Reorganization Agreement
By & Among
AmeriNet Xxxxx.xxx, Inc., a Delaware corporation,
and Vista Vacations International, Inc., a
Florida corporation
Table of Contents
Article I: Plan of Reorganization
1.1 Definitions
1.2 Reorganization
1.3 Effect of the Reorganization
1.4 Articles of Incorporation & Bylaws
1.5 Directors and Officers
1.6 Maximum Shares to Be Issued & Effect on
Capital Stock
1.7 Exchange of Certificates
1.8 No Further Ownership Rights in Vista Vacations'
Securities
1.9 Lost, Stolen or Destroyed Certificates
1.10 Tax Consequences and Accounting Treatment
1.11 Taking of Necessary Action & Further Action
Article II: Representations and Warranties of
Vista Vacations
2.1 Organization of Vista Vacations
2.2 Vista Vacations' Capital Structure
2.3 Subsidiaries
2.4 Authority
2.5 Vista Vacations' Financial Statements
2.6 No Undisclosed Liabilities
2.7 No Changes
2.8 Tax and Other Returns and Reports
2.9 Restrictions on Business Activities
2.10 Title of Properties, Absence of Liens and
Encumbrances and Condition of Equipment
2.11 Intellectual Property
2.12 Agreements, Contracts and Commitments
2.13 Interested Party Transactions
2.14 Governmental Authorization
2.15 Litigation
2.16 Accounts Receivable
2.17 Minute Books
2.18 Environmental and OSHA
2.19 Brokers' and Finders' Fees
2.20 Labor Matters
2.21 Insurance
2.22 Compliance with Laws
2.23 Complete Copies of Materials
2.24 Binding Agreements & No Default
2.25 Current Report on Form 8-K
2.26 FIRPTA
2.27 Employee Benefit Plans
2.28 Distribution Agreements
2.29 Vista Vacations' Stockholders
2.30 Representations Complete
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Article III Representations And Warranties of
AmeriNet
3.1 Organization, Standing and Power
3.2 Capital Structure
3.3 Authority
3.4 Exchange Act Reports & AmeriNet's Financial
Statements
3.5 Broker's and Finders' Fees
3.6 Ownership of Vista Vacations' Common Stock
3.7 Litigation
3.8 Limited Activities
3.9 No Undisclosed Liabilities
3.10 No Changes
3.11 Tax and Other Returns and Reports
3.12 Environmental and OSHA
3.13 Representations Complete
Article IV Conduct Prior to the Closing
4.1 Conduct of Business of Vista Vacations
4.2 No Solicitation
4.3 Conduct of Business of AmeriNet
Article V Additional Agreements
5.1 Report on Form 8-K
5.2 No Meeting of Vista Vacations' Stockholders
5.3 Access to Information
5.4 Confidentiality
5.5 Expenses
5.6 Public Disclosure
5.7 Consents
5.8 Affiliate Agreements
5.9 Legal Requirements
5.10 Blue Sky Laws
5.11 Best Efforts, Additional Documents and Further
Assurances
5.12 Employment Agreements
5.13 Investment by AmeriNet in Vista Vacations
5.14 Vista Vacations' Board of Directors
5.15 Additional Vista Vacations' Covenants
Article VI Conditions to The Reorganization
6.1 Conditions to Obligations of Each Party to Effect
the Reorganization
6.2 Additional Conditions to Obligations of Vista
Vacations
6.3 Additional Conditions to the Obligations of
AmeriNet
Article VII Survival of Condition Subsequent,
Representations and Warranties,
Covenants and Escrow
7.1 Survival of Condition Subsequent,
Representations and Warranties & Covenants
7.2 Escrow Arrangements
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Article VIII Termination, Amendment And
Waiver
8.1 Termination
8.2 Effect of Termination
8.3 Amendment
8.4 Extension & Waiver
Article IX General Provisions
9.1 Interpretation
9.2 Notice
9.3 Merger of All Prior Agreements Herein
9.4 Survival
9.5 Severability
9.6 Governing Law
9.7 Indemnification
9.8 Dispute Resolution
9.9 Benefit of Agreement
9.10 Further Assurances
9.11 Counterparts
9.12 License
Schedules
Schedule 1.4 Vista Vacations' Constituent
Documents
Schedule 1.7(C) Vista Vacations' Final
Stockholder Data
Schedule 2.4(D) Conflicts with Obligations
Schedule 2.5(A) Vista Vacations' Financial
Statements
Schedule 2.7 Changes Since Vista
Vacations' Financial
Statements
Schedule 2.8(A) Tax Disclosure Schedule
Schedule 2.10(A) Leased Real Property
Schedule 2.10(C) Equipment
Schedule 2.11 Intellectual Property
Schedule 2.12 Contracts and Agreements
Schedule 2.12(A)(12) Debt & Guarantee Instruments
Schedule 2.13 Related Party Transactions
Schedule 2.14 Governmental Authorization
Schedule 2.15 Litigation
Schedule 2.19 Brokers' and Finders' Fee
Schedule 2.20 List of Employees
Schedule 2.21 Insurance
Schedule 2.27 Employee Benefit Plans
Schedule 2.28 Distribution Agreements
Schedule 4.1 Exceptions to Prohibited Pre-
Closing Actions
Schedule 5.7 Consents
Schedule 5.8 Affiliates
Schedule 5.12 List and Summary of
Employment Agreements
Schedule 5.13 Use of Proceeds
Schedule 5.14 Projections
Schedule 6.3(M) Non-accredited investors
Exhibits
Exhibit 1.2(D) Superseder & Conversion Agreement
Exhibit 2.25 The Form 8-K Information
Exhibit 5.8 Affiliate Agreements
Exhibit 5.12 Copies of Employment Agreements
Exhibit 6.2(D) AmeriNet Legal Opinion
Exhibit 6.3(E) Vista Vacations Legal Opinion
Exhibit 6.3(L) Confidentiality Agreements
Exhibit 7.2(A) Escrow Allocation Information
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Reorganization Agreement
This Reorganization Agreement (the "Agreement") is made and entered into by
and among AmeriNet Xxxxx.xxx, Inc., a publicly held Delaware corporation with a
class of securities registered under Section 12(g) of the Securities Exchange
Act of 1934, as amended ("AmeriNet" and the "Exchange Act," respectively); Vista
Vacations International, Inc., a Florida corporation ("Vista Vacations"); and,
Xxxx Xxxxxx, a Florida resident ("Xx. Xxxxxx") on her own behalf and on behalf
of all other holders of the common stock of Vista Vacations, each of whom has
granted Xx. Xxxxxx an irrevocable power of attorney coupled with an interest to
execute this Agreement on their behalf (each such person being hereinafter
collectively referred to with Xx. Xxxxxx as the "Former Vista Vacations
Stockholders" or generically as a "Former Vista Vacations Stockholder");"
AmeriNet, Vista Vacations and the Former Vista Vacations Stockholders being
sometimes hereinafter collectively referred to as the "Parties" or generically
as a "Party").
Preamble:
WHEREAS, the board of directors of AmeriNet and Vista Vacations believe it
is in the best interests of each corporation and their respective stockholders
that Vista Vacations become a wholly owned subsidiary of AmeriNet and, in
furtherance thereof, have approved the Reorganization; and
WHEREAS, pursuant to the terms of the Reorganization, as hereinafter set
forth, among other things, all of the outstanding and reserved securities of
Vista Vacations ("Vista Vacations' Securities") shall be exchanged for between
220,000 and 439,999 shares of AmeriNet's common stock, $0.01 par value
("AmeriNet's Common Stock"), depending on Vista Vacations' net, pre-tax profits
during the fiscal period starting on July 1, 2000 and ending on June 30, 2003,
as hereinafter described; and
WHEREAS, the Parties intend that AmeriNet invest up to $650,000 within 300
days after completion of the Reorganization and the filing of required reports
with the United States Securities and Exchange Commission (the "Commission");
and
WHEREAS, Vista Vacations, AmeriNet and the Former Vista Vacations
Stockholders desire to make certain representations and warranties and other
agreements in connection with the Reorganization and their subsequent operating
and business relationships; and
WHEREAS, the Parties intend, by executing this Agreement, to adopt a plan
of reorganization within the meaning of Section 368 of the Internal Revenue Code
of 1986, as amended (the "Code"):
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the Parties, intending to be legally bound, hereby agree as follows:
Witnesseth:
Article I
Plan of Reorganization
1.1 Definitions
The following terms, whether or not initially capitalized, will have the
meanings set forth below:
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(A) 1999 10-KSB:
AmeriNet's report on Commission Form 10-KSB for the fiscal year
ended June 30, 1999.
(B) Accredited Investor:
A person or entity that meets the asset or income requirements
for treatment as an accredited investor specified in Rule 501 of
Commission Regulation D promulgated under the Securities Act
(C) AmeriNet Exchange Share Number:
220,000 shares of AmeriNet's common stock, $0.01 par value, to be
exchanged for 1,265 shares of Vista Vacations' Common stock,
without par value.
(D) Affiliate:
An entity or person that controls, is controlled by or is under
common control with another person.
(E) AmeriNet Financial Statements:
Financial statements, including all related schedules and the
notes thereto, of AmeriNet included in the report on Commission
Form 10-KSB for the period ended June 30, 1999, as amended; the
reports on Commission Form 10-QSB filed subsequent to June 30,
1999 and the financial statements for subsidiaries subsequently
acquired by AmeriNet included in current reports on Commission
Form 8-K filed since the dates of the Subsequent Quarterly
Reports (the "Subsequent Current Reports"); all such financial
statements being hereinafter collectively and generically
referred to as the "AmeriNet Financial Statements,"
(F) AmeriNet Schedules:
The schedules referenced by the Section designations of this
Agreement as to which they apply, annexed at the direction of
AmeriNet to this Agreement and constituting a material component
of this Agreement.
(G) Capital Stock:
The generic term used for equity securities, whether common,
preferred or otherwise.
(H) Closing:
The event at which the exchange of all of the Vista Vacations
securities will be exchanged for the AmeriNet Exchange Share
Number of AmeriNet's Common Stock.
(I) Closing Date: The date that the Closing takes place.
(J) Commission: The United States Securities and Exchange Commission.
(K) Code: The Internal Revenue Code of 1986, as amended.
(L) Commercial Software Rights:
Packaged commercially available software programs generally
available to the public through retail dealers in computer
software which have been licensed to end-user licenses and which
are used in the licensee's business but are in no way a component
of or incorporated in any of its products and related trademarks,
technology and know-how.
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(M) Escrow Number:
The number of shares of AmeriNet Common Stock equal to the
AmeriNet Exchange Share Number multiplied by twenty percent.
(N) Escrow Agent:
The Yankee Companies, Inc., a Florida corporation, or such other
person designated for such role by AmeriNet.
(O) Exchange Act: The Securities Exchange Act of 1934, as amended.
(P) Exchange Act Reports:
All reports filed by AmeriNet with the Commission pursuant to
Sections 12(g), 13 and 15(d) of the Exchange Act.
(Q) Exchange Agent:
The person or entity responsible, following the Closing, for
issuing and delivering the Initial AmeriNet Stock Exchanged to
Vista Vacations' Stockholders.
(R) Exchange Ratio:
The quotient obtained by dividing the AmeriNet Exchange Share
Number by the Vista Vacations Exchange Share Number.
(S) GAAP: Generally accepted accounting principles, consistently applied.
(T) Initial AmeriNet Stock Exchanged:
The 220,000 shares of AmeriNet's Common Stock to be issued to
Vista Vacations' Stockholders immediately following the Closing,
without regard to Vista Vacations' future performance.
(U) Initial Funding Installment:
The sum of $125,000 payable to the order of Vista Vacations in
satisfaction of AmeriNet's commitment under Section 5.13(A) of
this Agreement but to be expended solely as provided for in such
Section.
(V) IRS: The United States Internal Revenue Service.
(W) Knowledge:
When used to qualify a representation or warranty, the word
"knowledge" or any derivations or variations thereof, whether in
the form of a word or phrase, shall mean knowledge after
reasonable inquiry by an executive officer of the legal entity on
whose behalf the assertion is made and will include information
that such legal entity should have had in the exercise of
reasonable diligence.
(X) Material:
When used to qualify a representation or warranty, the word
"material" or any derivations or variations thereof, whether in
the form of a word or phrase, shall mean a variance that could
have negatively affected a decision by a reasonably prudent
person to engage in the transactions contemplated by this
Agreement, and shall be measured both on the occasion in which
such term is referenced as well as on an aggregate basis with
other similar matters.
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(Y) NASD:
The National Association of Securities Dealers, Inc., a Delaware
corporation and self regulatory organization registered with the
Commission.
(Z) OTC Bulletin Board:
The over the counter electronic securities market operated by the
NASD.
(AA) Performance Shares:
Up to 219,999 shares of AmeriNet's Common Stock to be issued to
Vista Vacations' Stockholders in the future, based on the
performance of Vista Vacations during the period Starting on July
1, 2000 and ending on June 30, 2003.
(BB) Securities Act: The Securities Act of 1933, as amended.
(CC) Subsequent Current Reports:
AmeriNet's reports on Commission Form 8-K filed after the
Subsequent Quarterly Reports but prior to the date of this
Agreement.
(DD) Subsequent Quarterly Reports:
AmeriNet's reports on Commission Form 10-QSB for the quarterly
periods following the 1999 10-KSB filed prior to the date of this
Agreement.
(EE) Substantial Compliance:
Compliance which the Party for whose benefit or at whose request
an act is performed, or for whose benefit or at whose request an
act is refrained from could under the circumstances be reasonably
expected to accept as full compliance.
(FF) Tax: For the purposes of this Agreement, a "Tax" or, collectively,
"Taxes," means any and all federal, state, local and foreign
taxes, assessments and other governmental charges, duties,
impositions and liabilities, including taxes based upon or
measured by gross receipts, income, profits, sales, use and
occupation, and value added, ad valorem, transfer, franchise,
withholding, payroll, recapture, employment, excise and property
taxes, together with all interest, penalties and additions
imposed with respect to such amounts and any obligations under
any agreements or arrangements with any other person with respect
to such amounts.
(GG) Ten-Day Average Price:
The average closing transaction price of a share of AmeriNet's
publicly traded Common Stock for the ten most recent days that
AmeriNet Common Stock has traded ending on the trading day prior
to the date in question, as reported on the OTC Bulletin.
(HH) Vista Vacations Exchange Share Number:
The 1,265 shares of Vista Vacations' Common Stock outstanding
immediately prior to the Closing.
(II) Vista Vacations' Financial Statements:
Vista Vacations's unaudited financial statements (balance sheets,
income statements and related schedules and footnotes) as of and
for the fiscal year ending December 31, 1999, prepared in
conformity with GAAP.
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(JJ) Vista Vacations Schedules:
The schedules referenced by the Section designations of this
Agreement as to which they apply, annexed at the direction of
Vista Vacations to this Agreement and constituting a material
component of this Agreement.
(KK) Vista Vacations Stockholders:
Stockholders of Vista Vacations at the time immediately preceding
the Closing, collectively and generically, despite the fact that
after the Closing they will not hold any Vista Vacations
securities.
(LL) Additional defined terms are specified in certain sections and
subsections below and are characterized by the use of initial letter
capitalization.
1.2 Reorganization
(A) The Reorganization.
(1) At the Closing on this Agreement all of the Vista Vacations'
Stockholders will exchange all of their Vista Vacations
securities, being an aggregate of 1,265 shares of common
stock, without par value (the remaining 235 shares being
unreserved treasury shares), for 220,000 shares of AmeriNet
Common Stock.
(2) The Initial AmeriNet Stock Exchanged shall be allocated among
Vista Vacations' Stockholders in proportion to their holdings
of Vista Vacations common stock immediately prior to the
Closing.
(3) (a) In addition to the Initial AmeriNet Stock Exchanged,
AmeriNet shall reserve 219,999 shares of its common stock,
$0.01 par value (the Performance Shares), to be issued to
the former Vista Vacations Stockholders, on the following
terms and subject to the following requirements:
(i) If Vista Vacations earns net, pre tax
profits, determined in accordance with GAAP,
of at least $400,000 during the period
starting on July 1, 2000 and ending on June
30, 2001, then Vista Vacations' Stockholders
shall be issued an aggregate of 36,667 of
the Performance Shares;
(ii) If Vista Vacations earns net, pre tax
profits, determined in accordance with GAAP,
of at least $1,200,000 during the period
starting on July 1, 2001 and ending on June
30, 2002, then Vista Vacations' Stockholders
shall be issued an aggregate 102,666 of the
Performance Shares (including the 36,667
that either were or could have been earned
as of June 30, 2001);
(iii) If Vista Vacations earns net, pre tax
profits, determined in accordance with GAAP,
of at least $2,800,000 during the period
starting on July 1, 2000 and ending on June
30, 2003, then Vista Vacations' Stockholders
shall be issued all of 219,999 of the
Performance Shares (including the 102,666
that either were or could have been earned
as of June 30, 2002); however, all rights to
any of the Performance Shares not earned as
of such date shall thereupon expire.
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(b) The Performance Shares will be allocated among the
Vista Vacations' Stockholder's, pro rata, based on
their ownership of Vista Vacations' Common Stock
immediately preceding the Closing, will be reserved
for future issuance immediately following the Closing
and will be issued within 30 days after AmeriNet's
audit for the subject fiscal year confirming the
calculations called for.
(B) As promptly as practicable after the satisfaction or waiver of the
conditions set forth in Article VI, the Parties shall cause the
Reorganization to be consummated by effecting the exchange all of Vista
Vacations' Common Stock for the Initial AmeriNet Stock Exchanged.
(C) The Closing Date and time of the Reorganization shall be the date and
time on which the Closing of this Reorganization Agreement is
consummated.
(D) (1) At the Closing the Parties shall exchange all closing
documentation, certificates, resolutions, exhibits, schedules and
opinions called for by this Agreement, and
(a) Xx. Xxxxxx Xxxxxxx, a creditor of Vista Vacations, will
irrevocably convert all of Vista Vacations' liabilities to
her or her affiliates, including, without limitation, loans
aggregating at least $180,000, into the right to receive
66,667 shares of AmeriNet Common Stock, as provided for in
the form of superseder and conversion agreement annexed
hereto and made a part hereof as exhibit 1.2(D);
(b) All stockholders of Vista Vacations other than Xx. Xxxxxx
shall have repaid Vista Vacations all debts theretofore owed
by them to Vista Vacations (either in the form of loans to
stockholders or advances to employees, consultants or
independent contractors), including debts aggregating at
least $86,000 as heretofore represented to AmeriNet by
having tendered an aggregate of 235 shares of their Vista
Vacations Common Stock back to Vista Vacations prior to
closing;
(c) Xx. Xxxxxx shall repay her $25,000 debt to Vista Vacation
from an equivalent debt owed to her by Vista Vacations using
a portion of the hereinafter defined Initial Funding
Installment by AmeriNet;
(d) The Xxxxxxxxx Xxxxx Xxxxx, who serves as a director of Vista
Vacations and as its general counsel, shall be paid the sum
of $25,000 using a portion of the hereinafter defined
Initial Funding Installment by AmeriNet, representing a one
time payment for his agreement to serve as Vista Vacations's
general counsel and to provide all legal services that it
may require until June 30, 2005, at a monthly fee of $1,200;
(e) All of Vista Vacations' outstanding securities (being solely
1,265 shares of its Common Stock) shall be exchanged with
AmeriNet for 220,000 shares of AmeriNet Common Stock;
provided that delivery of the certificates for the Initial
AmeriNet Stock Exchanged shall be made directly to Vista
Vacations' Stockholders by AmeriNet's stock transfer agent
after the Closing; and
(f) AmeriNet will tender its check for the Initial Funding
Installment.
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1.3 Effect of the Reorganization.
At the Closing, the effect of the Reorganization shall be that Vista
Vacations' shall become a wholly owned subsidiary of AmeriNet and that the
stockholders of Vista Vacations immediately prior to the Closing shall become
stockholders of AmeriNet at the Closing, with no further rights, title or
interest in Vista Vacations, other than indirectly as stockholders of AmeriNet.
1.4 Articles of Incorporation & Bylaws.
Unless otherwise determined by AmeriNet prior to the Closing Date, the
articles of incorporation and bylaws of Vista Vacations shall be amended to
conform with those included in Schedule 1.4.
1.5 Directors and Officers.
Subject to the requirements of Section 5.14, the directors of Vista
Vacations shall continue in office following the Reorganization until their
respective successors are duly elected or appointed and qualified, in accordance
with the requirements of this Agreement.
1.6 Maximum Shares to Be Issued & Effect on Capital Stock.
(A) The number of shares of AmeriNet Common Stock to be issued in exchange
for all of the Vista Vacations Common Stock (the only Vista Vacations
securities to be outstanding or reserved at the Closing) shall be
439,999, 220,000 of which shall be issued by the Exchange Agent
following the Closing, and up to 219,999 may be issued, subject to
Vista Vacations' net, pre tax profits during the period starting on
July 1, 2000 and ending on June 30, 2003 (as hereinbefore established).
(B) Adjustments to Exchange Ratio.
The Exchange Ratio shall be adjusted to reflect fully the effect of any
stock split, reverse split, stock dividend (including any dividend or
distribution of securities convertible into AmeriNet Common Stock or
Vista Vacations' Common Stock), reorganization, recapitalization or
other like change with respect to AmeriNet Common Stock or Vista
Vacations' Common Stock occurring after the date hereof and prior to
the Closing.
(C) Fractional Shares.
No fraction of a share of AmeriNet Common Stock will be issued, but in
lieu thereof each holder of shares of Vista Vacations' Common Stock who
will otherwise be entitled to a fraction of a share of AmeriNet Common
Stock (after aggregating all fractional shares of AmeriNet Common Stock
to be received by such holder) shall be entitled to receive from
AmeriNet a whole share of AmeriNet Common Stock.
1.7 Exchange of Certificates.
(A) Exchange Agent.
Unless modified by AmeriNet prior to the Closing Date, Liberty
Transfer Co., Inc., of Huntington, New York, AmeriNet's current
transfer agent, shall serve as the Exchange Agent.
(B) AmeriNet to Provide Common Stock.
Promptly after the Closing, AmeriNet shall make available to the
Exchange Agent for exchange in accordance with this Article I the
shares of AmeriNet Common Stock issuable pursuant to Section 1.6 in
exchange for all of the outstanding shares of Vista Vacations' Common
Stock.
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(C) Exchange Procedures.
(1) All certificates for shares of Vista Vacations' outstanding
common Stock shall be tendered to AmeriNet at the Closing,
with medallion signature guarantees or otherwise in proper
form for immediate transfer to the order of AmeriNet,
whereupon AmeriNet shall issue instructions to the Exchange
Agent to issue shares of AmeriNet's Common Stock, in the
quantities and names set forth in Schedule 1.7(C), subject to
the escrow requirements of Article VII.
(2) As soon as practicable after the Closing, and subject to and
in accordance with the provisions of Article VII hereof,
AmeriNet shall cause to be distributed to the Escrow Agent a
certificate or certificates representing that number of
shares of AmeriNet Common Stock equal to the Escrow Number
which shall be registered in the name of the Escrow Agent.
(4) Such shares shall be beneficially owned by the holders on
whose behalf such shares were deposited in the Escrow Fund but
shall be available to compensate AmeriNet for certain damages
as provided in Article VII.
(D) Transfers of Ownership.
If any certificate for shares of AmeriNet Common Stock is to be issued
in a name other than that in which the certificate surrendered in
exchange therefor is registered, it will be a condition of the issuance
thereof that the certificate so surrendered will be properly endorsed
and otherwise in proper form for transfer and that the person
requesting such exchange will have paid to AmeriNet or any agent
designated by it any transfer or other Taxes required by reason of the
issuance of a certificate for shares of AmeriNet Common Stock in any
name other than that of the registered holder of the certificate
surrendered, or established to the satisfaction of AmeriNet or any
agent designated by it that such Tax has been paid or is not payable.
(E) No Liability.
Notwithstanding anything to the contrary in this Section 1.7, none of
the Exchange Agent, AmeriNet, Vista Vacations or any other Party shall
be liable to a holder of shares of AmeriNet Common Stock or Vista
Vacations' Capital Stock for any amount properly paid to a public
official pursuant to any applicable abandoned property, escheat or
similar law.
1.8 No Further Ownership Rights in Vista Vacations' Securities.
(A) All shares of AmeriNet Common Stock issued upon the surrender for
exchange of shares of Vista Vacations' Common Stock in accordance with
the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Vista
Vacations' Common Stock, and there shall be no further registration of
transfers on the records of Vista Vacations, of shares of Vista
Vacations' Capital Stock which were outstanding immediately prior to
the Closing.
(B) If, after the Closing, Certificates are presented to Vista Vacations,
for any reason, they shall be canceled and exchanged as provided in
this Article I.
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1.9 Lost, Stolen or Destroyed Certificates.
In the event any certificates evidencing shares of Vista Vacations'
Common Stock shall have been lost, stolen or destroyed, Vista
Vacations' transfer agent or share registrar shall, prior to the
Closing, have issued in exchange for such lost, stolen or destroyed
certificates, upon the making of an affidavit of that fact by the
holder thereof, such shares of its Common Stock as may have been
required pursuant to Section 1.6; provided, however, that AmeriNet may,
in its discretion and as a condition precedent to the issuance of the
shares of AmeriNet Common Stock to be exchanged therefor, require the
owner of such lost, stolen or destroyed certificates to deliver a bond
in such sum as it may reasonably direct as indemnity against any claim
that may be made against AmeriNet or the Exchange Agent with respect to
the certificates alleged to have been lost, stolen or destroyed.
1.10 Tax Consequences and Accounting Treatment.
(A) It is intended by the Parties that the Reorganization shall constitute
a reorganization within the meaning of Section 368(a)(1)(B) of the
Code and the Parties agree that if modification of the terms of this
Agreement in a non-material manner to attain such qualification is
necessary, they will negotiate in good faith to make such required
modifications.
(B) The Parties understand that because of the inclusion of contingencies
in determining the quantity of AmeriNet's Common Stock being exchanged
for Vista Vacations' Common Stock, the reorganization will not qualify
for accounting as a pooling of interests but rather, must be accounted
for under the purchase method.
1.11 Taking of Necessary Action: Further Action.
If, at any time after the Closing, any such further action is necessary
or desirable to carry out the purposes of this Agreement including,
without limitation the vesting in AmeriNet of full right, title and
possession to all of Vista Vacations' Capital Stock; or, compliance
with the requirements of Code Section 368(a)(1)(B); the officers and
directors of AmeriNet and Vista Vacations are fully authorized in the
name of their respective corporations or otherwise to take, and will
take, all such lawful and necessary action.
Article II
Representations and Warranties of Vista Vacations
Vista Vacations hereby represents and warrants to AmeriNet, as a material
inducement to its entry into this Agreement, subject to the exceptions
specifically disclosed in the Vista Vacations Schedules, as follows:
2.1 Organization of Vista Vacations.
(A) Vista Vacations is a corporation duly organized, validly existing and
in good standing under the laws of the State of Florida.
(B) Vista Vacations has the corporate power to own its property and to
carry on its business as now being conducted and as proposed to be
conducted by Vista Vacations.
(C) Vista Vacations is duly qualified to do business and in good standing
as a foreign corporation in each jurisdiction in which the failure to
be so qualified would have a material adverse effect on the business,
assets (including intangible assets), financial condition, or results
of operations of Vista Vacations.
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(D) Vista Vacations has delivered a true and correct copy of its articles
of incorporation and bylaws (or similar governing instruments), each as
amended to date, to counsel for AmeriNet.
2.2 Vista Vacations' Capital Structure.
(A) The authorized Capital Stock of Vista Vacations consists of 1,500
shares of Common Stock, without par value;
(B) There are 1,265 shares of Vista Vacations Common Stock issued and
outstanding, held by the persons, and in the amounts, set forth on
Schedule 1.7(C), 235 shares previously outstanding having been returned
to Vista Vacations' treasury by the holders as payment for the $61,000
owed by them to Vista Vacations.
(C) All outstanding shares of Vista Vacations Capital Stock are duly
authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights created by statute, the articles of
incorporation or bylaws of Vista Vacations or any agreement to which
Vista Vacations is a party or is bound.
(D) Vista Vacations has no other outstanding or securities reserved for
issuance for any purpose, there being no other obligations directly or
indirectly obligating Vista Vacations to issue any of its securities
to any person for any purpose, there are no other options, warrants,
calls, rights, commitments or agreements of any character to which
Vista Vacations is a party or by which it is bound obligating Vista
Vacations to issue, deliver, sell, repurchase or redeem, or cause to
be issued, delivered, sold, repurchased or redeemed, any shares of the
Vista Vacations Capital Stock or obligating Vista Vacations to grant,
extend or enter into any such option, warrant, call, right, commitment
or agreement.
2.3 Subsidiaries.
Vista Vacations has no subsidiaries or affiliated companies and does
not otherwise own any shares of stock or any interest in, or control,
directly or indirectly, any other corporation, partnership,
association, joint venture or business entity.
2.4 Authority.
(A) Vista Vacations has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions
contemplated hereby.
(B) The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Vista Vacations.
(C) This Agreement has been duly executed and delivered by Vista Vacations
and subject to the proper authorization of this Agreement by AmeriNet's
board of director and its due execution and delivery by AmeriNet to
Vista Vacations, constitutes the valid and binding obligation of Vista
Vacations.
(D) The execution and delivery of this Agreement by Vista Vacations does
not, and the consummation of the transactions contemplated hereby will
not, conflict with, or result in any violation of, or default under
(with or without notice or lapse of time, or both), or give rise to a
right of termination, cancellation or acceleration of any obligation or
loss of a material benefit under (i) any provision of the articles of
incorporation or bylaws of Vista Vacations or (ii) any material
mortgage, indenture, lease, contract or other agreement or instrument,
permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Vista
Vacations or its properties or assets.
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(E) No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality
("Governmental Entity"), is required by or with respect to Vista
Vacations in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby,
except for such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under
applicable state and federal securities laws (notification on Form D)
and the laws of any foreign country.
2.5 Vista Vacations' Financial Statements.
(A) Schedule 2.5(A) includes Vista Vacations' Financial Statements.
(B) Vista Vacations' Financial Statements are complete and correct in all
material respects and have been prepared in accordance GAAP throughout
the periods indicated.
(C) Vista Vacations' Financial Statements present fairly the financial
condition and operating results of Vista Vacations as of the dates and
during the periods indicated therein, subject to normal year-end audit
adjustments, which will not be material in the aggregate.
(D) The unaudited balance sheet of Vista Vacations as of December 31, 1999
is hereinafter referred to as "Vista Vacations' Balance Sheet."
