Reorganization Agreement
By and among
AmeriNet ▇▇▇▇▇.▇▇▇, Inc.,
a Delaware corporation
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
a Utah resident
and
Riverview Financial Corp.
a California corporation
TABLE OF CONTENTS
Page
ARTICLE ONE DEFINITIONS & RULES OF CONSTRUCTION............................1
1.1 Definitions:...................................................1
1.2 Rules of Construction:.........................................7
ARTICLE TWO PLAN OF REORGANIZATION..........................................7
2.1 Reorganization.................................................7
2.2 Unregistered Status of AmeriNet Stock to Be Issued:............11
ARTICLE THREE REPRESENTATIONS & WARRANTIES..................................12
3.1 Park City Group................................................12
3.2 AmeriNet:......................................................22
ARTICLE FOUR COVENANTS 30
4.1 Park City Group................................................30
4.2 AmeriNet:......................................................31
4.3 The Parties:...................................................32
ARTICLE FIVE CONDITIONS PRECEDENT...........................................34
5.1 Conditions to Obligations of Each Party to Effect the
Reorganization...............................34
5.2 Additional Conditions to Obligations of Park City Group's
Participants.............................34
5.3 Additional Conditions to the Obligations of AmeriNet...........36
ARTICLE SIX CLOSING
6.1 Closing Date:..................................................37
6.2 Items to be Delivered at Closing by Park City Group:...........37
6.3 Items to be Delivered at Closing by AmeriNet:..................37
6.4 Completion of Closing..........................................38
ARTICLE SEVEN DEFAULT OR TERMINATION........................................38
7.1 Termination....................................................38
7.2 Failure of Conditions..........................................39
7.3 Termination Without Default....................................39
ARTICLE EIGHT CONFIDENTIALITY...............................................40
8.1 Park City Group's Business Information:........................40
8.2 AmeriNet's Business Information:...............................40
ARTICLE NINE MISCELLANEOUS..................................................41
9.1 Expenses.......................................................41
9.2 Assignability..................................................41
9.3 Counterparts & Facsimile Execution.............................41
9.4 Remedies.......................................................41
9.5 Survival of Condition Subsequent, Representations and Warranties,
Covenants.......................41
9.6 Third-Party Beneficiaries......................................42
9.7 Severability................... ...............................42
9.8 Entire Agreement...............................................42
9.9 Amendments, Extensions & Waiver................................42
9.10 Exhibits......................................................42
9.11 Negotiated Transactions.......................................43
9.12 Governing Laws, Venue and Dispute Resolution..................43
9.13 Notices.......................................................43
9.14 Further Assurances............................................44
9.15 License.......................................................44
9.16 Broker........................................................44
Park City Exhibits
2.1C Park City Group's Participants' Data
3.1.B.2 Park City Group Capitalization
3.1.B.4 Obligation to Issue or Reserve Stock
3.1.D Acceptable Liabilities and Permitted Encumbrances
3.1.E Tax Obligations & Liens
3.1.F Park City Group Subsidiaries, Affiliates and Interests in Other
Entities
3.1.G.5 Employee Benefits
3.1.H.2 Material Contracts
3.1.I.2 Existing Insurance Policies
3.1.J Intellectual Property
3.1.J.7 Confidentiality Agreements
3.1.K Litigation
3.1.M Park City Group Financial Statements
3.1.O Interested Party Transactions
4.2.B.4 Use of Proceeds
4.3.C Consents
5.3E Legal Opinion
AmeriNet's Exhibits
1.1O Consulting Agreement
3.2B Options and Warrants
3.2B4 Registration Rights
3.2C3 Financial Representations and Disclosure
3.2C4 SEC Comment Letters
3.2.E Litigation
3.2.F Tax Obligations & Liens
3.2H Liabilities and Obligations
3.2J Leases
3.2.K.2 Insurance Policies and Fidelity Bonds
3.2L Contracts and Commitments
4.3.C Consents
5.2.D Legal Opinion
Items to be delivered at Closing by Park City Group
1. Certificates for the Park City Group Securities
2. A lien and judgement search
3. A good standing certificate
4. A certificate attesting that all representation, warranties, exhibits
and schedules remain materially true and accurate.
Items to be delivered at Closing by AmeriNet
1. A lien and judgement search
2. A good standing certificate
3. Certified copies of resolutions passed by Board of Directors and
Shareholders
4. A certificate attesting that all representation, warranties, exhibits
and schedules remain materially true and accurate.
5. Certificates for the Exchange Shares will be delivered within a
reasonable time after the Closing.
4
REORGANIZATION AGREEMENT
This Reorganization Agreement (hereinafter referred to collectively with
all exhibits as the "Agreement") is made and entered into by and among AmeriNet
▇▇▇▇▇.▇▇▇, Inc., a publicly held Delaware corporation with a class of securities
registered under Section 12(g) of the Exchange Act ("AmeriNet"); and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, a Utah resident, and Riverview Financial Corp., a California corporation
("Park City Group's Participants") (each of the above listed being sometimes
hereinafter collectively referred to as the "Parties" and each being sometimes
hereinafter generically referred to as a "Party").
PREAMBLE:
WHEREAS, the board of directors of AmeriNet believes it is in the best
interest of the corporation and its securities holders that AmeriNet acquire
approximately ninety-eight percent of the outstanding stock of Park City Group,
Inc., a Delaware corporation ("Park City Group"), as a result of which, the Park
City Group's Participants become the controlling stockholders of AmeriNet and,
for accounting purposes, Park City Group is deemed to constitute a continuing
entity and consolidated subsidiary of AmeriNet, and, in furtherance thereof, has
approved the Reorganization; and
WHEREAS, pursuant to the terms of the Reorganization, as hereinafter set
forth, among other things, approximately ninety-eight percent of the outstanding
securities of Park City Group ("Park City Group's Securities") will be exchanged
for shares of AmeriNet's common stock, $0.01 par value ("AmeriNet's common
stock"), in reliance on applicable exemptions from the registration requirements
of the Securities Act and applicable Blue Sky laws, as hereinafter described;
and
WHEREAS, the Parties intend that AmeriNet raise at least $1,000,000 (net)
prior to Closing for the exclusive use of Park City Group subsequent to Closing;
and
WHEREAS, AmeriNet and the Park City Group's Participants desire to make
certain representations and warranties and other agreements in connection with
the Reorganization; and
WHEREAS, the Parties intend, by executing this Agreement, to adopt a plan
of reorganization relating to the Reorganization and that the Reorganization
shall constitute a tax-free reorganization as described in Section 368(a)(1)(B)
of the Internal Revenue Code of 1986, as amended (the "Code"):
Now, Therefore, in consideration of the entry of the Parties into this
Agreement, as well as the sum of ten dollars, the mutual promises herein and
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the Parties, intending to be legally bound, hereby agree as
follows:
WITNESSETH:
DEFINITIONS & RULES OF CONSTRUCTION
Definitions:
As used in this Agreement, the following words, terms and phrases will have
the meanings ascribed to them below:
"Agreement" will mean this Reorganization Agreement.
"2000 10-KSB" will mean AmeriNet's report on Commission Form 10-KSB for the
fiscal year ended June 30, 2000.
"Acceptable Liabilities" will mean the Park City Group's liabilities, either
actual, accrued or contingent which individually or in the aggregate, (i) have
been reflected in the Park City Group's Audited Financial Statements (including
the notes thereto) or (ii) have been specifically described in this Agreement or
in the Park City Group's Schedules or Exhibits.
"Accredited Investor" will mean a person or entity that meets the asset or
income requirements for treatment as an accredited investor specified in Rule
501 of Commission Regulation D promulgated under the Securities Act.
"Securities Act" will mean the Securities Act of 1933, as amended.
"Rule 506" will mean Rule 506 of Commission Regulation D promulgated under the
Securities Act.
"Affiliate" will mean an entity or person that controls, is controlled by or is
under common control with another person.
"AmeriNet Exhibits" will mean the exhibits referenced by the Section
designations of this Agreement as to which they apply, annexed at the direction
of AmeriNet to this Agreement and constituting a material component of this
Agreement.
"AmeriNet Schedules" will mean the schedules referenced by the Section
designations of this Agreement as to which they apply, annexed at the direction
of AmeriNet to this Agreement and constituting a Material component of this
Agreement.
"AmeriNet Financial Statements" will mean the AmeriNet financial statements,
including all related schedules and the notes thereto, included in the 2000
10-KSB; the reports on Commission Form 10-QSB filed subsequent to June 30, 2000
and the financial statements for subsidiaries subsequently acquired by AmeriNet
included in current reports on Commission Form 8-K, as amended, filed since the
dates of the Subsequent Quarterly Reports; all such financial statements being
hereinafter collectively and generically referred to as the "AmeriNet Financial
Statements."
"Blue Sky Laws" will mean the securities laws, rules, regulations and judicial
decisions and interpretations of state securities laws.
"Books and Records" will mean all books, records, bank statements, budgets,
financial statements, correspondence, computer programs, software developments,
trade secrets, customer lists, supplier lists, site plans, surveys, plans and
specifications, marketing materials, floor plans, tax assessment records,
billing and collection records, engineering plans and specifications, as-built
drawings, development plans and all other records.
"Capital Stock" will mean the generic term used for equity securities, whether
common, preferred or otherwise.
"Client and Customer Agreements" will mean all firm orders from customers for
the purchase of goods or services.
"Code" will mean the United States Internal Revenue Code of 1986, as amended.
"IRS" will mean the United States Internal Revenue Service.
"Close" or "Closing" will mean the consummation of the transactions contemplated
by this Agreement.
"Closing Date" will mean the date that the Closing takes place.
"Commission" will mean the United States Securities and Exchange Commission.
"Exchange Act" will mean the Securities Exchange Act of 1934, as amended.
"Exchange Act Reports" will mean all reports filed by AmeriNet with the
Commission pursuant to the Exchange Act.
"Subsequent Current Reports" will mean AmeriNet's reports on Commission Form 8-K
filed after the Subsequent Quarterly Reports but prior to the date of Closing of
this Agreement.
"Subsequent Exchange Act Reports" will mean AmeriNet's reports filed with the
Commission pursuant to requirements of the Exchange Act after the filing of
AmeriNet's report on Commission Form 10-KSB for the year ended June 30, 2000 but
prior to the date of Closing on this Agreement.
"Subsequent Quarterly Reports" will mean AmeriNet's reports on Commission Form
10-QSB for the quarterly periods following the filing of AmeriNet's report on
Commission Form 10-KSB for the year ended June 30, 2000 but prior to the date of
Closing on this Agreement.
"Commercial Software Rights" will mean all license and other rights to use
commercially available third party software applications, tools and libraries
and documentation pursuant to end-user licenses, including but not limited to
"shrink wrapped, off the shelf," commercially available, third party products
used by Park City Group.
"Consulting Agreement" will mean the consulting agreement between AmeriNet and
Yankees, a copy of which is annexed hereto and made a part hereof as Exhibit
1.1O.
"Contracts" will mean all contracts, agreements, understandings, indentures,
notes, bonds, loans, instruments, leases, subleases, mortgages, franchises,
licenses, commitments or binding arrangements, express or implied, oral or
written, whether or not enforceable.
"Disputed Item(s)" will mean any disputes that are not resolved by reference to
specific provisions of this Agreement, without recourse to this Agreement"s
dispute resolution procedures.
"Dependent Service Agreements" will mean the Contracts, alliances or joint
ventures entered into by Park City Group with third parties for the generation
of business for Park City Group or the provision of services, supplies,
equipment, media placement, personnel or access to facilities, equipment or
time, software or other computer-related items, for the benefit or use of Park
City Group's clients or customers.
"Employee Benefit Plan" will mean any:
Non-qualified deferred compensation or retirement plan or arrangement which
is an Employee Pension Benefit Plan;
Qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan;
Qualified defined benefit retirement plan or arrangement which is an
Employee Pension Benefit Plan including any Multi-employer Plan as defined in
ERISA Section 3[37]); or
Employee Welfare Benefit Plan.
"Employee Pension Benefit Plan" will have the meaning set forth in ERISA Section
3(2).
"Employee Welfare Benefit Plan" will have the meaning set forth in ERISA Section
3(1).
"ERISA" will mean the Employee Retirement Income Security Act of 1974, as
amended.
"Encumbrance" will mean any title defect, mortgage, assignment, pledge,
hypothecation, security interest, title or retention agreement, levy, execution,
seizure, attachment, garnishment, deemed trust, lien, easement, option, right or
claim of others, or charge or encumbrance of any kind whatsoever.
"Permitted Encumbrance" will mean those specific Park City Group Encumbrances
detailed in Exhibit 3.1D annexed hereto and made a part hereof, but only to the
extent, including duration, amounts and nature specified therein.
"Exchange Agent" will mean the person or entity responsible following the
Closing, for issuing and delivering the shares of AmeriNet's common stock to
Park City Group's Participants.
"Exchange Shares" will mean the shares of AmeriNet voting common stock to be
issued in exchange for the Park City Group's Securities as determined in Section
2.1B.
"Exchange Ratio" will mean the quotient obtained by dividing the Exchange Shares
by the number of shares of Park City Group's Securities tendered to AmeriNet.
"GAAP" will mean generally accepted accounting principles, consistently applied,
in conformity with the rules and regulations of the Commission.
"GAAS" will mean generally accepted auditing standards, in conformity with the
rules and regulations of the Commission.
"Net, Pre-Tax Profits" will mean earnings before taxes, but after deduction of
all other expenses, depreciation and amortization, determined in accordance with
GAAP.
"Net Tangible Assets" will mean total assets less intangible assets and
liabilities, as defined for purposes of Exchange Act Section 3(a)(51) and Rule
3a-51-1(g) promulgated thereunder.
"Governmental Entity" means agencies, authorities, bodies, boards, commissions,
courts, instrumentalities, legislatures and offices of any nature whatsoever for
any government unit or political subdivision, whether federal, state, county,
district, municipal, city or otherwise, and whether now or later in existence.
"Hazardous Waste" will mean any waste, substance or material, in any physical
state, designated as hazardous by the United States Environmental Protection
Agency under the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901
et. seq., any regulations promulgated thereunder, or comparable laws or
regulations of the state, county or local governmental unit having jurisdiction
thereof, or determined under binding judicial decisions thereunder.
"Knowledge" or any derivations or variations thereof, whether in the form of a
word or phrase, when used to qualify a representation or warranty, will mean
knowledge after reasonable inquiry by a senior executive officer of the legal
entity on whose behalf the assertion is made and will include information that
such legal entity should have had in the exercise of reasonable diligence.
