FIRST AMENDMENT TO REORGANIZATION AGREEMENT
This First Amendment to Reorganization Agreement ("First Amendment") is
entered into as of the 11th day of June, 2001, by and between AMERINET
XXXXX.XXX, INC., a Delaware corporation ("AmeriNet"); and XXXXXXX X. XXXXXX, a
Utah resident, and RIVERVIEW FINANCIAL CORP., a California corporation
(collectively, the "Park City Group's Participants ").
RECITALS
WHEREAS, AmeriNet and the Park City Group's Participants previously entered
into that certain Reorganization Agreement, dated May 31, 2001 (the
"Reorganization Agreement"); and
WHEREAS, AmeriNet and the Park City Group's Participants desire to amend
the Reorganization Agreement as provided herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements set forth herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, AmeriNet and the Park City Group's Participants agree
that the Reorganization Agreement shall be amended as follows:
1. Definitions.
Terms used in this First Amendment and not otherwise defined herein
shall have the same meanings as are set forth for such terms in the
Reorganization Agreement.
2. Shares to be Issued and Effect on Capital Stock. Section 2.1B is
hereby amended to (a) supplement the definition of "Z = Post-Closing
Shares" and (b) change the definition of "N = AmeriNet Stock Prior to
Closing" to increase the number of $.22 warrants, delete the last
clause of the first sentence of this definition, and add the actual
number agreed to by the Parties, as follows:
Z = Post-Closing Shares. This number equals the number of shares of
AmeriNet common stock at Closing which is equal to the sum of the
AmeriNet Stock Prior to Closing and the Exchange Shares. On June 11,
2001, the Parties agreed that this number equals 150,300,000 shares.
N = AmeriNet Stock Prior to Closing. This number equals all of the
outstanding shares of AmeriNet common stock immediately prior to
Closing, after the conversion of all AmeriNet debt into AmeriNet Class
A Preferred Stock, the conversion of all AmeriNet Class A Preferred
Stock into common stock, the exercise of the Yankees Warrant into
common stock, the issuance of all shares sold in connection with the
Private Placement prior to Closing, the exercise into common stock of
all other warrants held by Yankees (except for a warrant to purchase
up to 1,000,000 shares of AmeriNet common stock at an exercise price
of $.22 per share), the exercise of all rights to acquire AmeriNet
common stock for all such rights that have an exercise price of less
than $.25 per share. deleted text "and the deemed exercise of all
other rights to acquire AmeriNet common stock."end deleted text On
June 11, 2001, the Parties agreed that this number equals 39,000,000
shares. This number excludes a total of 300,000 shares that may be
issued to Xxxxxxxx Xxxxxxx and Xxxxxx Xxxxxxx for finders fees.
3. Park City Group Exhibits. The Park City Group's Exhibits are hereby
amended in their entirety as attached hereto as Exhibit A.
4. AmeriNet Exhibits. The AmeriNet's Exhibits are hereby amended in their
entirety as attached hereto as Exhibit B.
5. Revision of Covenants. Section 4.3G.2 will be revised to increase the
remaining warrant to 1,000,000 shares at $.22 per share.
6. Termination of the Park City Group's Participants Condition Precedent;
Riverview Agreement. Section 5.2M is hereby deleted in its entirety.
7. No Other Amendment. Except as expressly amended pursuant to this First
Amendment, the terms of the Reorganization Agreement shall remain in
full force and effect.
8. Counterparts. This First Amendment may be executed in one or more
counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same document.
IN WITNESS WHEREOF, the parties have executed this First Amendment as of
the date first set forth above.
AMERINET XXXXX.XXX, INC., a Delaware corporation
By: /s/ Xxxxxx Xxxxxxx
Its: President
XXXXXXX X. XXXXXX, a Utah resident
/s/ Xxxxxxx X. Xxxxxx
RIVERVIEW FINANCIAL CORP., a California corporation
By: /s/ Xxxxxxx X. Xxxxxx
Its: President
A-1
EXHIBIT A
AMENDED PARK CITY GROUP EXHIBITS
AMENDED PARK CITY GROUP EXHIBITS
PARK CITY GROUP'S DECLARANTS' EXHIBITS - AMENDMENT NO. 1
The following Exhibits are being delivered by Park City Group's Declarants
pursuant to the Reorganization Agreement, dated May 31, 2001, between Xxxxxxx X.
Xxxxxx, a Utah resident, Riverview Financial Corp., a California corporation,
and AmeriNet Xxxxx.xxx, a Delaware corporation (the "Reorganization Agreement").
Any information disclosed in one Exhibit shall be deemed to be disclosed in
all Exhibits to which such information is applicable. References to Articles,
Sections, Paragraphs, and Exhibits shall mean the Articles, Sections, Paragraphs
and Exhibits of the Reorganization Agreement and/or these Exhibits. These
Exhibits are incorporated by reference into and shall be deemed a part of the
Reorganization Agreement.
No reference in these Exhibits to any agreement or documents shall be
construed as an admission or indication to any other party other than AmeriNet
Xxxxx.xxx that such agreement or document is enforceable or currently in effect
under such agreement or document. No disclosure in these Exhibits relating to
any possible breach or violation of any agreement, law, or regulation shall be
construed as an admission or indication to any party other than AmeriNet
Xxxxx.xxx that any such breach or violation exists or has actually occurred.
Capitalized terms not otherwise defined in these Exhibits shall have those
meanings attributed to them in the Reorganization Agreement.
EXHIBIT 2.1.C
PARK CITY GROUP'S PARTICIPANTS' DATA
------------------------------------- -------------------------- ------------------ -------------------------
Shareholder Park City Group Shares % AmeriNet Shares
------------------------------------- -------------------------- ------------------ -------------------------
------------------------------------- -------------------------- ------------------ -------------------------
Xxxxxx, Xxxxxxx X. 3,750,000 14.49% 16,083,900
------------------------------------- -------------------------- ------------------ -------------------------
------------------------------------- -------------------------- ------------------ -------------------------
Riverview Financial Corp. 20,500,000 79.21% 87,923,100
------------------------------------- -------------------------- ------------------ -------------------------
------------------------------------- -------------------------- ------------------ -------------------------
Xxxxxx, Xxx 31,250 .12% 133,200
------------------------------------- -------------------------- ------------------ -------------------------
------------------------------------- -------------------------- ------------------ -------------------------
Xxxxx, Xxxxxxx and Xxxx 7,844 .03% 33,300
------------------------------------- -------------------------- ------------------ -------------------------
------------------------------------- -------------------------- ------------------ -------------------------
Xxxxxx, Xxxx 20,708 .08% 88,800
------------------------------------- -------------------------- ------------------ -------------------------
------------------------------------- -------------------------- ------------------ -------------------------
Xxxxx, Xxxx 750,000 2.90% 3,219,000
------------------------------------- -------------------------- ------------------ -------------------------
------------------------------------- -------------------------- ------------------ -------------------------
Xxxxxx, Xxxxx 500,000 1.93% 2,142,300
------------------------------------- -------------------------- ------------------ -------------------------
------------------------------------- -------------------------- ------------------ -------------------------
Reserve 320,334 1.24% 1,376,400
------------------------------------- -------------------------- ------------------ -------------------------
------------------------------------- -------------------------- ------------------ -------------------------
25,880,136 100% 111,000,000
------------------------------------- -------------------------- ------------------ -------------------------
EXHIBIT 3.1.B.2
PARK CITY GROUP CAPITALIZATION
1. Outstanding Park City Group Common Stock and Shareholders
------------------------------------------------------- ---------------------
Shareholder Shares
------------------------------------------------------- ---------------------
Xxxx, Xxxxxxx 479
Baker, Wade, H. 6,562
Xxxxxxx, Xxxxxxx and Xxxxxx 4,583
Xxxxxxxx, Xxxx 4,340
Xxxxxx, Xxx 31,250
Xxxxxxx, Xxxxx X. 903
Xxxxx, Xxxxxx Miles 3,138
Fields Children's Trust (Xxxxx Xxxxxx, Trustee) 250,000
Xxxxxx, Xxxxxxx X. 3,750,000
Fine, Xxxxx 875
Xxxxx, Xxxx 20,708
Xxxx, Xxxxxx 1,156
Xxxxxx, Xxxxx 500,000
Xxxxxxx, Xxxx and Xxxxx 9,722
Xxxxx, Xxxxxxx and Xxxx 7,844
Xxxxx, Xxxxx and Xxxxx 847
Xxxx, Xxxxxxx and Jeninne 12,633
Xxxxx, Xxxx 750,000
Riverview Financial Corp. 20,500,000
Xxxxxxx, Xxx 2,570
Xxxxxx, Xxxxx and Xxxxxxxx 1,652
Xxxxxx, Xxxxxxxx Xxx 923
Xxx, Xxxxxx 14,161
Weeks, Xxxxxx X. 1,846
Xxxxx, Xxxxxxx X. 1,652
Young, Xxxxx Xxxxxxx 2,292
Total 25,880,136
2. Registration Rights. One current shareholder, Xxxxx Xxxxxx, has piggy-back
registration rights with respect to one-third of his shares of Park City
Group. It is understood that such rights will be assumed by AmeriNet in
connection with the Reorganization Agreement to which these Exhibits are a
part.
3. Series A Convertible Preferred Stock. Pursuant to a Certificate of
Designation of Preferences of Series A Convertible Preferred Stock of Park
City Group, Inc., Park City Group has designated , but has not yet issued,
Series A Convertible Preferred Stock.
EXHIBIT 3.1.B.4
OBLIGATION TO ISSUE OR RESERVE STOCK
1. Outstanding Options to Purchase Park City Group Common Stock
Park City Group has established two stock option plans: (1) 1993 Equity
Incentive Plan, established January 29, 1993, as amended, and (2) 1993 Directors
Stock Option Plan, established December 28, 1993, as amended. A total of
4,800,000 shares are reserved under the 1993 Equity Incentive Plan. A total of
300,000 shares are reserved under the 1993 Directors Stock Option Plan. Most
outstanding options have been granted pursuant to one of these plans. Park City
Group also adopted a bonus plan in 1998, which provided for issuance of options
to certain employees dependent upon achievement of certain revenue and net
income levels. Because these thresholds were not achieved, these option grants
were cancelled.
All options expire ten years following the date of grant. In addition, all
options expire 90 days following the termination of the option holder's
employment with Park City Group. Several vesting schedules have been used by
Park City Group in granting options pursuant to its option plans:
A. Provides for a six-year vesting schedule, with 16.667% vesting one
year from the date of grant and 1.389% vesting each month thereafter.
B. Provides for a four-year vesting schedule, with 25% vesting one year
from the date of grant and 25% vesting each year thereafter.
C. Provides for a four-year vesting schedule, with 40% vesting one year
from the date of grant and 1.667% vesting each month thereafter.
AmeriNet has been provided copies of the 1993 Equity Incentive Plan, as
amended, and 1993 Directors Stock Option Plan, as amended, as well as the 1998
Bonus/Option Plan. AmeriNet has also been provided sample stock option
agreements. The table below provides information related to the options to
purchase Park City Group's Common Stock outstanding as of May 30, 2001.
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Name Original Reissuance Vesting Shares Exercise Vested
Grant Date Date Schedule Price
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Xxxxxxxxx, Xxxxx 9/14/95 1/19/96 B 3,500 $1.00 3,500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
1/19/96 1/19/96 B 3,000 $1.00 3,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
6/14/96 B 8,500 $1.00 8,500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
2/17/97 B 4,500 $1.00 4,500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
1/20/98 B 5,000 $1.00 3,750
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Total for Option Holder 24,500 23,250
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Xxxxx, Xxxxxxx 2/20/95 1/19/96 B 1,000 $1.00 1,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
9/14/95 1/19/96 B 1,000 $1.00 1,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
1/19/96 1/19/96 B 1,000 $1.00 1,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
6/14/96 B 7,000 $1.00 7,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
2/17/97 B 1,000 $1.00 1,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
1/20/98 B 1,500 $1.00 1,125
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Total for Option Holder 12,500 12,125
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Doll, Xxxxxxx X. 9/14/95 1/19/96 B 10,000 $1.00 10,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
1/19/96 1/19/96 B 10,000 $1.00 10,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
6/14/96 B 30,000 $1.00 30,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
2/17/97 B 7,500 $1.00 7,500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Total for Option Holder 57,500 57,500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Doll, Xxxx X. 9/14/95 1/19/96 B 10,000 $1.00 10,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
1/19/96 1/19/96 B 3,000 $1.00 3,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
6/14/96 B 20,000 $1.00 20,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
2/17/97 B 12,500 $1.00 12,500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Total for Option Holder 45,000 45,500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Xxx, Xxxxxxx 2/20/95 1/19/96 B 1,500 $1.00 1,500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
9/14/95 1/19/96 B 3,500 $1.00 3,500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
1/19/96 1/19/96 B 1,000 $1.00 1,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
6/14/96 B 3,000 $1.00 3,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
2/17/97 B 2,500 $1.00 2,500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
1/20/98 B 2,875 $1.00 2,156
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Total for Option Holder 14,375 13,656
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Xxxxx, Xxxxxxx X. 2/20/95 1/19/96 B 1,000 $1.00 1,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
9/14/95 1/19/96 B 500 $1.00 500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
1/19/96 1/19/06 B 2,000 $1.00 2,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
6/14/96 B 9,500 $1.00 9,500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
2/17/97 B 3,000 $1.00 3,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
1/20/98 B 3,000 $1.00 2,250
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Total for Option Holder 19,000 18,250
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Ganasky, Xxxx 1/20/98 B 3,000 $1.00 1,500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
1/20/98 B 3,750 $1.00 2,813
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Total for Option Holder 6,750 4,313
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Greenland, Xxxxxx 2/17/97 B 1,000 $1.00 1,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
1/20/98 B 1,500 $1.00 1,125
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Total for Option Holder 2,500 2,125
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Xxxxxxxx, Xxxxxxxx X. 7/10/92 B 125,000 $0.40 125,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Total for Option Holder 125,000 125,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Jinaraj, Liji 11/13/98 B 1,000 $1.00 500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Total for Option Holder 1,000 500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Kalautt, Xxxx 1/20/98 B 3,000 $1.00 2,250
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
1/20/98 B 3,750 $1.00 2,813
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Total for Option Holder 6,750 5,063
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Xxxxxx, Xxxxxx 1/20/98 B 5,000 $1.00 3,750
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
1/20/98 B 5,000 $1.00 3,750
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Total for Option Holder 10,000 7,500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Xxxxxxxx, Xxxxxxxx 1/29/93 1/19/96 A 750 $0.04 750
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
10/25/93 1/19/96 B 1,000 $1.00 1,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
2/20/95 1/19/96 B 2,000 $1.00 2,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
9/14/95 1/19/96 B 1,500 $1.00 1,500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
1/19/96 1/19/96 A 3,000 $1.00 3,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
6/14/96 B 8,500 $1.00 8,500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
2/17/97 B 3,200 $1.00 3,200
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
1/20/98 B 4,000 $1.00 3,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Total for Option Holder 23,950 22,950
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Xxxxxxx, Xxxxx X. 1/19/96 1/19/96 B 500 $1.00 500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
6/14/96 B 10,000 $1.00 10,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
2/17/97 B 2,500 $1.00 2,500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
1/20/98 B 1,000 $1.00 750
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Total for Option Holder 14,000 13,750
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Xxxxxx, Xxxx Xxx 2/20/95 1/19/96 B 500 $1.00 500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
9/14/95 1/19/96 B 1,000 $1.00 1,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
1/19/96 1/19/96 B 1,000 $1.00 1,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
6/14/96 B 12,000 $1.00 12,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
2/17/97 B 2,500 $1.00 2,500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
1/20/98 B 2,500 $1.00 1,875
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Total for Option Holder 19,500 18,875
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Xxxxxxxxx, Xxx 9/14/95 1/19/96 B 3,500 $1.00 3,500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
1/19/96 1/19/96 B 2,000 $1.00 2,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
6/14/96 B 2,000 $1.00 2,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
2/17/97 B 5,500 $1.00 5,500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
1/20/98 B 5,000 $1.00 3,750
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Total for Option Holder 18,000 16,750
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Xxxxxx, Xxx 1/20/98 B 1,000 $1.00 750
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Total for Option Holder 1,000 750
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Xxxxx, Xxxxx 2/20/95 1/19/96 B 2,000 $1.00 2,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
9/14/95 1/19/96 B 3,500 $1.00 3,500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
1/19/96 1/19/96 B 5,000 $1.00 5,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
6/14/96 B 10,000 $1.00 10,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
2/17/97 B 2,500 $1.00 2,500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
1/20/98 B 1,000 $1.00 750
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Total for Option Holder 24,000 23,750
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Xxxxxxx, Xxxx 2/20/95 1/19/96 B 2,000 $1.00 2,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
9/14/95 1/19/96 B 2,500 $1.00 2,500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
1/19/96 1/19/96 B 5,000 $1.00 5,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
6/14/96 B 2,500 $1.00 2,500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
2/17/97 B 1,500 $1.00 1,500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
1/20/98 B 4,000 $1.00 3,000
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Total for Option Holder 17,500 16,500
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
Totals 443,325 428,107
------------------------------------ --------------- ------------- ------------ ---------- ----------- -----------
2. Stock Pledge and Security Agreement Pursuant to a Stock Pledge and Security
Agreement between Xxxxxx Capital, LLC and Riverview Financial Corp., dated
effective January 1, 2001, and acknowledged and joindered by Park City
Group, Park City Group may be required, under certain circumstances, to
deliver to Xxxxxx Capital, LLC stock certificates representing shares of
stock of Park City Group in addition to those already delivered by
Riverview to Xxxxxx Capital pursuant to the Pledge Agreement. A copy of
this agreement has been provided to AmeriNet.
3. Obligation to Issue Stock to Wm. Xxxxxxx. Xxxxxxx Xxxxxxx, an employee of
Fresh Market Manager, LLC, has indicated that he may be entitled to certain
interests in Fresh Market Manager in connection with that certain
Employment Agreement between Xx. Xxxxxxx and Fresh Market Manager, dated as
of July 1, 1999 (a copy of which has been provided to AmeriNet). Although
Park City Group disagrees that Xx. Xxxxxxx is entitled to any interests in
Fresh Market Manager, Park City Group may issue shares of its common stock
to Xx. Xxxxxxx in exchange for any interests Xx. Xxxxxxx may have in Fresh
Market Manager.
4. Obligation to Issue Preferred Stock upon Conversion of Indebtedness to
Riverview Financial Corp. See Exhibit 3.1.D(5), (7) and (8).
5. Convertible Series A Preferred Stock. Pursuant to a Certificate of
Designation of Preferences of Series A Convertible Preferred Stock of Park
City Group, Inc., Park City Group is obligated to reserve a certain number
of shares of Series A Preferred Stock, as well as a sufficient number of
shares of Park City Group Common Stock issuable upon conversion of the
Series A Convertible Preferred Stock. Pursuant to the Certificate of
Designation, Park City Group is obligated to convert outstanding shares of
Series A Convertible Preferred Stock into common stock of Park City Group,
at the option of the holders of such Series A Convertible Preferred Stock.
EXHIBIT 3.1.D
ACCEPTABLE LIABILITIES AND PERMITTED ENCUMBRANCES
1. Services Owed
------------------------------------------------------- ---------------------
CUSTOMER AMOUNT
------------------------------------------------------- ---------------------
3COM $250,000.00
AHOLD $18,863.48
BATH & BODY WORKS $51,866.38
BIG DOG SPORTS WEAR $11,285.31
BISCUITVILLE $8,532.61
BOOTS $124,241.25
XXXXX ENTERTAINMENT $55,533.33
CRATE & BARREL (EURO-MARKET) $583.33
FOOT ACTION USA $4,684.25
HOLIDAY COMPANY $300.00
HOME DEPOT $27,837.83
XXXXXX & XXXXX $8,435.00
XXXXXX'X DISCOUNT AUTO $10,565.63
PACIFIC SUNWEAR $12,749.82
PEACOCK $50,967.15
PIGGLY WIGGLY $26,661.51
XXXXXX INC. $70,698.58
UNIVERSAL STUDIOS $5,195.31
VICTORIA SECRET $5,236.32
WAWA $103,349.33
XXXXXXX SONOMA $6,325.24
TOTAL $853,911.66
-----------
2. Accounts Payable
------------------------------------------------------- ----------------------
VENDOR AMOUNT
------------------------------------------------------- ----------------------
AFCO $8,101.92
AMERICAN EXPRESS $37,660.98
XXXXXXXX LUMBER $23.94
AT&T METROCALL $21.29
AVATAR MOVING SYSTEMS $335.50
XXXXX XXX $519.21
XXXXX XXXXX & COMP. $26,404.82
UNICYN FUNDING GROUP $317.54
DFS ACCEPTANCE $125.45
HELLO DIRECT $361.98
FENWICK & WEST $3,035.62
FEDERAL EXPRESS $535.84
FIRST EQUIPMENT COMP. $554.48
XXXXX XXXXXX $3,011.65
FLUID TECHNOLOGY INC. $79.69
FORBES MAGAZINE $119.89
GREAT AMERICAN LEASING $186.67
XXXXXXX XXXXXX & XXXXX $8,971.67
JONES, WALDO, XXXXXXXX $55.50
MAXIM GROUP $4,000.00
THE MAIL MUCKERS $98.44
XXXXXX & XXXXXXX $5,538.04
QUESTAR $148.36
NEWSPAPER AGENCY CORP. $478.80
NETWORKWISE, INC. $135.00
PARK RECORD $32.00
PLATINUM SOFTWARE $748.07
QUEST SOFTWARE $175.00
XXXXX & XXXXXX $2,185.10
SPAN SYSTEMS $35,200.00
SUMMIT SELF-STORAGE $440.00
SWIRE COCA-COLA, USA $134.32
TEL AMERICA 1,955.70
QWEST $3,797.41
PARK CITY MAIN STREET MALL $11,717.58
WAXIE SANITARY SUPPLY $121.08
XXXX XXXXX $200.00
TOTAL $157,528.54
------------
3. $150,000 Bank One Grid Promissory Note, issued by Park City Group November
17, 2000, to be repaid at an annual interest rate of 1% above the Prime
Rate, as announced by Bank One. Interest shall be paid monthly, with all
outstanding principal and accrued interest due and payable on November 17,
2001. This Note is secured by all of Park City Group's accounts with Bank
One.
