EXHIBIT 2.8 REORGANIZATION AGREEMENT
Reorganization Agreement
This Reorganization Agreement (the "Agreement") is made and entered
into by and among Equity Growth Systems, inc., a Delaware corporation with a
class of securities registered under Section 12 of the Securities Exchange Act
of 1934, as amended (the "Holding Company" and the "Exchange Act,"
respectively); American Internet Technical Centers, Inc., a Nevada corporation
originally organized as Ascot Industries, Inc. (the "Target Company"); American
Internet Technical Center, Inc., a Florida corporation wholly owned by the
Target Company (the "Subsidiary") and, J. Xxxxx Xxxxxxx, a Florida resident
("Xx. Xxxxxxx"), on his own behalf and as attorney-in-fact for the individuals
and entities which are listed in exhibit 0.1 annexed hereto and made a part
hereof, each of whom has executed a power of attorney so designating Xx. Xxxxxxx
(collectively hereinafter referred to together with Xx. Xxxxxxx as the
"Subscribers"; the Holding Company, the Target Company, the Subsidiary and the
Subscribers being sometimes hereinafter collectively referred to as the
"Parties" and each being sometimes hereinafter generically referred to as a
"Party"). This Agreement is also executed by The Yankee Companies, Inc., a
Florida corporation ("Yankees"), for the limited purposes specifically set forth
in this Agreement directly involving Yankees.
Preamble:
WHEREAS, the Subscribers own 90% of the authorized issued and
outstanding shares of common stock, $0.001 par value (there being no other
securities) of the Target Company; the "Target Company Stock"); and
WHEREAS, the Target Company, through the Subsidiary, is engaged in the
business more particularly described in the private placement memorandum dated
January 15, 1999 heretofore filed by the Holding Company with the United States
Securities and Exchange Commission (the "Commission") as an exhibit to its
report on Form 10-KSB for the year ended December 31, 1998 (the "Memorandum");
and
WHEREAS, the Subscribers desire to acquire 2,250,000 shares of the
Holding Company's common stock, par value $0.01 per share, in exchange for their
conveyance of all of their shares of the Target Company Stock and the Target
Company is agreeable to issuing such additional shares of its common stock as
may be required to equal when aggregated with the shares to be conveyed by the
Subscribers, 90%of the Target Company's reserved, issued and outstanding
securities, in a transaction intended to meet the requirements of Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the "Code"):
NOW, THEREFORE, in consideration of the premises, as well as the mutual
covenants hereinafter set forth, the Parties, intending to be legally bound,
hereby agree as follows:
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Witnesseth:
Article One
Exchange Provisions
1.1 Exchange
Subject to the hereinafter described conditions:
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(a) The Holding Company hereby agrees to exchange 2,250,000 shares of its
Common Stock, $0.01 par value (the "Holding Company Stock"), with the
Subscribers for all of the capital stock in the Target Company held by
them;
(1) The Subscribers hereby agree to exchange all of the shares of
the Target Company's capital stock held by them with the
Holding Company for the Holding Company Stock; and
(2) The Target Company hereby agrees to issue to the Holding
Company such additional shares of its capital stock as may be
required, when aggregated with the shares of capital stock
being exchanged by the Subscribers, to equal 90% of the Target
Company's capital stock (all of the Target Company's capital
stock to be conveyed by Subscribers to the Holding Company and
issued to the Holding Company by the Target Company being
hereinafter included within the defined term "Target Company
Stock").
(b) Concurrently with the closing on this Agreement (as set forth in
Article Three of this Agreement, hereinafter referred to as the
"Closing") and delivery of the Target Company Stock to the Holding
Company, the Holding Company shall instruct its transfer agent, to
issue 2,250,000 shares of the Holding Company Stock to the Subscribers,
allocated to each Subscriber in proportion to their ownership of the
Target Company Stock, inter se.