(E) Vista Vacations' financial statements can and will be audited, at Vista
Vacations' expense, as required to comply with the requirements for
material acquisitions under Commission Regulation S-B in a manner
permitting AmeriNet to comply with its obligation under the Securities
Act and the Exchange Act in conjunction therewith.
2.6 No Undisclosed Liabilities.
Vista Vacations does not have any material liabilities or obligations,
either accrued or contingent (whether or not required to be reflected in
financial statements in accordance with generally accepted accounting
principles), and whether due or to become due, which individually or in the
aggregate, (i) have not been reflected in the Vista Vacations Balance Sheet
(including the notes thereto) or (ii) have not been specifically described in
this Agreement or in the Vista Vacations Schedules.
2.7 No Changes.
Except as specifically disclosed in Schedule 2.7, since the date of Vista
Vacations' Financial Statements there has not been, occurred or arisen any:
(A) Transaction by Vista Vacations except in the ordinary course of business as
conducted on that date;
(B) Capital expenditure by Vista Vacations, either individually or in the
aggregate, exceeding $5,000;
(C) Destruction, damage to, or loss of any assets (including without limitation
intangible assets) of Vista Vacations (whether or not covered by
insurance), either individually or in the aggregate, exceeding $5,000;
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(D) Labor trouble or claim of wrongful discharge, sexual harassment or other
unlawful labor practice or action;
(E) Change in accounting methods or practices (including any change in
depreciation or amortization policies or rates, any change in policies in
making or reversing accruals, or any change in capitalization of software
development costs) by Vista Vacations;
(F) Declaration, setting aside, or payment of a dividend or other distribution
in respect to the shares of Vista Vacations, or any direct or indirect
redemption, purchase or other acquisition by Vista Vacations of any of its
shares;
(G) Increase in the salary or other compensation payable or to become payable
by Vista Vacations to any of its officers, directors or employees, or the
declaration, payment, or commitment or obligation of any kind for the
payment, by Vista Vacations, of a bonus or other additional salary or
compensation to any such person;
(H) Acquisition, sale or transfer of any asset of Vista Vacations except in the
ordinary course of business;
(I) Formation, amendment or termination of any distribution agreement or any
material contract, agreement or license to which Vista Vacations is a
party, other than termination by Vista Vacations pursuant to the terms
thereof;
(J) Loan by Vista Vacations to any person or entity, or guaranty by Vista
Vacations of any loan except for expense advances in the ordinary course of
business consistent with past practice;
(K) Waiver or release of any material right or claim of Vista Vacations,
including any write-off or other compromise of any material account
receivable of Vista Vacations;
(L) The notice or, to Vista Vacations' knowledge, commencement or threat of
commencement of any governmental proceeding against or investigation of
Vista Vacations or its affairs;
(M) Other event or condition of any character that has or would, in Vista
Vacations' reasonable judgment, be expected to have a Material Adverse
Effect on Vista Vacations;
(N) Issuance, sale or redemption by Vista Vacations of any of its shares or of
any other of its securities other than issuances of shares of Common Stock
pursuant to outstanding Options and Warrants;
(O) Change in pricing or royalties set or charged by Vista Vacations except for
discounts extended in the ordinary course of business consistent with past
practice; or
(P) Negotiation or agreement by Vista Vacations to do any of the things
described in the preceding clauses (A) through (O) (other than negotiations
with AmeriNet and its representatives regarding the transactions
contemplated by this Agreement).
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2.8 Tax and Other Returns and Reports.
(A) Tax Returns and Audits.
(1) Vista Vacations has accurately prepared and timely filed all
required federal, state, local and foreign returns, estimates,
information statements and reports ("Returns") relating to any
and all Taxes relating or attributable to Vista Vacations or
its operations
(2) The Returns are true and correct in all material respects and
have been completed in accordance with applicable law in all
material respects.
(3) Vista Vacations has timely paid all Taxes required to be paid
with respect to such Returns and has withheld with respect to
its employees all federal and state income Taxes, FICA, FUTA
and other Taxes it is required to withhold.
(4) The accruals for Taxes on the books and records of Vista
Vacations are sufficient to discharge the Taxes for all
periods (or the portion of any period) ending on or prior to
the Closing Date.
(5) Vista Vacations has not been delinquent in the payment of any
Tax nor, except as set forth in Schedule 2.8(A), is there any
Tax deficiency outstanding, proposed or assessed against Vista
Vacations, nor has Vista Vacations executed any waiver of any
statute of limitations on or extending the period for the
assessment or collection of any Tax.
(6) (a) No audit or other examination of any Return of Vista
Vacations is presently in progress. Except as set forth in
Schedule 2.8(A), Vista Vacations does not have any
liabilities for unpaid federal, state, local and foreign
Taxes, whether asserted or unasserted, known or unknown,
contingent or otherwise and Vista Vacations has no knowledge
of any basis for the assertion of any such liability
attributable to Vista Vacations, or their respective assets
or operations.
(b) Vista Vacations is not (nor has it ever been) required to
join with any other entity in the filing of a consolidated
Tax return for federal Tax purposes or a consolidated or
combined return or report for state Tax purposes.
(7) Vista Vacations is not a party to or bound by any Tax
indemnity, Tax sharing or Tax allocation agreement.
(8) Vista Vacations has provided, or made available, to AmeriNet
or its legal counsel copies of all federal, provincial and
state income and all sales and use Tax Returns of Vista
Vacations for all periods since its date incorporation.
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(9) There are (and as of immediately following the Closing Date
there will be) no liens on the assets of Vista Vacations
relating to or attributable to Taxes.
(10) Vista Vacations has no knowledge of any basis for the
assertion of any Tax claim which, if adversely determined,
would result in liens on the assets of Vista Vacations.
(11) Vista Vacations has no property which is being sold, conveyed
or transferred pursuant to this Agreement which in the hands
of AmeriNet would be treated as being owned by persons other
than AmeriNet pursuant to Section 168(f)(8) of the Internal
Revenue Code of 1954 as in effect immediately prior to the
enactment of the Tax Reform Act of 1986, or any analogous
provisions of any state law.
(12) None of the assets of Vista Vacations are treated as
"Tax-exempt use property" within the meaning of Section 168(h)
of the Code.
(13) There is no contract, agreement, plan or arrangement,
including but not limited to the provisions of this Agreement,
covering any employee or former employee of Vista Vacations
that, individually or collectively, could give rise to the
payment of any amount that would not be deductible pursuant to
Sections 280G, 162 or 404 of the Code.
(B) No Penalty.
Vista Vacations is not subject to any penalty by reason of a violation
of any order, rule or regulation of, or a default with respect to any
return, report or declaration required to be filed with, any
Governmental Entity to which it is subject, which violations or
defaults, individually or in the aggregate, would have a material
adverse effect on Vista Vacations.
2.9 Restrictions on Business Activities.
There is no agreement (assuming the Parties thereto other than Vista
Vacations performed their respective obligations thereunder as required),
judgment, injunction, order or decree binding upon Vista Vacations which has or
could reasonably be expected to have the effect of materially prohibiting or
materially impairing any business practice of Vista Vacations, any acquisition
of property by Vista Vacations or the conduct of business by Vista Vacations as
currently conducted or as currently proposed to be conducted.
2.10 Title of Properties: Absence of Liens and Encumbrances:
Condition of Equipment.
(A) (1) Vista Vacations owns no real property.
(2) Schedule 2.10(A) sets forth a true and complete list of all
real property leased by Vista Vacations and the aggregate
annual rental or other fee payable under any such lease.
(3) To the knowledge of Vista Vacations, all such leases are in
good standing, valid and effective in accordance with their
respective terms, and there is not with respect to Vista
Vacations under any of such leases, any existing default or
event of default (or event which with notice or lapse of time,
or both, would constitute a default and in respect of which
Vista Vacations has not taken adequate steps to prevent such
default from occurring), except where the lack of such good
standing, validity and effectiveness or the existence of such
default or event of default would not have a material adverse
effect on Vista Vacations.
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(B) Vista Vacations holds good and valid title to, or, in the case of
leased properties and assets, valid leasehold interests in, all of its
tangible properties and assets, real, personal and mixed, used in its
business, free and clear of any liens, charges, pledges, security
interests or other encumbrances, except as reflected in Vista
Vacations' Financial Statements and except for such imperfections of
title and encumbrances, if any, which are not substantial in character,
amount or extent, and which do not materially detract from the value,
or interfere with the present use, of the property subject thereto or
affected thereby.
(C) (1) The equipment owned or leased by Vista Vacations is listed
in Schedule 2.10(C) (the "Equipment"), except individual
pieces of equipment owned by Vista Vacations with an
individual value of less than $100.
(2) To the knowledge of Vista Vacations, the Equipment is, taken
as a whole:
(a) Adequate for the conduct of the business of Vista Vacations
consistent with its past practice;
(b) Suitable for the uses to which it is currently employed;
(c) In good operating condition;
(d) Regularly and properly maintained, reasonable wear and tear
excepted; and
(e) Not obsolete, dangerous or in need of renewal or
replacement, except for renewal or replacement in the
ordinary course of business.
2.11 Intellectual Property.
(A) (1) Vista Vacations owns, or is licensed to use, all patents,
trademarks, trade names, service marks, copyrights, and any
applications therefor, maskworks, net lists, schematics,
technology, know-how, computer software programs or
applications and tangible or intangible proprietary
information or material (excluding Commercial Software Rights
as defined in paragraph [B] below) that are used or currently
proposed to be used in the business of Vista Vacations as
currently conducted or as currently proposed to be conducted
("Vista Vacations' Intellectual Property Rights").
(2) Schedule 2.11 sets forth a complete list of all patents,
trademarks, registered and material unregistered copyrights,
trade names and service marks, and any applications therefor,
included in Vista Vacations Intellectual Property Rights, and
specifies the jurisdictions in which each such Vista
Vacations' Intellectual Property Right has been issued or
registered or in which an application for such issuance and
registration has been filed, including the respective
registration or application numbers and the names of all
registered owners, together with a list of all of Vista
Vacations' currently marketed software products and an
indication as to which, if any, of such software products have
been registered for copyright protection with the United
States Copyright Office and any foreign offices and by whom
such items have been registered.
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(3) (a) Schedule 2.11 also sets forth a complete list of (i) any
requests Vista Vacations has received to make any such
registration, including the identity of the requestor and
the item requested to be so registered, and the jurisdiction
for which such request has been made and (ii) all licenses,
sublicenses and other agreements as to which Vista Vacations
is a party and pursuant to which Vista Vacations or any
other person is authorized to use any Vista Vacations'
Intellectual Property Right or other trade secret material
to Vista Vacations, and includes the identity of all parties
thereto, a description of the nature and subject matter
thereof, the applicable royalty and the term thereof.
(b) Vista Vacations is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance
of its obligations hereunder, in violation of any license,
sublicense or agreement described on such list.
(4) Vista Vacations is the sole and exclusive owner or licensee
of, with all right, title and interest in and to (free and
clear of any liens or encumbrances), Vista Vacations
Intellectual Property Rights, and has sole and exclusive
rights (and is not contractually obligated to pay any
compensation to any third party in respect thereof) to the use
thereof or the material covered thereby in connection with the
services or products in respect of which Vista Vacations
Intellectual Property Rights are being used.
(5) To the knowledge of Vista Vacations, no claims with respect to
Vista Vacations Intellectual Property Rights have been
asserted or are threatened by any person, nor, to the
knowledge of Vista Vacations, is there any valid grounds for
any bona fide claims (i) to the effect that the manufacture,
sale, licensing or use of any product as now used, sold or
licensed or proposed for use, sale or license by Vista
Vacations infringes on any copyright, patent, trade xxxx,
service xxxx or trade secret, (ii) against the use by Vista
Vacations of any trademarks, trade names, trade secrets,
copyrights, patents, technology, know-how or computer software
programs and applications used in Vista Vacations' business as
currently conducted or as proposed to be conducted, or (iii)
challenging the ownership, validity or effectiveness of any of
Vista Vacations Intellectual Property Rights.
(6) All trademarks, service marks and copyrights held by Vista
Vacations are valid and subsisting.
(7) To the knowledge of Vista Vacations, there is no material
unauthorized use, infringement or misappropriation of any of
Vista Vacations Intellectual Property Rights by any third
party, including any employee or former employee of Vista
Vacations.
(8) Vista Vacations has not been sued or charged as a defendant in
any claim, suit, action or proceeding which involves a claim
of infringement of any patents, trademarks, service marks,
copyrights or violation of any trade secret or other
proprietary right of any third party and which has not been
finally terminated prior to the date hereof nor does it have
any knowledge of any such charge or claim, and there is not
any infringement liability with respect to, or infringement or
violation by, Vista Vacations of any patent, trademark,
service xxxx, copyright, trade secret or other proprietary
right of another.
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(9) To Vista Vacations' knowledge, no Vista Vacations'
Intellectual Property Right or product of Vista Vacations is
subject to any outstanding order, judgment, decree,
stipulation or agreement restricting in any manner the
licensing thereof by Vista Vacations.
(10) There is no outstanding order, judgment, decree or stipulation
on Vista Vacations, and Vista Vacations is not party to any
agreement, restricting in any manner the licensing of Vista
Vacations' products by Vista Vacations.
(11) Vista Vacations has not entered into any agreement to
indemnify any other person against any charge of infringement
of any Vista Vacations' Intellectual Property Right.
(12) Each current and former employee of and consultant to Vista
Vacations has signed a confidentiality agreement substantially
in Vista Vacations' standard form as certified by Vista
Vacations, delivered to AmeriNet and included in Schedule
2.12.
(B) (1) To the best of Vista Vacations' knowledge, Vista Vacations
has not breached or violated the terms of its license,
sublicense or other agreement relating to any Commercial
Software Rights and has a valid right to use such Commercial
Software Rights and has a valid right to use such Commercial
Rights under such license and agreements.
(2) Vista Vacations is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of
its obligations hereunder, in violation of any license,
sublicense or agreement relating to Commercial Software
Rights.
(3) No claims with respect to the Commercial Software Rights have
been asserted or, to the knowledge of Vista Vacations, are
threatened by any person against Vista Vacations, nor to the
knowledge of Vista Vacations is there any valid grounds for
any bona fide claims (i) to the effect that the manufacture,
sale, licensing or use of any product as now used, sold or
licensed or proposed for use, sale or license by Vista
Vacations infringes on any copyright, patent, trade xxxx,
service xxxx or trade secret, (ii) against the use by Vista
Vacations of any trademarks, trade names, trade secrets,
copyrights, patents, technology, know-how or computer software
programs and applications used in Vista Vacations' business as
currently conducted or as proposed to be conducted, or (iii)
challenging the validity or effectiveness of any of Vista
Vacations' rights to use Commercial Software Rights.
(4) To the knowledge of Vista Vacations, there is no material
unauthorized use, infringement or misappropriation of any of
the Commercial Software Rights by Vista Vacations or any
employee or former employee of Vista Vacations during the
period of their employment.
(5) To the knowledge of Vista Vacations, no Commercial Software
Right is subject to any outstanding order, judgment, decree,
stipulation or agreement restricting in any manner the use
thereof by Vista Vacations.
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2.12 Agreements, Contracts and Commitments.
(A) Except as specifically disclosed in Schedule 2.12, Vista Vacations does
not have, is not a party to nor is it bound by:
(1) Any collective bargaining agreements;
(2) Any agreements that contain any unpaid severance liabilities
or obligations;
(3) Any bonus, deferred compensation, incentive compensation,
pension, profit-sharing or retirement plans, or any other
employee benefit plans or arrangements;
(4) Any employment or consulting agreement, contract or commitment
with an employee or individual consultant or salesperson or
consulting or sales agreement, contract or commitment with a
firm or other organization, not terminable by Vista Vacations
on thirty days notice without liability, except to the extent
general principles of wrongful termination law may limit Vista
Vacations' ability to terminate employees at will;
(5) Any agreement or plan, including, without limitation, any
stock option plan, stock appreciation right plan or stock
purchase plan, any of the benefits of which will be increased,
or the vesting of benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions
contemplated by this Agreement;
(6) Any fidelity or surety bond or completion bond;
(7) Any lease of personal property having a value individually in
excess of $2,000;
(8) Any agreement of indemnification or guaranty not entered into
in the ordinary course of business;
(9) Any agreement, contract or commitment containing any covenant
limiting the freedom of Vista Vacations to engage in any line
of business or compete with any person;
(10) Any agreement, contract or commitment relating to capital
expenditures and involving future obligations in excess of
$2,000 in any single instance or $10,000 in the aggregate;
(11) Any agreement, contract or commitment relating to the
disposition or acquisition of assets not in the ordinary
course of business or any ownership interest in any
corporation, partnership, joint venture or other business
enterprise;
(12) Any mortgages, indentures, loans or credit agreements,
security agreements or other agreements or instruments
relating to the borrowing of money or extension of credit,
including guaranties referred to in Schedule 2.12(A)(12)
hereof;
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(13) Any purchase order or contract for the purchase of raw
materials or acquisition of assets involving $1,000 or more in
any single instance or $10,000 or more in the aggregate;
(14) Any construction contracts;
(15) Any distribution, joint marketing or development agreement;
(16) Any other agreement, contract or commitment which involves
$1,000 or more in any single instance or more than $10,000 in
the aggregate and is not cancelable without penalty within
thirty (30) days other than standard end-user licenses of
Vista Vacations' products and services in the ordinary course
of business consistent with past practice, or
(17) Any agreement which is otherwise material to Vista Vacations'
business.
(B) (1) Vista Vacations has not breached, or received any claim or
threat that it has breached, any of the terms or conditions of
any agreement, contract or commitment to which it is bound
(including those set forth in any of Vista Vacations
Schedules) in such manner as would permit any other party to
cancel or terminate the same.
(2) Each agreement, contract or commitment required to be set
forth in any of Vista Vacations Schedules is in full force and
effect (assuming such agreement, contract or commitment has
been duly authorized, executed and delivered by the other
party or parties thereto) and, except as otherwise disclosed
or defaults fully remedied or resolved, is not subject to any
material default thereunder of which Vista Vacations has
knowledge by any party obligated to Vista Vacations pursuant
thereto.
2.13 Interested Party Transactions.
Except as specifically disclosed in Schedule 2.13, no officer, director or
stockholder of Vista Vacations (nor any parent, sibling, descendant or spouse of
any of such persons, or any trust, partnership, corporation or other entity
(provided, that ownership of no more than one percent of the outstanding voting
stock of a publicly traded corporation shall not be deemed an "interest in any
entity" for purposes of this Section 2.13) in which any of such persons has or
has had an interest), has or has had, directly or indirectly:
(A) An interest in any entity which furnished or sold, or furnishes or
sells, services or products which Vista Vacations furnishes or sells,
or proposes to furnish or sell;
(B) Any interest in any entity which purchases from or sells or furnishes
to, Vista Vacations, any goods or services; or
(C) A beneficial interest in any contract or agreement required to be set
forth in Schedule 2.12.
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2.14 Governmental Authorization.
(A) Schedule 2.14 accurately lists each material federal, state, county,
local or foreign governmental consent, license, permit, grant, or other
authorization issued to Vista Vacations:
(1) Pursuant to which Vista Vacations currently operates or holds
any interest in any of its properties; or
(2) Which is required for the operation of its business or the
holding of any such interest (hereinafter collectively
referred to as the "Vista Vacations Authorizations").
(B) Vista Vacations Authorizations are in full force and effect and
constitute all the material authorizations required to permit Vista
Vacations to operate or conduct its business or hold any interest in
its properties.
2.15 Litigation.
(A) Schedule 2.15 annexed hereto accurately lists all suits, actions and
legal, administrative, arbitration or other proceedings and
governmental investigations and all other claims, pending or, to Vista
Vacations' knowledge, threatened or which Vista Vacations expects will
ultimately be threatened or commenced.
(B) None of such suits, actions, proceedings, investigations or claims seek
to prevent the consummation of the Reorganization.
(C) There is no judgment, decree or order enjoining Vista Vacations in
respect of, or the effect of which is to prohibit, any business
practice or the acquisition of any property or the conduct of business
of Vista Vacations.
(D) Schedule 2.15 also lists all suits and legal actions initiated by
Vista Vacations.
2.16 Accounts Receivable.
(A) All receivables of Vista Vacations arose in the ordinary course of
business and the aggregate amounts thereof, are to the best of Vista
Vacations' knowledge collectible (except to the extent reserved against
as reflected in Vista Vacations' Financial Statements) and are carried
at values determined in accordance with generally accepted accounting
principles consistently applied.
(B) To the knowledge of Vista Vacations, none of the receivables of Vista
Vacations is subject to any claim of offset, recoupment, setoff or
counterclaim and there are no facts or circumstances (whether asserted
or unasserted) that would give rise to any such claim.
(C) No receivables are contingent upon the performance by Vista Vacations
of any obligation or contract except for Vista Vacations' maintenance
obligations under its maintenance agreements (although no customer has
claimed that Vista Vacations has failed to perform its maintenance
obligations).
(D) No person has any lien, charge, pledge, security interest or other
encumbrance on any of such receivables and no agreement for deduction
or discount has been made with respect to any of such receivables.
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2.17 Minute Books.
The minute books of Vista Vacations made available to counsel for AmeriNet
contain a complete and accurate summary of all meetings of directors and
stockholders since the time of incorporation of Vista Vacations, and reflect all
transactions referred to in such minutes accurately in all material respects.
2.18 Environmental and OSHA.
(A) Hazardous Material.
(1) As of the Closing Date, no material amount of any substance
that is regulated by any Governmental Entity or that has been
designated by any Governmental Entity to be radioactive,
toxic, hazardous or otherwise a danger to health or the
environment, including, without limitation, PCBs, asbestos,
urea-formaldehyde and all substances listed pursuant to the
United States Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended from time
to time, and the United States Resource Recovery and
Conservation Act of 1976, as amended from time to time, and
the regulations and publications promulgated pursuant to said
laws (a "Hazardous Material"), is present, as a result of the
actions of Vista Vacations (excluding failure of Vista
Vacations to remedy the presence of a Hazardous Material
resulting from the actions of any previous owner or occupier
of Vista Vacations' Property of which presence Vista Vacations
does not have knowledge) in violation of any law in effect on
or before the Closing Date, in, on or under any property,
including the land and the improvements, ground water and
surface water thereof, that Vista Vacations or any of its past
or present subsidiaries has at any time owned, operated,
occupied or leased (collectively, "Vista Vacations'
Property").
(2) In any event, Vista Vacations does not know of the presence of
any Hazardous Material in, on or under any Vista Vacations'
Property.
(B) Hazardous Materials Activities.
At no time prior to the Closing Date has Vista Vacations transported,
stored, used, manufactured, released or exposed its employees or others
to Hazardous Materials in violation of any law in effect on or before
the Closing Date, nor has Vista Vacations disposed of, transferred,
sold, or manufactured any product containing a Hazardous Material
(collectively "Hazardous Materials Activities") in violation of the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, the Resource Conservation and Recovery Act of 1976,
the Toxic Substances Control Act of 1976 and any other applicable state
or federal acts (including the rules and regulations thereunder) as in
effect on or before the Closing Date.
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(C) Permits.
Vista Vacations currently holds no environmental approvals, permits,
licenses, clearances and consents and none are necessary for the
conduct of Vista Vacations' Hazardous Material Activities and other
businesses of Vista Vacations as such activities and businesses are
currently being conducted.
2.19 Brokers' and Finders' Fees.
Except as set forth in Schedule 2.19, Vista Vacations has not incurred, nor
will it incur, directly or indirectly, any liability for brokerage or finders'
fees or agents' commissions or any similar charges in connection with this
Agreement or any transaction contemplated hereby.
2.20 Labor Matters.
(A) Vista Vacations is in compliance in all material respects with all
currently applicable laws and regulations respecting employment,
discrimination in employment, terms and conditions of employment and
wages and hours and occupational safety and health and employment
practices, and is not engaged in any unfair labor practice.
(B) Vista Vacations has not received any notice from any Governmental
Entity, and to the knowledge of Vista Vacations, there has not been
asserted before any Governmental Entity, any claim, action or
proceeding to which Vista Vacations is a party or involving Vista
Vacations, and there is neither pending nor, to the knowledge of Vista
Vacations, threatened, any investigation or hearing concerning Vista
Vacations arising out of or based upon any such laws, regulations or
practices.
(C) Vista Vacations has not received notice of and to the best of its
knowledge, there are no pending claims against Vista Vacations under
any workers compensation plan or policy or for long term disability.
(D) To the best of Vista Vacations' knowledge, it has complied in all
material respects with all applicable provisions of the Consolidated
Omnibus Budget Reconciliation Act of 1985 and has no obligations with
respect to any former employees or qualifying beneficiaries thereunder.
(E) Schedule 2.20 lists all current employees of Vista Vacations and their
current salary and vacation accruals.
2.21 Insurance.
(A) Schedule 2.21 lists all insurance policies and fidelity bonds covering
the assets, business, equipment, properties, operations, software
errors and omissions, employees, officers and directors of Vista
Vacations as well as all claims made under any insurance policy by
Vista Vacations since its incorporation.
(B) There is no claim by Vista Vacations pending under any of such policies
or bonds as to which coverage has been questioned, denied or disputed
by the underwriters of such policies or bonds.
(C) All premiums payable under all such policies and bonds have been paid
and Vista Vacations is otherwise in compliance in all material respects
with the terms of such policies and bonds (or other policies and bonds
providing substantially similar insurance coverage).
(D) Such policies of insurance and bonds are of the type and in amounts
customarily carried by persons conducting businesses similar to those
of Vista Vacations.
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(E) Vista Vacations does not know of any threatened termination of or
material premium increase with respect to any of such policies.
(F) Vista Vacations has never been denied insurance coverage nor has any
insurance policy of Vista Vacations ever been canceled for any reason.
2.22 Compliance with Laws.
Vista Vacations has not received any notices of violation with respect to
and to the best of its knowledge has complied in all material respects with and
is not in violation in any material respect of any federal, state or local
statute, law or regulation with respect to the conduct of its business, or the
ownership or operation of its business, assets or properties.
2.23 Complete Copies of Materials.
Vista Vacations has delivered or made available true and complete copies of
each document (or summaries of same) which has been requested by AmeriNet or its
counsel.
2.24 Binding Agreements: No Default.
Each of the contracts, agreements and other instruments shown on the
Exhibits and Schedules referred to in this Agreement to which Vista Vacations is
a party is a legal, binding and enforceable obligation in favor of or against
Vista Vacations (assuming that such contracts, agreements and instruments are
binding on all other parties thereto, Vista Vacations having no reason to
believe that they are not), in accordance with its terms, and no party with whom
Vista Vacations has an agreement or contract is, to Vista Vacations' knowledge,
in default thereunder or has breached any material terms or provisions thereof
(subject to all applicable bankruptcy, insolvency, reorganization and other laws
applicable to creditors' rights and remedies and to the exercise of judicial
discretion in accordance with general principles of equity).
2.25 Current Report on Form 8-K
(A) The information supplied by Vista Vacations for inclusion in the
current report on Commission Form 8-K within 15 days after the Closing
Date annexed hereto as Exhibit 2.25 and in all other reports which
AmeriNet will file thereafter pursuant to Sections 12(g), 13 and 15(d)
of the Exchange Act, shall not contain any statement which, at such
time and in light of the circumstances under which it shall be made, is
false or misleading with respect to any material fact, or shall omit to
state any material fact necessary in order to make the statements made
therein not false or misleading; or omit to state any material fact
necessary to correct any statement which has become false or
misleading.
(B) If at any time prior to the Closing Date any event relating to Vista
Vacations or any of its affiliates, officers or directors should be
discovered by Vista Vacations which should be set forth in the Current
Report on Form 8-K, Vista Vacations shall promptly inform AmeriNet.
2.26 FIRPTA.
Vista Vacations is not, and has not been at any time, a "United States real
property holding corporation" within the meaning of Section 897(c)(2) of the
Code.
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2.27 Employee Benefit Plans.
(A) Schedule 2.27 lists all employee benefit plans [as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended,
"ERISA"] and all bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance and other similar fringe
or employee benefit plans, programs or arrangements, and any current or
former employment or executive compensation or severance agreements,
written or otherwise, for the benefit of, or relating to, any employee of
Vista Vacations, any trade or business (whether or not incorporated) which
is a member or which is under common control with Vista Vacations (an
"ERISA Affiliate") within the meaning of Section 414 of the Code, or any
subsidiary of Vista Vacations (together, the "Employee Plans"), and a copy
of each such Employee Plan has been provided to AmeriNet.
(B) (1) None of the Employee Plans promises or provides retiree medical or
other retiree welfare benefits to any person except as required by
applicable law, including but not limited to COBRA;
(2) (a) To the best of Vista Vacations' knowledge: all Employee Plans are
in compliance in all material respects with the requirements
prescribed by any and all applicable statutes (including ERISA
and the Code), orders, or governmental rules and regulations
currently in effect with respect thereto (including all
applicable requirements for notification to participants or
beneficiaries or the Department of Labor, the IRS or Secretary of
the Treasury), and Vista Vacations has performed in all material
respects all obligations required to be performed by it under, is
not in default under or violation of, and has no knowledge of any
default or violation by any other party to, any of the Employee
Plans;
(b) Each Employee Plan intended to qualify under Section 401(a) of
the Code and each trust intended to qualify under Section 501(a)
of the Code either has received a favorable determination letter
with respect to each such Employee Plan from the IRS or still has
a remaining period of time under applicable Treasury Regulations
or IRS pronouncements in which to apply for such a determination
letter and to make any amendments necessary to obtain a favorable
determination;
(c) No Employee Plan is or within the prior six years has been
subject to, and Vista Vacations has not incurred and does not
expect to incur any liability under, Title IV of ERISA or Section
412 of the Code; and
(d) To the best of Vista Vacations' knowledge, nothing in any
Employee Plan precludes or interferes with AmeriNet's ability to
cause Vista Vacations to terminate (or consolidate, at AmeriNet's
option) any Employee Plan after the Closing Date; provided that:
(i) the Employee Plans may be terminated prospectively only,
subject to rights accrued by Vista Vacations' employees at the
time of such termination and (ii) not more than sixty days notice
may be required to terminate certain Employee Plans.
