Exhibit 2.2
AFFINITY/PRESTIGE ACQUISITION AGREEMENT
THIS AFFINITY/PRESTIGE ACQUISITION AGREEMENT (the "Agreement") shall be
deemed effective as of January 1, 1999, by and among Affinity International
Travel Systems, Inc., a publicly held Nevada corporation (hereinafter the
"Purchaser"), Prestige Travel Services II, Inc., a privately-held Florida
corporation (hereinafter the "Private Company"), and the shareholders of the
Private Company whose names are set forth upon the signature page of this
Agreement (the "Selling Shareholders").
RECITALS:
WHEREAS, the Purchaser wishes to acquire, and the Selling Shareholders are
willing to sell, all of the outstanding stock of the Private Company in exchange
solely for Series "A" Convertible Preferred Stock of the Purchaser; and
WHEREAS, the parties hereto intend to qualify such transaction as a
tax-free exchange pursuant to Section 368(a)(1)(B) of the Internal Revenue Code
of 1986, as amended;
NOW, THEREFORE, based upon the stated premises, which are incorporated
herein by reference, and for and in consideration of the mutual covenants and
agreements set forth herein, the mutual benefits to the parties to be derived
herefrom, and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the Purchaser, the Private Company, and the
Selling Shareholders hereby approve and adopt this Agreement and mutually
covenant and agree with each other as follows:
ARTICLE 1. EXCHANGE
1.1 Shares to be Exchanged.
(a) At the Closing, the Selling Shareholders shall transfer to the
Purchaser certificates for the number of shares of the common stock of the
Private Company (the "Private Company Shares") described in Schedule "A",
attached hereto and incorporated herein, which in the aggregate shall represent
all of the issued and outstanding Private Company Shares. Following said
transfer, the Private Company shall become a wholly-owned subsidiary of the
Purchaser.
(b) In exchange for the transfer of the Private Company Shares, the
Purchaser shall, at the Closing and contemporaneously with such transfer of the
Private Company Shares to it by the Selling Shareholders. issue and deliver to
the Selling Shareholders Eight Hundred Thousand (800,000) shares of Series "A"
Convertible Preferred Stock of the Purchaser (the "Preferred Shares"), in the
manner set forth on Schedule "A" hereof:
(c) The Preferred Shares shall be convertible into shares of common stock
of the Purchaser (the "Common Stock"), as allows:
At the time of conversion, the Current Market Price of the Common Stock,
as defined below, shall be divided into the sum of $1,600,000. The
resulting number shall determine
the number of shares of Common Stock that the Selling Shareholders shall
receive in total.
Example: If the Current Market Price is $1.60, the Selling
Shareholders will be entitled to and receive upon conversion a total
of 1,000,000 shares of the Common Stock among them.
The term "Current Market Price" shall mean the Current Market Price of the
Common Stock, which shall be calculated, in the event the Common Stock is
publicly traded, as the daily average closing price per share of the
Common Stock for twenty (20) consecutive trading days immediately
preceding the conversion date (as adjusted for any stock dividend, split,
combination or reclassification that was effected during such twenty (20)
day trading period). The closing price for each day shall be the last
reported sale price regular way, or, in case no reported sale takes place
on such day, the average of the last closing bid and asked prices, regular
way, on the principal national securities exchange on which the Common
Stock is listed or admitted to trading, or if not so listed or admitted to
trading, the closing sale price per share of the Common Stock as reported
by NASDAQ or the NASD Electronic Over the Counter Bulletin Board (OTCBB).
In the event the Common Stock is not quoted on NASDAQ or OTCBB, Current
Market Price shall be deemed to be the fair market value per share of the
Common Stock on the conversion date as determined by the independent
accountants for the Corporation.
1.2 Time and Place of Closing. The closing of the exchange provided for in
this Agreement (herein called the "Closing") shall be held at the offices of
Xxxxx X. Xxxxx, P.A., at 10:00 a.m., February 9, 1999, provided that all of the
conditions to the obligations of the parties to consummate the transactions
contemplated hereby as set forth in Articles 6 and 7 have been satisfied or
waived in writing, or at such other place, date or time as may be fixed by
mutual agreement of the parties.
1.3 Delivery of the Private Company Shares. At the Closing, the Selling
Shareholders shall deliver or cause to be delivered to the Purchaser, among
other things:
(a) certificates for the Private Company Shares owned by each of the
Selling Shareholders, duly endorsed in blank for transfer or with stock powers
attached duly executed in blank, with all signatures guaranteed;
(b) such other documents as may be required to effect a valid transfer of
the Private Company Shares by the Selling Shareholders, free and clear of any
and all liens, encumbrances, charges or claims, under Article 8 of the Uniform
Commercial Code of the State of Florida or otherwise;
(c) general releases by all present officers and directors of the Private
Company of any liability of the Private Company to them or any claim which they
may have against the Private Company, except claims for accrued but unpaid
compensation and benefits, and claims for amounts owing and payable to Xxx
XxXxxxx and Xxxxx XxXxxxx under those certain promissory notes of the Private
Company dated December 31, 1998, attached hereto as Exhibit "A"; and
(d) such other documents as may be required elsewhere in or by this
Agreement.
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1.4 Delivery of the Preferred Shares. At the Closing, the Purchaser shall
deliver or cause to be delivered to the Selling Shareholders, among other
things, certificates representing the Preferred Shares, registered in the names
of the Selling Shareholders, free and clear of any and all liens, encumbrances,
charges or claims, under Article 8 of the Uniform Commercial Code of the State
of Florida or otherwise.
1.5 Further Assurances. The Selling Shareholders from time to time after
the Closing at the request of Purchaser and without further consideration shall
execute and deliver further instruments of transfer and assignment (in addition
to those delivered under Section 1.3) and take such other action as the
Purchaser may reasonably require to more effectively transfer and assign to, and
vest in, the Purchaser the Private Company Shares.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF THE PRIVATE COMPANY AND THE SELLING
SHAREHOLDERS.
The Private Company and the Selling Shareholders, jointly and severally,
hereby represent and warrant to the Purchaser as follows:
2.1 Organization and Qualification of the Private Company. The Private
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Florida, with full power and authority to own,
lease and operate its properties and to conduct its business in the manner and
in the places where such properties are owned or leased or such business is
conducted by it, except where the failure to be so qualified or in good standing
will not, taken together with all other such failures have a material adverse
effect on the business, business prospects, assets, operations or financial
condition of the Private Company taken as a whole. (Any such material adverse
effect being hereafter referred to as "Material Adverse Effect"). Copies of the
Private Company's Articles of Incorporation or equivalent documents as amended
to date ("Charter"), attached as Schedule 2.1 hereto and previously delivered to
the Purchaser, are and will be at the Closing complete and correct.
2.2 Capitalization of the Private Company; Title to the Private Company
Shares.
(a) The authorized capital stock of the Private Company consists of Five
Hundred (500) shares of Common Stock, $1.00 par value, of which Five Hundred
(500) shares are issued and outstanding. All such issued and outstanding shares
of capital stock were validly issued, are fully paid and nonassessable and were
issued in compliance with Federal and applicable state securities laws. Except
as set forth on Schedule 2.2 hereto, there are no (I) outstanding or authorized
subscriptions, warrants, options or other rights granted by the Private Company
or any Selling Shareholder to purchase or acquire, or preemptive rights with
respect to the issuance or sale of, the capital stock of the Private Company
which obligate or may obligate the Private Company, to issue any additional
shares of its capital stock or any securities convertible into or evidencing the
right to subscribe for any shares of its capital stock, (ii) other securities of
the Private Company directly or indirectly convertible into or exchangeable for
share of capital stock of the Private Company, or (iii) restrictions on the
transfer of the Private Company's capital stock.
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(b) Each Selling Shareholder is the record and beneficial owner of the
number of the Private Company Shares set forth next to such Selling
Shareholder's name on Schedule "A" hereto, and no Selling Shareholder owns of
record or beneficially any other shares of capital stock of the Private Company,
or rights, options, or warrants with respect thereto, including those described
in item (I) of paragraph (a) above. The Private Company Shares to be delivered
by the Selling Shareholders to the Purchaser pursuant to this Agreement will be,
when delivered, duly authorized, validly issued, fully paid and nonassessable,
and will be free and clear of all liens, encumbrances, charges or claims under
Article 8 of the Uniform Commercial Code of the State of Florida or otherwise.
2.3 Subsidiaries. The Private Company does not own, directly or
indirectly, any capital stock of any corporation. Except as set forth on
Schedule 2.3, the Private Company does not own any securities issued by any
other business organization or governmental authority, except US Government
securities, nor is the Private Company a partner or participant in any joint
venture or partnership of any kind.
2.4 Authorization of Transaction. The Private Company has the full power
and authority to execute, deliver and perform this Agreement and to carry out
the transactions contemplated hereby. All necessary action, corporate or
otherwise, has been taken by each Selling Shareholder and the Private Company to
authorize the execution, delivery and performance of this Agreement and the
transactions contemplated hereby, and the Agreement is the legal, valid and
binding obligation of the Private Company and the Selling Shareholders,
enforceable against the Private Company and the Selling Shareholders in
accordance with its terms, subject to laws of general application affecting
creditors generally.
