b) Each of the Preferred Shares will have a liquidation preference of
Three Dollars ($3.00) per share. After payment in full of such liquidation
amount, the Common Stock shareholders shall then each receive a liquidation
payment of Three Dollars ($3.00) per share. Thereafter, all Common Stock and
Preferred Stock shareholders of AMERINET shall participate equally on a per
share basis in any further liquidation payments
(c) Each of the Preferred Sham will have an annual, noncumulative dividend
preference equal to Eighteen Cents ($0.18) per share. Following the payment of
this dividend preference in any year, the Preferred Shares will participate with
the AMERINET Common Stock equally on a Share-for-share basis in any remaining
dividend distributions.
(d) The Preferred Shares will automatically convert into AMERINET Common
Stock, on a one-for-one basis, upon either 01 the closing(s) of any equity
offering(s) for the account of AMERINET which results in aggregate gross cash
proceeds to AMERINET of at least $20,000,000 received after the Effective Time
or (it) at such time that AMERINET is listed and trading as a National Market
System company on NASDAQ.
2.3 Conversion of Shares. Each share of RETN Common Stock, issued and
outstanding immediately prior to the Effective Time, will, by virtue of the
Merger, and at the Effective Time, and without further action on the part of any
holder thereof, be converted into two thousand (2,000) shares of fully paid and
nonassessable shares of AMERINET Series A Stock.
2.4 Fractional Shares No fractional shares of AMERINET Series A Stock
will be issued in connection with the Merger.
2.5 Lock-up Arrangement. At the Effective Time, certificates
representing Four Hundred Thousand (400,000) of the shares of the AMERINET
Series A Stock issued to JNE in the Merger SHALL be subject to a lock-up. The
JNE Lock-up Sham shall be held as collateral for the indemnification obligation
of JNE under Section 11 and pursuant to the provisions of a lock-up agreement to
be entered into between the parties, with the terms of such agreement to be
mutually agreed upon, which terms shall not be inconsistent with the terms set
forth in this Agreement.
2.6 Contingent Shares JNE shall be issued in additional Four Hundred
Thousand (400,000) AMERINET Series A Stock shares (the *Contingent Shares") on
the six month anniversary date following the Closing Date (the "Contingent Share
Date") if, on, or before such anniversary, RETN shall have sold, delivered and
received payment subsequent to the Closing Date for not less than 10 real estate
satellite system to new clients and AMERINET shall have raised not less than
$750,000 in equity financing on terms reasonably acceptable to AMERINET
following the Closing.
2.7 The Closing. Subject to termination of this Agreement as provided in
Section 10 (below), the Closing shall take place at the offices of AMERINET as
soon as possible upon the satisfaction or waiver of all conditions set forth in
Sections 8 and 9 hereof, or such other time and place as is mutually agreeable
to the parties.
2.8 Effective Time. Simultaneously with the Closing, the Certificate of
Merger shall be filed in the office of the Secretary of State of the State of
Delaware. The Merger shall become effective immediately upon the filing of the
Certificate of Merger with such office.
4
2.9 Tax Free Reorganization. The parties intend to adopt this Agreement as
a tax-free plan of reorganization to consummate the Merger in accordance with
the provisions of '368(a)(2)(D) of the Code. Each parry agrees that it will not
take or assert any position on any tax return, report or otherwise which is
inconsistent with the qualification of the Merger as a reorganization within the
meaning of 5368(a) of the Code. Except for cash paid in lieu of fractional
shares, no consideration that could constitute "other property" within the
meaning of S356 of the Code is being paid by ANFS for the RETN Common Stock. In
addition, ANFS represents now, and as of the Closing Date, that it presently
intends to continue RETN's historic business. or use a significant -portion -of
RETN's business assets in a business.
3. Representations and Warranties of JNE and RETN. Except as otherwise
set forth in the RETN Disclosure Schedule attached hereto, JNE and RETN jointly
and severally represent and warrant to AMERINET and ANFS as set forth below. No
fact or circumstance disclosed shall constitute an exception to these
representations and wan-antics unless such fact or circumstance is set forth in
the RETN Disclosure Schedule or such supplements thereto as may mutually be
agreed upon in writing by JNE, RETN, AMERINET and ANFS.
3.1 Organizaton. RETN and JNE are corporations duly organized, validly
existing and in good standing under the laws of the state of incorporation of
such entity and have the corporate power and authority to carry on their
respective businesses as it is now being conducted. RETN and JNE am duly
qualified or licensed to do business and are in good standing in each
jurisdiction in which the nature of their respective businesses or properties
makes such qualification or licensing necessary except where the failure to be
so qualified would not have a Material Adverse Effect on RETN and JNE. The RETN
Disclosure Schedule contains a true and complete listing of the locations of all
sales offices, manufacturing facilities, and any other offices or facilities of
RETN, and a true and complete list of all states in which RETN maintains any
employees. The RETN Disclosure Schedule contains a true and complete list of all
states in which RETN is duly qualified to transact business as a foreign
corporation. True and complete copies of RETN's Articles of Incorporation and
Bylaws, as in effect on the date hereof and as to be in effect: as of the
Closing, have been provided to AMERINET, ANFS or its representatives.
3.2 Capitalization of RETN.
(a) General. As of the Closing Date, the authorized equity securities
of RETN will consist of two thousand five hundred (2,500) shares of common
stock, of which
five hundred (500) shares are issued and outstanding, and no (-0-) shares of
Preferred Stock, of
which no shares are issued and outstanding. No other ▇▇▇▇▇▇ of capital stock are
issued and
outstanding. All of ' of the issued and outstanding shares have been duly and
validly issued in
accordance and compliance with all applicable laws, rules and regulations and
are fully paid
and nonassessable. There are no options, warrants, rights, calls, commitments,
plans, contracts
or other agreements of any character granted or issued by RETN which provide for
the
purchase, issuance or transfer of any shares of the capital stock of RETN nor
are there any
outstanding securities granted or issued by RETN that are convertible into any
shares of the
equity securities of RETN, and none is authorized.
(b) JNE Ownership. JNE is the record and beneficial owner of all such
shares of RETN Common Stock, free and clear of any and all claims, liens,
encumbrances or security interests. Neither JNE nor RETN is under any obligation
to register under the Securities Act any such shares or any other securities of
RETN that might be issued in the future if the Merger were not consummated.
Neither JNE nor RETN are a party to any voting agreement or other understanding
that affects or relates to the voting or giving of written consent with respect
to such shares or any other of RETN's securities that Might be issued in the
future if the Merger were not consummated.
5
3.3 Power, Authority and Validity. JNE and RETN have the corporate power to
enter into this Agreement and the other Transaction Documents to which they are
parties and to carry out their obligations hereunder and thereunder. The
execution and delivery of this Agreement and the Transaction Documents and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by the Boards of Directors of JNE and RETN and no other corporate
proceedings on the part of RETN are necessary to authorize this Agreement, the
other Transaction Documents and the transactions contemplated herein and
therein. JNE and RETN are not subject to, or obligated under, any charter, bylaw
or contract provision or any license, franchise or permit, or subject to any
order or decree, which would be breached or violated by or in conflict with its
executing and carrying out this Agreement and the transactions contemplated
hereunder and under the Transaction Documents. Except for (i) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and
appropriate documents with the relevantauthorities of other states in which RETN
is qualified to do business, and (ii) filings under applicable securities laws,
no consent of any person who is a party to a contract which is material to
RETN's business, nor consent of any governmental authority, is required to be
obtained on the part of RETN to permit the transactions contemplated herein and
to permit RETN to continue the business activities of RETN as previously
conducted by RETN without a Material Adverse Effect. This Agreement is, and the
other Transaction Documents when executed and delivered by JNE and RETN shall
be, the valid and binding obligations of JNE and RETN, enforceable in accordance
with their respective terms.
3.4 Financial Statements.
(a) RETN has delivered to AMERINET copies of the RETN Financial Statements.
(b) The RETN Financial Statements are complete and in accordance with the
books and records of RETN and present fairly the financial position of RETN as
of its historical dates. The RETN Financial Statements have been prepared in
accordance with GAAP (except for the absence of footnotes) applied on a basis
consistent with prior periods. Except and to the extent reflected or reserved
against in such balance sheets (including the notes thereto), RETN does not
have, as of the dates of such balance sheets, any liabilities or obligations
(absolute or contingent) of a nature required or customarily reflected in a
balance sheet (or the notes thereto) prepared in accordance with GAAP. The
reserves, if any, reflected on the RETN Financial Statements are adequate in
light of the contingencies with respect to which they are made.
(c) RETN has no debt, liability, or obligation of any nature, whether
accrued, absolute, contingent, or otherwise, and whether due or to become due,
that is not reflected or reserved against in the RETN Financial Statements,
except for those 01 that may have been incurred after the date of the RETN
Financial Statements; or (ii) that are not required by GAAP to be included in a
balance sheet or the notes thereto.
3.5 Tax Matters.
(a) RETN has fully and timely, properly and accurately filed all tax
returns and reports required to be filed by it, including all federal, foreign,
state and local tax returns and estimates for all years and periods (and
portions thereof) for which any such returns, reports or estimates were due. All
such returns, reports and estimates were prepared in the manner required by
applicable law. All income, sales, use, occupation, property or other taxes or
assessments clue from REIN have been paid. There am no pending assessments,
asserted deficiencies or claims for additional tam that have not been paid. The
reserves for taxes, if any, reflected on the RETN Financial Statements are
adequate and there are no tax liens on any property or assets of RETN. There
have been no audits examinations of any tax returns or reports by my applicable
governmental agency. No state of facts exists or his .existed which would
constitute grounds for the assessment of any penalty or of any further tax
liability beyond that shown on the respective tax -reports, returns or
estimates. There am no outstanding agreements or waivers extending the statutory
period of limitation applicable to any federal, am or local income tax return or
. report for any period.
(b) All tam which RETN has been required to collect or withhold have been
duly withheld or collected and, to the extent required. have been paid to the
proper taxing authority.
(c) RETN is not a party to any tax-sharing agreement or similar arrangement
with any other party.
(d) At no time has RETN been included in the federal consolidated tax return of
any affiliated group of corporations.
(e) No payment which RETN is obliged to pay to any director, Officer,
employee or independent contractor pursuant to the terms of an employment agree-
severance agreement or otherwise will constitute an excess parachute payment as
defined in '28OG of the Code.
(f) RETN is not currently under any contractual obligation to pay any tax
obligations of, or with respect to any transaction relating to, any other person
or to indemnify any other person with respect to- any tax.
3.6 Tax-Free Reorganization
(a) Neither RETN nor JNE his taken or agreed to take any action that would
prevent the Merger from constituting a reorganization qualifying under the
provisions of 368(a) of the Code.
(b) There is no present plan or intention by JNE to sell, exchange or
otherwise dispose of the ANERR14ET Series A Stock to be received in the Merger.
6
(c) Neither JNE nor RETN is an *investment company as defined in
368(a)(2)(F)(iii) and (iv) of the Code.