(c) In addition to the 2,250,000 shares of Stock to be issued to the
Subscribers at the Closing, the Holding Company shall immediately
instruct its transfer agent to reserve an additional 4,500,000 shares
of its common stock, $0.01 par value, for possible issuance to the
Subscribers as a contingent part of the exchange being effected through
this Agreement, based on the Target Company's attainment of the
hereinafter defined "Performance Criteria."
(d) Notwithstanding the foregoing, in the event that during the initial 60
days following the Closing the Holding Company's publicly traded
common stock, $0.01 par value per share, does not retain an average
price per share of at least $0.50 based on the average daily closing
offering price therefor reported by members of the National
Association of Securities Dealers, Inc., a Delaware corporation
registered as a self regulatory organization by the Commission (the
"NASD") on the over the counter electronic bulletin board (the "OTC
Bulletin Board") and such failure is not due to unusual market
conditions or improprieties or irregularities in the trading of the
Holding Company's securities, then, the Holding Company and the
Subscribers (acting by majority of Holding Company shares of common
stock held by them) will either:
(1) Agree to an adjustment in the amount of Stock exchanged, or,
(2) Permit the Subscribers to rescind this Agreement, provided
that any decision to rescind
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must be made in writing, signed by Subscribers holding a
majority of the shares of the Holding Company's common stock,
inter se, and delivered to the Holding Company in the manner
hereinafter provided for delivery of notices generally, not
later than the 90th day following the Closing and must be
accompanied by concurrent payment to the Holding Company, in
United States legal tender, of all sums theretofore advanced
or invested in the Target Company, the Subsidiary, or any
affiliates of either of them (excluding the Holding Company),
by or on behalf of the Target Company.
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1.2 Exemption From Registration & Representations as to Title
(a) The Subscribers each severally hereby represent, warrant, covenant and
acknowledge, after consultation with their advisors, that:
(1) The Holding Company Stock is being issued without registration
under the provisions of Section 5 of the Securities Act of
1933, as amended (the "Act"), the Delaware Securities Act, or
the securities acts of the Subscribers' states of domicile
(the "Subscribers' State Blue Sky Laws") pursuant to
exemptions provided by Section 4(2) of the Act and comparable
sections of the Subscribers' State Blue Sky Laws pertaining to
private placements;
(2) All of the Holding Company Stock will bear legends restricting
its transfer, sale, conveyance or hypothecation unless such
Stock is either registered under the provisions of Section 5
of the Act and the Subscribers' State Blue Sky Laws, or an
opinion of legal counsel, in form and substance satisfactory
to legal counsel to the Holding Company is provided by the
Subscribers to the effect that such registration is not
required as a result of applicable exemptions therefrom;
(3) The Holding Company's transfer agent shall be instructed not
to transfer any of the Holding Company Stock unless the
Holding Company advises it that such transfer is in compliance
with all applicable laws;
(4) The Subscribers are each acquiring the Holding Company Stock
for their own account, for investment purposes only, and not
with a view to further sale or distribution;
(5) The Subscribers or their advisors have examined the Holding
Company's securities acts filings as posted on the
Commission's XXXXX Internet web site and prior to the Closing
will have become fully familiar with the Holding Company and
its operations as a result of their pre-Closing due diligence
investigations during which they will have been provided with
access to all of the Holding Company's books and records and
have been provided with the opportunity to question the
Holding Company's officers and directors as to such matters
involving the Holding Company as the Subscribers' deemed
appropriate; and
(6) The Subscribers will, on the date of the Closing, own the
Target Company Stock, registered in their names and subject to
no liens, pledges or encumbrances, and will convey good title
thereto to the Holding Company, there being no outstanding
subscriptions, options, warrants or other agreements or
commitments obligating the Subscribers to sell any of their
shares of the Target Company's Stock or any options or rights
with respect thereto.