2.5 Present Compliance with Obligations and laws. The Private Company is
not (a) in violation of its Charter or bylaws; (b) in default in the performance
of any obligation, agreement or condition of any debt instrument which (with or
without the passage of time or the giving of notice) affords to any person the
right to accelerate any indebtedness or terminate any right; (c) in default of
or breach of (with or without the passage of time or the giving of notice) any
other contract to which it is a party or by which it or its assets are bound; or
(d) in violation of any law, regulation, administrative order or judicial order,
decree or judgment applicable to it or its business or assets.
2.6 No Conflict of Transaction With Obligations and Laws.
(a) Except as set forth on Schedule 2.6(a), neither the execution,
delivery and performance of this Agreement, nor the performance of the
transactions contemplated hereby, will: (I) constitute a breach or violation of
the Charter or bylaws of the Private Company; (ii) require any consent, approval
or authorization of or declaration, filing or registration with, any person,
(iii) conflict with or constitute (with or without the passage of time or the
giving of notice) a breach of, or default under, any debt instrument to which
the Private Company is a party, or give any person the right to accelerate any
indebtedness or terminate, modify or cancel any right; (iv) constitute (with or
without the passage of time or giving of notice) a default under or breach of
any other agreement, instrument or obligation to which the Private Company is a
party or by which it or its assets are bound; (v) result in the creation of any
lien or encumbrance upon any of the Private Company Shares or any of the assets
of the Private Company; or (vi)
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result in a violation of any law, regulation, administrative order or judicial
order, decree or judgment applicable to the Private Company, or its businesses
or assets, or (vii) invalidate or adversely affect any permit, license or
authorization used in the Private Company's business.
(b) The execution, delivery and performance of this Agreement and the
transactions contemplated hereby by the Selling Shareholders do not require the
consent, waiver, approval, authorization, exemption of or giving of notice to
any governmental authority, except for those listed on Schedule 2.6(b).
2.7 Financial Statements. Attached as Schedule 2.7 hereto are the
following financial statements of the Private Company audited or unaudited as
indicated, all of which statements are complete and correct and fairly present
the financial position of the Private Company on the dates of such statements
and the results of its operations on the applicable basis for the periods
covered thereby, and such financial statements have been prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods involved and prior periods:
Balance sheets, statements of profit and loss, statements of changes in
stockholders equity and statements of cash flow at and as of each of the
twelve (12) months ended December 31, 1997, 1996, and 1995, and for the
eleven (11) months ended November 30, 1998.
Statements of accounts payable and accounts receivable as of November 30,
1998.
The balance sheet dated November 30, 1998 included in the above financial
statements is sometimes referred to hereinafter as the "Base Balance
Sheet".
2.8 Absence of Undisclosed Liabilities. To the best of the knowledge and
belief of the Selling Shareholders, as of the date of the Base Balance Sheet,
the Private Company had no liabilities of any nature, whether accrued, absolute,
contingent or otherwise (including without limitation liabilities as guarantor
or otherwise with respect to obligations of others, or liabilities for taxes due
or then accrued or to become due), except: (a) liabilities stated or adequately
reserved against on the Base Balance Sheet; (b) liabilities not in excess of
$1,000 arising in the ordinary course of business; (c) liabilities with respect
to those certain promissory, notes of the Private Company dated December 31,
1998, executed in favor of Xxx XxXxxxx and Xxxxx XxXxxxx; and (d) liabilities
disclosed in Schedule 2.8 hereto. There is no fact which materially adversely
affects, or may in the future (so far as can now be reasonably foreseen)
materially adversely affect, the business, properties, operation or condition of
the Private Company which has not been specifically disclosed herein or in a
schedule furnished herewith.
2.9 Absence of Certain Changes. Except as disclosed in Schedule 2.9
hereto, since the date of the Base Balance Sheet there has not been:
(a) any change in the financial condition, working capital, earning,
reserves, properties, assets, liabilities, business or operations of the Private
Company, which change by itself or in conjunction with all other such changes,
whether or not arising in the ordinary course of business, has had a Material
Adverse Effect with respect to the Private Company;
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(b) any contingent liability incurred by the Private Company as guarantor
or otherwise with respect to the obligations of others;
(c) any mortgage, encumbrance or lien placed on any of the properties of
the Private Company which remains in existence on the date hereof or at the time
of the Closing;
(d) any obligation or liability incurred by the Private Company other than
an obligation or liability incurred in the ordinary course of business,;
(e) any purchase, sale or other disposition, or any agreement or other
arrangement for the purchase, sale or other disposition, of any of the
properties or assets of the Private Company other than in the ordinary course of
business;
(f) any damage, destruction or loss, whether or not covered by insurance,
which has had a Material Adverse Effect on the Private Company;
(g) any declaration, setting aside or payment of any dividend on, or the
making of any other distribution in respect of, the capital stock of the Private
Company, or any direct or indirect redemption, purchase or other acquisition by
the Private Company of its own capital stock;
(h) any labor trouble or claim of unfair labor practices involving the
Private Company; any change in the compensation payable or to become payable by
the Private Company to any of its officers, employees or agents other than
normal merit increases in accordance with its usual practices, or any change in
any bonus, pension, or profit sharing payment, entitlement or arrangement made
to or with any of such officers, employees or agents;
(i) any change with respect to the management or supervisory personnel of
the Private Company;
(j) any payment or discharge of a lien, claim, obligation or liability of
the Private Company which was not shown on the Base Balance Sheet or incurred in
the ordinary course of business thereafter;
(k) any obligation or liability incurred by the Private Company to any of
its officers, directors or shareholders, except normal compensation and expense
allowances payable to officers and liability incurred by the Private Company
under those certain promissory notes of the Private Company dated December 31,
1998, executed in favor of Xxx XxXxxxx and Xxxxx XxXxxxx, attached hereto as
Exhibit "A";
(l) any loan or advance made by the Private Company to any of its
officers, directors or shareholders
(m) any disposal or lapse of any right to the use of any trademark,
tradename, patent or copyright, or disposal of or disclosure to any person other
than the Purchaser of any trade secret, formula, process or know-how not
theretofore a matter of public knowledge other than pursuant to confidentiality
agreements;
(n) any change in any method of accounting or accounting practice; or
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(o) any agreement, whether in writing or otherwise, to take any action
described in this Section 2.09.
2.10 Payment of Taxes. The Private Company has duly and timely filed all
federal, state, local, and foreign government income, excise, gross receipts or
franchise tax returns, real estate and personal property tax returns, sales and
use tax returns, employee tax and contribution returns, and all other tax
returns, reports and declarations, including valid extensions therefore, or
estimated taxes required to be filed by it, with respect to all applicable taxes
("Tax Returns") including without limitation, with respect to all income,
profit, franchise, sales, use, real property, personal property, ad valorem,
excise, employment, social security and wage withholding, severance, stamp,
occupation, and windfall profits taxes, of every kind, character or description,
and imposed by any government or quasi-governmental authority (domestic or
foreign), and any interest or fines, and any and all penalties or additions
relating to such taxes, charges, fees, levies or other assessments ("Taxes").
All of the Tax Returns are complete and correct. All Taxes shown to be due on
each Tax Return have been paid or are being contested in good faith by the
Private Company (which contest is being diligently pursued and is described in
Schedule 2.10). With respect to all other taxes which no return is required, or
which have not yet accrued or otherwise become due, adequate provision has been
made in the pertinent financial statements referred to in Section 2.7 above. All
Taxes and other assessments and levies which the Private Company are required to
withhold or collect have been withheld or collected and paid over or will be
paid over to proper governmental authorities as required. Except as set forth on
Schedule 2.10 the tax returns have never been examined by any government entity,
including the Internal Revenue Service and the Florida Department of Revenue.
The Private Company is not aware of any intention on the part of any
government entity to examine any of the Tax Returns. No deficiencies have been
asserted or assessments made against the Private Company, nor is the Internal
Revenue Service nor any other taxing authority now asserting or, to the
knowledge of the Private Company or any Selling Shareholder, threatening to
assert against the Private Company any deficiency or claim for additional taxes
or interest thereon or penalties in connection therewith. The Private Company
has not extended the time for the filing of any Tax Return or the assessment of
deficiencies or waived any statute of limitations for any year, which extension
or waiver is still in effect. The provisions for taxes reflected in the
above-mentioned financial statements are adequate to cover any tax liabilities
of the Private Company in respect of its businesses, properties and operations
during the periods covered by said financial statements and all prior periods.
The Private Company has not filed a consent under Section 341(f) of the Internal
Revenue Code of 1986, as amended (the "Code"). The Private Company has not had
any nonresident aliens or foreign corporations as stockholders. The Private
Company has never been part of an affiliated group filing consolidated returns,
and it has not entered into any tax allocation or tax sharing agreement.
2.11 Title to Properties: Liens: Condition of Properties.
(a) Set forth on Schedule 2.11 hereto is a listing of (i) all the real
property owned by the Private Company at the date hereof, (ii) all leases under
which the Private Company leases real property at the date hereof, (iii) a
complete description of the machine, equipment and other personal property with
a fair market value in excess of $2,000 used or owned by the Private Company as
of the date hereof, and (iv) all leases under which the Private Company or any
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Subsidiary leases any personal property at the date hereof with an original cost
in excess of $1,000. The Private Company has delivered to the Purchaser true,
correct and complete copies of all leases, subleases, rental agreements,
contracts of sale, tenancies or licenses related to any of the real or personal
property identified on Schedule 2.11. The real and personal property identified
on said Schedule includes all properties and assets (whether real, personal or
mixed, tangible or intangible) reflected in the Base Balance Sheet or purchased
by the Private Company since the date of the Base Balance Sheet in the ordinary
course of business), and include all property and assets used or required for
use in the Private Company business.