"Material" or any derivations or variations thereof, whether in the form of a
word or phrase when used to qualify a representation or warranty will mean a
variance that could have negatively affected a decision by a reasonably prudent
person to engage in the transactions contemplated by this Agreement, and will be
measured both on the occasion in which such term is referenced as well as on an
aggregate basis with other similar matters.
"Substantial Compliance" will mean compliance which the Party for whose benefit
or at whose request an act is performed, or for whose benefit or at whose
request an act is refrained from could under the circumstances be reasonably
expected to accept as full compliance.
"Material Contracts" will mean those Contracts not made in the ordinary course
of business that will be performed after the date of this Agreement or that were
entered into not more than two years before the date of this Agreement as listed
on Exhibit 3.1.H.2 annexed hereto and made a part hereof.
"NASD" will mean the National Association of Securities Dealers, Inc., a
Delaware corporation and self regulatory organization registered with the
Commission and any of its subsidiaries.
"OTC Bulletin Board" will mean the over the counter electronic securities market
operated by the NASD.
"Park City Group's Audited Financial Statements" will mean Park City Group's
audited financial statements (balance sheets, income statements and related
schedules and footnotes) as of and for the fiscal year ending December 31, 2000
prepared in conformity with GAAP.
"Park City Group's Declarants" will mean ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and Riverview
Financial Corp.
"Park City Group's Exhibits" will mean the exhibits referenced by the section
designations of this Agreement as to which they apply, and constituting a
Material component of this Agreement.
"Park City Group's Financial Statements" will be the collective term for the
Park City Group Unaudited Financial Statements, the Park City Group's Audited
Financial Statements and Park City Group's Unaudited Balance Sheet.
"Park City Group's Intellectual Property" will mean (i) all United States and
foreign patents and patent applications owned or controlled by Park City Group;
(ii) all federal, state, and foreign trademark and service ▇▇▇▇ registrations
and applications with respect to the trademarks and service marks which Park
City Group is using, or intends to use, and those trademarks and service marks
owned or controlled by Park City Group or licensed to Park City Group for which
no application for registration is pending; (iii) all United States copyright
registrations and applications owned or controlled by Park City Group or
licensed to Park City Group; and (iv) all license and other rights in any third
party product, intellectual property, proprietary or personal rights,
documentation, or tangible or intangible property, including without limitation
the types of intellectual property and tangible and intangible proprietary
information described in (i), (ii) or (iii) above, that are in either case owned
or held by or on behalf of Park City Group or that are being used in Park City
Group's business as it has been or is currently conducted.
"Park City Group's Participants" shall mean the signatories to this Agreement
who own Park City Group's Securities. Said participants will own approximately
98% of the issued and outstanding Park City Group's Securities.
"Park City Group's Securities" shall have the meaning used by the Commission for
federal securities law purposes which includes, without limitation, all
outstanding shares of Park City Group Capital Stock together with all options or
rights to acquire Park City Group Capital Stock if such options or rights have
an exercise price of less than the number obtained by multiplying $.25 by the
Exchange Ratio.
"Park City Group's Securities Holders" shall mean the holders of Park City
Group's Securities at the time immediately preceding the Closing.
"Park City Group's Unaudited Financial Statements" will mean Park City Group's
unaudited financial statements (balance sheets, income statements and related
schedules and footnotes) as of and for the fiscal quarters following December
31, 2000, prepared in conformity with GAAP.
"Park City Group's Schedules" will mean the schedules referenced by the section
designations of this Agreement as to which they apply, annexed to this Agreement
at the direction of Park City Group's Declarants and constituting a Material
component of this Agreement.
"Performance Shares" will mean the shares of AmeriNet voting common stock
reserved by AmeriNet at Closing for issuance to Park City Group's Participants
based on the performance of Park City Group and its consolidated subsidiaries,
as described in Section 2.1A2.
"Permits and Licenses" will mean all government permits, licenses,
authorizations, certificates of occupancy and approvals which are possessed by
Park City Group.
"Post-Closing Shares" will mean the number of shares of AmeriNet common stock at
Closing, as described in Section 2.1B.1.
"AmeriNet Stock Prior to Closing" will mean the outstanding shares of AmeriNet
common stock immediately prior to Closing, as described in Section 2.1B.1.
"Principal Executive Officers" will mean all of Park City Group's executive
officers who, after the Closing, will hold 3% or more of AmeriNet's common
stock.
"Private Placement" shall mean a private placement of up to $5,100,000 in
AmeriNet common stock in reliance on Section 4(2) of the Securities Act, to be
commenced after execution of this Agreement, with a net of at least $1,000,000
to be raised prior to Closing in cash or notes at the Park City Group's
Declarants discretion, with the remainder of the $5,100,000 to be raised
subsequent to Closing, the net proceeds of which will be used to provide Park
City Group with expansion and growth capital.
"Real Property" will mean all real property rights or ownership interests
belonging to Park City Group.
"Leased Realty" will mean all Real Property that is leased, rather than owned in
fee simple by Park City Group.
"Reorganization" will mean the effectuation of the acquisition of approximately
98% of the outstanding securities of Park City Group by AmeriNet, as
contemplated by this Agreement.
"Tax" or collectively or generically, "Taxes," will mean any and all, state,
local or foreign income, gross receipt, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental
(including any tax under Code Section 59a.), custom duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other
tax of any kind whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not.
"Tax Return" will mean any return, declaration, report, claim for refund,
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
State Securities Act Exemptions will mean one of the following:
Section 61-1-14(2)(n) of the Utah Uniform Securities Act;
Section 44-1844.A.1 of the Arizona Revised Statutes; or
Section 10-5-9(12) of the Official Code of Georgia Annotated.
"Yankees" will mean the Yankee Companies, Inc., a Florida corporation which has
served as AmeriNet's strategic planning consultant and will remain one of
AmeriNet's largest stockholders subsequent to Closing.
"Yankees Warrant" means the warrant dated November 23, 1999 related to an option
entitling Yankees to purchase 12.5% of AmeriNet's outstanding and reserved
Capital Stock.
Additional defined terms are specified in certain sections and subsections below
and are characterized by the use of initial letter capitalization.
Rules of Construction:
When a reference is made in this Agreement to schedules or exhibits, such
reference will be to a schedule or exhibit to this Agreement unless otherwise
indicated.
The words "include," "includes" and "including" when used herein will be deemed
in each case to be followed by the words "without limitation."
The table of contents and headings contained in this Agreement are for reference
purposes only and will not affect in any way the meaning or interpretation of
this Agreement.
The captions in this Agreement are for convenience and reference only and in no
way define, describe, extend or limit the scope of this Agreement or the intent
of any provisions hereof.
All pronouns and any variations thereof will be deemed to refer to the
masculine, feminine, neuter, singular or plural, as the identity of the Party or
Parties, or their personal representatives, successors and assigns may require.
The Parties agree that they have been represented by counsel during the
negotiation and execution of this Agreement and, therefore, waive the
application of any law, regulation, holding or rule of construction providing
that ambiguities in an agreement or other document will be construed against the
Parties drafting such agreement or document.
PLAN OF REORGANIZATION
Reorganization
The Reorganization.
At the Closing on this Agreement all of the Park City Group's Participants
will exchange all of their Park City Group's Securities for the Exchange Shares.
In addition to the Exchange Shares, AmeriNet will reserve Performance
Shares for potential future issuance to Park City Group's Participants in an
amount equal to 35% of the AmeriNet common stock outstanding as of the date the
Performance Shares are earned, issuable in annual installments as follows:
For the year ended December 31, 2001, an amount equal to one half of the
Performance Shares if Park City Group together with its consolidated
subsidiaries has earned, on an accrual basis in accordance with GAAP, Net,
Pre-Tax Profits of not less than $3,000,000; and
For the year ended December 31, 2002, an amount equal to one half of the
Performance Shares if Park City Group together with its consolidated
subsidiaries has earned, on an accrual basis in accordance with GAAP, Net,
Pre-Tax Profits of not less than $4,200,000.
In the event that the foregoing Net, Pre-Tax Profits (determined under the
accrual method of accounting in compliance with GAAP) are not attained during
the time periods set, then:
If the Net, Pre-Tax Profits (determined under the accrual method of
accounting in compliance with GAAP) are less than 33% of the required
threshold during such subject 12 month period, the Performance Shares for
such period will be forfeited;
If the Net, Pre-Tax Profits (determined under the accrual method of
accounting in compliance with GAAP) are between 33% and 80% of the required
threshold during such subject 12 month period, the Performance Shares for
such period and the required threshold will be carried over to the next
year, increasing both the aggregate threshold and the aggregate shares
attainable for such year;
If the Net, Pre-Tax Profits (determined under the accrual method of
accounting in compliance with GAAP) are between 80% and 100% of the
required threshold during such subject 12 month period, the Performance
Shares for such period will be prorated and the remaining Performance
Shares for such period will be carried over to the next year, increasing
the aggregate shares attainable for such year; and
In the event of a carry forward into 2003, the required threshold will
equal $4,200,000. There will be no carry forwards beyond 2003.
The Exchange Shares and the Performance Shares will be allocated among the
Park City Group's Participants in proportion to their holdings of Park City
Group's Securities immediately prior to the Closing. For avoidance of doubt, in
the event that less than all Park City Group's Securities are tendered for
exchange at Closing, the total number of Exchange Shares issuable at Closing
shall be equal to the number determined in accordance with Section 2.1B(1),
multiplied by a fraction, the numerator being the aggregate number of shares of
Park City Group's Securities tendered at Closing, divided by the total number of
Park City Group's Securities as of the Closing. The remaining Exchange Shares
will be held in reserve for future issuance either to (1) those Park City
Group's Security Holders who do not tender their shares pursuant to this
Agreement or (2) the Park City Group's Participants one year from the date of
Closing.
Shares to Be Issued & Effect on Capital Stock.
Determination.
To calculate the number of shares issuable to Park City Group's
Participants, use the following formula:
Z = N + X
Z = Post-Closing Shares. This number equals the number of shares
of AmeriNet common stock at Closing which is equal to the sum of
the AmeriNet Stock Prior to Closing and the Exchange Shares.
N = AmeriNet Stock Prior to Closing. This number equals all of
the outstanding shares of AmeriNet common stock immediately prior
to Closing, after the conversion of all AmeriNet debt into
AmeriNet Class A Preferred Stock, the conversion of all AmeriNet
Class A Preferred Stock into common stock, the exercise of the
Yankees Warrant into common stock, the issuance of all shares
sold in connection with the Private Placement prior to Closing,
the exercise into common stock of all other warrants held by
Yankees (except for a warrant to purchase up to 800,000 shares of
AmeriNet common stock at an exercise price of $.22 per share),
the exercise of all rights to acquire AmeriNet common stock for
all such rights that have an exercise price of less than $.25 per
share and the deemed exercise of all other rights to acquire
AmeriNet common stock. This number will exclude a total of
300,000 shares that may be issued to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇▇▇ for finders fees.
X = Exchange Shares. This number equals 78% of the Post-Closing
Shares. This percentage will be reduced by 4% (up to a total of
16%) for every $1 million of unrestricted cash that AmeriNet
holds at Closing (up to a total of $4 million) that exceeds the
first $1 million (net) in Private Placement funds.
Notwithstanding the foregoing, the Park City Group's Declarants
may reject any Private Placement subscription offers in their
discretion.
Adjustments to Exchange Ratio.
The Exchange Ratio will be adjusted to reflect fully the effect
of any stock split, reverse split, stock dividend (including any
dividend or distribution of securities convertible into AmeriNet
common stock or Park City Group's common stock), recapitalization
or other like change with respect to AmeriNet's common stock or
Park City Group's common stock occurring after the date hereof
and prior to the Closing.
Fractional Shares.
No fraction of a share of AmeriNet's common stock will be issued,
but in lieu thereof each holder of shares of Park City Group's
Securities who will otherwise be entitled to a fraction of a
share of AmeriNet's common stock (after aggregating all
fractional shares of AmeriNet's common stock to be received by
such holder) will be entitled to receive a whole share of
AmeriNet's common stock.
Exchange of Certificates.
Exchange Agent.
Unless modified by written agreement of the Parties prior to the
Closing Date, Liberty Transfer Co., Inc., of Huntington, New
York, AmeriNet's current transfer agent, will serve as exchange
agent (the "Exchange Agent") in the Reorganization.
AmeriNet to Provide Common Stock.
In the event that Liberty Transfer Co., Inc., of Huntington, New
York, is not the Exchange Agent, then promptly after the Closing
AmeriNet will make available to the Exchange Agent for exchange
in accordance with the provisions of this Article II the shares
of AmeriNet's common stock issuable pursuant to Section 2.1A.
Exchange Procedures.
All certificates for shares of Park City Group's Securities owned by the
Park City Group's Participants will be tendered to AmeriNet at the Closing, with
medallion signature guarantees or otherwise in proper form for immediate
transfer to the order of AmeriNet, whereupon AmeriNet will issue instructions to
the Exchange Agent to issue shares of AmeriNet's common stock, in the quantities
and names set forth in Exhibit 2.1C.
The AmeriNet Shares will be issued to the order of the Park City Group's
Participants, subject to verification of directions and authorizations, as
follows:
At the Closing, AmeriNet will deliver to the Park City Group's Declarants
an original directive comprised of a cover letter to AmeriNet's transfer agent
directing it to issue the Exchange Shares at AmeriNet's expense, a corporate
resolution authorizing and directing the issuance of the Exchange Shares and an
opinion of counsel to AmeriNet, directed to AmeriNet's transfer agent,
authorizing the issuance of the Exchange Shares, which Park City Group's
Declarants will cause to be delivered to AmeriNet's transfer agent.
Within ten days after delivery of the AmeriNet audit on which the number of
the Performance Shares will be based, by AmeriNet's auditors to AmeriNet,
AmeriNet will deliver to Park City Group's Declarants an original directive
comprised of a cover letter to AmeriNet's transfer agent directing it to issue
the Performance Shares called for at AmeriNet's expense, a corporate resolution
authorizing and directing the issuance of the Performance Shares and an opinion
of counsel to AmeriNet, directed to AmeriNet's transfer agent, authorizing the
issuance of the Performance Shares which Park City Group's Declarants will cause
to be delivered to AmeriNet's transfer agent.
Transfers of Ownership.
If any certificate for shares of AmeriNet's common stock is to be
issued in a name other than that in which the certificate
surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that the certificate so
surrendered will be properly endorsed and otherwise in proper
form for transfer and that the person requesting such exchange
will have paid to AmeriNet or any agent designated by it any
transfer or other Taxes required by reason of the issuance of a
certificate for shares of AmeriNet's common stock in any name
other than that of the registered holder of the certificate
surrendered, or established to the satisfaction of AmeriNet or
any agent designated by it that such Tax has been paid or is not
payable.