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(b) The Holding Company hereby represents, warrants, covenants and acknowledges
that:
(1) The Target Company Stock is being transferred or issued
without registration under the provisions of Section 5 of the
Act or under the Delaware Securities Act or the Subscribers'
State Blue Sky Laws pursuant to exemptions provided by Section
4(2) of the Act and comparable provisions of the Delaware
Securities Act and the Subscribers' State Blue Sky Laws;
(2) All of the Target Company Stock will bear legends restricting
its transfer, sale, conveyance or hypothecation unless such
Target Company Stock is either registered under the provisions
of Section 5 of the Act and under applicable state securities
laws, or an opinion of legal counsel is provided by the
Holding Company certifying that such registration is not
required as a result of applicable exemptions therefrom;
(3) The Holding Company shall not transfer any of the Target
Company Stock except in compliance with all applicable laws;
and
(4) The Holding Company is acquiring the Target Company Stock for
its own account, for investment purposes only and not with a
view to further sale or distribution.
(c) In the event that the restructuring provisions of Section 4.9 become
applicable, then the representations in Section 1.2(b) shall be deemed
to refer to the Subsidiary's common stock rather than the Target
Company's common stock.
1.3 Liabilities.
(a) Any liabilities in any manner encumbering or affecting the Target
Company, the Subsidiary (the Target Company and the Subsidiary being
hereinafter collectively or generically referred to as the "Target
Companies") or their assets are disclosed on exhibit 1.3 annexed hereto
and made a part hereof (the "Disclosed Liabilities").
(b) The Target Companies and the Subscribers hereby covenant and agree to
indemnify and hold the Holding Company harmless from any liabilities
of the Target Companies or affecting the Target Companies' assets
other than the Disclosed Liabilities ("Undisclosed Liabilities") and
the Holding Company may, in addition to all other legal or equitable
remedies that may be available, offset from any funds, securities or
other things of value due to the Target Companies, the Subscribers or
the Subscribers' affiliates (as that term is most liberally defined
for federal securities law purposes), such sums as may be required to
make the Holding Company whole as a result of the assertion of any
Undisclosed Liability against the Target Companies or their assets.
Article Two
Representations And Warranties
2.1 The Holding Company.
The Holding Company hereby represents and warrants to the Subscribers, the
Target Company and the Subsidiary, as a material inducement to their entry into
this Agreement, that, except as disclosed in exhibit 2.1 (the "Holding Company's
Warranty Exceptions") or in the Holding Company's Exchange Act Reports provided
filed with the Commission prior to the date of this Agreement (the "Exchange Act
Reports"), that, to the best of current management's knowledge and except for
matters that are not material:
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(a) All of the Holding Company's assets are described in the Exchange Act
Reports.
(b) The Holding Company has 20,000,000 shares of Common Stock $0.01 par
value authorized, not more than 6,238,448 shares of which are expected
to be outstanding as of the Closing, there being no other outstanding
securities of any class or of any kind or character of the Holding
Company, there being no outstanding subscriptions, options, warrants or
other agreements or commitments obligating the Holding Company to issue
or sell any additional shares of the Holding Company's Stock or any
options or rights with respect thereto, or any securities convertible
into any shares of Stock of any class, except as follows:
(1) 200,000 shares of common stock are reserved for issuance
pursuant to currently existing obligations disclosed in the
Exchange Act Reports, to the Holding Company's president;
(2) An undetermined additional number of shares of common stock
are reserved for issuance to Yankees, as described in the
Exchange Act Reports or disclosed in this Agreement; and
(3) The Holding Company has 5,000,000 shares of preferred stock of
undefined characteristics authorized, $0.01 par value per
share, none of which has been issued or reserved.