(b) Except as specifically disclosed in Schedule 2.11 or in the Base
Balance Sheet, the Private Company has good and marketable title in fee simple
to all of their real and personal property, including property described in said
Schedule, and all of its leases are valid, binding and enforceable in accordance
with their terms against the parties thereto, and no default exists under any
such leases. The Private Company has not received notice that any party to any
such lease intends to cancel, terminate or refuse to renew the same or to
exercise or decline to exercise any option or any right thereunder.
(c) None of the real or personal property owned or used by the Private
Company is subject to any mortgage, pledge, deed of trust, lien (other than for
taxes not yet due and payable), conditional sale agreement, security title,
encumbrance, or other adverse claim or interest of any kind, except as
specifically disclosed in Schedule 2.11 or in the Base Balance Sheet.
(d) Except as otherwise specified in Schedule 2.11 hereto:
(i) all buildings, machinery and equipment of the Private Company
and each Subsidiary are in good condition, working order and repair normal
wear and tear and excepted, are adequate for the uses to which they are
being put, have been well maintained, substantially conform with all
applicable ordinances, regulations, and zoning, safety or other laws, and
do not encroach on property of others; and
(ii) as of the date hereof, neither the Private Company, nor any
Selling Shareholder knows of any pending or threatened change of any such
ordinance, regulation or zoning, safety or other law and there is no
pending or threatened condemnation of any such property.
2.12 Collectibility of Accounts Receivable. To the best of the knowledge
and belief of the Selling Shareholders, all of the accounts receivable of the
Private Company shown or reflected on the Base Balance Sheet, less a reserve for
bad debts in the amount shown of the Base Balance Sheet, are, and those existing
at the time of Closing, less the reserve shown on the Base Balance Sheet, will
be, (a) valid and enforceable claims, (b) which arose out of transactions with
unaffiliated parties, (c) fully collectible within ninety (90) days from invoice
date through the Private Company's normal means of collection and (d) subject to
no set-off, defense or counterclaim.
2.13 Profitable Operation. Between the date of the Base Balance Sheet and
the date of this Agreement, the Private Company has conducted its businesses
only in the ordinary course and at a net profit after taxes on a consolidated
basis of not less than $___________ The Private
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Company warrants that from the date hereof until the Closing, it will continue
to conduct its business only in the ordinary course and at a net profit after
taxes on a consolidated basis of not less than $92,000, and that it will have
total revenues for calendar year 1998 in excess of $9,000,000. For the purpose
of this Section 2.13, whether the Private Company operated at a net profit after
taxes for such period shall be determined in accordance with generally accepted
accounting principles, practices and methods, consistently applied ("GAAP").
2.14 Value of the Private Company Business. At the Closing, the value of
the Private Company's assets shall be not less than $41,900 in excess of
liabilities. For the purpose of this Section 2.14, the value of the Private
Company's assets shall be deemed to be the aggregate book value thereof at the
Closing, net of depreciation and other reserves, determined in accordance with
GAAP.
2.15 Contracts and Commitments
(a) Except for contracts, commitments, plans, agreements and licenses
described in Schedule 2.15(a) hereto, the Private Company is not a party to or
subject to:
(i) any contract or agreement for the purchase of any commodity,
material, equipment, or asset;
(ii) any other contract or agreements creating any obligations of
the Private Company after the date of the Base Balance Sheet of $1,000 or
more with respect to any such contract or agreement, other than sales and
purchase commitments in the ordinary course of business;
(iii) any contract or agreement which by its terms does not
terminate or is not terminable without penalty by the Private Company (or
its successor or assign) within one year after the date hereof;
(iv) any contract or agreement for the sale or lease of its products
not made in the ordinary course of business;
(v) any contract with any sales agent or distributor of products of
the Private Company;
(vi) any contract containing covenants limiting the freedom of the
Private Company to compete in any line of business or with any person or
entity;
(vii) any license or franchise agreement (as licensor or licensee of
franchiser or franchisee); or
(viii) any contract which is material to the business of the Private
Company.
(b) Except as set forth on Schedule 2.15(b), the Private Company has not
had any customer who accounted, directly or indirectly, for more than ten
percent (10%) of its sales during the last two fiscal years and the Private
Company has no supplier from whom it has purchased more than ten percent (10%)
of the goods and services that it purchased during the last
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two fiscal years. The Private Company is not in default under any contracts,
commitments, plans, agreements or licenses described in Schedule 2.15(b) nor
does the Private Company or any Selling Shareholder have knowledge of any
termination, cancellation, limitation or modification or change in any business
relationship with any material supplier or customer. For the purposes hereof, a
supplier or customer is material if it accounts for more than ten percent (10%)
of the orders or sales, of the Private Company.
2.16 Labor and Employee Relations: Agents
(a) Except as shown on Schedule 2.16(a) hereto, there are no currently
effective consulting or employment agreements or other material agreements with
individual consultants or employees to which the Private Company or any is a
party. Complete and accurate copies of all such written agreements have been
delivered to Purchaser and are attached to Schedule 2.16. Also shown on Schedule
2.16(a) are the name and rate of compensation (including all salary, bonus,
benefit and compensation) of each officer, employee or agent of the Private
Company.
(b) Except as shown on Schedule 2.16(b), none of the employees of the
Private Company is covered by any collective bargaining agreement with any trade
or labor union, employees' association or similar association. The Private
Company has complied in all respects with applicable laws, rules and regulations
relating to the employment of labor, including without limitation those relating
to wages, hours, unfair labor practices, discrimination, and payment of social
security and similar taxes. There are no representation elections, arbitration
proceedings, labor strikes, slowdowns or stoppages, material grievances or other
labor troubles pending, or to the knowledge of the Selling Shareholders, overtly
threatened, with respect to the employees of the Private Company.
(c) There are no complaints against the Private Company pending or, to the
knowledge of the Selling Shareholders, overtly threatened before the National
Labor Relations Board or any similar state or local labor agencies, or before
the Equal Employment Opportunity Commission or any similar state or local
agency, by or on behalf of any employee or former employee of the Private
Company.
(d) There is no contingent liability for sick leave, vacation time,
severance pay or similar items not set forth on the Base Balance Sheet or on
Schedule 2.16(d). The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not trigger any
severance pay obligation under any contract or at law.
(e) The Selling Shareholders have provided to the Purchaser a complete
description of all employment policies under which the Private Company has
operated or which has been communicated to its employees.
(f) Set forth on Schedule 2.16(f) is a list of all outside agents and
sales representatives who provide services for and on behalf of the Private
Company, together with (I) a description of their related commission or other
compensation scheme for such services, (ii) their total compensation for fiscal
1997 to date, and (iii) a copy of any written agreements with the Private
Company to which they are parties.
2.17 Employee Benefits and ERISA.
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(a) Except as shown on Schedule 2.17 hereto, there are no currently
effective retirement, pension, executive or deferred compensation, stock
purchase, stock option, stock bonus, stock appreciation, severance, profit
sharing, bonus, savings, thrift, cafeteria, medical, health, hospitalization,
dental, vision, welfare, life insurance, disability, accident insurance, group
insurance, sick pay, holiday and vacation programs or other employee benefit
plans, funds, programs, contracts, arrangements or practices, formal or
informal, including "employee benefit plans" as defined in Section 3 of the
Employment Retirement Income Act of 1974, as amended ("ERISA"), (each such plan,
arrangement or practice being hereafter referred to as "Benefit Plan") relating
to the employees of the Private Company. The Private Company has no agreement,
arrangement, or commitment, whether formal or informal and whether legally
binding or not, to create any additional plan, fund, program, contract or
arrangement or to modify or amend any existing Benefit Plan. There are no
multi-employer plans (as defined within the meaning of Section 3 (37) and
4001(a)(3) of ERISA) relating to the employees of the Private Company, nor has
there been any multi-employer plan relating to such employees within the last
five (5) years.
(b) With respect to each Benefit Plan described in Schedule 2.17, the
Private Company has furnished to the Purchaser complete and accurate copies of
the Benefit Plan, including all amendments, the most recent determination letter
from the Internal Revenue Service, the three (3) most recent form 5500's, the
most recent plan actuarial reports, summary plan descriptions, summary annual
reports, summaries of material modifications, employee manuals and material
employee communications, and all reports of the Benefit Plan required by ERISA
and the regulations thereunder. The Purchaser has also been provided with copies
of any insurance contracts or trust agreements through which any Benefit Plan is
funded and notice of any material adverse change occurring with respect to any
Benefit Plan since the date of the most recently completed and filed annual
report.
(c) With respect to each Benefit Plan which is subject to ERISA:
(i) the value of the Benefit Plan's assets equals or exceeds the
total value of all vested and unvested employee benefits under such plan;
(ii) there is no "accumulated funding deficiency" and no "reportable
event" or "prohibited transaction" has occurred (as such terms are defined
in ERISA);
(iii) the Benefit Plan meets all applicable requirements of ERISA
and Section 401(a) of the Internal Revenue Code;
(iv) the Private Company has properly and timely made all required
governmental filings with respect to the Benefit Plan;
(v) the Base Balance Sheet reflects in the aggregate all amounts
accrued but unpaid under the aforesaid plans and arrangements as of the
date hereof.