3.7 Absence of Certain Changes or-Events Since June 30, 1996, RETN has
not:
(a) suffered any Material Adverse Effect in its financial condition or in
the operations of its business, nor any Material Adverse Effect in its balance
sheet, (with the REIN Financial Statements and any subsequent balance sheet
analyzed as if each had been prepared according to GAAP), including but not
limited to cash distributions or material decreases in the net assets of RETN;
(b) suffered any damage, destruction or loss, whether covered by insurance
or not, materially and adversely affecting its properties or business.
(c) granted or agreed to make any increase in the compensation payable or
to become payable by it to its officers or employees, except those occurring in
the ordinary course of business;
(d) declared, set aside or paid any dividend or made any other distribution
on or in respect of the shares of its capital stock or declared any direct or
indirect redemption, retirement, purchase or other acquisition by-it of such
shares;
(e) issued any shim of its capital stock or any warrants, rights, options
or entered into any commitment relating to its shares;
(f) made any change in the accounting methods or practices it follows,
whether for general financial or tax purposes, or any change in depreciation or
amortization policies or rates adopted therein;
(g) sold, leased, abandoned or otherwise dis posed of any real property or
any machinery, equipment or other operating property other thin in the ordinary
course of business;
(h) sold, assigned, transferred, licensed or otherwise disposed of any
patent, trademark, trade name, brand name, copyright (or pending application for
any patent, trademark or copyright) invention, work of authorship, process,
know-how, formula or trade secret or interest thereunder or other intangible
asset except in the ordinary course of its business;
(i) suffered any labor dispute;
(j) engaged in any activity or entered into any material commitment or
transaction (including without limitation any borrowing or capital expenditure)
other thin in the ordinary course of business;
(k) incurred any liabilities except in the ordinary course of business
(which liabilities in the ordinary course of business do not exceed $10,000 as
of the Closing Date) and consistent with past practice which would be required
to be disclosed in financial statements prepared in accordance with GAAP;
(1) permitted or allowed any of its property or assets to be subjected to
any mortgage, deed of trust, pledge, lien, security interest or other
encumbrance of any kind, except those permitted under Section 3.8 hereof, other
than any purchase money security interests incurred in the ordinary course of
business;
(m) made any capital expenditure or commitment for additions to property,
plant or equipment individually in excess of Ten Thousand Dollars ($10,000), or
in the aggregate, in excess of Fifty Thousand Dollars ($50,000);
(n) paid, loaned or advanced any amount to, or sold, transferred or leased
any properties or assets to, or entered into any agreement or arrangement with
any of its Affiliates, officers, directors or stockholder or any Affiliate or
associate of any of the foregoing;
(o) made any amendment to or terminated any agreement which, if not so
amended or terminated, would be required to be disclosed on the RETN Disclosure
Schedule; or
(p) agreed to take any action described in Sections 2.9, 3.6 or 3.7 or
outside of its ordinary course of business or which would constitute a breach of
any of the representations contained in this Agreement.
7
3.8 Title and Related Matters, RETN has good and marketable title to all
the properties, interests in properties and assets, real and personal, reflected
in the RETN Financial Statements or acquired after the date of the RETN
Financial Statements (except properties, interests in properties and assets sold
or otherwise disposed of since the date of the RETN Financial Statements in the
ordinary course of business), free and clear of all mortgages, liens, pledges,
charges or encumbrances of any kind or character, except the lien of current
taxes not yet due and payable and except for liens which in the aggregate do not
secure more than Ten Thousand Dollars ($10,000) in liabilities. The equipment of
RETN used in the operation of its business is in good operating condition and
repair. The RETN Disclosure Schedule contains a description of all real and
personal property leased or owned by RETN, identifying such property and, in
Elie case of real property, stating the monthly rental due, term of lease and
square feet leased. True and correct copies of each of RETN's leases have been
provided to AMERINET, ANFS or its representatives.
3.9 Proprietary Rights.
(a) RETN owns all right, title and interest in and to, or valid licenses
for use of, all patents, copyrights, technology, software, software tools,
know-how, processes, trade secrets, trademarks, service marks, trade names and
other proprietary rights used in or necessary for the conduct of RETN's business
as conducted to the date hereof or contemplated, including, without limitation,
the technology and all proprietary rights developed or discovered or used in
connection with or contained in the RETN ' Products/Services, free and clear of
all liens, claims and encumbrances (including without limitation distribution
rights) (all of which are referred to as "RETN Proprietary Rights") and RETN has
the right to transfer all such rights to ANFS as contemplated hereby, which RETN
Proprietary Rights if not so owned by RETN would have a Material Adverse Effect
on RETN. The foregoing representation as it relates to RETN Third-Party
Technology (as hereinafter defined) is limited to RETN's interest pursuant to
the RETN Third-Party Licenses (as hereinafter defined), 211 Of which are valid
and enforceable and in full force and effect and which grant RETN such rights to
the RETN Third-Party Technology as are employed in or necessary to the business
of RETN as conducted or proposed to be conducted. The RETN Disclosure Schedule
contains an accurate and complete description of (i) all patents, trademarks
(with separate listings of registered and unregistered trademarks), trade names,
and registered copyrights in or related to the RETN Products/ Services, all
applications and registration statements therefor, and a list of all licenses
and other agreements relating thereto; and (ii) a list of all licenses and other
agreements with third parties (the "RETN Third-Party licenses") relating to any
inventions, technology, know-how, or processes that RETN is licensed or
otherwise authorized by such third parties to use, market, distribute or
incorporate into products distributed by RETN (such Software, inventions,
technology, know-how and processes am collectively referred to as the "RETN
Third-Party Technology"). RETN's trademark or trade name registrations related
to the RETN Products/Services and all of RETN's copyrights in any of the RETN
Products/Services are valid and in full force and effect, and consummation of
the transactions contemplated hereby will not alter or impair any such rights.
No claims have been asserted against RETN (and RETN is not aware of any claims
which am likely to be asserted against it or which have been asserted against
others) by any person challenging RETN's use, possession, manufacture,sale,
------------
provision or distribution of the RETN Products/Services under any parents,
trademarks, trade names, copyrights, trade secrets, technology, know-how or
processes utilized by RETN (including, without limitation, the RETN Third-Party
Technology) or challenging or questioning the validity or effectiveness of any
license or agreement relating thereto (including, without limitation, the RETN
Third-Party Licenses).
(b) No employee of RETN is in violation of any material term of any
employment contract, patent disclosure agreement or any other contract or
agreement relating to the relationship of any such employee with RETN or, to
JNE's or RETN's actual knowledge, any other party because of the nature of the
business conducted by RETN or proposed to be conducted by RETN.
(c) Each person presently or previously employed by RETN
(including independent contractors, if any) with access to confidential
information has executed
a confidentiality and non-disclosure agreement pursuant to the form of agreement
previously
provided to ANFS or its representatives. Such confidentiality and non-disclosure
agreements
constitute valid and binding obligations of RETN and such person, enforceable in
accordance
with their respective terms. Neither the execution or delivery. of such
agreements, nor the
carrying on of their business as employees by such persons, nor the conduct of
their business
as currently anticipated, will conflict with or result in a breach of the terms,
conditions or
provisions of or constitute a default under any contract, covenant or instrument
under which
any of such persons is obligated.
(d) No product or service liability or warranty claims which individually
or in the aggregate could exceed One Thousand Dollars ($1,000) 'individually or
Ten Thousand ($10,000) in the aggregate have been communicated to, or threatened
against, RETN nor, to RETN's actual knowledge, is there any specific situation,
set of facts or occurrence that provides a basis for such claim.
8
3.10 Employee Benefit Plans There is no unfunded prior service cost with
respect to any bonus, deferred compensation, pension, profit-sharing,
retirement, stock purchase, stock option, or other employee benefit or fringe
benefit plans, whether formal or informal, maintained by RETN. Each -bonus,
deferred compensation, pension, profit-sharing, retirement, stock purchase,
stock option, and other employee benefit or fringe benefit plans, whether formal
or informal, maintained by RETN conforms to all applicable requirements of the
Employees Retirement Income Security Act of 1974. The RETN Disclosure Schedule
lists and describes all profit-sharing, bonus, incentive, deferred compensation,
vacation, severance pay, retirement, stock option, group insurance or other
plans (whether written or not) providing employee benefits.
3.11 Bank Accounts.The REIN Disclosure Schedule sets forth the names and
---------------
locations of all banks, trusts, companies, savings and loan associations, and
other financial institutions at which RETN maintains accounts of any nature and
the names of all persons authorized to draw thereon or make withdrawals
therefrom.
3.12 Contracts
(a) RETN has no agreements, contracts or commitments that provide for the
sale, licensing or distribution by RETN of any of its products, services,
inventions, technology, know-how, trademarks or trade names except in the
ordinary course *-its business.
(b) RETN has no agree ments, contracts or commitments that call for fixed
and/or contingent payments or expenditures by or to RETN of more than Ten
Thousand Dollars ($10,000).
(c) Without limiting the provisions of Section 3.9 and except for any
agreements with AMERINET or ANFS, REIN his not granted to any third party any
exclusive rights of any kind with respect to any of the RETN Products/Services.
(d) There is no outstanding sales contract, commitment or proposal of RETN
that is currently expected to result in any loss to RETN (before allocation of
overhead and administrative costs) upon completion or performance thereof which
would have a Material Adverse Effect on RETN.
(c) RETN has no outstanding agreements, contracts or commitments with
officers, employees, agents, consultants, advisors, salesmen, sales
representatives, distributors or dealers that are not cancelable by it on notice
of not longer thin thirty (30) days and without liability, penalty or premium.
(f) RETN has no employment, independent contractor. or similar agreement,
contract or commitment that is not terminable on no more thin thirty (30) days'
notice without penalty or liability of any type, including without limitation
severance or termination pay.
(g) RETN has no currently effective collective bargaining or union
agreements, contracts or commitments.
(h) RETN is not restricted by agreement from competing with any person or
from carrying on its business anywhere in the world.
(i) RETN has not guaranteed any obligations of other persons or made any
agreements to acquire or guarantee any obligations of other persons.
(j) RETN has no outstanding loan or advance to any person; nor is it party
to any line of credit, standby financing, revolving credit or other similar
financing arrangement of any sort which would permit the -borrowing by RETN of
any sum not reflected in the REIN Financial Statements.
(k) All material contracts, agreements and instruments to which RETN is a
parry are valid, binding, in full force and effect, and enforceable by RETN in
accordance with their respective terms. No such material contract, agreement or
instrument contains any material liquidated-damages, penalty or similar
provision. RETN has not received any notice from any party to any such material
contract, agreement or instrument that such party intends to cancel, withdraw,
modify or amend such contract, agreement or arrangement.
(l) The RETN Disclosure Schedule lists all material agreements pursuant to
which RETN has agreed to supply to any third party RETN Products/Services.
9
(m) RETN is not in default under or in breach or violation of, nor, to its
actual knowledge, is there any valid basis for any claim of default by RETN
under, or breach Or violation by RETN of, any contract, commitment or
restriction to which RETN is a party or to which it or any of its properties is
bound, where such defaults, breaches, or violations would, in the aggregate,
have a Material Adverse Effect on RETN. To RETN's actual knowledge, no other
party is in default under or in breach or violation of, nor is there any valid
basis for any claim of default by any other party under or any breach or
violation by any other party of, any material contract, commitment, or
restriction to which RETN is bound or by which any of its properties is bound,
where such defaults, breaches, or violations would, in the aggregate, have a
Material Adverse Effect on RETN.