(c) Except as described in the preceding paragraph, the Holding Company is
not a party to any written or oral agreement which grants an option or
right of first refusal or other arrangement to acquire any of its
securities or to any agreement that affects the voting rights of any of
its securities, nor has the Holding Company made any commitment of any
kind relating to the issuance of shares of any of the Holding Company's
securities, whether by subscription, right of conversion, option or
otherwise;
(d) The Holding Company is not a party to any agreement or understanding
for the sale or exchange of inventory or services for consideration
other than cash or at a discount in excess of normal discount for
quantity or cash payment, except in the ordinary course of business;
(e) There are presently no contingent liabilities, factual circumstances,
threatened or pending litigation, contractually assumed obligations or
unasserted possible claims which might result in a material adverse
change in the future financial condition or operations of the Holding
Company;
(f) (1) The execution, delivery and performance of this Agreement
and the transactions con templated hereby do not require the
consent, authority or approval of any other person or entity
except such as have been obtained;
(2) Notwithstanding the generality of the foregoing, the entering
into of this Agreement and the performance thereof has been
duly and validly authorized by all required corporate action;
(g) No transactions have been entered into either by or on behalf of the
Holding Company, other than
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in the ordinary course of business nor have any acts been performed
(including within the definition of the term performed the failure to
perform any required acts) which would adversely affect the goodwill of
the Holding Company;
(h) (1) The audited, consolidated financial statements of the Holding
Company including statements of operations, stockholders
investment and cash flows and balance sheets since inception, and
unaudited financial statements for the period from the last
audited financial statement until the end of the Holding
Company's fiscal quarter closest to the date of this Agreement,
all prepared in accordance with generally accepted accounting
principles, consistently applied, are included in the Holding
Company's Exchange Act Reports (the "Holding Company's Financial
Statements").
(2) To the best of the Holding Company's knowledge, the Holding
Company's Financial Statements, as contained in its Exchange
Act Reports, fairly present the Holding Company's financial
condition as of their respective dates and its results of
operations for their respective periods in accordance with
generally accepted accounting principles, consistently
applied;
(i) Except as and to the extent reflected or reserved against in the
unaudited interim balance sheet of the Holding Company (the "Holding
Interim Company's Balance Sheet), the Holding Company had no
liabilities or legal obligations of a nature required to be reflected
on a corporate balance sheet prepared in accordance with generally
accepted accounting principles or disclosed in the notes thereto,
whether absolute, accrued, contingent, or otherwise and whether due or
to become due;
(j) To the best of the Holding Company's knowledge, there is no material
reasonable basis for the assertion against the Holding Company or any
of its subsidiaries of any liability or obligation which is not fully
reflected or reserved against in the Holding Company's Interim Balance
Sheet or disclosed in the notes thereto, except liabilities or
obligations incurred since the date thereof in the ordinary course of
the Holding Company's business;
(k) Since the date of the Holding Company's Financial Statements no events
have occurred nor have any facts been discovered which materially alter
in a detrimental manner the financial status or prospects of the
Holding Company;
(l) The Holding Company does not have any liabilities which constitute a
lien or charge on their securities or assets;
(m) The Holding Company has good, valid and marketable title to all of its
assets, subject to no mortgage, pledge, lien, encumbrance, security
interest or charge, except as disclosed in the Holding Company's
Financial Statements, and can and will retain free and clear title
thereto after the Closing, free and clear of any claims whatsoever;
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(n) There are no claims, actions, suits, proceedings or investigations
pending or threatened against the Holding Company and the Holding
Company does not know of any basis for any such claim, action, suit,
proceeding or investigation;
(o) The Holding Company has filed with the appropriate governmental
agencies all tax returns and tax reports required to be filed; all
federal, state and local income, profits, franchise, sales, use,
occupation, property or other taxes due have been fully paid, and, the
Holding Company is not a party to any action or proceeding by any
governmental authority for assessment or collection of taxes, nor has
any claim for assessments been asserted against the Holding Company or
its assets;
(p) The Holding Company is, as of the date of this Agreement, a validly
existing corporation, organized pursuant to the laws of the State of