4. $2,750,000 Xxxxxx Capital, L.L.C. Promissory Note, issued by Park City
Group April 5, 2001 and effective January 1, 2001 (in conjunction with the
Master Agreement described on Exhibit 3.1.F), to be repaid at an annual
interest rate of 10% per annum. Interest is payable monthly. $1 million in
principal is due December 20, 2001; $500,000 in principal is due June 20,
2002; the outstanding balance of principal and accrued interest is due
December 20, 2002.
5. $1,110,713.88 Riverview Financial Corp. Promissory Note, issued by Park
City Group on April 5, 2001 in favor of Riverview Financial Corp., to be
repaid at an annual interest rate of 10%. Principal and accrued interest
are due and payable in full on December 31, 2002. Riverview Financial Corp.
has the right to convert this note into Park City Group preferred stock at
any time.
6. $250,000 Bank One Promissory Note, representing a revolving line of credit,
originally issued by Fresh Market Manager, LLC, a subsidiary of Park City
Group, in favor of Bank One, Utah, N.A., on April 10, 2001, to be repaid at
a variable interest rate, with outstanding principal and accrued interest
due and payable on March 10, 2002. Interest is payable monthly. This
obligation, originally guaranteed by Park City Group, has been assumed by
Park City Group on behalf of Fresh Market Manager.
7. $1,675,000 Riverview Financial Corp. Promissory Note, issued by Park City
Group on January 1, 2000 in favor of Riverview Financial Corp., to be
repaid at an annual interest rate of 8%. Principal and accrued interest are
due and payable in full on December 31, 2002. Riverview Financial Corp. has
the right to convert this note into Park City Group preferred stock at any
time.
8. $475,000 Riverview Financial Corp. Promissory Note, issued by Park City
Group on January 1, 2000 in favor of Riverview Financial Corp., to be
repaid at an annual interest rate of 8%. Principal and accrued interest are
due and payable in full on December 31, 2002. Riverview Financial Corp. has
the right to convert this note into Park City Group preferred stock at any
time.
9. $250,000 3COM Note, issued by Park City Group on or around May 18, 1998,
pursuant to which note Park City Group is obligated to provide to 3COM
Corporation certain services valued at approximately $250,000 in exchange
for services provided to Park City Group by 3COM, pursuant to a Partnering
Agreement between Park City Group and 3COM, dated May 18, 1998. Because
3COM has failed to satisfy its obligations to Park City Group under the
Partnering Agreement, Park City Group does not believe that it is, or will
become, obligated to provide these services or repay the note; however,
this position has not been confirmed in writing.
10. UCC Liens
---------------- ------------------ --------------- --------------------------- ------------------------ -----------------------
RECORD NUMBER EXPIRATION DATE FILING DATE SECURED PARTY COLLATERAL CURRENT STATUS
---------------- ------------------ --------------- --------------------------- ------------------------ -----------------------
00674402 03/27/2005 03/27/2000 Bank One Commercial Loan All Securities, Obligation Outstanding
Commodity Contracts,
Financial Assets
---------------- ------------------ --------------- --------------------------- ------------------------ -----------------------
95461979 11/22/2005 11/22/1995 Silicon Valley Bank All Goods, Equipment, Obligation Assigned
Inventory and C/R to Riverview
Financial Corp.
---------------- ------------------ --------------- --------------------------- ------------------------ -----------------------
96512594 03/20/2001 03/20/1996 AT&T Capital Leasing Equipment/Lease Obligation Satisfied
#00522104
---------------- ------------------ --------------- --------------------------- ------------------------ -----------------------
96531651 08/13/2001 08/13/1996 Sanwa Leasing Corporation 5 Dim Pentium Computers Obligation Satisfied
---------------- ------------------ --------------- --------------------------- ------------------------ -----------------------
97554728 02/18/2002 02/18/1997 Leasetec Corporation Electronic Data Obligation Satisfied
Processing Equipment
---------------- ------------------ --------------- --------------------------- ------------------------ -----------------------
97555594 02/24/2002 02/24/1997 First Equipment Equipment Listed Obligation Satisfied
Company/Trans-america
Business Credit
---------------- ------------------ --------------- --------------------------- ------------------------ -----------------------
11. See Exhibit 3.1.M, Note 11, "Commitments and Contingencies."
12. See Exhibit 3.1.B.4(2), "Stock Pledge and Security Agreement."
13. See Exhibit 3.1.E, "Tax Obligations and Liens."
3.1.E
TAX OBLIGATIONS AND LIENS
1. Unpaid Federal, State, Local and Foreign Taxes
a. California Corporate Franchise Tax. Riverview Financial Corp., a
significant shareholder of Park City Group, is currently in the
process of paying its State of California annual franchise taxes
outstanding for 1999 for Riverview Financial Corp., Park City Group
and other subsidiaries of Riverview which are qualified to do business
in California.
b. Outstanding Federal Tax Obligations. For estimated federal income tax
obligations owed by Park City Group for 1999 and 2000, see Exhibit
3.1.M, Note 2, "Income Taxes." Park City Group has not yet filed 2000
federal income tax returns. Park City Group may file amended federal
income tax returns for 1999.
2. Consolidated Tax Returns, State and Federal
Park City Group files a consolidated federal tax return with Riverview
Financial Corp. and the following subsidiaries of Riverview: MF
Holdings, Inc., LPB Holdings, Inc., La Petite Boulangerie, Inc.,
Fields Aviation, Inc., Fields Petroleum, Inc., and FSG Holdings, Inc.
In addition, Park City Group filed consolidated income tax returns in
the following states for 1999 with Riverview Financial Corp., MF
Holdings, Inc., LPB Holdings, Inc., La Petite Boulgerie, Inc., Fields
Aviation, Inc., Fields Petroleum, Inc. and FSG Holdings, Inc.:
Arizona, California, Florida, Georgia, Illinois, Kentucky,
Massachusetts, Michigan, Minnesota, Missouri, New Jersey, New York,
North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina,
Tennessee, Texas, Utah, Virginia, and Wisconsin.
In 1998, Park City Group filed consolidated state income tax returns
in the following states with the same entities listed in the previous
sentence: Arizona, California, Florida, Georgia, Illinois,
Massachusetts, Michigan, Minnesota, Missouri, New Jersey, New York,
North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Texas,
Utah, Virginia, and Wisconsin.
3. Tax Indemnity, Sharing or Allocation Agreements
Tax Allocation and Indemnification Agreement. Park City Group is a
party to a Tax Allocation and Indemnification Agreement, dated March
5, 1993, originally by and between Riverview Financial Corporation,
Xxx. Xxxxxx Inc. and MF Holdings, Inc., a copy of which has been
provided to AmeriNet.
4. Tax-Related Security Interests
None
EXHIBIT 3.1.F
PARK CITY GROUP SUBSIDIARIES, AFFILIATES
AND INTERESTS IN OTHER ENTITIES
1. Fresh Market Manager. Fresh Market Manager, LLC, a Utah limited liability
company, is a wholly-owned subsidiary of Park City Group, subject to the
potential interest of Will Xxxxxxx in Fresh Market Manager, as described in
Exhibit 3.1.B.4(3).
a. Acquisition of Xxxxxx Capital's Membership Interests in Fresh Market
Manager, LLC.
Master Agreement; Assignment and Assumption of Membership Interests.
Pursuant to a Master Agreement between Xxxxxx Capital, LLC, Fresh
Market Manager, LLC, Riverview Financial Corp., Park City Group, and
Xxxxxxx X. Xxxxxx, dated effective January 1, 2001 (the "Master
Agreement," a copy of which has been provided to AmeriNet), as well as
an Assignment and Assumption of Membership Interest between Xxxxxx
Capital, LLC, Fresh Market Manager, LLC, Park City Group and Xxxxxxx
X. Xxxxxx, dated effective January 1, 2000 (the "Xxxxxx Assignment," a
copy of which has been provided to AmeriNet), Park City Group acquired
all of Xxxxxx Capital's 50% interest in Fresh Market Manager, LLC.
The Master Agreement includes certain business covenants and
obligations of Park City Group and Fresh Market Manager, such as
covenants related to the operation of the respective companies'
business, executive compensation, related party transactions, stock
dividends and distributions, liens and indebtedness, as well as other
covenants. Pursuant to the Xxxxxx Assignment, Park City Group and
Fresh Market Manager are subject to certain business covenants and
obligations, similar to those included in the Master Agreement.
Xxxxxx Capital Note. Park City Group acquired Xxxxxx Capital's 50%
interest in Fresh Market Manager, LLC in exchange for $1,110,713.88 in
cash loaned to Park City Group by Riverview Financial Corp. and
transferred to Xxxxxx Capital (see Exhibit 3.1.D (5)) and a Secured
Promissory Note issued by Park City Group to Xxxxxx Capital in the
principal amount of $2,750,000, (See Exhibit 3.1.D (4).) (The "Xxxxxx
Capital Note"). As security for the Xxxxxx Capital Note, Park City
Group has pledged all of the membership interests in Fresh Market
Manager, LLC to Xxxxxx Capital, pursuant to a Membership Interest
Pledge and Security Agreement between Xxxxxx Capital and Park City
Group and dated effective January 1, 2001, a copy of which has been
provided to AmeriNet. Pursuant to the Membership Interest Pledge and
Security Agreement, Park City Group and Fresh Market Manager are
subject to certain business covenants and obligations, similar to
those included in the Master Agreement.
Stock Pledge and Security Agreement. As additional security for the
Xxxxxx Capital Note, Riverview Financial Corp. pledged certain of its
shares of Park City Group to Xxxxxx Capital, LLC pursuant to a Stock
Pledge and Security Agreement (the "Stock Pledge Agreement") between
Xxxxxx Capital, LLC and Riverview Financial Corp. to which agreement
Park City Group executed a Joinder Acknowledgement and Agreement, also
dated effective January 1, 2001, copies of which agreements have been
provided AmeriNet.
Pursuant to a Stock Pledge Agreement, Park City Group may be required,
under certain circumstances, to deliver to Xxxxxx Capital, LLC stock
certificates representing shares of stock of Park City Group in
addition to those already delivered by Riverview to Xxxxxx Capital
pursuant to the Pledge Agreement. In addition, pursuant to the Stock
Pledge Agreement, Riverview and Park City Group are subject to certain
business covenants and obligations, similar to those included in the
Master Agreement.
Guaranty. As additional security for the Xxxxxx Capital Note, Fresh
Market Manager, Riverview, Xxxxxxx X. Xxxxxx and Xxxxxxx X. Xxxxxxx
(each, a "Guarantor," and collectively the "Guarantors") entered a
Guaranty Agreement, dated as of January 1, 2001 (the "Guaranty"),
pursuant to which the Guarantors, jointly and severally, guaranteed
the satisfaction of all Park City Group's obligations under the Xxxxxx
Capital Note. Pursuant to the Guaranty, any debt or obligation owed by
Park City Group to a Guarantor is subordinated to the obligations of
Park City Group to Xxxxxx Capital under the Xxxxxx Capital Note, with
the exception of a working capital revolver for ordinary business
purposes of up to $1,000,000 provided Park City Group by Riverview or
Xx. Xxxxxx, as long as no event of default under the Xxxxxx Capital
Note exists. Under the Guaranty, the Guarantors are subject to certain
business covenants and obligations similar to those included in the
Master Agreement. The Guaranty is secured by much of the same assets
which collateralize the Xxxxxx Capital Note and other obligations of
Park City Group to Xxxxxx Capital. A copy of the Guaranty has been
provided to AmeriNet.
b. Acquisition of Xxxxxxx X. Field's Membership Interests in Fresh Market
Manager, LLC. Xxxxxxx X.
Xxxxxx transferred his entire 50% membership interest in Fresh Market
Manager to Riverview Financial Corp. pursuant to an Assignment and
Assumption of Membership Interest between Xxxxxxx X. Xxxxxx, Riverview
Financial Corp. and Park City Group, dated April 5, 2001. A copy of
this Agreement has been provided to AmeriNet.
Pursuant to an Assignment and Assumption of Membership Interest
between Riverview Financial Corp. and Park City Group, also dated
April 5, 2001 (a copy of which has been provided to AmeriNet), Park
City Group then acquired all of Riverview's 50% interest in Fresh
Market Manager, LLC, making Park City Group the sole member of Fresh
Market Manager.
2. Other Park City Group Affiliates. Park City Group is a subsidiary of
Riverview Financial Corp., a California corporation, and is affiliated with
several subsidiaries of Riverview, including LPB Holdings, Inc., MF
Holdings, Inc., La Petite Boulangerie, Inc., Fields Aviation, Inc., Fields
Petroleum, Inc. and FSG Holdings, Inc.
EXHIBIT 3.1.G.5
EMPLOYEE BENEFITS
1. Benefit Plans. The following benefits are provided to employees of Park
City Group who are regular full-time employees working thirty or more hours
per week and who have been employed by Park City Group for at least one
month:
------------------------------------------------ ----------------------
Benefit Provider
------------------------------------------------ ----------------------
Medical Insurance United Health Care*
Dental Insurance The Principal Financial Group
Voluntary Life Insurance UNUM
Life Insurance Prudential
Long Term Disability Insurance Prudential
401(k) Retirement Savings Plan The Principal Financial Group
* It is anticipated that in June 2001 Park City Group's medical insurance
provider will change to Blue Cross and Blue Shield of Utah.
EXHIBIT 3.1.H.2
MATERIAL CONTRACTS
1. Park City Group has executed agreements with the following customers, which
agreements are currently in effect and copies of which have been made
available to AmeriNet.
AHOLD
Bath & Body Works Big Dog Sports Wear Bi-Lo Chevron Products Company G & G Oil
Haggar Clothing Holiday Company Home Depot Limited, Inc.
Pacific Sunwear
Piggly Wiggly
The Right Start
Victoria Secret
WAWA
Xxxxxxx Sonoma
Xxxx-Xxxxx
2. Overhead Sharing and Referral Agreement. Park City Group is a party to an
Overhead Sharing and Referral Agreement with its subsidiary Fresh Market
Manager, LLC, dated May 7, 1999, a copy of which has been provided to
AmeriNet. See Exhibit 3.1.M, Note 9(a), and Exhibit 3.1.O(2).
3. Acquisition of Fresh Market Manager
See Exhibit 3.1.F and agreements described therein.
4. Employee Compensation and Benefit Plans
a. See Exhibit 3.1.G.5.
b. Xxxxxxx X. Xxxxxx Employment Agreement. Park City Group currently has
an employment agreement with its president and chief executive
officer, Xxxxxxx X. Xxxxxx, dated effective January 1, 2001. The term
of this agreement is five years, with automatic one-year renewals. Xx.
Xxxxxx' Employment Agreement is not terminable on thirty days' notice.
Xx. Xxxxxx' Employment Agreement provides for (1) an annual base
salary of $350,000, subject to annual cost of living increases of 5%;
(2) use of a company vehicle; (3) a term life insurance policy for at
least $10,000,000 with the beneficiary determined at his sole
discretion; and (4) employee benefits provided to Park City Group
employees generally, among other benefits. Pursuant to the agreement,
Xx. Xxxxxx is entitled to a bonus of 5% of the consolidated and/or
combined annual profits before income taxes, interest, depreciation
and amortization of Park City Group and its affiliates and
subsidiaries beginning the year ended December 31, 2001. Xx. Xxxxxx is
also entitled to an additional bonus equal to 5% of the consideration
paid for any business acquired by Park City Group during the term of
the Employment Agreement.
The agreement provides that the Company may terminate Xx. Xxxxxx'
employment only for cause. Xx. Xxxxxx may elect to terminate his
employment in the event of a change in control. If Xx. Xxxxxx'
employment is terminated following a change in control of Park City
Group, Xx. Xxxxxx will receive as severance the balance of his
compensation through the end of the then current term of the agreement
at the rate that would have been in effect in the fifth year of the
agreement as if it were the current rate of compensation. In addition,
he will receive the previously described annual 5% bonus equal to the
bonus for the immediately preceding year for the remaining term of the
agreement. If Xx. Xxxxxx terminates his employment for good cause
consisting of Park City Group's material breach of the Employment
Agreement, he will receive severance and bonus compensation as
previously described in the event of a change in control. During the
term of his employment as chairman of Park City Group, Xx. Xxxxxx will
be elected to the position of director, pursuant to this Agreement. A
copy of this Agreement has been provided to AmeriNet.
c. Xxxxxxx X. Xxxxxxx Employment Agreement. Fresh Market Manager, LLC, a
subsidiary of Park City Group, currently has an employment agreement
with its executive vice president and chief operating officer, Xxxxxxx
X. Xxxxxxx, dated effective July 1, 1999. The term of this agreement
is one year, with automatic one-year renewals. Xx. Xxxxxxx'x
employment agreement provides for an initial annual base salary of
$115,000. On a quarterly basis, Xx. Xxxxxxx is entitled to receive a
cash bonus equal to 1% of the revenues collected by Fresh Market
Manger and generated by certain licenses or similar fees. Xx. Xxxxxxx
is entitled to an annual cash bonus equal to 1% of Fresh Market
Manager's "recurring revenues" collected by Fresh Market Manager,
subject to certain adjustments. In addition, following each of the
first five full years that Xx. Xxxxxxx is an employee, he is entitled
to a 1% unvested interest in the ownership units of Fresh Market
Manager, which interests vest on the earlier of the fourth anniversary
of their issuance or the occurrence of certain events. These unvested
interests are subject to forfeiture upon termination of Xx. Xxxxxxx'x
employment, and are subject to various transfer restrictions,
including a right of first refusal in Fresh Market Manager. Xx.
Xxxxxxx is entitled to those employee benefits provided to employees
of Fresh Market Manger generally. Either Fresh Market Manager or Xx.
Xxxxxxx may terminate the employment agreement, with or without cause,
upon thirty days' notice.
d. Contingent Bonus for X. Xxxxxxxx. On March 27, 2001, Park City Group
agreed to pay to Xxxxxxx Xxxxxxxx, Secretary and Chief Financial
Officer of Park City Group, a bonus of $15,000 upon (1) successful
completion of Park City Group's 1998, 1999 and 2000 audits and (2)
consummation of the transaction contemplated by the Reorganization
Agreement.
e. Xxxxxxx X. Xxx Consulting Agreement. On March 28, 2001, Park City
Group entered a consulting agreement with Xx. Xxx, which agreement
will expire of its own terms on May 31, 2001, a copy of which
agreement has been provided to AmeriNet.
5. Personal Property Leases
a. First Equipment Company Lease. Pursuant to Master Lease Number E12379
between First Equipment Company Lease and Park City Group, dated
December 1, 1994, Park City Group leases equipment used by Park City
Group in its business operations. Monthly lease payments are
approximately $502. This lease will expire on February 1, 2003.
b. Dell Financial Services Lease. Pursuant to Lease No. 001758769-001
between Dell Financial Services and Park City Group, dated April 28,
1998, Park City Group leases certain computer hardware. Monthly lease
payments are approximately $115. This lease will expire on April 28,
2001.
c. National Lan Exchange Lease. Pursuant to a lease agreement between
Park City Group and National Lan Exchange/Commercial Capital
Corporation, Park City Group leases certain equipment and software.
Monthly lease payments are approximately $300. This lease will expire
on approximately November 20, 2001.
d. Great America Lease. Pursuant to a Lease Agreement dated December 1,
2000 between Park City Group and Great America Leasing Corporation,
Park City Group leases copy machines. Monthly lease payments are
approximately $165. This lease will expire on December 12, 2003.
Copiers For Less also provides service and maintenance for these
copiers, the cost of which is included in the Lease Agreement with
Great America Lease for the first year of the Lease Agreement.
6. Indemnification or Guarantee Agreements Out of Ordinary Course
a. Pursuant to the Master Agreement, (see Exhibit 3.1.F), Park City Group
has agreed to indemnify Xxxxxx Capital, LLC under certain
circumstances.
b. Pursuant to the First Amended and Restated Operating Agreement of
Fresh Market Manager, LLC, dated April 5, 2001, Fresh Market Manager
is obligated to indemnify the manager of Fresh Market Manager under
certain circumstances.
c. Park City Group is in the process of executing indemnification
agreements with most of its officers and directors.
d. Many licensing agreements to which Park City Group is a party (all of
which have been made available to counsel to AmeriNet) include
standard intellectual property indemnification provisions.
7. Agreements for Disposition or Acquisition of Assets Not in Ordinary Course,
or for Interest in Business Entity
See Exhibit 3.1.F.
8. Agreements Related to Borrowing of Money or Extension of Credit, including
Guaranties
a. See Exhibit 3.1.D(3)-(8) "Acceptable Liabilities and Permitted
Encumbrances."
b. See Exhibit 3.1.D(9) "UCC Liens."
9. Distribution, Joint Marketing or Development Agreements
See Exhibit 3.1.O(2).
10. Potential Default See Exhibit 3.1.M (Financial Statements, Note 4, "Note
Payable").
11. Other Material Agreements
a. Stock Option Plans and Agreements. See Exhibit 3.1.B.4(1),
"Outstanding Options to Purchase Park City Group Common Stock."
b. Note Conversion Agreement, dated June 8, 2001, between Park City Group
and Riverview Financial Corp.
EXHIBIT 3.1.I.2
EXISTING INSURANCE POLICIES
1. Insurance Policies. The following table sets forth all Park City Group
insurance policies in effect.