(n) All agreements, contracts and commitments (the "Material Contracts")
listed or described in the RETN Disclosure Schedule pursuant to this Section
3.12 are assumable, or will otherwise be the property of, the Surviving
Corporation following the Merger without further action by the Surviving
Corporation or ANFS. If any of the Material Contracts are not assumable by or
will not be the property of, the Surviving Corporation following the Merger,
then RETN his described in the RETN Disclosure Schedule such actions as is
necessary for assumption of the Material Contract by the Surviving Corporation.
(o) True and correct copies of each document or instrument described in the
RETN Disclosure Schedule pursuant to this Section 3.12 have been made available
to AMERINET, ANFS, or their representatives.
3.13 Insider Transactions. No Affiliate of RETN or JNE has any interest
in (i) any material equipment or other property, real or personal, tangible or
intangible, including, without limitation, any item of intellectual property,
used in connection with or pertaining to the business of RETN; or (ii) any
creditor, supplier, customer, agent or representative of RETN; provided,
however, that no such Affiliate or other person shall, be deemed to have such an
interest solely by virtue of the ownership of less thin one percent (1%) of the
outstanding stock or debt securities of any publicly-held company, the stock or
debt securities of which are traded on a recognized stock exchange or quoted on
the National Association of Securities Dealers Automated Quotation System.
3.14 Insurance. The RETN Disclosure Schedule contains a list of the
principal policies of fire, liability and other forms of insurance held by RETN.
3.15 disputes and Litigation. There is no suit, action, litigation,
proceeding, investigation, claim, complaint, or accusation pending, or to 'its
knowledge threatened against or affecting RETN or any of its properties, assets
or business or to which RETN is a party, in any court or before any arbitrator
of any kind or before or by any governmental agency (including, without
limitation, any federal, state, local, foreign or other governmental department,
commission, board, bureau, agency or instrumentality), and to its knowledge,
there is no basis for such suit, action, litigation, proceeding, investigation,
claim, complaint, or accusation; (b) there is no pending or threatened change in
any environmental, zoning or building laws, regulations or ordinances which
affect or could affect RETN or any of its properties, assets or businesses; and
(c) there is no outstanding order, writ, injunction, decree, judgment or award
by any court, arbitrator or governmental body against or affecting RETN or any
of its properties, assets or business. There is no litigation, proceeding,
investigation, claim, complaint or accusation, formal or informal, or
arbitration pending, or any of the aforesaid threatened, or any contingent
liability which would give rise to any right of indemnification or similar right
on the part of any director or officer of RETN or any such person's heirs,
executors or administrators as against RETN.
3.16 Compliance with Laws. RETN has at all times been, and presently
is, in full compliance with, and has not received notice of any claimed
violation of, any applicable federal, state, local, foreign and other laws,
rules and regulations which lack of compliance or violation would cause a
liability or Material Adverse Effect in dollar terms of in excess of $10,000.
RETN has filed all returns, reports and other documents and furnished all
information required or requested by any federal, state, local or foreign
governmental agency and all such returns, reports, documents and information are
true and complete in all respects. All permits, licenses, orders, franchises and
approvals of all federal, state, local or foreign governmental or regulatory
bodies required of RETN for the conduct of its business have been obtained, no
violations are or have been recorded in respect of any such permits, licenses,
orders, franchises and approvals, and there is no litigation, proceeding,
investigation, arbitration, claim, complaint or accusation, formal or informal,
pending or threatened, which may revoke, limit, or question the validity,
sufficiency or continuance of any such permit, license, order, franchise or
approval which action, lack of compliance or violation would cause a liability
or Material Adverse Effect in dollar terms of in excess of $10,000. Such
permits, licenses, orders, franchises and approvals are valid and sufficient for
all activities presently carried on by RETN.
3.17 Subsidiaries. RETN has no subsidiaries.
10
3.18 Environmental Matters' To its knowledge:
(a) As of the date hereof, no underground storage tanks am present under
any property that RETN has at any time owned, operated, occupied or leased. As
of the date hereof except as set forth in the RETN Disclosure Schedule, no
material amount of any substance char has been designated by any governmental
entity, or by applicable federal, state or local law to be radioactive, toxic,
hazardous or otherwise a danger to health or the environment, including, without
limitation, PCBs, asbestos, petroleum, urea-formaldehyde and all substances
listed as hazardous substances pursuant to the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, or defined as a
hazardous waste pursuant to the United States Resource Conservation and Recovery
Act of 1976, as amen" and the regulations promulgated pursuant to said laws (a
"hazardous Material"), excluding office, janitorial and other immaterial
supplies, am present, as a result of the actions of RETN or, to RETN's actual
knowledge, as a result of any actions of any third party or otherwise, in, on or
under any property, including the land and the improvements, ground water and
surface water, that RETN have at any time owned, operated, occupied or leased
which would be reasonably likely to have a Material Adverse Effect on RETN.
(b) At no time has RETN transported, stored, used, manufactured, disposed
of, released or exposed its employees or others to Hazardous Materials in
violation of any law in effect on or before the Closing Date, nor has RETN
disposed of, transported, sold, or manufactured any product containing a
Hazardous Material in violation of any rule, regulation, treaty or statute
promulgated by any governmental entity to prohibit, regulate or control
Hazardous Materials or any Hazardous Material Activities which would be
reasonably likely to have a Material Adverse Effect on RETN.
(c) RETN currently holds all environmental approvals, permits, licenses,
clearances and consents necessary for the conduct of its business as such
business is currently being conducted, the absence of which would be reasonably
likely to have a Material Adverse Effect on RETN.
(d) No action, proceeding, revocation proceeding, amendment procedure,
writ, injunction or claim is pending or, to the actual knowledge of RETN,
threatened concerning any Environmental Permit which would be reasonably likely
to have a Material Adverse Effect on RETN. RETN is not aware of any fact or
circumstance which could involve it in any environmental litigation or impose
upon it any environmental liability which would be reasonably likely to have a
Material Adverse Effect on RETN
3.19 Corporate Documents. RETN his furnished to AMERINET for its
examination: (i) copies of its Certificate or Articles of Incorporation and
Bylaws; (ii) its Minute Book containing all records required to be set forth of
all proceedings, consents, actions, and meetings of the stockholders, the board
of directors and any committees thereof-, (iii) all permits, orders, and
consents issued by any regulatory agency with respect to RETN, or any securities
of RETN, and all applications for such permits, orders, and consents; and (iv)
its stock transfer books setting forth all transfers of any capital stock. The
corporate minute books, stock certificate books, stock registers and other
corporate records of RETN are complete and -cc,in all material respects, and the
----
signatures appearing on all documents contained therein are the true signatures
of the persons purporting to have signed the sane. AU actions reflected in such
books and records were duly and validly taken in compliance with the laws of the
applicable jurisdiction.
3.20 No Brokers, Neither JNE nor RETN is obligated for the payment of
fees or expenses of any broker or finder in connection with the or&, negotiation
or execution of this Agreement or the Certificate of Merger or in connection
with any transaction contemplated hereby or thereby.
3.21 Disclosure No statements by JNE or RETN contained in this
Agreement and the Exhibits and RETN Disclosure Schedule attached hereto, any
other Transaction Document or any written statement or certificate furnished or
to be furnished pursuant hereto or in connection with the transactions
contemplated hereby and thereby (when read together) contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading in light
of the circumstances under Which they were made.
4. Representations and Warranties of AMERINET and ANFS. Except as
otherwise set forth in the ANFS Disclosure Schedule attached hereto, AMERINETand
--------
ANFS represents and warrants to RETN as set forth below. No fact or circumstance
disclosed to JNE shall constitute in exception to these representations- and
warranties unless such fact or circumstance is set forth in the ANFS Disclosure
Schedule or such supplements thereto as may mutually be agreed upon in writing
by AMERINET and JNE.
11
4.1 Corporate Existence and Authority of AMERINET. AMERINET is a
corporation duly organized, validly existing and in good standing under the laws
of the state of incorporation of such entity and his the corporate power and
authority to carry on its business as it is now being conducted. AMERINET is
duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or properties makes such
qualification or licensing necessary except where the failure to be so qualified
would not have a Material Adverse Effect on AMERINET. AMERINET has the corporate
power to enter into this Agreement and the other Transaction Documents to which
they are parties and to carry out their obligations hereunder and thereunder.
The execution and delivery of this Agreement and the Transaction Documents and
the consummation of the transactions contemplated hereby and thereby have been
duly authorized by the Board of Directors of AMERINET and no other corporate
proceedings on the part of AMERINET are necessary to authorize this Agreement,
the other Transaction Documents and the transaction contemplated herein and
therein. AMERINET is not subject to, or obligated under, any contract provision
which would be breached or violated by or in conflict with its executing and
carrying out this Agreement and the transactions contemplated hereunder and
under the Transaction Documents. This Agreement is, and the other Transaction
Documents when executed and delivered by AMERINET shall be, the valid and
binding, obligations of AMERINET, enforceable in accordance with their
respective terms.
4.2 Capitalization of AMERINET. As of the Closing Date, the authorized
equity securities of AMERINET will consist of fifty million (50,000,000) shares
of common stock, of which seven million one hundred two thousand six hundred
seventy (7,102,670) shares are issued and outstanding, and fifty million
(50,000,000) shares of Preferred Stock, of which no shares are issued and
outstanding. No other sham of capital stock of AMERINET are issued and
outstanding All of the issued and outstanding sham have been duly and validly
issued in accordance and compliance with all applicable laws, rules and
regulations and are fully paid and nonassessable. There am no options, wan-ants,
rights, calls, commitments, plans, contracts or other agreements of any
character granted or issued by AMERINET which provide for the purchase, issuance
or transfer of any shares of the capital stock of AMERINET nor are there any
outstanding securities granted or issued by AMERINET that am convertible into
any shares of the equity securities of AMERINET, and none is authorized.
4.3 Subsidiaries. There are no Subsidiaries of AMERINET, except as
identified in the ANFS Disclosure Schedule.
4.4 Execution of Agreement. The execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated hereby
will not: (a) violate, conflict with, modify or cause any default under or
acceleration of (or give any party any right to declare any default or
acceleration upon notice or passage of time or both), in whole or in part, any
charter, article of incorporation, bylaw, mortgage, lien, deed of trust,
indenture, lease, agreement, instrument, order, injunction, decree, judgment,
law or any other restriction of any kind to which AMERINET is a party or to its
knowledge by which it or any of its properties are bound; (b) result in the
creation of any security interest, lien, encumbrance, adverse claim,
proscription or restriction on any property or asset (whether real, personal,
mixed, tangible or intangible), right, contract, agreement or business of
AMERINET; (C) to its knowledge violate any law, rule or regulation of any
federal or state regulatory agency; or (d) to its knowledge permit any federal
or state regulatory agency to impose any restrictions or limitations of any
nature on AMERINET or any of its actions.