(3) None of the following now exists or has existed within the six-year
period ending on the date hereof with respect to any Employee Plan:
(a) Any act or omission by Vista Vacations constituting a violation
of Section 402, 403, 404 or 405 of ERISA;
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(b) Any act or omission by Vista Vacations which constitutes a
violation of Sections 406 and 407 of ERISA and is not exempted by
Section 408 of ERISA or which constitutes a violation of Section
4975(c) of the Code and is not exempted by Section 4975(d) of the
Code;
(c) Any act or omission by Vista Vacations constituting a violation
of Section 503, 510 or 511 of ERISA; or (IV) any act or omission
by Vista Vacations which could give rise to liability under
Section 502 of ERISA or under Sections 4972 or 4975 through 4980
of the Code.
(4) (a) Each Employee Plan has been maintained in substantial compliance
with its terms, and all contributions, premiums or other payments
due from Vista Vacations or any of its subsidiaries to (or under)
any such Employee Plan have been fully paid or adequately
provided for on the audited Vista Vacations' Financial Statements
for the most recently-ended fiscal year.
(b) To the best of Vista Vacations' knowledge, all accruals thereon
(including, where appropriate proportional accruals for partial
periods) have been made in accordance with generally accepted
accounting principles consistently applied on a reasonable basis.
(c) There has been no amendment, written interpretation or
announcement (whether or not written) by Vista Vacations with
respect to, or change in employee participation or coverage
under, any Employee Plan that would increase materially the
expense of maintaining such plans or arrangements, individually
or in the aggregate, above the level of expense incurred with
respect thereto for the most recently-ended fiscal year.
(5) Vista Vacations has made available to AmeriNet complete, accurate and
current copies of all Employee Plans and all amendments, documents,
correspondence and filings relating thereto, including but not limited
to any statements, filings, reports or returns filed with any
governmental agency with respect to the Employee Plans at any time
within the three-year period ending on the date hereof.
2.28 Distribution Agreements.
No third party or parties have the right to distribute Vista Vacations'
products or to market its services except as disclosed in Schedule 2.28, which
discloses the names, addresses, telephone numbers, fax numbers, e-mail addresses
and federal Tax identification numbers of each such person, together with a
summary of the agreements pursuant to which Vista Vacations' products are
distributed or its services are marketed.
2.29 Vista Vacations' Stockholders
All of Vista Vacations' Stockholders qualify as Accredited Investors and
each Vista Vacations' Stockholder hereby represents and warrants that he, she or
it:
(A) Has had access through the Commission's Internet web site at
xxx.xxx.xxx, in the XXXXX Archives sub-cite, to all of AmeriNet's
reports filed with the Commission during the past two fiscal years, has
reviewed all such reports and has, either directly or through a
representative, been granted access to all of AmeriNet's officers and
directors, and to all officers and directors of AmeriNet's operating
subsidiaries, for purposes of providing all disclosure required under
applicable federal and state securities laws in conjunction with the
exchange contemplated by this Agreement;
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(B) Has been advised that:
(1) The securities to be issued to them by AmeriNet in exchange
for their shares of Vista Vacations' Common Stock have not
been registered under the Exchange Act or any comparable state
securities laws, but rather, are being issued in reliance on
the exemption from registration under the Securities Act
provided by Section 4(6) thereof;
(2) All certificates for their shares of AmeriNet Common Stock
will bear legends restricting any transactions therein,
directly or indirectly, unless they are first registered under
applicable federal and state securities laws or the proposed
transaction is exempt from such registration requirements, and
such facts are demonstrated to the satisfaction of AmeriNet
and its legal counsel, based on such third party legal
opinions, affidavits and transfer agency procedures as
AmeriNet shall reasonably require or have in place generally;
(3) AmeriNet's transfer agent has been instructed to decline
transfers of certificates for their shares of AmeriNet Common
Stock, unless the foregoing requirements have been met and
have been confirmed as having been met by a duly authorized
officer of AmeriNet.
(C) Has independently determined through his, her or its own legal counsel,
that all requirements of their states of domicile for the issuance of
the shares of AmeriNet's Common Stock called for by this Agreement have
been met, or will have been met, prior to Closing, by such legal
counsel acting on behalf of the Parties to this Agreement.
2.30 Representations Complete.
None of the representations or warranties made by Vista Vacations or its
stockholders, nor any statement made in any Schedule, Exhibit or certificate
furnished by Vista Vacations pursuant to this Agreement, when read in its
entirety, contains or will contain any untrue statement of a material fact at
the time the Closing takes place, or omits or will omit to state any material
fact necessary in order to make the statements contained herein or therein, in
the light of the circumstances under which made, not misleading.
Article III
Representations and Warranties of AmeriNet
AmeriNet represents and warrants to Vista Vacations as a material
inducement to its entry into this Agreement, subject to the exceptions
specifically disclosed in the AmeriNet Schedules or in AmeriNet's Exchange Act
Reports, as follows:
3.1 Organization, Standing and Power.
(A) AmeriNet is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
(C) AmeriNet has the corporate power to own its properties and to carry on
its business as now being conducted and is duly qualified to do
business and is in good standing in each jurisdiction in which the
failure to be so qualified would have a material adverse effect on
AmeriNet taken as a whole.
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(D) A true and correct copy of its articles of incorporation and bylaws, as
amended to date, are available at the Commission's web site in the
XXXXX archives, filed as exhibit's to the report on Form 10-KSB for the
year ended June 30, 1999 and any future modifications thereof will be
filed with the Commission and will also be available at such site.
3.2 Capital Structure.
(A) (1) The authorized stock of AmeriNet consists of 20,000,000
shares of Common Stock, par value $0.01 per share, and
5,000,000 shares of Preferred Stock, $0.01 par value per
share, the attributes of which are to be determined on a case
by case basis by AmeriNet's board of directors.
(2) AmeriNet had 10,663,460 shares of Common Stock issued and
outstanding as of February 29, 2000 and no shares of Preferred
Stock have ever been issued.
(3) As of February 29, 2000, AmeriNet had reserved 4,876,814
shares of Common Stock (excluding those issuable pursuant to
the terms of this Agreement) for issuance as described in
AmeriNet's annual report on Form 10-KSB for the year ended
June 30, 1999 and the quarterly reports on Form 10-QSB for the
calendar quarters ended September 30, 1999 and December 31,
1999 and any Subsequent Current Reports.
(4) There are no other options, warrants, calls, rights,
commitments or agreements of any character to which AmeriNet
is a party or by which it is bound obligating AmeriNet to
issue, deliver, sell, repurchase or redeem, or cause to be
issued, delivered, sold, repurchased or redeemed, any shares
of the Capital Stock of AmeriNet or obligating AmeriNet to
grant, extend or enter into any such option, warrant, call,
right, commitment or agreement, other than as may be required
in conjunction with other acquisitions under negotiation,
rights granted to investors under common stock purchase
warrants since December 31, 2000 and as disclosed in the
Exchange Act Reports.
(5) Pursuant to AmeriNet's articles of incorporation, they may be
amended by action of the board of directors without
stockholder approval to increase the amount of authorized
Capital Stock.
(B) All of AmeriNet's shares of common and preferred stock have been duly
authorized, and all of their issued and outstanding shares of common
stock have been validly issued, are fully paid and nonassessable and
are free of any liens or encumbrances other than any liens or
encumbrances created by or imposed upon the holders thereof.
(C) The shares of AmeriNet Common Stock to be issued pursuant to the
Reorganization will be duly authorized, validly issued, fully paid, and
nonassessable.
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3.3 Authority.
(A) AmeriNet has all requisite corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby.
(B) The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of AmeriNet.
(C) This Agreement has been duly executed and delivered by AmeriNet and,
subject to having also been approved by Vista Vacations' board of
directors and properly executed and delivered by Vista Vacations,
constitutes a valid and binding obligation of AmeriNet.
(D) The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or default (with or without notice
or lapse of time, or both), or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material
benefit under:
(1) Any provision of the articles of incorporation or bylaws of
AmeriNet; or
(2) Any mortgage, indenture, lease, contract or other agreement or
instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation
applicable to AmeriNet or its properties or assets, other than
any such conflicts, violations, defaults, terminations,
cancellations or accelerations which individually or in the
aggregate would not have a material adverse effect on the
ability of AmeriNet to consummate the transactions
contemplated hereby.
(E) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity, is required by or
with respect to AmeriNet in connection with the execution and delivery
of this Agreement by AmeriNet or the consummation by AmeriNet of the
transactions contemplated hereby, except for:
(1) Such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required
under applicable state and federal securities laws (a Form D
Notification Statement) and the laws of any foreign country;
and
(2) Such other consents, authorizations, filings, approvals and
registrations which if not obtained or made would not have a
material adverse effect on the ability of AmeriNet to
consummate the transactions contemplated hereby.
3.4 Exchange Act Reports; AmeriNet Financial Statements.
(A) All materials required to be filed by AmeriNet with the Commission
pursuant to Sections 13 or 15(d) of the Exchange Act since current
management took office starting in November of 1998, have been filed
and are available on the Commission's Internet web site at xxx.xxx.xxx
in its XXXXX Archives sub-site.
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(B) To the best of AmeriNet's knowledge, the Exchange Act Reports comply in
all material respects with the requirements of the Exchange Act and do
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they
were made, not misleading, except to the extent corrected by a
subsequently filed document with the Commission or by information
provided by AmeriNet to Vista Vacations.
(C) The AmeriNet Financial Statements comply as to form in all material
respects with applicable accounting requirements and with the published
rules and regulations of the Commission with respect thereto, have been
prepared in accordance with generally accepted accounting principles
consistently applied and fairly present the consolidated financial
position of AmeriNet at the date thereof and of its operations and cash
flows for the period then ended, subject to normal year end audit
adjustments.
(D) There has been no change in AmeriNet accounting policies or estimates
except as described in the notes to AmeriNet's Financial Statements or
in subsequently filed Exchange Act Reports.
(E) AmeriNet has no material obligations, other than:
(1) Those set forth in AmeriNet's Financial Statements
(obligations not required to be set forth in AmeriNet's
Financial Statements under generally accepted accounting
principles being deemed not material);
(2) Those resulting from ongoing acquisition activities which
developed after the date of AmeriNet's Financial Statements
but are not yet definite enough to require filing in the
Exchange Act Reports;
(3) Those pertaining to confidential letters of intent; or
(4) Those disclosed by AmeriNet to Vista Vacations in writing.
(F) The information supplied by AmeriNet for inclusion in the Current
Report on Form 8-K pertaining to this Reorganization will not contain
any statement which, at such time and in light of the circumstances
under which it shall be made, is false or misleading with respect to
any material fact, or shall omit to state any material fact necessary
in order to make the statements therein not false or misleading.
(G) If at any time prior to the Closing Date any event relating to AmeriNet
or any of its affiliates, officers or directors should be discovered by
AmeriNet which should be set forth in a current report on Form 8-K,
AmeriNet will promptly inform Vista Vacations.
(H) Notwithstanding the foregoing, AmeriNet makes no representation or
warranty with respect to any information supplied by Vista Vacations
which is contained in any of the foregoing documents.
(I) To the best of AmeriNet's knowledge, there are no currently outstanding
comment letters from the Commission that have not been responded to and
complied with.
3.5 Broker's and Finders' Fees.
Except as disclosed in the Exchange Act Reports, AmeriNet has not incurred,
and will not incur, directly or indirectly, any liability for brokerage or
finders' fees or agents' commissions or any similar charges in connection with
this Agreement, the Reorganization or any transaction contemplated hereby.
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3.6 Ownership of Vista Vacations' Capital Stock.
As of the date of execution of this Agreement, AmeriNet does not own any
shares of Vista Vacations' Capital Stock.
3.7 Litigation.
There are no suits, actions or legal, administrative, arbitration or other
proceedings or governmental investigations against AmeriNet pending or, to
AmeriNet's knowledge, threatened, which (i) if determined adversely to AmeriNet,
could be expected to result in a material adverse effect on the financial
condition or results of operations of AmeriNet, or (ii) seek to prevent the
consummation of the Reorganization.
3.8 Limited Activities
(A) AmeriNet is a holding company with no material operations or assets other
than the shares of its subsidiaries common stock and operations pertaining
to supervision and coordination of the activities of its subsidiaries,
provision of support services for its subsidiaries, acquisition related
activities and compliance with applicable laws, including federal
securities and internal revenue laws.
(B) AmeriNet currently has two operating subsidiaries, Xxxxxxx.xxx, Inc., and
Trilogy International, Inc., both Florida corporations, and is a party to a
letter of intent to acquire Custom Software Systems, Inc., a Virginia
corporation currently headquartered in Houston, Texas.
3.9 No Undisclosed Liabilities.
AmeriNet does not have any material liabilities or obligations, either
accrued or contingent (whether or not required to be reflected in financial
statements in accordance with generally accepted accounting principles), and
whether due or to become due, which individually or in the aggregate, (i) have
not been reflected in the AmeriNet Financial Statements (including the notes
thereto) or (ii) have not been specifically described in this Agreement or in
the Exchange Act Reports.
3.10 No Changes.
Since the date of the latest AmeriNet Exchange Act Report there has not
been, occurred or arisen any:
(A) Destruction, damage to, or loss of any assets (including without
limitation intangible assets) of AmeriNet or its subsidiaries (whether
or not covered by insurance), either individually or in the aggregate,
exceeding $30,000, other than losses by subsidiaries in the ordinary
course of business.
(B) Labor trouble or claim of wrongful discharge, sexual harassment or
other unlawful labor practice or action;
(C) Change in accounting methods or practices (including any change in
depreciation or amortization policies or rates, any change in policies
in making or reversing accruals, or any change in capitalization of
software development costs) by AmeriNet or its subsidiaries;
64
(D) Declaration, setting aside, or payment of a dividend or other
distribution in respect to the shares of AmeriNet or its subsidiaries,
or any direct or indirect redemption, purchase or other acquisition by
AmeriNet or its subsidiaries of any of their shares;
(E) Other event or condition of any character that has or would, in
AmeriNet or its subsidiaries' reasonable judgment, be expected to have
a material adverse effect on AmeriNet or its subsidiaries;
(F) Negotiation or agreement by AmeriNet or its subsidiaries to do any of
the things described in the preceding clauses (A) through (F) other
than negotiations with AmeriNet or its subsidiaries and their
representatives regarding the transactions contemplated by this
Agreement or other acquisitions.
3.11 Tax and Other Returns and Reports.
(A) Tax Returns and Audits.
(1) AmeriNet and its subsidiaries have accurately prepared and
filed all required federal, state, local and foreign returns,
estimates, information statements and reports ("Returns")
relating to any and all Taxes relating or attributable to
AmeriNet or its subsidiaries or their operations and such
Returns are true and correct in all material respects and have
been completed in accordance with applicable law in all
material respects.
(2) AmeriNet and its subsidiaries have timely paid all Taxes
required to be paid with respect to such Returns and have
withheld with respect to its employees all federal and state
income taxes, FICA, FUTA and other Taxes they are required to
withhold.
(3) The accruals for Taxes on the books and records of AmeriNet
and its subsidiaries are sufficient to discharge the Taxes for
all periods (or the portion of any period) ending on or prior
to the Closing Date.
(4) AmeriNet and its subsidiaries have not been delinquent in the
payment of any Tax nor, except as disclosed in the Exchange
Act Reports, is there any Tax deficiency outstanding, proposed
or assessed against AmeriNet or its subsidiaries, nor has
AmeriNet or its subsidiaries executed any waiver of any
statute of limitations on or extending the period for the
assessment or collection of any Tax.
(5) Except as disclosed in the Exchange Act Reports:
(a) No audit or other examination of any Return of AmeriNet or
its subsidiaries is presently in progress.
(b) AmeriNet and its subsidiaries do not have any liabilities
for unpaid federal, state, local and foreign Taxes, whether
asserted or unasserted, known or unknown, contingent or
otherwise and AmeriNet and its subsidiaries have no
knowledge of any basis for the assertion of any such
liability attributable to AmeriNet or its subsidiaries, or
their respective assets or operations.
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(6) AmeriNet and its subsidiaries are not parties to or bound by
any tax indemnity, tax sharing or tax allocation agreement.
(7) AmeriNet and its subsidiaries have provided, or made available
to Vista Vacations or its legal counsel copies of all federal,
provincial and state income and all sales and use Tax Returns
of AmeriNet or its subsidiaries for all periods since January
1, 1998.
(8) There are (and as of immediately following the Closing Date
there will be) no liens on the assets of AmeriNet or its
subsidiaries relating to or attributable to Taxes.
(9) AmeriNet and its subsidiaries have no knowledge of any basis
for the assertion of any Tax claim which, if adversely
determined, would result in liens on the assets of AmeriNet or
its subsidiaries.
(10) There is no contract, agreement, plan or arrangement,
including but not limited to the provisions of this Agreement,
covering any employee or former employee of AmeriNet or its
subsidiaries that, individually or collectively, could give
rise to the payment of any amount that would not be deductible
pursuant to Sections 280G, 162 or 404 of the Code.
(B) No Penalty.
Neither AmeriNet nor its subsidiaries are subject to any penalty by
reason of a violation of any order, rule or regulation of, or a default
with respect to any return, report or declaration required to be filed
with, any Governmental Entity to which it is subject, which violations
or defaults, individually or in the aggregate, would have a material
adverse effect on AmeriNet or its subsidiaries.
3.12 Environmental and OSHA.
(A) Hazardous Material.
(1) As of the Closing Date, no material amount of any substance
that is regulated by any Governmental Entity or that has been
designated by any Governmental Entity to be radioactive,
toxic, hazardous or otherwise a danger to health or the
environment, including, without limitation, PCBs, asbestos,
urea-formaldehyde and all substances listed pursuant to the
United States Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended from time
to time, and the United States Resource Recovery and
Conservation Act of 1976, as amended from time to time, and
the regulations and publications promulgated pursuant to said
laws (a "Hazardous Material"), is present, as a result of the
actions of AmeriNet or its subsidiaries (excluding failure of
AmeriNet or its subsidiaries to remedy the presence of a
Hazardous Material resulting from the actions of any previous
owner or occupier of AmeriNet or its subsidiaries' property of
which presence AmeriNet or its subsidiaries do not have
knowledge) in violation of any law in effect on or before the
Closing Date, in, on or under any property, including the land
and the improvements, ground water and surface water thereof,
that AmeriNet or its subsidiaries own, operate, occupy or
lease.
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(2) In any event, AmeriNet and its subsidiaries do not know of the
presence of any Hazardous Material in, on or under any of
their property.
(B) Hazardous Materials Activities.
At no time prior to the Closing Date has AmeriNet or its subsidiaries
transported, stored, used, manufactured, released or exposed its
employees or others to Hazardous Materials in violation of any law in
effect on or before the Closing Date, nor has AmeriNet or its
subsidiaries disposed of, transferred, sold, or manufactured any
product containing a Hazardous Material (collectively "Hazardous
Materials Activities") in violation of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, the
Resource Conservation and Recovery Act of 1976, the Toxic Substances
Control Act of 1976 and any other applicable state or federal acts
(including the rules and regulations thereunder) as in effect on or
before the Closing Date.
(C) Permits.
AmeriNet or its subsidiaries currently holds no environmental approvals,
permits, licenses, clearances and consents and none are necessary for the
conduct of AmeriNet or its subsidiaries' Hazardous Material Activities and other
businesses of AmeriNet or its subsidiaries as such activities and businesses are
currently being conducted.
3.13 Representations Complete.
None of the representations or warranties made by AmeriNet or its
subsidiaries, nor any statement made in any Schedule, Exhibit or certificate
furnished by AmeriNet or its subsidiaries pursuant to this Agreement, when read
in its entirety, contains or will contain any untrue statement of a material
fact at the Closing Date, or omits or will omit to state any material fact
necessary in order to make the statements contained herein or therein, in the
light of the circumstances under which made, not misleading.
Article IV
Conduct Prior to the Closing
4.1 Conduct of Business of Vista Vacations.
(A) During the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the Closing, Vista
Vacations agrees (except to the extent that AmeriNet shall otherwise
consent in writing), to carry on its business in the usual, regular
and ordinary course in substantially the same manner as heretofore
conducted and, to the extent consistent with such business, use all
reasonable efforts consistent with past practice and policies to
preserve intact Vista Vacations' present business organizations, keep
available the services of its present officers and key employees and
preserve their relationships with customers, suppliers, distributors,
licensors, licensees, and others having business dealings with it, to
the end that Vista Vacations' goodwill and ongoing businesses shall be
unimpaired at the Time of Closing.
(B) Vista Vacations shall promptly notify AmeriNet of any event or
occurrence or emergency not, in the reasonable judgment of Vista
Vacations, in the ordinary course of business of Vista Vacations, and
any event which could, in the reasonable judgment of Vista Vacations,
have a material adverse effect on Vista Vacations.
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(C) Except as expressly contemplated by this Agreement or set forth in
Schedule 4.1, Vista Vacations shall not, without the prior written
consent of AmeriNet:
(1) Enter into any commitment or transaction not in the ordinary
course of business (i) to be performed over a period longer
than six (6) months in duration, or (ii) to purchase fixed
assets for a purchase price in excess of $1,000;
(2) Grant any severance or termination pay to any director,
officer or employee except (i) payments made pursuant to
standard written agreements outstanding on the date hereof or
(ii) in the case of employees who are not officers, grants
which are made in the ordinary course of business in
accordance with Vista Vacations' standard past practices;
(3) Except for licenses granted to end-users pursuant to Vista
Vacations' standard license agreements, transfer to any person
or entity any rights to Vista Vacations' Intellectual
Property;
(4) Enter into or amend any agreements pursuant to which any other
party is granted exclusive marketing or other rights of any
type or scope with respect to any products of Vista Vacations;
(5) Violate, amend or otherwise modify the terms of any of the
contracts or agreements required to be set forth in Vista
Vacations Schedules;
(6) Commence any litigation;
(7) Declare or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect
of any of its Capital Stock, or split, combine or reclassify
any of its Capital Stock or issue or authorize the issuance of
any other securities in respect of, in lieu of or in
substitution for shares of Capital Stock of Vista Vacations,
or repurchase or otherwise acquire, directly or indirectly,
any shares of its Capital Stock except from former employees,
directors and consultants in accordance with agreements
providing for the repurchase of shares at cost in connection
with any termination of service to Vista Vacations;
(8) Issue, deliver or sell or authorize or propose the issuance,
delivery or sale of, or purchase or propose the purchase of,
any shares of its Capital Stock or securities convertible
into, or subscriptions, rights, warrants or options to
acquire, or other agreements or commitments of any character
obligating it to issue any such shares or other convertible
securities;
(9) Cause or permit any amendments to its articles of
incorporation or bylaws;
(10) Acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial portion of the assets of, or by
any other manner, any business or any corporation,
partnership, association or other business organization or
division thereof, or otherwise acquire or agree to acquire any
assets which are material, individually or in the aggregate,
to the business of Vista Vacations;
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(11) Sell, lease, license or otherwise dispose of any of its
properties or assets which are material, individually or in
the aggregate, to the business of Vista Vacations, except in
the ordinary course of business;
(12) Incur any indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities of
Vista Vacations or guarantee any debt securities of others;
(13) Adopt or amend any employee benefit plan, or enter into any
employment contract, pay any special bonus or special
remuneration to any director or employee, or increase the
salaries or wage rates of its employees;
(14) Revalue any of its assets, including without limitation
writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of
business;
(15) Pay, discharge or satisfy in an amount in excess of $1,000 in
any one case any claim, liability or obligation (absolute,
accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction in the
ordinary course of business of liabilities reflected or
reserved against in Vista Vacations' Financial Statements (or
the notes thereto);
(16) Make or change any material election in respect of Taxes,
adopt or change any accounting method in respect of Taxes,
file any material Return or any amendment to a material
Return, enter into any closing agreement, settle any claim or
assessment in respect of Taxes, or consent to any extension or
waiver of the limitation period applicable to any claim or
assessment in respect of Taxes; or
(17) Take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.1(C)(1) through 4.1(C)(16)
above, or any action which would make any of the
representations or warranties or covenants of Vista Vacations
contained in this Agreement materially untrue or incorrect.
4.2 No Solicitation.
(A) Prior to the Closing Vista Vacations will not (nor will Vista Vacations
permit any of Vista Vacations' officers, directors, stockholders
affiliated with any officer or director or Vista Vacations' agents,
representatives or affiliates to) directly or indirectly, take any of
the following actions with any party other than AmeriNet and its
designees:
(1) Solicit, encourage, initiate or participate in any
negotiations or discussions with respect to, any offer or
proposal to acquire all or substantially all of Vista
Vacations' business and properties or Capital Stock whether by
merger, purchase of assets, tender offer or otherwise;
(2) Except as required by law and except for disclosures made to
financial institutions and others in the ordinary course of
business, disclose any information not customarily disclosed
to any person other
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than its attorneys or financial advisors concerning Vista
Vacations' business and properties or afford to any person or
entity access to its properties, books or records; or
(3) Assist or cooperate with any person to make any proposal to
purchase all or any part of Vista Vacations' Capital Stock or
of its assets (other in the ordinary course of business).
(B) In the event Vista Vacations shall receive any offer or proposal,
directly or indirectly, of the type referred to in Section 4.2(A)(1)
and (3) above, or any request for disclosure or access pursuant to
clause 4.2(A)(2) above, Vista Vacations shall immediately inform
AmeriNet as to any such offer or proposal and will cooperate with
AmeriNet by furnishing any information it may reasonably request.
4.3 Conduct of Business of AmeriNet.
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Closing, as the case may be,
AmeriNet agrees (except to the extent that Vista Vacations shall otherwise
consent in writing), that AmeriNet shall promptly notify Vista Vacations of any
event or occurrence or emergency which is not in the ordinary course of business
of AmeriNet and which is material and adverse to the business of AmeriNet and
its subsidiaries taken as a whole.
Article V
Additional Agreements
5.1 Report on Form 8-K.
(A) Within fifteen days following the Closing Date, AmeriNet, with the
assistance and cooperation of Vista Vacations' current officers, will
prepare and file with the Commission a current report on Commission
Form 8-K (the "8-K Report") disclosing the Reorganization and
containing information concerning Vista Vacations required by
Commission Regulation S-B, except for audited financial statements that
may be filed within 75 days after the Closing Date.
(B) Within sixty days following the Closing Date Vista Vacations, at its
own expense, shall provide AmeriNet with audited financial statements
prepared in accordance with GAAP and meeting all requirements of the
Commission for reports of material acquisitions under the Securities
Act and the Exchange Act, including the requirements imposed by
Commission Regulation S-B.
(B) AmeriNet and Vista Vacations will use their best efforts to secure the
Commission's acceptance of Vista Vacations' audited financial
statements, as complying with the requirements of Regulation S-B, and
Vista Vacations will make any modification's to its financial
statements suggested by the Commission; and, if required, will use best
efforts to secure required extensions from the Commission of time in
which to provide materials complying with Commission Regulation S-B.
5.2 No Meeting of Vista Vacations' Stockholders.
Because each Vista Vacations Stockholders has independently made the
decision to exchange all of his, her or its Vista Vacations Securities for
shares of AmeriNet's Common Stock, no formal stockholder action by Vista
Vacations shall be required in conjunction with authorization of this Agreement
or the Closing; however, each Vista Vacations Stockholder must have become a
party to this Agreement either by direct execution hereof or by having granted a
duly executed and notarized power of attorney to Xx. Xxxxxx, as contemplated by
this Agreement, permitting her to execute this Agreement on his, her or its
behalf.
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5.3 Access to Information.
(A) Vista Vacations shall afford AmeriNet and its accountants, counsel and
other representatives, reasonable access during normal business hours
during the period prior to the Closing to all:
(1) Of its properties, books, contracts, commitments and records;
and
(2) Other information concerning the business, properties and
personnel of Vista Vacations as AmeriNet may reasonably
request.
(B) Vista Vacations agrees to provide to AmeriNet and its accountants,
counsel and other representatives copies of internal financial
statements promptly upon request.
(C) No information or knowledge obtained in any investigation pursuant to
this Section 5.3 shall affect or be deemed to modify any representation
or warranty contained herein or the conditions to the obligations of
the Parties to consummate the Reorganization.
5.4 Confidentiality.
(A) From the date hereof to and including the Closing Date, the Parties
shall maintain, and cause their directors, employees, agents and
advisors to maintain, in confidence and not disclose or use for any
purpose, except the evaluation of the transactions contemplated hereby
and the accuracy of the respective representations and warranties of
the Parties contained herein, information concerning the other Parties
and obtained directly or indirectly from such Parties, or their
directors, employees, agents or advisors, or as was in the possession
of such Party prior to obtaining such information from such other Party
as to which the fact of prior possession such possessing Party shall
have the burden of proof and such information as is or becomes:
(1) Available to the non-disclosing Party from third parties not
subject to an undertaking of confidentiality or secrecy;
(2) Generally available to the public other than as a result of a
breach by the non-disclosing party hereunder; or
(3) Required to be disclosed under applicable law.
(B) In the event that the transactions contemplated hereby shall not be
consummated, all such information which shall be in writing shall be
returned to the party furnishing the same, including to the extent
reasonably practicable, copies or reproductions thereof which may have
been prepared.
5.5 Expenses.
Whether or not the Reorganization is consummated, all expenses incurred in
connection with the Reorganization and this Agreement shall be the obligation of
the Party incurring such expenses.
5.6 Public Disclosure.
Unless otherwise required by law, prior to the Closing Date no disclosure
(whether or not in response to an inquiry) of the subject matter of this
Agreement shall be made by any Party unless approved by AmeriNet and Vista
Vacations prior to release, provided that such approval shall not be
unnecessarily withheld, subject, in the case of AmeriNet, to AmeriNet's
obligation to comply with applicable securities laws.
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5.7 Consents.
AmeriNet and Vista Vacations shall promptly apply for or otherwise seek,
and use their best efforts to obtain, all consents and approvals required to be
obtained by them for the consummation of the Reorganization, and Vista Vacations
shall use its best efforts to obtain all consents, waivers and approvals under
any of Vista Vacations' agreements, contracts, licenses or leases in order to
preserve the benefits thereunder for Vista Vacations, and otherwise in
connection with the Reorganization; all of such consents and approvals being set
forth in Schedule 5.7.
5.8 Affiliate Agreements.
(A) Schedule 5.8 sets forth those persons who are, in Vista Vacations'
reasonable judgment, Affiliates" of Vista Vacations.
(B) Vista Vacations shall provide AmeriNet such information and documents
as AmeriNet shall reasonably request for purposes of reviewing such
list.
(C) Vista Vacations shall use its best efforts to deliver or cause to be
delivered to AmeriNet, concurrently with the execution of this
Agreement (and in any case prior to the Closing Date) from each of the
Affiliates of Vista Vacations, an executed Affiliate Agreement in the
form annexed hereto as Exhibit 5.8.