--------------------------------- -------------------------------------- ---------------- -------------- -------------
Insurance Type Carrier Policy # Premium Term
--------------------------------- -------------------------------------- ---------------- -------------- -------------
Homeowners Pacific Indemnity 11525316-02 $1,854 5-14-00/01
Automobile Federal Insurance Co. 11506206-03 $4,919 5-14-00/01
Excess Federal Insurance Co. 11506206-04 $876 5-14-00/01
Commercial Package Federal Insurance Co. 3531-99-25 $11,461 8-15-00/01
Automobile Federal Insurance Co. 7320-68-94 $473 8-15-00/01
Foreign Great Northern Ins. Co. 3535-62-85 $2,660 8-15-00/01
Workers Compensation W/C Fund of Utah 1926787 $3,408 8-15-00/01
Workers Compensation Legion Insurance Co. WC61213397 $403 8-15-00/01
Excess Liability Federal Insurance Co. 7972-18-15 $6,236 8-15-00/01
Directors & Officers Liability National Union 000-00-00 $20,000 11-1-00/01
Fiduciary Liability National Union 000-00-00 $1,500 11-1-00/01
2. Claims made under any Park City Group insurance policy
None
EXHIBIT 3.1.J
INTELLECTUAL PROPERTY
The following describe Intellectual Property either owned or controlled by Park
City Group:
1. U.S. Patents held of record by Park City Group
-------------------------------------------------- ------------------- -----------------------------------------------
Patent Title U.S. Patent No. Status and Remarks
-------------------------------------------------- ------------------- -----------------------------------------------
System and method for creating, processing, and 5,410,646 Issued 25 April 1995; Park City Group, Inc.
storing forms electronically listed as Assignee
-------------------------------------------------- ------------------- -----------------------------------------------
Agent-based multithreading application 5,421,013 Issued 30 May 1995; Park City Group, Inc.
programming interface listed as Assignee
-------------------------------------------------- ------------------- -----------------------------------------------
Business demand projection system and method 5,459,656 Issued 17 Oct. 1995; Park City Group, Inc.
listed as Assignee
-------------------------------------------------- ------------------- -----------------------------------------------
Data management using nested records and code 5,634,123 Issued 27 May 1997; Park City Group, Inc.
points listed as Assignee
-------------------------------------------------- ------------------- -----------------------------------------------
Automated post office based rule analysis of 6,073,142 Issued 6 June 2000; Park City Group listed as
e-mail messages, etc. Assignee
-------------------------------------------------- ------------------- -----------------------------------------------
System and Method for Estimating Business Demand 5,712,985 Continuation of Patent No. 5,459,656
Based on Business Influences
-------------------------------------------------- ------------------- -----------------------------------------------
2. U. S. Patents held of record by Xxx. Xxxxxx Software Group, Inc.
-------------------------------------------------- ------------------- -----------------------------------------------
Patent Title U.S. Patent No. Status and Remarks
-------------------------------------------------- ------------------- -----------------------------------------------
* Product demand system and method 5,299,115 Issued 29 March 1994; Xxx. Xxxxxx Software
Group Inc. listed as Assignee.
-------------------------------------------------- ------------------- -----------------------------------------------
3. U.S. Patents held of record by Xxx. Xxxxxx, Inc.
-------------------------------------------------- ------------------- -----------------------------------------------
Patent Title U.S. Patent No. Status and Remarks
-------------------------------------------------- ------------------- -----------------------------------------------
* System and Method for Making Staff Schedules, 5,111,391 Issued 5 May 1992, Xxx. Xxxxxx, Inc. listed
Etc. as Assignee.
-------------------------------------------------- ------------------- -----------------------------------------------
* Assigned by Xxx. Xxxxxx, Inc. to MFI Software Inc. (formerly Fields
Software Group, Inc.) pursuant to an Exchange Agreement, dated April 30,
1990. Assigned by MFI Software, Inc. to Park City Group pursuant to a
Master Agreement, dated January 1, 1994, between Xxx. Xxxxxx, Inc., MFI
Software, Inc. and Park City Group (the "Master Agreement"), and a Patent
Assignment executed by MFI Software, Inc. of even date therewith.
4. Pursuant to the Master Agreement, MFI Software assigned to Park City Group
a patent application entitled "Method of Operating Database Utility," (Case
No. 354). The current status of this patent is unverified.
5. U.S. Trademarks held of record by Park City Group
---------------------------------------- -------------------------------------- --------------------------------------
Xxxx U.S. Reg. No. or App. Serial No. Status and Remarks
---------------------------------------- -------------------------------------- --------------------------------------
ACTION GATEKEEPER Reg. No. 2,247,985 Registered.
---------------------------------------- -------------------------------------- --------------------------------------
ACTIONBOARD Reg. No. 2,030,761 Registered.
---------------------------------------- -------------------------------------- --------------------------------------
PARK CITY GROUP Reg. No. 2,012,174 Registered.
---------------------------------------- -------------------------------------- --------------------------------------
PARK CITY GROUP Reg. No. 1,996,245 Registered.
---------------------------------------- -------------------------------------- --------------------------------------
PAPER MANAGEMENT Reg. No. 1,952,025 Registered.
---------------------------------------- -------------------------------------- --------------------------------------
PAPERLESS MANAGEMENT Reg. No. 1,941,453 Registered.
---------------------------------------- -------------------------------------- --------------------------------------
6. U.S. Trademarks held of record by MFI Software, Inc.
---------------------------------------- -------------------------------------- --------------------------------------
Xxxx U.S. Reg. No. Status and Remarks
---------------------------------------- -------------------------------------- --------------------------------------
** ROI Reg. No. 1,550,023 registered 1 Aug. Registered and incontestable; Mrs.
1989 Fields Inc. appears to have been
original
Applicant;
TESS
record
indicates
later
change
of
owner
name
to
MFI
Software
Inc.
---------------------------------------- -------------------------------------- --------------------------------------
** FORMMAIL Reg. No. 1,550,022 registered 1 Aug. Registered and incontestable; Mrs.
1989 Fields Inc. appears to have been
original
Applicant;
TESS
record
indicates
later
change
of
owner
name
to
MFI
Software
Inc.
---------------------------------------- -------------------------------------- --------------------------------------
** Assigned by MFI Software, Inc. to Park City Group pursuant to the Master
Agreement, and a Trademark Assignment executed by MFI Software, Inc. of
even date therewith (the "Trademark Assignment").
7. Pursuant to the Master Agreement and the Trademark Assignment , MFI
Software, Inc. assigned to Park City Group the pending overseas trademark
applications set forth in the table below. The current status of these
applications is unverified.
--------------- ------------------------ -------------------------------------------- --------------------------------
Xxxx Country Application Date Application Number
--------------- ------------------------ -------------------------------------------- --------------------------------
ROI Greece 10-31-90 101,401
--------------- ------------------------ -------------------------------------------- --------------------------------
ROI Italy 09-18-90 23623-C/90
--------------- ------------------------ -------------------------------------------- --------------------------------
ROI Japan 09-28-90 109,647/1990
--------------- ------------------------ -------------------------------------------- --------------------------------
ROI Spain 09-07-90 1,587,404
--------------- ------------------------ -------------------------------------------- --------------------------------
ROI Sweden 09-05-90 90/08078
--------------- ------------------------ -------------------------------------------- --------------------------------
8. Pursuant to the Master Agreement and the Trademark Assignment, MFI
Software, Inc. assigned to Park City Group the overseas trademark
registrations set forth in the table below. The current status of these
trademarks is unverified.
--------------- ------------------------ -------------------------------------------- --------------------------------
Xxxx Country Registration Date Registration Number
--------------- ------------------------ -------------------------------------------- --------------------------------
ROI Austria 12-10-09 133,878
--------------- ------------------------ -------------------------------------------- --------------------------------
ROI Benelux 08-31-90 487,100
--------------- ------------------------ -------------------------------------------- --------------------------------
ROI Canada 03-15-91 381,510
--------------- ------------------------ -------------------------------------------- --------------------------------
ROI Denmark 02-28-92 01.007 1992
--------------- ------------------------ -------------------------------------------- --------------------------------
XXX Xxxxxx 00-00-00 1,510,977
--------------- ------------------------ -------------------------------------------- --------------------------------
ROI Germany 11-26-91 1,182,506
--------------- ------------------------ -------------------------------------------- --------------------------------
XXX Xxxxxx 00-00-00 405,816
--------------- ------------------------ -------------------------------------------- --------------------------------
ROI Switzerland 12-05-91 387178
--------------- ------------------------ -------------------------------------------- --------------------------------
ROI United Kingdom 12-19-88 B 1,371,198
--------------- ------------------------ -------------------------------------------- --------------------------------
9. U.S. Copyrights held of record by Park City Group, Inc.
----------------------- -------------------------------------------------------------------------- -------------------
Number Title Date Registered
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-817-835 PaperLess Management : installation guide, release 3.0 16 May 94
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-829-211 Messaging plus, release 3.0. 9 May 94
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-829-214 Flash viewer, release 3.0. 9 May 94
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-829-215 PaperLess Management technical reference guide, release 3.0. 9 May 94
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-829-216 FormMail, release 3.0. 9 May 94
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-829-217 PaperLess foundation, release 3.0. 9 May 94
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-829-264 Cash sheet & sales reporting, release 3.0. 9 May 94
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-829-328 PaperLess Management on-line manuals, release 3.0. 9 May 94
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-829-331 PaperLess Management network communications, release 3.0. 9 May 94
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-829-332 PaperLess Management skills appraisal, release 3.0. 9 May 94
----------------------- -------------------------------------------------------------------------- -------------------
10. U.S. Copyrights held of record by Fields Software Group, Inc.
----------------------- -------------------------------------------------------------------------- -------------------
Number Title Date Registered
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-243-267 Retail operations intelligence PC/flash report. 7 Feb. 92
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-243-268 Retail operations intelligence PC/computer aided instruction. 7 Feb. 92
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-249-381 ROI host reference manual 2.12 : v. 1-3. 18 Feb. 92
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-249-488*** Retail operations intelligence host/quality, service and cleanliness 7 Feb. 92
version 2.0.
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-249-489*** Retail operations intelligence PC/inventory, management & analysis 7 Feb. 92
version 2.0.
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-249-490*** Retail operations intelligence host/recurring expenses version 2.0. 7 Feb. 92
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-252-263*** Retail operations intelligence PC/utilities. 7 Feb. 92
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-252-264*** Retail operations intelligence PC/time collection. 7 Feb. 92
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-252-265*** Retail operations intelligence PC/interviewing. 7 Feb. 92
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-255-455*** Retail operations intelligence host/repair & maintenance. 7 Feb. 92
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-255-456 Retail operations intelligence PC/on line manuals. 7 Feb. 92
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-255-457 Retail operations intelligence PC/P & L user's model. 7 Feb. 92
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-255-458*** Retail operations intelligence host/inventory management & analysis. 7 Feb. 92
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-255-459*** Retail operations intelligence host/cash & sales reporting. 7 Feb. 92
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-255-460*** Retail operations intelligence host/lease abstract. 7 Feb. 92
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-255-461*** Retail operations intelligence PC/skill testing. 7 Feb. 92
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-255-462*** Retail operations intelligence PC/cash & sales reporting. 7 Feb. 92
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-255-463*** Retail operations intelligence PC/production planner. 7 Feb. 92
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-260-713*** Retail operations intelligence PC/labor scheduler, version 2.0. 7 Feb. 92
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-260-715 ROI PC reference manual, version 2.0. 14 Feb. 92
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-261-734 ROI host technical reference manual. 14 Feb. 92
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-263-552 ROI PC technical reference manual. 14 Feb. 92
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-267-720 ROI concepts training manual, version 2.0. 14 Feb. 92
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-281-929*** Retail operations intelligence PC/formmail/messaging. 7 Feb. 92
----------------------- -------------------------------------------------------------------------- -------------------
TX-3-335-622 Retail operations intelligence PC/sales forecasting. 7 Feb. 92
----------------------- -------------------------------------------------------------------------- -------------------
*** Assigned by MFI Software, Inc. (formerly Fields Software Group, Inc.) to
Park City Group pursuant to the Master Agreement, and a Copyright
Assignment executed by MFI Software, Inc. of even date therewith (the
"Copyright Assignment").
11. Pursuant to the Master Agreement and the Copyright Assignment, MFI
Software, Inc. also assigned to Park City Group the U.S. copyrights
described in the table below. The current status of these copyrights is
unverified.
----------------------- -------------------------------------------------------------------------- -------------------
Number Title Date Registered
----------------------- -------------------------------------------------------------------------- -------------------
TX 0-000-000 Retail Operations Intelligence 22 Nov. 88
----------------------- -------------------------------------------------------------------------- -------------------
TX 0-000-000 Retail Operations Intelligence PC/Messaging Version 1.0 26 Dec. 89
----------------------- -------------------------------------------------------------------------- -------------------
12. Liens and Encumbrances. Previously, Silicon Valley Bank acquired a security
interest in many of the Intellectual Property items owned or controlled by
Park City Group. However, the obligation underlying such security interests
has been assigned to Riverview Financial Corp. See Exhibit 3.1.D(10) "UCC
Liens."
EXHIBIT 3.1.J.7
CONFIDENTIALITY AGREEMENTS
INVENTION ASSIGNMENT AND PROPRIETARY INFORMATION AGREEMENT
In consideration of my employment or continuous employment by Park City
Group Inc. (the "Company"), I hereby represent and agree as follows:
1. I understand that the Company is engaged in a continuous program of
research, development, production and marketing in connection with its
business and that, as an essential part of my employment with the
Company, I am expected to make new contributions to and create inventions
of value for the Company.
2. I will promptly disclose, subject to the limitations of this paragraph,
in confidence to the Company all inventions, improvements, original works
of authorship, formulas, processes, computer programs, databases, trade
secrets, mechanical and electronic hardware, computer languages, user
interfaces, documentation, marketing and new product plans, production
processes, advertising, packaging, and marketing techniques, and
improvements to anything (hereinafter referred to as "Inventions"),
whether or not patentable or copyrightable or protectable as trade
secrets, that are made or conceived or first reduced to practice or
created by me, either alone or jointly with others, during the period of
my employment, whether or not in the course of my employment. With
respect to those Inventions not owned by the Company in accordance with
Paragraph 3 below, such disclosure, shall only be to the extent necessary
to satisfy with Company that no conflict with the business of the Company
exists or that there has not been a compromise of any Company trade
secret.
3. I agree that except with the written consent of the Company signed by an
officer of the Company, all Inventions that (a) are developed using
equipment, supplies, facilities or trade secrets of the Company, or (b)
result from work performed by me for the Company or (c) relate to the
business or the actual or anticipated research or development of the
Company, or (d) are not developed entirely on my own time, will be the
sole and exclusive property of the Company.
4. I agree to assist the Company in every proper way to obtain for the
Company and enforce patents, copyrights and other legal protection for
the Company's Inventions in any and all countries. I will execute any
documents that the Company may reasonably request for use in obtaining or
enforcing such patents, copyrights and other legal protection. My
obligations under this paragraph will continue beyond the termination of
my employment with the Company, provided that the Company will compensate
me at a rate agreed to, by me and the Company, after such termination,
for time actually spent by me at the Company's request on such
assistance.
5. I hereby irrevocably transfer and assign to the Company any and all
"Moral Rights" (as defined below) that I may have in or with respect to
any Invention. I also hereby forever waive and agree never to assert any
and all Moral Rights I may have in or with respect to any Invention, even
after termination of my work on behalf of the Company. "Moral Rights"
means any rights of paternity or integrity, any right to claim authorship
of any Invention, to object to any distortion, mutilation or other
modification of, or other derogatory action in relation to, any
Invention, whether or not such would be prejudicial to my honor or
reputation, and any similar right, existing under judicial or statutory
law of any country in the world, or under any treaty, regardless of
whether or not such right is denominated or generally referred to as a
"moral right".
6. I understand that my employment by the Company creates a relationship of
confidence and trust with respect to any information of a confidential or
secret nature that may be disclosed to me by the Company that relates to
the business, or products of the Company or to the business of any
parent, subsidiary, affiliate, customer or supplier of the Company
(hereinafter referred to as "Proprietary Information"). Such Proprietary
Information includes but is not limited to Inventions described in
Paragraph 3(a), (b), (c) or (d), marketing plans, product plans, business
strategies, financial information, forecasts, personnel information and
customer lists and any other nonpublic technical or business information
which I know or have reason to know the Company would like to treat as
confidential for any purpose, such as maintaining a competitive advantage
or avoiding undesirable publicity.
7. At all times, both during my employment and after its termination, I will
keep all such Proprietary Information in confidence and trust, and I will
not use or disclose any of such Proprietary Information without the
written consent of the Company except as may be necessary to perform my
duties as an employee of the Company. Upon termination of my employment
with the Company, I will promptly deliver to the Company, all documents
and materials of any nature pertaining to my work with the Company and I
will not take with me any documents or materials or copies thereof
containing any Proprietary Information.
8. I represent that my performance of all the terms of this Agreement and my
duties as an employee of the Company will not breach any invention
assignment or proprietary information agreement with any former employer
or other party. I represent that I will not bring with me to the Company
or use in the performance of my duties for the Company any documents or
materials of a former employer that are not generally available to the
public.
9. I agree, that except with the prior written consent of the Company, I
will not, during the period of my employment with the Company , directly
or indirectly engage in any business which is competitive with that of
the Company, its parent, or any of its subsidiary corporations, or accept
employment with or render services to a competitor as a director,
officer, agent, employee or consultant, or take any action inconsistent
with the fiduciary relationship of an employee of his or her employer.
10. I agree that for a period of two (2) years following the termination of
my employment with the Company for any reason, I will not, without
written consent of the Company and signed by an officer of the Company
for any reason directly or indirectly, by any means or device, for myself
or on behalf of or in conjunction with any individual, organization,
partnership or corporation that has expressed an interest, (including
participating in demonstrations or participating in pilot programs), in
the company's software products including ActionManager(TM) applications,
do any of the following:
(a) induce, entice, hire, or attempt to hire or employ any employee of
the Company; or
(b) compete with the Company in the business of computer software for
multi-unit management or solicit any potential software customers of
the Company to license or purchase similar software products; or
(c) engage in research, development, production, marketing or sale of any
computer software designed to manage multi-unit entities that would
compete with any ActionManager(TM) product.
11. I hereby authorize the Company to notify others, including but not
limited to customers of the Company and my future employers, of the terms
of this Agreement and my responsibilities hereunder.
12. I understand that in the event of a breach or threatened breach of this
Agreement by me the Company may suffer irreparable harm and will
therefore be entitled to injunctive relief to enforce this Agreement and
shall have the right to recover the Company's reasonable attorney's fees
and court costs expended in connection with any litigation instituted to
enforce this agreement. In the event it is determined that no such
irreparable harm existed, the Company will pay my fees and costs expended
in defending such an action. I expressly agree that any terms of my
covenants not to compete contained in this Agreement which might be held
unreasonable by a court of competent jurisdiction may be reformed or
modified by such court to make the restriction of such covenants
reasonable under the circumstances.
13. I understand that this Agreement does not constitute a contract of
employment or obligate the Company to employ me for any stated period of
time. I understand that my employment with the Company is at will and may
be terminated by the Company at any time and for any reason, with or
without cause.
14. This Agreement will be of no further force and effect if the Company
ceases to market ActionManager(TM) or other subsequently developed
products.
IN WITNESS WHEREOF the parties have entered into this Agreement as of the ___
day of ___________ , 19___.
Employee Park City Group, Inc.
-----------------------------------------------------------------------------
Date Date
-----------------------------------------------------------------------------
Signature Signature/Title
-----------------------------------------------------------------------------
Print Name Print Name
Address: ______________________________
------------------------------
------------------------------
INVENTION ASSIGNMENT AND PROPRIETARY INFORMATION AGREEMENT
FOR CONSULTANTS
In consideration of my being retained as a consultant (either as an
independent consultant or through sponsorship by an employment agency) by Park
City Group Inc. (the "Company"), I hereby represent and agree as follows:
1. I understand that the Company is engaged in a continuous program of
research, development, production and marketing in connection with its
business and that, as an essential part of my employment with the
Company, I am expected to make new contributions to and create inventions
of value for the Company.
2. I will promptly disclose, subject to the limitations of this paragraph,
in confidence to the Company all inventions, improvements, original works
of authorship, formulas, processes, computer programs, databases, trade
secrets, mechanical and electronic hardware, computer languages, user
interfaces, documentation, marketing and new product plans, production
processes, advertising, packaging, and marketing techniques, and
improvements to anything (hereinafter referred to as "Inventions"),
whether or not patentable or copyrightable or protectable as trade
secrets, that are made or conceived or first reduced to practice or
created by me, either alone or jointly with others, during the term of my
consultancy, whether or not in the course of my job duties. With respect
to those Inventions not owned by the Company in accordance with Paragraph
3 below, such disclosure shall only be to the extent necessary to satisfy
the Company that no conflict with the business of the Company exists or
that there has not been a compromise of any Company trade secret.
3. I agree that except with the written consent of the Company signed by an
officer of the Company, all Inventions that (a) are developed using
equipment, supplies, facilities or trade secrets of the Company, or (b)
result from work performed by me for the Company or (c) relate to the
business or the actual or anticipated research or development of the
Company, or (d) are not developed entirely on my own time, will be the
sole and exclusive property of the Company.
4. I agree to assist the Company in every proper way to obtain for the
Company and enforce patents, copyrights and other legal protection for
the Company's Inventions in any and all countries. I will execute any
documents that the Company may reasonably request for use in obtaining or
enforcing such patents, copyrights and other legal protection. My
obligations under this paragraph will continue beyond the termination of
my consultancy with the Company, provided that the Company will
compensate me at a rate agreed to, by me and the Company, after such
termination, for time actually spent by me at the Company's request on
such assistance.
5. I hereby irrevocably transfer and assign to the Company any and all
"Moral Rights" (as defined below) that I may have in or with respect to
any Invention. I also hereby forever waive and agree never to assert any
and all Moral Rights I may have in or with respect to any Invention, even
after termination of my work on behalf of the Company. "Moral Rights"
means any rights of paternity or integrity, any right to claim authorship
of any Invention, to object to any distortion, mutilation or other
modification of, or other derogatory action in relation to any Invention,
whether or not such would be prejudicial to my honor or reputation, and
any similar right, existing under judicial or statutory law of any
country in the world, or under any treaty, regardless of whether or not
such right is denominated or generally referred to as a "moral right".
6. I understand that my consultancy with the Company creates a relationship
of confidence and trust with respect to any information of a confidential
or secret nature that may be disclosed to me by the Company that relates
to the business, or products of the Company or to the business of any
parent, subsidiary, affiliate, customer or supplier of the Company
(hereinafter referred to as "Proprietary Information"). Such Proprietary
Information includes but is not limited to Inventions described in
Paragraph 3(a), (b), (c) or (d), marketing plans, product plans, business
strategies, financial information, forecasts, personnel information and
customer lists and any other nonpublic technical or business information
which I know or have reason to know the Company would like to treat as
confidential for any purpose, such as maintaining a competitive advantage
or avoiding undesirable publicity.
