DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT (the "Agreement") is made and entered into this
29th day of March, 2005, by and between BUDGETHOTELS NETWORK, INC., a Nevada
corporation ("Budgethotels"), and INFOCENTER, INC., a Washington
corporation and wholly-owned subsidiary of Budgethotels ("Infocenter.").
W I T N E S S E T H:
WHEREAS, Budgethotels is the parent of Infocenter and Infocenter is a
wholly-owned subsidiary of Budgethotels;
WHEREAS, Budgethotels anticipates closing an Agreement for Share Exchange
(the "Acquisition") with Edentify, Inc., a Delaware corporation ("Edentify"),
which transaction in expected to close on or about April 30,2005; and
WHEREAS, conditioned upon the closing of the Acquisition, the Board of
Directors of Budgethotels has resolved that it would be in the best interests of
Budgethotels and its stockholders that (i) all of the outstanding securities of
Infocenter (the "Infocenter Shares") should be distributed to the record common
stockholders of Budgethotels existing at the close of business on March 29, 2005
(the "Record Date"), and subject to adjustment by the National Association of
Securities Dealers, Inc. (the "NASD") setting an ex-dividend date, pro rata, on
a one share for ten share basis (the "Distribution"); and (ii) that all shares
of common stock of Budgethotels issued after the opening of business on March
30, 2005 , would be issued subject to waiver of the Dividend only; and
WHEREAS, the respective Boards of Directors of Budgethotels and Infocenter
have adopted resolutions pursuant to which Budgethotels shall deposit all of the
Infocenter Shares with Computershare Trust Company, Inc., ("Computershare"), a
transfer agency registered with the Securities and Exchange Commission, to be
held by Computershare for Distribution to the Budgethotels stockholders, subject
to the filing and effectiveness by Infocenter of a registration statement on the
appropriate form and related prospectus with the Securities and Exchange
Commission (the "Registration Statement" and the Prospectus) and such comparable
applicable state agencies, or in reliance upon an available exemption from the
applicable federal and state registration requirements as may be necessary, to
lawfully effect the Distribution by dividend (the "Dividend) to the Budgethotels
stockholders of all of the Infocenter Shares on Budgethotels's behalf, subject
to the terms and provisions hereof (the "Plan of Distribution");
NOW, THEREFORE, in consideration of the closing of the Acquisition and the
mutual covenants and promises contained herein, it is agreed:
SECTION 1. PLAN OF DISTRIBUTION, EFFECTIVE DATE AND STOCKHOLDERS ENTITLED
TO PARTICIPATE.
1.1 The effective date (the "Effective Date") of the Dividend will be the
same date as the closing of the Acquisition, at which time this Agreement
shall take effect. At the close of business on April 29, 2005 there were
28,911,682 outstanding shares of common stock of Budgethotels. Only
Budgethotels stockholders of record on the Record Date for the Dividend
(subject to the effects of any adjustments resulting from the NASD setting
an ex-dividend date immediately following the closing of the Acquisition),
will be entitled to participate in the Dividend and Distribution of the
Infocenter Shares.
1.2 Prior to the Effective Date, the Infocenter Board of Directors will
have taken all necessary and requisite action to effect a forward stock
split of the ten (10) shares of Infocenter common stock issued and
outstanding on a 289,116 shares for one share basis, resulting in 2,891,160
shares of Infocenter common stock outstanding and subject to the Dividend.
1.3 Budgethotels hereby conveys all of the assets of Budgethotels and
Infocenter at the Record Date to Infocenter.
1.4 Infocenter will assume, pay and indemnify and hold Budgethotels
harmless from and against any and all liabilities of Budgethotels and
Infocenter that existed at the Record Date, of every kind and nature
whatsoever, whether by contract, lease, license or otherwise, without
qualification, including the costs and expenses of the Dividend, the
Distribution and the Plan of Distribution.