(D) AmeriNet shall be entitled to place appropriate legends on the
certificates evidencing any AmeriNet Common Stock to be received by
such Affiliates pursuant to the terms of this Agreement, and to issue
appropriate stop transfer instructions to the transfer agent for
AmeriNet Common Stock, consistent with the terms of such Affiliate
Agreements, in addition to the legends and stop transfer instructions
placed and issues on all certificates to be issued to Vista Vacations'
stockholders in conjunction with the Reorganization based on the
Parties reliance on Section 4(2) of the Securities Act
5.9 Legal Requirements.
AmeriNet and Vista Vacations will take all reasonable actions necessary to
comply promptly with all legal requirements which may be imposed on them with
respect to the consummation of the transactions contemplated by this Agreement
and will promptly cooperate with and furnish information to any Party in
connection with any such requirements imposed upon such other Party in
connection with the consummation of the transactions contemplated by this
Agreement and will take all reasonable actions necessary to obtain (and will
cooperate with the other Parties in obtaining) any consent, approval, order or
authorization of, or any registration, declaration or filing with, any
Governmental Entity or other person, required to be obtained or made in
connection with the taking of any action contemplated by this Agreement.
5.10 Blue Sky Laws.
Legal counsel to Vista Vacations has taken such steps as may be necessary
to comply with the securities and blue sky laws of all jurisdictions which are
applicable to the issuance of AmeriNet Common Stock to the Former Vista
Vacations Stockholders.
5.11 Best Efforts: Additional Documents and Further Assurances.
(A) Each of the Parties to this Agreement shall use its best efforts to
effectuate the transactions contemplated hereby and to fulfill and
cause to be fulfilled the conditions to the Reorganization and the
condition subsequent under this Agreement.
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(B) Each Party, at the request of another Party, shall execute and deliver
such other instruments and do and perform such other acts and things as
may be reasonably necessary or desirable for effecting completely the
consummation of this Agreement and the transactions contemplated
hereby.
5.12 Employment Agreements.
(A) The individuals set forth on Schedule 5.12 will as of the Closing Date
be parties to the employment agreements included in composite Exhibit
5.12 hereto (the "Employment Agreements"), which shall supersede all
prior employment agreements or arrangements with any such persons, and
which will conform to the forms of employment agreements established by
AmeriNet for use by all material employees of AmeriNet and its
subsidiaries.
(B) AmeriNet shall, immediately following the Closing, reserve 931,000
shares of its Common Stock for future issuance through incentive stock
options (as defined in Section 422 of the Code) granted in certain of
the Employment Agreements, provided, however, that rights to such
shares shall vest on an annual basis, subject to attainment of the
following net, pre-tax profit projections determined in accordance with
GAAP:
(1) If Vista Vacations earns net, pre tax profits, determined in
accordance with GAAP, of at least $400,000 during the period
starting on July 1, 2000 and ending on June 30, 2001, then the
first 163,333 shares of AmeriNet's Common stock reserved for
issuance in the event of exercise of the subject incentive
stock options shall vest;
(2) If Vista Vacations earns net, pre tax profits, determined in
accordance with GAAP, of at least $1,200,000 during the period
starting on July 1, 2000 and ending on June 30, 2002, then all
rights to 457,333 (including the 163,333 shares vested, if
any, on June 30, 2001) of the shares of AmeriNet's Common
stock reserved for issuance in the event of exercise of the
subject incentive stock options shall vest; and
(3) If Vista Vacations earns net, pre tax profits, determined in
accordance with GAAP, of at least $2,800,000 during the period
starting on July 1, 2000 and ending on June 30, 2003, then all
rights to all of the shares (including the shares vested, if
any, on June 30, 2001 and June 30, 2002) of AmeriNet's Common
stock reserved for issuance in the event of exercise of the
subject incentive stock options shall vest.
(4) All rights to the incentive stock options in the subject
employment agreements that have not vested as of July 1, 2003
shall expire on such date, and no further rights of any kind
thereto or to the underlying shares of AmeriNet common stock
reserved for such purpose shall exist thereafter, the
reservation therefor terminating on such date.
5.13 Investment by AmeriNet in Vista Vacations.
Subject to Vista Vacations' substantial compliance with its material
obligations under this Agreement, including those involving provision of audited
financial statements for its operations for the time period and in the form
required by Commission Regulation S-B for purposes of the Reorganization,
AmeriNet hereby covenants and agrees to provide the following funds, to be
expended solely for the purposes set forth in Schedule 5.13, to Vista Vacations:
(A) As provided in Section 1.2(C), the sum of $125,000;
(B) Within 60 days after the audited financial statements for Vista
Vacations required pursuant to Commission Regulation S-B have been
provided to AmeriNet, filed with the Commission and not found deficient
by the Commission (the "Funding Trigger Date"), the sum of $125,000;
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(C) Within 120 days after the Funding Trigger Date, the sum of $100,000;
(D) Within 180 days after the Funding Trigger Date, the sum of $100,000;
(E) Within 240 days after the Funding Trigger Date, the sum of $100,000;
and
(F) Within 300 days after the Funding Trigger Date, the sum of $100,000.
5.14 Vista Vacations' Board of Directors.
(A) Subject to (i) compliance with all of obligations under this Agreement by
the Former Vista Vacations Stockholders and Vista Vacations, including,
without limitation, those involving provision of audited financial
statements for Vista Vacations' operations for the time period and in the
form required by Commission Regulation S-B for purposes of the
Reorganization, (ii) compliance by the members of the board of directors of
Vista Vacations with their fiduciary obligations to AmeriNet as Vista
Vacations' Stockholders and with applicable laws and (iii) the attainment
by Vista Vacations, on a quarterly basis of at least net pre tax profits
during the fiscal year starting on July 1, 2000 and ending on June 30, 2001
of $70,000; net pre tax profits during the fiscal year starting on July 1,
2001 and ending on June 30, 2002 of $185,000; and, net pre tax profits
during the fiscal year starting on July 1, 2002 and ending on June 30, 2003
of $312,000, AmeriNet hereby covenants and agrees that it will maintain
membership on the board of directors of Vista Vacations in the following
ratio: two thirds of the members will be nominees of Xx. Xxxx Xxxxxx and
one third will be nominees of AmeriNet, provided, however, that:
(1) A quorum for meetings of the board of directors of Vista
Vacations and action by such board of directors will require
the participation of AmeriNet's nominees; provided, however,
that, if a meeting deemed to involve material issues is
adjourned due to the inability to attain a quorum as a result
of the absence of the AmeriNet nominees, then, upon receipt of
written notice from Vista Vacations' board of directors,
AmeriNet must assure that its nominees attend the reconvened
meeting, which will be held by telephone conference at a time
during a business day designated by AmeriNet within three days
after AmeriNet is provided with the written notice of the
adjourned meeting;
(2) The board of directors of Vista Vacations will not, without
AmeriNet's prior written consent specifying the action
authorized, be authorized to engage in any material change in
Vista Vacations' business not contemplated by the Projections,
to sell a material portion of Vista Vacations' assets outside
the normal course of business, to issue any securities, to
authorize the borrowing of any funds or pledge of any assets,
for so long as Vista Vacations remains a subsidiary of
AmeriNet; and
(3) (a) The initial determination by AmeriNet as to the
attainment of the minimum acceptable net pre-tax
profits shall not be made until a complete fiscal
quarter has passed since the Closing Date;
(b) After the first year following the Closing Date, the
minimum acceptable net pre-tax profits may be
modified periodically by unanimous action (including
the affirmative votes of all AmeriNet nominees) of
the board of directors of Vista Vacations; provided
that after the third year, unless new minimum
acceptable net pre-tax profits are agreed to, the
net, pre tax profit portion of the minimum acceptable
net pre-tax profits will increase annually to 150% of
the net, pre-tax profit projected for the immediately
preceding year.
(c) In the event that the right of Xx. Xxxxxx to
designate two thirds of the membership on the board
of directors of Vista Vacations is suspended due to
failure to meet the minimum acceptable net pre-tax
profits, such right shall be reinstated at such time
as the deficiency in meeting the minimum acceptable
net pre-tax profits, on a cumulative basis, has been
cured.
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5.15 Additional Vista Vacations' Covenants
(A) (1) Vista Vacations shall have signed a multi year Internet site
design and hosting agreement with Xxxxxxx.xxx, Inc., a Florida
corporation and wholly owned subsidiary of AmeriNet ("WRI" and
the "WRI Web Design & Hosting Agreement"), pursuant to which
Vista Vacations shall pay WRI a monthly fee of at least $10,000
throughout the term of the WRI Web Design & Hosting Agreement, in
form and substance acceptable to AmeriNet and to AmeriNet's
strategic planning consultant, the Yankee Companies, Inc., a
Florida corporation ("Yankees") and shall faithfully comply with
all of its material obligations thereunder throughout the term
thereof.
(2) In the event that Vista Vacations fails to make payments to WRI
called for by the WRI Web Design & Hosting Agreement, AmeriNet
may, at its sole option, tender the required payments to WRI on
Vista Vacations' behalf, and deduct such sums, together with
interest thereon at the rate of 8% per annum, from any funds
which it has agreed to provide to Vista Vacations under this
Agreement, all such payments to be deemed advances to Vista
Vacations under this Agreement.
(B) Xx. Xxxxxx Xxxxxxx, a creditor of Vista Vacations, will, at or prior to
the Closing irrevocably convert all of Vista Vacations' liabilities to
her or her affiliates, including, without limitation, loans aggregating
at least $180,000, into the right to receive 66,667 shares of AmeriNet
Common Stock.
(C) All accrued obligations by Vista Vacations to its employees,
consultants and independent contractors involving payments due for
services rendered, whether in the form of salaries, bonuses, benefits,
benefit plans, or other fees or consideration of any kind, will be
fully and irrevocably discharged as of the Closing date.
Article VI
Conditions to the Reorganization
6.1 Conditions to Obligations of Each Party to Effect the Reorganization.
The respective obligations of each party to this Agreement to effect the
Reorganization shall be subject to the satisfaction at or prior to the Closing
Date of the following conditions:
(A) No Injunctions or Restraints: Illegality.
No temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Reorganization shall
be in effect, nor shall any proceeding brought by an administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, seeking any of the foregoing be pending; nor shall there be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Reorganization, which makes the consummation of the
Reorganization illegal.
(B) Vista Vacations Information Required by Commission Regulation S-B
The provision by Vista Vacations on a timely basis in full compliance with
the requirements of Commission Regulation S-B of all information concerning its
past operations, including audited financial statements, shall constitute a
condition subsequent to the obligations of AmeriNet under this Agreement and in
the event of the failure of such condition subsequent, then, at AmeriNet's sole
option:
(1) The Reorganization may be rescinded, and all funds advanced by
AmeriNet to Vista Vacations shall be repaid, with interest at
the annual rate of 8%, to AmeriNet within 30 days after such
rescission; or
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(2) The Escrow Shares shall be deemed defaulted to AmeriNet and
the Reorganization shall be restructured in a manner complying
with AmeriNet's reporting and other obligations under the
Exchange Act, including the sale by AmeriNet of Vista
Vacations.
6.2 Additional Conditions to Obligations of Vista Vacations.
The obligations of Vista Vacations to consummate and effect this Agreement
and the transactions contemplated hereby shall be subject to the satisfaction at
or prior to the Closing Date of each of the following conditions, any of which
may be waived, in writing, exclusively by Vista Vacations:
(A) Representations, Warranties and Covenants.
The representations and warranties of AmeriNet in this Agreement shall
be true and correct in all material respects on and as of the Closing
Date as though such representations and warranties were made on and as
of such time and AmeriNet shall have performed and complied in all
material respects with all covenants, obligations and conditions of
this Agreement required to be performed and complied with by it as of
the Closing Date.
(B) Certificate of AmeriNet.
Vista Vacations shall have been provided with a certificate executed on
behalf of AmeriNet by its President and its Chief Financial Officer,
Treasurer or officer exercising such functions to the effect that, as
of the Closing Date:
(1) All representations and warranties made by AmeriNet under this
Agreement are true and complete in all material respects; and
(2) All covenants, obligations and conditions of this Agreement to
be performed by AmeriNet on or before such date have been so
performed in all material respects.
(C) Satisfactory Form of Legal Matters.
The form, scope and substance of all legal and accounting matters
contemplated hereby and all documents and other papers delivered
hereunder prior to and on the Closing Date shall be reasonably
acceptable to counsel to Vista Vacations.
(D) Legal Opinion.
Vista Vacations shall have received a legal opinion from legal counsel
to AmeriNet, substantially in the form of Exhibit 6.2(D) hereto.
(E) No Material Adverse Changes.
There shall not have occurred any event, fact or condition that has had
or reasonably would be expected to have a material adverse effect on
AmeriNet.
(F) Tax Opinion.
(1) Vista Vacations shall have received a written opinion from
AmeriNet's Counsel to the effect that the Reorganization will
constitute a reorganization within the meaning of Section
368(a)(1)(B) of the Code.
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(2) In rendering such opinion counsel may rely on (and to the
extent reasonably required, the Parties and Vista Vacations'
stockholders shall make) reasonable representations related
thereto.
6.3 Additional Conditions to the Obligations of AmeriNet.
The obligations of AmeriNet to consummate and effect this Agreement and the
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Closing Date of each of the following conditions, any of which may
be waived, in writing, exclusively by AmeriNet:
(A) Representations, Warranties and Covenants.
(1) The representations and warranties of Vista Vacations in this
Agreement shall be true and correct in all material respects
on and as of the Closing Date as though such representations
and warranties were made on and as of such time and Vista
Vacations shall have performed and complied in all material
respects with all covenants, obligations and conditions of
this Agreement required to be performed and complied with by
it as of the Closing Date.
(2) AmeriNet shall have no remedy against the Escrow Fund in
respect of an untrue representation or warranty if prior to
the Closing Date Vista Vacations delivers to AmeriNet in
accordance with Section 9.2 a written statement:
(a) Advising AmeriNet that an event (a "Post-Execution
Event") has occurred (specifying in reasonable detail
such event) subsequent to the date of execution of
this Agreement that would render any representation
or warranty made by Vista Vacations in this Agreement
untrue if such representation or warranty were made
as of the Closing; and
(b) Confirming that such representation or warranty was
true as of the date of execution of this Agreement,
and
(c) AmeriNet subsequently waives the failure to satisfy
the condition set forth in Section 6.3(A) with
respect to such representation or warranty.
(B) Certificate of Vista Vacations.
AmeriNet shall have been provided with a certificate executed on behalf
of Vista Vacations by its President and Chief Financial Officer to the
effect that, as of the Closing Date, all:
(1) Representations and warranties made by Vista Vacations under
this Agreement are true and complete in all material respects;
and
(2) Covenants, obligations and conditions of this Agreement to be
performed by Vista Vacations on or before such date have been
so performed in all material respects.
(C) Third Party Consents.
Any and all consents, waivers and approvals required from third Parties
relating to the contracts and agreements of Vista Vacations so that the
Reorganization and other transactions contemplated hereby do not
adversely affect the rights of, and benefits to, Vista Vacations
thereunder shall have been obtained.
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(D) Satisfactory Form of Legal and Accounting Matters.
The form, scope and substance of all legal and accounting matters
contemplated hereby and all documents and other papers delivered
hereunder prior to and on the Closing Date shall be reasonably
acceptable to AmeriNet's counsel (provided that the condition
subsequent concerning the compliance of information provided by Vista
Vacations with the requirements of Commission Regulation S-B, on a
timely basis, shall survive the Reorganization).
(E) Legal Opinion.
AmeriNet shall have received a legal opinion from legal counsel to
Vista Vacations, in substantially the form of Exhibit 6.3(E) hereto.
(F) No Material Adverse Changes.
There shall not have occurred any event, fact or condition which has
had or reasonably would be expected to have a material adverse effect
on Vista Vacations.
(G) Affiliate Agreements.
AmeriNet shall have received from each of the Affiliates of Vista
Vacations an executed Affiliate Agreement which shall be in full force
and effect.
(H) Dissenters.
The number of shares of Vista Vacations' Common Stock held by holders
who either (i) have exercised appraisal rights or (ii) retain the
ability to exercise such appraisal rights shall not exceed nineteen
percent of Vista Vacations' outstanding Common Stock, by class and
series, in the aggregate.
(I) Employment Agreements.
The Employment Agreements shall have been duly executed and delivered
and shall be in full force and effect.
(J) Minimum Net Worth.
Vista Vacations shall on the Closing Date have stockholders equity of
at least $180,000, not more than $20,000 in net current payables, not
more than $50,000 in net long term payables, at least $640,000 in
annualized gross sales and not less than $7,000 in annualized, net pre
tax profits, all determined in conformity with GAAP.
(K) Tax Opinion.
(1) AmeriNet shall have received a written opinion of Vista
Vacations Counsel, to the effect that the Reorganization will
constitute a reorganization within the meaning of Section
368(a)(1)(B) of the Code.
(2) In rendering such opinion, counsel may rely on (and to the
extent reasonably required, the Parties and Vista Vacations'
stockholders shall make) reasonable representations related
thereto.
(L) Confidentiality Agreements.
Each current employee, consultant or other person having access to
Vista Vacations' confidential information shall have executed a
confidentiality agreement in the form annexed hereto as Exhibit 6.3(L).
(M) There shall be no stockholders of Vista Vacations who are not
Accredited Investors.
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(N) Vista Vacations shall have signed the WRI Web Design & Hosting
Agreement, a fully executed copy of which shall be delivered by Vista
Vacations to AmeriNet at the Closing.
(O) Xx. Xxxxxx Xxxxxxx, a creditor of Vista Vacations, shall have
irrevocably converted all of Vista Vacations' liabilities to her or her
affiliates, including, without limitation, loans aggregating at least
$180,000, into the right to receive 66,667 shares of AmeriNet Common
Stock.
(P) All obligations by Vista Vacations to its employees, consultants and
independent contractors involving payments due for services rendered
have been fully discharged, as of the Closing date.
Article VII
Survival of Condition Subsequent, Representations and Warranties,
Covenants & Escrow
7.1 Survival of Condition Subsequent, Representations and Warranties and
Covenant.
(A) All conditions subsequent to the Reorganization and covenants to be
performed prior to the Closing, and all representations and warranties
in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Reorganization and continue until the date
the audit of AmeriNet's financial statements for the year ending June
30, 2000 has been completed and AmeriNet has received a signed opinion
from its independent auditors certifying such financial statements (the
"2000 Audit Date").
(B) All covenants to be performed after the Closing shall continue
indefinitely.
7.2 Escrow Arrangements.
(A) Escrow Fund.
(1) As soon as practicable after the Closing Date, a portion of
the shares of AmeriNet's Common Stock to be issued in the
Reorganization equal to the Escrow Number plus any additional
New Shares (as defined below) as may be issued in respect
thereof after the Closing Date) (collectively, the "Escrow
Shares"), without any act of any stockholder, will be
registered in the name of Yankees, AmeriNet's strategic
planning consultant, or such other person or legal entity as
may otherwise be selected by AmeriNet prior to the Closing, as
escrow agent (the "Escrow Agent"), and will be deposited with
a financial institution acceptable to AmeriNet and the Agent
[as defined in Section 7.2(H) below)], such deposit to
constitute an escrow fund (the "Escrow Fund") to be governed
by the terms set forth herein and at AmeriNet's sole cost and
expense.
(2) (a) The portion of AmeriNet Common Stock in the
Escrow Fund contributed on behalf of each stockholder
of Vista Vacations is listed opposite such
stockholders' name on Exhibit 7.2(A).
(b) The Escrow Fund shall be available to compensate
AmeriNet and its affiliates for any claim, loss,
expense, liability or other damage, including
reasonable attorneys' fees that AmeriNet or any of
its affiliates has incurred or reasonably anticipates
incurring by reason of the breach by Vista Vacations
of any representation, warranty, covenant or
agreement of Vista Vacations contained herein,
("Losses"), but only to the extent that such Losses
exceed $20,000.
(c) AmeriNet and Vista Vacations each acknowledge that
such Losses, if any, would relate to unresolved
contingencies existing at the Time of Closing, which
if resolved at the Closing would have led to a
reduction in the total number of shares of AmeriNet
Common Stock AmeriNet would have agreed to issue in
connection with the Reorganization.
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(3) Nothing herein shall limit the liability of Vista Vacations
for any breach of any representation, warranty or covenant if
the Reorganization does not close. Resort to the Escrow Fund
shall be the exclusive contractual remedy of AmeriNet and its
affiliates for any such breaches and misrepresentations if the
Reorganization does close; provided, however, that nothing
herein shall limit any noncontractual remedy for fraud.
(B) Escrow Period; Distribution upon Termination of Escrow Periods.
(1) Subject to the following requirements, the Escrow Fund shall
remain in existence until the 2000 Audit Date (the "Escrow
Period").
(2) Upon the expiration of such Escrow Period, the Escrow Fund
shall terminate with respect to all Escrow Shares; provided,
however, that the number of Escrow Shares, which, in the
reasonable judgment of AmeriNet, subject to the objection of
the Agent and the subsequent arbitration of the matter in the
manner provided in Section 7.2(G) hereof, are necessary to
satisfy any unsatisfied claims specified in any Officer's
Certificate delivered to the Escrow Agent prior to the
expiration of such Escrow Period with respect to facts and
circumstances existing on or prior to the 2000 Audit Date
shall remain in the Escrow Fund (and the Escrow Fund shall
remain in existence) until such claims have been resolved.
(3) As soon as all such claims have been resolved, the Escrow
Agent shall deliver to the Former Vista Vacations Stockholders
all AmeriNet Common Stock and other property remaining in the
Escrow Fund and not required to satisfy such claims.
(4) Deliveries of AmeriNet Common Stock and other property to the
Former Vista Vacations Stockholders pursuant to this Section
7.2(B) shall be made in proportion to their respective
original contributions to the Escrow Fund.
(C) Protection of Escrow Fund.
The Escrow Agent shall hold and safeguard the Escrow Fund during the
Escrow Period, shall treat such fund as a trust fund in accordance with
the terms of this Agreement and not as the property of AmeriNet and
shall hold and dispose of the Escrow Fund only in accordance with the
terms hereof.
(D) Distributions; Voting.
(1) (a) Any shares of AmeriNet Common Stock or other
equity securities issued or distributed by AmeriNet,
including shares issued upon a stock split or any
stock dividend or distribution ("New Shares") in
respect of AmeriNet Common Stock in the Escrow Fund
which have not been released from the Escrow Fund
shall be added to the Escrow Fund and become a part
thereof.
(b) New Shares issued in respect of AmeriNet Common Stock
which have been released from the Escrow Fund shall
not be added to the Escrow Fund, but shall be
distributed to the holders thereof.
(c) When and if cash dividends on AmeriNet Common Stock
in the Escrow Fund shall be declared and paid, they
shall not be added to the Escrow Fund but shall be
paid to those on whose behalf such AmeriNet Common
Stock is held who, prior to the Reorganization, held
Vista Vacations' Common Stock.
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(2) Each stockholder of Vista Vacations shall have voting rights
with respect to the shares of AmeriNet Common Stock
contributed to the Escrow Fund on behalf of such stockholder
(and on any voting securities added to the Escrow Fund in
respect of such shares of AmeriNet Common Stock) so long as
such shares of AmeriNet Common Stock or other voting
securities are held in the Escrow Fund.
(E) Claims Upon Escrow Fund.
Subject to the objection procedure established in Section 7.2(F) below,
the Escrow Agent shall deliver to AmeriNet out of the Escrow Fund, as
promptly as practicable, shares of AmeriNet Common Stock or other
assets held in the Escrow Fund in an amount equal to Losses by
AmeriNet, provided that
(1) A written claim of loss has been provided by AmeriNet to the
Escrow Agent at any time on or before the last day of the
Escrow Period in the form of a certificate signed by any
officer of AmeriNet (an "Officer's Certificate"), with a copy
to Vista Vacations:
(a) Stating that AmeriNet has paid or properly accrued or
reasonably anticipates that it will have to pay or
accrue Losses, and
(b) Specifying in reasonable detail the individual items
of Losses included in the amount so stated, the date
each such item was paid or properly accrued, or the
basis for such anticipated liability, and the nature
of the misrepresentation, breach of warranty or claim
to which such item is related, the Escrow Agent
shall, subject to the provisions of Section 7.2(F)
hereof.
(2) For the purposes of determining the number of shares of
AmeriNet Common Stock to be delivered to AmeriNet out of the
Escrow Fund pursuant to Section 7.2(E)(1), the shares of
AmeriNet Common Stock shall be valued at the average closing
transaction price therefor during the preceding ten trading
days, as reported on the highest rated securities market or
securities exchange on which AmeriNet's Common Stock is
actually traded.
(F) Objections to Claims.
(1) At the time of delivery of any Officer's Certificate to the
Escrow Agent, a duplicate copy of such certificate shall be
delivered to the Agent [as defined in Section 7.2(H)] and for a
period of thirty (30) days after such delivery, the Escrow Agent
shall make no delivery to AmeriNet of shares of AmeriNet Common
Stock, pursuant to Section 7.2(E) hereof unless the Escrow Agent
shall have received written authorization from the Agent to make
such delivery.
(2) After the expiration of such thirty (30) day period, the Escrow
Agent shall make delivery of the shares of AmeriNet Common Stock
or other property in the Escrow Fund in accordance with Section
7.2(E) hereof, provided that no such payment or delivery may be
made if the Agent shall object in a written statement to the
claim made in the Officer's Certificate, and such statement shall
have been delivered to the Escrow Agent prior to the expiration
of such thirty (30) day period.
(G) Resolution of Conflicts; Arbitration.
(1) (a) In case the Agent shall so object in writing to
any claim or claims made in any Officer's
Certificate, the Agent and AmeriNet shall attempt in
good faith to agree upon the rights of the respective
Parties with respect to each of such claims.
(b) If the Agent and AmeriNet should so agree, a
memorandum setting forth such agreement shall be
prepared and signed by both Parties and shall be
furnished to the Escrow Agent.
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(c) The Escrow Agent shall be entitled to rely on any
such memorandum and distribute shares of AmeriNet
Common Stock or other property from the Escrow Fund
in accordance with the terms thereof.
(2) (a) If no such agreement can be reached after good
faith negotiation, either AmeriNet or the Agent may
demand arbitration of the matter unless the amount of
the damage or loss is at issue in pending litigation
with a third party, in which event arbitration shall
not be commenced until such amount is ascertained or
both Parties agree to arbitration; and in either such
event the matter shall be settled by arbitration
conducted by three arbitrators.
(b) AmeriNet and the Agent shall each select one
arbitrator, and the two arbitrators so selected
shall select a third arbitrator.
(c) The arbitrators shall set a limited time period and
establish procedures designed to reduce the cost and
time for discovery while allowing the Parties an
opportunity, adequate in the sole judgment of the
arbitrators, to discover relevant information from
the opposing Parties about the subject matter of the
dispute.
(d) The arbitrators shall rule upon motions to compel or
limit discovery and shall have the authority to
impose sanctions, including attorneys fees and costs,
to the extent as a court of competent law or equity,
should the arbitrators determine that discovery was
sought without substantial justification or that
discovery was refused or objected to without
substantial justification.
(e) The decision of a majority of the three arbitrators
as to the validity and amount of any claim in such
Officer's Certificate shall be binding and conclusive
upon the Parties to this Agreement, and
notwithstanding anything in Section 7.2(F) hereof,
the Escrow Agent shall be entitled to act in
accordance with such decision and make or withhold
payments out of the Escrow Fund in accordance
therewith.
(f) Such decision shall be written and shall be supported
by written findings of fact and conclusions which
shall set forth the award, judgment, decree or order
awarded by the arbitrators.
(3) (a) (i) Judgment upon any award rendered by the
arbitrators may be entered in any court
having jurisdiction.
(ii) Any such arbitration shall be held in
Broward County, Florida, under the rules
then in effect of the American Arbitration
Association.
(b) For purposes of this Section 7.2(G), in any
arbitration hereunder in which any claim or the
amount thereof stated in the Officer's Certificate is
at issue, AmeriNet shall be deemed to be the
Non-Prevailing Party in the event that the
arbitrators award AmeriNet less than the sum of 50%
of the disputed amount plus any amounts not in
dispute; otherwise, the Former Vista Vacations
Stockholders as represented by the Agent shall be
deemed to be the Non-Prevailing Party.
(c) The Non-Prevailing Party to an arbitration shall pay
its own expenses, the fees of each arbitrator, the
administrative fee of the American Arbitration
Association, and the expenses, including without
limitation, reasonable attorneys' fees and costs,
incurred by the other party to the arbitration.
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(H) Agent of the Stockholders: Power of Attorney.
(1) (a) (i) Xxxx Xxxxxx is hereby irrevocably appointed as the agent and
attorney-in-fact (the "Agent") for each stockholder of Vista
Vacations, for and on behalf of the Former Vista Vacations
Stockholders, to give and receive notices and
communications, to authorize delivery to AmeriNet of
AmeriNet Common Stock or other property from the Escrow Fund
in satisfaction of claims by AmeriNet, to object to such
deliveries, to agree to, negotiate, enter into settlements
and compromises of, and demand arbitration and comply with
orders of courts and awards of arbitrators with respect to
such claims, and to take all actions necessary or
appropriate in the judgment of Agent for the accomplishment
of the foregoing.
(ii) Such agency may be changed by the Former Vista Vacations
Stockholders from time to time upon not less than thirty
(30) days prior written notice to AmeriNet; provided that
the Agent may not be removed unless holders of a two-thirds
interest of the Common Stock comprising the Escrow Fund
agree to such removal and to the identity of the substituted
agent.
(iii) No bond shall be required of the Agent, and the Agent shall
not receive compensation for his or her services.
(iv) Notices or communications to or from the Agent shall
constitute notice to or from each of the Former Vista
Vacations Stockholders.
(b) The Agent shall be entitled to submit a claim and receive
reimbursement from the Escrow Fund for all reasonable,
documented out-of-pocket expenses incurred by the Agent as a
result of his acting as the Agent; provided, however, that
such right to reimbursement shall be subordinate to
AmeriNet's claims on the Escrow, if any, and shall be paid
only after all such claims have been satisfied.
(c) Any such reimbursement shall be paid in shares of AmeriNet
Common Stock out of the Escrow Fund.
(d) For purposes of such reimbursement of the Agent only, such
shares shall be valued at the average of the closing prices
of AmeriNet Common Stock for the ten trading days ending on
the day prior to the date the Escrow Agent pays such
reimbursement amount.
(2) (a) The Agent shall not be liable for any act done or omitted
hereunder as Agent while acting in good faith and in the
exercise of reasonable judgment.