Delaware with all legal and corporate authority and power to conduct
its business and to own its properties and possesses all necessary
permits and licenses required in connection with the conduct of its
business;
(q) The conduct of the Holding Company's business is in full compliance
with all applicable federal, state and local governmental statutes,
rules, regulations, ordinances and decrees;
(r) The execution and delivery of this Agreement, the consummation of the
transactions herein contemplated and compliance with the terms of this
Agreement will not conflict with or result in a breach in any of the
terms or provisions of, or constitute a default under, the certificate
of incorporation or bylaws of the Holding Company; any indenture, other
agreement or instrument to which the Holding Company or its assets are
bound; or, any applicable regulation, judgment, order or decree of any
governmental instrumentality or court, domestic or foreign, having
jurisdiction over the Holding Company, its securities or its
properties;
(s) This Agreement constitutes a binding obligation of the Holding Company,
enforceable against it in accordance with the terms hereof;
(t) (1) None of the employees of the Holding Company are
represented by labor unions, nor does the Holding Company have
any reason to believe that any of its employees desire to be
represented by labor unions; and
(2) The Holding Company has no reason to believe that any of its
employees have any potential claims against the Holding
Company based on violations of equal employment laws,
occupational health and safety standards, restrictions against
sexual harassment or any other legally protected rights;
(u) (1) The Holding Company has no reason to believe that it has
generated any hazardous wastes or engaged in activities which
could be interpreted as potential violations of laws,
statutes, regulations ordinances or judicial decrees in any
manner regulating the generation or disposal of hazardous
waste.
(2) There are no on-site or off-site locations where the Holding
Company has stored, disposed or arranged for the disposal of
chemicals, pollutants, contaminants, wastes, toxic substances,
petroleum or petroleum products; there are no underground
storage tanks lo cated on property owned or leased by the
Holding Company; and, no polychlorinated hiphenyle are used or
stored at any property owned or leased by the Holding Company;
(v) There are no impediments to obtaining hazard and liability insurance
covering all of the Holding Company's assets and operations, at
commercially reasonable insurance rates, nor does the Holding Company
have any basis for believing that such insurance, at such rates, will
not be obtainable by the Holding Company in the future;
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(w) All of the information reflected in the foregoing representations and
warranties is complete and accurate, and does not omit any information
required to make the information provided non-misleading, accurate and
meaningful, in light of the nature of this transaction.
2.2 The Subscribers, the Subsidiary and The Target Company.
The Subscribers, the Subsidiary and the Target Company hereby
represents and warrants to the Holding Company, as a material inducement to the
Holding Company's entry into this Agreement, that, except as specified on
exhibit 2.2 annexed hereto and made a part hereof (the "Target Companies'
Warranty exceptions"), to the best of current management's knowledge and except
for matters that are not material:
(a) Exhibit 2.2(a) contains a complete and accurate list of all real,
personal and intellectual property owned by the Target Companies,
whether tangible or intangible, current or inchoate, and the principal
terms of thereof, including, without limitation, all patents,
copyrights, trademarks, service marks, all leases pursuant to which the
Target Companies lease property (including identification of the
property, the annual rentals payable thereunder, the expiration dates,
and other terms of any extensions or renewals permitted thereunder);
(b) (1) The Target Company has 20,000,000 shares of Common Stock,
$0.001 par value, authorized, 11,600,000 of which are
currently issued and outstanding, there being no other
authorized or outstanding securities of any class or of any
kind or character of the Target Company; and
(2) The Subsidiary has 7,500 shares of Common Stock, $1.00 par
value, authorized, all of which are currently issued and
outstanding solely to the Target Company, there being no other
authorized or outstanding securities of any class or of any
kind or character of the Subsidiary;
(3) There are no outstanding subscriptions, options, warrants or
other agreements or commitments obligating the Target
Companies or the Subscribers to issue or sell any additional
shares of Target Companies' capital stock or any options or
rights with respect thereto, or any securities convertible
into any shares of Target Companies' capital stock of any
class;
(c) (1) Upon conveyance of the Target Company Stock by the
Subscribers, the Holding Company will become the owner of 90%
of the Target Company's authorized, issued and outstand ing
equity securities;
(3) On and after the Closing, the Target Company will continue to
own all of the Subsidiary's capital stock and securities, and