(d) The execution and delivery of this Agreement by the Selling
Shareholders, and the consummation of the transactions contemplated hereunder:
11
(i) do not constitute a prohibited transaction within the meaning of
Section 406 if ERISA or Section 4975 of the Internal Revenue Code; and
(ii) will not result in any obligation or liability of the Purchaser
or the Private Company to any employee of the Private Company or to the
Pension Benefit Guaranty Corporation in respect of any Benefit Plan.
2.18 Environmental Matters
[INTENTIONALLY OMITTED]
2.19 Permits. The Private Company holds all licenses, permits,
registrations, orders, authorizations, approvals and franchises which are
required to permit it to conduct its businesses as presently conducted, and all
such licenses, permits, registrations, orders, authorizations, approvals and
franchises are listed on Schedule 2.19 hereto and are now, and will be after the
Closing, valid and in full force and effect, and the Purchaser shall have full
benefit of the same. The Private Company has not received any notification of
any asserted present failure (or past and unremedied failure) by it to have
obtained any such license, permit, registration, order, authorization, approval
or franchise.
2.20 Warranty, or Other Claims. Neither the Private Company nor any
Selling Shareholder knows of, or has reason to know of; any existing or
threatened claims, or any facts upon which a claim could be based, against the
Private Company for services which are defective or fail to meet any service or
product warranties. No claim has been asserted against the Private Company for
renegotiations or price predetermination of any business transaction, and
neither the Private Company, nor any Selling Shareholder has knowledge of any
facts upon which any such claim could be based.
2.21 Litigation Claims and Legal Proceedings. Except for matters described
in Schedule 2.21 hereto, there are no claims, actions, suits, arbitration's,
proceedings or investigations pending (or, to the knowledge of the Private
Company or any Selling Shareholder, threatened) against, the Private Company and
there are no outstanding court orders, court decrees, or court stipulations to
which the Private Company is a party or by which any of its assets are bound,
any of which (a) question this Agreement or affect the transactions contemplated
hereby, or (b) materially restrict the present business properties, operations,
prospects, assets or condition, financial or otherwise, of the Private Company
or (c) will result in any materially adverse change in the business, properties,
operations, prospects assets or the condition, financial or otherwise, of the
Private Company. Neither the Private Company nor any Selling Shareholder has any
reason to believe that any such claim, action, suit, arbitration, proceeding or
investigation may be brought against the Private Company.
2.22 Borrowings and Guarantees. Except as shown on Schedule 2.22 hereto,
there are no agreements and undertaking pursuant to which the Private Company:
(a) is borrowing or is entitled to borrow any money, (b) is lending or has
committed itself to lend any money, or (c) is a guarantor or surety with respect
to the obligations of any person. Complete and accurate copies of all such
written agreements have been delivered to Purchaser and are attached to Schedule
2.22.
12
2.23 Financial Service Relations and Powers of Attorney. All of the
arrangements which the Private Company has with any bank depository institution
or other financial services entity, whether or not in the Private Company's name
are completely and accurately described in Schedule 2.23 hereto.
2.24 Insurance. The Private Company maintains (i) insurance on all of its
property (including leased premises) that insures against loss or damage by fire
or other casualty (including extended coverage) and (ii) insurance against
liabilities, claims and risks of a nature and in such amounts as are normal and
customary in its industry. Schedule 2.24 contains a complete and correct list of
all policies of insurance maintained by the Private Company (including insurance
providing benefits for employees) in effect on the date hereof, together with
complete and correct information with respect to the premiums, coverage's,
insurers, expiration dates, and deductibles in respect of such policies. Such
policies are sufficient for compliance with all requirements of law currently
applicable to the Private Company and of all agreements to which the Private
Company is a party, will remain in full force and effect through the respective
expiration dates of such policies without the payment of additional premiums and
will not in any way be affected by, or terminate or lapse by reason of, the
transactions contemplated by this Agreement. Except for amounts deductible under
policies of insurance described on such schedule or with respect to risks
assumed as a self-insurer and described on such schedule, the Private Company is
not, nor has it been at any time, subject to any liability as a self-insurer of
the businesses or assets of the Private Company that is reasonable likely to
have a Material Adverse Effect upon the businesses, assets, revenues, condition
(financial or otherwise) or prospects of the Private Company. Except as set
forth of Schedule 2.24, there are no claims pending or, to the knowledge of
Selling Shareholders, overtly threatened, under any of said policies, or
disputes with insurers, and all premiums due and payable thereunder have been
paid, and all such policies are in full force and effect in accordance with
their respective terms. No notice of cancellation or termination has been
received with respect to any such policy. The Private Company has not been
refused any insurance with respect to its assets or operations, nor has its
coverage been limited, by any insurance carrier with which it has applied for
any such insurance or with which it has carried insurance.
2.25 Corporate Minute Books and Records. The minute books and stock
ledgers of the Private Company, copies of which have been made available for
inspection by the Purchaser, accurately record all action taken by the Private
Company's shareholders, boards of directors and committees thereof.
2.26 Finder's Fee. Neither the Private Company nor any Selling Shareholder
has incurred or become liable for any broker's commission or finder's fee
relating to or in connection with the transactions contemplated by this
Agreement except for the fee incurred by the Selling Shareholders to Xxxxxxx X.
Xxxxxxxx which shall be paid by the Purchaser.
2.27 Transactions with Interested Persons. No officer, supervisory
employee, director or stockholder of the Private Company, or any Selling
Shareholder, or their respective spouses or children, (i) owns, directly or
indirectly, on an individual or joint basis, any material interest in, or serves
as an officer or director of, any customer, competitor or supplier of the
Private Company, or any organization which has a material contract or
arrangement with the Private Company, or (ii) has any contract or agreement with
the Private Company other than as disclosed
13
on a Schedule hereto, and all such agreements are, except as noted on such
schedule, on arms-length terms.
2.28 Absence of Sensitive Payments. Neither the Private Company nor, to
the knowledge of the Private Company or any Selling Shareholder, any of the
Private Company's directors, officers, agents, stockholders or employees:
(a) has made or has agreed to make any contributions, payments or gifts of
funds or property to any governmental official, employee or agent where either
the payment or the purpose of such contribution, payment or gift was or is
illegal under the laws of the United States, any state thereof, or any other
jurisdiction (foreign or domestic);
(b) has established or maintained any unrecorded fund or asset for any
purpose, or has made any false or artificial entries on any of its books or
records for any reason; or
(c) has made or has agreed to make any contribution or expenditure, or has
reimbursed any political gift or contribution or expenditure made by any other
person to candidates for public office, whether federal, state or local (foreign
or domestic) where such contributions were or would be a violation of applicable
law.
2.29 Disclosure of Material Information. Neither this Agreement nor any
exhibit hereto or certificate issued pursuant hereto contains any untrue
statement of a material fact, or omits to state a material fact necessary to
make the statements herein or therein not misleading, relating to the business
or affairs of the Private Company. There is no fact which materially adversely
affects, or may in the future (so far as now can be reasonably foreseen)
materially adversely affect, the business, properties, operations or conditions
(financial or otherwise) or prospects of the Private Company which has not been
specifically disclosed herein.
2.30 Pooling. Neither the Private Company nor any executive officer,
director or other person or entity which are "affiliates" of the Private Company
for purposes of Rule 145 under the Securities Act of 1933, as amended, to the
extent such persons or entities own Private Company Shares, has through the date
of this Agreement, taken or agreed to take any action that would prevent the
Private Company and the Purchaser from accounting for the business combination
to be entered into pursuant to this Agreement as a "pooling of interest" in
accordance with GAAP. The Private Company has received a letter from Xxxxxxxxx &
Associates with respect to the absence of certain attributes of the Private
Company which would preclude the transaction contemplated by this Agreement from
being tracked as a "pooling of interests" for accounting purposes. A copy of
such letter has been furnished to the Purchaser.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser hereby represents and warrants to the Selling Shareholders
and the Private Company as follows:
3.1 Organization of the Purchaser. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada with full corporate power to own or lease its properties and to conduct
its business in the manner and in the places where such properties are owned or
leased or such business is conducted by it.
14
3.2 Capitalization of the Purchaser. The authorized capital stock of the
Purchaser consists of 100,000,000 shares of common stock, $.001 par value, and
100,000,000 shares of preferred stock, $.001 par value. All of the presently
issued and outstanding capital stock of the Purchaser has been duly authorized
and validly issued and is fully paid and nonassessable. There are no outstanding
options, warrants or agreements of any kind for the issuance or sale of, or
outstanding securities convertible into, any additional shares of capital stock
of any class of the Purchaser.
3.3 Authorization of Transaction. The Purchaser has the full power and
authority to execute, deliver and perform this Agreement and to carry out the
transactions contemplated hereby. All necessary action, corporate or otherwise,
has been taken by the Purchaser to authorize the execution, delivery and
performance of this Agreement and the transaction contemplated hereby, and the
Agreement is the legal, valid and binding obligation of the Purchaser
enforceable in accordance with its terms, subject to laws of general application
affecting creditor's rights generally.
3.4 The Purchaser's Preferred Shares. The Preferred Shares to be delivered
pursuant to this Agreement will be, when delivered, duly authorized, validly
issued, fully paid and nonassessable, and free and clear of all liens,
encumbrances, charges or claims under Article 8 of the Uniform Commercial Code
of the State of Florida or otherwise.