(b) The Former Vista Vacations Stockholders on whose behalf
shares of AmeriNet Common Stock were contributed to the
Escrow Fund shall severally indemnify the Agent and hold the
Agent harmless against any loss, liability or expense
incurred without negligence or bad faith on the part of the
Agent and arising out of or in connection with the
acceptance or administration of the Agent's duties
hereunder, including the reasonable fees and expenses of any
legal counsel retained by the Agent.
(I) Actions of the Agent.
(1) A decision, act, consent or instruction of the Agent shall
constitute a decision of all the stockholders for whom shares
of AmeriNet Common Stock otherwise issuable to them are
deposited in the Escrow Fund and shall be final, binding and
conclusive upon each of such stockholders, and the Escrow
Agent
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and AmeriNet may rely upon any such decision, act, consent or
instruction of the Agent as being the decision, act, consent
or instruction of every such stockholder.
(2) The Escrow Agent and AmeriNet are hereby relieved from any
liability to any person for any acts done by them in
accordance with such decision, act, consent or instruction of
the Agent.
(J) Third-Party Claims.
(1) In the event AmeriNet becomes aware of a third-party claim
which AmeriNet believes may result in a demand against the
Escrow Fund, AmeriNet shall notify the Agent of such claim,
and the Agent and the Former Vista Vacations Stockholders
shall be entitled, at their expense, to participate in any
defense of such claim.
(2) AmeriNet shall have the right in its sole discretion to settle
any such claim; provided, however, that except with the
consent of the Agent, no settlement of any such claim with
third-party claimants shall alone be determinative of the
validity of any claim against the Escrow Fund.
(3) In the event that the Agent has consented to any such
settlement, the Agent shall have no power or authority to
object under any provision of this Article VII to the amount
of any claim by AmeriNet against the Escrow Fund with respect
to such settlement.
(K) Escrow Agent's Duties.
(1) (a) The Escrow Agent shall be obligated only for the performance
of such duties as are specifically set forth herein, and as
set forth in any additional written escrow instructions
which the Escrow Agent may receive after the date of this
Agreement which are signed by an officer of AmeriNet and the
Agent, and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed
to be genuine and to have been signed or presented by the
proper party or Parties.
(b) The Escrow Agent shall not be liable for any act done or
omitted hereunder as Escrow Agent while acting in good faith
and in the exercise of reasonable judgment, and any act done
or omitted pursuant to the advice of counsel shall be
conclusive evidence of such good faith.
(2) The Escrow Agent is hereby expressly authorized to disregard
any and all warnings given by any of the Parties or by any
other person, excepting only orders or process of courts of
law, and is hereby expressly authorized to comply with and
obey orders, judgments or decrees of any court. In case the
Escrow Agent obeys or complies with any such order, judgment
or decree of any court, the Escrow Agent shall not be liable
to any of the Parties or to any other person by reason of such
compliance, notwithstanding any such order, judgment or decree
being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.
(3) The Escrow Agent shall not be liable in any respect on account
of the identity, authority or rights of the Parties executing
or delivering or purporting to execute or deliver this
Agreement or any documents or papers deposited or called for
hereunder.
(4) The Escrow Agent shall not be liable for the expiration of any
rights under any statute of limitations with respect to this
Agreement or any documents deposited with the Escrow Agent.
(5) The Escrow Agent may resign at any time upon giving at least
thirty (30) days written notice to AmeriNet and the Agent to
this Agreement; provided, however, that no such resignation
shall become effective until the appointment of a successor
escrow agent which shall be accomplished as follows:
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(a) AmeriNet and the Agent shall use their best efforts
to mutually agree upon a successor agent within
thirty (30) days after receiving such notice.
(b) If the Parties fail to agree upon a successor escrow
agent within such time, AmeriNet shall have the right
to appoint a successor escrow agent authorized to do
business in Florida.
(c) The successor escrow agent selected in the preceding
manner shall execute and deliver an instrument
accepting such appointment and it shall thereupon be
deemed the Escrow Agent hereunder and it shall
without further acts be vested with all the estates,
properties, rights, powers, and duties of the
predecessor Escrow Agent as if originally named as
Escrow Agent.
(d) Thereafter, the predecessor Escrow Agent shall be
discharged for any further duties and liabilities
under this Agreement.
Article VIII
Termination, Amendment And Waiver
8.1 Termination.
This Agreement may be terminated and the Reorganization abandoned at any
time prior to the Closing Date, as follows:
(A) By mutual consent of Vista Vacations and AmeriNet.
(B) By AmeriNet if it is not in material breach of its obligations under
this Agreement and there has been a material breach of any
representation, warranty, covenant or agreement contained in this
Agreement on the part of Vista Vacations and such breach has not been
cured within fifteen days after notice to Vista Vacations.
(C) By Vista Vacations if it is not in material breach of its respective
obligations under this Agreement and there has been a material breach
of any representation, warranty, covenant or agreement contained in
this Agreement on the part of AmeriNet and such breach has not been
cured within 15 days after notice to AmeriNet;
(D) By any Party if:
(1) The Reorganization has not occurred by April 15, 2000;
(2) There shall be a final nonappealable order of a federal or
state court in effect preventing consummation of the
Reorganization;
(3) There shall be any action taken, or any statute, rule,
regulation or order enacted, promulgated or issued or deemed
applicable to the Reorganization by any Governmental Entity
which would make consummation of the Reorganization illegal;
or
(4) There shall be any action taken, or any statute, rule,
regulation or order enacted, promulgated or issued or deemed
applicable to the Reorganization by any Governmental Entity,
which would:
(a) Prohibit AmeriNet's or Vista Vacations' ownership or
operation of all or a material portion of the
business of Vista Vacations, or compel AmeriNet or
Vista Vacations to dispose of or hold separate all or
a material portion of the business or assets of Vista
Vacations or AmeriNet as a result of the
Reorganization; or
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(b) Render AmeriNet or Vista Vacations unable to
consummate the Reorganization, except for any waiting
period provisions.
(E) Where action is taken to terminate this Agreement pursuant to this
Section 8.1, it shall be sufficient for such action to be authorized by
the board of directors (as applicable) of the Party taking such action.
8.2 Effect of Termination.
In the event of termination of this Agreement as provided in Section 8.1,
this Agreement shall forthwith become void and there shall be no liability or
obligation on the part of AmeriNet or Vista Vacations or their respective
officers, directors or stockholders, except if such termination results from the
breach by a Party of any of its representations, warranties, covenants or
agreements set forth in this Agreement (it being understood that termination of
this Agreement because of failure of Vista Vacations to satisfy the condition
set forth in Section 6.3(A) as a result of the occurrence of a Post-Execution
Event shall not be deemed to be a termination resulting from such a breach of
representation or warranty.)
8.3 Amendment.
(A) This Agreement may be amended by the Parties at any time before or
after approval of matters presented in connection with the
Reorganization by the stockholders of those Parties required by
applicable law to so approve but, after any such stockholder approval,
no amendment shall be made which by law requires the further approval
of stockholders of a party without obtaining such further approval.
(B) This Agreement may not be amended except by an instrument in writing signed
on behalf of each of the Parties.
8.4 Extension & Waiver.
(A) At any time prior to the Closing any Party may, to the extent legally
allowed:
(1) Extend the time for the performance of any of the obligations
or other acts of the other Parties;
(2) Waive any inaccuracies in the representations and warranties
made to such party contained herein or in any document
delivered pursuant hereto; or
(3) Waive compliance with any of the agreements or conditions for
the benefit of such Party contained herein.
(B) Any agreement on the part of a Party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on
behalf of such Party.
Article IX
General Provisions
9.1 Interpretation.
(A) When a reference is made in this Agreement to Schedules or Exhibits,
such reference shall be to a Schedule or Exhibit to this Agreement
unless otherwise indicated.
(B) The words "include," "includes" and "including" when used herein shall
be deemed in each case to be followed by the words "without
limitation."
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(C) The table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(D) The captions in this Agreement are for convenience and reference only
and in no way define, describe, extend or limit the scope of this
Agreement or the intent of any provisions hereof.
(E) All pronouns and any variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular or plural, as the identity of the
Party or Parties, or their personal representatives, successors and
assigns may require.
(F) The Parties agree that they have been represented by counsel during the
negotiation and execution of this Agreement and, therefore, waive the
application of any law, regulation, holding or rule of construction
providing that ambiguities in an agreement or other document will be
construed against the party drafting such agreement or document.
9.2 Notice.
(A) All notices, demands or other communications given hereunder shall be
in writing and shall be deemed to have been duly given on the first
business day after mailing by United States registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
(1) To AmeriNet:
AmeriNet Xxxxx.xxx, Inc.
Crystal Corporate Center;
0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxx 000-X; Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxx Xxxxxx, President
Telephone (000) 000-0000, Fax (000) 000-0000;
and, e-mail xxxxxxx@xxxxxxxxxxxxx.xxx; with a copy to
G. Xxxxxxx Xxxxxxxxxx, Esquire; General Counsel
AmeriNet Xxxxx.xxx, Inc.
0000 Xxxxxxxxx 00xx Xxxxxxx; Xxxxx, Xxxxxxx
00000 Telephone (000) 000-0000, Fax (000) 000-0000; and,
e-mail, xxxxxxxx@xxxxxxxx.xxx.
(2) To Vista Vacations:
Vista Vacations International, Inc.
0000 Xxxxxxxxx 00xx Xxxxxx; Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxx, President
Telephone (000) 000-0000; Fax (000) 000-0000;
e-mail xxxxx@xxxxxx.xxx; with a fax copy to
Xxxxx X. Xxxxx
000 Xxxxx Xxxx Xxxxxx; Xxx Xxxx, Xxx Xxxx
00000 Telephone (000) 000-0000; Fax (000) 000-0000; and,
e-mail xxxxxxxx@xxx.xxx
(3) To Agent:
Xx. Xxxx Xxxxxx
0000 Xxxxxxxxx 00xx Xxxxxx; Xxxxxxx, Xxxxxxx
00000 Telephone (000) 000-0000; Fax (000) 000-0000; e-mail
xxxxx@xxxxxx.xxx; with a fax copy to
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Xxxxx X. Xxxxx
000 Xxxxx Xxxx Xxxxxx; Xxx Xxxx, Xxx Xxxx
00000 Telephone (000) 000-0000; Fax (000) 000-0000; and,
e-mail xxxxxxxx@xxx.xxx
(4) To the Escrow Agent:
The Yankee Companies, Inc.
Crystal Corporate Center;
0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxx 000; Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxx Xxxxxx, President
Telephone (000) 000-0000, Fax (000) 000-0000; and, e-mail xxxxxxxxxx@xxxxxx.xxx
or such other address or to such other person as any Party shall
designate to the other for such purpose in the manner hereinafter set
forth.
(B) At the request of any Party, notice will also be provided by overnight
delivery, facsimile transmission or e-mail, provided that a
transmission receipt is retained.
(C) (1) The Parties acknowledge that Yankees serves as a strategic
consultant to AmeriNet and has acted as scrivener for the
Parties in this transaction but that Yankees is neither a law
firm nor an agency subject to any professional regulation or
oversight.
(2) Because of the inherent conflict of interests involved,
Yankees has advised all of the Parties to retain independent
legal and accounting counsel to review this Agreement and its
exhibits and incorporated materials on their behalf.
(3) The decision by any Party not to use the services of legal
counsel in conjunction with this transaction shall be solely
at their own risk, each Part acknowledging that applicable
rules of the Florida Bar prevent AmeriNet's general counsel,
who has reviewed, approved and caused modifications on behalf
of AmeriNet, from representing anyone other than AmeriNet in
this transaction.
9.3 Merger of All Prior Agreements Herein.
(A) This instrument, together with the instruments referred to herein,
contains all of the understandings and agreements of the Parties with
respect to the subject matter discussed herein.
(B) All prior agreements whether written or oral are merged herein and
shall be of no force or effect.
9.4 Survival.
The several representations, warranties and covenants of the Parties
contained herein shall survive the execution hereof and the Reorganization and
shall be effective regardless of any investigation that may have been made or
may be made by or on behalf of any Party.
9.5 Severability.
If any provision or any portion of any provision of this Agreement, other
than one of the conditions precedent or subsequent, or the application of such
provision or any portion thereof to any person or circumstance shall be held
invalid or unenforceable, the remaining portions of such provision and the
remaining provisions of this Agreement or the application of such provision or
portion of such provision as is held invalid or unenforceable to persons or
circumstances other than those to which it is held invalid or unenforceable,
shall not be affected thereby.
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9.6 Governing Law.
This Agreement shall be construed in accordance with the substantive and
procedural laws of the State of Delaware (other than those regulating Taxation
and choice of law).
9.7 Indemnification.
(A) Each Party hereby irrevocably agrees to indemnify and hold the other
Parties harmless from any and all liabilities and damages (including
legal or other expenses incidental thereto), contingent, current, or
inchoate to which they or any one of them may become subject as a
direct, indirect or incidental consequence of any action by the
indemnifying Party or as a consequence of the failure of the
indemnifying Party to act, whether pursuant to requirements of this
Agreement or otherwise.
(B) In the event it becomes necessary to enforce this indemnity through an
attorney, with or without litigation, the successful Party shall be
entitled to recover from the indemnifying Party, all costs incurred
including reasonable attorneys' fees throughout any negotiations,
trials or appeals, whether or not any suit is instituted.
9.8 Dispute Resolution.
(A) In any action between the Parties to enforce any of the terms of this
Agreement or any other matter arising from this Agreement any
proceedings pertaining directly or indirectly to the rights or
obligations of the Parties hereunder shall, to the extent legally
permitted, be held in Broward County, Florida, and the prevailing Party
shall be entitled to recover its costs and expenses, including
reasonable attorneys' fees up to and including all negotiations, trials
and appeals, whether or not any formal proceedings are initiated.
(B) Except for the arbitration procedures outlined in paragraphs 7.2(G)(2)
and 7.2(G)(3) which shall govern any arbitration proceeding described
therein, in the event of any dispute arising under this Agreement, or
the negotiation thereof or inducements to enter into the Agreement, the
dispute shall, at the request of any Party, be exclusively resolved
through the following procedures:
(1) (a) First, the issue shall be submitted to mediation
before a mediation service in Broward County, Florida
to be selected by lot from six alternatives to be
provided, three by AmeriNet and three by Vista
Vacations.
(b) The mediation efforts shall be concluded within ten
business days after their initiation unless the
Parties unanimously agree to an extended mediation
period;
(2) In the event that mediation does not lead to a resolution of
the dispute then at the request of any Party, the Parties
shall submit the dispute to binding arbitration before an
arbitration service located in Broward County, Florida to be
selected by lot, from six alternatives to be provided, three
by AmeriNet and Three by Vista Vacations.
(3) (a) Expenses of mediation shall be borne equally by the
Parties, if successful.
(b) Expenses of mediation, if unsuccessful and of
arbitration shall be borne by the Party or Parties
against whom the arbitration decision is rendered.
(c) If the terms of the arbitral award do not establish a
prevailing Party, then the expenses of unsuccessful
mediation and arbitration shall be borne equally by
the Parties involved.
89
9.9 Benefit of Agreement.
The terms and provisions of this Agreement shall be binding upon and inure
to the benefit of the Parties, their successors, assigns, personal
representatives, estate, heirs and legatees but are not intended to confer upon
any other person any rights or remedies hereunder.
9.10 Further Assurances.
The Parties agree to do, execute, acknowledge and deliver or cause to be
done, executed, acknowledged or delivered and to perform all such acts and
deliver all such deeds, assignments, transfers, conveyances, powers of attorney,
assurances, stock certificates and other documents, as may, from time to time,
be required herein to effect the intent and purpose of this Agreement.
9.11 Counterparts.
(A) This Agreement may be executed in any number of counterparts.
(B) All executed counterparts shall constitute one Agreement
notwithstanding that all signatories are not signatories to the
original or the same counterpart.
(C) Execution by exchange of facsimile transmission shall be deemed legally
sufficient to bind the signatory; however, the Parties shall, for
aesthetic purposes, prepare a fully executed original version of this
Agreement which shall be the document filed with the Commission.
9.12 License.
(A) This form of agreement is the property of Yankees and has been
customized for this transaction with the consent of Yankees by G.
Xxxxxxx Xxxxxxxxxx, Esquire, AmeriNet's acting general counsel.
(B) The use of this form of agreement by the Parties is authorized hereby
solely for purposes of this transaction.
(C) The use of this form of agreement or of any derivation thereof without
Yankees' prior written permission is prohibited.
90
In Witness Whereof, AmeriNet, Vista Vacations and the Escrow Agent (with
respect to the Escrow Agent, as to matters set forth in Article VII only) have
caused this Agreement to be executed by themselves or their duly authorized
respective officers, all as of the last date set forth below:
Signed, sealed and delivered
In Our Presence:
AmeriNet Xxxxx.xxx, Inc.
_________________________________ (A Delaware corporation)
_________________________________ By: /s/ Xxxxxxx X. Xxxxxx
_____________________________
Xxxxxxx X. Xxxxxx, President
(Corporate Seal)
Attest: /s/ Xxxxxxx X. Xxxxxxx
_____________________________
Xxxxxxx X. Xxxxxxx, Secretary
Dated: March 12, 2000
State of Florida }
County of Palm Beach } ss.:
On this 12th day of March, 2000, before me, a notary public in and for
the county and state aforesaid, personally appeared Xxxxxxx X. Xxxxxx and
Xxxxxxx X. Xxxxxxx, to me known, and known to me to be the president and
secretary of AmeriNet Xxxxx.xxx, Inc., the above-described corporation, and to
me known to be the persons who executed the foregoing instrument, and
acknowledged the execution thereof to be their free act and deed, and the free
act and deed of AmeriNet Xxxxx.xxx, Inc., for the uses and purposes therein
mentioned.
In witness whereof, I have hereunto set my hand and affixed my notarial
seal the day and year in this certificate first above written. My commission
expires the 26th day of April, 2004.
{Seal} /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Notary Public
91
Vista Vacations International, Inc.
_________________________________ (a Florida corporation)
_________________________________ By: /s/ Xxxx X. Xxxxxx
_____________________________
Xxxx Xxxxxx, President
(Corporate Seal)
Attest: /s/ Xxxxxx Xxxxxxxxx
_____________________________
Xxxxxx Xxxxxxxxx, Secretary
Dated: March 12, 2000
State of Florida }
County of Palm Beach } ss.:
On this 12th day of March, 2000, before me, a notary public in and for
the county and state aforesaid, personally appeared Xxxx Xxxxxx and Xxxxxx
Xxxxxxxxx, to me known, and known to me to be the president and secretary of
Vista Vacations International, Inc., the above-described corporation, and to me
known to be the persons who executed the foregoing instrument, and acknowledged
the execution thereof to be their free act and deed, and the free act and deed
of Vista Vacations International, Inc., for the uses and purposes therein
mentioned.
In witness whereof, I have hereunto set my hand and affixed my notarial
seal the day and year in this certificate first above written. My commission
expires the 26th day of April, 2004.
(Seal) /s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Notary Public
The Yankee Companies, Inc.
_________________________________ (a Florida corporation)
_________________________________ By: /s/ Xxxxxxx X. Xxxxxx
____________________________
Xxxxxxx Xxxxx Xxxxxx, President
(Corporate Seal)
Attest: /s/ Xxxxxxx X. Xxxxxxx
' ____________________________
Xxxxxxx X. Xxxxxxx, Secretary
Dated: March 12, 2000
State of Florida }
County of Palm Beach } ss.:
On this 12th day of March, 2000, before me, a notary public in and for
the county and state aforesaid, personally appeared Xxxxxxx Xxxxx Xxxxxx and
Xxxxxxx X. Xxxxxxx, to me known, and known to me to be the president and
secretary of the Yankee Companies, Inc., the above-described corporation, and to
me known to be the persons who executed the foregoing instrument, and
acknowledged the execution thereof to be their free act and deed, and the free
act and deed of the Yankee Companies, Inc., as the Escrow Agent, the uses and
purposes therein mentioned.
In witness whereof, I have hereunto set my hand and affixed my notarial
seal the day and year in this certificate first above written. My commission
expires the 26th day of April, 2004.
(Seal) /s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Notary Public
92
Schedule 1.4
Vista Vacations' Constituent Documents
1. Amended Articles of Incorporation.
2. Amended Bylaws.
3. Resolution by majority of Vista Stockholders adopting Amended Articles of
Incorporation and Amended Bylaws.
4. Resolution by Vista Board of Directors adopting Amended Articles of
Incorporation and Amended Bylaws.
5. Resolution of Board of Directors dated March 7, 2000 approving and adopting
Reorganization Agreement and Affiliate Agreements with AmeriNet Xxxxx.xxx,
Inc., with a direction that the Secretary cancel all stock certificated
pursuant to instructions of each stockholder and the issuance of 100% of
the common stock of Vista Vacations to AmeriNet Xxxxx.xxx, Inc.
Items 1-2 can be found as Exhibit 3(i)vv.4 and 3(ii)vv.4 of this Form 8-K.
93
Vista Vacations International, Inc.
Consent in Lieu of Meeting
THE UNDERSIGNED, being the all of the Stockholders and all of the members
of the Board of Directors of Vista Vacations International, Inc.. (the
"Corporation"), pursuant to authority granted under Florida Statutes Sections
607.0704 and .0821, hereby take the following actions and adopt the following
resolutions:
Witnesseth:
WHEREAS, as a result of the Corporation's current status as a wholly owned
subsidiary of AmeriNet Xxxxx.xxx, Inc., a publicly held Delaware corporation
("AmeriNet"), it is appropriate to amend its articles of incorporation and
bylaws (collectively sometimes hereinafter referred to as the "Constituent
Documents") in order to effectuate the provisions of the reorganization
agreement pursuant to which the Corporation was acquired by AmeriNet, as
subsequently amended, and the provisions of the reorganization agreement
pursuant to which Vista Vacations International, Inc., a Florida corporation was
merged into the Corporation, and to reflect its current status and operational
procedures and requirements; NOW, THEREFORE, be it:
RESOLVED, that this Corporation's articles of incorporation be amended and
restated in the form heretofore circulated among the duly authorized and
empowered representatives of AmeriNet, this Corporation's sole stockholder, a
copy of which is annexed to and made a part of this written consent in lieu of
special meeting of stockholders as exhibit A, and that a restated copy thereof
be placed in the Corporation's minute book, in the place and stead of the
Corporation's articles of incorporation and subsequent amendments thereto; and
be it FURTHER
RESOLVED, that the Corporation's bylaws be, and they are hereby repealed
and replaced by the form of bylaws heretofore circulated among the duly
authorized and empowered representatives of AmeriNet, this Corporation's sole
stockholder, a copy of which is annexed to and made a part of this written
consent in lieu of special meeting of stockholders as exhibit B, and that a
restated copy thereof be placed in the Corporation's minute book, in the place
and stead of the Corporation's repealed bylaws; and be it FURTHER
RESOLVED, that the Officers of this Corporation are hereby authorized,
empowered and directed to take all actions on behalf of the Corporation
necessary or desirable to effect the foregoing.
DONE, effective as of the 7th day of March, 2000.
AmeriNet Xxxxx.xxx, Inc., as the sole stockholder
of Vista Vacations International, Inc.
By: /s/ Xxxxxxx X. Xxxxxx
______________________
Xxxxxxx X. Xxxxxx, President
{Seal}
Attest: /s/ Xxxxxxx X. Xxxxxxx
_____________________
Xxxxxxx X. Xxxxxxx, Secretary
94
RESOLUTION
BE IT RESOLVED, that by unanimous vote of the Board of Directors of Vista
Vacations International, Inc., the amended Articles of Incorporation and Amended
Bylaws have been adopted.
Dated: Margate, Florida
March 7, 2000
/s/ Xxxxxx Xxxxxxxxx, Secretary
RESOLUTION
BE IT RESOLVED, that by a vote of the Board of Directors of Vista
Vacations International, Inc., the Reorganization Agreement and Affiliate
Agreements with XxxxxXxxXxxxx.xxx, Inc. are hereby approved and accepted and.
Pursuant to the terms of the Reorganization Agreement the Secretary is hereby
directed to cancel all stock certified pursuant tot instructions of each
shareholder and the issuance of 100% of the common stock of Vista Vacations
International, Inc. to XxxxxXxxXxxxx.xxx, Inc.
Dated: Margate, Florida
March 7, 2000
/s/ Xxxxxx Xxxxxxxxx, Secretary
Schedule 1.7(C)
Vista Vacation's Final Stockholder Data
Name State Shares Cert No. Date Issued Consideration
---- ----- ------ -------- ----------- -------------
Xxxxxx Xxxxxxx Washington 375 shares unknown 11/13/98 canceled
Xxxx X. Xxxxxx Florida 765 shares 1 11/13/98 $ 765.00
Xxxx Xxxxxxx Florida 20 shares 4 11/13/98 $ 20.00
Xxxxxx Xxxxxxxxx Florida 20 shares 5 11/13/98 $ 20.00
Xxx & Xxxxx Xxxxxx Florida 75 shares 3 01/21/00 $50,000.00
Xxxx Xxxxxxx Florida 160 Shares 6 01/21/00 $ 160.00
Xxxxxx Xxxxxxxxx Florida 40 shares 7 01/21/00 $ 20.00
Xxxxx XxXxxxxx Washington 20 shares 8 01/21/00 $13,333.20
Xxxxx X. Xxxxx New York 400 shares 2 11/13/98 $ 400.00
(Corrected issuance)
1875 shares
Schedule 2.4(D)
Conflicts with Obligations
NONE
Schedule 2.5(A)
Vista Vacations Financial Statements
1. Balance Sheet and Profit and Loss Statements thru December 31, 1999.
2. Budget
3. Quarterly Tax Returns for March/99, June/99, Sept/99, Dec/99.
95
Balance Sheet and Profit and Loss Statements thru December 31, 1999.
Dec 31, '99
------------
ASSETS
Current Assets
Checking/Savings
First Union Cap Account 5,775.54
First Union Operations 66,063.09
------------
Total Checking/Savings 71,838.63
Other Current Assets
Credit Card Reserve 7,077.00
Xxxxx Cash 200.00
------------
------------
Total Other Current Assets 7,277.00
------------
Total Current Assets 79,115.63
Fixed Assets
Accumulated Depreciation -11,901.74
Computer Equipment 18,281.55
Furniture and Fixtures 13,387.28
Leasehold Improvements 1,089.00
Office Equipment 30,676.75
------------
Total Fixed Assets 51,532.84
Other Assets
Intangibles
Accumulated Amortization -561.60
Organizational Costs 400.00
Trademark 7,224.00
------------
Total Intangibles 7,062.40
Prepaid Consulting Fees 86,000.00
Prepaid Interest 684.20
Prepaid Rent 1,116.72
Recoverable Deposits 2,962.76
------------
------------
Total Other Assets 97,826.08
------------
------------
TOTAL ASSETS 228,474.55
============
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Other Current Liabilities
Payroll Liabilities 12,189.88
------------
------------
Total Other Current Liabilities 12,189.88
------------
Total Current Liabilities 12,189.88
Long Term Liabilities
N/P BSFS-Telephone System 12,087.00
N/P Xerox-Copiers 12,219.32
------------
------------
Total Long Term Liabilities 24,306.32
------------
Total Liabilities 36,496.20
Equity
Additional Paid in Capital 180,000.00
Net Income 11,978.35
------------
------------
Total Equity 191,978.35
------------
------------
TOTAL LIABILITIES & EQUITY 228,474.55
96
Jan - Dec '99
--------------
Ordinary Income/Expense
Income
Air Tickets 2,821.00
Car Reservations 508.95
ClLIA Fams 197,942.94
Cruises 185,826.98
Enrollment Income 103,637.96
Hotel Reservations 1,481.12
Override Commission 3,266.94
Printing Commission 14,426.49
Tours 134,595.70
Travel Insurance 2,643.90
--------------
Total Income 647,151.98
Cost of Goods Sold
CLIA Fam Expense 144,124.54
Cruise Line Expense 62,069.29
Enrollment Expense 4,284.20
Hotel Reservation Expense 182.40
Outside Printing 5,115.07
Tous Expense 71,756.70
--------------
--------------
Total COGS 287,532.20
--------------
Gross 359,619.78
Profit
Expense
Advertising 2,427.71
Automobile Expense 37,064.84
Bank Service Charges 465.23
Commissiom 49,216.54
Credit Card Expense 5,874.77
Delivery & Courier 3,223.28
Dues and Subscriptions 1,263.53
Equipment Rental 604.03
Insurance
Group Insurance 7,521.85
Xxxxxxx'x Compensation 1,850.00
Insurance - Other 1,880.02
--------------
Total Insurance 11,251.87
Interest Expense
Loan Interest 342.10
--------------
Total Interest Expense 342.10
Internet 1,851.80
Licenses and Permits 1,236.60
Miscellaneous 0.00
Office Expenses 15,867.30
Payroll Expenses 44,439.34
Payroll Taxes
Fica and MC 506.47
Payroll Taxes-FUTA/SUTA -1,297.35
--------------
Total Payroll Taxes -790.88
Postage 3,670.54
Printing and Reproduction 821.90
Professional Fees
Consulting 31,608.00
--------------
Total Professional Fees 31,608.00
Rent 27,747.80
97
Repairs & Maintenance
Building Repairs 274.69
Computer Repairs 1,000.00
Repairs & Maintenance - Other 261.57
--------------
Total Repairs & Maintenance 1,536.26
Telephone 23,504.89
Travel & Ent
Meals & Entertainment 6,208.38
Travel 1,511.18
Travel & Ent - Other 0.00
--------------
Total Travel & Ent 7,719.56
Trip Insurance 637.00
Uncategorized Expenses 0.00
Utilities
Gas and Electric 2,030.74
Water 363.83
--------------
Total Utilities 2,394.57
Void 0.00
--------------
--------------
Total Expense 273,978.58
--------------
Net Ordinary Income 85,641.20
Other Income/Expense
Other Income
Interest 908.08
--------------
Total Other Income 908.08
Other Expense
Amortization Expense 561.60
Depreciation Expense 11,901.74
Fines & Penalties 620.35
Officer Salary 61,487.24
--------------
--------------
Total Other Expense 74,570.93
--------------
--------------
Net Other -73,662.85
Income
--------------
--------------
Net Income 11,978.35
==============
98
COST ANALYSIS - YEAR 2000
ITEMS INCOME EXPENSE PROFIT
(GROSS SALES) (COST)
Enrollment $374,800 $138,500 $236,300
Renewal 30,000 30,000
Kinkos 69,600 36,888 32,712
Travel Sales 2,625,000 2,310,000 315,000
Agent Sales 0 157,500 0
Commission (157,500)
Travel Insurance 91,875 73,500 18,375
Agent Travel Ins 0 4,593 0
Commission (4,593)
Training Conferences 205,260 156,500 48,760
Website Advertising 50,000 0 50,000
Website Replica sites 100,000 84,500 15,500
Website Locater sites 472,500 236,250 236,250
(9 months)
TOTAL $4,019,035 $3,198,231 $820,804
99
Budget
March 2000 to March 2001
March April May June July August
Rent 1,359 1,359 1,359 2,600 2,600 2,600
Utlities 185 185 185 450 450 450
Telephone 1,700 1,700 1,700 2,400 2,400 2,400
Phone Sys. BS FS 503 503 503 503 503 503
Copier Xerox (lease) 550 550 550 550 550 550
Office Insurance 291 291 291 400 400 400
Health Insurance 1,105 1,700 1,700 1,700 1,700 1,700
Workmans Comp. 165 165 16 165 165 165
Security System 25 25 25 50 50 50
Internet (Verio) 215 270 290 290 290 290
Accountant 125 125 125 125 125 125
Postage 150 150 250 250 250 150
Courier & Delivery 100 100 150 100 100 100
Office Supplies 300 500 200 500 200 200
Maintenance --- 100 100 200 200 200
Web Site 10,000 10,000 10,000 10,000 10,000 10,000
Advertising --- 4,000 4,000 4,000 4,000 4,000
Travel 5,000 5,000 5,000 5,000 5,000 5,000
Meals & Enter. 600 600 600 600 600 600
Furn. & Equip. 3,500 1,500 --- 1,500 --- ---
Salary 28,332 30,065 30,065 31,798 31,798 31,798
Taxes (employee) 2,110 2,240 2,240 2,370 2,370 2,370
Auto Expense 2,000 2,000 2,000 2,000 2,000 2,000
Misc. Expense 300 300 300 300 300 300
Promotion (Xxxx) 225 225 225 225 225 225
Trade Show --- --- ---- --- --- 5,000
TOTAL 52,715 63,653 62,023 68,076 66,276 71,176
Sept. Oct. Nov. Dec. Jan. Feb. Mar.