7. At all times, both during my consultancy and after its termination, I
will keep all such Proprietary Information in confidence and trust, and I
will not use or disclose any of such Proprietary Information without the
written consent of the Company except as may be necessary to perform my
duties as an consultant to the Company. Upon termination of my
consultancy with the Company, I will promptly deliver to the Company all
documents and materials of any nature pertaining to my work with the
Company, and I will not take with me any documents or materials or copies
thereof containing any Proprietary Information.
8. I represent that my performance of all the terms of this Agreement and my
duties as a consultant to the Company will not breach any invention
assignment or proprietary information agreement with any former employer
or other party. I represent that I will not bring with me to the Company
or use in the performance of my duties for the Company any documents or
materials of a former employer that are not generally available to the
public.
9. I agree, that except with the prior written consent of the Company, I
will not, during the period of my consultancy with the Company, directly
or indirectly engage in any business which is competitive with that of
the Company, its parent, or any of its subsidiary corporations, or accept
employment or other consulting positions with or render services to a
competitor as a director, officer, or agent, or take any action
inconsistent with the fiduciary relationship of an employee of his or her
employer.
10. I agree that for a period of two (2) years following the termination of
my consultancy with the Company, I will not, without written consent,
signed by an officer of the Company, for any reason directly or
indirectly, by any means or device, for myself or on behalf of or in
conjunction with any individual, organization, partnership or corporation
that has expressed an interest, (including participating in
demonstrations or participating in pilot programs), in the company's
software products including ActionManager(TM) applications, do any of the
following:
(a) induce, entice, hire, or attempt to hire or employ any employee of
the Company; or
(b) compete with the Company in the business of computer software for
multi-unit management or solicit any potential software customers of
the Company to license or purchase similar software products; or
(c) engage in research, development, production, marketing or sale of any
computer software designed to manage multi-unit entities that would
compete with any ActionManager(TM) product.
11. I hereby authorize the Company to notify others, including but not
limited to customers of the Company and my future employers or companies
who will utilize my services as a consultant, of the terms of this
Agreement and my responsibilities hereunder.
12. I understand that in the event of a breach or threatened breach of this
Agreement by me the Company may suffer irreparable harm and will
therefore be entitled to injunctive relief to enforce this Agreement and
shall have the right to recover the Company's reasonable attorney's fees
and court costs expended in connection with any litigation instituted to
enforce this agreement. In the event it is determined that no such
irreparable harm existed, the Company will pay my fees and costs expended
in defending such an action. I expressly agree that any terms of my
covenants not to compete contained in this Agreement which might be held
unreasonable by a court of competent jurisdiction may be reformed or
modified by such court to make the restriction of such covenants
reasonable under the circumstances.
13. I understand that this Agreement does not constitute a contract of
employment or obligate the Company to retain my services as a consultant
for any stated period of time. I understand that my consultancy with the
Company is at will and may be terminated by the Company or myself at any
time and for any reason, with or without cause.
14. This Agreement will be of no further force and effect if the Company
ceases to market ActionManager(TM) or other subsequently developed
products.
IN WITNESS WHEREOF the parties have entered into this Agreement as of the
________ day of ___________ , 20___.
Consultant Park City Group, Inc.
-----------------------------------------------------------------------------
Signature Signature/Title
-----------------------------------------------------------------------------
Print Name Print Name
Address: ______________________________
------------------------------
------------------------------
EXHIBIT 3.1.K.
LITIGATION
1. Decision One Corporation vs. Park City Group, Inc. (Third Judicial District
Court in Summit County, Case No. 000600258DC, filed on August 24, 2000).
The Plaintiff filed a complaint alleging a single cause of action for the
recovery of a debt in the amount of $15,489.32 for "merchandise/and or
services purchased or rendered on behalf of the Company by Decision One
between March 1, 1998 and February 1, 1999, together with interest and
costs." The Company timely filed its answer to the complaint on October 6,
2000.
2. Chevron Oil Company. Park City Group is seeking to receive payment of
approximately $128,000 from Chevron Oil Company for services rendered by
Park City Group in connection with a contract for software license and
services executed in 2000. Chevron is disputing the obligation and has
requested supporting documentation related to the performance of the
services. Park City Group has provided the requested documentation to
Chevron for its review. Park City Group also believes that there may be
additional amounts due to it in connection with this terminated contract.
No formal litigation has been filed with regard to these disputes.
3. G&G Oil Co. of Indiana, Inc. Park City Group is seeking to receive payment
of approximately $32,000 from G&G Oil Co. in conjunction with a Customer
License Agreement, dated August 23, 2000, between Park City Group and G&G
Oil Co., as amended. G&G Oil Co. is disputing the obligation and has
requested that a portion of its initial payment be returned by Park City
Group. The parties are currently negotiating a resolution to this dispute.
No formal litigation has been filed with regard to this dispute.
EXHIBIT 3.1.M
PARK CITY GROUP FINANCIAL STATEMENTS
PARK CITY GROUP, INC.
FINANCIAL STATEMENTS
WITH
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
YEARS ENDED DECEMBER 31, 2000 AND 1999
PARK CITY GROUP, INC.
Table of Contents
Page
Report of Independent Certified Public Accountants...........................1
Balance Sheets...............................................................2
Statements of Income.........................................................4
Statements of Changes in Stockholders' Deficit...............................5
Statements of Cash Flows.....................................................6
Notes to Financial Statements................................................8
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors
Park City Group, Inc.
We have audited the accompanying balance sheets of Park City Group, Inc. (a
majority-owned subsidiary of Riverview Financial Corporation) as of December 31,
2000 and 1999, and the related statements of income, stockholders' deficit and
cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Park City Group, Inc. as of
December 31, 2000 and 1999, and the results of its operations and its cash flows
for the years then ended in conformity with accounting principles generally
accepted in the United States.
Xxxxxxxx, Xxxxx & Company, P.C.
/s/ Xxxxxxxx, Xxxxx & Company
Salt Lake City, Utah
April 10, 2001
1
PARK CITY GROUP, INC.
BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
Assets 2000 1999
---------- ----------
Current assets:
Cash and cash equivalents $ 1,099,242 $ 247,442
Receivables:
Trade accounts, net of allowance for doubtful accounts
of $160,758 for 2000 and $4,054 for 1999 272,137 758,446
Related parties 558,643 86,789
Deferred tax asset 120,000 60,000
Prepaid expenses and other current assets 20,335 28,429
------------- -------------
Total current assets 2,070,357 1,181,106
----------- -----------
Property and equipment, at cost:
Computer equipment 868,586 799,945
Furniture and equipment 172,486 172,486
Equipment under capital leases 171,304 154,954
Leasehold improvements 85,795 85,795
------------- -------------
1,298,171 1,213,180
Less accumulated depreciation and amortization (1,120,674) (937,236)
----------- ------------
Net property and equipment 177,497 275,944
------------ ------------
Other assets:
Deferred tax asset, net of valuation allowance of
$2,239,656 for 2000 and $2,230,328 for 1999 1,280,000 2,280,000
Deposits 33,802 34,150
------------- ------------
Total other assets 1,313,802 2,314,150
----------- -----------
Total assets $ 3,561,656 $ 3,771,200
=========== ===========
Continued - next page
The accompanying notes are an integral
part of the financial statements.
2
PARK CITY GROUP, INC.
BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
Continued from prior page -
Liabilities and Stockholders' Deficit 2000 1999
------------------------------------- ----------- -----------
Current liabilities:
Line of credit $ 150,000 $ 137,000
Note payable 250,000 250,000
Accrued interest on note payable 36,956 21,971
Accounts payable 192,607 193,118
Accrued payroll and related liabilities 198,756 189,989
Sales tax payable 23,212 41,313
Accrued litigation settlements, current portion 54,944 125,333
Capital lease obligations, current portion 33,293 90,736
Deferred revenue 1,294,773 2,659,736
Accrued contingency -- 267,495
Income taxes payable 67,912 9,713
----------- --------------
Total current liabilities 2,302,453 3,986,404
----------- -----------
Long-term liabilities:
Notes payable to parent corporation 2,150,000 2,150,000
Accrued interest on notes to parent corporation 267,203 151,394
Accrued litigation settlements, net of current portion -- 14,444
Capital lease obligations, net of current portion 6,642 28,006
------------- ------------
Total long-term liabilities 2,423,845 2,343,844
----------- -----------
Total liabilities 4,726,298 6,330,248
----------- -----------
Stockholders' deficit:
Preferred stock, $0.01 par value,
10,000,000 shares authorized,
no shares issued and outstanding -- --
Common stock, $0.00002 par value,
40,000,000 shares authorized,
25,130,136 shares issued and outstanding 503 503
Additional paid-in-capital 6,294,031 6,294,031
Accumulated (deficit) (7,459,176) (8,853,582)
----------- -----------
Total stockholders' deficit (1,164,642) (2,559,048)
----------- ------------
Total liabilities and stockholders' deficit $ 3,561,656 $ 3,771,200
=========== ===========
The accompanying notes are an integral
part of the financial statements.
PARK CITY GROUP, INC.
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
Revenues: 2000 1999
----------- -------------
Software licenses $ 2,115,545 $ 2,321,655
Maintenance and support 2,066,523 2,403,287
Consulting and other 769,074 506,155
Development and software enhancement 1,562,000 --
------------ ------------
6,513,142 5,231,097
Cost of revenues 1,013,930 1,021,526
------------- ------------
Gross profit 5,499,212 4,209,571
------------ ------------
Operating expenses:
Research and development 1,035,926 878,064
Sales and marketing 912,109 1,115,543
General and administrative expenses 970,792 1,339,282
------------- ------------
2,918,827 3,332,889
------------ ------------
Operating income 2,580,385 876,682
------------ -------------
Other income (expense):
Interest expense (225,579) (190,665)
Interest income 31,535 12,373
-------------- --------------
(194,044) (178,292)
-------------- --------------
Income before income taxes 2,386,341 698,390
Income tax expense 991,935 324,699
-------------- --------------
Net income $ 1,394,406 $ 373,691
=========== ============
The accompanying notes are an integral
part of the financial statements.
PARK CITY GROUP, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
Additional
Common Stock Paid Accumulated
Shares Amount In Capital (Deficit) Total
Balances:
December 31, 1998 25,120,414 $ 502 $ 6,293,606 $ (9,227,273) $ (2,933,165)
Common stock issued
upon exercise of stock
options 9,722 1 425 -- 426
Net income -- -- -- 373,691 373,691
-------------- ----------- ------------ ------------ -------------
Balances:
December 31, 1999 25,130,126 503 6,294,031 (8,853,582) (2,559,048)
Net income -- -- -- 1,394,406 1,394,406
-------------- ----------- ------------- ------------ --------------
Balances:
December 31, 2000 25,130,136 $ 503 $ 6,294,031 $ (7,459,176) $ (1,164,462)
============== ============ ============= ============== ==============
The accompanying notes are an integral
part of the financial statements.
PARK CITY GROUP, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
2000 1999
-------------- --------------
Cash Flows From Operating Activities:
Net income $ 1,394,406 $ 373,691
-------------- --------------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 183,437 255,920
Provision for doubtful accounts 182,154 116,959
Recognition of year 2000 contingency (267,495) (511,432)
Decrease in deferred tax asset 940,000 310,000
(Increase) decrease in accounts receivable 304,155 (163,335)
(Increase) in receivable from related parties (471,854) (86,789)
(Increase) decrease in prepaid expenses and other current assets 8,094 (4,383)
Decrease in deposits 348 --
Increase in accrued interest to parent corporation 115,809 151,394
(Decrease) in bank overdraft -- (67,922)
(Decrease) in accounts payable (511) (155,185)
Increase in accrued payroll and related liabilities 8,767 13,128
Increase in accrued interest 14,985 14,203
(Decrease) in sales tax payable (18,101) (11,086)
Increase (decrease) in accrued litigation settlements (84,833) 139,777
(Decrease) in deferred revenue (1,364,963) (541,337)
(Decrease) in payable to related party -- (9,021)
Increase in income taxes payable 58,199 9,713
--------------- --------------
Total adjustments (391,809) (539,396)
--------------- --------------
Net cash provided by (used in) operating activities 1,002,597 (165,705)
--------------- --------------
Cash Flows From Investing Activities:
Purchase of equipment (68,641) (60,150)
--------------- -------------
Net cash (used in) investing activities (68,641) (60,150)
--------------- -------------
Continued - next page
The accompanying notes are an integral
part of the financial statements.
6
PARK CITY GROUP, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
Continued from prior page -
2000 1999
------------ --------------
Cash Flows From Financing Activities:
Proceeds from sale of equipment -- 50,000
Proceeds from issuance of common -- 426
Net proceeds from borrowing on line of credit 13,000 137,000
Proceeds from borrowing from parent corporation -- 505,000
Principal payments on capital leases (95,156) (79,129)
Principal payments on note payable with parent corporation -- (140,000)
------------ --------------
Net cash provided by (used in) financing activities (82,156) 473,297
------------ --------------
Net increase in cash and cash equivalents 851,800 247,442
Cash and cash equivalents, beginning of year 247,442 --
---------------- --------------
Cash and cash equivalents, end of year $ 1,099,242 $ 247,442
================= ===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 94,784 $ 25,068
=============== =============
Income taxes $ 1,731 $ 2,323
================== ================
Non-Cash Transactions:
Prior to 1999, the Company accrued a loss contingency related to the year 2000
issue for necessary changes to the software code. During the years ended
December 31, 2000 and 1999, the Company recognized $267,495 and $511,432,
respectively, as an offset to related costs in the statement of income.
In 1999, long-term debt to a bank in the amount of $1,675,000 was assumed by the
parent company in exchange for an equivalent note payable to the parent
corporation.
In 1999, the Company sold equipment with a cost of $68,000 to a related party.
The related party paid cash of $50,000 and assumed the remaining liability on
the equipment in the amount of $18,000.
In 1999, several capital leases were renegotiated and combined into a new lease
obligation for $186,000 which, also, included additional equipment purchased
with a cost of $29,128.
In 2000, the Company entered into a capital lease obligation for the acquisition
of equipment with a cost of $16,350.
The accompanying notes are an integral
part of the financial statements.
7
PARK CITY GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
1. SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
A. Organization
Park City Group, Inc. designs, develops, markets and supports
proprietary software products. These products are designed to be used
in retail businesses having multiple locations to assist in the
management of business operations on a daily basis and communicate
results of operations in a timely manner. The principal markets for
the Company's products are with retail companies which have operations
in North America and to a lesser extent in Europe. The Company was
incorporated in Delaware on May 11, 1990 as Riverview Software, Inc.
In 1990, the Company changed its name to Fields Software Group, Inc.
and in 1993, the Company's name was changed again to Park City Group,
Inc. The Company is a majority-owned subsidiary of Riverview Financial
Corporation, a California corporation. Substantially all of the
Company's shares which are not owned by Riverview are owned or
controlled by the Company's Chief Executive Officer. Riverview is
beneficially owned by the Company's Chief Executive Officer.
B. Significant Accounting Policies
The following significant accounting policies are presented to assist
in understanding the Company's financial statements. These accounting
policies conform to generally accepted accounting principles and have
been consistently applied in the preparation of the accompanying
financial statements.
Basis of Presentation
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern, which contemplates the
realization of assets and payment of liabilities in the normal course
of business. At December 31, 2000 and 1999, the Company had a working
capital deficit of $232,096 and $2,805,298 caused primarily by
deferred revenues of $1,294,773 and $2,659,736, respectively that
represent revenues for which payment has been received but not yet
earned, along with an accumulated deficit of $7,459,176 and
$8,853,582, respectively. In addition, substantial accrued expenses
and related party borrowings were outstanding at December 31, 2000 and
1999 and through the date of the auditor's report. Also, as part of an
agreement entered into on April 5, 2001, the Company is obligated to
pay $3,750,000 in accordance with a promissory note payable (see note
15).
The Company believes that these conditions have resulted from the
inherent risks associated with a technology company. Such risks
include, but are not limited to, the ability to (i) develop and market
their technology products, (ii) obtain sufficient capital through
investment or borrowing to finance product development, sales and
marketing activities, (iii) generate sales of products at sufficient
levels to cover costs and expenses, and (iv) compete with other
technology companies that have financial, production and marketing
resources significantly greater than the Company.
Management believes that its software products, including "Fresh
Market Manager" products acquired subsequent to December 31, 2000 as
discussed in note 15, will continue to improve in market acceptance
and, accordingly, generate additional revenues. This should enable the
Company to achieve increased profitability resulting in improved
working capital, reduction of stockholders' equity deficits and
increased cash flow to fund further business development and satisfy
obligations in the normal course of business. In addition, the
combining of financial, management and development resources as a
result of the acquisition of Fresh Market Manager, LLC (formerly
Xxxxxx Fields, LLC) as discussed in note 15, should enable the Company
to operate more efficiently and profitably. Note 15, also, discusses a
Letter of Intent arrangement that is anticipated to result in a
reorganization agreement and additional equity funding that will
improve the Company's liquidity and support anticipated increases in
revenue and customer base. Accordingly, management of the Company
believes that assets will be realized and liabilities satisfied in the
normal course of business.
8
Notes to the financial statements - continued
Cash and Cash Equivalents
Cash and cash equivalents are defined as cash on hand, checking and savings
accounts and highly liquid investments with original maturities of three
months or less. The Company maintains all of its cash and cash equivalents
at one financial institution, which at times exceeds federally insured
limits. The Company utilizes a sweep account at this financial institution
whereby available funds are invested overnight. The Company has not
experienced any losses and does not believe it is exposed to significant
risk for its cash and cash equivalents.
Allowance for Doubtful Accounts
The Company provides an allowance for uncollectible accounts based upon
management's assessment and an aging analysis of specific accounts.
Property and Equipment
Property and equipment are stated at cost. Depreciation is provided using
the straight-line method over the estimated useful lives of three to seven
years for equipment, furniture and fixtures. Leasehold improvements are
amortized over the shorter of the remaining lease term or the estimated
useful life of the improvements using the straight-line method. The Company
uses accelerated methods of depreciation for income tax purposes. These
methods provide for more depreciation expense in the early years than in
the later years of the life of the asset.
Significant replacements and betterments are capitalized. The costs of
repairs and maintenance which are not considered capital expenditures and
which do not extend the useful lives of the assets are charged to
operations when incurred.
When assets are retired or otherwise disposed of, the costs and related
accumulated depreciation and amortization are removed from the accounts and
any resulting gain or loss is recognized in the statement of income.
Depreciation and amortization expense was $183,437 and $255,920 for 2000
and 1999, respectively.
Patents
The Company is continually developing patents in its normal course of
business and has been issued patents in previous years. During 2000, the
Company was successful in protecting its patent rights against a company
for patent infringement. In connection with the resulting settlement, the
Company granted this company a license to use the Company's patented
technology for compensation of $275,000 which has been included as software
license revenue in 2000. A similar suit was filed and settled in a similar
manner in 1999 for $275,000.
Revenue Recognition
Revenue for the sale of software licenses is recognized upon delivery of
the software unless specific delivery terms provide otherwise. If not
recognized upon delivery, revenue is recognized upon meeting specified
conditions, such as, meeting customer acceptance criteria. In no event is
revenue recognized if significant Company obligations remain. Customer
payments are typically received in part upon signing of license agreements,
with the remaining payments received in installments pursuant to the
agreements. Until revenue recognition requirements are met, the cash
payments received are treated as deferred revenue.
Maintenance and support services that are sold with the initial license fee
are recorded as deferred revenue and recognized ratably over the initial
service period. Revenues from maintenance and other support services
provided after the initial period are generally paid in advance and are
recorded as deferred revenue and recognized on a straight-line basis over
the term of the service agreements.
Consulting service revenues are recognized in the period that the service
is provided or in the period such services are accepted by the customer if
acceptance is required by agreement.
9
Notes to the financial statements - continued
Software Development Costs
The Company accounts for software development costs in accordance with the
Statement of Financial Accounting Standards No. 86, Accounting for the
Costs of Computer Software to be Sold, Leased, or Otherwise Marketed.
Research and development costs have been charged to operations as incurred.
From inception through the current period, the Company has viewed the
software as an evolving product. Therefore, all costs incurred for research
and development of the Company's software products through December 31,
2000 and 1999 have been expensed as incurred.
Research and development costs include personnel costs, engineering,
consulting, and contract labor.
Income Taxes
The Company's results of operations are included in the consolidated tax
return of Riverview Financial Corporation, its parent company. The Company
is required to pay income taxes to Riverview based upon an inter-company
tax sharing agreement. Amounts due to Riverview are determined as if the
Company filed tax returns based solely upon its operations.
The Company utilizes the asset and liability method to account for income
taxes. The objective of this method is to establish deferred tax assets and
liabilities for the temporary differences between net income for financial
reporting basis and tax basis of the Company's assets and liabilities at
enacted tax rates expected to be in effect when such amounts are realized.
Timing differences are created by different expense recognition for
financial and tax reporting for net operating losses, depreciation expense,
allowance for doubtful accounts and accrued compensated absences. The
effects of such differences are reported as either a deferred income tax
asset or liability, which is reduced by a valuation allowance based upon
management's assessment for realization of such deferred tax assets.
Stocked Based Compensation
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 123, Accounting for Stock-based Compensation,
which became effective in 1996. The statement established an accounting
method based on the fair value of the options awarded to employees as
compensation. However, the Company is permitted to continue applying
previous accounting standards in the determination of net income or loss
with appropriate disclosure of the differences between previous accounting
measurements and those formulated by the new standard. The Company
determines net income using previous accounting standards and makes the
appropriate disclosures in the notes to the financial statements as
permitted by the new standard.
Fair Value of Financial Instruments
The fair value of financial instruments including cash, accounts
receivable, accounts payable, accrued liabilities, obligations under
capital leases and notes payable approximate book value at December 31,
2000 and 1999.
Management Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
2. INCOME TAXES
Income taxes are provided at statutory rates for the tax effects of
transactions reported in the financial statements and consist of taxes due
currently and for deferred taxes which relate to timing differences for the
expense recognition of depreciation, allowance for doubtful accounts,
accrued compensated absences, and net operating loss carryforwards.
10
Notes to the financial statements - continued
The provision for income taxes reflected in the financial statements relate
to actual current taxes due of $51,935 for 2000 and $14,699 for 1999 and
deferred taxes which primarily result from the change in deferred tax
assets relating to historical net operating losses in the amount of
$940,000 and $310,000, respectively.