the Subsidiary will continue to own all of the assets and to
engage in all of the operations described or projected in the
memorandum, subject solely to dispositions in the ordinary
course of business and dispositions, if any, approved in
writing by the Holding Company; and
(4) In the event that the restructuring provisions of Section 4.9
become applicable:
(A) The Holding Company will be the direct owner of all
of the Subsidiary's securities and neither the Target
Company nor any affiliate, stockholder or person
claiming thereunder shall have any interests orrights
therein, thereto or thereunder;
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(B) All of the assets of the Target Companies will be
irrevocably vested in the Subsidiary and the Target
Company will have no interests or rights therein,
thereto or thereunder;
(d) As of the Closing, the Target Companies will not be a party to any
written or oral agreement which grants any option or right of first
refusal or other arrangement to acquire any of their securities or to
any agreement that will affect the voting rights of any of their
securities, nor have the Subscribers or the Target Companies made any
commitment of any kind relating to the issuance of shares of any of the
Target Companies' securities, whether by subscription, right of
conversion, option or otherwise;
(e) The Target Companies are not a party to any agreement or understanding
for the sale or exchange of inventory or services for consideration
other than cash or at a discount in excess of normal discounts for
quantity or cash payment;
(f) There are presently no contingent liabilities, factual circumstances,
threatened or pending litigation, contractually assumed obligations or
unasserted possible claims which might result in a material adverse
change in the future financial condition or operations of the Target
Companies, other than, as to the Target Company, the hereinafter
defined Ascot 504 offering, and as to that, the restructure provisions
of Section 4.9 of this Agreement provide the Holding Company with full
protection therefrom;
(g) (1) The execution, delivery and performance of this Agreement
and the transactions con templated hereby do not require the
consent, authority or approval of any other person or entity,
except such as have been obtained;
(2) Without limiting the generality of the foregoing, the entering
into of this Agreement and the performance required hereunder
has been duly and validly authorized by all required corporate
action;
(h) No transactions have been entered into either by or on behalf of the
Target Companies, other than in the ordinary course of business nor
have any acts been performed (including within the definition of the
term performed the failure to perform any required acts) which would
materially adversely affect the goodwill of the Target Companies;
(i) (1) Annexed hereto and made a part hereof as composite exhibit
2.2(i) are: (a) an unaudited balance sheet of the Subsidiary as
of December 31, 1998, with the related unaudited statement of
operations and accumulated deficit and unaudited statements of
cash flows since inception, and unaudited quarterly updates
thereto for each calendar quarter ending since such time, other
than the current calendar quarter, all of which have been
prepared in accordance with generally accepted accounting
purposes, consistently applied (such balance sheets, statements
of operations, statements of cash flow, statements of
stockholders equity and other statements required by generally
accepted accounting principals are referred to herein as the
"Subsidiary's Financial Statements");
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(2) The addition of all required financial data concerning the
Target Company necessary for preparation of audited financial
statements and pro forma financial information required by
Commission Regulation SB in conjunction with the acquisition
of the Target Companies by the Holding Company (the "Required
SEC Statements") will not materially differ from the
Subsidiary's Financial Statements because the Target Company
does not have and has not historically had any material assets
or operations independent of the Subsidiary's, and the
addition of information concerning the Target Company will not
render preparation of the Required SEC Statements materially
more difficult or expensive;
(3) The Subsidiary's Financial Statements fairly present the
financial condition of the Target Companies as of the dates
thereof, and the results of operations of the Target Companies
for the periods indicated, in each case in accordance with
generally accepted accounting principles applied on a
consistent basis;
(4) Except as disclosed in the Subsidiary's Financial Statements,
the Target Companies have no liabilities or legal obligations
of a nature required to be reflected on a corporate balance
sheet prepared in accordance with generally accepted
accounting principles or disclosed in the notes thereto,
whether absolute, accrued, contingent, or otherwise and
whether due or to become due (including, without limitation,
liabilities for taxes and interest, penalties, and other
charges payable with respect thereto (a) in respect of or
measured by the income of the Target Companies through such
date, or (b) arising out of any transaction entered into prior
thereto).