3.5 Financial Statements. The Purchaser has delivered to the Selling
Shareholders an audited consolidated balance sheet of the Purchaser and its
subsidiaries as of June 30, 1997 and the related consolidated statement of
income, retained earnings and capital in excess of par value for the fiscal year
then ended, certified by B.D.O. Xxxxxxx LLP. The foregoing financial statements
have been prepared in accordance with GAAP and present fairly the consolidated
financial condition of the Purchaser and its subsidiaries as at the date thereof
and the consolidated results of their operations for the year then ended. The
Purchaser has also delivered to the Selling Shareholders an unaudited balance
sheet, statement of profit and loss and statement of changes in stockholders
equity at and as of the twelve (12) months ended June 30, 1998.
3.6 Litigation. There is no litigation pending or, to the knowledge of the
Purchaser, threatened against Purchaser which will have a material adverse
effect on its properties, assets of business or which would prevent or hinder
the consummation of the transactions contemplated by this Agreement.
3.7 Finder's Fee. The Purchaser has not incurred or become liable for any
broker's commission or finder's fee relating to or in connection with the
transactions contemplated by this Agreement except that, upon consummation of
the Closing, the Purchaser shall assume the Selling Shareholders' obligation to
pay to Xxxxxxx X. Xxxxxxxx, Xx. a finders fee in connection with the
transactions contemplated by this Agreement, which fee shall be payable in the
form of 40,000 shares (or equivalent pro rata amount based on the ultimate
Purchase Price) of the Purchaser's Common Stock.
ARTICLE 4. COVENANTS OF THE PRIVATE COMPANY AND THE SELLING SHAREHOLDERS.
15
Each of the Selling Shareholders and the Private Company hereby covenant
and agree with the Purchaser as follows:
4.1 Conduct of Business. Between the date of this Agreement and the
Closing, the Private Company will do the following unless Purchaser shall
otherwise be advised of:
(a) conduct its business only in the ordinary course and retain from
changing or introducing any method of management or operations except in the
ordinary course of business and consistent with prior practices;
(b) refrain from making any purchase, sale or disposition of any asset or
property other than in the ordinary course of business and consistent with prior
practices;
(c) refrain from incurring any contingent liability as a guarantor or
otherwise with respect to the obligations of others, and from incurring any
other contingent or fixed obligations or liabilities except those that are usual
and normal in the ordinary course of business;
(d) refrain from making any change or incurring any obligation to make a
change in its Charter or bylaws or authorized or issued capital stock, except as
contemplated by this Agreement;
(e) refrain from splitting, combining or reclassifying any shares of its
capital stock; declaring, setting aside or paying any dividend or making any
other distribution in respect of capital stock (whether in cash, stock or
property or any combination thereof), or making any direct or indirect
redemption, purchase or other acquisition of capital stock, of the Private
Company;
(f) refrain from entering into any employment contract (other than as may
be contemplated by this Agreement) or making any change in the compensation
payable or to become payable to any of its officers, employees or agents;
(g) refrain from prepaying any loans from its stockholders, officers or
directors (if any) or making any change in its borrowing arrangements;
(h) use its best efforts to prevent any change with respect to its banking
arrangements;
(i) use its best efforts to keep intact its business organization, to keep
available its present officers, agents and employees and to preserve the
goodwill of all suppliers, customers and others having business relation with
it;
(j) have in effect and maintain at all times all insurance of the kind, in
the amount and with the insurers set forth in Schedule 2.24 hereto or equivalent
insurance with any substitute insurers approved by the Purchaser; and
(k) permit the Purchaser and its authorized representatives to have full
access to all its properties, assets, records, tax returns, contracts and
documents and furnish to the Purchaser or its authorized representatives such
financial and other information with respect to its business or properties as
the Purchaser may from time to time reasonably request, refrain from issuing,
16
selling, delivering or agreeing or committing to issue, sell or deliver (whether
through the issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase or otherwise) or authorizing the issuance,
sale or delivery of, or redemption or repurchase of, any stock of any class or
any other securities or any rights, warrants or options to acquire any such
stock or other securities, or amend any of the terms of any such convertible
securities, options or warrants;
(l) except in the ordinary course of business and consistent with past
practice; refrain from creating, incurring or assuming any debt not currently
outstanding (including obligations in respect of capital leases); assuming,
guaranteeing, endorsing or otherwise becoming liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other person; or
making any loans, advances or capital contributions to, or investments in, any
other person;
(m) refrain from entering into, adopting or amending any ERISA Benefit
Plan or Benefit Plan or any employment or severance agreement or arrangement or
materially modifying the employment terms of, its directors, officers of
employees, generally or individually, or paying any benefit not required by the
terms in effect on the date hereof of any existing ERISA Benefit Plan or Benefit
Plan;
(n) refrain from making any change in any material respect its accounting
methods, principles or practices, except insofar as may be required by a
generally applicable change in GAAP;
(o) refrain from discharging or satisfying any security interest, lien or
other obligation or liability other than in the ordinary course of business and
consistent with past practice;
(p) refrain from entering into, amending, terminating, taking or omitting
to take any action that would constitute a violation of or default under, or
waive any material rights under, any material contract or agreement;
(q) refrain from taking any action or failing to take any action permitted
by this Agreement with the knowledge that such action or failure to take action
would result in (i) any of the representations and warranties of the Private
Company set forth in this Agreement becoming untrue or (ii) any of the
conditions set forth in Article 6 not being satisfied;
(r) refrain from entering into any lease with respect to real property; or
(s) refrain from agreeing in writing or otherwise taking any of the
foregoing actions.
4.2 Authorization from Others. Prior to the Closing, the Private Company
and Selling Shareholders will have obtained all authorizations, consents and
permits of others required to permit the consummation by the Private Company and
the Selling Shareholders of the transactions contemplated by this Agreement.
4.3 Breach of Representations and Warranties. Promptly upon the occurrence
of, or promptly upon the Private Company or any Selling Shareholder becoming
aware of the impending or threatened occurrence of, any event which would cause
or constitute a breach, or would have caused or constituted a breach had such
event occurred or been known to the Private
17
Company or any Selling Shareholder prior to the date hereof, of any of the
representations and warranties of the Private Company and the Selling
Shareholders contained in or referred to in this Agreement, such person shall
give detailed written notice thereof to the Purchaser and the Private Company
and the Selling Shareholders shall use their best efforts to prevent or promptly
remedy the same.
4.4 Consummation of Agreement. The Private Company and each Selling
Shareholder shall use their best efforts to perform and fulfill all conditions
and obligations on their part to be performed and fulfilled under this
Agreement, to the end that the transactions contemplated by this Agreement shall
be fully carried out. To this end, the Private Company and each Selling
Shareholder which is a corporation will obtain all necessary authorizations or
approvals of its stockholders and Board of Directors. From the date hereof until
the termination of this Agreement, neither the Private Company nor any Selling
Shareholder will discuss or negotiate with any other party, or entertain or
consider any inquiries or proposals received from any other party, concerning
the possible disposition of the Private Company's business, assets or capital
stock and the Private Company and the Selling Shareholders shall promptly inform
the Purchaser of all such inquiries or proposals together with the terms
thereof.
4.5 No Transfer or Encumbrance of the Private Company Shares. None of the
Selling Shareholders will at any time prior to the Closing assign, transfer,
hypothecate or otherwise encumber or create in favor of any other party any
right or interest in the Private Company Shares now owned by them.
4.6 Tax Effect. The Selling Shareholders acknowledge that this transaction
has been designed to be effectuated as a tax free exchange as stated herein
above. The Selling Shareholders have relied upon their tax advisers with regard
to said treatment under the terms of this Agreement.
4.7 Disposition of the Preferred Shares. Each Selling Shareholder agrees
that it will deliver an investment letter in the form of Exhibit B hereto and
will not sell or otherwise dispose of any of the Preferred Shares in violation
of the registration requirements of the Securities Act of 1933, as amended or in
violation of any other federal or state laws or regulations governing the sale
or other disposition of securities.
ARTICLE 5. COVENANTS OF THE PURCHASER
The Purchaser hereby covenants and agrees with the Private Company and
each of the Selling Shareholders as follows:
5.1 Authorization from Others. Prior to the Closing, the Purchaser will
have obtained all authorizations, consents and permits of others required to
permit the consummation by the Purchaser of the transactions contemplated by
this Agreement.
5.2 Consummation of Agreement. The Purchaser shall use its best efforts to
perform and fulfill all conditions and obligations on its part to be performed
or fulfilled under this Agreement, to the end that the transactions contemplated
by this Agreement shall be fully carried out. To this end, the Purchaser will
obtain any approvals of its stockholders or Board of Directors, which may be
required in order to consummate the transactions contemplated hereby.
18
5.3 Breach of Representations and Warranties. Promptly upon the occurrence
of, or promptly upon the Purchaser becoming aware of the impending or threatened
occurrence of, any event which would cause or constitute a breach, or would have
caused or constituted a breach had such event occurred or been known to the
Purchaser prior to the date hereof, of any of the representations and warranties
of the Purchaser contained in or referred to in this Agreement, the Purchaser
shall give detailed written notice thereof to the Private Company and Selling
Shareholders and the Purchaser shall use its best efforts to prevent or promptly
remedy the same.