No Liability.
Notwithstanding anything to the contrary in this Section 2.1C,
neither the Exchange Agent, AmeriNet, Park City Group nor any
other Party will be liable to a holder of shares of AmeriNet's
common stock or Park City Group's Securities for any amount
properly paid to a public official pursuant to any applicable
abandoned property, escheat or similar law.
Lost, Stolen or Destroyed Certificates.
In the event any certificates evidencing shares of Park City
Group's Securities have been lost, stolen or destroyed, the Park
City Group's Participants will work with Park City Group's
transfer agent or share registrar, prior to the Closing, to have
issued in exchange for such lost, stolen or destroyed
certificates, upon the making of an affidavit of that fact by the
holder thereof, such shares of Park City Group's Securities as
may have been required pursuant to Section 2.1; provided,
however, that AmeriNet may, in its discretion and as a condition
precedent to the issuance of the shares of its common stock to be
exchanged therefor, require the owner of such lost, stolen or
destroyed certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made
against AmeriNet or the Exchange Agent with respect to the
certificates alleged to have been lost, stolen or destroyed.
Tax Consequences and Accounting Treatment.
It is intended by the Parties that the Reorganization will constitute a
reorganization within the meaning of Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended, and the Parties agree that if modification of
the terms of this Agreement in a non-material manner to attain such
qualification is necessary, they will negotiate in good faith to make such
required modifications.
The Parties intend for this transaction to qualify for accounting treatment
as a reverse acquisition and agree to take all reasonable steps necessary,
including agreeing to reasonable, non Material modifications of the provisions
of this Agreement in order to attain such treatment.
Taking of Necessary Action & Further Action.
As promptly as practicable after the satisfaction or waiver of the
conditions set forth in Article VI, the Parties will cause the Reorganization to
be consummated by effecting the exchange of the tendered Park City Group's
Securities for the Exchange Shares.
At the Closing, the effect of the Reorganization will be that Park City
Group will have become a consolidated subsidiary of AmeriNet and that the Park
City Group's Participants will have become stockholders of AmeriNet, with no
further rights, title or interest in Park City Group, other than indirectly as
stockholders of AmeriNet.
If, at any time after the Closing, any further action is necessary or
desirable to carry out the purposes of this Agreement, the Park City Group's
Participants and the officers and directors of AmeriNet are fully authorized in
the name of their corporation or otherwise to take, and will take, all such
lawful and necessary action.
Unregistered Status of AmeriNet Stock to Be Issued:
The Exchange Shares and the Performance Shares (collectively hereinafter
referred to as the "AmeriNet Shares") will be issued to the Park City Group's
Participants without registration under the Securities Act in reliance on the
exemptive provisions of Section 4(2) thereof pertaining to non-public offerings
limited solely to Accredited Investors, and in compliance with the State
Securities Act Exemptions, compliance with which is predicated on the following
representations and warranties by the Park City Group's Participants:
Each of Park City Group's Participants has had access through the
Commission's Internet web site at ▇▇▇.▇▇▇.▇▇▇, in the ▇▇▇▇▇ Archives sub-cite,
to all of AmeriNet's reports filed with the Commission during the past two
fiscal years, has reviewed all such reports and has, either directly or through
a representative, been granted access to all of AmeriNet's officers and
directors, and to all officers and directors of AmeriNet's operating
subsidiaries, for purposes of providing all disclosure required under applicable
federal and state securities laws in conjunction with the exchange contemplated
by this Agreement.
Each of Park City Group's Participants has been advised that:
The securities to be issued by AmeriNet in exchange for Park City Group's
Securities have not been registered under the Securities Act, the Exchange Act
or any comparable state securities laws, but rather, are being issued in
reliance on the exemption from registration under the Securities Act provided by
Section 4(2) thereof;
All certificates for the shares of AmeriNet's common stock will bear
legends restricting any transactions therein, directly or indirectly, unless
they are first registered under applicable federal and state securities laws or
the proposed transaction is exempt from such registration requirements, and such
facts are demonstrated to the satisfaction of AmeriNet and its legal counsel,
based on such third party legal opinions, affidavits and transfer agency
procedures as AmeriNet will reasonably require or have in place generally;
AmeriNet's transfer agent has been instructed to decline transfers of
certificates for the shares of AmeriNet's common stock to be issued pursuant to
this Agreement unless the foregoing requirements have been met and have been
confirmed as having been met by a duly authorized officer of AmeriNet.
Each of Park City Group's Participants has independently determined through
his, her or its own legal counsel, that all requirements of Park City Group's
state of domicile for the issuance of the shares of AmeriNet's common stock
called for by this Agreement have been met, or will have been met, prior to
Closing, by such legal counsel acting on behalf of the Parties to this
Agreement, other than in conjunction with the post-Closing filing requirements
with the Commission and any state securities divisions, as specified in Section
4.1B.
REPRESENTATIONS & WARRANTIES
Park City Group
As a Material inducement to AmeriNet's entry into this Agreement and
exchange of AmeriNet common stock for the Park City Group's Securities, the Park
City Group's Declarants hereby acknowledge, represent and warrant that, to the
best of their Knowledge, except as specifically disclosed in individual exhibits
relating to this Section 3.1 annexed hereto and made a part hereof (the "Park
City Group's Warranty Exceptions") or pursuant to subsequent notice given
pursuant to Section 4.1C:
Other Agreements
Other than customer agreements and contracts that are entered into in the
normal course of business or otherwise disclosed in Exhibit 3.1.H.2, Park
City Group is not a party to any Material contract, agreement,
understanding or instrument nor are any of its assets or operations subject
to any Material contract, agreement, understanding or instrument.
Park City Group's Capital Structure.
The authorized Capital Stock of Park City Group consists of 40,000,000
shares of common stock, $.00002 per share par value, and 10,000,000 shares of
"blank check" preferred stock, $0.01 par value per share.
There are 25,880,136 shares of Park City Group's common stock issued, all
of which are outstanding, held by the persons, and in the amounts, set forth on
Exhibit 3.1.B.2. As of May 23, 2001, none of Park City Group's preferred stock
is issued and outstanding, however, certain Park City Group debt holders have
rights to convert their debt into shares of preferred stock at any time.
All outstanding shares of Park City Group Capital Stock are duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights created by statute, the articles of incorporation or bylaws of
Park City Group or any agreement to which Park City Group is a party or is
bound.
Except as set forth on Exhibit 3.1.B.4, Park City Group has no securities
reserved for issuance for any purpose, there being no other obligations directly
or indirectly obligating Park City Group to issue any of its securities to any
person for any purpose. There are no other options, warrants, calls, rights,
commitments or agreements of any character to which Park City Group is a party
or by which it is bound obligating Park City Group to issue, deliver, sell,
repurchase or redeem, or cause to be issued, delivered, sold, repurchased or
redeemed, any shares of the Park City Group Capital Stock or obligating Park
City Group to grant, extend or enter into any such option, warrant, call, right,
commitment or agreement. There is no present intention to issue additional
shares of Park City Group so as to cause AmeriNet to lose "control" of Park City
Group within the meaning of Section 368(c) of the Code.
Real Property
Park City Group does not currently own, have right or title to any Real
Property;
All Leased Realty is currently held by Park City Group pursuant to a valid
and binding lease. The subject lease is currently in good standing and without
defaults, subject to no Material zoning restrictions, liens or encumbrances,
except for the Acceptable Liabilities and Permitted Encumbrances set forth on
Exhibit 3.1.D.
Title to Assets
Park City Group has good, valid and marketable title to all of its assets
or operations, subject to no mortgage, pledge, lien, encumbrance, security
interest or charge, except for the Permitted Encumbrances and Acceptable
Liabilities listed in Exhibit 3.1.D.
Taxes & Other Returns and Reports
Tax Returns and Audits.
Park City Group has accurately prepared and filed all required federal,
state, local and foreign Tax Returns, relating to any and all Taxes relating or
attributable to Park City Group or its operations.
The Tax Returns are true and correct in all Material respects and have been
completed in accordance with applicable law in all Material respects.
Park City Group has paid all Taxes required to be paid with respect to such
Returns and has withheld with respect to its employees all federal and state
income Taxes, FICA, FUTA and other Taxes it is required to withhold.
The accruals for Taxes on the books and records of Park City Group are
sufficient to discharge the Taxes for all periods (or the portion of any period)
ending on or prior to the Closing Date.
Except as set forth in Exhibit 3.1.E, Park City Group is not currently
delinquent in the payment of any Tax, nor is there any Tax deficiency
outstanding, proposed or assessed against Park City Group, nor has Park City
Group executed any waiver of any statute of limitations on or extending the
period for the assessment or collection of any Tax.
(1) No audit or other examination of any Tax Return of Park City Group is
presently in progress.
Except as set forth in Exhibit 3.1.E, Park City Group does not have any
liabilities for unpaid federal, state, local and foreign Taxes, whether asserted
or unasserted, known or unknown, contingent or otherwise and Park City Group's
Participants have no Knowledge of any basis for the assertion of any such
liability attributable to Park City Group, or its respective assets or
operations.
Except as set forth in Exhibit 3.1.E, Park City Group has never been
required to join with any other entity in the filing of a consolidated Tax
Return for federal Tax purposes or a consolidated or combined return or report
for state Tax purposes.
Except as set forth in Exhibit 3.1.E, Park City Group is not a party to or
bound by any Tax indemnity, Tax sharing or Tax allocation agreement.
There are (and as of immediately following the Closing Date there will be)
no liens on the assets of Park City Group relating to or attributable to Taxes.
The Park City Group's Declarants have no Knowledge of any basis for the
assertion of any Tax claim which, if adversely determined, would result in liens
on the assets of Park City Group.
None of the assets of Park City Group is treated as "Tax-exempt use
property" within the meaning of Section 168(h) of the Code.
There is no contract, agreement, plan or arrangement, including but not
limited to the provisions of this Agreement, covering any employee or former
employee of Park City Group that, individually or collectively, could give rise
to the payment of any amount that would not be deductible pursuant to Sections
280G, 162 or 404 of the Code.
Park City Group is not a party to any action or proceeding by any
governmental authority for assessment or collection of taxes, or for failure to
file other governmentally required reports.
No claim for assessments has been asserted against its assets or
operations, nor, to the best of the Park City Group's Declarants' Knowledge, are
any assessments affecting its assets or operations currently contemplated.
Except as set forth on Exhibit 3.1.E, there are no security interests
affecting Park City Group's assets or operations or any component thereof that
arose in connection with any failure (or alleged failure) to pay any Tax, and
Park City Group has withheld and paid all Taxes required to have been withheld
and paid in connection with amounts paid or owing to any employee employed by
Park City Group, independent contractor, creditor, or other third party with
respect to Park City Group.
Corporate Matters
Park City Group is, as of the date of this Agreement, a validly existing
corporation organized pursuant to the laws of the State of Delaware, with all
legal and corporate authority and power to conduct its business (as now
conducted and as proposed to be conducted) and to own its properties, and
possesses all necessary permits and licenses required in connection with the
conduct of its business.
The conduct of Park City Group's business is in Material compliance with
all applicable federal, state and local governmental statutes, rules,
regulations, ordinances and decrees currently in force and known.
The consummation of the transactions herein contemplated and compliance
with the terms of this Agreement will not conflict with or result in a Material
breach in any of the terms or provisions of, or constitute a Material default
under, Park City Group's governing instruments (e.g., certificate of
incorporation or bylaws, as amended); any indenture, other agreement or
instrument to which Park City Group or the Park City Group's Declarants are a
party or by which Park City Group or its assets are bound; or, any applicable
law, regulation, judgment, order or decree of any governmental instrumentality
or court, domestic or foreign, having jurisdiction over Park City Group, its
securities or its properties.
Except as set forth in Exhibit 3.1.F, Park City Group has no subsidiaries
or affiliated companies nor does it otherwise own any shares of stock or any
interest in, or control, directly or indirectly, any other limited liability
company, company, corporation, partnership, association, joint venture or
business entity.
To the Park City Group's Declarant's knowledge, the minute books of Park
City Group made available to counsel for AmeriNet contain a complete and
accurate summary of all meetings of directors and stockholders since the time of
organization and reflect all transactions referred to in such minutes accurately
in all Material respects.
Employees
Park City Group has not experienced any significant difficulties with the
recruitment of employees or with the management of any of its employees beyond
that which similarly situated companies in its market have experienced, nor do
the Park City Group's Declarants have any Knowledge that any such difficulties
are likely to arise in the future;
(i) None of Park City Group's employees is subject to any collective
bargaining or union agreement.
There are no existing representation questions pertaining to any employees
of Park City Group nor to the Park City Group's Declarants' Knowledge are there
any organizational efforts with respect to any employees of Park City Group.
Park City Group's Declarants have no Knowledge that any of Park City
Group's employees will not agree to continue their employment with Park City
Group after Closing.
Except as set forth on Exhibit 3.1.B.4 (3), the Park City Group's
Declarants have no Knowledge that any of Park City Group's employees have any
potential claims against Park City Group or its predecessors or successors in
interest based on any matters whatsoever, including, without limitation,
violations of equal employment laws, occupational health and safety standards,
pension or benefit protection laws or any other legally protected rights.
Employee Benefits.
Exhibit 3.1.G.5 attached hereto lists each Employee Benefit Plan that Park
City Group maintains or to which Park City Group contributes for persons
employed by Park City Group.
(a) To the best of the Park City Group's Declarants' Knowledge: all
Employee Plans are in compliance in all material respects with the
requirements prescribed by any and all applicable statutes (including ERISA
and the Code), orders, or governmental rules and regulations currently in
effect with respect thereto (including all applicable requirements for
notification to participants or beneficiaries or the Department of Labor,
the IRS or the Secretary of the Treasury), and Park City Group has
performed in all material respects all obligations required to be performed
by it under, is not in default under or violation of, and has no knowledge
of any default or violation by any other party to, any of the Employee
Plans;
Each Employee Plan intended to qualify under Section 401(a) of the Code and
each trust intended to qualify under Section 501(a) of the Code either has
received a favorable determination letter with respect to each such Employee
Plan from the IRS or still has a remaining period of time under applicable
Treasury Regulations or IRS pronouncements in which to apply for such a
determination letter and to make any amendments necessary to obtain a favorable
determination;
No Employee Plan is or within the prior six years has been subject to, and
Park City Group has not incurred and does not expect to incur any liability
under, Title IV of ERISA or Section 412 of the Code; and
(a) Each Employee Plan has been maintained in substantial compliance with
its terms, and all contributions, premiums or other payments due from Park
City Group or any of its subsidiaries to (or under) any such Employee Plan
have been fully paid or adequately provided for on the audited Park City
Group's Financial Statements for the most recently ended fiscal year.