4.5 Taxes.
(a) All taxes, assessments, fees, penalties, interest and other
governmental charges with respect to AMERINET which have become due and payable
on the date hereof have been paid in full or adequately reserved against by
AMERINET, (including without limitation, income, property, sales, use,
franchise, capital stock, excise, added value, employees' income withholding,
social security and unemployment taxes), and 211 interest and penalties thereon
with respect to the periods then ended and for all periods thereto;
(b) There are no agreements, waivers or other arrangements providing for in
extension of time with respect to the assessment of any tax or deficiency
against AMERINET, nor are there any actions, suits, proceedings, investigations
or claims now pending against AMERINET, nor are there any actions, suits,
proceedings, investigations or claim now pending against AMERINET in respect of
any tax or assessment, or any matters under discussion with any feeral, state,
local or foreign authority relating to any taxes or assessments, or any claims
for additional taxesor assessments asserted by any such authority, and there is
-----
no basis for the assertion of any additional tam or assessments against
AMERINET, and
(c) The consummation of the transactions contemplated by this Agreement
will not result in the imposition of any additional taxes on or assessments
against AMERINET.
12
4.6 Disputes and Litigation. There is no suit, action, litigation,
proceeding investigation, claim, complaint, or accusation pending, or to its
knowledge threatened against or affecting AMERINET or any of its properties,
assets or business or to which AMERINET is a party, in any court or before any
arbitrator of any kind or before or by any governmental agency (including,
without limitation, any federal, state, local, foreign or other governmental
department, commission, board, bureau., agency or instrumentality), and to its
knowledge there is no basis for such suit, action, litigation, proceeding,
investigation, claim, complaint, or accusation; (b) to its knowledge there is no
pending or threatened change in any environmental, zoning or building laws,
regulations or ordinances which affect or could affect AMERINET or any of its
properties, assets or businesses; and (c) there is no outstanding order, writ,
injunction, decree, judgment or award by any court, arbitrator or governmental
body against or affecting AMERINET or any of its properties, assets or business.
To its knowledge, there is no litigation, proceeding, investigation, claim,
complaint or accusation, formal or informal, or arbitration pending, or any of
the aforesaid threatened, or any contingent liability which would give rise to
any right of indemnification or similar right on the part of any director or
officer of AMERINET or any such person's heirs, executors or administrators as
against AMERINET.
4.7 Compliance with ▇▇▇▇.▇▇ its knowledge, AMERINET has at all times,
-----------------------
been, and presently is, in full compliance with, and has not received notice of
any claimedviolation of, any applicable federal, state, local, foreign and
other laws, rules and regulationswhich lack of compliance or violation would
cause a liability or Material Adverse Effect in dollar terms of in excess of
$100,000. AMERINET has filed all returns, reports and other documents and
furnished all information required or requested by any federal, state, local or:
foreign governmental agency and all such returns, reports, documents and
information are true; and complete in all respects. To its knowledge, all
permits, licenses, orders, franchises and, approvals of all federal, state,
local or foreign governmental or regulatory bodies required of, AMERINET for the
conduct of its business have been obtained, no violations arc or have been:
recorded in respect of any such permits, licenses, orders, franchises and
approvals, and there': is no litigation, proceeding, investigation, arbitration,
claim, complaint or accusation, formal or informal, pending or threatened, which
may revoke, limit, or question the validity,. sufficiency or continuance of any
such permit, license, order, franchise or approval which action, lack of
compliance or violation would cause a liability or Material Adverse Effect in'
dollar terms of in excess of $100,000. Such permits, licenses, orders,
franchises and approvals are valid and sufficient for all activities presently
carried on by AMERINET.
4.8 Guarranties.AMERINET has not guaranteed any dividend, obligation or
------------
indebtedness of any Person; nor his any Person guaranteed any dividend,
obligation or indebtedness of AMERINET.
4.9 Financial Statements.
----------------------
(a) AMERINET has delivered toJNE copies of the AMERINET: Financial
--
Statements.
13
(b) The AMERINET Financial Statements arc complete and in accordance with
the books and records of AMERINET and present fairly the financial position of
AMERINET as of its historical dares. The AMERINET Financial Statements have been
prepared in accordance with GAAP (except for the absence of footnotes) applied
on a basis consistent with prior periods. Except and to the extent reflected or
reserved against in such balance sheets (including the notes thereto), AMERINET
does not have, as of the dares of such balance sheets, any liabilities or
obligations (absolute or contingent) of a nature required or customarily
reflected in a balance sheet (or the notes thereto) prepared in accordance with
GAAP. The reserves, if any, reflected on the AMERINET Financial Statements are
adequate in light of the contingencies with respect to which they are made.
(c) AMERINET has no debt, liability, or obligation of any nature, whether
accrued, absolute, contingent, or otherwise, and whether due or to become due,
that is not reflected or reserved against in the AMERINET Financial Statements,
except for those (i) that may have been incurred after the date of the AMERINET
Financial Statements; or (ii) that are not required by GAAP to be included in a
balance sheet or the notes thereto.
4.10 Tax-Free Reorganization.
-------------------------
(a) AMERINET has not taken or agreed to take any action that would prevent
the Merger from constituting a reorganization qualifying under the provisions'
of 368(a) of the Code.
(b) AMERINET is not an investment company as defined in: 368(a)(2)(F)(iii)
and (iv) of the Code.
4.11 Title and Related Matters.AMERINET has good and marketable title
----------------------------
to 0 the properties, interests in properties and mats, real and personal,
reflected in -the AMERINET Financial Statements or acquired after the date of
the AMERINET Financial Statements (except properties, interests in properties
and assets sold or otherwise disposed of since the date of the AMERINET
Financial Statements in the ordinary course of business), free and clear of all
mortgages, liens, pledges, charges or encumbrances of any kind or character,
except the lien of current taxes not yet due and payable and except for liens
which in the aggregate do not secure more than One Hundred Thousand Dollars
($I00,000) in liabilities. The equipment of AMERINET used in the operation of
its business is in good operating condition and repair.
4.12 Proprietary Rights.AMERINET owns all right, title and interest in
--------------------
and to, or valid licenses; for use of, all patents, copyrights, technology,
software, software tools, know-how, processes, trade secrets, trademarks,
service marks, trade names and other proprietary rights used in or necessary for
the conduct of AMERINET's business as conducted to the date hereof, including,
without limitation, the technology and all proprietary rights developed or
discovered or used in connection with or contained in the AMERINET
Products/Services, free and clear of all liens, claims and encumbrances
(including without limitation distribution rights) (all of which are referred to
j AMERINET Proprietary Rights"), which AMERINET Proprietary Rights if not so
owned by AMERINET would have a Material Adverse Effect an AMERINET. No claims
have been asserted against AMERINET (and AMERINET is not aware of any claims
which are likely to be asserted against it or which have been asserted against
others) by any person challenging AMERINET's use, possession, manufacture, sale,
provision or distribution of the AMERINET Products/Services under any patents,
trademarks, trade names, copyrights, trade secrets, technology, know-how or
processes utilized by AMERINET or challenging or questioning the validity or
effectiveness of any license or agreement relating thereto.
4.13 Environmental ▇▇▇▇▇▇▇.▇▇ its knowledge:
-----------------------
(a) As of the date hereof, no underground storage tanks are present under
any property that AMERINET his at any time owned, operated, occupied or leased.
As of the date hereof except as set forth in the AMERINET Disclosure Schedule,
no material amount of any substance that has been designated by any governmental
entity or by applicable federal, state or local law to be radioactive, toxic,
hazardous or otherwise a danger to health or the environment, including, without
limitation, PCBs, asbestos, petroleum, ureaformaldehyde and all substances
listed as hazardous substances pursuant to the Comprehensive Environmental.
Response, Compensation and Liability Act Of 1980, as amended, or defined as a
hazardous waste pursuant to the United States Resource Conservation and Recovery
Act of 1976, as amended, and the regulations promulgated pursuant to said laws
(a "Hazardous Material"), excluding office, janitorial and other immaterial
supplies, are present, as a result of any actions of any third party or
otherwise, in, on or under any property, including the land and the
improvements, ground water and surface water, that AMERINET has at any time
owned, operated, occupied or leased which would be reasonably likely to have a
Material Adverse Effect on AMERINET
14
(b) At no time has AMERINET transported, stored, used, manufactured,
disposed of, released or exposed its employees or others to Hazardous Materials
in violation of any law in effect on or before the Closing Date, nor has
AMERINET disposed of, transported, sold, or manufactured any product containing
a Hazardous Material in violation of any rule, regulation, treaty or statute
promulgated by any governmental entity to prohibit, regulate or control
Hazardous Materials or any Hazardous Material Activities which would be
reasonably likely to have a Material Adverse Effect on AMERINET.
(c) AMERINET currently holds all environmental approvals, permits,
licenses, clearances and consents necessary for the conduct of its business as
such business is currently being conducted, the absence of which would be
reasonably likely to have a Material Adverse Effect on AMERINET.
(d) No action, proceeding, revocation proceeding, amendment procedure,
writ, injunction or claim is pending or, to the actual knowledge of AMERINET,
threatened concerning any Environmental Permit which would be reasonably likely
to have a Material Adverse Effect on AMERINET. AMERINET is nor aware of any fact
or .circumstance which could involve it in any environmental litigation or
impose upon it anyenvironmental liability which would be reasonably likely to
have a Material Adverse Effect on AMERINET.
4.14 No Brokers.AMERINET is not obligated for the payment of fees or
------------
expenses of any broker or finder in connection with the origin, negotiation or
execution of this Agreement or the Certificate of Merger or in connection with
any transaction contemplated hereby or thereby.
4.15 Disclosure. No statements by AMERINET contained in this Agreement
and the Exhibits and AMERINET Disclosure Schedule attached hereto, any other
Transaction Document or any written statement or certificate furnished or to be
furnished pursuant hereto or in connection with the transactions contemplated
hereby and thereby (when read together) contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading in light of the
circumstances under which they were made.
5. Preclosing Covenants of RETN and.
-------------------------------------
5.1 Notices and Approvals. JNE agrees: (a) to give and to cause RETN to
give all notices to third parties which may be necessary or deemed desirable by
AMERINET in connection with this Agreement and the consummation of the
transactions contemplated hereby, (b) to use its best efforts to obtain and to
cause RETN to obtain, all federal and state governmental regulatory agency
approvals, consents, permit, authorizations, and orders necessary or deemed
desirable by AMERINET in connection with this Agreement and the consummation of
the transaction contemplated hereby, and (c) to use its best efforts to obtain,
and to cause RETN to obtain, all consents and authorizations of any other third
panics necessary or deemed desirable by AMERINET in connection with this
Agreement and the consummation of the transactions contemplated hereby.
5.2 Employment Agreements, Other Commitments Terminated. Prior to the
Closing, all employment agreements to which RETN is a party shall be reviewed by
RETN and AMERINET and, as agreed between them, either terminated prior to the
Closing or assumed by ANFS as of the Closing with such modifications as may be
acceptable to RETN, AMERINET and the employee party to such agreement.
5.3 Advice of Changes.RETN and JNE will promptly advise AMERINET in
--------------------
writing (i) of any event occurring subsequent to the date of this Agreement
which would reader any representation or warranty of RETN or JNE contained in
this Agreement, if made on or as of the date of such event or the Closing Date,
untrue or inaccurate in any material respect and (ii) of any material adverse
change in RETN's business, taken as a whole.