ARTICLE 6. CONDITIONS TO OBLIGATIONS OF THE PURCHASER
The obligations of the Purchaser to consummate this Agreement and the
transactions contemplated hereby are subject to the condition that on or before
the Closing the actions required by this Article 6 will have been accomplished.
6.1 Representations: Warranties: Covenants. Each of the representations
and warranties of the Private Company and the Selling Shareholders contained in
Article 2 shall be true and correct as though made on and as of the Closing; the
Private Company and the Selling Shareholders shall, on or before the Closing,
have performed all of their obligations hereunder which by the terms hereof are
to be performed on or before the Closing; and the Private Company shall have
delivered to the Purchaser a certificate of the Private Company's President
dated as of the Closing to the foregoing effect.
6.2 Resignations of Officers and Directors. The Selling Shareholders shall
have provided the Purchaser with a complete and correct list of all of the
officers and directors of the Private Company, the Purchaser shall have received
the written resignations of such of the officers and directors of the Private
Company as Purchaser shall have designated in a writing delivered to the Private
Company at least ten days prior to the Closing which resignations will be
effective no later than the Closing.
6.3 Employment and Non-Competition Agreements. The Private Company shall
have executed and delivered to Xxx XxXxxxx, Xxxxx XxXxxxx and Xxxxxxxx XxXxxxx
employment agreements having substantially the terms and conditions of Exhibits
X- 0, X-0, and C-3 attached hereto and Non-competition Agreements having
substantially the temps mid conditions of Xxxxxxxx X-0, X-0, and D-3.
6.4 Approval of the Purchaser's Board of Directors. There shall have been
no determination by the Board of Directors of the Purchaser, acting in good
faith, that the consummation of the transactions contemplated by this Agreement
has become inadvisable or impracticable by reason of the institution or threat
by any person or any federal, state or other governmental authority of material
litigation, proceedings or other action against the Purchaser or the Selling
Shareholders or the Private Company.
6.5 Approval of the Purchaser's Counsel. All actions, proceedings,
instruments and documents required to carry out this Agreement and all related
legal matters contemplated by this Agreement shall have been approved by counsel
for Purchaser, provided that the approval of such counsel shall not be
unreasonably withheld.
19
6.6 Absence of Certain Litigation. There shall not be any (a) injunction,
restraining order or order of any nature issued by any court of competent
jurisdiction which directs that this Agreement or any material transaction
contemplated hereby shall not be consummated as herein provided, (b) suit,
action or other proceeding by the United States (or any agency thereof) or by
any state (or any agency thereof) pending before any court or governmental
agency, or threatened to be filed or initiated, wherein such complainant seeks
the restraint or prohibition of the consummation of any material transaction
contemplated by this Agreement or asserts the illegality thereof or (c) suit,
action or other proceeding by a private party pending before any court or
governmental agency, or threatened to be filed or initiated, which in the
reasonable opinion of counsel for Purchaser is likely to result in the restraint
or prohibition of the consummation of any material transaction contemplated
hereby or the obtaining of an amount in payment (or indemnification) of material
damages from or other material relief against any of the parties or against any
directors or officers of Purchaser, in connection with consummation of any
material transaction contemplated hereby.
6.7 Pooling of Interests. The Purchaser shall have received:
(a) an agreement from each of the Selling Shareholders that he will not
dispose of any of the Preferred Shares or in any other way reduce his risk
relative to any of the Purchase Shares prior to the date on which financial
results of the Purchaser covering at least thirty (30) days of post-Closing
combined operations of the Purchaser and the Private Company have been published
in the manner necessary for Purchaser to meet the requirements for pooling of
interests accounting treatment of the acquisition contemplated hereby under
Accounting Series Release Nos. 130 and 135 of the Securities and Exchange
Commission;
(b) an opinion of Xxxxxxxxx & Associates, the Private Company's
independent public accountants, reasonably satisfactory to the Purchaser with
respect to the absence of certain attributes of the Private Company which would
preclude thc transactions contemplated hereby from being treated as a "pooling
of interests" for accounting purposes; and
(c) an opinion of B.D.O. Xxxxxxx LLP, the Purchaser's independent public
accountants, that the transaction contemplated hereby may be treated as a
pooling of interests under generally accepted accounting principles.
ARTICLE 7. CONDITIONS TO OBLIGATIONS OF THE PRIVATE COMPANY AND THE SELLING
SHAREHOLDERS.
The obligations of the Private Company and the Selling Shareholders to
consummate this Agreement and the transactions contemplated hereby are subject
to the condition that on or before the Closing the actions required by this
Article 7 will have been accomplished.
7.1 Representations: Warranties: Covenants. Each of the representations
and warranties of the Purchaser contained in Article 3 shall be true and correct
as though made on and as of the Closing; Purchaser shall, on or before the
Closing, have performed all of its obligations hereunder which by the terms
hereof are to be performed on or before the Closing; and the Purchaser shall
have delivered to the Private Company and the Selling Shareholders a certificate
20
of the President or any Vice President of the Purchaser dated as of the Closing
to the foregoing effect.
7.2 Opinion of the Purchaser's Counsel. At the Closing, the Private
Company and the Selling Shareholders shall have been received from J. Xxxxx
XxXxxxxxxx, counsel for the Purchaser, an opinion dated as of the Closing, in
form and substance satisfactory to the Selling Shareholders and their counsel.
In rendering said opinion, such counsel may rely on, to the extent he deems such
reliance proper (i) certificates of public officials, (ii) certificates, in form
and substance satisfactory to the Selling Shareholders and their counsel, of
officers of the Purchaser, and (iii) an opinion or opinions in form and
substance satisfactory to the Selling Shareholders and their counsel, or other
counsel satisfactory to the Selling Shareholders and their counsel. In the event
such counsel for the Purchaser rely upon any such certificate or opinion, a
counterpart of each thereof shall be delivered to the Selling Shareholders and
their counsel.
7.3 Employment Agreements. The Purchaser shall have executed mid delivered
to the Selling Shareholders the Employment Agreements described in Section 6.3.
ARTICLE 8. TERMINATION OF AGREEMENT
8.1 Termination. At any time prior to the Closing, this Agreement may be
terminated (a) by mutual consent of the parties with the approval of the
respective Board of Directors of the Purchaser and the Private Company, (b) by
either side if there has been a material misrepresentation, breach of warranty
or breach of covenant by the other side in its representations, warranties mid
covenants set forth herein, (c) by the Purchaser if the conditions stated in
Article 6 have not been satisfied at or prior to the Closing, or (d) by the
Private Company and the Selling Shareholders if the conditions stated in Article
7 have not been satisfied at or prior to the Closing.
8.2 Effect of Termination. If this Agreement shall be terminated as above
provided, all obligations of the parties hereunder shall terminate without
liability of either party to the other. In the event that this Agreement is so
terminated, each part), will return all papers, documents, financial statements
and other data furnished to it by or with respect to each other party to such
other party (including any copies thereof made by the first party).
8.3 Right to Proceed. Anything in this Agreement to the contrary
notwithstanding, if any of the conditions specified in Article 6 hereof have not
been satisfied, the Purchaser shall have the rights to proceed with the
transactions contemplated hereby without waiving its rights hereunder, and if
any of the conditions specified in Article 7 hereof have not been satisfied, the
Selling Shareholders shall have the right to proceed with the transactions
contemplated hereby without waiving their rights hereunder.
ARTICLE 9. INDEMNIFICATION.
9.1 Definitions. For purposes of this Article 9:
"Losses" means all losses, damages (including, without limitation,
punitive and consequential damages), liabilities, payments and obligations, and
all expenses related thereto. Losses shall include any reasonable legal fees and
costs incurred by any of the Indemnified
21
Persons subsequent to the Closing in defense of or in connection with any
alleged or asserted liability, payment or obligation, whether or not any
liability or payment, obligation or judgement is ultimately imposed against the
Indemnified Persons and whether or not the Indemnified Persons are made or
become parties to any such action.
"Purchaser's Indemnified Persons" means the Purchaser, its subsidiary and
affiliate corporations, their respective directors, officers, employees,
stockholders, agents, the Private Company after the Closing, and any person
serving as a director, officer, employee or agent of the Private Company at the
Purchaser's request after the Closing.
"Indemnified Person" means any person entitled to be indemnified under
this Article 9.
"Indemnifying Person" means any person obligated to indemnify another
person under this Article 9.
"Third Party Action" means any written assertion of a claim, or the
commencement of any action, suit, or proceeding, by a third party as to which
any person believes it may be an Indemnified Person hereunder.
9.2 Indemnification by the Selling Shareholders.
(a) Subject to the limitations in paragraph (b) below, each Selling
Shareholder jointly and severally agrees to defend, indemnify and hold harmless
Purchaser's Indemnified Persons from and against all Losses directly or
indirectly incurred by or sought to be imposed upon any of them:
(i) resulting from or arising out of any breach of any of the
representations or warranties made by the Selling Shareholders in or
pursuant to this Agreement or any agreement, document or instrument
executed and delivered pursuant hereto or in connection with the Closing,
(ii) resulting from or arising out of any breach of any covenant or
agreement made by the Selling Shareholders in or pursuant to this
Agreement, or
(iii) in respect of any liability or obligations of the Private
Company which any Selling Shareholder has expressly assumed or for which
any Selling Shareholder has expressly agreed to be responsible.