Income tax expense consists of the following:
Current income taxes at statutory rates: 2000 1999
---- ----
Federal (Alternative Minimum Tax) $ 51,635 $ 12,072
State 300 2,627
------------- ------------
Total 51,935 14,699
Change in deferred income taxes 940,000 310,000
------------- ------------
Income tax expense $ 991,935 $ 324,699
============= ============
The actual tax expense differs from the "expected" tax expense computed by
applying the U.S. corporate statutory rate of 34% as follows:
Computed "expected" Federal tax expense $ 811,356 $ 237,453
State tax expense 119,317 16,235
Net operating loss carryforward deduction (930,673) (253,688)
State minimum taxes 300 2,627
Federal alternative minimum tax 51,635 12,072
Change in deferred income taxes 940,000 310,000
------------- ------------
$ 991,935 $ 324,699
============= ============
Using the applicable combined federal and state tax rate of 39%, the
deferred tax assets and liabilities are as follows:
Deferred tax asset:
Accrued compensated absences $ 57,905 $ 55,674
Allowance for doubtful accounts 62,696 1,581
Book depreciation in excess of tax depreciation 43,795 62,778
Net operating loss carryforwards 3,639,656 4,570,328
----------- -----------
Net deferred tax asset before valuation allowance 3,804,052 4,690,361
Net operating loss in excess of remaining deferred tax assets (164,396) (120,033)
Valuation allowance (2,239,656) (2,230,328)
----------- -----------
Net deferred tax asset $ 1,400,000 $ 2,340,000
=========== ===========
As of December 31, 2000, the Company had available net operating losses for
federal and state tax purposes of $9,332,450. The tax net operating losses
will begin to expire in 2007. The following schedule summarizes the
appropriate net operating losses available to the Company for income tax
purposes.
Year of Loss Amount Expiration Year
1992 $ 1,505,000 2007
1995 920,000 2010
1997 5,825,000 2012
1998 1,082,000 2013
-------------
Total $ 9,332,000
=============
3. LINE OF CREDIT
The Company has a $150,000 line of credit arrangement with a financial
institution. The line is guaranteed by the Company's major shareholder,
bears interest at the bank's prime lending rate plus 1% and is due November
2001. The balance due on the line of credit was $150,000 and $137,000 as of
December 31, 2000 and 1999, respectively.
11
Notes to the financial statements - continued
4. NOTE PAYABLE
In June 1998, the Company received a $250,000 advance as part of a
partnering agreement with another company. The agreement contemplated a
cooperative effort to develop business opportunities for the sale of their
respective products. No "qualifying sale" was ever consummated under the
agreement. As a result, pursuant to the terms of a related promissory note,
the Company is required to repay the advance, plus interest at an annual
rate of 5.51%. Payment on the note was due in May 2000, however, no
principal or interest payments have been made as of December 31, 2000 nor
by the audit date.
5. NOTES PAYABLE TO PARENT CORPORATION
On January 1, 1999, the Company had a $110,000 note payable to Riverview
Financial Corporation (its Parent Company) originating from borrowings in
1998. During 1999, Riverview paid a note to a bank that was on the books of
the Company at $1,675,000. The Company, also, borrowed an additional
$505,000 and repaid $140,000. As of December 31, 1999, the Company owed
Riverview $2,150,000. Interest was accrued on the note in the amount of
$151,394 based on an interest rate of 12% per year.
Effective January 1, 2000, the note was divided into two separate notes for
$1,675,000 and $475,000, respectively, and the interest rate was reduced to
8%. During 2000, the Company made interest payments of $75,000 and no
principal payments. As of December 31, 2000, the Company owed Riverview a
combined total of $2,150,000 on the notes payable and $267,203 in accrued
interest. The notes and related accrued interest are due and payable in
full on December 31, 2002.
6. DEFERRED REVENUE
Deferred revenue consisted of the following as of December 31, 2000 and
1999:
2000 1999
---- ----
Software licenses $ 478,000 $ 677,416
Maintenance and support 743,573 420,320
Consulting and other 73,200 --
Co-development project -- 1,562,000
--------------- --------------
Total $ 1,294,773 $ 2,659,736
============== ==============
7. DEVELOPMENT AND SOFTWARE ENHANCEMENT REVENUE
Periodically the Company enters into arrangements with customers that
involve significant additional development and enhancements to the existing
software that will meet the customers individual specifications. These
types of revenue have been separately classified in the financial
statements. With respect to this type of activity, the Company entered into
an agreement in 1997 with a retail grocery customer with approximately 140
store locations. The contract provided for extensive core development,
customization, product tailoring and implementation. The customer was to
create a laboratory environment and the end result had to be operational at
the store level. The terms of the agreement provided for payment of the
following:
License fees $ 762,000
Product enhancements 300,000
Customizations 250,000
Tailoring and implementation 250,000
-------------
Total $ 1,562,000
===========
12
Notes to the financial statements - continued
The Company received the $1,562,000 in 1997 and began to perform on the
contract. Substantial changes in the business practices of this customer
along with changes in their management and oversight of the project for an
extended period of time resulted in significant changes to the project
specifications. During 1998 and the first half of 1999, the customer's
internal computer department took control of the project with the Company
providing technical support, advise and continued development of the core
software primarily based on the revised specifications. In 1999, the
customer and the Company agreed that an enhanced version of the software
would be required to meet the customer's specifications.
In September 1999, a complete revision of the inventory and production
planning software modules had been completed. Additional product modules
were developed for the customer and installation, tailoring and
implementation of the software was substantially performed and completed in
2000.
8. LEASE AGREEMENTS
A. Capital Leases
The Company leases equipment with an original cost of $171,304 under the
terms of several capital lease arrangements. The monthly payments total
$9,347 including imputed interest ranging from 14.3% to 17.4%. The leases
mature between March 2001 and January 2003.
The following is a schedule of future minimum lease payments:
Year Ending
December 31, 2000 1999
------------ ----------- -----------
2000 $ -- $ 104,195
2001 35,686 29,032
2002 6,654 --
2003 554 --
----------- -----------
Total minimum lease payments 42,894 133,227
Less: amount representing interest (2,959) (14,485)
----------- -----------
Present value of net minimum lease payments 39,935 118,742
Less: current portion (33,293) (90,736)
Capital lease obligation, net of current portion $ 6,642 28,006
========== ==========
Amortization expense related to capitalized leases is included in
depreciation expense and was $56,647 and $51,651 for 2000 and 1999,
respectively. Accumulated amortization was $109,076 and $52,429 as of
December 31, 2000 and 1999, respectively.
13
Notes to the financial statements - continued
B. Operating Leases
Office Space
In September 1998, the Company entered into a lease agreement for
office space. Under the terms of the lease agreement, the Company was
required to pay $16,723 per month with a 4% annual increase in the
base rent until December 2000. The lease agreement was renewed in
February 2001, and under the terms of the new agreement, the Company
must pay $18,482 per month with a 4% annual increase in the base rent
until December 31, 2003. From December 2000 until the renewal was
finalized in March 2001, the Company continued to lease the space on a
month-to-month basis. Total rent expense under this agreement, net of
reimbursed rent expense of $51,000 which was paid by a related party
for shared office space, was $166,306 for 2000. Total rent expense,
net of reimbursed rent expense of $34,000 paid by a related party, was
$157,715 for 1999.
Equipment
The Company incurred rental expense of $2,240 in 1999 and 2000 related
to an equipment lease. The Company has a future commitment of $5,904
through the year 2003 for an equipment lease.
9. RELATED PARTY TRANSACTIONS
x. Xxxxxx Fields, LLC
In May, 1999 the Company transferred to Riverview (its parent company)
all of its rights, title and interest in a certain application
software program known and marketed as "Fresh Market Manager"
including all related documentation, copyrights, patents, intellectual
property and other materials. The agreement specifically excluded all
of the Company's other software programs and applications. The
Company, also, retained the rights to the "Fresh Market Manager"
software solely necessary to perform the Company's obligations
relating to the development and software enhancement contract that the
Company had with a retail customer (see note 7).
The chief executive of Riverview, who is also the chief executive of
the Company then assigned the "Fresh Market Manager" software to
Xxxxxx Fields, LLC, a Utah limited liability company which had been
formed in April 1999 with the chief executive as managing member.
Xxxxxx Fields, LLC acquired the intellectual property rights for
$4,750,000 by cost payment of $2,750,000 to Riverview and execution of
a note payable in the amount of $2,000,000.
As part of the Xxxxxx Fields, LLC organizational and operational
documents, the members agreed to an "Overhead Sharing and Referral
Agreement" whereby Xxxxxx Fields would pay to Park City Group its
allocable share of direct costs and expenses. The LLC was to pay the
Company the allocated cost in twelve monthly payments for one year
with annual renewal terms. The amount was to cover the shared costs of
facilities, personnel and operating costs. The Company recorded the
reimbursed costs as a reduction to operating costs. Accordingly,
shared cost reimbursements were $620,232 in 2000 and $413,488 in 1999.
As of December 31, 2000 and 1999, the Company had a receivable of
$466,486 and $73,449, respectively for the overhead sharing costs and
$26,350 and $3,145, respectively for interest. The agreement, also,
provided for a referral fee to be paid for the introduction of
prospective customers. The Company received $82,326 in the year 2000
for a customer referral.
b. Riverview Financial Corporation (Parent Company)
The Company has a note payable with Riverview (note 5). The Company,
also, has a receivable from Riverview for certain expenses paid by the
Company in 2000. The balance due the Company was $19,411 as of
December 31, 2000.
14
Notes to the financial statements - continued
c. Chief Executive
The Company has a receivable from its chief executive for certain
non-business expenses paid by the Company. The balance due the Company
was $46,396 and $10,836 as of December 31, 2000 and 1999,
respectively.
10. CONCENTRATION OF CREDIT RISK
The Company's accounts receivable are derived from sales of products
and services primarily to customers operating multi-location retail
stores, hotels, and hospitals. At December 31, 2000 and 1999, accounts
receivable includes amounts due from four customers totaling $216,202
and $660,970, respectively. These customers accounted for 79% and 87%
of accounts receivable at December 31, 2000 and 1999, respectively.
Sales to significant customers are summarized in Note 14. The Company
provides credit terms to its customers in the normal course of
business. The Company performs ongoing credit evaluations of it
customers and maintains an allowance for doubtful accounts based upon
collection assessment. Collateral is not required from customers.
11. COMMITMENTS AND CONTINGENCIES
A. Litigation
The Company offers a limited warranty against software defects for a
general period of six months. Customers who are not completely
satisfied with their software purchase sometimes attempt to be
reimbursed for their purchases outside the warranty period. During
1999, the Company accrued $147,000 for such warranty settlements that
were probable and could be reasonably estimated. The unpaid balance
due on the settlements was $54,944 and $139,778 as of December 31,
2000 and 1999, respectively.
B. Contingency for Year 2000 Issue
In prior years, the Company sold software with source code that was
not year 2000 compliant. The source code was written with two digits
rather than four digits to define the applicable year. As a result,
the software could recognize a date using "00" as the year 1900 rather
than the year 2000. In addition, 2000 was a leap year and the Company
was unsure of additional complications. Prior to 1999, the Company
recognized the potential exposure of the noncompliance and decided
that it would be necessary to correct the source code deficiency and
to remedy the situation with customers who had purchased the software.
The Company estimated the cost of this effort and accrued a loss
contingency of $778,927. During 1999, the Company expended significant
time and effort to resolve the software's deficiencies. Accordingly,
the Company recognized $511,432 of the previously accrued loss
contingency as a reduction in related operating costs during 1999. The
remaining accrued contingency of $267,495 was recognized as a
reduction in related operating costs during 2000 upon satisfactory
resolution of all known year 2000 deficiencies.
12. STOCK OPTIONS
In January 1993, the Company adopted the 1993 Equity Incentive Plan
(the Incentive Plan) which provides for the issuance of up to
2,500,000 stock options (increased to 4,800,000 in 1996) for
employees, directors, consultants or advisors of the Company or any
affiliate of the Company. Options granted may be either incentive
stock options within the meaning of the Internal Revenue Code, or
non-qualified options. The terms of each award are determined by a
committee of the Board of Directors. The options generally vest over
four to six years with the initial vesting occurring one year from the
date of grant. Vested options are exercisable until ten years from the
date of grant or until 90 days after termination of employment, if
earlier. Options are granted with an exercise price not less than the
fair market value of the Company's common stock on the date of grant.
All options granted under this plan were repriced in 1998 to $1 per
share.
15
Notes to the financial statements - continued
In December 1993, the Company adopted the 1993 Directors Stock Option
Plan (the Directors Plan) which provides for the issuance of up to
75,000 non-qualified common stock options to non-employee members of
the Board of Directors. The Company increased the number of
non-qualified common stock options authorized for issuance by the
Directors Plan to 100,000 in 1995 and 300,000 in 1996. The options
vest 33.33% twelve months following the grant date and an additional
2.75% each month thereafter and cease to vest on the date the optionee
ceases to be a member of the Board of Directors. Options are granted
with an exercise price not less than the fair market value of the
Company's common stock as determined by the Board of Directors on the
date of grant.
The following table summarizes option transactions through the year
ended December 31, 2000:
Weighted-Average
Outstanding Exercise Price
Balance - 12/31/98 1,492,997 0.45226
Granted - 1999 -- --
Exercised - 1999 (9,722) 0.04000
Forfeited - 1999 (85,200) 0.93803
-----------
Balance - 12/31/99 1,398,075 0.42552
Granted - 2000 -- --
Exercised - 2000 -- --
Forfeited - 2000 ----------
Balance - 12/31/00 1,256,825 0.36688
==========
The following table summarizes outstanding options granted by the Company
as of December 31, 2000:
Number of Shares Weighted-Average
------------------------------------------
Share Vested and Weighted-Average Remaining Option
Optionee Price Outstanding Exercisable Exercise Price Life (In Years)
-------- ------- ----------- ----------- -------------- ---------------
Employees (a) $0.04 750,750 750,750 0.04000 0.99560
Employees $0.40 125,000 125,000 0.40000 1.51781
Employees (b) $1.00 381,075 332,213 1.00000 5.74216
---------- ----------
Total 1,256,825 1,207,963 0.36688 2.48671
========= =========
(a) An employee holding an option for 750,000 shares was terminated on
December 31, 2000. This individual exercised his option to purchase
the shares for $30,000 in 2001.
(b) Five employees with outstanding options of 63,500 vested for 55,500
shares were terminated on January 5, 2001. None of these individuals
exercised their option to buy shares.
13. RETIREMENT PLAN
The Company participates in Riverview's 401(k) profit sharing plan (the
"Plan") for which Company contributions are based upon wages paid to
eligible employees. Employees are eligible to participate in the Plan upon
reaching 21 years of age and one year of service with the Company. The Plan
is funded by voluntary employee contributions and Company matching
contributions. A participant's maximum elective contribution to the Plan in
1999 may not exceed the lesser of $10,000 or 20 percent of the eligible
employee's compensation. The Company's matching contribution is 50 percent
of the first 4 percent of each employee's contribution. The Company made
matching contributions totaling $38,907 and $42,194 for the years ended
December 31, 2000 and 1999, respectively.
16
Notes to the financial statements - continued
14. SIGNIFICANT CUSTOMERS
In 2000, the Company generated approximately 24% of its revenue from a
development and software enhancement contract (Note 7).
The Company received approximately 39% and 34% of its revenue from five
major customers during the years ended December 31, 2000 and 1999,
respectively.
15. SUBSEQUENT EVENTS
X. Xxxxxx Fields, LLC Acquisition (Name changed to Fresh Market Manager,
LLC)
On April 5, 2001, the Company, Riverview Financial Corporation (Parent
Company), and the members of Xxxxxx Fields, LLC (see note 9) entered
into an agreement to be effective January 1, 2001, whereby the Company
acquired the member interests in Xxxxxx Fields, LLC for $3,750,000.
The amount due is to be paid as follows: (i) $1,000,000 plus accrued
interest on funds held in a bank escrow account. These funds were
being held by the bank subject to a joint account and pledge agreement
which were initiated at the creation of Xxxxxx Fields, LLC in May,
1999. The joint account was pledged for payment on funds that were
loaned by a member of the LLC and subject to restrictions and
agreement regarding its use. No withdrawals were ever made from the
account. (ii) $2,750,000 by an executed promissory note which calls
for principal payments of $1,000,000 on December 20, 2001, $500,000 on
June 20, 2002 and the principal balance of $1,250,000 on December 20,
2002. Interest accrues on the note at 10% per annum and is payable
monthly with the first payment due on April 10, 2001.
The note is guaranteed by Xxxxxx Fields, LLC, Riverview Financial
Corporation, the Company's Chief Executive and an individual employed
by Xxxxxx Fields, LLC. The Company executed a "Stock Pledge and
Security Agreement" whereby 8,625,850 shares of the Company's common
stock (33 1/3% of the issued and outstanding shares) were pledged
along with irrevocable stock powers. Also, 4,340,098 common shares
(18% of the issued and outstanding shares) were delivered to a title
company subject to an escrow agreement as additional collateral in the
event of default. The note is also collateralized by the Chief
Executive's 50% interest in a condominium property located in Puerto
Vallarta, Mexico.
The agreement, also, contains numerous covenants which provide certain
limitations on compensation increases, dividends, related party
transactions, borrowings and the creation of liens.
The Company's Chief Executive, who was the other member of Xxxxxx
Fields, LLC, assigned his interest to the Company which makes the
Company the sole owner of Fresh Market Manager, LLC (formerly Xxxxxx
Fields, LLC). The Company's Chief Executive was elected as the sole
manager of the LLC.
The following unaudited pro forma consolidated information for the
years ended December 31, 2000 and 1999 give effect to the transaction
as if it had occurred at the beginning of 2000 and 1999. The unaudited
pro forma consolidated information is presented for informational
purposes only and is not necessarily indicative of the results of
operations that would have been achieved had the transaction been
completed as of the beginning of those years, nor are they indicative
of the Company's future results of operations.
2000 1999
---- ----
Net sales $ 7,325,566 $ 4,956,097
============= =============
Net income (loss) $ 611,406 $ ( 3,154,338)
============== =============
17
Notes to the financial statements - continued
B. Letter of Intent
In February 2001, the Company entered into a "Letter of Intent"
arrangement regarding the potential reorganization of the Company with
AmeriNet Xxxxx.xxx, Inc. (AmeriNet). AmeriNet is a Delaware
corporation and has retained the services of Yankee Companies, Inc.
(Yankees), a mutual intermediary, to negotiate an acceptable agreement
on their behalf.
A summary of the proposed transaction is as follows:
1. The Company would consolidate all current operations of its
affiliates and related business enterprises for consolidated
financial reporting.
The Company has confirmed to AmeriNet certain unaudited financial
information for 2000 and AmeriNet has confirmed to the Company
that, upon disposition of its subsidiaries, it will not have
material assets or liabilities other than the Company and that it
will not be subject to contracts other than the Reorganization
Agreement culminating from this Letter of Intent and will have no
material liabilities other than certain indicated obligations.
2. AmeriNet would exchange 60% of its unregistered outstanding
common stock with the Company's stockholders for all of the
Company's outstanding common stock.
3. AmeriNet will have up to $5 million in cash for use by the
Company following the closing of the Renegotiation Agreement.
4. Prior to closing, AmeriNet will distribute all the capital stock
of its subsidiaries to AmeriNet's stockholders, except for shares
required to be issued to Yankees, in consideration for the
release by Yankees of its lien on such shares and Yankees
agreement to convert the balance of the debt owed by AmeriNet to
Yankees into shares of AmeriNet's Class A Preferred stock (see
item 8).
5. Executive officers of the Company that hold a specified
percentage of AmeriNet's common stock would enter into long term
employment agreements with the Company. Total annual compensation
to these officers will be within certain limitations.
In addition to the annual compensation, AmeriNet would allocate
additional shares of unregistered AmeriNet common stock in an
amount equal to 50% of the shares issued to the stockholders of
the Company, to a stock incentive plan. The shares would be
issued in installments based upon the attainment of certain
economic thresholds.
6. As a result of the above, the Company would become a wholly-owned
subsidiary of AmeriNet; AmeriNet would have no other
subsidiaries; the Company's shareholders would hold 60% of
AmeriNet's outstanding common stock; and, AmeriNet's stockholders
prior to closing and their successors would hold 40% of
AmeriNet's outstanding common stock.
7. Upon closing, Yankees will commence efforts on behalf of the
Company to develop new sources of funding and business. If such
funding or business is obtained as a result of Yankees' efforts,
the Company agrees to provide specified compensation to Yankees
for its services, provided that certain conditions are met.
Also, Yankees currently has options to purchase up to 12.5% of
AmeriNet's common stock.
18
EXHIBIT 3.1.0
INTERESTED PARTY TRANSACTIONS
1. Xxxxxxx X. Xxxxxx, an officer, director and significant shareholder of Park
City Group, and Riverview Financial Corp., also a significant shareholder
of Park City Group, each previously held significant interests in Fresh
Market Manager, LLC (formerly "Xxxxxx Fields, LLC"), a current subsidiary
of Park City Group which has sold or furnished, and continues to sell and
furnish, products similar to those which Park City Group sells to its
customers, in the form of a product entitled "Fresh Market Manager" and
other products and services.
2. Pursuant to an Overhead Sharing and Referral Agreement, between Fresh
Market Manger, LLC and Park City Group, dated May 7, 1999, Fresh Market
Manager and Park City Group have each agreed to provide marketing
assistance to the other through referrals of potential customers, in
exchange for which the source of the referral is entitled to a fee of
approximately twenty percent of the "up front" and deferred sales revenues,
and ongoing revenues related to the referral for a period of three years
from the date of sale. See Exhibit 3.1.M Note (9)(a).
3. Pursuant to a Marketing Assistance Agreement between Fresh Market Manager,
LLC and Riverview Financial Corp, dated May 7, 1999, Riverview has
previously provided to Fresh Market Manager assistance in marketing Fresh
Marketing Manager's software, as requested by Fresh Market Manager, in
exchange for twenty percent of the revenues realized from licensing of the
software, not to exceed an aggregate of $2,000,000 during the term of the
agreement. This agreement was cancelled by the parties in April 2001.