Rent 2,600 2,600 2,600 2,600 2,600 2,600 2,600
Utlities 450 450 450 450 000 000 000
Telephone 2,400 2,400 2,400 2,400 2,400 2,400 2,400
Phone Sys. BS FS 503 503 503 500 503 503 503
Copier Xerox (lease) 550 550 550 550 550 550 550
Office Insurance 400 400 40 400 400 400 400
Health Insurance 1,105 1,700 1,700 1,700 1,700 1,700 1,700
Workmans Comp. 165 165 165 165 165 165 165
Security System 50 50 50 50 50 50 50
Internet (Verio) 290 290 290 290 290 290 290
Accountant 125 125 125 125 125 125 125
Postage 150 250 250 150 150 250 150
Courier & Delivery 100 100 100 100 150 10 100
Office Supplies 200 200 200 200 200 20 200
Maintenance 200 200 200 200 200 200 200
Web Site 10,000 10,000 10,000 10,000 10,000 10,000 10,000
Advertising 4,000 4,000 4,000 4,000 4,000 4,000 4,000
Travel 5,000 5,000 5,000 5,000 5,000 5,000
Meals & Enter. 600 600 600 600 600 600 600
Furn. & Equip. --- --- --- --- --- --- ---
Salary 31,978 31,978 31,798 31,798 31,798 31,798 31,798
Taxes (employee) 2,370 2,370 2,370 2,370 2,370 2,370 2,370
Auto Expense 2,000 2,000 2,000 2,000 2,000 2,000 2,000
Misc. Expense 300 300 300 300 300 300 300
Promotion (Xxxx) 225 225 225 225 225 225 225
Trade Show --- --- 5,000 --- --- --- ---
66,176 66,276 71,226 66,126 66,226 66,326 66,126
100
PROJECTED REVENUE FROM MEMBERSHIP
First Year 1999
Founders: 100 @ $349.00-----------------$ 34,900
Affiliates: 75 @ $ 99.00-----------------$ 7,425
Vista Agent: 400 @ $449.00-----------------$179,600
Affiliates: 200 @ $149.00-----------------$ 29,800
Club Member: 100 @ $ 79.00-----------------$ 7,900
TOTAL $262,075
COST OF MEMBERSHIP
Founders and Affiliates----------------$10,800
Vista Agent and Affiliates-------------$41,800
Club Member and Affiliates-------------$ 950
(see attached for breakdown of cost)
TOTAL $(53,550)
NET REVENUE FOR MEMBERSHIP ** TOTAL $208,525
**This is a very conservative total as we believe that the membership for the
first year will be triple the amount we are projecting. However, it is our
business philosophy to deliver much more than expected!
PROJECTED REVENUE FROM 1-1-99 THROUGH 12-31-99
INCOME
NEW MEMBER ENROLLMENT $262,075
COM. ON CRUISE SALES $784,000
INSURANCE REVENUE $ 75,421
---------
TOTAL $1,121,496
EXPENSES
MEMBERSHIP (53,550)
REFERRAL COM. AGENTS (53,415)
COM TO AGENTS (235,200)
FIXED OPERATING COSTS (386,836)
12% INCREASE OF OPERATING EXP. (2ND 6 MONTH PERIOD) (46,420)
TOTAL (775,421)
NET PROFIT 346,075 **see note on Projected Revenue from Membership
101
Schedule 2.7
Changes Since Vista Vacations' Financial Statements
NONE
Schedule 2.8(A)
Tax Disclosure Schedule
No tax delinquencies.
Schedule 2.10(A)
Leased Real Property
1. Commercial Lease dated December 9, 1998 between Xxxx X. Xxxxxxxx and
Vista for property located at 0000 XX 00xx Xxxxxx, Xxxxxxx: Two year
term ending December 31, 2000. Rent is presently $1,247.00 per month.
No other Leased Real Property.
Item 1 can be found as exhibit 10vv.1 to this Form 8-K.
Schedule 2.10(C)
Equipment
Leased Equipment:
1. BSFS Equipment Leasing of ICS phone system, supplier BellSouth
Communications Systems, Inc. dated 12/31/1998 for term of 36 months at
473.8 per month.
2. Xerox Equipment Lease dated 3/16/99 36 months at $87.32.
3. Xerox Equipment Lease dated 3/16/99 36 months at $57.65.
4. Xerox Equipment Lease dated 3/16/99 36 months at $252.60.
5. Equipment and Inventory List
Items 1-4 can be found as exhibits 10vv.2 through 10vv.5 of this Form 8-K.
VISTA VACATIONS INTERNATIONAL
INVENTORY LIST
NORSTAR PLUS MODULAR COMMUNICATION SYSTEM (1)
PANASONIC FAX AND COPIER (1)
XEROX 5322 BLACK AND WHITE COPIER (1)
XEROX 5760 COLOR COPIER (1)
XEROX PRO 635 FAX WORK CENTER (1)
REFRIGERATOR (1)
TOASTER (1)
COFFEE MAKER (1)
TWO DRAWER BLACK FILE CABINETS (6)
SMALL WHITE FILE CABINET (1)
WORK TABLE (1)
STACKING SHELVES (4)
FOUR DRAWER BLACK LATERAL FILE CABINETS (3)
XXXX HIGH BACK EXECUTIVE CHAIR (1)
XXXX LOW BACK DESK CHAIRS (8)
TWO DRAW LAMINATED EXECUTIVE FILE CABINET (1)
MIRROR AND CABINET EXECUTIVE WALL UNIT (1)
GLASS AND DOUBLE PEDESTAL EXECUTIVE DESK (1)
IMPORTED WHITE AND SILVER PLATED VASES (2)
WHITE TATAN WING CHAIRS (2)
WHITE RATAN OCCASIONAL TABLE (1)
LARGE 8" XXXX XXXXXXX LAMINATE MULTI-SHELF UNITS (2)
BLACK XXXX SOUTH TELEPHONE (1)
CITIZENS AND TRANZ VERIFONE CREDIT CARD TERMINAL (10)
PITNEY XXXXX POSTAGE METER AND SCALE (1)
WHITE TWO SHELVE TABLE (1)
MONITOR, E MACHINE ETOWER 333 COMPUTER, KEYBOARD, PRINTERS (14)
SPEAKERS (10)
MISCELLANEOUS SOFTWARE PROGRAMS 10MEGA ZIP 1001 (3)
POWER BATTERY BACK UP (10)
ACCESSORIES (WALL HANGINGS, FLORAL ARRANGEMENTS, PLANTS ETC.)
DESK ACCESSORIES AND OFFICE SUPPLIES (CALCULATORS, WASTE BASKETS
STAPLERS, STACK FILES, ETC.)
SCANNERS (2)
HEWLETT PACKARD DESKJET 560C PRINTER (1)
102
Schedule 2.11
Intellectual Property
1. Federal Trademark Elimination Search dated November 24, 1998.
No other Intellectual Property.
To: Xxxxxxx Xxxxxxxxxx
From: Xxxxx X. Xxxxx
Date: March 11, 2000
Xxxxxxx,
With regard to you question about the trademark relative to schedule Section
2.11, please be advised that while a trademark search was in fact completed, the
application for a trademark has not been completed. As such, we can provide a
copy of the search but nothing else related thereto.
Please call us when and if you need to discuss this.
/s/ Xxxxx X. Xxxxx
Corporate Service Bureau, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxx Xxx Xxxx 00000
Phone (000) 000-0000
Fax (000) 000-0000
November 24, 0000
Xxxxx Xxxxx
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Re: Federal Trademark Research for "Vista Vacations International" for Travel
Dear Xx. Xxxxx:
Enclosed please fine our comprehensive report on the Federal Trademark
Search performaed on the above xxxx.
In order to proceed with the Federal Trademark filing, we need you to
complete the attached worksheet and return it with a check payable to Corporate
Service Bureau, in the amount of $675.00 to file in one class. Attached is a
credit card authroization form for your convenience. Also enclosed is a
timetable for the application procedure.
Thank you.
Sincerely,
/s/ Xxxxx X. Xxxxxxxx
Corporate Service Bureau
Enclosures
103
Corporate Service Bureau, Inc. Ref. No: 116283
000 Xxxxxxxxxx Xxxxxx Client ID: 397011
Xxxxxx Xxx Xxxx 00000 Inv. Date: November 24, 1998
Phone (000) 000-0000
Fax (000) 000-0000
Billed to:
Xxxxx Xxxxx
000 X. Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Performed a Federal Trademark Elimination search from the u.s. patent &
trademark office for: VISTA VACATIONS INTERNATIONAL
SERVICE FEE $475.00
---------
Invoice Total $475.00
We have received your payment of $475.00, VIS74431-232 The credit will appear on
your monthly statement. The remaining balance due on this invoice is $0.00
Thank you - Pay this invoice upon receipt
Return copy of this invoice with your payment - write the invoice number on all
payments. Note: We guarantee our information to be as accurate as reasonable
care can make it. However, the ultimate responsibility for maintaining files
rests with the filing officer and/or government agency and we will accept no
liability beyond the exercise of reasonable care.
Xxxxxx: DMC
U.S.
PATENT & TRADEMARK
OFFICE
CORPORATE SERVICE BUREAU INC.
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxx 00000
000-000-0000
Fax: 000-000-0000
Requested By: VISTA VACATIONS INTERNATIONAL
Type of Search STANDARD FEDERAL (USPTO) SEARCH
GOOD/SERVICES: TRAVEL SERVICES
DATE OF SEARCH: NOVEMBER 23, 1997
********
This report contains information from U.S. Patent and Trademark Office
Tapes received through 11/17.98.
If you have any questions about this Report, please write or call us at
(000) 000-0000.
********
Corporate Service Bureau
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
000-000-0000
Fax: 000-000-0000
104
Schedule 2.12
Contracts and Agreements
1. Shareholders Agreement and Irrevocable Proxy for Vista Vacations
International, Inc., dated November 13, 1998, between Xxxx Xxxxxx, Xxxxxx
Xxxxxxx, Xxxx Xxxxxxx, Xxxxxx Xxxxxxxxx. (32 pages)
2. Amended Shareholders Agreement dated September 28, 1999, between Xxxx
Xxxxxx, Xxxxxx Xxxxxxx, Xxxx Xxxxxxx, Xxxxxx Xxxxxxxxx.(Four pages).
3. Letter agreement removing security interest in Vista shares by Xxxxxx
Xxxxxx, dated January 20, 2000.
4. Security and Pledge Agreement dated November 14, 1998, between Xxxxxx
Xxxxxxx, Xxxx Xxxxxxx, Xxxxxx Xxxxxxxxx and Vista Vacations dated November
14, 1998.
5. Shareholders Agreement and Irrevocable Proxy dated January 17, 2000 between
Xxxx Xxxxxx, Xxxxx X. Xxxxx, Xxxx Xxxxxxx, Xxxxxx Xxxxxxxxx, Xxxxx
XxXxxxxx, Xxxxx Xxxxxx, and Xxx Xxxxxx. (28 pages).
6. Carnival Cruise Override Commission Agreement dated March 18, 1999. (2
pages).
7. Letter, application and membership agreement form with Xxxxxxxx.xxx and
Vista Vacations International, Inc.
8. Pending Agreement with Xxxx Xxxxxx Xxxxxx as Public Relations Consultant
for $15,000 for 200 hours.
9. Agreement for Professional Services between Vista Vacations and
XXXxxxx.xxx, Inc.
10. Superseder & Conversion Agreement with Xxxxxx Xxxxxxx.
No other Contracts or Agreements except as disclosed in the Exhibits of
the Reorganization Agreement.
Items 1-10 can be found as Exhibit 10vv.6 through 10vv.15 of this Form 8-K.
Schedule 2.12(A)(12)
Debt & Guarantee Instruments
1. Promissory Note in favor of Xxxxxx Xxxxxxx.
2. Cancellation of Promissory Note in favor of Xxxxxx Xxxxxxx.
No other Debt & Guarantee Instruments.
Items 1-2 can be found as Exhibit 10vv.16 of this Form 8-K.
Schedule 2.13
Related Party Transactions
1. Xxxx Xxxxxx and Xxxxx Xxxxx are brother and sister.
No other Related Party Transactions.
105
Schedule 2.14
Governmental Authorization
1. State of Florida Department of Agriculture, Sellers of Travel Registration
Certificate No. 00177 dated February 7, 2000, expires February 7, 2001.
2. State of Florida Broward County Occupational License for October 1, 1999
thru September 30, 2000.
3. Notice of Acceptance of S. Corporation dated March 22, 1999.
4. Corporate detail summary sheet as of January 1, 2000.
--------------------------------------------------------------------------------
STATE OF FLORIDA
DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES
Division of Consumer Services
Xxxxxxxxxxx, Xxxxxxx 00000-0000
POST CERTIFICATE
CONSPICUOUSLY
Certificate No.: 00177
Date Issued: 02/07/2000
Date Expires: 02/07/2001
Fee Amount: $300.00
SELLERS OF TRAVEL
REGISTRATION CERTIFICATE
Section 559.928, Florida Statutes
VISTA VACATIONS INTERNATIONAL, INC.
0000 XX 00 XXXXXX
XXXXXXX, XXXXXXX 00000
Registration No.: ST-30880 Xxx Xxxxxxxx
Commissioner of Agriculture
--------------------------------------------------------------------------------
BROWARD COUNTY OCCUPATIONAL LICENSE TAX
FOR PERIOD OCTOBER 1, 1999 THRU SEPTEMBER 30, 2000
X Renewal SEC #32/328 TAX $81.00 Renew on or before
September 30, 2000
Date Business Opened: 01/28/99
Account Number 328-0000000
State or Xxxxxx Xxxx/Xxx # XX 00000
Business Location Address:
0000 XX 00 XX.
XXXXXXX, XX 00000
Business Phone 000-000-0000
Tax ID#00-0000000 VISTA VACATIONS INTERNATIONAL INC
XXXXXX, XXXX
0000 XX 00 XX
XXXXXXX, XX 00000
SELLER OF TRAVEL
- 6 UNITS -
1999-2000
Broward County Revenue Collector
000 X. Xxxxxxx Xxx., Xxxxxxxxxxxx Xxxxxx Xxxxx
Xx. Xxxxxxxxxx, XX 00000
0 00000000 0000008100 0000003280001284 1001 0 8100 027373 07 91499
--------------------------------------------------------------------------------
106
Internal Revenue Service Date of this notice: Mar. 22, 1999
Xxxxxxx, XX 00000
VISTA VACATIONS INTERNATIONAL INC
0000 XX 00XX XXXXX
XXXXX XXXXXXX XX 00000-0000000
NOTICE OF ACCEPTANCE AS AN S-CORPORATION
Your election to be threated as an S-Corporation with an accounting
period of December is accepted. The election is effective beginning January 1,
1999, subject to verification if we examine your return.
If your effective date is not as requested, it will have been changed
for one of two reasons. Either your election was made after the 15th day of the
third month of the tax year to which it applies, but before the end of that tax
year, or the election period. In either case, your election is invalid for the
next tax year requested and has therefore, been treated as though it were made
for the next tax year.
Please keep this notice in your permanent records as verification of
your acceptance as an S-corporation.
If you have any questions about this notice or the actions we have
taken, please write to us at the address shown aboe. If you prefer, you may call
us at the IRS telephone number listed in your local directory. An employee there
may be able to help you; however, the office at the address shown on this notice
is most familiar with your case.
If you write to us, please provide your telephone number and the most
convenient time for us to call so we can contact you to resolve your inquiry.
Please return the bottom part of this notice to help us identify your case.
Thank you for your cooperation.
107
CORPORATE DETAILS
As at January 1, 2000
Date of incorporation: November 12, 1998
State of Incorporation: Florida
Principal Place of Business: Florida
Chairperson: Xxxxx Xxxxx Director:
Director: Xxxx Xxxxxx Director: Xxxxx Xxxxx
Officers:
President Xxxx Xxxxxx
Vice-President: Xxxxx Xxxxx
Secretary Xxxxxx Xxxxxxxxx
Treasurer Xxxx Xxxxxxx
Bank Accounts: 2000004895840/9982760113
Fiscal Year: January 1 - 12/31
Annual Meeting Date: Ooctober 8th
Attorney: Xxxxx Xxxxx
Accountant: Xxxxxx Xxxx
Registered Agent: Xxxx Xxxxxx
Shareholders Number of Shares
------------ ----------------
Xxxx Xxxxxx 765
Xxxxx Xxxxx 400
Xxxx Xxxxxxx 180
Xxxxxx Terrealba 60
M/M Xxxxxx 75
Xxxxx XxXxxxxx 20
Schedule 2.15
Litigation
1. No Litigation Pending.
2. No Potential Litigation Pending.
Schedule 2.19
Brokers' and Finders' Fee
1. No Broker's fees or Finder's fees.
108
Schedule 2.20
List of Employees and Independent Agents
Xxxx X. Xxxxxx, President and Chief Executive Officer
0000 XX 00xx
Xxxxx Xxxxxxx, Xxxxxxx 00000
Xxxxx Xxxxx, General Counsel and Chief Legal Officer
000 X. Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxx Xxxxxxx, Executive Vice President of Operations and Finance
0000 XX 00xx Xxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Xxxxxx Xxxxxxxxx, Executive Director of CLIA
0000 X. Xxxxx Xxxxx, Xxxxxxxxx 00-X
Xxxxxxxxxx, Xxxxxxx 00000
Xxxxx XxXxxxxx, Executive Director of Field Sales
00000X Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Xxxxxx Xxxxxxxx, Inside Sales
00000 X. Xxxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Xxx Xxxxxx, Inside Sales
0000 Xxxxxxxxx Xxx
Xxxxx Xxxxxxxxxx, Xxxxxxx 00000
List of Independent Agents.
SOURCE CODES & DESCRIPTIONS
CODE DESCRIPTION ACTIVE
630 HOUSE ACCT YES
F111 Xxxxx/Xxxxxx YES
F112 XXXXXXXX/Xxxxxxx & K YES
F113 Brody/Xxxxxx & M YES
F114 Xxxxxx/Xxxxxx & D YES
F115 Xxxxxxxx/Xxxxxx & T YES
F116 Xxxxxx/Xxxx & Xxxxx YES
F117 Xxxx/Xxx & Deloryce YES
F118 Xxxxxxx/Xxxxxx & C YES
F119 XxXxxxxxx/S & Xxxxx YES
F120 Xxxxxx/Xxxxxx & E YES
F121 Xxxxxxxx/Xxxxx YES
F122 Xxxxxx/Xxx & Xxxxx YES
F123 Xxxx/Xxxxx & Xxxxx X. YES
F124 Fette/Xxxx YES
F125 Xxxxxxx/.Xxxxxxx & S YES
F126 Snow/Rob & Max YES
F127 Crane/Xxxxx & N YES
F128 Crane/Xxxxx & Xxx YES
F129 Xxxxxxxxx/Xxxxxx & R YES
F130 Cullen/D YES
F131 Xxxxxx/Xxxxx & Xxxxxx YES
F132 Xxxxxx/Xxxx & Xxx YES
F133 XxXxxxxx/Xxx YES
F134 Xxxxx/Xxxxx YES
F135 Xxxxxxx/Xxxxxx YES
F136 Xxxxxxx/Lenoir YES
F137 Xxxxxxx/Xxxxx YES
F138 Maio/Don & Xxxxx YES
F139 Xxxxxxx/Xxxxx YES
F140 Xxxxxx/Art & Xxxxx YES
F141 Xxxxxx/Xxxxxx YES
F142 Xxxxxx/Xxxxxxx YES
F143 Xxxxxxx/Valentina YES
F144 Xxxxxx/Xxxxxxxxx YES
F145 VACANT NO
F146 Pirrie/Xxxx YES
F147 Xxxxxx/Ed & Xxxxxx YES
F148 Xxxxx/Xxxxxx & Xxxxx YES
F149 Xxxxxx/Xxxxx & Xxxxx YES
F150 Xxxxx/Xxxx & Xxxxx YES
109
F151 Xxxxx/Xxx & Xxxx YES
F152 Xxxxxxx/Xxxxxx & S YES
F153 Xxxxxx/Xxxxxx & G YES
F154 Green/Roz & McNab S YES
F155 Xxxxxxx/Xxxx & Xxx YES
F156 Xxxxx/Dixie YES
F157 Xxxxx/Xxxxx & Xxxxxx/D YES
F158 Xxxxx/Xxxxxx & Xxxxxx YES
F159 Vacant NO
F160 Vacant NO
F161 Vacant NO
F162 Xxxxx/Xxxxx & Xxxxxx YES
F163 Knight/Xxxxxx YES
F164 Arberle/Xxxxx YES
F165 Pelligrini/Xxxxx & M YES
F166 Gadman/Xxx & Xxxxxxxxx YES
F167 Kiss/Xxxxxx & Xxxxxx YES
F168 Flowers/Xxxxx YES
F169 Bauersfield/Bunny YES
F170 Xxxxxxx/Xxxxxxxx YES
F171 Benz/Xxxxxxx & Xxxxxx YES
F172 Xxxxxxxx/Xxxxxxx YES
F173 Xxxxxxx/C E YES
F174 VACANT NO
F175 VACANT NO
F176 Xxxxxx/Xxxxx & Xxxxx YES
F177 Xxxxxxxxx/Veda & R YES
F178 Xxxxx/Xxxxx & Xxxxxxx YES
F179 VACANT NO
F180 Xxxxx/J & X Xxxx YES
F181 Xxxxxxx/Xxxxxxx & F YES
F182 Xxxx/Xxxxxx & June YES
F183 Xxxxxxx/Xxxxx & J YES
F184 Brietenfeldt/Don & Xxx YES
F185 Olsson/Ulla YES
F186 XxXxxxxxx/Xxxxxx YES
F187 Xxxxxxxx/N& Xxxxxxx V YES
F188 VACANT NO
F189 Xxxxxxxxx/Xxx & Xxxxxx YES
F190 Xxxxxxxx/Xxxxx & B YES
F191 Xxxxxxxxx/Xxxxx & Trud YES
F192 Xxxxxx/Art YES
F193 Town/Xxxxxxx & Xxxx YES
F194 Xxxx/Xxxxx & Ed YES
F195 Xxxxx/Cleveland & R YES
110
F196 Criss/Xxxxx & Xxxxx YES
F197 Xxxxx/Xxxx & Xxxxx YES
F198 VACANT NO
F199 VACANT NO
F200 VACANT NO
P101 Xxxxx/Xxxx & Xxxx YES
P102 Xxxxxx/Xxxxxxxx YES
P103 Xxxxxxxxx/Xxx & Xxxx YES
P104 Xxxxxx/Xxxxx & Xxx YES
P105 Xxxxxxx/Xxxxxx YES
P106 Slof/Xxxxxxx & Xxxxxx YES
P107 Xxxxx/Xxxxxxx & L YES
P108 Xxxxxxxxxx/Xxxxxxx & B YES
P109 Xxxxxxx/Xxxxxx YES
P110 Goodmenson/Xxxxxx YES
TAU NO
UNI NO
V201 Xxxxx/Xxxxx YES
V202 Slof/Xxxxx & Xxxxxxx YES
V203 Xxxxxxx/Xxxxxx YES
V204 Xxxxxx/Xxxxx YES
V205 Xxxxxxxxx/Xxxxxxx YES
V206 Colbert/Xxxx & Xxxxx YES
V207 Stonberg/Xxxxxx & S YES
V208 Saba/Xxxxxx & Xxxx YES
V209 Dunkin/Ester & Xxxxx YES
V210 Xxxxxxx/Xxxxx YES
V211 Xxxxxx/Xxx & Xxxxx YES
V212 Xxxxxx/Mahmunir YES
V213 XxXxxxxx/Xxxxxxxx YES
V214 Xxxxxxxx/Xxxxxx YES
V215 Xxxxxx/Xxxxxx, Dr. YES
V216 Crane/Xxxx & Xxxxx/L YES
V217 Xxxxxx/Xxxxxxx YES
V218 Xxxxxx/Xxxxxx & Xxxxx YES
V219 Abaroa/Xxxxxxx YES
V220 Xxxxx/Xxxxx YES
V221 Xxxxxx/Xxxxx & Xxxxx YES
V222 XxXxxxxx/Xxxx YES
V223 Davidoff/Sid & Xxxxxxx YES
V224 Xxxxxx/Xxxxxxxx & Elsw YES
V225 Erkind/Xxx & Xxxxxx YES
V226 Xxxxx/Xxxxxxx & Xxxx YES
V227 Xxxxxx/Xxxxxx & Lore YES
V228 Zarider/Xxxxx YES
111
V229 Xxx/Xxxx Dr. & Xxxxx YES
V230 Peel/Don & Xxxxxxx YES
V231 Xxxxxxx/Xxx YES
V232 Xxxxxxxx/Xxxxx & Xxxx YES
V233 Swords/Xxxxx & Xxxx YES
V234 Bench/Xxxx YES
V235 Xxxxxx/Xxxxxx YES
V236 Xxxxxxxx/Xxxx & Xxxxxx YES
V237 Galt/Xxxxxx & Xxxxxx YES
V238 Murakami/Xxxxxx & Xxxx YES
V239 Link-McDonald/Xxxxxx YES
V240 Xxxxxx/Xxxxx YES
V241 XxXxxxxx/Xxxxxxx & M YES
V242 Xxxxxxx/Xxxxxx & Dolor YES
V243 Nabatoff/Xxxxxx & Ro YES
V244 Xxxxxx/Xxxxxx YES
V245 Xxxxxx/Xxxx YES
V246 Xxxxxxx/Xxxxxxx/Xxxx YES
V247 Xxxxxx/Xxxxx YES
V248 Xxxxxxx/Xxxx/Xxxxxx YES
V249 Xxxx/Xxxx/Xxxxx YES
V250 Brunshow/Xxxx & Lorr YES
V251 Cable/Xxxx/Xxxxx YES
V252 Doctor/Xxxxxx/Xxxxxxx YES
V253 Xxxxxxx/Xxxxxxx YES
V254 Xxxxxxx/Xxxxxxx YES
V255 VACANT NO
V256 Xxxxxxx/Xxxxx YES
V257 King/Xxxxxx & Xxxxxxx YES
V258 Xxxxxxx/Xxxx YES
V259 Maryasis/Xxxxx & Olg YES
V260 Xxxxxxxx/Wm & Xxxxxx YES
V261 Xxxxxxx/Xxxxx & L Swe YES
V262 Xxxxxx/Xxxxxx & Loui YES
V263 Xxxxxxx/Sol & Xxxx YES
V264 Xxxxxxx/Xxxxxx & J Hul YES
V265 Xxxxxx/Xxxxx YES
V266 Galperine/Xxxxx & Mich YES
V267 Xxxxxxxxx/Xxxxx & Xxxx YES
V268 Xxxxxxxxx/Xxxxxxx YES
V269 Xxxxxxxxx/Xxxx & Xxxxx YES
V270 York/Xxxxx & Xxxxx YES
V271 Xxxxx/Xxxx & Xxxxxxx YES
V272 XxXxxxxxx/Xxx & Xxxxxx YES
V273 Xxxxxxxxxx/Xxxxxxx & W YES
112
V274 Xxxxx/Xxxxxxx YES
V275 Xxxxx/Xxxx YES
V276 Xxxxx/Xxx & Xxxxxx YES
V277 Xxxxxxx/Xxxxxx YES
V278 Hoda/Fairideh & Xxxxx YES
V279 Xxxxxx/Xxxx & Xxxxx YES
V280 Xxxxx/Xxxx & Xxxxxx YES
V281 Xxxxxxx/Xxxxxxx & Don YES
V282 Xxxxxx/Xxxxxx YES
V283 Applegate/Xxxxxx YES
V284 Xxxxxxxxx/Xxxx YES
V285 Vanier/Denis YES
V286 Xxxxx/W Pls 3 Assoc YES
V287 Xxxxx/Xxxxxxx & Xxxxx YES
V288 Xxxxxxxx/Xxxx & Xxxxxxxxx YES
V289 Xxxxxxx/Xxxxxxx & Xxxx YES
V290 Xxxxxx/Xxxxx & Xxxx YES
V291 Xxxxxxx/Nyta & Xxxxxxx YES
V292 Xxxxxxx/Xxxxx YES
V293 Xxxxxx/Xxxxxxx & Xxxxx YES
V294 Xxxxxxxx/Xxxxx & Xxxxx YES
V295 Xxxxxx/Xxxxxxxxx YES
V296 Xxxxxx/Xxxxxxx YES
V297 Xxxxxxxxx/Xxxxx YES
V298 Xxxxxxx/Xxxxxx/Xxxxx YES
V299 Xxxxx/Xxxxx YES
V300 Xxxxx/Xxxxxxxxx YES
V301 Xxxxxxxxxxxx/Xxx YES
V302 Grafflin/Ray/Xxxxx YES
V303 Grafflin/Xxxxxx/Xxx YES
V304 Broadbridge/Xxxxxxx YES
V305 Grafflin/Trevor/Marl YES
V306 Grafflin/Xxxx/Jan YES
V307 Beven/Xxxxx/Xxxx YES
V308 Broadbridge/Xxxxx/Al YES
V309 Grafflin/Xxxxxx/Hayl YES
V310 Xxxx/Ian/Xxxx YES
V311 Xxxx/Xxx/Xxxxxxx YES
V312 Ugell/Xxxxx/Xxxxxx YES
V313 Ugell/Shi/Jac/Rac/Ml YES
V314 Xxxxxx/xxx YES
V315 Barbie/XxXxxxxx YES
V316 Xxxxx/Xxxxx/Xxxxx YES
V317 Xxxxxx/Louis/Xxxxx YES
V318 Young/Xxxx/Xxxxxx YES
113
V319 Xxxxxxx/Xxxx/Xxxxxxx YES
V320 Plough/Xxxxx/Xxx YES
V321 Xxxxxx/Xxxxx/Xxxxxxx YES
V322 Xxxxxx/Xxxx/Xxxx YES
V323 Xxxxxxx/Xxxx YES
V324 XxXxxx/Shann/Xxxxxxx YES
V325 Xxxxx/Xxxxx/Xxxxx YES
V326 Xxxxxxx/Xxxxx/Xxxx YES
V327 Xxxxxx/Xxxxx/Xxxx YES
V328 Chetti/Xxxxxxx YES
V329 Xxxxxx/Xxxxx YES
V330 Wood/Xxxxx/Xxxxxxx YES
V331 Xxxxx/Xxxxx YES
V332 Xxxxx/Xxx/Xxxxxxx YES
V333 Xxxxxxx/Xxx YES
V334 Franklin/Xxxx/Xxxx YES
V335 Xxxxxx/Xxxx/Xxxxx YES
V336 Xxxxxxxx/Xxxx/Xxxxxx YES
V337 Xxxxx/Xxxx/Xxxx YES
V338 Xxxxx/Xxx/Xxxxxx YES
V339 Xxxxxxxxx/Xxx/Kar/Sa YES
V340 Xxxxxxxxx/Xxxxx YES
V341 Xxxxxxx/Xxxxx/Krissy YES
V342 Clay/Xxxxx/Xxxxx YES
V343 Xxxxxx/Xxxx/Xxxxx YES
V344 Xxxxx/Xxxxx YES
V345 Crane/Xxxxx/.Xxxxxx YES
V346 Crane/Xxxx/Xxxxxx YES
V347 Crane/Melody YES
V348 Crane/Xxxxx YES
V349 Crane/Xxxx YES
V350 Xxxxx/Xxxxxxxx YES
V351 Xxxxxx/Xxxxxx/Xxxx YES
V352 Xxxxxxx/Xxxxxx/Xxxxx YES
V353 Xxxxxxx/Xxxx YES
V354 Ugell/Marc/Xxxxx YES
114
Schedule 2.21
Insurance
1. Premium Finance Agreement dated February 2, 2000, in the amount of
$3,420.06 financing $2,565.04 in 10 payments of $274.82. (For Preferred
National Insurance.)