1.5 The Distribution and the Plan of Distribution will be subject to the
following conditions:
(a) All of the Infocenter Shares that are owned by Budgethotels,
amounting to 2,891,168 shares (post-split as per section 1.2 above),
will be deposited with Computershare and held by Computershare in
escrow (the "Distribution Escrow") with a list of stockholders of
Budgethotels at the Record Date, subject to Distribution, on
satisfaction of the following conditions:
(i) The prior filing and effectiveness of a Registration
Statement and Prospectus with the Securities and Exchange
Commission or an available exemption from the applicable federal
and state registration requirements applicable to the
Distribution of the Infocenter Shares by Budgethotels, in
accordance with all applicable federal and state securities laws,
rules and regulations at Infocenter's sole cost and expense
within a reasonable time, but not later than January 31, 2006;
and
(ii)Compliance with applicable "blue sky" laws, rules and
regulations respecting the Dividend and the Distribution, by
registration or exemption, in any state in which any stockholder
of Budgethotels resided at the Record Date, as may be adjusted by
any ex-dividend date set by the NASD, by Infocenter, in
accordance with all applicable federal and state securities laws,
rules and regulations at Infocenter's sole cost and expense
within a reasonable time but not later than ten months from the
date hereof.
1.6 Infocenter will timely file a Form 10b-17 with the NASD advising it of
the Distribution and Plan of Distribution including, as necessary, a
description of this Agreement.
SECTION 2. CLOSING. The closing of the Agreement (the "Closing") will occur
immediately on the closing of the Acquisition. The Closing may be accomplished
by wire, express mail or other courier service, conference telephone
communications or as otherwise agreed by the respective parties or their duly
authorized representatives.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF BUDGETHOTELS.
Budgethotels represents and warrants to, and covenants with, Infocenter as
follows:
3.1 Budgethotels is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada and is licensed or
qualified as a foreign corporation in all states or jurisdictions in which
the nature of its business or the character or ownership of its properties
makes such licensing or qualification necessary.
3.2 The current pre-Dividend and pre-Distribution authorized capital stock
of Budgethotels consists of 100,000,000 shares of $0.001 par value common
voting stock, of which 28,911,682 shares shall have been issued and
outstanding on the Record Date, all fully paid and non-assessable and
issued in accordance with applicable state corporate law and federal and
state securities laws, rules and regulations, and 1,000,000 shares of $0.01
par value preferred stock, of which no shares shall have been issued and
outstanding on the Record Date. No other shares of common stock of
Budgethotels were or have been issued subsequent to the Record Date, unless
pursuant to the Acquisition and unless the issuance was conditioned upon
waiver of the Dividend.
3.3 Budgethotels has full corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder and will deliver to
Infocenter or its representatives at the Closing a copy of resolutions of
its Board of Directors authorizing execution of this Agreement by
Budgethotels's officers and performance thereunder.
3.4 Execution of this Agreement and performance by Budgethotels hereunder
have been duly authorized by all requisite corporate action on the part of
Budgethotels, and this Agreement constitutes a valid and binding obligation
of Budgethotels and performance hereunder will not violate any provision of
the Articles of Incorporation, By-Laws, agreements, mortgages or other
commitments of Budgethotels.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF INFOCENTER.
Infocenter represents and warrants to, and covenant with, Budgethotels as
follows:
4.1 Infocenter is a corporation duly organized, validly existing and in
good standing under the laws of the State of Washington and is licensed or
qualified as a foreign corporation in all states or jurisdictions in which
the nature of its business or the character or ownership of its properties
makes such licensing or qualification necessary.
4.2 The current authorized capital stock of Infocenter consists of 500
shares of $500.00 par value common voting stock, of which 2,891,160 shares
(post-split as per section 1.2 above) will be issued and outstanding at the
Closing, all owned by Budgethotels. There are no outstanding options,
warrants or calls pursuant to which any person has the right to purchase
any authorized and unissued common stock or other securities of Infocenter.
4.3 Infocenter has full corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder and will deliver to
Budgethotels or its representative at the Closing a copy of the resolutions
of its Board of Directors authorizing execution of this Agreement by its
officers and performance thereunder.
4.4 Execution of this Agreement and performance by Infocenter hereunder
have been duly authorized by all requisite corporate action on the part of
Infocenter, and this Agreement constitutes a valid and binding obligation
of Infocenter and performance hereunder will not violate any provision of
the Articles of Incorporation, Bylaws, agreements, mortgages or other
commitments of Infocenter.