EXHIBIT 4.2.B.4
USE OF PROCEEDS
Increase in sales and marketing staff and related costs 150,000 15%
Increase in advertising programs 125,000 12%
Increase in program development and customer support staff and related costs 200,000 20%
Public reporting and investor relations costs 250,000 25%
Working capital 275,000 28%
------- ---
Total $ 1,000,000 100%
EXHIBIT 4.3.C
CONSENTS
1. Right of First Refusal. With respect to those shares of Park City Group
Capital Stock that have been acquired by the Park City Group's Participants
pursuant to options, Park City Group must waive certain transfer
restrictions and other rights prior to consummation of the transactions
contemplated by the Reorganization Agreement.
2. Debt Conversion into Preferred Stock. With respect to any promissory notes
being converted into preferred stock as contemplated in Exhibit 3.1.D, Park
City Group may need to obtain consents to the conversion.
EXHIBIT 5.3.E
LEGAL OPINION
B-1
EXHIBIT B
AMENDED AMERINET EXHIBITS
AMERINET'S EXHIBITS AMENDMENT #1
The following Exhibits are being delivered by AmeriNet pursuant to the
Reorganization Agreement, dated May 31, 2001, between Xxxxxxx X. Xxxxxx, a Utah
resident, Riverview Financial Corp., a California corporation, and AmeriNet
Xxxxx.xxx, a Delaware corporation (the "Reorganization Agreement").
Any information disclosed in one Exhibit shall be deemed to be disclosed in
all Exhibits to which such information is applicable. References to Articles,
Sections, Paragraphs, and Exhibits shall mean the Articles, Sections, Paragraphs
and Exhibits of the Reorganization Agreement and/or these Exhibits. These
Exhibits are incorporated by reference into and shall be deemed a part of the
Reorganization Agreement.
No reference in these Exhibits to any agreement or documents shall be
construed as an admission or indication to any other party other than Park City
Group, Inc. that such agreement or document is enforceable or currently in
effect under such agreement or document. No disclosure in these Exhibits
relating to any possible breach or violation of any agreement, law, or
regulation shall be construed as an admission or indication to any party other
than Park City Group, Inc. that any such breach or violation exists or has
actually occurred.
Exhibit 1.1O
Consulting Agreement with Yankees
A copy of the consulting agreements between Yankees and AmeriNet has
been provided to Park City.
Exhibit 3.2B
Options & Warrants
AmeriNet has established four stock option plans: (1) Non-qualified and
incentive stock option plan , effective January 1, 2000; (2) Non-qualified and
incentive stock option plan , effective March 8, 2000; (3) 2001 Officers' &
Directors' Stock Option Plan, effective as of January 1, 2001; and (4) AmeriNet
Communications, Inc. Incentive Stock Option Plan Indenture, effective as of
October 1, 2000. Other options and warrants were granted pursuant to
acquisitions or to current stockholders. Park City Group has been provided
copies of all four plans and all warrants and award certificates. The table
provides information related to the options to purchase AmeriNet's common stock
as of May 31, 2001.
Name Title/ Description Amount Price Granted Exercisable
Officers Warrants
for Employment
Xxxxxxx Xxxxxx President 100,000w* $0.69w 8/19/99 9/1/00 to 8/31/03
Xxxxx Xxx Xxxxx President 100,000w* $0.56w 5/22/00 7/1/01 to 6/30/04
Xxxxx Xxx Xxxxx President 50,000w $0.60w 5/22/00 5/22/00 to 8/19/00
Xxxxx Xxxxxxx CFO 50,000w * $1.4325w 2/17/00 7/1/01 to 6/30/04
50,000w * $0.5625w 5/26/00 7/1/01 to 6/30/04
Xxxxxxx Xxxxxxx Secretary 15,000w * $1.28w 11/11/99 1/1/01 to 12/31/02
Director's Options 2000 Plan dated
January 1, 2000
1,000,000 shares
Xxxx X. Xxxxxx Director Audit C 50,000w $1.0625w 10/26/99 1/1/01 to 2/31/02
Xxxxxxx X. Xxxxxx Director Exec. C 30,000 $1.44 11/4/99 * 12/31/02
Xxxxxxx Xxxxxxxxxx Director, Exec. M 25,000 $1.44 11/4/99 * 12/31/02
Xxxxxxx Xxxxx Director , Exec M 35,000 $1.44 11/4/99 * 12/31/02
Xx Xxxxxxx Director, Audit M 25,000 $1.44 11/4/99 * 12/31/02
Xxxxx Xxxxxxx Director 6,000 $1.44 2/17/00 * 12/31/02
Xxxxxxx Xxxxxxx Director, Exec. M 16,200 $1.44 4/6/00 * 12/31/02
Xxxxx Xxx Xxxxx Director, Exec. M 12,600 $1.44 5/22/01 * 12/31/02
Xxxxx Xxxxxxx Director 15,000 $1.44 11/4/99 * 12/31/02
TOTALS 470,200 shares left 529,800 * There are 2,000,000 left under the
under the plan shares March 31, 2000 plan
granted
Directors Options January 1, 2001
Option Plan for
1,000,000 shares
Xxxx Xxxxxx Director, Exec. M 9,000 $0.27 4/16/01 4/16/01-12/31/03
Xxxxx Xxx Xxxxx Director, Exec. M 9,000 $0.27 4/16/01 4/16/01-12/31/03
Xxxxxxx Xxxxxxx Director Exec. M 9,000 $0.27 4/16/01 4/16/01-12/31/03
Xx Xxxxxxx Director Exec C. 11,000 $0.27 4/16/01 4/16/01-12/31/03
Xxxx Xxxxx Director, Audit M 15,000 $0.27 4/16/01 4/16/01-12/31/03
J. Xxxxx Xxxxxxx Director 5,000 $0.27 4/16/01 4/16/01-12/31/03
Xxxxxxx Xxxxxxxxxx Director, 5,000 $0.27 4/16/01 4/16/01-12/31/03
Xxxxx Xxxxxxx Director 5,000 $0.27 4/16/01 4/16/01-12/31/03
Xxxxxxx Xxxxxxxx Director, Audit C 15,000 $0.27 4/16/01 4/16/01-12/31/03
TOTALS 917,000 shares left 83,000
under theplan shares
granted
Warrants &
Options(held by
persons involved
in acquisition of
subsidiaries)
Xxxxxx & Joann Trilogy 6,667w $0.75 11/30/99 11/30/99 to 11/30/04
Xxxxxxx
Xxxxxx Xxxxxx Trilogy 3,333w $0.75 11/30/99 11/30/99 to 11/30/04
Antares Capital Trilogy 47,273w $0.75 11/30/99 11/30/99 to 11/30/04
Management
Xxxxxx Xxxxxx Trilogy 10,000w $0.75 11/30/99 11/30/99 to 11/30/04
Xxxx and Xxxx Trilogy 5,000w $0.75 11/30/99 11/30/99 to 11/30/04
XxXxxx
Xxxxxx Downs Trilogy 12,667 $0.75 11/30/99 11/30/99 to 11/30/04
Xxxxx Glint Trilogy 13,333w $0.75 11/30/99 11/30/99 to 11/30/04
Xxxx Xxxxxxx Trilogy 20,000w $0.75 11/30/99 11/30/99 to 11/30/04
Xxxxxxx Trilogy 5,000w $0.75 11/30/99 11/30/99 to 11/30/04
Xxxxxxxxx
Xxxx & Xxxxx Trilogy 20,000w $0.75 11/30/99 11/30/99 to 11/30/04
Xxxxxx
Xxxxxxx Xxxxxx Trilogy 20,000w $0.75 11/30/99 11/30/99 to 11/30/04
Xxxxxx Xxxxxxxx Trilogy 5,000w $0.75 11/30/99 11/30/99 to 11/30/04
SOG Investments Trilogy 20,000w $0.75 11/30/99 11/30/99 to 11/30/04
Xxxxxx & Xxxxx Trilogy 20,000w $0.75 11/30/99 11/30/99 to 11/30/04
Xxxxx
Xxxx & Xxxxxxx Trilogy 3,333w $0.75 11/30/99 11/30/99 to 11/30/04
Xxxxx
Xxxxxx Xxxxxx Trilogy 20,000w $0.75 11/30/99 11/30/99 to 11/30/04
Xxxx & Xxxxxxx Trilogy 10,000w $0.75 11/30/99 11/30/99 to 11/30/04
Xxxx
Xxxxx Xxxxxxxx Trilogy 6,667w $0.75 11/30/99 11/30/99 to 11/30/04
Xxxxxxxx Xxxxxxx Investor 50,000w $0.75 3/1/00 to 6/30/02
Xxxxx Xxxxxxx Investor 100,000w $0.75 3/1/00 to 6/30/02
Yankee Companies Investor 1,000,000w $0.22 5/2/01 5/31/01to 9/30/01
* Shares which were granted under the Non-qualified and incentive stock
option plan, effective January 1, 2000.
w means warrant, all others are options
3.2B4
Registration Rights
1. List of persons with registration rights:
Xxxxx Xxxxxxx 100,000 shares and 100,000 shares
for warrants
Xxxxxxxx Xxxxxxx 100,000 shares and 50,000 shares
for warrants
Xxxxx Xxxxxxx 100,000 shares
X. Xxxxxx, LTD. 250,001 shares
Xxxxxx X. Xxxxxxxxx 67,000 shares
Xxxxxxxx, Xxxxxx & Xxxxxx, P.A. 50,000 shares
However, all such shares have met Rule 144 holding periods, except for the
150,000 shares reserved for warrants and the 50,000 shares for Xxxxxxxx, Xxxxxx
& Xxxxxx, P.A.
2. List of persons and amounts of stock being registered on S-8 stock prior to
closing:
A. Xxxxxxx X. Xxxxxxx 90,658
B. Xxxxxx Xxxxxxx 187,741
C. Xxxxxxxx Xxx Xxxxx 178,643
D. Xxxxxx Xxxxxxxx 74,101
E. Xxxxxxx X. Xxxxxx 92,216
F. Xxxxxxx Xxxxxxxxxx 2,000
G. Xxxxx Xxxxxxx 10,216
3. The securities that will be registered on the initial SB-2 filed post
closing will include:
A. Coast to Coast Realty 173,908
X. Xxxxxx Trading Corp. SA 700,000
C. SKRD Trading Corp. 10,000
D. Xxxxxxx X. Xxxxxxx 90,680
E. Xxxxxx Xxxxxxx 16,660
F. Xxxxxx Xxxxxx 666,680
X. X. Xxxxxx 761,346
H. Xxxxx Xxxxxxx 836,680
I. Xxxxxxxx Xxxxxxx 816,680
J. Xxxxx Xxxxxx 266,680
K. Palm Air 916,914
L. Xxxxx Xxxxxx ( .333 of his 500,000 PC
shares converted to ABUY
shares )
M. Xxxxx Xxxxxxx 100,000 shares for warrant
N. Xxxxxxxx Xxxxxxx 50,000 shares for warrant
Exhibit 3.2C3
Financial Representations and Disclosure
3.2C3c(1): Except for the divestiture of AmeriNet's subsidiaries, as
required by Park City Group, as a condition to this transaction
3.2C3c(4): Goodwill(an intangible asset) has been and will be materially
reduced as a result of the divestitures of AmeriNet's subsidiaries, as required
by Park City Group, as a condition to this transaction
3.2C3c(7): Except for distributions of securities as required by Park City
Group, as a condition to this transaction
3.2C3c(8): Except for the sale or issuance of AmeriNet's Capital Stock
which is sold or granted in the ordinary course of business. However at closing,
not more than 27,300,000 shares of common stock will be outstanding. Attached
are copies of the common and preferred stock ledgers used by management.
3.2C3c(9): Except for a revolving loan agreement between AmeriNet and the
Yankee Companies, Inc.("Yankees"), dated May 5, 2000, and a convertible loan
agreement between AmeriNet and Yankees, dated May 7, 2001. However, the
revolving loan agreement has been terminated. Copies have been supplied to Park
City Group, along with a copy of the termination agreement between AmeriNet and
Yankees, dated May 23, 2001. The convertible loan agreement has not yet been
terminated, but will be terminated at closing when the outstanding principal
will be converted to AmeriNet common stock at $0.17 per share.
List of Common Shares Issued from December 1998 to May 31,2001
Date Amount of Subscriber Total Offering Total Registration Effective
issued Securities Consideration Discounts or Exemption Date
sold Commission relied on
4,166,148
12/9/98 630,000 Blue Lake Capital Corp $0.02 None (2) 11/06/98
12/9/98 108,750 X. Xxxxxx C/F Xxxxxx Xxxxxx $0.02 None (2) 11/06/98
12/9/98 108,750 X. Xxxxxx C/F Xxxxxxx Xxxxxx $0.02 None (2) 11/06/98
12/9/98 435,000 The Yankee Companies, Inc.("Yankees")$0.02 None (2) 11/06/98
12/9/98 217,500 Xxxxx Family $0.02 None (2) 11/06/98
12/9/98 50,000 Yankees None (6) (2)
12/9/98 125,000 X. Xxxxxxxxxx $0.02 None (2) 11/23/98
12/9/98 62,500 Xxxxxxx Xxxxx $0.02 None (2) 11/23/98
12/9/98 62,500 Xxxxx Field $0.02 None (2) 11/23/98
12/9/98 25,000 Xxxxxxxxxx None (7) (2)
5/25/99 50,000 Xxxxxxx Xxxxxxxxxx for legal services(8) None (2) 05/25/99
5/25/99 47,000 E. Xxxxxxxxx Xxxxx settlement Bolina 30,000 None (2)
shares and X. Xxxxxx 17,000 03/19/99
5/25/99 150,000 Yankees Xxxxx settlement (9) None (2) 02/18/99
7/26/99 1,769 Xxxx Poppitti AITC reorganization (10) (4) (1) 06/25/99
7/26/99 1,105,325 Xxxx Xxxxx AITC reorganization (10) (4) (1) 06/25/99
7/26/99 1,127,431 Xxxxx Xxxxxxx AITC reorganization (10) (4) (1) 06/25/99
9/29/99 122,500 Yankees AITC reorganization (10) (4) (1) 06/25/99
9/29/99 20,000 Xxxxxxx Xxxxxxx Part of Yankees AITC shares (10) (4) (1) 06/25/99
9/29/99 2,500 Xxxxx Xxxxxxxxxx Part of Yankees AITC shares (10) (4) (1) 06/25/99
9/29/99 5,000 Xxxxxx Xxxx Part of Yankees AITC shares (10) (4) (1) 06/25/99
10/7/99 15,000 Xcel In lieu of interest on $75,000 loan(11) None (2) 09/30/99
10/7/99 (126,238) Xxxxx Xxxxxxx sold his shares to Yankees for $0.25 None (3) 08/25/99
10/7/99 (123,762) Xxxx Xxxxx sold his shares to Yankees for $0.25 None (3) 08/25/99
10/7/99 242,211 Yankees bought from Xxxxxxx and Xxxxx None (3) 08/25/99
10/7/99 7,789 Xxxxxxxx & Xxxxx Xxxx part of Yankees bought from None (3) 08/25/99
Xxxxxxx and Xxxxx
10/14/99 7,500 Internet Stock School $6,075 of fixed assets (12) None (2) 07/22/99
10/29/99 (841,378) Xxxxx Xxxxxxx AITC Recission None (2) 10/15/99
10/29/99 (841,378) Xxxx Xxxxx AITC Recission None (2) 10/15/99
11/1/99 190,000 Bolena $0.50 $ 95,000 None (2) 10/28/99
11/12/99 110,000 X. Xxxxxx $0.50 $ 55,000 None (2) 10/26/99
11/29/99 (94,602) Yankees AITC Recission None (2) 10/15/99
12/7/99 2,211 Xxxxxxxx & Xxxxx Xxxx AITC Stockholder and Exchanging None (2) 9/27/99
stockholders agreement (10)
12/14/99 40,000 Xxxxxxxx Xxxxxxx $0.50 $ 20,000 None (2) 06/23/99
12/14/99 100,000 Xxxxx Xxxxxxx $0.50 $ 50,000 None (2) 06/23/99
12/14/99 40,000 Xxxxxx Coleitti $0.50 $ 20,000 None (2) 06/23/99
12/14/99 20,000 Xxxxx Xxxxxxx $0.50 $ 10,000 None (2) 09/08/99
12/14/99 80,000 Yankees $0.25 $ 20,000 (4) (2) 06/24/99
12/14/99 30,000 Yankees $0.25 $ 7,500 (4) (2) 09/03/99
12/17/99 500,380 Xxxxxxx Xxxxxx WRI merger None (2) 11/12/99
12/17/99 10,000 X. Xxxxx WRI merger None (2) 11/12/99
12/17/99 10,000 X. Xxxx WRI merger None (2) 11/12/99
12/17/99 10,620 Source Marketing WRI merger None (2) 11/12/99
12/17/99 13,319 Yankees WRI merger (4) (2) 11/12/99
12/17/99 2,500 Xxxxxx Xxxx Part of Yankees WRI shares(14) (4) (2) 11/12/99
12/17/99 1,000 Xxxxx Xxxxxxxxxx Part of Yankees WRI shares(14) (4) (2) 11/12/99
12/17/99 3,500 Xxxxxxx Xxxxxxx Part of Yankees WRI shares(14) (4) (2) 11/12/99
12/17/99 13,275 Xxxxx Xxxxxxx Part of Yankees WRI shares(14) (4) (2) 11/12/99
12/17/99 13,275 Xxxx Xxxxx Part of Yankees WRI shares(14) (4) (2) 11/12/99
12/17/99 6,231 Xxxx Poppitti Part of Yankees WRI shares(14) (4) (2) 11/12/99
12/17/99 100,000 Xxxxxxx Xxxxxxxxx $0.50 $ 50,000 None (2) 11/10/99
TOTAL 8,164,126
01/04/00 16,000 Xxxxxx X. & Xxxxx Xxxxxxx Trilogy Reorganization (15) None (1) 12/01/99
JTWROS
01/04/00 8,000 Xxxxxx X. Xxxxxx Trilogy Reorganization (15) None (1) 12/01/99
01/04/00 113,454 Antares Capital
Management, Inc. Trilogy Reorganization (15) None (1) 12/01/99
01/04/00 24,000 Xxxxxx Xxxxxx Trilogy Reorganization (15) None (1) 12/01/99
01/04/00 12,000 Xxxx & Xxxx DeRosaJTWROS Trilogy Reorganization (15) None (1) 12/01/99
01/04/00 31,333 Xxxxxx X. Xxxxxx Trilogy Reorganization (15) None (1) 12/01/99
01/04/00 32,000 Xxxxx Glint Trilogy Reorganization (15) None (1) 12/01/99
01/04/00 48,000 Xxxx X. Xxxxxxx Trilogy Reorganization (15) None (1) 12/01/99
01/04/00 12,000 Xxxxxxx X. Xxxxxxxxx Trilogy Reorganization (15) None (1) 12/01/99
01/04/00 48,000 Xxxx & Xxxxx X. MaxwellJTWROS Trilogy Reorganization (15) None (1) 12/01/99
01/04/00 48,000 Xxxxxxx X. Xxxxxx Trilogy Reorganization (15) None (1) 12/01/99
01/04/00 12,000 Xxx Xxxxxxx Trilogy Reorganization (15) None (1) 12/01/99
01/04/00 48,000 SOG Investments, Inc. Trilogy Reorganization (15) None (1) 12/01/99
01/04/00 48,000 Xxxxxx X. Xxxxx & Xxxxx Trilogy Reorganization (15) None (1) 12/01/99
X. Xxxxx JTWEROS
01/04/00 8,000 Xxxx X. Xxxxx Xx.& Trilogy Reorganization (15) None (1) 12/01/99
Xxxxxxx MeeksJTWROS
01/04/00 48,000 Xxx Xxxxxx Trilogy Reorganization (15) None (1) 12/01/99
01/04/00 24,000 Xxxx & Xxxxxxx Xxxx JTWROS Trilogy Reorganization (15) None (1) 12/01/99
01/04/00 16,000 Xxxxx X. Xxxxxxxx Trilogy Reorganization (15) None (1) 12/01/99
01/04/00 841,381 Xxxxxx & Xxxxx Xxxxxxx Trilogy Reorganization (15) None (1) 12/01/99
01/04/00 800 Xxxxxxx Xxxxxxx Trilogy Reorganization (15) None (1) 12/01/99
01/04/00 800 Xxxx Xxxxxx Xxxxxxxxx Trilogy Reorganization (15) None (1) 12/01/99
01/04/00 576 Xxxxxxx Xxxxx Trilogy Reorganization (15) None (1) 12/01/99
01/04/00 576 Xxxxxx Xxxxxxxxx Trilogy Reorganization (15) None (1) 12/01/99
01/04/00 534 Xxxx Xxxxx Trilogy Reorganization (15) None (1) 12/01/99
01/04/00 6,934 Xxxxx Xxxxxxx Trilogy Reorganization (15) None (1) 12/01/99
01/04/00 309 Xxx XxXxxx Trilogy Reorganization (15) None (1) 12/01/99
01/04/00 309 Xxxxx Xxxxx Trilogy Reorganization (15) None (1) 12/01/99
01/04/00 412 Xxxx Hinnick Trilogy Reorganization (15) None (1) 12/01/99
01/04/00 72,864 Yankees Trilogy Reorganization (16) (4) (1) 12/01/99
01/04/00 90,863 Xxxxxx Xxxxxx Part of Yankees shares (4) (1) 12/1/99
for Trilogy Reorg. (16)
01/04/00 18,000 Xxxxx Family Part of Yankees shares (4) (1) 12/1/99
for Trilogy Reorg (16)
1/12/00 200,000 Yankees $0.25 $ 50,000 (4) (2) 11/19/99
1/21/00 67,000 Xxx Xxxxxxxxx $0.75 $ 50,250 None (2) 12/16/99
5/2/00 133,334 X. Xxxxxx, Ltd. $0.75 $ 100,000 None (2) 01/31/00
5/2/00 100,000 X. Xxxxxx, Ltd. $0.75 $ 75,000 None (2) 03/09/00
5/2/00 100,000 X. Xxxxxx, Ltd. $0.60 $ 60,000 None (2) 03/23/00
5/2/00 100,000 Xxxxxxxx Xxxxxxx $0.75 $ 75,000 None (2) 01/31/00
5/2/00 100,000 Xxxxx Xxxxxxx $0.75 $ 75,000 None (2) 02/28/00
5/2/00 100,000 Xxxxx Xxxxxxx $0.75 $ 75,000 None (2) 01/31/00
5/2/00 200,000 Bolena Trading Corp. S.A.$0.60 $ 120,000 None (2) 03/15/00
6/15/00 200,000 Xcel Associates, Inc. settlement (17) None (2) 05/31/00
6/16/00 4,400 Xxxxxx Xxxxxx Shares he didn't (4) (1) 12/01/99
originally receive (15)
6/30/00 11,100,005 Total
7/3/00 377,099 Xxxxxx & Xxxxx Xxxxxxxxxx Xxxxxxx (18) (4) (1) 05/11/00
Reorganization
7/3/00 114,504 Yankees as escrow agent Xxxxxxx reorganization
as escrow agent (4) (1) 05/11/00
(18)
7/3/00 80,916 Xxxxx Xxxxxxxx,
Esquire as escrow agent Xxxxxxx Reorganization
as escrow agent (4) (1) 05/11/00
(18)
7/3/00 9,427 Xxxx Xxxxx Part of Yankees shares (4) (1) 05/11/00