5.4 Information for AMERINET's Statements and Applications.JNE and RETN
-------------------------------------------------------
and their employees, accountants and attorneys shall cooperate fully with
AMERINET in the preparation of any statements or applications made by AMERINET
to any federal or state governmental regulatory agency in connection with this
Agreement and the transactions contemplated hereby and to furnish AMERINET with
all information concerning JNE and RETN necessary or deemed desirable by
AMERINET for inclusion in such statements and applications, including, Without
limitation, all requisite financial statements and schedules.
5.5 Conduct of Business by RETN.Until the Closing, RETN will continue
------------------------------
to conduct its business and maintain its business relationships in the ordinary
and usual course and will not, without the prior written consent of AMERINET:
(a) borrow any money which borrowings exceed in the aggregate Ten Thousand
Dollars ($10,000) or incur or commit to incur any capital expenditures in excess
of Ten Thousand Dollars ($10,000) in the aggregate;
15
(b) lease, license, sell, transfer or encumber or permit to be encumbered
any asset, intellectual property right or other property associated with the
business of RETN (including sales or transfers to Affiliates of REIN, except for
sales of inventory in the usual and ordinary course of business;
(c) dispose of any of its assets, except in the regular and ordinary'
course of business;
(d) enter into any lease or contract for the purchase or sale of any':
property, real or personal except in the ordinary course of business;'
(e) pay any bonus, increased saIary, or special remuneration to any:
officer or employee, including any amounts for accrued but unpaid saIary or
bonuses (other than amounts not in excess of normal payments made on a regular
basis in prior periods);
(f) change accounting methods;
(g) declare, -set aside or pay any cash or stock dividend or other
distribution in respect of capital, or redeem or otherwise acquire any of its
capital stock;
(h) amend or terminate any contract, agreement or license to which it is a
party except in the ordinary course of business;
(i) loan any amount to any person or entity, or guaranty or act as: a
surety for any obligation;
(j) issue or sell any shares of its capital stock of any class or any other
of its securities, or issue or create any warrants, obligations, subscriptions,
options, convertible securities, or other commitments to issue shares of capital
stock, other than stock options granted as part of existing stock option program
or pursuant to any recapitalization plan disclosed to and approved by AMERINET
in its discretion;
(k) split or combine the outstanding share of its capital stock of any
class or enter into any recapitalization affecting the number of outstanding
shares of its capital stock of any class or affecting any other of its
securities;
(l) amend its Certificate of Incorporation or Bylaws except as necessary to
carry out a recapitalization plan;
(m) make or change any election, change any annual accounting period, adopt
or change any accounting method, file any amended tax return, enter into any
closing agreement, settle any tax claim or assessment, surrender any right to
claim refund of taxes, consent to any extension or waiver of the limitation
period applicable to any tax claim or assessment, or take any ocher action or
omit to take any action, if any such election, adoption, change, amendment,
agreement, settlement, surrender, consent or other action or omission would have
the effect of increasing the tax liability of RETN;
(n) do anything that would cause there to be material adverse changesin
its Financial Statements (with such Financial Statements analyzed as if it had
been prepared according to GAAP, and including but not limited to cash
distributions or material decreases in the net assets of RETN), except as would
occur in the ordinary course of RETN's business, between the date of the RETN
Financial Statements and the Closing Date; or
(o) agree to do any of the things described in the preceding clauses
Section 6.1(a) through (n).
6. Mutual Covenants.
6.1 No Public Announcement.The parties shall. make no public
-------------------------
announcement concerning this Agreement, their discussions or any other memos,
letters or agreements between the panics relating to the Merger until such time
as they agree to the contents of a mutually satisfactory press release which
they intend to publicly-release on the date of this Agreement. Either of the
parties, but only after reasonable consultation with the other, may make
disclosure if required under applicable law.
16
6.2 Other NegotiationBetween the date hereof and the Closing, or such
------------------
earlier date as AMERINET and JNE mutually agree to discontinue discussions of
the Merger, neither AMERINET nor JNE will take any action to solicit, initiate,
seek, encourage or support any inquiry, proposal or offer from, furnish any
information to, or participate in any negotiations with, any corporation,
partnership, person or other entity or group (other than discussions pursuant to
this Agreement) regarding any acquisition, any merger or consolidation with or
involving RETN, or any acquisition of any material portion of the stock or
assets. JNE and AMERINET agree that any such negotiations in progress as of the
date hereof will be terminated or suspended during such period.
6.3 Due Diligence, Investigation, and ▇▇▇▇▇▇.▇▇ such time prior to the
------------------------------------------
Closing as may be reasonably requested, each party shall make available to the
other party and the other parry's employees, agents and representatives all
information concerning the operation, business and prospects of such party as
may be reasonably requested by the other party. including, without limitation,
making the -working papers of such party's independent certified public
accountants available for inspection by the other parry's independent certified
public accountants. Each party will cooperate with the other party for the
purpose of permitting the other party to discuss such party's business and
prospects with such parry's customers, creditors, suppliers and other persons
having business dealings with such parry, subject to reasonable confidentiality
obligations between the parties.
6.4 Regulatory Filings: Consents: Reasonable Efforts Subject to the
terms
and conditions of this Agreement, JNE, RETN, AMERINET and ANFS shall use their
respective best efforts to (i) make all necessary filings with respect to the
Merger and this
Agreement under the Securities Act, and applicable blue sky or similar
securities laws and shall
use all reasonable efforts to obtain required approvals and clearances with
respect thereto and
shall supply all additional information requested in connection therewith; (ii)
make merger
notification or other appropriate filings with federal, state or local
governmental bodies or
applicable foreign governmental agencies and shall use all reasonable efforts to
obtain required
approvals and clearances with respect thereto and shall supply an additional
information
requested in connection therewith; (iii) obtain all consents, waivers,
approvals, authorizations
and orders required in connection with the authorization, execution and delivery
of this
Agreement and the consummation of the Merger, and (iv) take, or cause to be
taken, all
appropriate action, and do, or cause to be done, all things necessary, proper or
advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by
this Agreement.
6.5 Further Assurances.Prior to and following the Closing, each parry
--------------------
agrees to cooperate fully with the other parties and to execute such further
instruments, documents and agreements and to give such further written
assurances, as may be reasonably requested by any other party to better evidence
and reflect the transactions described herein and contemplated hereby and to
carry into effect. the intents and purposes of this Agreement.
7. Closing Matters
----------------
7.1 Filing of Certificate of Merger. On the date of the Closing, but
not prior to the Closing, the Certificate of Merger shall be filed with the
offices of the Secretary of State of the State of Delaware and Nevada and the
merger of RETN with and into ANFS shall be consummated.
7.2 Exchange of Certificates. At the Closing, JNE shall exchange its
RETN Common Stock certificate(s) for a certificate representing the AMERINET
Series A Stock.
7.3 Delivery of ContingentShares. Subject to fulfillment of the
------------------------
conditions subsequent for the issuance of the Contingent Shares, AMERINET shall
deliver a share certificate for the Contingent Shares to JNE on the Contingent
Shares Date.
7.4 Delivery of Documents.On or before the Closing, the parties shall.
-----------------------
deliver the documents, and shall perform the acts, which are set forth- in
Sections 8 and 9, as' specified in such Sections, including. delivery of the
counterpart signature pages of the Transaction Documents executed by JNE, RETN,
AMERINET and/or ANFS, as the case may be. All documents which JNE or RETN shall
deliver or cause to be delivered shall be in form and substance reasonably
satisfactory to AMERINET. All documents which AMERINET or ANFS shall deliver or
cause to be delivered shall be in form and substance reasonably satisfactory to
JNE.
8. Conditions to RETN's Obligations,.Unless otherwise provided below,
------------------------------------
JNE's. and RETN's obligations to close the transactions contemplated under this
Agreement are. subject to the fulfillment or satisfaction by Closing of each of
the following conditions (any. one or more of which may be waived by JNE, but
only in a writing signed by JNE):
17
8.1 Accuracy of Representations and Warranties.The representations and
-----------------------------------------------
warranties of AMERINET and ANFS set forth in Section 4 shall be true in all
material respects on and as of the Closing with the same force and effect as if
they had been made at': the Closing, and JNE shall receive a certificate to such
effect executed by the Presidents of AMERINET and ANFS.
8.2 Covenants.AMERINET and ANFS shall have performed and complied with all
----------
of its covenants contained in Section 6 on or before the Closing, and JNE shall
receive a certificate from AMERINET and ANFS to such effect executed by the
Presidents of ANERINET and ANFS.
8.3 No Litigation.On and as of the Closing, no litigation or proceeding
---------------
shall be threatened or pending against AMERINET or ANFS with the purpose or with
the probable effect of enjoining or preventing the consummation of arty of the
transactions contemplated by this Agreement, and JNE shall receive a certificate
to such effect executed by the Presidents of AMER24ET and ANFS.
8.4 No Adverse Development.There shall not have been -any material adverse
-----------------------
changes in the financial condition, results of operations, assets, liabilities,
business or prospects of AMERINET since the date of this Agreement, and JNE
shall receive a certificate to such effect executed by the President of
AMERINET.
8.5 Authorizations.JNE shall have received from AMERINET written evidence
---------------
that the execution, delivery and performance of AMERINET's and ANFS' obligations
under this Agreement and the Certificate of Merger have been duly and validly
approved and authorized by the Board of Directors of AMERINET.
8.6 Government Consents.There shall have been obtained at or prior to. the
--------------------
Closing such permits or authorizations, and there shall have been taken such
other action, as may be required by any regulatory authority having jurisdiction
over the parties and the subject matter and the actions herein proposed to be
taken.
8.7 Filing of Certificate of Merger . As of the Closing, the Certificate
off Merger shall have been filed with the Secretary of State of the State of
Delaware.
8.8 Registration Rights Agreement
-------------------------------
(a) The Corporation's Obligation to Register.If AMERINET at any time
---------------------------------------------
proposes to register any of its securities under the Securities Act (other than
a registration effected solely to implement in employee benefit plan, a
transaction to which' Rule 145 of the Commission is applicable or any other form
or type of registration in which "Registrable Securities" (as defined below)
cannot be included pursuant to Commission regulation, rule or practice), then
JNE (and any other holder of 250,000 or more AMERINET Series A Stock sham
received hereunder by JNE hereinafter to be referred to as a "Holder") shall
receive written notice from AMERINET (the "AMERINET Notice") of its intention to
make such registration (JNE's AMERINET Series A Stock Shares are referred to
herein as "Registrable Securities"). If such registration is proposed to be on a
form which permits inclusion of the Registrable Securities, then upon the
written request by JNE given within ten (10) days after transmittal by AMERINET
to JNE of the AMERINET Notice, AMERINET will, subject to the limits contained
in this Section, use its reasonable efforts to cause such Registrable Securities
to be registered under the Securities Act and applicable Blue Sky laws, all to
the extent requisite to permit such sale or other disposition by JNE of the
Registrable Securities so registered.