To the best of the Park City Group's Declarants' Knowledge, all accruals
thereon (including, where appropriate proportional accruals for partial periods)
have been made in accordance with generally accepted accounting principles
consistently applied on a reasonable basis.
There has been no amendment, written interpretation or announcement
(whether or not written) by Park City Group with respect to, or change in
employee participation or coverage under, any Employee Plan that would increase
materially the expense of maintaining such plans or arrangements, individually
or in the aggregate, above the level of expense incurred with respect thereto
for the most recently-ended fiscal year.
Material Contracts and Other Commitments
To the best of Park City Group's Declarants' Knowledge, Park City Group
does not currently have any outstanding work orders or Dependent Service
Agreements.
Exhibit 3.1.H.2 sets forth a complete and correct list of all of the
Material Contracts not included elsewhere in exhibits to this Section 3.1.
Except as set forth in Exhibit 3.1.H.2, Park City Group has not received
notice from any person who is a party to any Material Contract, and the Park
City Group's Declarants have no reason to believe, that Park City Group is in
default of any of the terms, conditions or provisions of any Material Contract.
Each Material Contract is valid, binding and enforceable in accordance with
its terms, and no condition exists that (with the passage of time, the giving
notice, or both) would lead to a default with respect to, or permit any party
thereto to terminate, accelerate or amend any such agreement, and Park City
Group has performed in all Material respects all of its obligations under each
Material Contract in accordance with its terms.
Except as specifically disclosed in Exhibit 3.1.H.2, Park City Group does
not have, is not a party to nor is it bound by:
Any collective bargaining agreements;
Any agreements that contain any unpaid severance liabilities or obligations;
Any bonus, deferred compensation, incentive compensation, pension,
profit-sharing or retirement plans, or any other employee benefit plans or
arrangements;
Any employment or consulting agreement, contract or commitment with an employee
or individual consultant or salesperson or consulting or sales agreement,
contract or commitment with a firm or other organization, not terminable by Park
City Group on thirty days notice without liability, except to the extent general
principles of wrongful termination law may limit Park City Group's ability to
terminate employees at will;
Any agreement or plan, including, without limitation, any stock option plan,
stock appreciation right plan or stock purchase plan, any of the benefits of
which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement;
Any fidelity or surety bond or completion bond;
Any lease of personal property having a value individually in excess of $10,000;
Any agreement of indemnification or guaranty not entered into in the ordinary
course of business;
Any agreement, contract or commitment containing any covenant limiting the
freedom of Park City Group to engage in any line of business or compete with any
person;
Any agreement, contract or commitment relating to capital expenditures and
involving future obligations in excess of $10,000 in any single instance or
$50,000 in the aggregate;
Any agreement, contract or commitment relating to the disposition or acquisition
of assets not in the ordinary course of business or any ownership interest in
any corporation, partnership, joint venture or other business enterprise;
Any mortgages, indentures, loans or credit agreements, security agreements or
other agreements or instruments relating to the borrowing of money or extension
of credit;
Any purchase order or contract for the purchase of raw materials or acquisition
of assets involving $10,000 or more in any single instance or $50,000 or more in
the aggregate;
Any construction contracts;
Any distribution, joint marketing or development agreement;
Any other agreement, contract or commitment which involves $10,000 or more in
any single instance or more than $50,000 in the aggregate and is not cancelable
without penalty within thirty (30) days other than standard end-user licenses of
Park City Group's products and services in the ordinary course of business
consistent with past practice, or
Any agreement which is otherwise material to Park City Group's business.
Assignability of Material Contracts
Except as disclosed on Exhibit 4.3.C, and except where failure to obtain a
consent would not have a material adverse effect on the Park City Group's
business, Park City Group has all of the consents or approvals of the other
contracting party to any Material Contract that are necessary for the
consummation of the transactions contemplated herein.
Product Warranties
No event is known to have occurred that may give rise to liability on the
part of Park City Group in respect of any claim that any of the products
produced or sold or services provided by or on the part of Park City Group is
not or was not at the time of such occurrence:
In compliance in all Material respects with all applicable federal, state,
local and foreign laws and regulations; or
Is not or was not at the time of such occurrence fit for use, and does not
or did not conform in all Material respects to any promises or affirmations of
fact made on the container or labels for such product or in connection with its
sale.
No event is known to have occurred that may give rise to liability on the
part of AmeriNet based on any claim that there is or was at the time of such
occurrence any design defect with respect to any of such products or that any of
such products fails or failed to contain adequate warning, presented in a
reasonably prominent manner, in accordance with applicable laws and current
industry practice with respect to its contents and use, or that any such product
fails to meet contract specifications.
Advertising
To the best of the Park City Group's Declarants' Knowledge, neither any
advertising by Park City Group nor any promotional material used by Park
City Group at any time has contained any Material untrue or misleading
statements or claims with respect to the products or services of Park City
Group.
Binding Agreements & No Default
Each of the contracts, agreements and other instruments shown on the
Exhibits and Schedules referred to in this Agreement to which Park City
Group is a party is a legal, binding and enforceable obligation in favor of
or against Park City Group (assuming that such contracts, agreements and
instruments are binding on all other parties thereto, Park City Group
having no reason to believe that they are not), in accordance with its
terms, and no party with whom Park City Group has an agreement or contract
is, to the Park City Group's Declarants' Knowledge, in default thereunder
or has breached any Material terms or provisions thereof (subject to all
applicable bankruptcy, insolvency, reorganization and other laws applicable
to creditors' rights and remedies and to the exercise of judicial
discretion in accordance with general principles of equity).
Distribution Agreements
No third party or parties have the right to distribute Park City Group's
products or to market its services.
Insurability
Park City Group knows of no impediments to obtaining hazard and liability
insurance covering its assets or operations, at commercially reasonable
insurance rates, nor do the Park City Group's Declarants have any Knowledge that
such insurance, at such rates, will not be obtainable by AmeriNet in the future.
Exhibit 3.1.I.2 lists all insurance policies and fidelity bonds covering
the assets, business, equipment, properties, operations, software errors and
omissions, employees, officers and directors of Park City Group as well as all
claims made under any insurance policy by Park City Group in the past three
years.
There is no claim by Park City Group pending under any of such policies or
bonds as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds.
All premiums payable under all such policies and bonds have been paid and
Park City Group is otherwise in compliance in all material respects with the
terms of such policies and bonds (or other policies and bonds providing
substantially similar insurance coverage).
Such policies of insurance and bonds are of the type and in amounts
customarily carried by persons conducting businesses similar to those of Park
City Group.
Park City Group does not know of any threatened termination of or material
premium increase with respect to any of such policies.
To the best of the Park City Group's Declarants' Knowledge, Park City Group
has never been denied insurance coverage nor has any insurance policy of Park
City Group ever been canceled for any reason.
Intellectual Property Rights
All Park City Group Intellectual Property (excluding Commercial Software
Rights) is identified on Exhibit 3.1.J.
Except as set forth on Exhibit 3.1.J, Park City Group is the sole and
exclusive owner of the entire and unencumbered right, title, and interest in and
to each of the patents, registered service marks, trademarks, and copyrights
listed on the attached Exhibit 3.1.J, free and clear of any liens, charges and
encumbrances, including pledges, assignments, licenses, shop rights and
covenants by debtor not to ▇▇▇ third persons.
To the Park City Group's Declarants' Knowledge, each of the patents and
registered service marks, trademarks and copyrights listed on the attached
Exhibit 3.1.J is valid and enforceable, and the Park City Group's Declarants are
not aware of any present claim by any third party that any of such patents,
service marks, trademarks or copyrights are invalid or unenforceable, or that
the use of any such patents, service marks, trademarks or copyrights violates
the rights of any third person, or of any basis for any such claims.
Park City Group has all rights in the Park City Group Intellectual Property
reasonably necessary to carry out Park City Group's current business activities
and has or has had all rights in Park City Group Intellectual Property
reasonably necessary to carry out Park City Group's former business activities.
To the best Knowledge of the Park City Group's Declarants, there are no
claims by any person against Park City Group, nor to the knowledge of the Park
City Group's Declarants are there any valid grounds for any bona fide claims, to
the effect that the manufacture, sale, licensing or use of any product as now
used, sold or licensed by Park City Group infringes on any US registered
copyright, US patent, US registered trade ▇▇▇▇ or service ▇▇▇▇ or
misappropriates a third party trade secret.
Park City Group has not entered into any agreement to indemnify any other
person against any charge of infringement of any Park City Group's Intellectual
Property Right.
Each current and former employee of and consultant to Park City Group
having access to confidential information has signed a form of the agreement set
forth on Exhibit 3.1.J.7 pursuant to which such employees and consultants are
required to keep such information in confidence.
Legal & Regulatory Matters
To the best Knowledge of the Park City Group's Declarants, Park City Group
holds, and is in compliance in all Material respects with, all licenses,
permits, and authorizations necessary for the conduct of Park City Group's
business pursuant to applicable statutes, laws, ordinances, rules, regulations,
codes, or any law of any governmental body, agency, commission, or unit to which
Park City Group may be subject, including compliance with waste and hazardous
waste disposal, the failure of which would have a Material adverse effect on
Park City Group.
Park City Group has not received any notices:
From any city, village or other governmental authority of, and the Park
City Group's Declarants have no Knowledge of the basis of, any zoning, building,
fire or health code violations in respect to the Real Property that have not
been heretofore corrected.
Of any alleged violation of any statute, order, rule, regulation or
requirement in connection with the operation of Park City Group.
Except as set forth on Exhibit 3.1.K:
There are no actions, suits or proceedings pending, or, to the Park City
Group's Declarants' Knowledge, threatened or anticipated before any court or
governmental or administrative body or agency affecting Park City Group; and
Park City Group is not presently subject to any injunction, order or other
decree of any court of competent jurisdiction.
Books, Records & Results
To the best of the Park City Group's Declarants' Knowledge, Park City
Group's Books and Records (including customer order files and employment
records) are complete, true and correct in all Material respects.
Park City Group has consolidated all operations of its affiliates and
related business enterprises permitting consolidation of their financial
statements pursuant to GAAP.
Park City Group's Financial Statements
Exhibit 3.1.M includes Park City Group's Audited Financial Statements as of
and for the years ending December 31, 1999 and 2000.
Park City Group's Financial Statements are complete and correct in all
Material respects and have been prepared in accordance with GAAP throughout the
periods indicated.
Park City Group's Financial Statements present fairly the financial
condition and operating results of Park City Group as of the dates and during
the periods indicated therein, subject to normal year-end audit adjustments.
Park City Group's Financial Statements have been audited by independent
public accountants who are members in good standing of the American Institute of
Certified Public Accountants' Securities Practice Section, and comply with the
requirements for material acquisitions under Commission Regulation SB in a
manner permitting AmeriNet to comply with its obligation under the Securities
Act and the Exchange Act in conjunction therewith.
Since the date of Park City Group's Financial Statements and through the
date of this Agreement, with the exception of the (1) ▇▇▇▇▇▇ Fields LLC
transaction described on Exhibit 3.1.F or (2) transactions described elsewhere
in the Exhibits to Section 3.1, there has not been, occurred or arisen any:
Transaction by Park City Group except in the ordinary course of business as
conducted on that date;
Capital expenditure by Park City Group, either individually or in the
aggregate, exceeding $250,000;
Destruction, damage to, or loss of any assets (including without limitation
intangible assets) of Park City Group (whether or not covered by insurance),
either individually or in the aggregate, exceeding $250,000;
Labor trouble or claim of wrongful discharge, sexual harassment or other
unlawful labor practice or action;
Change in accounting methods or practices (including any change in
depreciation or amortization policies or rates, any change in policies in making
or reversing accruals, or any change in capitalization of software development
costs) by Park City Group;
Declaration, setting aside, or payment of a dividend or other distribution
in respect to the shares of Park City Group, or any direct or indirect
redemption, purchase or other acquisition by Park City Group of any of its
shares;
Increase in the salary or other compensation payable or to become payable
by Park City Group to any of its officers, directors or employees, or the
declaration, payment, or commitment or obligation of any kind for the payment,
by Park City Group, of a bonus or other additional salary or compensation to any
such person;
Acquisition, sale or transfer of any asset of Park City Group except in the
ordinary course of business;
Formation, amendment or termination of any Material contract or license to
which Park City Group is a party, other than termination by Park City Group
pursuant to the terms thereof;
Loan by Park City Group to any person or entity, or guaranty by Park City
Group of any loan except for expense advances in the ordinary course of business
consistent with past practice;
Waiver or release of any Material right or claim of Park City Group,
including any write-off or other compromise of any Material account receivable
of Park City Group;
The notice or, to the Park City Group's Declarants' Knowledge, commencement
or threat of commencement of any governmental proceeding against or
investigation of Park City Group or its affairs;
Other event or condition of any character that has or would, in Park City
Group's reasonable judgment, be expected to have a Material adverse effect on
Park City Group;
Issuance, sale or redemption by Park City Group of any of its shares or of
any other of its securities other than issuances of shares of common stock
pursuant to outstanding options and warrants; or
Change in pricing or royalties set or charged by Park City Group except for
discounts extended in the ordinary course of business consistent with past
practice.
Restrictions on Business Activities
There is no agreement (assuming the parties thereto other than Park City
Group performed their respective obligations thereunder as required),
judgment, injunction, order or decree binding upon Park City Group which
has or could reasonably be expected to have the effect of materially
prohibiting or materially impairing any business practice of Park City
Group, any acquisition of property by Park City Group or the conduct of
business by Park City Group as currently conducted or as currently proposed
to be conducted.
Interested Party Transactions
Except as disclosed on Exhibit 3.1.O, to the best Knowledge of the Park
City Group's Declarants, no officer, director or stockholder of Park City
Group (nor any parent, sibling, descendant or spouse of any of such
persons, or any trust, partnership, corporation or other entity (provided,
that ownership of no more than one percent of the outstanding voting stock
of a publicly traded corporation will not be deemed an "interest in any
entity" for purposes of this Section 3.1.O) in which any of such persons
has or has had an interest), has or has had, directly or indirectly:
An interest in any entity which furnished or sold, or furnishes or sells,
services or products which Park City Group furnishes or sells, or proposes to
furnish or sell;
Any interest in any entity which purchases from or sells or furnishes to,
Park City Group, any goods or services.