for Xxxxxxx Reorganization
(18)
7/3/00 9,427 Xxxxx Xxxxxxx Part of Yankees shares
for Xxxxxxx Reorganization (4) (1) 05/11/00
(18)
7/3/00 8,869 Xxxxxx Xxxxxxxx Part of Yankees shares (4) (1) 05/11/00
for Xxxxxxx Reorganization
(18)
7/3/00 4,987 X. Xxxxxx, Ltd. Part of Yankees shares (4) (1) 05/11/00
for Xxxxxxx Reorganization
(18)
7/3/00 5,000 Xxxxx Xxx Xxxxx Part of Yankees shares (4) (1) 5/11/00
for Xxxxxxx Reorganization
(18)
7/3/00 7,000 Yankees in consideration for use (4) (2)
of collateral by Xcel
(11)
7/13/00 200,000 Palmair, Inc. $4,000 exercise of warrant
(19) None (2) 04/08/00
7/13/00 56,000 Yankees $0.125 $ 7,000 (4) (2) 06/16/00
7/13/00 50,000 Xxxxxx Xxxxxxxx $0.25 $ 12,500 None (2) 06/05/00
7/13/00 50,000 Xxxx Xxxxxxxx $0.25 $ 12,500 None (2) 06/05/00
7/13/00 12,000 Xxxxx Xxx Xxxxx $0.25 $ 7,000 None (2) 06/08/00
7/13/00 12,000 Xxxxx Xxx Xxxxx $0.25 $ 7,000 None (2) 06/08/00
7/13/00 16,000 American Express for
Xxxxx Xxx Xxxxx $0.25 $ 7,000 None (2) 06/08/00
7/13/00 16,000 American Express for
Xxxxx Xxx Xxxxx $0.25 $ 7,000 None (2) 06/08/00
7/13/00 12,129,234 Total
9/12/00 12,129,234 Total
11/8/00 (841,381) Return of
Xxxxxxx'x Stock superseder and exchange agreement None (1) 06/30/00
(15)
12/13/00 700,000 Yankees $0.125 Yankees converted $98, 500
of debt to equity (4) (2) 06/30/00
(20)
12/13/00 20,000 Coast to Coast Realty, Inc. Part of Yankees conversion
(20) (4) (2) 06/30/00
12/13/00 5,000 Xxxxxxx X. Xxxxxxx Part of Yankees conversion
(20) (4) (2) 06/30/00
12/13/00 9,000 Xxxxxx Xxxxxxxx Part of Yankees conversion
(20) (4) (2) 06/30/00
12/13/00 50,000 Xxxxx Xxx Xxxxx Part of Yankees conversion
(20) (4) (2) 06/30/00
12/13/00 2,000 Xxxxx Xxxxxxxx Part of Yankees conversion
(20) (4) (2) 06/30/00
12/13/00 2,000 Xxxxx Xxxxxxxx Part of Yankees conversion
(20) (4) (2) 06/30/00
12/13/00 200,000 X. Xxxxxx, Ltd. $0.25 $ 50,000 None (2) 05/16/00
12/13/00 16,667 X. Xxxxxx, Ltd. $0.60 $ 10,000.20 None (2) 05/16/00
12/31/00 12,292,520 TOTAL
3/7/01 4,000 Xxxxxx X. & Xxxxx Xxxxxxx Trilogy Escrow
(15) None (1) 12/01/99
3/7/01 2,000 Xxxxxx Xxxxxx Trilogy Escrow
(15) None (1) 12/01/99
3/7/01 28,364 Antares Capital
Management, Inc. Trilogy Escrow (15) None (1) 12/01/99
3/7/01 6,000 Xxxxxx Xxxxxx Trilogy Escrow (15) None (1) 12/01/99
3/7/01 3,000 Xxxx & Xxxx Xx Xxxx Trilogy Escrow (15) None (1) 12/01/99
3/7/01 8,933 Xxxxxx Xxxxxx Trilogy Escrow (15) None (1) 12/01/99
3/7/01 8,000 Xxxxx Glint Trilogy Escrow (15) None (1) 12/01/99
3/7/01 12,000 Xxxx Xxxxxxx Trilogy Escrow (15) None (1) 12/01/99
3/7/01 3,000 Xxxxxxx X. Xxxxxxxxx Trilogy Escrow (15) None (1) 12/01/99
3/7/01 12,000 Xxxx X. Xxxxxx &
Xxxxx X. Xxxxxxx Trilogy Escrow (15) None (1) 12/01/99
3/7/01 12,000 Xxxxxxx X. Xxxxxx Trilogy Escrow (15) None (1) 12/01/99
3/7/01 3,000 Xxxxxx Xxxxxxxx Trilogy Escrow (15) None (1) 12/01/99
3/7/01 12,000 SOG Investments Trilogy Escrow (15) None (1) 12/01/99
3/7/01 12,000 Xxxxxx X. & Xxxxx X. Xxxxx Trilogy Escrow (15) None (1) 12/01/99
3/7/01 2,000 Xxxx X. Xxxxx &
Xxxxxxx Xxxxx Trilogy Escrow (15) None (1) 12/01/99
3/7/01 12,000 Xxxxxx Xxxxxx Trilogy Escrow (15) None (1) 12/01/99
3/7/01 6,000 Xxxx & Xxxxxxx Xxxx Trilogy Escrow (15) None (1) 12/01/99
3/7/01 4,000 Xxxxx X. Xxxxxxxx Trilogy Escrow (15) None (1) 12/01/99
3/7/01 200 Xxxxxxx Xxxxxxx Trilogy Escrow (15) None (1) 12/01/99
3/7/01 200 Xxxx Xxxxxx Xxxxxxxxx Trilogy Escrow (15) None (1) 12/01/99
3/7/01 144 Xxxxxxx Xxxxx Trilogy Escrow (15) None (1) 12/01/99
3/7/01 144 Xxxxxx Xxxxxxxxx Trilogy Escrow (15) None (1) 12/01/99
3/7/01 133 Xxxx Xxxxx Trilogy Escrow (15) None (1) 12/01/99
3/7/01 1,733 Xxxxx X. Xxxxxxx Trilogy Escrow (15) None (1) 12/01/99
3/7/01 77 Xxxxxxxx Mc Ever Trilogy Escrow (15) None (1) 12/01/99
3/7/01 77 Xxxxx Xxxxx Trilogy Escrow (15) None (1) 12/01/99
3/7/01 103 Xxxx Xxxxxxxx Trilogy Escrow (15) None (1) 12/01/99
3/7/01 15,947 Yankees Trilogy Escrow (15) None (1) 12/01/99
3/7/01 10,000 Xxxxx Family Trilogy Escrow (15) None (1) 12/01/99
Spendthrift Trust (AmeriNet Group)
3/7/01 16,947 Xxxxxx Xxxxxx Trilogy Escrow (15) None (1) 12/01/99
3/23/01 (15,947) Yankees returned-
issued wrong number of Trilogy Escrow (15) None (1) 12/01/99
shares on 3/7/01
3/23/01 5,000 Xxxxxxxxxx Capital Yankees compensation None (1) 12/1/99
Trilogy Escrow (15)
3/23/01 1,947 Yankees Trilogy Escrow (15) None (1) 12/1/99
3/31/01 12,479,522 TOTAL
4/26/01 (500,380) Xxxxxxx Xxxxxx Return of shares pursuant
to WRI settlement agreement
(13)
5/14/01 7,720 Frontline Processing settlement on behalf None (1)
of Xxxxx and Xxxxxxx AITC
5/3/01 484,752 Yankees Yankees exercise of warrant
(21) (4) (2)
5/3/01 1,000,000 Xxxxx Family Yankees exercise of warrant (4) (2)
and distributed shares back
to its stockholders
(21)
5/3/01 1,000,000 Xxxxxx Family Yankees exercise of warrant and (2)
distributed shares back to its
stockholders (21)
5/23/01 10,000 Xxxxxx X. Xxxxxxx escrow agent for WRI and (2)
PriMed agreement
5/28/01 173,908 Coast To Coast Realty, Inc. Services as corporation information (2)
spokesperson May 2000 to May 2001
5/28/01 220,000 Bolina Trading Corp conversion of debt to equity (2)
$55,000 @$0.25
5/28/01 10,000 SKRD Trading Corp Conversion of preferred to common
5/28/01 90,680 Xxxxxxx X. Xxxxxxx Conversion of preferred to common
5/28/01 16,660 Xxxxxx X. Xxxxxxx Conversion of preferred to common
5/28/01 666,680 Xxxxxx Xxxxxx Conversion of preferred to common
5/31/01 227,860 X. Xxxxxx Conversion of preferred to common
5/31/01 480,000 Bolena Conversion of preferred to common
5/31/01 600,000 Xxxxx Family Conversion of preferred to common
5/31/01 5,193,340 Yankees Conversion of preferred to common
5/31/01 186,680 Xxxxx Xxxxxxx Conversion of preferred to common
5/31/01 166,680 Xxxxxxxx Xxxxxxx Conversion of preferred to common
5/31/01 166,680 Xxxxx Xxxxxxx Conversion of preferred to common
5/31/01 450,400 Palm Air Conversion of preferred to common
5/31/01 26,660 Xxxxxxx X. Xxxxxx Conversion of preferred to common
5/31/01 573,340 Blue Lake Conversion of preferred to common
6/8/01 178,643 Xxxxxxxx X. Xxx Xxxxx compensation and expenses S-8
6/8/01 74,101 Xxxxxx Xxxxxxxx compensation S-8
6/8/01 90,658 Xxxxxxx X. Xxxxxxx compensation S-8
6/8/01 187,741 Xxxxxx X. Xxxxxxx compensation and expenses S-8
6/8/01 92,216 Xxxxxxx X. Xxxxxx compensation S-8
6/8/01 2,000 G. Xxxxxxx Xxxxxxxxxx compensation S-8
6/8/01 10,216 Xxxxx X. Xxxxxxx compensation S-8
6/8/01 533,486 X. Xxxxxx Finders fee
6/8/01 466,514 Palm Air
6/8/01 650,000 Xxxxxxxx Xxxxxxx finders fee
6/8/01 650,000 Xxxxx Xxxxxxx finders fee
6/8/01 161,622 Xxxxx Family Spendthrift Trust Yankees exercise of warrant and
distributed shares back to its
stockholders (21)
6/8/01 161,621 Xxxxxx Family Spendthrift Trust Yankees exercise of warrant and
distributed shares back to its
stockholders (21)
6/8/01 150,000 Xxxxxxx X. Xxxxxxx Yankees exercised warrant &
distributed shares to its employees (21)
6/8/01 100,000 Xxxxxx X. Xxxxxxx Yankees exercised warrant (21)
6/8/01 20,000 Xxxxx Xxxxxxxx Yankees exercised warrant &
distributed shares to its employees (21)
6/8/01 20,000 Xxxxx Malonari Yankees exercised warrant &
distributed shares to its employees (21)
6/8/01 20,000 Xxxxxx Xxxx Yankees exercised warrant &
distributed shares to its employees (21)
6/8/01 5,000 Xxxxxxxx Xxxxxxx Yankees exercised warrant &
distributed shares to its employees (21)
6/8/01 (5,000) Xxxx Xxxxxxx AmeriNet purchased shares for $1500
27,300,000 total common stock outstanding
(1) Section 4(2) of the Securities Act. In each case, the subscriber was
required to represent that the shares were purchased for investment
purposes, the certificates were legended to prevent transfer except in
compliance with applicable laws and the transfer agent was instructed
not to permit transfers unless directed to do so by our company, after
approval by its legal counsel. In addition, each subscriber was
directed to review our company's filings with the Commission under the
Exchange Act and was provided with access to our company's officers,
directors, books and records, in order to obtain required information.
(2) Section 4(6) of the Securities Act. In each case, the subscriber was
required to represent that the shares were purchased for investment
purposes, the certificates were legended to prevent transfer except in
compliance with applicable laws and the transfer agent was instructed
not to permit transfers unless directed to do so by our company, after
approval by its legal counsel. Each subscriber was directed to review
our company's filings with the Commission under the Exchange Act and
was provided with access to our company's officers, directors, books
and records, in order to obtain required information; and, a Form D
reporting the transaction was filed with the Commission.
(3) Section 4(1 1/2 ) of the Securities Act. The transaction involved a
private sale of restricted securities under the exemption commonly
referred to as the Section 4 1 1/2 exemption. The recipient receives
restricted securities but, if obtained from a person not deemed a
control person under Commission Rule 144, the recipient is permitted
to "tack the transferor's holding period" for purposes of Commission
Rule 144.
(4) No commissions or discounts were paid to anyone in conjunction with
the sale of the foregoing securities, except that Yankees exercised
preferential subscription rights granted by our company in Yankees'
consulting agreement or that it may be entitled to compensation based
on the terms of its consulting agreement with our company.
(5) Part of a private placement of 1,750,000 shares of our company's
common stock required to raise emergency capital for our company and
to induce Yankees to provide services to our company and recruit
officers and directors while its consulting agreement with our company
was being negotiated.
The shares were allocated by Yankees among its stockholders and their
families and to three individuals who agreed to serve as members of
our company's board of directors (one of whom who also agreed to serve
as our company's secretary and general counsel). Consideration was an
aggregate of $35,000.
(6) Reimbursement for 50,000 shares transferred by the Xxxxx Family
Spendthrift Trust to Xxxxxxxxxx Capital Corp., at the request of
Xxxxxx Xxxxxxxxx-Xxxxx, Xx., then our company's sole executive officer
and director, in partial consideration for its agreement to assist our
company.
(7) Consulting assistance pertaining to resumption of trading in our
company's securities, including preparation of required disclosure
information pursuant to Commission Rule 5c2-11, coordinating with
market makers in filing Form 15c2-11 with the NASD and general
business advice and assistance.
(8) Shares issued to G. Richard Chamberlin, Esquire, a member of our
company's board of directors as well as its secretary and general
counsel, as additional consideration for services rendered in
conjunction with preparation of our company's Form 10-KSB for the year
ended December 31, 1998.
(9) The shares were issued in a settlement with William A. Calvo, III, for
services and related costs provided between 1995 and 1998, prior to
the creation of Yankees. The original balance due was approximately
$150,000 but the terms of the settlement were not consistent with
representations made by our company in conjunction with other
transactions at the time. As a result, our company agreed to adjust
the compensation by issuance of 150,000 shares of its common stock,
originally valued by our company and Mr. Calvo at $3,000, with the
remaining balance due being written off in the interests of preserving
our company's future business prospects. Mr. Calvo, as a principal of
Yankees, had assigned his rights to such shares to Yankees which was
responsible for the decision to write-off the remaining balance due.
During our company's latest audit, the value was adjusted to $24,000
based on the average of the bid and offering price for our company's
common stock ($0.16) on February 18, 1999, the date the agreement was
amended, and thereafter, based on comments by the Commission's staff,
the difference between the amount owed and such fair market value
($126,000) was treated as additional capital contributed to our
company by Mr. Calvo.
(10) Shares of common stock issued to former stockholders of American
Internet who were officers or directors thereof in exchange for their
American Internet shares and to Yankees and its designees pursuant to
the terms of its consulting agreement with our company in
consideration for its role in arranging the acquisition (after
material reductions based on American Internet's failure to meet its
performance projections and inaccuracies in certain pre-acquisition
representations by American Internet's management).
(11) Shares issued to Xcel in lieu of interest on a $75,000 loan (15,000
shares) and to Yankees for having pledged 35,000 shares of our
company's common stock as security for such loan (7,000 shares).
(12) Shares issued to Internet Stock Trading School pursuant to the terms
of the Equipment Purchase Agreement
(13) On November 12, 1999, WRI was merged into American Internet with all
of WRI's capital stock canceled and converted into 531,000 shares of
our company's's common stock. In addition, the former WRI stockholders
were granted the right to receive up to 150,000 additional shares of
our company's common stock, based on WRI's performance over a three
year period. 500,380 shares were returned by Michael Caputa pursuant
to the terms of a settlement agreement.
(14) Pursuant to the terms of its consulting agreement with our company,
Yankees was entitled to compensation in an amount equal to 10% of the
consideration received by the former WRI stockholders, for its
services in arranging for the acquisition of WRI. As contemplated in
its consulting agreement, a portion of such compensation was assigned
by Yankees to persons who provide it with assistance in performing its
services. In addition, Yankees voluntarily assigned 6,231 shares to
Lynn Popitti, a former stockholder in American Internet.
(15) Shares issued in exchange for all of Trilogy's capital stock,
1,105,726 of the shares returned by Mr. and Mrs. Berardi pursuant to
the terms of a settlement agreement.
(16) Pursuant to the terms of its consulting agreement with our company,
Yankees was entitled to compensation in an amount equal to 10% of the
consideration received by the former Trilogy stockholders, for its
services in arranging for the acquisition of Trilogy, half of which
was assigned by Yankees to Robert Harris Pozner in consideration for
his assistance in conjunction with the acquisition.
(17) On May 31, 2000, our company entered into a settlement agreement with
Xcel Associates, Inc. A copy of the settlement agreement was filed as
an exhibit to a current report on Form 8-K filed with the Commission
on June 15, 2000
(18) Shares of common stock issued to Gerald A. and Leigh A. Cunningham,
former stockholders of Lorilei who were officers or directors thereof,
in exchange for their Lorilei shares and to Yankees and its designees
pursuant to the terms of its consulting agreement with our company in
consideration for its role in arranging the acquisition. A portion of
the shares are being held by Yankees as escrow agent (114,504 shares)
and by Bruce Brashear, Esquire as escrow agent (80,916 shares).
Pursuant to the terms of its consulting agreement with our company,
Yankees is entitled to compensation in an amount equal to 10% of the
consideration received by the former Lorilei stockholders, for its
services in arranging for the acquisition of Lorilei, of which was
assigned by Yankees to others.
(19) On December 11, 1998, Mr. Scimeca received options to purchase 200,000
shares of our company's common stock, at an exercise price of $0.02
per share as his only compensation from our company for services in
all capacities. Mr. Scimeca transferred all of his rights to our
company's securities, including those reflected in this table, to
Palmair, Inc., a Bahamian corporation, with an address at 55 Frederick
Street, Box CB-13039; Nassau, Bahamas ("Palmair"). Chrisje
Gentis-VerMeulen, an individual with an address at Brouwrij 8;
Breukelen (UTR) 3621, The Netherlands ("Ms. Gentis-VerMeulen"), is
listed as the record stockholder and director of Palmair. The option
was exercised by Palmair, Inc. on April 8, 2000.
(20) At the issuers request, Yankees converted $98,5000 of debt to equity (
a total of 788,000 shares of common stock ). A portion of the 788,000
shares received by Yankees was given to persons by Yankees.
(21) Option to purchase 12.5% of our company's outstanding and reserved
capital stock (including all securities convertible into capital
stock) outstanding or reserved, measured immediately following
exercise of the option, in consideration for an aggregate of $90,000.