(b) Limitations\Cutbacks.The right of JNE to request inclusion in the
---------------------
registration pursuant to this Section 8.9 shall terminate at such time that all
of the shares of Registrable Securities held by JNE may be publicly sold under
Rule 144 or any applicable exemption or registration statement without
applicable volume limitations during any 90-day period. Furthermore,
notwithstanding any other provision of this Section, if the underwriter managing
such registration or AMERINET in a self-underwritten offering notifies JNE (and
any other Holder of Registrable Securities) in writing that market or economic
conditions limit the amount of securities ▇▇▇▇ may reasonably be expected to be
old or that inclusion of such Registrable Securities would jeopardize the
success of the offering, then AMERINET may exclude all or any portion of such
Registrable Securities so long as all executive officers, directors or presently
existing 5% or greater shareholders of AMERINET who remain 5% or greater
shareholders at the time of such request arc likewise cutback in proportion to
their respective shareholdings.
18
(c) Further Documents/Lock-up.JNE shall enter into such further agreements,
--------------------------
including indemnification and customary underwriting agreements, as AMERINET
and/or the managing underwriter shall reasonably require in such registration.
In connection with any public registration of AMERINET's securities after the
date hereof, JNE agrees, upon the request of AMERINET or the underwriters
managing such offering of AMERINET's securities, not to sell, make any short
sale of, loan, grant any option for the purchase of, or otherwise dispose of any
AMERINET equity without the prior written consent of ANERINET or such
underwriters, as the case may be, for a period of time, not to exceed ninety
(90) clays from the effective date of such registration (or such other period as
shall be requested); provided that all executive officers, directors and 5% or
greater shareholders of AMERINET enter into similar agreements. Such agreement
shall be in writing in the form reasonably satisfactory to AMERINET and such
underwriter, if applicable. AMERINET may impose stop-transfer instructions with
respect to the shares subject to the foregoing restrictions until the end of
said lock-up period.
9. Conditions to AMERINET's and ANFS' ObligationsUnless otherwise provided
----------------------------------------------
below, the obligations of AMERINET and ANFS are subject to the fulfillment or
satisfaction by Closing, of each of the following conditions (any one or more of
which may be waived by AMERINET, but only in a writing signed by AMERINET):
9.1 Accuracy of Representations and WarrantiesThe representations and
----------------------------------------------
warranties of JNE and RETN contained in Section 2 shall be true in all material
respects on and as of the Closing with the same force and effect as if they had
been nude at the Closing, and AMERINET shall receive a certificate from JNE and
RETN to such effect with respect to the representations and wan-antics of RETN
executed by the Presidents of JNE and RETN.
9.2 Coventants.JNE and RETN shall have performed and complied with all of
-----------
its covenants contained in Sections 5 and 6 on, or before the Closing, and AFNS
shall receive a certificate from JNE and RETN to such effect signed by the
Presidents of JNE and RETN.
9.3 No Litigation.On and as of the Closing, no litigation or proceeding
---------------
shall be threatened or pending AGAINST JNE OR RETN FOR THE PURPOSE OR WITH the
probable effect of enjoining or preventing the consummation of any of the
transactions contemplated by this Agreement, and AMERINET shall receive a
certificate from JNE and RETN to such effect signed by the Presidents of JNE and
RETN.
9.4 Authorizations.AMERINET shall have received from RETN written evidence
---------------
that
the execution, delivery and performance of this Agreement and the Certificate of
Merger have been duly
and validly approved and authorized by RETN's Board of Directors and by JNE's
Board of Directors.
AMERINET shall have received a certificate from RETN to such effect signed by
the President of RETN.
9.5 No Adverse Development.There shall not have been any material adverse
------------------------
changes in the financial condition, results of operations, assets, liabilities,
business or prospects of RETN since the date of this Agreement. AMERINET shall
have received a certificate from RETN to such effect signed by the President of
RETN.
9.6 Government Consents.There shall have been obtained at or prior to' the
--------------------
Closing such permits or authorizations, and there shall have been taken such
other action, as may be required by any regulatory authority having jurisdiction
over the parties and the subject matter and the actions herein proposed to be
taken
9.7 Filing of Certificate of MergeAs of the Closing, the Certificate of
---------------------------------
Merger shall have been filed with the Secretary of State of the State of
Delaware.
10. Termination of Agreement.
10.1 Termination.This Agreement may be terminated at any time prior to; the
------------
Closing by the mutual written consent of each of the parties hereto. This
Agreement may; also be terminated and abandoned
(a) By AMERINET or ANFS if any of the conditions -precedent to AMERINET's
and ANFS' obligations pursuant to Section 9 shall not have been fulfilled at
and;: as of the Closing.
(b) By JNE or RETN any of the conditions precedent to JNE's and RETN's
obligations pursuant to Section 8 above shall not have been fulfilled at and as
of the Closing.
(c) By either JNE or AMERINET upon three (3) business days' prior written
notice, if the Merger is not effected by September 30, 1996.
Any termination of this Agreement under this Section 10.1 shall be effected by
the delivery of written notice of the terminating parry to the other parties
hereto.
19
10.2 Liability for Termination.Any termination of this Agreement pursuant
---------------------------
to this Section 10 shall be without further obligation or liability upon any
party in favor of any other party hereto; provided, that if such termination
shall result from the willful failure of a party to carry our its obligations
under this Agreement, then such parry shall be liable for losses incurred by the
other parties as set forth in Section 10.4. The provisions of this Section 10.2
shall survive termination.
10.3 Certain Effects of Termination In the event of the termination of this
Agreement as provided in Section 10.1 hereof, each party, if so requested by the
other party,
will (i) return promptly every document (other than documents publicly
available) furnished.
to it by the ocher party (or any subsidiary, Divisi I on, associate or affiliate
of such other parry)
in connection with the transactions contemplated hereby, whether so obtained
before or after
the execution of this Agreement, and any copies thereof which may have been
made, and will.
cause its representatives and any representatives of financial institutions and
investors and
others to whom such documents were furnished promptly to return such documents
and any
copies thereof any of them may have made; or (ii) destroy such documents and
cause its
representatives and such other representatives to destroy such documents, and
such party shall
deliver a certificate executed by its president or vice president stating to
such effect; and
10.4 RemediesNo parry shall be limited to the termination right granted' in
--------
Section 10.1 hereto by reason of the willful nonfulfillment of any condition to
such party's closing obligations but may, in the alternative, elect to do one of
the following:
(a) proceed to close despite the willful nonfulfillment of any closing
condition, it being understood that consummation of the transactions
contemplated hereby shall be deemed a waiver of any misrepresentation or breach
of warranty or covenant and of any party's rights and remedies with respect
thereto to the extent that the other party shall have actual knowledge of such
misrepresentation or breach and the Closing shall nonetheless take place; or
(b) decline to close, terminate this Agreement as provided in Section 10.1
hereof, and thereafter seek damages.
11. Indemnification.
----------------
11.1 Survival of Representations, Warranties,COVENANTSand Agreements.
--------------------------------------------------------------------
(a) The lock-up as provided in Section 2.5 shall terminate one (1) year
after the Closing Date (the "Lock-up TERMINATION DATE"). Except asset forth in
11.1(b) below all warranties and representations of the parties hereto shall
terminate on the Lock-up Termination Date. Notwithstanding the foregoing, the
Lock-up Termination Date shall be accelerated to the date that AMERINET SHALL
HAVE RAISED NOT LEA THAN $1,500,000 in equity financing on terms reasonably
acceptable to AMERINET following the Closing if such event occurs prior to the
events set forth in the preceding sentence.
(b) The representations, warranties, covenants and agreements of the
parties contained in Sections 3 and 4 of this Agreement or in any writing
delivered pursuant to such sections, to the extent that a breach or default in
any such representations, warranties, covenants or agreements is not as a result
of fraud shall not terminate at, but rather shall survive, the Closing Date and
shall terminate on the Lock-up Termination Date; provided, however, that such
representations, warranties, covenants and agreements shall survive as to any
claim or demand made prior to the Lock-up Termination Date until such claim or
demand is fully paid or other-wise resolved by the -parties hereto in writing or
by a court of competent jurisdiction. Notwithstanding the foregoing, in the
event of fraud, or any breach of JNE's or RETN's representations set forth in
Section 3.2 (capitalization), the representations and warranties of the parties
hereto and their respective indemnity obligations under this Section 11 shall
not terminate.
11.2 Indemnificationby JNE. JNE shall indemnify and hold harmless AMERINET,
---------------
ANFS, their directors and officers, and each other person, if any, who controls
AMERINET or ANFS within the meaning of the Securities Act ("Controlling
Persons") in respect of any and all claims, LOSSES, damages, liabilities,
demands, assessments, judgments, costs and expenses (including, without
limitation, settlement costs and any legal or other expenses for investigating,
bringing or defending any actions or threatened actions) reasonably incurred by
AMERINET or ANFS, any of its directors, officers or Controlling Persons in
connection with any misrepresentation or breach of any warranty made by JNE or
RETN in this Agreement or in any schedule, exhibit, certificate or other
instrument contemplated by this Agreement.
20
11.3 Indemnification by AMERINET and ANFS. AMERINET and ANFS shall, jointly
and severally, indemnify and hold harmless JNE and its directors and officers,
and each other person, if any, who controls AMERINET or ANFS within the meaning
of the Securities Act ("Controlling Persons") in respect of any and all claims,
losses, damages, liabilities, demands, assessments, judgments, costs and
expenses (including, without limitation, settlement costs and any legal or other
expenses for investigating, bringing Or defending any
actions or threatened actions) reasonably incurred by JNE or any of its
directors, officers or Controlling Persons in connection with any
misrepresentation or breach of any warranty made by AMERINET or ANFS in this
Agreement or in any schedule, exhibit, certificate or other instrument
contemplated by this Agreement.
11.4 Claims for Indemnification.
-----------------------------
(a) Whenever any claim shall arise for indemnification under this Section
11, the indemnified party shall describe such claim in a Notice of Claim to the
other party and, when known, specify the facts constituting the basis for such
claim and the amount or an estimate of the amount of such claim. Each Notice of
Claim shall (A) be signed by the indemnified party, (B) contain a description of
the claim, (C) specify the amount of such claim, and (D) state that, in the
opinion of the signer thereof, such Notice of Claim is valid under the terms of
Section 11 hereof, and is being given in good faith.
(b) The indemnified party shall give the ocher party prompt-notice of any
claim for indemnification hereunder resulting from, or in connection with, any
claim or Third-Party Claim and, with respect to any Third-Party Claim, the
indemnified party shall undertake the defense thereof by representatives
reasonably satisfactory to the indemnified parry and the other partie(s) hereto.
The indemnified party shall not have the right to scale or compromise or enter
into any binding agreement to scale or compromise, or consent to entry of any
judgment arising from, any such claim or proceeding in its sole discretion
without the prior written consent of the ocher party. Each party shall have the
right to participate in any such defense of a Third-Parry Claim with advisory
counsel of its own choosing at its own expense. In the event the indemnified
party, within a reasonable time after notice of any Third-Parry Claim, fails to
defend, the other party shall have the right to undertake the defense,
compromise or settlement of such Third-Piny Claim on behalf of, and for the
account of, JNE, AMERINET or ANFS, at the expense and risk of all parties to the
extent of their liability set forth in Section 11. No party shall, without the
indemnified party's written consent, settle or compromise any- such Third-Parry
Claim or consent to entry of any judgment that does not include, as in
unconditional term thereof, the giving by Elie claimant or the plaintiff to the
indemnified parry, or affiliate or affiliates, as the case may be, an
unconditional release from all liability in respect of such Third-Party Claim.