2. Insurance Policies with Preferred National Insurance Company dated February
3, 2000.
3. Group Health Insurance Policy with United Wisconsin Life Insurance Company
dated June 1, 1999, through June 1,2000.
4. Comp Options Workers Compensation and Employers Liability Policy dated
December 12, 1999.
5. Xxxxx Xxxxx'x Malpractice Insurance and Professional Liability Policy with
Bertholan-Xxxxxxx, policy number 301691-0 dated May 5, 1999 to May 1, 2000.
No additional Insurance Policies.
Items 1-5 can be found as Exhibit 10vv.17 through 10vv.19 of this Form 8-K.
Schedule 2.27
Employee Benefit Plans
NONE
Schedule 2.28
Distribution Agreements
NONE
Schedule 4.1
Exceptions to Prohibited Pre-Closing Actions
Schedule 5.7
Consents
NONE
Schedule 5.8
Affiliates
1. Xxxx X. Xxxxxx
2. Xxxxx Xxxxx
3. Xxx Xxxxxx & Xxxxx Xxxxxx
4. Xxxx Xxxxxxx
5. Xxxxxx Xxxxxxxxx
6. Xxxxx XxXxxxxx
7. Xxxxxx Xxxxxxx
Schedule 5.12
List and Summary of Employment Agreements
and Confidentiality Agreements.
1. Xxxx X. Xxxxxx, President and Chief Executive Officer
2. Xxxxx Xxxxx, General Counsel and Chief Legal Officer
3. Xxxx Xxxxxxx, Treasurer and Chief Financial Officer
4. Xxxxxx Xxxxxxxxx, Secretary
5. Xxxxx XxXxxxxx
6. Xxxxxx Xxxxxxxx
7. Xxx Xxxxxx
115
Schedule 5.13
Use of Proceeds
March 8, 2000
Re: Use of Proceeds for Vista Vacations International, Inc. for $650,000
Description First Payment Second Payment Third - Sixth Payment
Office Equipment $3,200 $2,000 $0
Payroll-Marketing $15,000 $15,000 $15,000
Public Relations $4,500 $4,500 $4,500
Entertainment $4,300 $5,000 $5,000
Audit Expense $15,000 $2,500 $2,500
Telephone Expenses $4,500 $4,500 $4,500
Advertising $6,000 $6,000 $6,000
Postage $2,500 $2,500 $2,500
Printing $3,500 $3,500 $3,500
Working Capital $11,500 $44,500 $27,500
Xxxxx Xxxxx $25,000 $0 $0
XXXxxxx.xxx $30,000 $30,000 $30,000
TOTAL $125,000 $125,000 $100,000
* Xxxx Xxxxxx returns $25,000 as a shareholder loan in cash immediately post
closing
116
Schedule 5.14
Projections
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR YEARLY TOTAL
Agents Added 19 21 30 55 40 80 124 134 78 115 135 140 971
Total Agents 438 459 489 544 584 664 788 922 1000 1115 1250 1390
REVENUES
TRAVEL:
TRAVEL 75000 70000 75000 80000 60000 70000 80000 90000 50000 110000 110000 120000 990000
CLIA 125000 112500 162500 25000 162500 162500 162500 912500
TRAVEL INS. 2625 2450 2625 2800 2100 2450 2800 3150 1750 3850 3850 4200 34650
-------------------------------------------------------------------------------------------------------
TTL TRAVEL 77625 72450 77625 82800 62100 197450 195300 255650 76750 276350 276350 286700 1787150
ENROLLMENT:
ENROLLMENT 7600 8400 12000 22000 16000 32000 49600 53600 31200 46000 54000 56000 388400
RENEWAL 11150 11570 800 2230 6100 1065 4130 37045
PRINTING 1520 1680 2400 4400 3200 6400 9920 10720 6240 9200 10800 66480
TRAINING 205260 205260
-------------------------------------------------------------------------------------------------------
TTL ENROLLMENT 7600 9920 13680 24400 31550 46770 56800 65750 41920 58340 269525 626255 1252510
WEB AND OTHERS:
WEB ADVERTISING 4000 4000 8000 8000 12000 36000
WEB REPLICA SITE 3000 5000 10000 5000 3000 10000 10000 4000 50000
WEB LOCATION SITES 5000 10000 12500 17500 22500 25000 30000 32000 37000 42000 47000 280500
--------------------------------------------------------------------------------------------------------
TTL WEB & OTHER 0 5000 10000 15500 22500 32500 30000 37000 36000 55000 60000 63000 366500
TOTAL REVENUES 85225 87370 101305 122700 116150 276720 282100 358400 154670 389690 605875 975955 975955
REVENUES COSTS:
TRAVEL:
TRAVEL COST 0 61600 66000 70400 52800 61600 70400 79200 44000 96800 96800 105600 805200
CLIA COST 0 0 0 0 0 81000 81000 81000 81000 81000 81000 486000
TRAVEL INS. 2100 1960 2100 2240 1680 1960 2240 2520 1400 3080 3080 3360 27720
COMMISSIONS 131 4323 4631 4940 3705 4323 4940 5558 3088 6793 6793 7410 56633
-------------------------------------------------------------------------------------------------------
TTL TRAVEL COSTS 2231.3 67883 72731 77580 58185 148883 158580 168278 48488 187673 187673 197370 1375553
ENROLLMENT:
CLIA 950 1050 1500 2750 2000 4000 6200 6700 3900 5750 6750 7000 48550
COMMISSIONS 1140 1260 1800 3300 2400 4800 7440 8040 4680 6900 8100 8400 58260
-------------------------------------------------------------------------------------------------------
TTL ENROLLMENT 2090 2310 3300 6050 4400 8800 13640 14740 8580 12650 14850 91410 106810
WEB AND OTHERS:
WEB ADVERTISING
WEB REPLICA SITE 0 0 0 2535 4225 8450 4225 2535 0 8450 8450 3380 42250
WEB LOCATION SITE 0 2500 5000 6250 8750 11250 12500 15000 16000 18500 21000 23500 140250
PRINTING 0 798 882 1260 2310 1680 3360 5208 5628 3276 4830 5670 34902
TRAINING CONF. 156500 156500
----------------------------------------------------------------------------------------
TTL WEB AND OTHERS 0 3298 5882 10045 15285 21380 20085 22743 21628 30226 190780 341352 373902
TOTAL COST OF REVENUES 4321.3 73491 81913 93675 77870 179063 192305 205761 78696 230549 393303 630132 630132
GROSS PROFIT 80904 13880 19392 29025 38280 97658 89795 152640 75975 159142 212573 345823 1315084
LESS: 0
OPERATING COSTS 0
FROM PAGE 2 51,343 54,584 56,797 57,823 67,144 74,864 60,241 66,312 58,112 64,928 64,554 77,309 754,011
NET INCOME 29,561 -40,705 -37,405 -28,798 -28,864 -27,207 29,581 36,327 17,863 44,213 148,018 98,001 -23,025
117
VISTA VACATIONS
YEAR 2 4/1/01-3/31/02
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR YEARLY
TOTAL
Agents Added 100 80 60 75 45 90 100 100 50 90 150 150 1,090
Total Agents 1,183 1,263 1,323 1,398 1,443 1,533 1,633 1,733 1,783 1,873 2,023 2,173
REVENUES
TRAVEL:
TRAVEL 177,450 189,450 198,450 209,700 216,450 153,300 244,950 259,950 178,300 280,950 303,450 325,950 2,738,350
CLIA 150,000 150,000 150,000 150,000 150,000 150,000 900,000
TRAVEL INS. 6,211 6,631 6,946 7,340 7,576 5,366 8,573 9,098 6,241 9,833 10,621 11,408 95,842
--------------------------------------------------------------------------------------------------------------------
TTL TRAVEL 183,661 196,081 355,396 217,040 224,026 158,666 403,523 419,048 184,541 440,783 464,071 487,358 3,734,192
ENROLLMENT:
ENROLLMENT 40,000 32,000 24,000 30,000 18,000 36,000 40,000 40,000 20,000 36,000 60,000 60,000 436,000
RENEWAL 1,881 2,079 1,980 5,445 14,120 18,500 9,116 8,863 3,762 13,030 9,480 13,139 101,395
PRINTING 7,280 8,000 6,400 4,800 6,000 3,600 7,200 8,000 8,000 4,000 7,200 12,000 82,480
TRAINING 205,260 205,260 410,520
--------------------------------------------------------------------------------------------------------------------
TTL ENROLLMENT 49,161 42,079 32,380 40,245 38,120 58,100 261,576 56,863 31,762 53,030 281,940 85,139 1,030,395
WEB AND OTHERS:
WEB ADVERTISING 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 144,000
WEB REPLICA SITE 5,000 4,000 3,000 3,750 2,250 4,500 5,000 5,000 2,500 4,500 7,500 7,500 54,500
WEB LOCATION
SITES 11,830 12,630 13,230 13,980 14,430 15,330 16,330 17,330 17,830 18,730 20,230 21,730 193,610
--------------------------------------------------------------------------------------------------------------------
TTL WEB & OTHER 28,830 28,630 28,230 29,730 28,680 31,830 33,330 34,330 32,330 35,230 39,730 41,230 392,110
TOTAL REVENUES 261,652 266,790 416,006 287,015 290,826 248,596 698,429 510,241 248,633 529,043 785,741 613,727 5,156,697
REVENUES COSTS:
TRAVEL:
TRAVEL COST 156,156 166,716 174,636 184,536 190,476 134,904 215,556 228,756 156,904 247,236 267,036 286,836 2,409,748
CLIA COST - - 108,000 - - - 108,000 108,000 - 108,000 108,000 108,000 648,000
TRAVEL INS. 4,969 5,305 5,557 5,872 6,061 4,292 6,859 7,279 4,992 7,867 8,497 9,127 76,674
COMMISSIONS 10,958 11,699 12,254 12,949 13,366 9,466 15,126 16,052 11,010 17,349 18,738 20,127 169,093
------------------------------------------------------------------------------------------------------------------
TTL TRAVEL COSTS 172,082 183,719 300,447 203,357 209,902 148,663 345,540 360,087 172,906 380,451 402,271 424,090 3,303,515
ENROLLMENT:
CLIA 4,550 5,000 4,000 3,000 3,750 2,250 4,500 5,000 5,000 2,500 4,500 7,500 51,550
COMMISSIONS 6,000 4,800 3,600 4,500 2,700 5,400 6,000 6,000 3,000 5,400 9,000 9,000 65,400
-------------------------------------------------------------------------------------------------------------------
TTL ENROLLMENT 10,550 9,800 7,600 7,500 6,450 7,650 10,500 11,000 8,000 7,900 13,500 16,500 116,950
WEB AND OTHERS:
WEB ADVERTISING
WEB REPLICA SITE 4,225 3,380 2,535 3,169 1,901 3,803 4,225 4,225 2,113 3,803 6,338 6,338 46,053
WEB LOCATION SITE 5,915 6,315 6,615 6,990 7,215 7,665 8,165 8,665 8,915 9,365 10,115 10,865 96,805
PRINTING 3,822 4,200 3,360 2,520 3,150 1,890 3,780 4,200 4,200 2,100 3,780 6,300 43,302
TRAINING CONF. 156,500 156,500 313,000
------------------------------------------------------------------------------------------------------------------
TTL WEB AND
OTHERS 13,962 13,895 12,510 12,679 12,266 13,358 172,670 17,090 15,228 15,268 176,733 23,503 499,160
TOTAL COST OF
REVENUES 196,594 207,414 320,557 223,535 228,619 169,670 528,710 388,177 196,134 403,619 592,503 464,093 3,919,624
GROSS PROFIT 65,058 59,376 95,449 63,479 62,207 78,925 169,719 122,065 52,499 125,424 193,238 149,635 1,237,073
LESS:
OPERATING COSTS
FROM PAGE 2 68,595 77,505 80,145 77,175 82,015 79,986 79,966 85,606 76,406 83,766 80,736 80,006 951,906
NET INCOME (3,537) (18,129) 15,304 (13,696)(19,808) (1,061) 89,753 36,459 (23,907) 41,658 112,502 69,629 285,166
118
VISTA VACATIONS
YEAR 3 4/1/02-3/31/03
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR YEARLY
TOTAL
Agents Added 70 90 60 60 90 90 80 60 50 90 90 120 950
Total Agents 2,259 2,349 2,409 2,469 2,559 2,649 2,729 2,789 2,839 2,929 3,019 3,139
REVENUES
TRAVEL:
TRAVEL 250,600 210,800 230,400 245,300 383,850 175,200 285,000 290,000 190,500 310,000 375,000 350,000 3,296,650
CLIA 75,000 200,000 250,000 150,000 150,000 150,000 150,000 1,125,000
TRAVEL INS. 8,771 7,378 8,064 8,586 13,435 6,132 9,975 10,150 6,668 10,850 13,125 12,250 115,383
----------------------------------------------------------------------------------------------------------------------
TTL TRAVEL 259,371 218,178 313,464 253,886 397,285 381,332 544,975 450,150 197,168 470,850 538,125 512,250 4,537,033
ENROLLMENT:
ENROLLMENT 33,530 43,110 28,740 28,740 43,110 43,110 38,320 28,740 23,950 43,110 43,110 57,480 455,050
RENEWAL 9,900 7,920 5,940 7,425 4,455 8,910 9,900 9,900 4,950 8,910 14,850 13,139 106,199
PRINTING 10,500 5,600 7,200 4,800 4,800 7,200 7,200 6,400 4,800 4,000 7,200 7,200 76,900
TRAINING 375,000 205,260 205,260 785,520
----------------------------------------------------------------------------------------------------------------------
TTL ENROLLMENT 53,930 431,630 41,880 40,965 52,365 59,220 260,680 45,040 33,700 56,020 270,420 77,819 1,423,669
WEB AND OTHERS:
WEB ADVERTISING 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 144,000
WEB REPLICA SITE 9,500 4,500 4,000 5,000 8,500 9,500 8,000 6,000 4,000 6,000 8,000 9,000 82,000
WEB LOCATION
SITES 22,590 23,490 24,090 24,690 25,590 26,490 27,290 27,890 28,390 29,290 30,190 31,390 321,380
----------------------------------------------------------------------------------------------------------------------
TTL WEB & OTHER 44,090 39,990 40,090 41,690 46,090 47,990 47,290 45,890 44,390 47,290 50,190 52,390 547,380
TOTAL REVENUES 357,391 689,798 395,434 336,541 495,740 488,542 852,945 541,080 275,258 574,160 858,735 642,459 6,508,082
REVENUES COSTS:
TRAVEL:
TRAVEL COST 220,528 185,504 202,752 215,864 337,788 154,176 250,800 255,200 167,640 272,800 330,000 308,000 2,901,052
CLIA COST - - 54,000 - - 144,000 180,000 108,000 - 108,000 108,000 108,000 810,000
TRAVEL INS. 7,017 5,902 6,451 6,868 10,748 4,906 7,980 8,120 5,334 8,680 10,500 9,800 92,306
COMMISSIONS 15,475 13,017 14,227 15,147 23,703 10,819 17,599 17,908 11,763 19,143 23,156 21,613 203,568
-----------------------------------------------------------------------------------------------------------------------
TTL TRAVEL
COSTS 243,019 204,423 277,430 237,880 372,239 313,900 456,379 389,228 184,737 408,623 471,656 447,413 4,006,926
ENROLLMENT:
CLIA 4,550 3,500 4,500 3,000 3,000 4,500 4,500 4,000 3,000 2,500 4,500 4,500 46,050
COMMISSIONS 4,200 5,400 3,600 3,600 5,400 5,400 4,800 3,600 3,000 5,400 5,400 7,200 57,000
-----------------------------------------------------------------------------------------------------------------------
TTL ENROLLMENT 8,750 8,900 8,100 6,600 8,400 9,900 9,300 7,600 6,000 7,900 9,900 11,700 103,050
WEB AND OTHERS:
WEB ADVERTISING
WEB REPLICA SITE 8,028 3,803 3,380 4,225 7,183 8,028 6,760 5,070 3,380 5,070 6,760 7,605 69,290
WEB LOCATION
SITE 11,295 11,745 12,045 12,345 12,795 13,245 13,645 13,945 14,195 14,645 15,095 15,695 160,690
PRINTING 5,513 2,940 3,780 2,520 2,520 3,780 3,780 3,360 2,520 2,100 3,780 3,780 40,373
TRAINING CONF. 281,250 156,500 156,500 594,250
----------------------------------------------------------------------------------------------------------------------
TTL WEB AND
OTHERS 24,835 299,738 19,205 19,090 22,498 25,053 180,685 22,375 20,095 21,815 182,135 27,080 864,603
TOTAL COST
OF REVENUES 276,604 513,061 304,735 263,570 403,136 348,853 646,364 419,203 210,832 438,338 663,691 486,193 4,974,579
GROSS PROFIT 80,787 176,737 90,699 72,971 92,604 139,689 206,581 121,878 64,425 135,823 195,044 156,267 1,533,503
LESS: -
OPERATING COSTS -
FROM PAGE 2 76,195 85,245 87,225 86,083 91,523 86,908 86,708 92,788 83,278 95,602 90,652 90,462 1,052,669
NET INCOME 4,592 91,492 3,474 (13,112) 1,081 52,781 119,873 29,090 (18,853) 40,221 104,392 65,805 480,834
119
Schedule 6.3(M)
Non-Accredited Investors
NONE
Exhibit 2.25
The Form 8-K Information
This exhibit has been provided to AmeriNet's General Counsel and
President under separate cover, and by their initials on the bottom of this
page, such receipt is hereby acknowledged.
No later than March 17, 2000 Vista Vacations, Inc., by and through
their General Counsel will provide any additional information necessary for the
timely filing of the Form 8-K that it is to filed with the Securities and
Exchange Commission no later than March 27, 2000.
Exhibit 5.8
Affiliate Agreements
Signed Affiliate Agreements for the following persons are attached.
1. Xxxx X. Xxxxxx
2. Xxxxx Xxxxx
3. Xxx Xxxxxx & Xxxxx Xxxxxx
4. Xxxx Xxxxxxx
5. Xxxxxx Xxxxxxxxx
6. Xxxxx XxXxxxxx
7. Xxxxxx Xxxxxxx
Items 1-7 can be found as exhibit 10vv.20 through 10vv.26 of this Form 8-K.
Exhibit 5.12
Employment Agreements
1. Xxxx X. Xxxxxx
2. Xxxxx Xxxxx
3. Xxxx Xxxxxxx
4. Xxxxxx Xxxxxxxxx
5. Xxxxx XxXxxxxx
Items 1-5 can be found as exhibit 10vv.27 through 10vv.31 of this Form 8-K.
120
Exhibit 6.2(D)
AmeriNet Legal Opinion
1. Legal Opinion by G. Xxxxxxx Xxxxxxxxxx, Esq.
2. Tax Opinion by G. Xxxxxxx Xxxxxxxxxx, Esq.
AmeriNet Xxxxx.xxx, Inc.
A publicly held Delaware corporation
Xxxxxxx Xxxxxx Xxxxxx
President & Chief Executive Officer
Xxxxxxx X. Xxxxxxx
Secretary
G. Xxxxxxx Xxxxxxxxxx, Esquire
Acting General Counsel
Xxxxxxx Xxxxxx Jordan G. Xxxxxxx Xxxxxxxxxx
Xxxxxxx X. Xxxxx Xxxx X. Xxxxxx
Xxxxxx X. Xxxxxxx Xxxxx X. Xxxxx Field
J. Xxxxx Xxxxxxx Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxx Xxxxxx X. Xxxxxxx
------
Board of Directors
Xxxxxxx.xxx, Inc.
000 Xxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx Xxxxx, Xxxxxxx 00000
Telephone (000) 000-0000; Fax (000) 000-0000
Web site and e-mail xxx.xxxxxxx.xxx
---------------
Trilogy International, Inc.
000 Xxxxxxxxx Xxxxx Xxxxxxx; Xxxxxx, Xxxxxxx 00000
Telephone (000) 000-0000; Fax (000) 000-0000
Web site and e-mail xxx.xxxxxxxxxxxxx.xxx;
----------------------
Operating Subsidiaries
0000 Xxxxxxxxx 00xx Xxxxxxx
Xxxxx, Xxxxxxx 00000
Telephone (000) 000-0000
Fax (000) 000-0000
e-mail, xxxxxxxx@xxxxxxxx.xxx
Crystal Corporate Center
0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxx 000-X
Xxxx Xxxxx, Xxxxxxx 00000
Telephone (000) 000-0000
Fax (000) 000-0000
e-mail xxxxxxxxx@xxxxxxxxxxxxx.xxx
Respond to Boca Raton address
March 10, 2000
Xxxx Xxxxxx, President
Vista Vacations International, Inc.
0000 XX 00xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Fax (000-000-0000)
Re: Opinion of Counsel
Dear Xx. Xxxxxx:
We have acted as counsel to AmeriNet Xxxxx.xxx, Inc., a Delaware
corporation ("AmeriNet") in connection with the Reorganization Agreement between
AmeriNet, (the "Acquiror"), and Vista Vacation International, Inc. ("Vista
Vacation") dated February 28, 2000. We are providing this opinion to you
pursuant to Section 6.2(D) of the Reorganization Agreement. Capitalized terms
used but not otherwise defined herein shall have the meanings given them in the
Reorganization Agreement.
A. Basis of Opinion
In rendering the following options, we have reviewed copies of each of the
following documents:
1. The Reorganization Agreement, including the disclosure schedules and
exhibits thereto;
121
2. The Certificate of Incorporation, as amended, and the Bylaws of
AmeriNet;
3. The Company is in Good Standing pursuant to Certificate of Good
Standing issued by the Delaware Secretary of State, dated February 23,
2000;
4. Minutes of proceedings of the Board of Directors of AmeriNet with
respect to the Reorganization Agreement duly adopted at a meeting of
the Board of Directors of the AmeriNet held on February 24, 2000.
5. Minutes of proceedings of the Board of Directors of AmeriNet with
respect to the form for the Vista Stockholder Affiliate Agreements
duly adopted at a meeting of the Board of Directors of the AmeriNet
held on March 8, 2000.
6. Certificate of Counsel for Vista Vacation dated as of the date of this
letter;
7. Officers' representations found in the body of the Reorganization
Agreement.
8. Such other agreements and documents and such matters of law as we have
considered necessary or appropriate for the expression of the opinions
contained herein.
The Reorganization Agreement and the other documents and information
referred to in this Section A are collectively referred to as the "Transaction
Documents."
B. Assumptions
This opinion has been prepared and is to be construed in accordance with
the Report on Standards for Florida Opinions dated April 8, 1991, as amended and
supplemented, issued by the Business Law Section of the Florida Bar, 46 The
Business Lawyer, No. 4 (the "Report"). The Report is incorporated by reference
into this opinion letter.
In rendering the following opinions, we have made no assumptions other than
those set forth in the Report, the assumption that the Company complies with all
laws and regulations relating to multi-level marketing, or those in the opinions
below.
C. Opinions
Based solely upon our examination and consideration of the foregoing
Transaction Documents, and in reliance thereon, and subject to the comments,
assumptions, exceptions, qualifications and limitations set forth in the Report,
we are of the opinion that:
1. AmeriNet is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware. AmeriNet is
duly authorized to conduct business and is in good standing under the
laws of each jurisdiction where such qualification is required, and
where, to our knowledge, the lack of such qualification would not have
a material adverse effect on the financial condition of AmeriNet and
its subsidiaries taken as a whole (a "Material Adverse Effect"). We do
not pass upon qualification in any other state where the Agreement is
void or voidable due to lack of qualification.
2. AmeriNet has the corporate power and authority to carry on the
business in which it is engaged and to own and use the properties
owned and used by it.
122
3. As of the date hereof, AmeriNet has two subsidiaries, Xxxxxxx.xxx,
Inc., f/k/a American Internet Technical Center, Inc., a Florida
corporation, and Trilogy International, Inc. a Florida corporation.
AmeriNet is the sole stockholder of both subsidiaries..
4. The authorized capital stock of AmeriNet consists of 20,000,000 shares
of Common Stock and 5,000,000 of Preferred Stock, of which there are
outstanding 10,663,460 shares of Common Stock shares of Common Stock
and 0 shares of Preferred Stock. There are 5,876,814 shares of common
stock reserved for future issuances.
5. All of the issued and outstanding shares of Common Stock have been
duly authorized and are validly issued, fully paid, and nonassessable.
6. The Reorganization Agreement and the transactions contemplated thereby
have been duly authorized by all necessary corporate action on the
part of AmeriNet. AmeriNet has the full power and authority, corporate
and otherwise, to execute and deliver the Reorganization Agreement and
to assume and perform all of its obligations thereunder. The
Reorganization Agreement has been duly executed and delivered by
AmeriNet and constitutes a legal, valid, and binding obligation of
AmeriNet, enforceable against AmeriNet in accordance with its terms. .
7. Neither the execution and the delivery of the Reorganization
Agreement, nor the consummation of the transactions contemplated
thereby, will (i) to our knowledge, violate any material statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court
to which AmeriNet is subject (ii) violate any provision of the
Certificate of Incorporation or Bylaws of AmeriNet or (iii) to our
knowledge, conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under
any agreement, contract, lease, license, instrument or other
arrangement to which AmeriNet is a party or by which it is bound or to
which any of its assets is subject (or result in the imposition of any
security interest upon any of the assets), except where the violation,
conflict, breach, default, acceleration, termination, modification,
cancellation, or failure to give notice would not have a Material
Adverse Effect. Other than in connection with the provisions of the
Florida Business Corporation Act, or as otherwise contemplated by the
Reorganization Agreement, AmeriNet is not required to give any notice
to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for
AmeriNet to consummate the transactions contemplated by the
ReorganizationAgreement.
8. To our knowledge, no judgment is presently filed of record against
AmeriNet and there is no litigation, arbitration, investigation,
inquiry or other proceedings by or before any federal, state, county
or other local governmental agency or authority, or by any other
person or entity pending, or that would materially adversely affect
AmeriNet's ability to perform its obligations as set forth in the
Transaction Documents and we have no knowledge of any material basis
for any such litigation, proceeding, arbitration, claim,
investigation, inquiry or proceeding that would materially adversely
affect AmeriNet; and
9. To the best of our knowledge after due inquiry, no representation,
warranty or statement by AmeriNet in the Transaction Documents
contains any untrue statement of a material fact, or omits or will
omit to state a fact necessary in order to make such representations,
warranties or statements not materially misleading.
Without our prior written consent, this opinion letter may not be quoted in
whole or in part or otherwise referred to in any document or report and may not
be furnished to any person or entity including any governmental agency.
Very truly yours
AmeriNet Xxxxx.xxx, Inc.
G. Richard Chamberlin, Esquire
General Counsel
cc: Michael H. Jordan
Leonard M. Tucker
123
AmeriNet Xxxxx.xxx, Inc.
A publicly held Delaware corporation
Michael Harris Jordan
President & Chief Executive Officer
Vanessa H. Lindsey
Secretary
G. Richard Chamberlin, Esquire
Acting General Counsel
Michael Harris Jordan G. Richard Chamberlin
Anthony Q. Joffe Saul B. Lipson
Edward C. Dmytryk Penny L. Adams Field
J. Bruce Gleason Michael A. Caputa
Carol A. Berardi Dennis A. Berardi
------
Board of Directors
Xxxxxxx.xxx, Inc.