The option was originally granted during November of 1998 and covered
10% of our company's outstanding or reserved common stock only, with
the exercise price being $60,000. It was granted as a portion of
consideration granted to Yankees under its consulting agreement with
our company, in exchange for Yankees agreement to forego hourly and
document licensing fees for a period of 365 days. During November of
1999, our company requested that the consulting agreement be
renegotiated to extend for another year the waiver of Yankees' hourly
and document licensing fees and in conjunction with the resulting
amendment, the current terms were adopted. The amendment was disclosed
in a report on Commission Form 8-K filed by our company on December
16, 1999. The number of shares issuable cannot be determined with
certainty, The transaction and option agreement are more fully
described in our company's report on Form 10-QSB for the quarter ended
September 30, 1998, its Form 10- KSB for the years ended December 31,
1998 and June 30, 1999, and the report on Form 8-K filed on December
16, 1999. It has been assumed that the option will cover 2,500,000
shares since only 20,000,000 shares of common stock are authorized;
however, the number may be different based on the actual number of
outstanding and reserved shares of capital stock. (actual certificate
was for 2,484,752 shares)
List of Preferred Shares Issued as of May 15, 2001
Date $ No. of Certific Stockholders Name & $ paid Date of From Whom To Whom Shares are Certific # of
received Shares & ate No. address per share Transfe transferred Transferred ate # Shares
& Date Signed &
Issued subscripti Exempti
on agree. on #
7-3-00 6,000 yes 22 (2) Bolina Trading Corp. S.A. $5.00
($30,000)
7-7-00 3,600 yes 23 (2) Bolina Trading Corp. S.A. $5.00
($18,000)
7-27-00 8,000 yes 24 (2) Bolina Trading Corp. S.A. $5.00
($40,000
8-15-00 46,000 yes 14 (2) The Yankee Companies, Inc. $2.50 *
($115,000
8-15-00 3,393 yes 15 (2) K. Walker Ltd. $5.00 *
($16,965)
8-30-00 5,920 yes 16 (2) PalmAir, Inc. $5.00
($29,600)
10-5-00 100,000 (2) The Yankee Companies, Inc. $2.50 * 10-5-00 Yankees Bolina Trading Corp. S.A. 25 6,400
yes ("Yankees")($250,000
10-5-00 Yankees Vanessa H. Lindsey 18 500
10-5-00 Yankees PalmAir, Inc. 20 6,600
10-5-00 Yankees Debra Ellenson 21 1,000
10-5-00 Yankees Yankees 17 85,500
11-13-00 27,797 yes (2) Yankees $2.50 * 11-13-00 Yankees Palm Air 02 2,000
($64,492.50)
11-13-00 Yankees Vanessa Lindsey 03 797
11-13-00 Yankees Yankees 01 25,000
11-13-00 16,000 yes (2) Yankees $2.50 *
($40,000)
12-15-00 30,000 yes (2) Yankees $2.50* 12-5-00 Yankees Vanessa Lindsey 05 1,000
($75,000)
12-5-00 Yankees PalmAir, Inc. 06 2,000
12-5-00 Yankees Yankees 04 27,000
1-31-01 5,000 yes (2) Yankees $10,000 1-31-01 Yankees Debra Elenson 08 5,000
January
compensation
1-31-01 10,000 yes (2) Yankees $2.00* 1-31-01 Yankees Jonathan Eichner 09 5,000
($20,000)
1-31-01 Yankees Scott Heicken 10 5,000
1/29/01 1,333 (2) Leonard M. Tucker $1.50
($2,000)
2/28/01 10,000 yes 36 (2) Blue Lake Capital Corp. $1.50
($15,000)
2/28/01 12,000 yes 28 (2) Yankees $1.50
($18,000)
2/28/01 6,667 yes (2) Yankees $1.50 2/28/01 Yankees K. Walker, Ltd. 29 2,500
($10,000)
February
compensation
2/28/01 Yankees PalmAir, Inc. 30 2,500
2/28/01 Yankees Vanessa Lindsey 31 834
2/28/01 Yankees Edward Dmytryk 33 833
3/1/01 10,000 yes 35 (2) Calvo Family Spendthrift Trust $1.50
($15,000)
3/31/01 6,667 yes (2) Yankees $1.50 3/31/01 Yankees K. Walker, Ltd. 29 4,000
($10,000)
March
compensation
3/31/01 Yankees SRKD Trading Corp. 34 500
2500 N. Military Trail,
Suite 240; Boca Raton, FL 33431
3/31/01 Yankees Vanessa Lindsey 31 667
3/31/01 Yankees Yankees 28 1,500
3/31/01 89,072 yes (2) Yankees $1.50 3/31/01 Yankees PalmAir 30 3,500
($133,608)
3/31/01 Yankees K. Walker 29 1,500
3/31/01 Yankees Vanessa Lindsey 31 736
3/31/01 Yankees Yankees 28 83,336
(3) Yankees took shares from cert 3/16/01 Yankees Robert Pozner (33,334)
# ____ and had it issued
(3) Yankees took shares from cert 3/19/01 Yankees Debra Ellenson (3,334)
# ____ and had it issued
(3) Yankees took shares from cert 3/19/01 Yankees Scott Heicken (3,334)
# ____ and had it issued
(3) Yankees took shares from cert 3/19/01 Yankees Jonathan Eichner (3,334)
# ____ and had it issued
3/31/01 14,667 yes 36 (2) Blue Lake Capital $1.50
($22,000)
3/31/01 1,333 yes 35 (2) Calvo Family $1.50
($2,000)
4/10/01 6667 (2) Calvo Family $1.50
($10,000)
4/10/01 4,000 36 (2) Blue Lake $1.50
($6,000)
4/24/01 4,000 (2) Calvo Family $1.50
($6,000)
4/27/01 4,000 (2) Calvo Family $1.50
($6,000)
4/30/01 6,667 (2) Yankees $10,000
compensation
for April
5/3/01 (6667) 04 Yankees cashless 5/3/01 Yankees received
exercise 20,333 shares back
of warrant from certificate # 4
which was originally
for 27,000 shares
5/701 4,000 (2) Calvo Family $1.50
($6,000)
5/31/01 6667 (2) Yankees $1.50
($10,000)
May
compensation
5/25/01 (500) SKRD Trading Corp. (4)
5/25/01 (4534) Vanessa Lindsey (4)
5/25/01 (833) Edward C. Dmytryk (4)
5/25/01 (33,334) Robert Pozner (4)
5/31/01 (24,000) Bolina Trading Corp (4)
5/31/01 (1,333) Leonard M. Tucker (4)
5/31/01 (22,520) PalmAir, Inc. (4)
5/31/01 (11,393) K. Walker (4)
5/31/01 (9,334) Debra Elenson (4)
5/31/01 (28,667) Blue Lake capital (4)
5/31/01 (30,000) Calvo Family (4)
5/31/01 (8,334) Scott Heicken (4)
5/31/01 (8,334) Jonathan Eichner (4)
5/31/01 (259,667) Yankees (4)
0 shares outstanding
* certificate numbers 11, 12, 13, 19 are all voided and cancelled.
(1) Section 4(2) of the Securities Act. In each case, the subscriber was
required to represent that the shares were purchased for investment
purposes, the certificates were legended to prevent transfer except in
compliance with applicable laws and the transfer agent was instructed not
to permit transfers unless directed to do so by our company, after approval
by its legal counsel. In addition, each subscriber was directed to review
our company's filings with the Commission under the Exchange Act and was
provided with access to our company's officers, directors, books and
records, in order to obtain required information.
(2) Section 4(6) of the Securities Act. In each case, the subscriber was
required to represent that the shares were purchased for investment
purposes, the certificates were legended to prevent transfer except in
compliance with applicable laws and the transfer agent was instructed not
to permit transfers unless directed to do so by our company, after approval
by its legal counsel. Each subscriber was directed to review our company's
filings with the Commission under the Exchange Act and was provided with
access to our company's officers, directors, books and records, in order to
obtain required information; and, a Form D reporting the transaction was
filed with the Commission.
(3) Section 4(1 1/2 ) of the Securities Act. The transaction involved a private
sale of restricted securities under the exemption commonly referred to as
the Section 4 1 1/2 exemption. The recipient receives restricted securities
but, if obtained from a person not deemed a control person under Commission
Rule 144, the recipient is permitted to "tack the transferor's holding
period" for purposes of Commission Rule 144.
(4) Converted preferred shares to Common.
Exhibit 3.2C4
Comment Letters from the Securities & Exchange Commission
The company received a notice from the Securities and Exchange Commission
on March 15, 2001, suggesting that an S-3 would be inappropriate to file:
"because we failed to meet the requirements for the use of this form,
specifically General Instruction 1.B.3." Park City Group has been provided a
copy of the letter from the Commission.
Exhibit 3.2E
Pending & Threatened Litigation
AmeriNet is not aware of any threatened litigation, except that one of its
directors, J. Bruce Gleason has refused to sign a termination and settlement
agreement based on the following allegation, which management refutes:
J. Bruce Gleason, a member of AmeriNet's board through an acquisition,
indicated that he feels he is owed approximately $32,000 from AmeriNet. Ed
Dmytryk showed existing documents and information pertaining to this claim and
the Board determined that there was no cause for the Board to settle. However a
compromise was offered and Mr. Gleason refused the compromise. A copy of the
letter from Bruce Gleason's attorney and his partner, Mr. Umile, have been
provided to Park City Group.
AmeriNet, Inc., a Delaware corporation, owns the trademark for AmeriNet,
AmeriNet and Design. In August of 1999, AmeriNet, Inc. threatened action if
AmeriNet Xxxxx.xxx, Inc. continued using the abbreviated form of AmeriNet in its
communication. In April of 2001, Ed Dmytryk, talked to both AmeriNet, Inc's
lawyer and president and discussed the pending acquisition of Park City Group.
The president of AmeriNet, Inc. indicated that if the acquisition took place
there would be no further action on their behalf as long as AmeriNet Xxxxx.xxx,
Inc.'s name changed, as agreed to by Park City Group. A copy of the letter from
AmeriNet, Inc's lawyer has been provided to Park City Group.
AmeriNet of Michigan, a Michigan corporation, owns the trademark for
AmeriNet In December of 1999, AmeriNet of Michigan assured AmeriNet Xxxxx.xxx,
Inc. that they would continue to monitor the situation and will take appropriate
action to protect its rights if any actual confusion occurs between our company
and their company. A copy of the letter from AmeriNet of Michigan's lawyer has
been provided to Park City Group.
Exhibit 3.2F
Tax Obligations and Liens
1. The exceptions apply to AmeriNet only and not to its subsidiaries since
there will be no subsidiaries at closing, however some of AmeriNet's
subsidiaries have not filed tax returns. (ie. Lorilei Communications, Inc.
& and AmeriNet Communications, Inc. )
2. AmeriNet's tax returns for 1999 and 2000 were filed in April of 2001.
3. Payroll taxes to the IRS for the 2nd quarter will need to be paid up to the
date of closing.
Exhibit 3.2H
Liabilities & Obligations
1. There is a liability to officers and consultants to issue approximately
635,575 shares of common stock.
2. All outstanding options and warrants as reflected in Exhibit 3.2B should be
considered a liability
3. All outstanding registration rights as reflected in Exhibit 3.2B4 should be
considered a liability
4. A copy of the consulting agreement between Funds America Finance
Corporation and AmeriNet has been provided to Park City. The only AmeriNet
obligation that will survive closing is the obligation to provide a
shareholders list.
5. A copy of the consulting agreement between PriMed Technologies, Inc.,
AmeriNet and Liberty Transfer Co. has been provided to Park City. The only
AmeriNet obligation that will survive closing is the obligation to provide
a shareholders list.
6. Liability to pay Liberty Transfer Co. for services as transfer agent.
7. All tax obligations reflected in Exhibit 3.2F should be considered a
liability.
8. Payroll to employees will be paid up to the date of closing.
9. Contract with Hamilton Lehrer & Dargan, P.A.
10. Contract with Jericho Capital Corp.
11. A claim from Bruce Gleason to pay him $32,000 and return 930,000 shares of
AmeriNet's common stock. See Exhibit 3.2E Litigation.
Exhibit 3.2J
Leases
AmeriNet has no leases.
Exhibit 3.2K2
Insurance Policies and Fidelity Bonds
AmeriNet has no insurance policies or fidelity bonds.
Exhibit 3.2L
Contracts and Commitments
(i) Except as set forth below AmeriNet is not a party and has not been a party
for a period of at least one year to any collective bargaining agreement or
contract with any labor union:
Not Applicable
(ii) Except as set forth below AmeriNet is not a party and has not been a party
for a period of at least one year to any bonus, pension, profit sharing,
retirement, or other form of deferred compensation plan:
- *Non-Qualified Stock Option & Stock Incentive Plan, 2000, effective
January 1, 2000with award certificates
- *Non-Qualified Stock Option & Stock Incentive Plan, 2000, effective
March 8, 2000 Filed on 10/22/99 10-KSB
- *Non-Qualified Stock Option & Stock Incentive Plan, 2001, effective
January 1, 2001 with award certificates
- AmeriNet Communications, Inc. Stock Option Plan, effective October ,
2000 Filed on 01/05/01 8-K
- Agreement to Adopt Stock Option Plan, dated 12/22/00 Filed 12/21/00 8-K
- Corporate Director Agreement - Cantley, David K., dated 12/21/00 filed on
01/05/01 8-K
- Corporate Director Agreement - Chamberlin, Richard, dated 12/21/00 filed on
01/05/01 8-K
- Corporate Director Agreement - Champion, Charles, dated 12/21/00 filed on
01/05/01 8-K
- Corporate Director Agreement - Dmytryk, Edward, dated 12/21/00 filed on
01/05/01 8-K
- Corporate Director Agreement - Gleason, Bruce, dated 12/21/00 filed on
01/05/01 8-K
- Corporate Director Agreement - Joffe, Anthony, dated 12/21/00 filed on
01/05/01 8-K
- Corporate Director Agreement - Lindsey, Vanessa, dated 12/21/00 filed on
01/05/01 8-K
- Corporate Director Agreement - Van Etten, Larry, dated 12/21/00 filed on
01/05/01 8-K
- Corporate Director Agreement- Wilson, Douglas, dated 12/21/00 filed on
01/05/01 8-K
- *Common Stock Purchase Warrant - Cantley, David K, dated 06/26/00
- *Common Stock Purchase Warrant - Cantley, David K., dated 04/03/01
- *Common Stock Purchase Warrant - Jordan, Michael, dated 06/26/00
- *Common Stock Purchase Warrant - Lipson, Saul B., dated 06/26/00
- *Common Stock Purchase Warrant - Lindsey, Vanessa H., dated 06/26/00
- *Common Stock Purchase Warrant - Van Etten, Lawrence, dated 06/26/00
(iii) Except as set forth below AmeriNet is not a party and has not been a party
for a period of at least one year to any medical insurance or similar plan or
practice, whether formal or informal:
Not applicable
(iv) Except as set forth below AmeriNet is not a party and has not been a party
for a period of at least one year to any contract for the employment of any
officer, employee, or other person on a full-time or consulting basis or
relative to severance pay or change-in-control benefits for any such person:
- *Agreement with PriMed Technologies, Inc, AmeriNet and Liberty, dated 5/31/01
- Consulting Agreement with Market Force, Inc. - dated 4/26/01
- Strategic Consulting Agreement with Yankee Companies - dated 12/29/00
Filed 01/05/01 8-K
- Consulting Agreement, Amended - Yankees, dated 11/23/99 Filed 12/12/99 8-K
- *Consulting Agreement - Funds America, dated 08/04/99 Filed 12/31/98 10-KSB
- Contract of Service Agreement-Trinity Venture, dated 03/26/01
- Corporate Information Service Agreement - Scimeca, Charles, dated 03/06/01
- Corporate Information Service Agreement - Wall Street Watch, dated 03/13/01
- Corporate Secretary Agreement - Lindsey, Vanessa, dated 01/11/00 Filed
01/05/01 8-K
- Director & Officer Superseder & Settlement Agreement - Cantley, David
- Director & Officer Superseder & Settlement Agreement - Chamberlin, dated
04/26/01
- Director & Officer Superseder & Settlement Agreement - Dmytryk, dated 04/09/01
- Director & Officer Superseder & Settlement Agreement - Franjola, dated
04/26/01
- Director & Officer Superseder & Settlement Agreement - Lindsey, dated
04/06/01
- Director & Officer Superseder & Settlement Agreement - Van Etten, dated
04/10/01
- Director & Officer Superseder & Settlement Agreement - Wilson, dated
04/11/01
- Employment Agreement - Cantley, David, dated 02/17/00 until 06/30/01
Filed 10/13/00 10-K
- Employment Agreement- Jordan, Michael, dated 08/19/99 Filed 08/24/99 8-K
- Employment Agreement- Van Etten, Lawrence, dated 05/22/00,Filed105130/00 8-K
- Retainer Letter Agreement - Chamberlin, dated 03/13/01
(v) Except as set forth below AmeriNet is not a party and has not been a party
for a period of at least one year to any agreement or indenture relating to the
borrowing of money in excess of $2,000 or to mortgaging, pledging or otherwise
placing a lien on any assets of AmeriNet which has a fair market value in excess
of $5,000 in the aggregate:
- Convertible Loan Agreement, dated 5/7/01
- Loan & Security Agreement - The Yankee Companies, dated 05/05/00 Filed
05/15/00 10-QSB
- Full Recourse Secured Promissory Note - Yankees, dated 05/05/00 Filed
05/15/00 10-QSB
- Promissory Note - AmeriNet/Lorilei, dated 10/12/00 Filed 11/02/00 8-K
- Promissory Note-AmeriNet/ PriMed, dated 01/17/01
(vi) Except as set forth below AmeriNet is not a party and has not been a party
for a period of at least one year to any guaranty of any obligation for borrowed
money or otherwise, other than endorsements made for collection:
- Convertible Loan Agreement, dated 5/7/01
- Loan & Security Agreement - The Yankee Companies, dated 05/05/00,Filed
05/15/00 10-QSB
- Full Recourse Secured Promissory Note - Yankees, dated 05/05/00, Filed
05/15/00 10-QSB
(vii) Except as set forth below AmeriNet is not a party and has not been a party
for a period of at least one year to any lease or agreement under which it is
lessor of, or permits any third party to hold or operate, any property, real or
personal:
Not applicable
(viii) Except as set forth below AmeriNet is not a party and has not been a
party for a period of at least one year to any contract or group of related
contracts with the same party for the purchase of products or services, under
which the undelivered balance of such products and services has a purchase price
in excess of $2,000:
Not applicable
(ix) Except as set forth below AmeriNet is not a party and has not been a party
for a period of at least one year to any contract or group of related contracts
with the same party for the sale of products or services, under which the
undelivered balance of such products and services has a sales price in excess of
$2,000:
Not applicable
(x) Except as set forth below AmeriNet is not a party and has not been a
party for a period of at least one year to any franchise agreement:
Not applicable
(xi) Except as set forth below AmeriNet is not a party and has not been a party
for a period of at least one year to any other agreement material to AmeriNet's
business or not entered into in the ordinary course of business:
- Agreement to Assign Claims - Yankees/AmeriNet, dated 05/04/01
- Assignment of Claims, dated 05/04/01
- Assignment and Transfer of Bankruptcy Claim #18, dated 05/04/01
- Assignment and Transfer of Bankruptcy Claim #20, dated 05/04/01
- Cisco Reseller Agreement, dated 02/09/01
- Conversion Agreement - Blue Lake Capital Corp, dated 02/28/01 filed on
05/15/01 10-Q
- Conversion Agreement - Blue Lake Capital Corp, dated 03/31/01 filed on
05/15/01 10-Q
- Conversion Agreement - Blue Lake Capital Corp., dated 04/10/01 filed on
05/15/01 10-Q
- Conversion Agreement - Calvo Family Spendthrift Trust, dated 03/01/01 filed on
05/15/01 10-Q
- Conversion Agreement - Calvo Family Spendthrift Trust, dated 03/31/01 filed on
05/15/01 10-Q
- Conversion Agreement - Calvo Family Spendthrift Trust, dated 04/01/01 filed on
05/15/01 10-Q
- Conversion Agreement - Calvo Family Spendthrift Trust, dated 04/24/01 filed on
05/15/01 10-Q
- Conversion Agreement - Calvo Family Spendthrift Trust, dated 04/27/01 filed on
05/15/01 10-Q
- Conversion Agreement - Calvo Family Spendthrift Trust, dated 05/07/01 filed on
05/15/01 10-Q
- Conversion Agreement - K. Walker, LTD., dated 08/15/00 filed on 05/15/01 10-Q
- Conversion Agreements - Tucker, Lenny, dated 01/29/01 filed on 05/15/01 10-Q
- Conversion Agreement - Yankees, dated 06/30/00 filed on 05/15/01 10-Q
- Conversion Agreement - Yankees, dated 08/15/00 filed on 05/15/01 10-Q
- Conversion Agreement - Yankees, dated 10/05/00 filed on 05/15/01 10-Q
- Conversion Agreement - Yankees, dated 11/13/00 filed on 05/15/01 10-Q
- Conversion Agreement - Yankees, dated 12/05/00 filed on 05/15/01 10-Q
- Conversion Agreement - Yankees, dated 01/31/01 filed on 05/15/01 10-Q
- Conversion Agreement - Yankees, dated 01/31/01 filed on 05/15/01 10-Q
- Conversion Agreement - Yankees, dated 02/28/01 filed on 05/15/01 10-Q
- Conversion Agreement - Yankees, dated 02/28/01 filed on 05/15/01 10-Q
- Conversion Agreement - Yankees, dated 03/31/01 filed on 05/15/01 10-Q
- Conversion Agreement - Yankees, dated 03/31/01 filed on 05/15/01 10-Q
- Conversion Agreement-Yankees, dated 4/30/01 filed on 05/15/01 10-Q
- Conversion Agreement-Yankees, dated 5/31/01 filed on 05/15/01 10-Q
- License Agreement - Yankees, dated 02/09/00 Filed 12/31/99 10-Q
- License Agreement, Amendment - Yankees/WRI, dated 04/16/01 Filed 04/30/01 8-K
- License Transfer Agreement, dated April 16, 2001
- Reorganization Agreement - Lorilei, dated 05/11/00 Filed 05/30/00 8-K
- Recission Agreement - Vista Vacation, dated 07/12/00 Filed 08/15/00 8-K
- Settlement Agreement - Frontline Processing, dated 04/15/01
- Subscription Agreement - Bolina Trading Corp.,dated 07/04/00 Filed on 05/15/01
- Subscription Agreement - Bolina Trading Corp.,dated 07/07/00 Filed on 05/15/01
- Subscription Agreement - Bolina Trading Corp.,dated 07/27/00 Template filed
on 05/15/01
- Subscription Agreement - Franjola, George, dated 06/06/00
- Subscription Agreement - Franjola, John, dated 06/05/00
- Subscription Agreement - K. Walker, Ltd., dated 06/07/00
- Subscription Agreement - K. Walker, Ltd., dated 06/07/00
- Subscription Agreement - Palmair, Inc., dated 08/30/00 Filed on 05/15/01 8-KSB
- Subscription Agreement - Van Etten, Lawrence, dated 06/08/00
- Subscription Agreement - Van Etten, Linda, dated 06/08/00
- Subscription Agreement - Van Etten, Lawrence and Linda, dated 06/08/00
- Subscription Agreement - The Yankee Companies, dated 06/16/00
- Superseder & Exchange Agreement - Trilogy, dated 06/30/00 Filed 07/17/00 8-K
- Superseder & Exchange Agreement - WRI, dated 01/26/01 Filed 02/08/01 8-K
- Superseder & Settlement Agreement - Xcel, dated 05/31/00 Filed 06/15/00 8-K
- Superseder and Termination Agreement -Yankees, dated 5/25/01
- Warrant Agreement, Amended - Elenson, Debra , dated 5/22/01
- Warrant Agreement, Amended - Eichner, Jonathan - dated May 23, 2001
- Warrant Agreement - The Yankee Companies, dated 11/23/99 Filed 05/11/01 8-K
- Warrant Agreement, Amended Supplement, dated 04/30/01 Filed 05/11/01 8-K
- *Warrant Agreement, Yankees, dated 5/2/01
- *Warrant Agency Agreement, Yankees/Liberty, dated 5/25/01
- Weekly Stock Xxxxx.xxx, dated 03/07/01
- Letter of Intent, dated 12/13/00
- *Hamilton Lehrer & Dargan, P.A. - *Jericho Capital Corp.
* This agreement will remain in effect after the closing of the Park City
Group/AmeriNet reorganization.
Exhibit 4.3C
Consents
1. A copy of the annual stockholders meeting minutes, dated December 21, 2001,
have been provided to Park City.
2. A copy of the Board minutes dated May 18, 2001, have been provided to Park
City.
3. See exhibit 3.2L for a copy of the termination agreement between AmeriNet
and Yankees.
Exhibit 5.2D
Legal Opinion