Liabilities
Except for the Acceptable Liabilities, Park City Group does not have any
Material liabilities or obligations of any nature, whether accrued,
absolute, contingent, inchoate or otherwise.
Accuracy of Representations and Warranties
No representation, warranty, or statement of the Park City Group's
Declarants omits or will omit to state any Material fact necessary to make such
representation, warranty, or statement in this Agreement accurate and not
misleading in any Material respect.
The copies of all instruments, agreements, or other documents and written
information relating to Park City Group delivered to AmeriNet by the Park City
Group's Declarants pursuant to or in connection with this Agreement are or will
be complete and correct in all Material respects as of the date of this
Agreement, subject to changes made in the ordinary course of business or matters
disclosed in Section 4.1.C.
AmeriNet:
As a Material inducement to the Park City Group's Participants exchange of
their securities for shares of AmeriNet's common stock as contemplated by this
Agreement, AmeriNet hereby acknowledges, represents and warrants that, except as
specifically disclosed in individual exhibits relating to this Exhibit 3.2
annexed hereto and made a part hereof ("AmeriNet's Warranty Exceptions").
Corporate Requirements
AmeriNet is, as of the date of this Agreement, a validly existing
corporation, organized and in good standing pursuant to the laws of the State of
Delaware, with all legal and corporate authority and power to conduct its
business (as now conducted and as proposed to be conducted) and to own its
properties, and, possesses all necessary permits and licenses required in
connection with the conduct of its business. The copies of the certificate of
incorporation and bylaws of Amerinet previously furnished to the Park City
Group's Participants are correct and complete and reflect all amendments
thereto.
The conduct of AmeriNet's business is in Material compliance with all
applicable federal, state and local governmental statutes, rules, regulations,
ordinances and decrees.
The execution and delivery of this Agreement by AmeriNet has been duly
authorized by all required corporate action, and, the consummation of the
transactions herein contemplated and compliance with the terms of this Agreement
will not conflict with or result in a Material breach in any of the terms or
provisions of, or constitute a Material default under, the certificate of
incorporation or bylaws of AmeriNet, as amended; any indenture, other agreement
or instrument to which AmeriNet or its members are a party or by which AmeriNet
or its assets are bound; or, any applicable law, regulation, judgment, order or
decree of any governmental instrumentality or court, domestic or foreign, having
jurisdiction over AmeriNet.
AmeriNet has the full legal right and power and all authority and approval
required by law to enter into this Agreement; all required consents to this
transaction have been obtained by AmeriNet; AmeriNet has complied with all
corporate requirements for execution and closing on this transaction; and this
Agreement constitutes the legal, valid and binding obligation of AmeriNet,
enforceable against it in accordance with the terms hereof.
Capital Structure
(i) The authorized Capital Stock of AmeriNet consists of 30,000,000 shares
of common stock, par value $0.01 per share, and 5,000,000 shares of
Preferred Stock, $0.01 par value per share, the attributes of which
are to be determined on a case by case basis by AmeriNet's board of
directors; however, at the last annual meeting of AmeriNet's
stockholders, AmeriNet's board of directors was authorized to increase
AmeriNet's authorized capitalization on a graduated basis, as required
to provide Capital Stock for acquisition purposes while minimizing
otherwise applicable Delaware corporate franchise taxes; consequently,
immediately prior to Closing, AmeriNet's certificate of incorporation
will be amended to increase its authorized common stock as required to
permit AmeriNet to comply with its obligations under this Agreement.
As of May 23, 2001, AmeriNet had 14,655,522 shares of common stock and
442,783 shares of Class A Preferred Stock issued and outstanding, the attributes
of the AmeriNet's Class A Preferred Stock being as described in AmeriNet's
Exchange Act Reports.
As of May 23, 2001, AmeriNet had reserved 15,283,416 shares of common stock
(excluding those issuable pursuant to the terms of this Agreement) for issuance
upon conversion of Class A Preferred Stock or pursuant to existing options and
warrants.
Except as set forth on Exhibit 3.2.B, there are no options, warrants,
calls, rights, commitments or agreements of any character to which AmeriNet is a
party or by which it is bound obligating AmeriNet to issue, deliver, sell,
repurchase or redeem, or cause to be issued, delivered, sold, repurchased or
redeemed, any shares of the Capital Stock of AmeriNet or obligating AmeriNet to
grant, extend or enter into any such option, warrant, call, right, commitment or
agreement. All outstanding option plans, options, and other rights to purchase
AmeriNet common stock are in compliance with all applicable laws.
All of AmeriNet's shares of common and preferred stock have been duly
authorized, and all of the issued and outstanding AmeriNet shares have been
validly issued, are fully paid and nonassessable, are not subject to preemptive
or similar rights, and are free of any liens or encumbrances other than any
liens or encumbrances created by or imposed upon the holders thereof.
The shares of AmeriNet's common stock to be issued pursuant to the
Reorganization will be duly authorized, validly issued, fully paid, and
nonassessable.
Except as set forth on Exhibit 3.2B4, AmeriNet has no registration rights
outstanding.
Securities Disclosure & Financial Statements
AmeriNet's reports filed with the Commission pursuant to its obligations
under Section 12(g) of the Exchange Act are publicly available at the ▇▇▇▇▇
archives on the Commission"s Internet website located at ▇▇▇.▇▇▇.▇▇▇. Since
1965, Amerinet has duly filed with the Commission all reports required to be so
filed in compliance with all securities laws, and all such reports are
materially accurate, as modified by subsequent reports filed, and include:
Narrative disclosure of all applicable Material items called for by
Commission Regulation SB;
Exhibits called for by Commission Regulation SB, including AmeriNet's
current certificate of incorporation and bylaws and all of AmeriNet's Material
Contracts.
AmeriNet's Audited Financial Statements for the years ended June 30, 2000
and June 30, 1999, as well as unaudited quarterly reports for each calendar
quarter following the last audited financial statements, all of which have been
prepared according to GAAP.
(i) The information supplied by AmeriNet for inclusion in the Current
Report on Form 8-K pertaining to this Reorganization will not
contain any statement which, at such time and in light of the
circumstances under which it will be made, is false or misleading
with respect to any material fact, or will omit to state any
material fact necessary in order to make the statements therein
not false or misleading.
If at any time prior to the Closing Date any event relating to AmeriNet or
any of its affiliates, officers or directors should be discovered by AmeriNet
which should be set forth in a current report on Form 8-K, AmeriNet will
promptly inform the Park City Group's Participants.
Notwithstanding the foregoing, AmeriNet makes no representation or warranty
with respect to any information supplied by the Park City Group's Declarants
which is contained in any of the foregoing documents.
(i) The AmeriNet Financial Statements present fairly the financial
condition and operating results of AmeriNet as of the dates and
during the periods indicated therein, subject to normal year-end
audit adjustments, which will not be Material in the aggregate.
The AmeriNet Financial Statements have been audited by independent public
accountants who are members in good standing of the American Institute of
Certified Public Accountants' Securities Practice Section, and comply with the
requirements for material acquisitions under Commission Regulation SB in a
manner permitting AmeriNet to comply with its obligation under the Securities
Act and the Exchange Act in conjunction therewith.
Since the date of the AmeriNet Financial Statements or except as set forth
on Exhibit 3.2.C.3., there has not been, occurred or arisen any:
Material adverse change in the assets, financial condition or operating
results of AmeriNet;
Transaction by AmeriNet except in the ordinary course of business as
conducted on that date;
Capital expenditure by AmeriNet, either individually or in the aggregate,
exceeding $5,000;
Destruction, damage to, or loss of any assets (including without limitation
intangible assets) of AmeriNet (whether or not covered by insurance), either
individually or in the aggregate, exceeding $5,000;
Labor trouble or claim of wrongful discharge, sexual harassment or other
unlawful labor practice or action;
Change in accounting methods or practices (including any change in
depreciation or amortization policies or rates, any change in policies in making
or reversing accruals, or any change in capitalization of software development
costs) by AmeriNet;
Declaration, setting aside, or payment of a dividend or other distribution
in respect to the Capital Stock of AmeriNet, or any direct or indirect
redemption, purchase or other acquisition by AmeriNet of any of its Capital
Stock;
Except as contemplated in this Agreement, sale or issuance of any AmeriNet
Capital Stock or options, warrants or other rights to acquire AmeriNet Capital
Stock;
Mortgage, pledge, lien, charge or other encumbrance against AmeriNet's
assets;or
Negotiation or agreement by AmeriNet to do any of the things described in
the preceding clauses (1) through (9) other than negotiations with the Park City
Group's Participants and their representatives regarding the transactions
contemplated by this Agreement.
Except as set forth on Exhibit 3.2.C.4, there are no currently outstanding
comment letters from the Commission that have not been responded to and complied
with.
Authority
Authority Generally.
AmeriNet has the full right, power and authority to execute and deliver
this Agreement and to perform AmeriNet's obligations hereunder.
Without limiting the generality of the foregoing, AmeriNet's board of
directors has duly authorized the execution, delivery, and performance of this
Agreement by AmeriNet.
The Agreement constitutes the valid and legally binding obligation of
AmeriNet, enforceable in accordance with its terms and conditions, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally.
Non-contravention.
Neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby (including any
necessary assignments and/or acceptances) will violate any
constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any government,
Governmental Entity, or court to which AmeriNet is subject or any
provision of AmeriNet's certificate of incorporation or bylaws, or
conflict with, result in a breach or constitute a default under,
result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under
any agreement, contract, lease, license, instrument, or other
arrangement to which AmeriNet is a party or by which it is bound or to
which any of its assets is subject, except where the violation,
conflict, breach, default, acceleration, termination, modification,
cancellation, or failure to give notice, would not have a Material
adverse effect on the financial condition of AmeriNet taken as a whole
or on the ability of the Parties to consummate the transactions
contemplated by this Agreement.
Legal & Regulatory Matters
The operations of AmeriNet have been conducted in compliance with all
applicable laws and regulations of foreign, federal, state and local
governmental authorities.
AmeriNet holds, and is in compliance in all Material respects with, all
licenses, permits, and authorizations necessary for the conduct of AmeriNet's
business pursuant to applicable statutes, laws, ordinances, rules, regulations,
codes, or any law of any governmental body, agency, commission, or unit to which
AmeriNet may be subject, the failure of which would have a Material adverse
effect on AmeriNet. AmeriNet is not now nor has it ever been subject to the
Investment Company Act of 1940.
AmeriNet has not received any notices:
From any city, village or other Governmental Entity of, and AmeriNet has no
Knowledge of the basis of, any zoning, building, fire or health code violations
by AmeriNet that have not been heretofore corrected.
Of any alleged violation of any statute, order, rule, regulation or
requirement in connection with the operation of AmeriNet.
No order, permission, consent, approval, license, authorization,
registration or validation of, or filing with, or exemption by any Governmental
Entity, commission, board or public authority, or any other person is required
to authorize, or is required in connection with, the execution, delivery or
performance by AmeriNet of this Agreement, or any other agreement or instrument
to be executed or delivered by AmeriNet herewith.
AmeriNet is not subject to any penalty by reason of a violation of any
order, rule or regulation of, or a default with respect to any return, report or
declaration required to be filed with any Governmental Entity to which it is
subject, which violations or defaults, individually or in the aggregate, would
have a Material adverse effect on AmeriNet.
(i) There has not been, as of the date hereof, any "release" (as defined in
42 U.S.C. " 9601[22]) or threat of a "release" of any hazardous substances" (as
defined in 42 U.S.C. " 9602[14]) by AmeriNet.
AmeriNet has not by contract, agreement, or otherwise arranged for the
disposal or treatment, or arranged with a transporter for transport for disposal
or treatment, of hazardous substances at any "facility" (as defined in 42 U.S.C.
" 9601[9]) owned or operated by another person or entity.
All of AmeriNet's past disposal practices relating to hazardous substances
and hazardous wastes have been accomplished in accordance with all applicable
laws, rules, regulations and ordinances.
AmeriNet has not been notified of nor is there any basis for any potential
liability of AmeriNet with respect to the clean-up of any waste disposal site or
facility, and has not obtained any information to the effect that any site at
which it has disposed of hazardous substances or oil has been or is under
investigation by any local, state or federal governmental body, authority or
agency.
Without limiting the generality of the foregoing, AmeriNet has not
generated any Hazardous Wastes or violated any federal, state or local
environmental, health or water management laws, statutes, regulations,
ordinances or judicial decrees or engaged in activities which could be
interpreted as potential violations of laws, statutes, regulations, ordinances
or judicial decrees in any manner regulating the generation or disposal of
Hazardous Waste, protection of the environment, regulating health matters or
involving water management.
Except as set forth on Exhibit 3.2E annexed hereto and made a part hereof:
There are no actions, suits or proceedings pending, or, to AmeriNet's
Knowledge, threatened or anticipated before any court, Governmental Entity, or
administrative body or agency affecting AmeriNet; and
AmeriNet is not presently subject to any injunction, order or other decree
of any court of competent jurisdiction.
Neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby (including the assignments
and acceptances referred to above), will:
Violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
Governmental Entity, or court to which AmeriNet is subject or any provision of
AmeriNet's Certificate of Incorporation or By-laws, or
Conflict with, result in a breach or constitute a default under, result in
the acceleration of, result in the creation of any Encumbrance upon any AmeriNet
assets or operations, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice, authorization, consent, approval,
exemption or other action under any of the Contracts or to which any of
AmeriNet's assets or operations are subject, except where the violation,
conflict, breach, default, acceleration, termination, modification,
cancellation, or failure to give notice, would not have a Material adverse
effect on the financial condition of AmeriNet taken as a whole or on the ability
of the Parties to consummate the transactions contemplated by this Agreement.
Taxes & Other Returns and Reports
Tax Returns and Audits.
AmeriNet has accurately prepared and timely filed all required federal,
state, local and foreign Tax Returns, relating to any and all Taxes relating or
attributable to AmeriNet or its operations.
The Tax Returns are true and correct in all Material respects and have been
completed in accordance with applicable law in all Material respects.
AmeriNet has timely paid all Taxes required to be paid and has withheld
with respect to its employees all federal and state income Taxes, FICA, FUTA and
other Taxes it is required to withhold.
The accruals for Taxes on the books and records of AmeriNet are sufficient
to discharge the Taxes for all periods (or the portion of any period) ending on
or prior to the Closing Date.
AmeriNet has not been delinquent in the payment of any Tax nor, except as
set forth in Exhibit 3.2F, is there any Tax deficiency outstanding, proposed or
assessed against AmeriNet, nor has AmeriNet executed any waiver of any statute
of limitations on or extending the period for the assessment or collection of
any Tax.