SECTION 5. CONDITIONS PRECEDENT TO OBLIGATIONS OF INFOCENTER.
All obligations of Infocenter under this Agreement are subject, at its
option, to the fulfillment, before or at the Closing, of each of the following
conditions:
5.1 The representations and warranties of Budgethotels contained in this
Agreement shall be deemed to have been made again at and as of the Closing
and shall then be true in all material respects and shall survive the
Closing.
5.2 Budgethotels shall have performed and complied with all of the terms
and conditions required by this Agreement to be performed or complied with
by it before the Closing and/or the Distribution.
5.3 All of the conditions respecting Budgethotels set forth herein shall
have been satisfied by Budgethotels prior to the Closing and/or the
Distribution.
5.4 The Acquisition between Budgethotels and Edentify shall have been
completed and closed.
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUDGETHOTELS.
All obligations of Budgethotels under this Agreement are subject, at
Budgethotels's option, to the fulfillment, before or at the Closing, of each of
the following conditions:
6.1 The representations and warranties of Infocenter contained in this
Agreement shall be deemed to have been made again at and as of the Closing
and shall then be true in all material respects and shall survive the
Closing.
6.2 Infocenter shall have performed and complied with all of the terms and
conditions required by this Agreement to be performed or complied with by
it before the Closing and/or the Distribution.
6.3 All of the conditions respecting Infocenter that are set forth herein
shall have been satisfied by Infocenter prior to the Closing and/or the
Distribution.
6.4 The Acquisition between Budgethotels and Edentify shall have been
completed and closed.
SECTION 7. TERMINATION. Prior to Closing, this Agreement may be terminated
(1) by mutual consent in writing; (2) by the directors of either Budgethotels or
Infocenter, if there has been a material misrepresentation or material breach of
any warranty or covenant by the other party; or (3) by the directors of either
Budgethotels or Infocenter if the Acquisition shall not have timely taken place,
unless adjourned to a later date by mutual consent in writing, by the date fixed
in the Acquisition.
SECTION 8. GENERAL PROVISIONS.
8.1 Expenses. All costs and expenses incurred in connection with this
Agreement will be paid by the party incurring such expenses.
8.2 Parties in Interest. This Agreement will inure to the benefit of and be
binding upon the parties hereto and the respective successors and assigns.
Nothing in this Agreement is intended to confer, expressly or by
implication, upon any other person any rights or remedies under or by
reason of this Agreement.
8.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all together
will constitute one document. The delivery by facsimile of an executed
counterpart of this Agreement will be deemed to be an original and will
have the full force and effect of an original executed copy.
8.4 Severability. The provisions of this Agreement will be deemed severable
and the invalidity or unenforceability of any provision hereof will not
affect the validity or enforceability of any of the other provisions
hereof. If any provisions of this Agreement, or the application thereof to
any person or any circumstance, is illegal, invalid or unenforceable, (a) a
suitable and equitable provision will be substituted therefor in order to
carry out, so far as may be valid and enforceable, the intent and purpose
of such invalid or unenforceable provision, and (b) the remainder of this
Agreement and the application of such provision to other persons or
circumstances will not be affected by such invalidity or unenforceability,
nor will such invalidity or unenforceability affect the validity or
enforceability of such provision, or the application thereof, in any other
jurisdiction.
8.5 Governing Law. This Agreement will be deemed to be made in and in all
respects will be interpreted, construed and governed by and in accordance
with the law of the State of Washington without regard to the conflict of
law principles thereof.
8.6 Amendment. This Agreement may be amended only with the approval of all
the parties hereto, but no amendment will be made which substantially and
adversely changes the terms hereof. This Agreement may not be amended
except by an instrument, in writing, signed on behalf of each of the
parties hereto.
IN WITNESS WHEREOF, the parties have executed this Distribution Agreement
effective the day and year first above written.
"Budgethotels"
BUDGETHOTELS NETWORK, INC.
By: /s/ "Xxxxxxx XxXxxx"
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Its President
"Infocenter"
INFOCENTER, INC.
By: /s/ "Xxxxxxx XxXxxx"
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Its Vice-President