(b) The right to indemnification under paragraph (a) is subject to the
following limitation: the Selling Shareholders shall have no liability under
paragraph (a) unless one or more of the Purchaser's Indemnified Persons gives
written notice to the Selling Shareholders asserting a claim for Losses,
including reasonably detailed facts and circumstances pertaining thereto, before
the expiration of the period set forth below:
(i) for claims under clause (i) of paragraph (a) above, a period of
five (5) years from the Closing;
22
(ii) for claims under clause (ii) of paragraph (a) above, for so
long as any claim may be made in respect of such matter under any
applicable statute of limitations; and
(iii) for fraud and for claims under clause (iii) of paragraph (a)
above, without limitation as to time.
(c) Notwithstanding anything to the contrary contained herein, the
limitations on the periods of survival contained in paragraph (a) above shall
not apply to any covenant or undertaking contained in this Agreement or any
agreement or instrument contemplated hereby, which is to be performed following
the Closing.
9.3 Indemnification by the Purchaser.
(a) Subject to the limitations in paragraph (b) below, from and after the
Closing, the Purchaser shall indemnify and hold harmless Selling Shareholders'
Indemnified Persons from any and all Losses directly or indirectly incurred by
or sought to be imposed upon them:
(i) resulting from or arising out of any breach of any of the
representations or warranties made by the Purchaser, in or pursuant to
this agreement or in any agreement, document or instrument executed and
delivered pursuant hereto or in connection with the Closing; and
(ii) resulting from or arising out of any breach of any covenant or
agreement made by the Purchaser in or pursuant to this Agreement.
(b) The fight to indemnification under paragraph (a) above is subject to
the limitation that the Purchaser shall have no liability under paragraph (a)
unless a Seller's Indemnified Person gives written notice to the Purchaser
asserting a claim for Losses, including reasonably detailed facts and
circumstances pertaining thereto, before the expiration of five (5) years from
the Closing.
9.4 Notice: Defense of Claims. The Purchaser shall give prompt written
notice to the Selling Shareholders of each claim for indemnification hereunder,
specifying the amount and nature of the claim, and of any matter which in the
opinion of the Purchaser is likely to give rise to an indemnification claim. The
Selling Shareholders shall have the right to participate at their own expense in
the defense of any such matter or its settlement. If, in the opinion of the
Purchaser, its financial condition or business or the financial condition or
business of the Private Company acquired by the Purchaser would not be impaired
thereby, the Purchaser may authorize the Selling Shareholders to take over the
defense of such matter so long as such defense is expeditious. Failure to give
notice of a matter which may give rise to an indemnification claim shall not
affect the rights of the Purchaser to collect such claim from the Selling
Shareholders from the Selling Shareholders' transferees.
ARTICLE 10. MISCELLANEOUS
10.1 Survival of Warranties. All representations, warranties, agreements,
covenants and obligations herein or in any schedule, certificate or financial
statement delivered by any party to another party incident to the transactions
contemplated hereby are material, shall be deemed to
23
have been relied upon by the other party and shall Survive the Closing
regardless of any investigation and shall not merge in the performance of any
obligation by either party hereto.
10.2 Fees and Expenses. Each of the parties will bear its own expenses in
connection with the negotiation and the consummation of the transactions
contemplated by this Agreement, and no expenses of the Private Company relating
in any way to the purchase and sale of stock hereunder shall be charged to or
paid by the Purchaser or included in any account of the Private Company as of
the Closing.
10.3 Notices. Any notice or other communication in connection with this
Agreement shall be deemed to be delivered if in writing (or in the form of a
telegram) addressed as provided below and if either (a) actually delivered at
said address, or (b) in the case of a letter, three business days shall have
elapsed after the same shall have been deposited in the United States mail,
postage prepaid and registered or certified, return receipt requested:
If the Selling Shareholders or, prior to the Closing to the Private Company, to:
Xxx XxXxxxx
0000 Xxxxxxxx Xxx
Xxxxx, XX 00000
Telephone: 000-000-0000
If the Purchaser, to:
Xxxxxx X. Xxxxxxxx, Xx.
Affinity International, Inc.
000 0xx Xxx. X. Xxxxx 000X
Xx. Xxxxxxxxxx, XX 00000
Telephone: 000-000-0000
Fax: 000-000-0000
and in any case at such other address as the addressee shall have specified by
written notice. All periods of notice shall be measured from the date of
delivery thereof.
10.4 Entire Agreement. This Agreement (including all exhibits or schedules
appended to this Agreement and all documents delivered pursuant to or referred
to in this Agreement, all of which are hereby incorporated herein by reference)
constitutes the entire agreement between the parties, and all promises,
representations, understandings, warranties and agreements with reference to the
subject matter hereof and inducements to the making of this Agreement relied
upon by any party hereto, have been expressed herein or in the documents
incorporated herein by reference.
10.5 Assignability. This Agreement shall be binding upon, and shall be
enforceable by and inure to the benefit of, the parties named herein and their
respective successors and assigns; provided, however, that (a) an assignment of
this Agreement may be made by the Purchaser to a subsidiary of the Purchaser or
otherwise, although no such assignment shall relieve the Purchaser of any
liabilities or obligations under this Agreement, and (b) this Agreement may not
be assigned by the Selling Shareholders without the prior written consent of the
Purchaser.
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10.6 Publicity and Disclosures. No press releases or any public
disclosure, either written or oral, of the transactions contemplated by this
Agreement shall be made without the prior knowledge and written consent of the
Purchaser.
10.7 Confidentiality. The parties agree that they will keep confidential
and not disclose or divulge any confidential, proprietary or secret information
which they may obtain from the Private Company in connection with the
transactions contemplated herein, or pursuant to inspection rights granted
hereunder unless such information is or hereafter becomes public information.
10.8 Governing Law Severability. This Agreement shall be deemed a contract
made under the laws of the State of Florida and, together with the rights and
obligations of the parties hereunder, shall be construed under and governed by
the laws of such State. The invalidity or enforceability of any other provision
hereof.
10.9 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
10.10 Effect of Table of Contents and Headings. Any table of contents,
title of an article or section heading herein contained is for convenience of
reference only and shall not affect the meaning of construction of any of the
provisions hereof.
Signatures on Following Page
25
IN WITNESS WHEREOF. the parties hereto have caused this Affinity/Prestige
Acquisition Agreement to be executed as of the date set forth above by their
duly authorized representatives.
AFFINITY INTERNATIONAL TRAVEL SYSTEMS, INC.
a Nevada corporation
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
---------------------------
Xxxxxx X. Xxxxxxxx, Xx., President
PRESTIGE TRAVEL SERVICES II, INC.
a Florida corporation
By: /s/ Xxxxx XxXxxxx
---------------------------
Xxxxx XxXxxxx, President
SELLING SHAREHOLDERS:
/s/ Xxx XxXxxxx
-------------------------------
Xxx XxXxxxx
/s/ Xxxxx XxXxxxx
-------------------------------
Xxxxx XxXxxxx
/s/ Xxxxxxxx XxXxxxx
-------------------------------
Xxxxxxxx XxXxxxx
26
ADDENDUM TO AFFINITY/PRESTIGE ACQUISITION AGREEMENT
THIS ADDENDUM (the "Addendum") is made as of the first day of January,
1999, to the Affinity/Prestige Acquisition Agreement (the "Agreement") of even
date herewith, by and among Affinity International Travel Systems, a Nevada
corporation (the "Purchaser"), Prestige Travel Services II, Inc., a Florida
corporation (the "Private Company"), and the shareholders of the Private Company
(the "Selling Shareholders").
1. The Purchaser has duly authorized the issuance and delivery to the
Selling Shareholders of the number of shares set forth on Schedule "A" to the
Agreement of Series "A" Convertible Preferred Stock, $0.001 par value, having
the rights, restrictions, privileges and preferences set forth in the
Certificate of Designation attached hereto as Exhibit A, which Certificate of
Designation the Purchaser has duly filed with the Secretary of State of the
State of Nevada.
3. Section 2.13 shall be deleted in its entirety.
4. Section 2.14 shall be deleted in its entirety.
5. Section 2.30 shall be deleted in its entirety.
6. Section 6.2 shall be deleted in its entirety.
7. Section 6.3 shall be deleted in its entirety, and replaced as follows:
6.3 Employment Agreements. The Purchaser and the Selling
Shareholders shall have entered into and executed employment agreements
having substantially the terms and conditions of Exhibits C-I, C-2 and
C-3.
8. Section 6.5 shall be deleted in its entirety.
9. Section 6.7 shall be deleted in its entirety.
10. Section 7.2 shall be deleted in its entirety.
11. The following ARTICLE 11. REGISTRATION RIGHTS shall be incorporated in
and made part of the Agreement:
ARTICLE 11. REGISTRATION RIGHTS
11.1 Certain Definitions. As used in this Article 11, the following terms
shall have the following respective meanings:
(a) The terms "Register" "Registered" and "Registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act ("Registration Statement"), and the
declaration or ordering of the effectiveness of such Registration Statement.
(b) "Registrable Securities" shall mean all Common Stock not
previously sold to the public: (A) issued or issuable upon conversion of the
Purchaser's Series "A" Preferred Stock, or (B) Common Stock issued pursuant to
stock splits, stock dividends and similar distributions with respect to such
shares.