(1) No audit or other examination of any Tax Return of AmeriNet is
presently in progress.
Except as set forth in Exhibit 3.2F, AmeriNet does not have any liabilities
for unpaid federal, state, local and foreign Taxes, whether asserted or
unasserted, known or unknown, contingent or otherwise and AmeriNet has no
Knowledge of any basis for the assertion of any such liability attributable to
AmeriNet, or its assets or operations.
AmeriNet has never been required to join with any other entity in the
filing of a consolidated Tax Return for federal Tax purposes or a consolidated
or combined return or report for state Tax purposes.
AmeriNet is not a party to or bound by any Tax indemnity, Tax sharing or
Tax allocation agreement.
AmeriNet has provided, or made available, to the Park City Group's
Participants or their legal counsel, copies of all federal, provincial and state
income and all sales and use Tax Returns of AmeriNet for 1998, 1999 and 2000.
There are (and as of immediately following the Closing Date there will be)
no liens on the assets of AmeriNet relating to or attributable to Taxes.
AmeriNet has no Knowledge of any basis for the assertion of any Tax claim
which, if adversely determined, would result in liens on the assets of AmeriNet.
AmeriNet has no property which is being sold, conveyed or transferred
pursuant to this Agreement which in the hands of Park City Group would be
treated as being owned by persons other than AmeriNet pursuant to Section
168(f)(8) of the Code as in effect immediately prior to the enactment of the Tax
Reform Act of 1986, or any analogous provisions of any state law.
None of the assets of AmeriNet is treated as "Tax-exempt use property"
within the meaning of Section 168(h) of the Code.
There is no contract, agreement, plan or arrangement, including but not
limited to the provisions of this Agreement, covering any employee or former
employee of AmeriNet that, individually or collectively, could give rise to the
payment of any amount that would not be deductible pursuant to Sections 280G,
162 or 404 of the Code.
AmeriNet has filed with the appropriate governmental agencies all tax
returns, tax reports and other reports required to be filed; all federal, state
and local income, profits, franchise, sales, use, occupation, property or other
taxes due have been fully paid.
AmeriNet is not a party to any action or proceeding by any governmental
authority for assessment or collection of taxes, or for failure to file other
governmentally required reports.
No claim for assessments has been asserted against its assets or
operations, nor, to the best of AmeriNet's Knowledge, are any assessments
affecting its assets or operations currently contemplated.
Except as set forth on Exhibit 3.2F annexed hereto and made a part hereof,
there are no security interests affecting AmeriNet's assets or operations or any
component thereof that arose in connection with any failure (or alleged failure)
to pay any Tax, and AmeriNet has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any employee
employed by AmeriNet, independent contractor, creditor, or other third party
with respect to AmeriNet.
Ownership of Park City Group's Capital Stock.
As of the date of execution of this Agreement, AmeriNet does not own any
shares of Park City Group's Capital Stock.
Liabilities
Except as set forth on Exhibit 3.2H, AmeriNet does not have any liabilities
or obligations of any nature, whether accrued, absolute, contingent, inchoate or
otherwise, whether due or to become due and regardless of when asserted, all
liabilities being solely those of its subsidiaries and as to those, none will
survive disposition of the subsidiaries prior to Closing.
Limited Activities
AmeriNet is a holding company with no material operations or assets other
than the shares of its subsidiaries' common stock and operations pertaining to
supervision and coordination of the activities of its subsidiaries, provision of
support services for its subsidiaries, acquisition-related activities and
compliance with applicable laws, including federal securities and internal
revenue laws.
AmeriNet currently has two operating subsidiaries, ▇▇▇▇▇▇▇.▇▇▇, Inc. and
AmeriNet Communications, Inc. both Florida corporations, and has interests in
four other corporations, all of which will be disposed of prior to Closing so
that immediately after the Closing, Park City Group will be AmeriNet's only
subsidiary of any kind.
Leases
The leases described in Exhibit 3.2.J are in full force and effect,
and AmeriNet has a valid and existing leasehold interest under each
such lease for the term set forth therein. AmeriNet has delivered to
the Park City Group's Participants complete and accurate copies of
each of the material leases and none of such leases have been modified
in any respect. AmeriNet is not in default under any such leases.
Insurability
AmeriNet knows of no impediments to obtaining hazard and liability
insurance covering its assets or operations, at commercially reasonable
insurance rates, nor does AmeriNet have any Knowledge that such insurance, at
such rates, will not be obtainable by Park City Group in the future.
Exhibit 3.2.K.2 lists all insurance policies and fidelity bonds covering
the assets, business, equipment, properties, operations, software, errors and
omissions, employees, officers and directors of AmeriNet as well as all claims
made under any insurance policy by AmeriNet in the past three years and the date
of expiration of each such insurance policy.
There is no claim by AmeriNet pending under any of such policies or bonds
as to which coverage has been questioned, denied or disputed by the underwriters
of such policies or bonds.
All premiums payable under all such policies and bonds have been paid and
AmeriNet is not in default with respect to its obligations under any of such
policies and bonds and is otherwise in compliance in all material respects with
the terms of such policies and bonds (or other policies and bonds providing
substantially similar insurance coverage).
Such policies of insurance and bonds are of the type and in amounts
customarily carried by persons conducting businesses similar to those of
AmeriNet.
AmeriNet does not know of any threatened termination of or material premium
increase with respect to any of such policies.
AmeriNet has never been denied insurance coverage nor has any insurance
policy of AmeriNet ever been canceled for any reason.
Contracts and Commitments
Except as set forth on Exhibit 3.2.L, AmeriNet is not a party and has
not been a party for a period of at least one year to any: (i)
collective bargaining agreement or contract with any labor union; (ii)
bonus, pension, profit sharing, retirement, or other form of deferred
compensation plan; (iii) medical insurance or similar plan or
practice, whether formal or informal; (iv) contract for the employment
of any officer, employee, or other person on a full-time or consulting
basis or relative to severance pay or change-in-control benefits for
any such person; (v) agreement or indenture relating to the borrowing
of money in excess of $2,000 or to mortgaging, pledging or otherwise
placing a lien on any assets of AmeriNet which has a fair market value
in excess of $5,000 in the aggregate; (vi) guaranty of any obligation
for borrowed money or otherwise, other than endorsements made for
collection; (vii) lease or agreement under which it is lessor of, or
permits any third party to hold or operate, any property, real or
personal; (viii) contract or group of related contracts with the same
party for the purchase of products or services, under which the
undelivered balance of such products and services has a purchase price
in excess of $2,000; (ix) contract or group of related contracts with
the same party for the sale of products or services, under which the
undelivered balance of such products and services has a sales price in
excess of $2,000; (x) franchise agreement; or (xi) other agreement
material to AmeriNet's business or not entered into in the ordinary
course of business.
Complete Copies of Materials
AmeriNet has delivered or made available true and complete copies of
each document (or summaries of same) which have been requested in
writing by the Park City Group's Participants or their counsel.
Restrictions on Business Activities
There is no agreement (assuming the parties thereto other than
AmeriNet performed their respective obligations thereunder as
required), judgment, injunction, order or decree binding upon AmeriNet
which has or could reasonably be expected to have the effect of
materially prohibiting or materially impairing any business practice
of AmeriNet, any acquisition of property by AmeriNet or the conduct of
business by AmeriNet as currently conducted or as currently proposed
to be conducted.
Accuracy of Representations or Warranties
All of AmeriNet's warranties and representations as hereinabove stated will
be true as of the date of this Agreement and on the Closing Date and the same
will survive the Closing and be deemed incorporated, whether explicitly stated
therein or not, into all documents or other instruments delivered by AmeriNet to
the Park City Group's Participants at the Closing.
No representation, warranty, or statement of AmeriNet omits or will omit to
state any Material fact necessary to make such representation, warranty, or
statement in this Agreement accurate and not misleading in any Material respect.
COVENANTS
Park City Group
No Meeting of Park City Group's Stockholders.
Because each of the Park City Group's Participants has independently made
the decision to exchange all of his, her or its Park City Group's Securities for
shares of AmeriNet's common stock, no formal stockholder action by Park City
Group will be required in conjunction with authorization of this Agreement or
the Closing; however, each of the Park City Group's Participants must have
become a party to this Agreement by direct execution.
Blue Sky Laws
Legal counsel to the Park City Group's Participants will take such steps as
may be necessary to comply with the securities and blue sky laws of all
jurisdictions which are applicable to the issuance of AmeriNet common stock to
Park City Group's Participants, including compliance with the State Securities
Act Exemptions.
Conduct of Business of Park City Group
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Closing, the Park City
Group's Declarants agree (except to the extent that AmeriNet will otherwise
consent in writing), to promptly notify AmeriNet of any event or occurrence or
emergency not, in the reasonable judgment of Park City Group's Declarants, in
the ordinary course of business of Park City Group, and any event which could,
in the reasonable judgment of Park City Group's Declarants, have a Material
adverse effect on Park City Group or that could cause any of the
representations, warranties, covenants, schedules or exhibits to be incorrect or
misleading.
AmeriNet:
Governance of AmeriNet, Membership on AmeriNet's Board of Directors and
Executive Committee .
AmeriNet will appoint a designee for the AmeriNet's stockholders, other
than those who obtained their shares as a result of the Reorganization with Park
City Group, who shall have the right to designate one member to AmeriNet's board
of directors for a period of five years following the Closing on the
Reorganization, it being the contemplation of the signatories to this Agreement,
that the initial designee will be AmeriNet's current president, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ ("▇▇. ▇▇▇▇▇▇▇").
Except for ▇▇. ▇▇▇▇▇▇▇, all other directors of AmeriNet in office, as of
the Closing on the reorganization, shall resign immediately following the
Closing, and will be replaced by designees of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇. ▇▇▇▇▇▇").
All officers in office, as of the Closing on the Reorganization, will be
replaced by the new AmeriNet board of directors subsequent to Closing.
AmeriNet will obtain a signed release from all resigning or replaced
officers or directors, releasing AmeriNet and its affiliates and successors from
all liability. At Closing, AmeriNet will file a Form S-8 registering the shares
granted to the officers as part of these releases.
Conduct of Business of AmeriNet.
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Closing, as the case may be,
AmeriNet agrees (except to the extent that the Park City Group's Declarant will
otherwise consent in writing), that AmeriNet will promptly notify the Park City
Group's Participants of any event or occurrence or emergency which is not in the
ordinary course of business of AmeriNet and which is Material and adverse to the
business of AmeriNet (including any issuance of AmeriNet Capital Stock or rights
to purchase AmeriNet Capital Stock).
Prior to Closing, AmeriNet will divest itself of any and all securities
that it holds in other corporations, including, without limitation, ▇▇▇▇▇▇▇.▇▇▇,
Inc., a Florida corporation; AmeriNet Communications, Inc., a Florida
corporation; Trilogy International, Inc., a Florida corporation; ▇▇▇▇▇▇▇
Communications, Inc., a Florida corporation; and, Vista Vacations International,
Inc., a Florida corporation, and provide an opinion of AmeriNet counsel that
such divestiture is in compliance with all securities and other laws.
Prior to Closing, all current holders of Class A preferred stock must waive
all registration rights and exercise their conversion rights so that the only
class of AmeriNet securities outstanding at the Closing is common stock.
Prior to Closing, AmeriNet hereby covenants and agrees to raise the sum of
at least $1,000,000 (net) to be expended for the purposes set forth in Exhibit
4.2.B.4. The Park City Group's Declarants have the discretion to accept the
$1,000,000 in the form of cash or a secured note. Should the Park City Group's
Declarants accept a secured note, and should the maker of the note default on
payment or any other obligation of the note, the Park City Group's Participants
will be entitled to an additional distribution of AmeriNet common stock equal to
two percent (2%) of the value of the default portion of the note. For example,
if there is a promissory note for $100,000 and a default after $60,000 has been
paid, The Park City Group's Participants will receive an additional 4,706 shares
(40,000/$.17=235,294 x .02=4,706).
The Parties:
Confidentiality
From the date hereof to and including the Closing Date, the Parties will
maintain, and cause their directors, employees, agents and advisors to maintain,
in confidence and not disclose or use for any purpose, except the evaluation of
the transactions contemplated hereby and the accuracy of the respective
representations and warranties of the Parties contained herein, information
concerning the other Parties and obtained directly or indirectly from such
Parties, or their directors, employees, agents or advisors, or as was in the
possession of such Party prior to obtaining such information from such other
Party as to which the fact of prior possession such possessing Party will have
the burden of proof and such information as is or becomes:
Available to the non-disclosing Party from third parties not subject to an
undertaking of confidentiality or secrecy;
Generally available to the public other than as a result of a breach by the
non-disclosing party hereunder; or
Required to be disclosed under applicable law.
In the event that the transactions contemplated hereby will not be
consummated, all such information which will be in writing will be returned to
the Party furnishing the same, including to the extent reasonably practicable,
copies or reproductions thereof which may have been prepared.
Public Disclosure
Unless otherwise required by law, prior to the Closing Date no disclosure
(whether or not in response to an inquiry) of the subject matter of this
Agreement will be made by any Party unless approved by AmeriNet and the Park
City Group's Declarants prior to release, provided that such approval will not
be unnecessarily withheld, subject, in the case of AmeriNet, to AmeriNet's
obligation to comply with applicable securities laws.
The Parties will agree upon the form and substance of :
A joint press release or other public announcement of this Agreement and
the transactions contemplated hereby; and
Other matters including, but not limited to, form letters to customers,
related to this Agreement or any of the transactions contemplated hereby which
will be released on or after the Closing; provided, however, that nothing in
this Agreement will be deemed to prohibit any Party from making any disclosure
which its counsel deems necessary or advisable in order to fulfill such Party's
disclosure obligations imposed by law or contract.
Consents
AmeriNet and the Park City Group's Declarants will promptly apply for or
otherwise seek, and use their best efforts to obtain, all consents and approvals
required to be obtained by them for the consummation of AmeriNet's acquisition
of the Park City Group's Securities contemplated by this Agreement, and the Park
City Group's Declarants will use their best efforts to obtain all consents,
waivers and approvals under any of Park City Group's agreements, contracts,
licenses or leases in order to preserve the benefits thereunder for Park City
Group, and otherwise in connection with AmeriNet's acquisition of the Park City
Group's Securities; all of such consents and approvals being set forth in
Exhibit 4.3.C.
Report on Form 8-K.