21
11.5 Arbitration.If a party makes a good faith determination that a breach
------------
(or potential breach) of any of the confidentiality, non-competition, or
intellectual property rights provisions of this Agreement by the other party may
result in damages or consequences that will be immediate, severe, and incapable
of adequate redress after the fact, so that a temporary restraining order or
other immediate injunctive relief is necessary for a realistic and adequate
remedy, that party may seek immediate injunctive relief without first seeking
relief through arbitration. After the court has ruled on the request for
injunctive relief, the parties will thereafter proceed with arbitration of the
DISPUTE and stay the litigation pending arbitration. Subject to the foregoing,
any dispute arising out of this Agreement, or its performance or breach, shall
be resolved by binding arbitration conducted by JAMS/Endispute under the
JAMS/Endispute Rules for Complex Arbitration (the "JAMS Rules"). This
arbitration provision is expressly made pursuant to and shall be governed by the
Federal Arbitration Act, 9 U.S.C. Sections 1-14. The parties hereto agree that
pursuant to Section 9 of the Federal Arbitration Act, a judgment of the United
States District Courts for the Northern District of California SHALL BE entered
upon the AWARD MADE PURSUANT TO THE ARBITRATION. A single arbitrator, who shall
have the authority to allocate the costs of any arbitration initiated under this
paragraph, shall be selected according to the JAMS Rules within ten (10) days of
the submission to JAMS/Endispute of the response to the statement of claim or
the date on which any such response is due, whichever is earlier. The arbitrator
shall conduct the arbitration in accordance with the Federal Rules of Evidence.
The arbitrator shall decide the amount and extent of pre-hearing discovery which
is appropriate. The arbitrator shall have the power to enter any award of
monetary and/or injunctive relief (including the power issue permanent
injunctive relief and also the power to reconsider any prior request for
immediate INJUNCTIVE relief by either of the parties and any order as to
immediate injunctive relief previously granted or denied by a court in response
to a request therefor by either of the parties), including the power to reader
an award as provided in Rule 43 OF THE JAMS RULES; PROVIDED, HOWEVER, that the
arbitrator-shall not have the power. to award punitive damages under any
circumstances (whether styled as -ve, exemplary, or treble damages, or any
penalty or punitive type of damages) regardless of whether such damages may be
available under applicable law, the parties hereby waiving their rights to
recover any such damages. The arbitrator shall award the prevailing parry its
costs and reasonable attorneys' fees, and the losing party shall bear the entire
cost of the arbitration, including the arbitrator's fees. All arbitration shall
be held in Ontario, California. In addition to the above court, the arbitration
award may be enforced in any court having jurisdiction over the parties and the
subject matter of the arbitration. Notwithstanding the foregoing, the parties
irrevocably submit to the nonexclusive jurisdiction of the state and federal
courts situated where the respondent is domiciled or resides as of the Effective
Date in any action to enforce in arbitration award. With respect to any request
for immediate injunctive relief, that state and federal courts in San Bernardino
County, California shall have exclusive jurisdiction and venue over any such
disputes.
11.6 Limitation on IndemnificationNo indemnified party hereunder will be
-------------------------------
entitled to make a claim against any indemnifying party under Section 11.2 or
11.3 unless and until with respect to the parry claiming indemnification 01 the
aggregate amount of losses indemnifiable by JNE exceeds Fifty Thousand Dollars
($50,000) and (it) the aggregate amount of losses indemnifiable by AMERINET
and/or ANFS exceeds Two Hundred Fifty Thousand Dollars ($250,000), respectively,
and then only to the extent of the excess. For purposes of the indemnification
set forth in this Section 11 as it relates to the Lock-up Shares, the parties
agree that each Lock-up Share shall have a value of $3.00.
11.7 Lock-up
-------
(a) JNE may give ANFS a written Notice of Objection: (1) attaching a copy
of such Notice of Claim; (2) stating that, in the good faith opinion of JNE, the
claim described in such Notice of Claim is invalid (either in whole or in
specified party) under the terms of Section I I hereof; (3) giving the reasons
for the alleged invalidity; and (4) stating that based on such alleged
invalidity, JNE object to the paymentof any portion of the JNE Lockup Shares to
-------
the requesting party on account thereof. In the event that a Notice of Objection
alleges that a Notice of Claim is only partially' invalid, JNE, within thirty
(30) days of the receipt of such Notice of Claim, agrees to pay over to AMERINET
or ANFS, as applicable, that portion of the amounts specified in such Notice of
Claim as to which no objection is made. JNE is not required to agree to make any
payments to AMERINET or ANFS in respect of a Notice of Claim that has been
objected to in a Notice of Objection except as provided in the immediately
preceding sentence.
(b) AMERINET, ANFS, REIN and JNE agree to submit to final and binding
-arbitration any and all disputes JNE has specified in a Notice of Objection or
AMERINET or ANFS have specified in a Notice of Claim to which JNE has not
responded within thirty (30) days of receipt of such Notice of Claim. Any such
dispute is subject to arbitration in accordance with the JAMS Rules as provided
in Section 11 hereof.
(c) The lock-up shall be terminated on the Lock-up Termination Date;
provided, however, that the lock-up may continue beyond such date if AMERINET or
ANFS has asserted in indemnification claim, and any such claim remains
unsatisfied.
12. Miscellaneous.
--------------
12.1 Governing ▇▇▇▇.▇▇ is the intention of the panics hereto that the
----------------
internal laws of the State of California (irrespective of its choice of law
principles) shall govern the validity of this Agreement, the construction of its
terms, and the interpretation and enforcement of the rights and duties of the
parties hereto.
12.2 Binding upon Successors and Assigns.Subject to, and unless otherwise
-------------------------------------
provided in, this Agreement, each and all of the covenants, terms, provisions,
and agreements contained herein shall be binding upon, and inure to the benefit
of, the permitted successors, executors, heirs, representatives, administrators-
and assigns of the parties hereto.
12.3 Severability.If any provision of this Agreement, or the application
-------------
thereof, shall for any reason and to any extent be invalid or unenforceable, the
remainder of this Agreement and application of such provision to other persons
or circumstances shall be interpreted so as best to reasonably effect the intent
of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
which will achieve, to the extent possible, the economic, business and other
purposes of the void or unenforceable provision.
12.4 Entire Agreement. This Agreement, the exhibits hereto, the documents
referenced herein, and the exhibits thereto, constitute the entire understanding
and agreement of the parties hereto with respect to the subject matter hereof
and thereof and supersede all prior and contemporaneous agreements or
understandings, inducements or conditions, express or implied, written or oral,
between the parties with respect hereto and thereto. The express terms hereof
control and supersede any course of performance or usage of the trade
inconsistent with any of the terms hereof.
12.5 Counterparts.This Agreement may be executed in any number of
-------------
counterparts, each of which shall be in original as against any party whose
signature appears thereon and all of which together shall constitute one and the
same instrument. This Agreement shall become binding when one or mom
counterparts hereof, individually or taken together, shall bear the signatures
of all of the parties reflected hereon as signatories.
22
12.6 Expenses.Except as provided to the contrary herein, each parry shall.
---------
pay all of its own costs and expenses INCURRED WITH RESPECT TO THE NEGOTIATION,
execution and, delivery of this Agreement, the exhibits hereto, and the other
Transaction Documents.
12.7 Amendment and Waivers.Any term or provision of this Agreement may be
-----------------------
amended, and the observance of any term of this Agreement may be waived either
generally or in a particular instance and either retroactively or prospectively)
only by a writing: signed by the party to be bound thereby. The waiver by a
party of any breach hereof for for default in payment of any amount due
hereunder or default in the performance hereof shall nor be deemed to constitute
a waiver of any other default or any succeeding breach or default
12.8 Survival of Agreements.All covenants, agreements, representations and
-----------------------
warranties made herein shall survive the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
notwithstanding any investigation of the parties hereto and shall terminate on
the date one year after the Closing Date.
12.9 No Waiver.The failure of any parry to enforce any Of the
-----------
provisions,hereof shall not be construed to be a waiver of the right of such
---
party thereafter to enforce such provisions.
12.10 Attorneys' Fees.Should suit be brought to enforce or interpret any
-----------------
part! of this Agreement, the prevailing parry shall be entitled to recover, as
an element of the costs:: of suit and not as damages, reasonable attorneys' fees
to be fixed by the court (including;: without limitation, costs, expenses and
fees on any appeal). The prevailing party shall be the party entitled to recover
its costs of suit, regardless of whether such suit proceeds to final judgment. A
parry not entitled to recover its costs shall not be entitled to recover
attorneys' fees. No sum for attorneys' fees shall be counted in calculating the
amount of a judgment for; purposes of determining if a party is entitled to
recover costs or attorneys' fees.
12.11 NoticesAny notice provided for or permitted under this Agreement';
-------
will be treated as having been given when (a) delivered personally, (b) sent by
confirmed telex or telecopy, (c) sent by commercial overnight courier with
written verification of receipt, or:
(d) mailed postage prepaid by certified or registered mail, return receipt
requested, to the party to be notified, at the address set forth below, or at
such other place of which the other parry, HAS BEEN NOTIFIED in accordance with
the provisions of this Section 12.11.
RETN:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Entertainment, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇. ▇▇▇ ▇▇▇▇▇▇▇▇
With copy to:
M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
AMERINET and ANFS:
▇▇▇▇ ▇. Pembroke
AMERINET FINANCIAL SYSTEMS, INC.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With copy to:
Pezzola & ▇▇▇▇▇▇
Lake ▇▇▇▇▇▇▇ Plaza Bldg.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Such notice will be treated as having been received upon actual receipt.
12.12 Time.Time is of the essence of this Agreement.
-----
23
12.13 Construction of Agreement. ement.This Agreement has been negotiated
----------------------------------
by the respective parties hereto and their attorneys and the language hereof
shall not be construed: for or against any parry. The titles and headings herein
are for* reference purposes only and shall not in any manner limit the
construction of this Agreement which shall be considered as a whole.
12.14 No Joint Venture.Nothing contained in this Agreement shall be deemed
-----------------
or construed as creating a joint venture or partnership between JNE and AMERINET
or ANFS. No parry is by virtue of this Agreement authorized as in agent,
employee or legal representative of any other party. No party shall have any
power or authority to bind or commit any other except as expressly provided by
this Agreement. No party shall hold itself out as having any authority or
relationship in contravention of this Section 12.14.
12.15 PronounsAll pronouns and any variations thereof shall be deemed to
--------
refer to the masculine, feminine or neuter, singular or plural, as the identity
of the person, persons, entity or entities may require.
12.16 Further AssuranceEach party agrees to cooperate fully with the other
-----------------
parties and to execute such further instruments, documents and agreements and to
give such further written assurances, as may be reasonably requested by any
other party to better evidence and reflect the transactions described herein and
contemplated hereby and to carry into effect the intents and purposes of this
Agreement.
12.17 Absence of Third-Party Beneficiary ▇▇▇▇▇▇.▇▇ provisions of this
----------------------------------------------
Agreement are intended, nor shall be interpreted, to provide or create any
third-party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, stockholder, partner of any party hereto or any other
person or entity except employees and stockholders of RETN specifically referred
to herein, and, except as so provided, all provisions hereof shall be personal
solely between the parries to this Agreement.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.)