245 North Ocean Boulevard, Suite 201
Deerfield Beach, Florida 33441
Telephone (954) 360-0636; Fax (954) 943-4046
Web site and e-mail xxx.xxxxxxx.xxx
Trilogy International, Inc.
526 Southeast Dixie Highway; Stuart, Florida 34494
Telephone (561) 781-7278; Fax (561) 781-7282
Web site and e-mail xxx.xxxxxxxxxxxxx.xxx;
Operating Subsidiaries
1941 Southeast 51st Terrace
Ocala, Florida 34471
Telephone (352) 694-6714
Fax (352) 694-9178
e-mail, grichard@atlantic.net
Crystal Corporate Center
2500 North Military Trail, Suite 225-C
Boca Raton, Florida 33487
Telephone (561) 998-3435
Fax (561) 998-3425
e-mail webmaster@amerinetgroup.com
Respond to Boca Raton address
March 10, 2000
Teri Nadler, President
Vista Vacations International, Inc.
5653 NW 29th Street
Margate, Florida 33063
Fax (954-975-8447)
Re: Tax Opinion of Counsel
Ladies and Gentlemen:
We have acted as counsel to AmeriNet Xxxxx.xxx, Inc., a Delaware
corporation ("AmeriNet") in connection with the Reorganization Agreement dated
February 28, 2000, AmeriNet (Acquirer" or the "Parent"), wherein the Parent
proposes to acquire Vista Vacations International, Inc. ("Vista Vacation) in
conjunction with Code Section 368(a)(1)(B).
In this transaction Vista Vacation will transfer 100% of the common and
preferred stock of all stockholders of Vista Vacations to the Parent in exchange
for common stock in the Parent.
124
If this transaction meets the statutory qualification as a tax free
reorganization, the acquiring corporation and its subsidiary recognize no gain
or loss upon the issuance of stock as consideration in the acquisition. The
target's shareholders do not recognize gain or loss upon the exchange of stock
and securities in the target corporation for stock and securities in the
acquiring corporations, except to the extent that boot is received. The
controlled subsidiary receives a carryover basis in the assets or stock of the
target that is acquired.
Statutory requirements for Section B Reorganizations
A B reorganization, defined in Code Section 368(a)(1)(B), is an acquisition
by one corporation, in exchange solely for its voting stock, of a controlling
stock interest in another corporation. Control means ownership of stock of the
acquired corporation possessing at least 80 percent of the total combined voting
power of all classes of stock entitled to vote and at least 80 percent of the
total number of shares of all other classes of stock of the acquired
corporation.
This reorganization transaction is defined in Section 368(a)(1)(B) of the
Code as an acquisition by one corporation, in exchange solely for its voting
stock, of a controlling stock interest in another. In this transaction, known as
a B reorganization, the acquiring corporation becomes the parent of the acquired
corporation and the acquired corporation becomes a subsidiary.
Unlike a statutory merger or consolidation (an A reorganization) in which
the assets of two or more corporations are combined into a single corporation, a
B reorganization involves an acquisition of stock of one corporation by another.
The statute defines a B reorganization as "the acquisition by one
corporation, in exchange solely for all or a part of its voting stock (or in
exchange solely for all or a part of the voting stock of a corporation which is
in control of the acquiring corporation), of stock of another corporation, if
immediately after the acquisition, the acquiring corporation has control of such
other corporation (whether or not such acquiring corporation had control
immediately before the acquisition).
This definition will be satisfied and the exchanges it contemplates will be
entitled to non recognition if all of the following conditions are met:
(1) The acquiring corporation must acquire stock rather than assets.
(2) As in other reorganizations, the acquisition must be made by a
corporation.
(3) The acquisition must be made in exchange solely for voting stock of
the acquiring corporation or its parent.
(4) The acquiring corporation must be in "control" of the acquired
corporation immediately after the acquisition, whether or not the
acquiring corporation possessed control of or owned an interest in the
acquired corporation before the acquisition.
125
The term "control" means ownership of stock of the acquired corporation
possessing at least 80 percent of the total combined voting power of all classes
of stock entitled to vote and at least 80 percent of the total number of shares
of all other classes of stock of the acquired corporation.
1) The Requirement That "Stock" of Another Corporation Be Acquired By a
Corporation.
The acquiring corporation must acquire stock rather than assets. In
this instance, AmeriNet is acquiring 100% of the stock of Vista
Vacations. There is no assets or boot accompanying the acquisition of
stock.
2) The Requirement That "Stock" of Another Corporation Be Acquired By a
Corporation
In a B reorganization a corporation must acquire "stock" of another
corporation. The acquiring corporation exchanges its voting stock, or the voting
stock of its parent, for stock owned by the shareholders of the acquired
corporation. In this instance, AmeriNet is exchanging its voting stock for 100%
of the stock owned by the shareholders of Vista Vacations.
3. The Consideration That May Be Used Is Limited "Solely" to Voting Stock
The consideration that may be used in a B reorganization is limited to
voting stock of the acquiring corporation (or only the voting stock of a
corporation under its "control"). "Voting stock" refers to stock of the
acquiring corporation, the ownership of which entitles its holder to be present
and to vote at stockholders' meetings. The courts have construed "voting stock"
literally. In this instance only voting stock is subject to the transaction.
If consideration other than voting stock is used, the transaction will no
qualify as a B reorganization. In some circumstances, as, for example, where
taxpayers desire recognition of losses, the strictness of the B reorganization
definition may work to their advantage. In this instance there is no
consideration other than voting stock.
4. Special Considerations Arising from the Solely-for-Voting-Stock Requirement
In a B reorganization, where only voting stock is permissible
consideration, questions arise as to the availability of B reorganization
treatment where the acquiring corporation pays the incidental expenses of the
acquisition, where it pays the cost of registering securities, or where there is
a deferred stock payment and where there is a preliminary dividend or
redemption.
126
Incidental expenses, including legal and accounting fees, appraisal fees
and the like, may be paid directly or assumed by the acquiring corporation
without violating the "solely for voting stock" requirement. However, expenses
not solely and directly related to the reorganization cannot be paid or assumed
by the acquiring corporation. In this instance, AmeriNet expenses not solely and
directly related to the reorganization will not be paid or assumed by AmeriNet.
The Service has ruled that B reorganization status will not be denied as a
result of the payment by the acquiring corporation of the cost of registering
its own stock which it issues to the stockholders of the acquired corporation.
Where a deferred stock payment is tied to the future earnings of the
acquired corporation, the transaction may, nonetheless, qualify, for ruling
purposes, as a B reorganization where the deferral period is not more than five
years, the maximum number of shares payable is stated in the plan, there is a
business reason for the deferral, the initial distribution includes a least
fifty percent of the shares issuable, the right to receive additional shares is
non-assignable, and the additional shares issuable are those of the acquiring
corporation or its parent.
In this instance there is no deferred stock payment tied to future earnings
i the reorganization agreement.
Preliminary dividends and redemptions raise serious questions as to whether
a transaction will qualify as a B reorganization. A dividend distributed to its
shareholders by the acquired corporation prior to closing might be separate from
the qualifying exchange. A redemption financed by the acquired corporation out
of its own funds might also not affect reorganization treatment. However, the
acquiring corporation cannot pay cash directly to the shareholders of the
acquired corporation who seek redemption of their shares. In this instance,
there are neither preliminary dividends or redemptions.
Representations and warranties do not, in themselves, constitute
additional, impermissible consideration.
Generally, employment agreements with the former officers of the acquired
corporation will not affect the qualification of a transaction as a B
reorganization. The result would be otherwise if the employment agreement called
for payments that did not bear a reasonable relationship to the work to be
performed by the employee. In this instance, the employment agreement called for
payments bear a reasonable relationship to the work to be performed by each
signing employee.
127
Tax Treatment of "Parties to Reorganization" in a B Reorganization
If an acquisition qualifies for tax free reorganization treatment, the
parties to the reorganization are protected from the recognition of gain or loss
by Section 361 and 1032. The controlled subsidiary receives a carryover basis in
the acquired stock or assets. The subsidiary's parent receives a corresponding
basis step-up in its stock in the subsidiary.
If the acquisition qualifies as a tax free reorganization, neither of the
corporate parties to the reorganization should be subject to the recognition of
gain or loss, with two exceptions,. The acquiring corporation or it's controlled
subsidiary may recognize gain or loss if appreciated property is used as
consideration in the acquisition, I.R.C. Section 311(b). Also, the target
corporation may recognize gain upon the distribution of appreciated property to
its shareholders. I.R.C. Section 361(c).
The issuance of stock and securities by either the parent corporation or
its controlled subsidiary as consideration in exchange for property is protected
form gain or loss recognition by Section 1032, and see Rev. Rul. 57-278, 1957-1
CB 124. The target corporation does not recognize gain or loss upon the
distribution to its shareholders of stock or securities received from the
acquirer or its subsidiary in the reorganization. I.R.C. Section 361(b)(3). The
parent does not recognize gain or loss upon the acquiring of 80% or more of the
stock of the subsidiary.
The controlling corporation's basis in the subsidiaries stock will be the
aggregate of the controlling corporation's basis in such stock prior to the
transaction, the "net basis" (i.e. the basis net of liabilities) of property
acquired from the target and the net basis of the property acquired by the
controlled corporation from its parent which property is distributed to the
target or to its shareholders in the transaction. Reg. Section 1.358-6(a)(5)
ex.(1).
Tax Treatment of Shareholders in a B Reorganization
The subsidiary shareholders receive stock in the controlling corporation
(plus, perhaps, other consideration in exchange for their stock in the target.
If the stock and the securities received are stock and securities "in a
corporation a party to a reorganization", the non-recognition provisions of
Section 354 and Section 356 apply. I.R.C. Section 354(a). See Section
4.08(5)(a).. According to these provisions, stock and securities of the target
may be exchanged solely for stock in the controlling corporation without the
recognition of gain or loss. I.R.C. Section 354(a). If a shareholder receives
securities with a greater principal amount then the securities given up in the
exchange, the fair market value of such excess principal amount is treated as
recognition property received by the shareholder. is treated as recognition of
property received by the shareholders. I.R.C. Section 356(d). A shareholder
recognizes gain to the extent of the amount of money and the fair market value
of recognition property received in the exchange. I.R.C. Section 356(a)(2(1). If
the exchange has the effect of a dividend distribution, any gain recognized will
be taxed as ordinary income to the extent of the shareholder's share of the
target corporation's earnings and profits. I.R.C. Section 356(a)(2).
128
The shareholder's bases in the stock, securities and other property
received in the exchange will be governed by Section 358(a) which generally
provides for fair market value bases for all recognition property and
substituted bases for all non-recognition property, in the exchange and decrease
by the fair market value of recognition property received in the exchange and by
the amount of loss recognized, if any. I.R.C. Section 358(a).
The basis of the Subsidiary's shares held by the controlling corporation
will increase, generally by the net basis of the assets and the stock acquired.
See Section 4.05(e).
The controlling corporation will not experience any other tax consequences
in its capacity as shareholder of the subsidiary, other than a change in value.
Neither is the B reorganization a taxable event for the shareholders of the
controlling corporation.
Assumptions
This opinion has been prepared and is to be construed in accordance with
the Report on Standards for Florida Opinions dated April 8, 1991, as amended and
supplemented, issued by the Business Law Section of the Florida Bar, 46 The
Business Lawyer, No. 4 (the "Report"). The Report is incorporated by reference
into this opinion letter.
Opinions
Based solely upon our examination and consideration of the Reorganization
Agreement and the Representations made therein, and in reliance thereon, and
subject to the comments, assumptions, exceptions, qualifications and limitations
set forth in the Report, we are of the opinion that: To the best of our
knowledge the contemplated transaction constitutes a reorganization within the
meaning of Section 368 of the Code.
Disclaimer
Without our prior written consent, this opinion letter may not be quoted in
whole or in part or otherwise referred to in any document or report and may not
be furnished to any person or entity including any governmental agency.
Very truly yours
G. Richard Chamberlin, Esquire
Interim General Counsel
cc: Michael H. Jordan
Leonard M. Tucker
129
Exhibit 6.2(E)
Vista Vacations Legal Opinion
1. Legal Opinion by Scott Ugell, Esq.
2. Tax Opinion by Scott Ugell, Esq.
Vista Vacations International
Experience the Journey
Ladies and Gentlemen:
We have acted as counsel to Vista Vacations International, Inc ., a Florida
corporation ("AmeriNet") in connection with the Reorganization Agreement between
AmeriNet, (the "cquirer"), and Vista Vacation International, Inc. ("Vista
Vacationsl") dated February 28, 2000. We are providing this opinion to you
pursuant to Section 6.2(D) of the Merger Agreement. Capitalized terms used but
not otherwise defined herein shall have the meanings given them in the Merger
Agreement.
A. Basis of Opinion
In rendering the following options, we have reviewed copies of each of the
following documents:
1. The Reorganization Agreement, including the disclosure schedules
and exhibits thereto;
2. The Certificate of Incorporation, as amended, and the Bylaws of
Vista Vacations International;
3. The Company is in Good Standing pursuant to Certificate of Good
Standing issued by the Florida Secretary of State, dated February
24, 2000;
4. Minutes of proceedings of the Executive Committee of the Board of
Directors of Vista Vacations International with respect to the
Reorganization Agreement duly adopted at a meeting of the Board
of Directors of the Vista Vacations International held on
February 25, 2000 and Board resolution for February 25, 2000.
130
7. Certificate of Counsel for AmeriNet dated as of the date of this
letter;
8. Officers' Certificate delivered to Counsel as of the date of this
letter.
9. Such other agreements and documents and such matters of law as we
have considered necessary or appropriate for the expression of
the opinions contained herein.
The Reorganization Agreement and the other documents and information
referred to in this Section A are collectively referred to as the "Transaction
Documents."
B. Assumptions
This opinion has been prepared and is to be construed in accordance with
the Report on Standards for Florida Opinions dated April 8, 1991, as amended and
supplemented, issued by the Business Law Section of the Florida Bar, 46 The
Business Lawyer, No. 4 (the "Report"). The Report is incorporated by reference
into this opinion letter.
In rendering the following opinions, we have made no assumptions other than
those set forth in the Report, the assumption that the Company complies with all
laws and regulations relating to multi-level marketing, or those in the opinions
below.
C. Opinions
Based solely upon our examination and consideration of the foregoing
Transaction Documents, and in reliance thereon, and subject to the comments,
assumptions, exceptions, qualifications and limitations set forth in the Report,
we are of the opinion that:
1. Vista Vacations International, Inc is a corporation duly
organized, validly existing, and in good standing under the laws
of the State of Florida. Vista Vacations International, Inc is
duly authorized to conduct business and is in good standing under
the laws of each jurisdiction where such qualification is
required, and where, to our knowledge, the lack of such
qualification would not have a material adverse effect on the
financial condition of Vista Vacations International and its
subsidiaries taken as a whole (a "Material Adverse Effect"). We
do not pass upon qualification in any other state where the
Agreement is void or voidable due to lack of qualification.
2. Vista Vacations International, Inc has the corporate power and
authority to carry on the business in which it is engaged and to
own and use the properties owned and used by it.
131
3. As of the date hereof, Vista Vacations International, Inc has no
subsidiaries.
4. The authorized capital stock of Vista Vacations International,
Inc consists of 1,500 shares of Common Stock and no Preferred
Stock, of which there are outstanding 1,500 shares of Common
Stock. There are no shares of common stock reserved for future
issuances.
5. All of the issued and outstanding shares of Common Stock have
been duly authorized and are validly issued, fully paid, and non
assessable. Except as set forth in the Reorganization Agreement,
to our knowledge there are no outstanding Options, Warrants, or
other outstanding or authorized purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or
commitments that could require Vista Vacations International, Inc
to issue, sell, or otherwise cause to become outstanding any
shares of its capital stock. To our knowledge, there are no
outstanding or authorized stock appreciation, phantom stock,
profit participation, or similar rights with respect to Vista
Vacations International, Inc.
6. The Reorganization Agreement and the transactions contemplated
thereby have been duly authorized by all necessary corporate
action on the part of Vista Vacations International, Inc. Vista
Vacations International, Inc has the full power and authority,
corporate and otherwise, to execute and deliver the
Reorganization Agreement and to assume and perform all of its
obligations thereunder. The Reorganization Agreement has been
duly executed and delivered by Vista Vacations International, Inc
and constitutes a legal, valid, and binding obligation of Vista
Vacations International, Inc enforceable against Vista Vacations
International, Inc in accordance with its terms. .
132
7. Neither the execution and the delivery of the Reorganization
Agreement, nor the consummation of the transactions contemplated
thereby, will (i) to our knowledge, violate any material statute,
regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any government, governmental
agency, or court to which Vista Vacations International, Inc is
subject (ii) violate any provision of the Certificate of
Incorporation or Bylaws of Vista Vacations International, Inc or
(iii) to our knowledge, conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify, or
cancel, or require any notice under any agreement, contract,
lease, license, instrument or other arrangement to which Vista
Vacations International, Inc is a party or by which it is bound
or to which any of its assets is subject (or result in the
imposition of any security interest upon any of the assets),
except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, or failure
to give notice would not have a Material Adverse Effect. Other
than in connection with the provisions of the Florida Business
Corporation Act, or as otherwise contemplated by the Merger
Agreement, Vista Vacations International, Inc is not required to
give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or
governmental agency in order for Vista Vacations International,
Inc to consummate the transactions contemplated by the Merger
Agreement.
8. To our knowledge, no judgment is presently filed of record
against Vista Vacations International, Inc and there is no
litigation, arbitration, investigation, inquiry or other
proceedings by or before any federal, state, county or other
local governmental agency or authority, or by any other person or
entity pending, or that would materially adversely affect Vista
Vacations International, Inc ability to perform its obligations
as set forth in the Transaction Documents and we have no
knowledge of any material basis for any such litigation,
proceeding, arbitration, claim, investigation, inquiry or
proceeding that would materially adversely affect Vista Vacations
International Inc.; and
9. To the best of our knowledge after due inquiry, no
representation, warranty or statement by Vista Vacations
International, Inc in the Transaction Documents contains any
untrue statement of a material fact, or omits or will omit to
state a fact necessary in order to make such representations,
warranties or statements not materially misleading.
10. To the extent that the preparer of this opinion has used a
similar form of opinion of that of XxxxxXxxXxxxx.xxx's Counsel,
the preparer did not in any way relay on XxxxxXxxXxxx.xxx's
counsel opinion to make any conclusions herein
11. Furthermore, the preparer of this opinion has done his own
research, and has applicable additions and modifications where
necessary.
Without our prior written consent, this opinion letter may not be quoted in
whole or in part or otherwise referred to in any document or report and may not
be furnished to any person or entity including any governmental agency.
Very truly yours
Vista Vacations International, Inc.
/s/ Scott B. Ugell
Scott B. Ugell, Esquire
General Counsel
133
Ugell Law Firm , P.C.
155 North main Street
New City, New York 10956
Tel (914) 639-7011
Fax (914) 639-7088
Re: Vista Vacations International, Inc.
Ladies and Gentlemen:
We have acted as counsel to Vista Vacations International, Inc., a Florida
corporation ("Vista") in connection with the Reorganization Agreement dated
February 28, 2000, Vista, (Acquired" or the subsidiary"), wherein the Parent ,
Amerinet xxxxx.xxx, Inc. proposes to acquire Vista Vacations International, Inc.
("Vista Vacation) in conjunction with Code Section 368(a)(1)(B).
In this transaction Vista Vacation will transfer 100% of the common and
preferred stock of all stockholders of Vista Vacations to the Parent in exchange
for common stock in the Parent.
If this transaction meets the statutory qualification as a tax free
reorganization, the acquiring corporation and its subsidiary recognize no gain
or loss upon the issuance of stock as consideration in the acquisition. The
target's shareholders do not recognize gain or loss upon the exchange of stock
and securities in the target corporation for stock and securities in the
acquiring corporations, except to the extent that boot is received. The
controlled subsidiary receives a carryover basis in the assets or stock of the
target that is acquired.
Statutory requirements for Section B Reorganizations
A B reorganization, defined in Code Section 368(a)(1)(B), is an acquisition
by one corporation, in exchange solely for its voting stock, of a controlling
stock interest in another corporation. Control means ownership of stock of the
acquired corporation possessing at least 80 percent of the total combined voting
power of all classes of stock entitled to vote and at least 80 percent of the
total number of shares of all other classes of stock of the acquired
corporation.
This reorganization transaction is defined in Section 368(a)(1)(B) of the
Code as an acquisition by one corporation, in exchange solely for its voting
stock, of a controlling stock interest in another. In this transaction, known as
a B reorganization, the acquiring corporation becomes the parent of the acquired
corporation and the acquired corporation becomes a subsidiary.
Unlike a statutory merger or consolidation (an A reorganization) in which
the assets of two or more corporations are combined into a single corporation, a
B reorganization involves an acquisition of stock of one corporation by another.
The statute defines a B reorganization as "the acquisition by one
corporation, in exchange solely for all or a part of its voting stock (or in
exchange solely for all or a part of the voting stock of a corporation which is
in control of the acquiring corporation), of stock of another corporation, if
immediately after the acquisition, the acquiring corporation has control of such
other corporation (whether or not such acquiring corporation had control
immediately before the acquisition).
134
This definition will be satisfied and the exchanges it contemplates will be
entitled to non recognition if all of the following conditions are met:
(1) The acquiring corporation must acquire stock rather than assets.
(2) As in other reorganizations, the acquisition must be made by a
corporation.
(3) The acquisition must be made in exchange solely for voting stock
of the acquiring corporation or its parent.
(4) The acquiring corporation must be in "control" of the acquired
corporation immediately after the acquisition, whether or not the
acquiring corporation possessed control of or owned an interest
in the acquired corporation before the acquisition.
The term "control" means ownership of stock of the acquired corporation
possessing at least 80 percent of the total combined voting power of all classes
of stock entitled to vote and at least 80 percent of the total number of shares
of all other classes of stock of the acquired corporation.
1) The Requirement That "Stock" of Another Corporation Be Acquired By a
Corporation.
The acquiring corporation must acquire stock rather than assets. In this
instance, AmeriNet is acquiring 100% of the stock of Vista Vacations. There
is no assets or boot accompanying the acquisition of stock.
2) The Requirement That "Stock" of Another Corporation Be Acquired By a
Corporation In a B reorganization a corporation must acquire "stock" of
another corporation. The acquiring corporation exchanges its voting stock,
or the voting stock of its parent, for stock owned by the shareholders of
the acquired corporation. In this instance, AmeriNet is exchanging its
voting stock for 100% of the stock owned by the shareholders of Vista
Vacations.
3. The Consideration That May Be Used Is Limited "Solely" to Voting Stock
The consideration that may be used in a B reorganization is limited to
voting stock of the acquiring corporation (or only the voting stock of a
corporation under its "control"). "Voting stock" refers to stock of the
acquiring corporation, the ownership of which entitles its holder to be present
and to vote at stockholders' meetings. The courts have construed "voting stock"
literally. In this instance only voting stock is subject to the transaction.
If consideration other than voting stock is used, the transaction will not
qualify as a B reorganization. In some circumstances, as, for example, where
taxpayers desire recognition of losses, the strictness of the B reorganization
definition may work to their advantage. In this instance there is no
consideration other than voting stock.
4. Special Considerations Arising from the Solely-for-Voting-Stock Requirement
In a B reorganization, where only voting stock is permissible
consideration, questions arise as to the availability of B reorganization
treatment where the acquiring corporation pays the incidental expenses of the
acquisition, where it pays the cost of registering securities, or where there is
a deferred stock payment and where there is a preliminary dividend or
redemption.
Incidental expenses, including legal and accounting fees, appraisal fees
and the like, may be paid directly or assumed by the acquiring corporation
without violating the "solely for voting stock" requirement. However, expenses
not solely and directly related to the reorganization cannot be paid or assumed
by the acquiring corporation. In this instance, AmeriNet expenses not solely and
directly related to the reorganization will not be paid or assumed by AmeriNet.
135
The Service has ruled that B reorganization status will not be denied as a
result of the payment by the acquiring corporation of the cost of registering
its own stock which it issues to the stockholders of the acquired corporation.
Where a deferred stock payment is tied to the future earnings of the
acquired corporation, the transaction may, nonetheless, qualify, for ruling
purposes, as a B reorganization where the deferral period is not more than five
years, the maximum number of shares payable is stated in the plan, there is a
business reason for the deferral, the initial distribution includes a least
fifty percent of the shares issuable, the right to receive additional shares is
non-assignable, and the additional shares issuable are those of the acquiring
corporation or its parent.
In this instance there is no deferred stock payment tied to future earnings
in the reorganization agreement.
Preliminary dividends and redemptions raise serious questions as to whether
a transaction will qualify as a B reorganization. A dividend distributed to its
shareholders by the acquired corporation prior to closing might be separate from
the qualifying exchange. A redemption financed by the acquired corporation out
of its own funds might also not affect reorganization treatment. However, the
acquiring corporation cannot pay cash directly to the shareholders of the
acquired corporation who seek redemption of their shares. In this instance,
there are neither preliminary dividends or redemptions.
Representations and warranties do not, in themselves, constitute
additional, impermissible consideration.
Generally, employment agreements with the former officers of the acquired
corporation will not affect the qualification of a transaction as a B
reorganization. The result would be otherwise if the employment agreement called
for payments that did not bear a reasonable relationship to the work to be
performed by the employee. In this instance, the employment agreement called for
payments bear a reasonable relationship to the work to be performed by each
signing employee.
Tax Treatment of "Parties to Reorganization" in a B Reorganization
If an acquisition qualifies for tax free reorganization treatment, the
parties to the reorganization are protected from the recognition of gain or loss
by Section 361 and 1032. The controlled subsidiary receives a carryover basis in
the acquired stock or assets. The subsidiary's parent receives a corresponding
basis step-up in its stock in the subsidiary.
If the acquisition qualifies as a tax free reorganization, neither of the
corporate parties to the reorganization should be subject to the recognition of
gain or loss, with two exceptions,. The acquiring corporation or it's controlled
subsidiary may recognize gain or loss if appreciated property is used as
consideration in the acquisition, I.R.C. Section 311(b). Also, the target
corporation may recognize gain upon the distribution of appreciated property to
its shareholders. I.R.C. Section 361(c).
136
The issuance of stock and securities by either the parent corporation or
its controlled subsidiary as consideration in exchange for property is protected
form gain or loss recognition by Section 1032, and see Rev. Rul. 57-278, 1957-1
CB 124. The target corporation does not recognize gain or loss upon the
distribution to its shareholders of stock or securities received from the
acquirer or its subsidiary in the reorganization. I.R.C. Section 361(b)(3). The
parent does not recognize gain or loss upon the acquiring of 80% or more of the
stock of the subsidiary.
The controlling corporation's basis in the subsidiaries stock will be the
aggregate of the controlling corporation's basis in such stock prior to the
transaction, the "net basis" (i.e. the basis net of liabilities) of property
acquired from the target and the net basis of the property acquired by the
controlled corporation from its parent which property is distributed to the
target or to its shareholders in the transaction. Reg. Section 1.358-6(a)(5)
ex.(1).
Tax Treatment of Shareholders in a B Reorganization
The subsidiary shareholders receive stock in the controlling corporation
(plus, perhaps, other consideration in exchange for their stock in the target.
If the stock and the securities received are stock and securities "in a
corporation a party to a reorganization", the non-recognition provisions of
Section 354 and Section 356 apply. I.R.C. Section 354(a). See Section
4.08(5)(a).. According to these provisions, stock and securities of the target
may be exchanged solely for stock in the controlling corporation without the
recognition of gain or loss. I.R.C. Section 354(a). If a shareholder receives
securities with a greater principal amount then the securities given up in the
exchange, the fair market value of such excess principal amount is treated as
recognition property received by the shareholder. is treated as recognition of
property received by the shareholders. I.R.C. Section 356(d). A shareholder
recognizes gain to the extent of the amount of money and the fair market value
of recognition property received in the exchange. I.R.C. Section 356(a)(2(1). If
the exchange has the effect of a dividend distribution, any gain recognized will
be taxed as ordinary income to the extent of the shareholder's share of the
target corporation's earnings and profits. I.R.C. Section 356(a)(2).
The shareholder's bases in the stock, securities and other property
received in the exchange will be governed by Section 358(a) which generally
provides for fair market value bases for all recognition property and
substituted bases for all non-recognition property, in the exchange and decrease
by the fair market value of recognition property received in the exchange and by
the amount of loss recognized, if any. I.R.C. Section 358(a).
The basis of the Subsidiary's shares held by the controlling corporation
will increase, generally by the net basis of the assets and the stock acquired.
See Section 4.05(e).
The controlling corporation will not experience any other tax consequences
in its capacity as shareholder of the subsidiary, other than a change in value.
Neither is the B reorganization a taxable event for the shareholders of the
controlling corporation.
Assumptions
This opinion has been prepared and is to be construed in accordance with
the Report on Standards for Florida Opinions dated April 8, 1991, as amended and
supplemented, issued by the Business Law Section of the Florida Bar, 46 The
Business Lawyer, No. 4 (the "Report"). The Report is incorporated by reference
into this opinion letter.
Opinions
Based solely upon our examination and consideration of the Reorganization
Agreement and the Representations made therein, and in reliance thereon, and
subject to the comments, assumptions, exceptions, qualifications and limitations
set forth in the Report, we are of the opinion that: To the best of our
knowledge the contemplated transaction constitutes a reorganization within the
meaning of Section 368 of the Code.
Disclaimer
Without our prior written consent, this opinion letter may not be quoted in
whole or in part or otherwise referred to in any document or report and may not
be furnished to any person or entity including any governmental agency.
Very truly yours
Vista Vacations International, Inc.
/s/ Scott B. Ugell
Scott B. Ugell, Esquire
Vice President and General Counsel
137
Exhibit 6.3(L)
Confidentiality Agreements
1. Karyn McKnight
2. Trevor Grafflin
3. Jay Lovins
Items 1-3 can be found as exhibit 10vv.32 and 10vv.34 of this Form 8-K.
Exhibit 7.2(A)
Escrow Allocation Agreement
To be provided by Scott B. Ugell, Esquire no later than 5:00 p.m. on March
20, 2000.
Dear Richard,
As per your request and following Scott Ugells instructions. Please find
below the requests for the 7.2 and 7.4 of the Reorganization Agreeemnts on the
distribution of shares. The rest will follow.
220,000 Shares
Teri Nadler 112,200 51%
Scott Ugell 58,674 26.67%
Jean Hickman 26,400 12%
Ken Nelson 11,000 5%
Alicia Torrealba 8,800 4%
Karyn McKnight 2,926 1.33%
--------- ---------
220,000 100%
/s/ Alicia Torrealba
138