The Park City Group's Participants understand that on the Closing Date,
AmeriNet will prepare and file with the Commission a current report on
Commission Form 8-K (the "8-K Report") disclosing AmeriNet's acquisition of the
Park City Group's Securities and containing information concerning Park City
Group required by Commission Regulation S-B, including Park City Group's Audited
Financial Statements for the two years ended December 31, 1999 and 2000,
prepared in full compliance with GAAP, GAAS and the requirements of Commission
Regulation SB pertaining to Material acquisitions, whether or not this
transaction is otherwise deemed to constitute a Material acquisition.
The Park City Group's Participants understand that AmeriNet and the Park
City Group's Declarants will use their best efforts to secure the Commission"s
acceptance of Park City Group's Audited Financial Statements, as complying with
the requirements of Commission Regulation S-B, and the Park City Group's
Declarants will make any modifications to the Park City Group's financial
statements suggested by the Commission; and, if required, will use best efforts
to secure required extensions from the Commission of time in which to provide
materials complying with Commission Regulation S-B.
Legal Requirements
The Parties will take all reasonable actions necessary to comply
promptly with all legal requirements which may be imposed on them with
respect to the consummation of the transactions contemplated by this
Agreement and will promptly cooperate with and furnish information to
any Party in connection with any such requirements imposed upon such
other Party in connection with the consummation of the transactions
contemplated by this Agreement and will take all reasonable actions
necessary to obtain (and will cooperate with the other Parties in
obtaining) any consent, approval, order or authorization of, or any
registration, declaration or filing with, any Governmental Entity or
other person, required to be obtained or made in connection with the
taking of any action contemplated by this Agreement.
Best Efforts, Additional Documents & Further Assurances
Each of the Parties to this Agreement will use its best efforts to
effectuate the transactions contemplated hereby and to fulfill and cause to be
fulfilled the conditions to AmeriNet's acquisition of the shares of Park City
Group's Securities owned by the Park City Group's Participants and the condition
subsequent under this Agreement.
Each Party, at the request of another Party, will execute and deliver such
other instruments and do and perform such other acts and things as may be
reasonably necessary or desirable for effecting completely the consummation of
this Agreement and the transactions contemplated hereby.
Prior to Closing, AmeriNet will conclude agreements with Yankees pursuant
to which:
Yankees will convert all of the debt owed to it by AmeriNet into shares of
AmeriNet's Class A Preferred Stock and will convert all of its AmeriNet Class A
Preferred Stock into shares of AmeriNet's common stock, so that, immediately
following Closing, AmeriNet's outstanding and reserved securities will be
limited to common stock.
The parties will terminate the Consulting Agreement and all other
agreements between AmeriNet and Yankees, except for a warrant to purchase up to
800,000 shares of AmeriNet common stock at an exercise price of $.22 per share,
and Yankees will waive any rights to registration, any preemptive rights to
purchase AmeriNet Capital Stock, and any other AmeriNet obligations or amounts
owed to Yankees.
CONDITIONS PRECEDENT
Conditions to Obligations of Each Party to Effect the Reorganization.
The respective obligations of each Party to this Agreement to effect the
Reorganization will be subject to the conditions that no temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Reorganization will be in effect, nor will any proceeding
brought by an administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, seeking any of the foregoing
be pending; nor will there be any action taken, or any statute, rule, regulation
or order enacted, entered, enforced or deemed applicable to the Reorganization,
which makes the consummation of the Reorganization illegal.
Additional Conditions to Obligations of Park City Group's Participants.
The obligations of Park City Group's Participants to consummate and effect
this Agreement and the transactions contemplated hereby will be subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by Park City
Group's Participants:
Representations, Warranties and Covenants.
The representations and warranties of AmeriNet in this Agreement will be
true and correct in all Material respects on and as of the Closing Date as
though such representations and warranties were made on and as of such time and
AmeriNet will have performed and complied in all Material respects with all
covenants, obligations and conditions of this Agreement required to be performed
and complied with by it as of the Closing Date.
Certificate of AmeriNet.
The Park City Group's Participants will have been provided with a
certificate executed on behalf of AmeriNet by its President and its Chief
Financial Officer, Treasurer or officer exercising such functions to the effect
that, as of the Closing Date:
All representations and warranties made by AmeriNet under this Agreement
are true and complete in all Material respects;
All covenants, obligations and conditions of this Agreement to be performed
by AmeriNet on or before such date have been so performed in all Material
respects; and
The AmeriNet certificate of incorporation is amended in compliance with
Delaware law to increase AmeriNet's authorized common stock by enough shares to
cover this transaction.
Satisfactory Form of Legal and Accounting Matters.
The form, scope and substance of all legal and accounting matters
contemplated hereby and all documents and other papers delivered hereunder prior
to and on the Closing Date will be reasonably acceptable to counsel to the Park
City Group's Participants.
Legal Opinion.
The Park City Group's Participants will have received a legal opinion from
legal counsel to AmeriNet, substantially in the form of Exhibit 5.2D hereto.
No Material Adverse Changes.
There will not have occurred any event, fact or condition that has had or
reasonably would be expected to have a Material adverse effect on AmeriNet.
Liabilities or Obligations.
As of the Closing Date, AmeriNet will not have any liabilities or
obligations of any nature, whether accrued, absolute, contingent, inchoate or
otherwise.
AmeriNet Closing Funds.
As of the Closing Date, AmeriNet will hold at least $1,000,000 to be
expended for the purposes set forth in Exhibit 4.2.B.4. The Park City Group's
Declarants have the discretion to accept the $1,000,000 in the form of cash or a
note. Any notes will be secured by a pledge of stock equal to or greater than
the face value of the note.
Indemnification Agreement.
As of the Closing Date, AmeriNet will have entered into with ▇▇▇▇▇▇▇▇▇▇
Capital Corp., an Indemnification Agreement whereby ▇▇▇▇▇▇▇▇▇▇ will agree to pay
for the following liabilities and obligations of Amerinet should such
liabilities or obligations survive Closing: (a) ▇▇▇▇▇ ▇▇▇▇▇▇▇ claim, (b) Liberty
Transfer Co. fees, (c) tax obligations, and (4) AmeriNet payroll, including
accrued benefits.
Convertible Stock.
No preferred stock, options, warrants or other rights to acquire AmeriNet
Capital Stock, and no option plans will survive the Closing, unless the number
of shares issuable on conversion or exercise of such stock, options, warrants or
other rights is a fixed number of shares with a fixed exercise price both of
which are unaffected by the Reorganization.
Third Party Consents.
Any and all consents, waivers and approvals required from third
parties relating to the contracts and agreements of AmeriNet so that
the Reorganization and other transactions contemplated hereby do not
adversely affect the rights of, and benefits to, AmeriNet thereunder
will have been obtained.
AmeriNet - Park City Group Preferred Stock Conversion Agreement.
As of the Closing Date, AmeriNet and Park City Group will have entered
into an agreement whereby AmeriNet will allow all of the holders of
Park City Group's Preferred Stock to convert their Preferred Stock
into shares of AmeriNet common stock at a conversion price of $.17 per
share. The AmeriNet shares issued upon conversion of the Park City
Group Preferred Stock will be subject to both demand and piggyback
registration rights.
Master Agreement Documents.
As of the Closing Date, AmeriNet and all of the parties to the Master
Agreement and related documents described in Exhibit 3.1F will have
complied with the terms of the Master Agreement and executed such
documents as may be necessary to effect the exchange of the
certificates as set forth in Section 2.1C of this Agreement and to
preserve the security interests as contemplated by the Master
Agreement.
Riverview Agreement.
AmeriNet and Riverview Financial Corporation will enter into an
agreement having a five-year term, which agreement will provide for
compensation to Riverview in an amount equal to 5% of the value of any
acquisition, merger or business combination, in whatever form, by
Amerinet of any company directly or indirectly introduced by
Riverview, or in connection therewith Riverview shall provide
compensable advisory services.
Additional Conditions to the Obligations of AmeriNet.
The obligations of AmeriNet to consummate and effect this Agreement and the
transactions contemplated hereby will be subject to the satisfaction at or prior
to the Closing Date of each of the following conditions, any of which may be
waived, in writing, exclusively by AmeriNet:
Representations, Warranties and Covenants.
The representations and warranties of the Park City Group's Declarants
in this Agreement will be true and correct in all Material respects on
and as of the Closing Date as though such representations and
warranties were made on and as of such time and the Park City Group's
Participants will have performed and complied in all Material respects
with all covenants, obligations and conditions of this Agreement
required to be performed and complied with by them as of the Closing
Date.
Certificate of Park City Group's Declarants.
AmeriNet will have been provided with a certificate executed on behalf of
the Park City Group's Participants by the Park City Group's Declarants to the
effect that, as of the Closing Date, all:
Representations and warranties made by Park City Group's Declarants under
this Agreement are true and complete in all Material respects; and
Covenants, obligations and conditions of this Agreement to be performed by
the Park City Group's Participants on or before such date have been so performed
in all Material respects.
Third Party Consents.
Any and all consents, waivers and approvals required from third parties
relating to the contracts and agreements of Park City Group so that the
Reorganization and other transactions contemplated hereby do not adversely
affect the rights of, and benefits to, Park City Group thereunder will have been
obtained.
Satisfactory Form of Legal and Accounting Matters.
The form, scope and substance of all legal and accounting matters
contemplated hereby and all documents and other papers delivered hereunder prior
to and on the Closing Date will be reasonably acceptable to AmeriNet's counsel
(provided that the condition subsequent concerning the compliance of information
provided by Park City Group with the requirements of Commission Regulation SB,
on a timely basis, will survive the Reorganization).
Legal Opinion.
AmeriNet will have received a legal opinion from legal counsel to the Park
City Group's Participants, in substantially the form of Exhibit 5.3E hereto.
No Material Adverse Changes.
There will not have occurred any event, fact or condition which has had or
reasonably would be expected to have a Material adverse effect on Park City
Group.
Accredited Investors.
Immediately prior to the Closing, there will be no Park City Group's
Participants who are not Accredited Investors.
Closing
Closing Date:
The Closing will take place at 10:00 o'clock on the morning of the day
after the Parties exchange confirmation that all of the conditions precedent to
the Closing have been either met or waived in writing (collectively referred to
throughout this Agreement as the "Closing Date").
The Closing will take place at Park City Group's offices in Park City,
Utah, or at such other time and place as may be agreed upon in writing by the
Parties, provided that if the Closing has not been scheduled to take place prior
to June 15, 2001, then either Party may terminate this Agreement.
Items to be Delivered at Closing by Park City Group:
At the Closing, Park City Group's Participants will deliver or have
delivered to AmeriNet certificates for all authorized and outstanding Park City
Group's Securities owned by the Park City Group's Participants, duly endorsed
and medallion signature guaranteed for transfer to AmeriNet, as well as the
following items:
As of a date no earlier than the fifth business day prior to Closing:
A lien and judgment search by an agency acceptable to AmeriNet's legal
counsel, disclosing the existence or absence of judgments or liens affecting
Park City Group and its assets or operations;
A good standing certificate from the State of Delaware attesting to the
continued corporate existence and good standing of Park City Group; and
A certificate signed by Park City Group's Declarants attesting to the fact
that all representations, warranties, exhibits and schedules pertaining to Park
City Group included in this Agreement remain materially true and accurate as of
the Closing Date.
An opinion from Park City Group's Participants' legal counsel, in form and
substance acceptable to legal counsel for AmeriNet addressing the compliance by
the Park City Group's Participants with all conditions to Closing.
Such other items in connection with the foregoing as AmeriNet's attorney
may reasonably have required within five business days prior to the Closing in
order to assist AmeriNet and its officers and directors to comply with
applicable laws and their responsibilities to AmeriNet's stockholders and the
public in conjunction with the Reorganization.
Items to be Delivered at Closing by AmeriNet:
At the Closing, AmeriNet will deliver the following to the Park City
Group's Participants:
As of a date no earlier than the fifth business day prior to Closing:
A lien and judgment search by an agency acceptable to Park City Group's
Participants' legal counsel, disclosing the existence or absence of judgments or
liens affecting AmeriNet and its assets or operations;
A good standing certificate from the State of Delaware attesting to the
continued corporate existence and good standing of AmeriNet;
Certified copies of resolutions passed by AmeriNet's Board of Directors and
shareholders approving all aspects of the transactions envisioned by this
Agreement;
A certificate signed by AmeriNet's president, chief financial officer and
chief legal officer attesting to the fact that all representations, warranties,
exhibits and schedules pertaining to AmeriNet included in this Agreement remain
materially true and accurate as of the Closing Date; and
An unaudited balance sheet indicating that AmeriNet does not have any
liabilities as of Closing.
An opinion from AmeriNet's legal counsel, in form and substance acceptable
to legal counsel for Park City Group's Participants addressing the compliance by
AmeriNet with all conditions to Closing.
Such other items in connection with the foregoing as Park City Group's
Participants' attorney may reasonably have required within five business days
prior to the Closing in order to assist the Park City Group's Participants to
comply with applicable laws and their responsibilities in conjunction with the
Reorganization.
Delivery of the certificates for the Exchange Shares will be made directly
to Park City Group's Participants by the Exchange Agent within a reasonable time
after the Closing.
Completion of Closing
The Reorganization will be deemed completed when certificates for all
shares of Park City Group's Securities owned by the Park City Group's
Participants have been tendered to AmeriNet, with signature medallion guaranteed
or otherwise in proper form for transfer to the order of AmeriNet, the
resignation of all of AmeriNet's officers and directors other than ▇▇. ▇▇▇▇▇▇▇
have been tendered and accepted and ▇▇. ▇▇▇▇▇▇▇ has elected designees of ▇▇.
▇▇▇▇▇▇ as replacement directors for the directors whose resignations have been
accepted, the provision by AmeriNet of executed instruments transferring control
over AmeriNet's financial accounts to designees of Park City Group's
Participants, which accounts will include at least $1,000,000 in cleared funds,
for use in accordance with the requirements of this Agreement (unless the Park
City Group's Declarants determine to accept such funds in the form of a secured
note); AmeriNet will have provided the Exchange Agent with instructions to issue
the Exchange Shares to Park City Group's Participants, and all of the opinions,
certificates, memoranda, documents, updates and other items to be delivered and
exchanged at Closing (generically referred to as the "Closing Documents") have
been delivered or exchanged; provided that, if any of the Closing Documents are
not delivered at Closing, the Party entitled to their receipt may, at his, her
or its exclusive option, either:
Waive receipt thereof, in writing, specifying the Closing Documents waived;
or
Suspend the Closing, as required to grant the non performing Party an
opportunity to provide the missing Closing Documents, on such terms as the Party
entitled to receipt of the missing Closing Documents may deem appropriate under
the circumstances, specifying in writing the time by which the missing Closing
Documents must be provided, the time the Closing will be reconvened, and the
date on which the Closing will be deemed to have become effective.