24
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first set forth above.
AMERINET FINANCIAL SYSTEMS INC.
By: /s/ ▇▇▇▇ Pembroke
Signature
▇▇▇▇ ▇. Pembroke, Chairman & CEO
(Print Name & Title)
ANFS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Signature
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, CFO
(Print Name & Title)
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ENTERTAINMENT, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Signature
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, CEO
(Print Name & Title)
REAL ESTATE TELEVISION NETWORK, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. English
Signature
▇▇▇▇▇▇▇ ▇. English, President
(Print Name & Title)
25
AMENDMENT NO. I TO
AGREEMENT AND PLAN OF REORGANIZATION
THIS AMENDMENT NO. I TO AGREEMENT AND PLAN OF REORGANIZATION (this
"Amendment") is entered into effective as of October 1. 1996, by and among
AMERINET FINANCIAL SYSTEMS, INC., a Florida corporation ("AMERINET'), ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ENTERTAINMENT, INC., a Colorado corporation ("JNE"), REAL ESTATE
TELEVISION NETWORK, INC., a Nevada corporation ("RETN"), and ANFS, INC., a
Delaware corporation (ANFS" and "Surviving Corporation").
1. Registration Rights Agreement.Section 8.8 of that certain Agreement
-------------------------------
and Plan of Reorganization entered into on even date herewith by and among the
parties hereto (the "Reorganization Agreement") is hereby amended in its
entirety to ready as follows:
"8.8 Registration Rights Agreement.
--------------------------------
(a) The Corporation's Obligation to Register.If AMERINET at any time
---------------------------------------------
proposes to register any of its securities under the Securities Act (other than
a registration affected solely to implement an employee benefit plan, a
transaction to which Rule 145 of the Commission Is applicable or any other form
or type of registration in which "Registrable Securities" (as defined below)
cannot be included pursuant to Commission regulation, rule or practice), then
JNE (and any other record and beneficial holder of 250,000 or more AMERINET
Series A Stock shares received under the Reorganization Agreement by JNE
hereinafter to be referred to as a "Holder") shall receive written notice FROM
AMERINET (the "AMERINET Notice") of its Intention to make such registration
(JNE's AMERINET Series A Stock Shares are referred to herein as 'Registrable
Securities"), If such registration is proposed to be on a form which permits
inclusion of the Registrable Securities, then upon the written request by JNE
and any other Holder given within ton (10) 0) days after transmittal by AMERINET
to JNE and all other Holders of the AMERINET Notice, AMERINET will, subject to
the limits contained in this Section, use Its reasonable efforts to cause such
Registrable Securities to be registered under the Securities Act and applicable
Blue Sky laws, all to the extent requisite to permit such sale or other
disposition by JNE and such other Holders of the Registrable Securities so
registered.
b. Demand Registration.Any time after the second anniversary date following
--------------------
the Closing, JNE shall HAVE the right to request in writing (the "DEMAND
Notice") registration with the Securities and Exchange Commission of Ks.
Registrable Securities to be effective for a period of Two Hundred Seventy (2701
days (such request shall be In writing and shall state the number of shares of
Registrable Securities to be disposed of and the intended method of disposition
of such shares), provided that AMERINET shall not be required to effect a
registration pursuant to this Section Unless JNE proposes to dispose of at least
Two Hundred Fifty Thousand (250,0001 shares of Registrable Securities. Upon
AMERINET's receipt of the Demand Notice, it shad notify all other Holder's of
JNE's Demand Notice. Each such Holder shall have ten (10) days after AMERINET's
transmittal to elect to Participate in such registration. Subject to the above
contingencies and the limitations set forth below. AMERINET shag thereafter use
its reasonable efforts to Cause such registration to become effective as soon as
reasonably possible.
c. Limitations.The right of JNE or any other Holder hereunder to request
------------
Inclusion in or demand the registration& pursuant to this section 8.8 shad
terminate at such time that all of the shares of Registrable Securities hold by
JNE may be Publicly sold (i) under Rule 144. (ii) any other applicable
exemption, or Oil) pursuant to any previous registration to which JNE had the
opportunity to sell Its Registrable Securities, Without applicable volume
limitations during any 90-day period In at least one of such three cases.
d. Other Documents/Lock-up.JNE and other participating Holder under any
-------------------------
registation under this Section 8.8 shall enter Into such further agreements,
including Indemnification and customary underwriting agreements, as AMERINET
and/or the managing underwriter shall reasonably require in such registration.
In connection with any registration statement filed by AMERINET after the date
hereof, JNE and all other Holders, upon the request of AMERINET or any
underwriter managing an offering of AMERINET's securities (whether for resale by
an AMERINET shareholder or by AMERINET), not to son, make any short sale of,
loan, grant any option for the purchase of, or otherwise dispose of any AMERINET
equity without the prior written consent of AMERINET or such underwriters, as
the case may be, for a period of time, not to exceed ninety 1901 days from the
effective date of such registration (or such other period as shall be requested
not to exceed in any event 180 days); provided that all executive officers,
directors and 5% or greater shareholders of AMERINET enter Into similar
agreements. Such agreement shag be In writing in the form reasonably
satisfactory to AMERINET and such underwriter, if applicable. AMERINET may
impose top-transfer instructions with respect to the shares subject to the
foregoing restrictions until the end of said lock-up period."
26
e. Amendments.Notwithstanding anything to the contrary herein, the
-----------
registration rights granted herein may be amended, modified, waived, extended or
cancelled with the mutually written consent of JNE and AMERINET.
2. Conditions To ▇▇▇▇▇▇▇.▇▇ addition to the conditions to Closing set
------------------------
forth in Section 9 of the Reorganization Agreement, RETN's and JNE's obligations
to consummate the transactions under the Reorganization Agreement shall be
contingent upon their acceptance of AMERINET's Certificate of Incorporation to
be attached to the Reorganization Agreement as Exhibit B.
IN WITNESS WHEREOF, the parties hereto have executed this Addendum as of the
date first set forth above.
AMERINET FINANCIAL SYSTEMS INC.
By: /s/ ▇▇▇▇ Pembroke
Signature
▇▇▇▇ ▇. Pembroke, Chairman & CEO
(Print Name & Title)
ANFS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Signature
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, CFO
(Print Name & Title)
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ENTERTAINMENT, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Signature
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, CEO
(Print Name & Title)
REAL ESTATE TELEVISION NETWORK, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. English
Signature
▇▇▇▇▇▇▇ ▇. English, President
(Print Name & Title)
27
ANFS Disclosure Schedule
Each disclosure set forth below shall be deemed to qualify all applicable
representation ions and warranties set forth in the Agreement and Plan of
Reorganization Dated October 1, 1996 whether or not specifically cross
-referenced as pertaining thereto.
4.2 Issued and outstanding capital and/or obligations /commitments to issue
capital stock of AmeriNet as of the Closing Date:
Shares Issued:
Common Stock - 7,122,445 shares
Preferred Stock - none
Commitments:
Common Stock - 250,000 shares, including 100,000 shares issuable to the
▇▇▇▇▇ Group
Options for Common Stock - 6,000,000 shares
Options for Class B Common (or Preferred) Stock (or similar class presently
contemplated to be non-voting, but as yet with undetermined rights, preferences
and privileges) - 1,100,000 shares
Series A Preferred Stock - 1,400,000 shares to be issued or potentially issuable
to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Entertainment for MTN acquisition
4.3 The HomeOwner Buying Club, a Nevada corporation, is a whollyowned
subsidiary. AmeriNet contemplates completing the formation of the following
entities pursuant to its current Business Plan:
Real Estate Professionals Cooperative, a Nevada Cooperative association, of
which AmeriNet presently contemplates that it will control approximately 50% of
the voting interests.
An indeterminate number of Limited Liability Corporations (LLC's) presently
contemplated to be organized under 'Nevada law, and which presently are
contemplated to be owned approximately Sok by AmeriNet for the point of sale to
consumers for the delivery of mortgages and other HomeOwner products and
services in the Real Estate Brokers offices.
There is no guaranty however, that additional ventures and subsidiaries will not
be formed or that any of the above subsidiaries will in fact be established if
the Board of Directors of AmeriNet determines otherwise.
4.8 'Various agreements with the BETA Brokers currently provide that they will
be paid 25%, of their office net revenue (total office revenue less office
direct expenses related to having a Customer Service Representative (CSR) in the
office, telephone charges, computer and other equipment costs, supplies
/brochures expense, etc- in their office).
4.12 The AmeriNet trademark "AmeriNet" may not be.exclusively or even
non-exclusively used by AmeriNet - AmeriNet has filed an application with the
USPTO to register the ▇▇▇▇ "AmeriNet" and its associated logo. There are other
companies in substantially the same market place/industry, however, that could
claim a prior use of the AmeriNet name.
4.13 AmeriNet is a successor company to Space Systems Laboratories, Inc. (SSLI)
. While AmeriNet has no knowledge or reason to believe that SSLI had
environmental problems, there may be issues or environmental liability due to
the nature of that company's business which was conducted essentially as a
machine shop type operation.
4.15 While the AmeriNet Financial Statements indicate a strong cash position,
the AmeriNet Business Plan currently requires that a large amount of cash be
expended each month. As disclosed to the principals of MTN and JNE,
approximately $15 to $20 million in additional equity/debt investment is
believed to be required at a minimum for AmeriNet to successfully execute its
strategy.
Additional Funding. significant additional funding will be required as noted
-------------------
above to continue operations, and there can be no assurance that AmeriNet will
---
be able to secure such additional financing on favorable terms, or at all.
Going Concern/NOL. AmeriNet has experienced recurring Losses from operations and
-----------------
use of cash from operations. Market conditions and AmeriNet's financial position
may inhibit its ability to achieve profitable operations. -These factors as well
as others indicate AmeriNet may be unable to continue as a going concern unless
it is able to obtain significant additional financing and generate sufficient
cash flows to meet its obligations as they come due and sustain its operations.
28
Shares Eligible for Future ▇▇▇▇.▇▇ prediction can be made as to the effect, if
----------------------------------
any, that substantial and significant sales of new shares of Common Stock or
Preferred Stock or the availability of such shares for sale will have on the
market prices prevailing from time to time. Nevertheless, the possibility that
substantial amounts of stock may be sold in the future may adversely affect
prevailing prices for AmeriNet's stock and could impair AmeriNet's ability to
raise capital through the sale of its equity securities . AmeriNet also
contemplates that a significant but as of yet undetermined number of stock
options will be issued to employee insiders, consultants and directors of
AmeriNet.
AGREED, CONFIRMED AND ACCEPTED AS OF JANUARY 15, 1997
AMERINET FINANCIAL SYSTEMS INC.
By: /s/ ▇▇▇▇ Pembroke
Signature
▇▇▇▇ ▇. Pembroke, Chairman & CEO
(Print Name & Title)
ANFS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Signature
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, CFO
(Print Name & Title)
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ENTERTAINMENT, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Signature
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, CEO
(Print Name & Title)
REAL ESTATE TELEVISION NETWORK, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. English
Signature
▇▇▇▇▇▇▇ ▇. English, President
(Print Name & Title)
29