(c) "Registration Expenses" shall mean all expenses incurred by the
Purchaser in complying with this ARTICLE 11, including, without limitation, all
federal and state registration, qualification and filing fees, printing
expenses, fees and disbursements of counsel for the Purchaser, blue sky fees and
expenses, and the expense of any special audits incident to or required by any
such registration, but shall not include Selling Expenses.
(d) "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
United States Securities and Exchange Commission thereunder, all as the same
shall be in effect at the time.
(e) "Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities pursuant to
this Agreement.
11.2 Piggyback Registration.
(a) Notice of Piggyback Registration and Inclusion of Registrable
Securities. In the event the Purchaser decides to Register any of its Common
Stock (either for its own account or the account of a security holder exercising
demand registration rights), the Purchaser shall: (i) promptly give the holders
of the Registrable Securities written notice thereof (which shall include a list
of the jurisdictions in which the Purchaser intends to attempt to qualify such
securities under the applicable Blue Sky or other state securities laws), and
(ii) include in such Registration (and any related qualification under Blue Sky
Laws or other compliance), and in any underwriting involved therein, all the
Registrable Securities specified in a written request delivered to the Purchaser
by any of the holders thereof within twenty (20) days after delivery of such
written notice from the Purchaser.
(b) Underwriting in Piggyback Registration.
(i) If the Registration of which the Purchaser gives notice is
a Registered public offering including an underwriting, the Purchaser shall so
advise the holders of the Registrable Securities as part of the written notice
given pursuant to Section 11.2(a). In such event, the right of the holders of
the Registrable Securities to Registration shall be conditioned upon such
underwriting (as it is agreed to by the Purchaser) and the inclusion of any
Registrable Securities in such underwriting to the extent provided in this
Section 11.2. The Selling Shareholders requesting Registration ("Registering
Selling Shareholders") shall, together with the Purchaser, enter into an
underwriting agreement with the underwriter selected for such underwriting by
the Purchaser (the "Underwriter").
(ii) Marketing Limitation in Piggyback Registration. In the
event the Underwriter advises the Purchaser and the holders of the Registerable
Securities in writing that market factors (including, without limitation, the
aggregate number of shares of Common Stock requested to be Registered, the
general condition of the market and the status of the persons proposing to sell
securities pursuant to the Registration) require a limitation of the number of
2
shares to be underwritten, the Underwriter (subject to the allocation priority
set forth in Section 11.2(b) (iii) below) may exclude some or all of the
Registrable Securities from such Registration and underwriting.
(iii) Allocation of Shares in Piggyback Registration. In the
event that the Underwriter limits the number of shares to be included in a
Registration pursuant to Section 11.2(b) (ii), the Registering Selling
Shareholders shall be entitled to include a portion of the Registrable
Securities requested to be included in such registration pro rata (based on the
number of shares requested to be included) with the other holders of Registrable
Securities requesting Registration.
(c) Blue Sky in Piggyback Registration. In the event of any
Registration of Registrable Securities pursuant to this Section 11.2, the
Purchaser will exercise its best efforts to Register and qualify the securities
covered by the Registration Statement under such other securities or Blue Sky
Laws of such jurisdictions as the Purchaser shall otherwise be registering or
qualifying.
11.3 Additional Requirements.
(a) Expenses of Registration. All Registration Expenses incurred in
connection with the Registration pursuant to this ARTICLE 11, shall be borne by
the Purchaser.
(b) Registration Procedures. The Purchaser shall keep the
Registering Selling Shareholders advised as to the initiation and completion of
such Registration. At its expense the Purchaser shall: (i) use its best efforts
to keep such Registration effective until the Registering Selling Shareholders
have completed the distribution described in the Registration Statement relating
thereto; and (ii) furnish such number of prospectuses (including preliminary
prospectuses) and other documents as the Registering Selling Shareholders from
time to time may reasonably request.
11.4 Information Furnished by Registering Selling Shareholders. It
shall be a condition precedent of the Purchaser's obligations under this
Agreement that the Registering Selling Shareholders furnish to the Purchaser
such information regarding the holders of the Registrable Securities and the
distribution proposed by the holders of the Registrable Securities as the
Purchaser may reasonably request.
11.5 Indemnification.
(a) Purchaser's Indemnification of the Registering Selling
Shareholders. To the extent permitted by the law, the Purchaser will indemnify
the Registering Selling Shareholders, their heirs, personal representatives and
assigns, against all claims, losses, damages or liabilities (or actions in
respect thereof) to the extent such claims, losses, damages or liabilities arise
out of or are based upon any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus or other document (including any
related Registration Statement) incident to any such Registration, qualification
or compliance, or are based on any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or any violation by the Purchaser of any rule
or regulation promulgated under the Securities Act applicable to the Purchaser
and relating to action or
3
inaction required of the Purchaser in connection with any such Registration,
qualification or compliance. The Purchaser will reimburse the Registering
Selling Shareholders for any legal and any other expenses reasonably incurred in
connection with investigation or defending any such claim, loss, damage,
liability or action; provided, however, that the indemnity contained in this
Section 11.5(a) shall not apply to amounts paid in settlement of any such claim,
loss, damage, liability or action if settlement is effected without the consent
of the Purchaser (which consent shall not unreasonably be withheld); and
provided further, that the Purchaser shall not be liable in any such case to the
extent that any such claim, loss, damage, liability or expense arises out of or
is based upon any untrue statement or omission based upon written information
furnished to the Purchaser by the Registering Selling Shareholders, and stated
to be for use in connection with the offering of securities of the Purchaser.
(b) Registering Selling Shareholder's Indemnification of the
Purchaser. To the extent permitted by law, the Registering Selling Shareholders
shall, indemnify the Purchaser, its directors and officers, against all claims,
losses, damages and liabilities (or actions in respect thereof) arising out of
or based upon any untrue statement (or alleged untrue statement) of a material
fact contained in any such Registration Statement, prospectus, offering circular
or other document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Registering Selling Shareholders
of any rule or regulation promulgated under the Securities Act applicable to the
Registering Selling Shareholders and relating to action or inaction required of
the Registering Selling Shareholders in connection with any such Registration,
qualification or compliance; and will reimburse the Purchaser, such directors,
officers, partners, persons, law and accounting firms, underwriters or control
persons for any legal and any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such Registration Statement, prospectus, offering circular or other
document in reliance, upon and in conformity with written information furnished
to the Purchaser by the Registering Selling Shareholders and stated to be
specifically for use in connection with the offering of securities of the
Purchaser.
(c) Indemnification Procedure. Promptly after receipt by an
indemnified party under this Section 11.5 of notice of the commencement of any
action, such indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party under this Section 11.5, notify the indemnifying
party in writing of the commencement thereof and generally summarize such
action. The indemnifying party shall have the right to participate in and to
assume the defense of such claim; provided, however, that the indemnifying party
shall be entitled to select counsel for the defense of such claim with the
approval of any parties entitled to indemnification, which approval shall not be
unreasonably withheld, provided further, however, that if either party
reasonably determines that there may be a conflict between the position of the
Purchaser and the Registering Selling Shareholders in conducting the defense of
such action, suit or proceeding by reason of recognized claims for indemnity
under this Section 11.5, then
4
counsel for such party shall be entitled to conduct the defense to the extent
reasonably determined by such counsel to be necessary to protect the interest of
such party. The failure to notify an indemnifying party promptly of the
commencement of any such action, if prejudicial to the ability of the
indemnifying party to defend such action, shall relieve such indemnifying party,
to the extent so prejudiced, of any liability to the indemnified party under
this Section 11.5, but the omission so to notify the indemnifying party will not
relieve such party of any liability that such party may have to any indemnified
party otherwise other than under this Section 11.5.
11.6 Limitations on Additional Registration Rights. The Purchaser shall
not, without the prior written consent of the Selling Shareholders, which
consent shall not be unreasonably withheld, enter into any agreement with any
holder or prospective holder of any securities of the Purchaser providing for
the granting to such holder of any right to Register or cause the Registration
of any securities of the Purchaser, unless such rights are in all respects
subordinate to those of the Selling Shareholders.
12. Capitalized terms not otherwise defined in this Addendum shall have
the definitions set forth in the Agreement.
13. This Addendum may be executed in counterparts, each of which shall be
deemed an original, but together which shall constitute one and the same
instrument.
14. This Addendum shall be deemed to be part of the Agreement. In the
event of any conflict between the terms of this Addendum and the terms of the
Agreement, the terms of this Addendum shall prevail.
5
IN WITNESS WHEREOF, the parties hereto have executed this Addendum to
Affinity/Prestige Acquisition Agreement as of the first day of January, 1999.
AFFINITY INTERNATIONAL TRAVEL SYSTEMS, INC., PRESTIGE TRAVEL SERVICES II, INC.
a Nevada corporation a Florida corporation
By: /s/ Xxxxxx X. Xxxxxxxx, Xx. By: /s/ Xxxxx XxXxxxx
-------------------------------- -----------------------------
Xxxxxx X. Xxxxxxxx, Xx. Xxxxx XxXxxxx
President President
SELLING SHAREHOLDERS:
/s/ Xxx XxXxxxx
------------------------------------
XXX XXXXXXX
/s/ Xxxxx XxXxxxx
------------------------------------
XXXXX XXXXXXX
Xxxxxxxx XxXxxxx
------------------------------------
XXXXXXXX XXXXXXX
6