Default or Termination
Termination.
This Agreement may be terminated and the Reorganization abandoned at any
time prior to the Closing Date, as follows:
By mutual consent of the Park City Group's Participants and AmeriNet.
By AmeriNet if it is not in Material breach of its obligations under this
Agreement and there has been a Material breach of any representation, warranty,
covenant or agreement contained in this Agreement on the part of the Park City
Group's Participants and such breach has not been cured within fifteen days
after notice to the Park City Group's Participants.
By the Park City Group's Participants if it is not in Material breach of
its respective obligations under this Agreement and there has been a Material
breach of any representation, warranty, covenant or agreement contained in this
Agreement on the part of AmeriNet and such breach has not been cured within
fifteen days after notice to AmeriNet.
By any Party if:
The Reorganization has not occurred by June 15, 2001;
There is a final nonappealable order of a federal or state court in effect
preventing consummation of the Reorganization;
There will be any action taken, or any statute, rule, regulation or order
enacted, promulgated or issued or deemed applicable to the Reorganization by any
Governmental Entity which would make consummation of the Reorganization illegal;
or
There will be any action taken, or any statute, rule, regulation or order
enacted, promulgated or issued or deemed applicable to the Reorganization by any
Governmental Entity, which would:
Prohibit AmeriNet's or Park City Group's ownership or operation of all or a
Material portion of the business of Park City Group, or compel AmeriNet or Park
City Group to dispose of or hold separate all or a Material portion of the
business or assets of Park City Group or AmeriNet as a result of the
Reorganization; or
Render AmeriNet or the Park City Group's Participants unable to consummate
the Reorganization, except for any waiting period provisions. Where action is
taken to terminate this Agreement pursuant to this Section 7.1, it will be
sufficient for such action to be authorized by the AmeriNet board of directors
or the Park City Group's Declarants taking such action.
Failure of Conditions.
Failure of a condition precedent, in and of itself, will not be deemed an
event of default; however, the fact that a covenant or representation or
warranty is also a condition precedent will not excuse its non-performance or
inaccuracy.
Termination Without Default.
In the event that this Agreement is terminated other than as a result of a
default by a Party, then the Parties will have no rights or obligations to each
other as a result of this Agreement or the transactions contemplated hereby and
this Agreement will become void and of no further force and effect.
Confidentiality
Park City Group's Business Information:
If this Agreement is terminated and the transactions contemplated hereby
are abandoned at any time prior to the Closing Date, AmeriNet will hold in
strict confidence, all business, financial and other information about Park City
Group obtained from the Park City Group's Participants or their affiliates and
will promptly return to Park City Group all documents received under this
Agreement, and will not use for the benefit of itself or others in any way that
may be competitive with or could be detrimental to Park City Group, any such
confidential information. These obligations will continue for two years from
termination, except as to return of materials, which will continue until all
such are returned.
Notwithstanding the foregoing, such obligation of confidentiality will not
extend to any information which is shown to have been:
Previously known to AmeriNet;
Generally known to others engaged in the trade or business of Park City
Group;
Part of public knowledge or literature (other than where such information
becomes public through the direct or indirect dissemination by AmeriNet without
Park City Group's Participants' consent);
Lawfully received by AmeriNet from a third party (not including Park City
Group), other than in connection with the consummation of the transactions
contemplated hereby; or
Disclosed pursuant to the mutual agreement of Park City Group and AmeriNet.
AmeriNet's Business Information:
If this Agreement is terminated and the transactions contemplated hereby
are abandoned at any time prior to the Closing Date, the Park City Group's
Participants will hold in strict confidence, for a period of two years, all
business, financial and other information about AmeriNet obtained from AmeriNet
and will return to AmeriNet all documents received under this Agreement, and
will not use for the benefit of itself or others in any way that may be
competitive with or could be detrimental to AmeriNet, any such confidential
information.
Notwithstanding the foregoing, such obligation of confidentiality will not
extend to any information which is shown to have been:
Previously known to the Park City Group's Participants;
Generally known to others engaged in the trade or business of AmeriNet;
Part of public knowledge or literature (other than where such information
becomes public through the direct or indirect dissemination by the Park City
Group's Participants without AmeriNet's consent);
Lawfully received by the Park City Group's Participants from a third party
(not including AmeriNet), other than in connection with the consummation of the
transactions contemplated hereby; or
Disclosed pursuant to the mutual agreement of AmeriNet and Park City Group.
Miscellaneous
Expenses
Each of the Parties agrees to pay, without right of reimbursement from any
other, the costs incurred by such Party incident to the preparation and
execution of this Agreement and performance of their respective obligations
hereunder, whether or not the transactions contemplated by this Agreement will
be consummated, including, without limitation, the fees and disbursements of
legal counsel, accountants and consultants employed by the respective Parties in
connection with the transactions contemplated by this Agreement.
Assignability
No Party may assign or transfer its rights and obligations under this
Agreement without the prior written approval of the other Parties.
This Agreement will inure only to the benefit of and be binding upon the
Parties and their respective successors and representatives and permitted
assigns.
Counterparts & Facsimile Execution
This Agreement may be executed in any number of counterparts.
All executed counterparts will constitute one Agreement notwithstanding
that all signatories are not signatories to the original or the same
counterpart.
Execution by exchange of facsimile transmission will be deemed legally
sufficient to bind the signatory; however, the Parties will, for aesthetic
purposes, prepare a fully executed original version of this Agreement which will
be the document filed with the Commission.
Remedies
No delay or omission on the part of any Party in exercising any right or
remedy will operate as a waiver of said right or remedy or any other right or
remedy.
A waiver on any one occasion will not be construed as a bar to or a waiver
of any right on any future occasion.
Every right and remedy of a Party will be cumulative and in addition to
every other right and remedy expressed in this Agreement or allowed by law or
equity, and may be exercised singularly or concurrently.
Survival of Condition Subsequent, Representations and Warranties, Covenants
The several representations, warranties and covenants of the Parties
contained herein will survive the execution hereof and the Reorganization and
will be effective regardless of any investigation that may have been made or may
be made by or on behalf of any Party and continue until the date the audit of
AmeriNet's financial statements for the year ending June 30, 2002 has been
completed and AmeriNet has received a signed opinion from its independent
auditors certifying such financial statements (the "2002 Audit Date").
All covenants to be performed after the Closing will continue indefinitely.
Third-Party Beneficiaries
Neither this Agreement nor any provision hereof, nor any document or
instrument executed or delivered pursuant to this Agreement, will be deemed to
create any right in favor of or impose any obligation upon any person or entity
other than the Parties.
Severability
Whenever legally possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction but this Agreement will be
interpreted, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
Entire Agreement
This Agreement and the agreements, instruments, exhibits and other writings
referred to in this Agreement contain the entire understanding of the Parties
with respect to the subject matter of this Agreement.
There are no restrictions, agreements, promises, warranties, covenants or
undertakings other than those expressly set forth herein or therein.
This Agreement supersedes all prior agreements and understandings between
the Parties with respect to its subject matter.
Amendments, Extensions & Waiver
This Agreement may not be amended, changed or terminated orally, and no
attempted change, termination or waiver of any of the provisions hereof will be
binding unless in writing and signed by the Parties against whom the amendment,
change, termination or waiver is sought to be enforced.
This Agreement may be amended by the Parties at any time before or after
approval of matters presented in connection with the Reorganization to the
stockholders of those Parties required by applicable law to so approve but,
after any such stockholder approval, no amendment will be made which by law
requires the further approval of stockholders of a party without obtaining such
further approval.
At any time prior to the Closing any Party may, to the extent legally allowed:
Extend the time for the performance of any of the obligations or other acts
of the other Parties;
Waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto;
Waive compliance with any of the agreements or conditions for the benefit
of such Party contained herein; or
Any agreement on the part of a Party to any such extension or waiver will
be valid only if set forth in an instrument in writing signed on behalf of such
Party.
Exhibits
Each exhibit referenced in this Agreement will be annexed hereto and will
be considered a part hereof as if set forth in the body hereof in full.
Negotiated Transactions
The provisions of this Agreement were negotiated by the Parties, this
Agreement and the agreements, indentures and other instruments incidental hereto
will be deemed to have been drafted by all of the Parties and this Agreement
will not be interpreted more or less favorably in favor of or against a Party
based on its authorship.
Governing Laws, Venue and Dispute Resolution
Jurisdiction & Venue
The Parties each hereby submits to the jurisdiction of any state or federal
court or private dispute resolution tribunal sitting in Summit County, Utah, in
any action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court or tribunal.
The Parties each agree not to bring any action or proceeding arising out of
or relating to this Agreement in any other court or tribunal.
Each of the Parties waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waives any bond, surety,
or other security that might be required of any other Party with respect
thereto. Applicable Law & Venue
This Agreement will be construed, interpreted and enforced in accordance
with, and governed by, the laws of the State of Delaware but venue for any
proceeding arising hereunder, whether in law, equity, administration or
alternate dispute resolution, will, to the extent legally permissible, lie
exclusively in Summit County, Utah.
Dispute Resolution
If there is any dispute hereunder which cannot be resolved by the Parties
(a "Disputed Item"), either Party may seek a resolution by arbitration by
applying for an arbitrator to be appointed by the American Arbitration
Association in accordance with the rules and regulations of that association,
except as specifically modified hereby.
In the event arbitration is requested, both Parties must proceed as quickly
as possible to arbitration and accept the results of same as final and binding.
The losing Party in the arbitration will pay all of the costs of the
arbitration. In the event that the results of the arbitration cannot be said to
result in a winning Party and a losing Party, the arbitrator will decide how the
costs and expenses of the arbitration will be borne by the Parties.
Any judgment upon the award rendered by the arbitrator may be enforced in
the Circuit Court sitting in and for Summit County, Utah.
Notices
All notices, demands or other communications given hereunder will be in
writing and will be deemed to have been duly given on the first business day
after mailing by United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
1. To AmeriNet: AmeriNet ▇▇▇▇▇.▇▇▇, Inc.; Crystal Corporate Center;
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇-▇; ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇; Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President; Telephone (561)
▇▇▇-▇▇▇▇, Fax (▇▇▇) ▇▇▇-▇▇▇▇; and, e-mail ▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇;
with copies to AmeriNet ▇▇▇▇▇.▇▇▇, Inc.;
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇; ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇; Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Secretary; Telephone (▇▇▇) ▇▇▇-▇▇▇▇, Fax
(▇▇▇) ▇▇▇-▇▇▇▇; and, e-mail, ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇.
2. To the Park City ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇; Group Security Telephone (▇▇▇) ▇▇▇-▇▇▇▇, Fax
(▇▇▇) ▇▇▇-▇▇▇▇, e-mail Holders: ▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
Riverview Financial Corp., ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇;
Telephone (▇▇▇) ▇▇▇-▇▇▇▇
or such other address or to such other person as any Party will
designate to the other for such purpose in the manner hereinafter set
forth.
At the request of any Party, notice will also be provided by overnight
delivery, facsimile transmission or e-mail, provided that a transmission receipt
is retained.
Further Assurances
From time to time after the Closing, the Park City Group's Participants
will execute and deliver, or cause its affiliates to execute and deliver, to
AmeriNet such instruments of sale, transfer, conveyance, assignment and
delivery, and such consents, assurances, powers of attorney and other
instruments as may be reasonably requested by AmeriNet or its counsel in order
to carry out the purpose and intent of this Agreement.
License
This Agreement is derived from a form developed by Yankees and in which
Yankees claims property rights. Such form has been adapted for this transaction
with the consent of Yankees by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire, AmeriNet's legal
counsel.
Yankees grants the Parties and their counsel a perpetual, unrestricted and
non-royalty bearing right and license to copy, use, modify and adapt this form
of agreement for any purpose.
Broker
Except as set forth on Exhibit 9.16, no person is entitled to any
compensation from the Parties to this Agreement as a result of the transactions
effected hereby. The Parties hereby agree to indemnify and hold each other
harmless from and against any claims for brokerage or other commissions relative
to the transactions contemplated by this Agreement based in any way on
agreements, understanding or arrangements made or claimed to have been made by
such Party with any third party.
IN WITNESS WHEREOF, the Parties hereby have caused this Agreement to be
duly executed as of the day and year set forth below.
Signed, sealed and delivered
In Our Presence:
AMERINET ▇▇▇▇▇.▇▇▇, INC.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
Attest: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Secretary
(Corporate Seal)
STATE OF FLORIDA }
COUNTY OF ▇▇▇▇▇▇ } SS.:
On this 31 day of May, 2001, before me, a notary public in and for the
county and state aforesaid, personally appeared ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, to me known, and known to me to be the president and secretary of
AmeriNet ▇▇▇▇▇.▇▇▇, Inc., the above-described Delaware corporation, and to me
known to be the persons who executed the foregoing instrument, and acknowledged
the execution thereof to be their free act and deed, and the free act and deed
of AmeriNet ▇▇▇▇▇.▇▇▇, Inc., for the uses and purposes therein mentioned. In
witness whereof, I have hereunto set my hand and affixed my notarial seal the
day and year in this certificate first above written. My commission expires:
{Seal}
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Notary Public
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, on his own behalf
STATE OF UTAH }
COUNTY OF SUMMIT } SS.:
On this 31st day of May, 2001, before me, a notary public in and for
the county and state aforesaid, personally appeared ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, to me
known, and known to me to be the person who executed the foregoing instrument,
and acknowledged the execution thereof to be his free act and deed for the uses
and purposes therein mentioned. In witness whereof, I have hereunto set my hand
and affixed my notarial seal the day and year in this certificate first above
written. My commission expires:
(Seal)
/s/ June ▇▇▇ ▇▇▇▇▇▇
--------------------
Notary Public
RIVERVIEW FINANCIAL CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
Attest: /s/ EG Perry
Secretary
(Corporate Seal)
STATE OF UTAH }
COUNTY OF SUMMIT } SS.:
On this 31st day of May, 2001, before me, a notary public in and for the
county and state aforesaid, personally appeared ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and eg Perry ,
to me known, and known to me to be the president and secretary of Riverview
Financial Corp., the above-described California corporation, and to me known to
be the persons who executed the foregoing instrument, and acknowledged the
execution thereof to be their free act and deed, and the free act and deed of
Riverview Financial Corp., for the uses and purposes therein mentioned. In
witness whereof, I have hereunto set my hand and affixed my notarial seal the
day and year in this certificate first above written. My commission expires:
{Seal}
June ▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Notary Public