(5) There is no basis for the assertion against the Target
Companies of any liability or obligation which is not fully
reflected or reserved against in the Subsidiary's Financial
Statements, except liabilities or obligations incurred since
the date of the Acquired Company's Financial Statements in the
ordinary course of the Target Companies' business consistent
with its past practices, other than, as to the Target Company,
the hereinafter defined Ascot 504 offering, and as to that,
the restructure provisions of Section 4.9 of this Agreement
provide the Holding Company with full protection therefrom;
(6) There are no impediments to the certification and auditing of
the Target Companies' financial statements, since the earlier
of inception (including the inception of any predecessors
under applicable securities laws and generally accepted
accounting procedures ["GAAP"]) for the last two fiscal or
calendar years, and the Target Companies have heretofore
retained the firm of Daszkal, Xxxxxx & Xxxxxx, certified
public accountants who are members of the AICPA's Securities
Practice Section and have successfully completed a peer review
of their auditing procedures, to commence a certified audit of
at least the last two fiscal or calendar years of their
operations, as required for filings under Section 12(g) of the
Exchange Act and Regulations SB of the Exchange Act, and will
not replace such accountants except with accountants meeting
similar competency requirements.
(j) Except as reflected in the Subsidiary's Financial Statements, since the
date of the Subsidiary's Financial Statements the Target Companies have
not suffered any material adverse change in their financial condition,
assets, liabilities or business; or suffered any material casualty loss
(whether or not insured);
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(k) On the date of the Closing, the Target Companies' aggregate
liabilities, whether accrued or inchoate, shall not exceed its current
cash assets by more than $15,000 and such liabilities shall not require
any payments, other than as specifically disclosed in exhibit 1.3;
(l) None of the properties or assets used in the business of the Target
Companies are subject to any mortgage, pledge, lien, security interest,
conditional sale agreement, encumbrance, or charge of any kind, except
as disclosed in exhibit 1.3;
(m) Except as set forth in Exhibit 2.2 annexed hereto and made a part hereof:
(1) (a) There are no claims, actions, suits, proceedings or
investigations pending or threatened by or against
the Target Companies; and
(b) The Target Companies do not know of any basis for any
such claim, action, suit, proceeding, or
investigation, other than, as to the Target Company,
the hereinafter defined Ascot 504 offering effected
by prior management prior to Ascot's acquisition of
the Subsidiary, could in the future result in an
investigation or regulatory proceedings if not
resolved, and as to that, the restructure provisions
of Section 4.9 of this Agreement provide the Holding
Company with full protection therefrom;
(2) The Target Companies are not subject to any liabilities or
potential liabilities that will subject the Holding Company,
or its affiliates, stockholders, officers, directors, agents
or advisors to any claims or liabilities predicated or
emanating from torts or violations of law attributable to the
Target Companies or for which the Target Companies assumed
responsibility or which can in any manner be imputed to the
Target Companies or their assets; except that, prior to its
acquisition of the Subsidiary, conducted an offering of it
securities in reliance on Commission Rule 504 of Regulation D
which the Registrant's legal counsel has determined may not
have met the requirements of such rule and consequently, the
Parties have agreed that if such deficiency is not corrected
to their mutual satisfaction within 30 days following the
Closing, this Agreement may be restructured by eliminating the
Target Company therefrom, in the manner set forth in Section
4.9;
(n) The Target Companies have no liabilities involving expenses
attributable directly, indirectly or incidentally to any litigation;
(o) (1) Except as otherwise disclosed in the Subsidiary's
Financial Statements and exhibit 1.3, the Target Companies
have good, valid, and marketable title to all their properties
and assets, real, personal and mixed, tangible and intangible;
(2) Prior to the Closing, the Target Companies shall have acquired
and fully paid for all of the securities, assets and
operations of all affiliated businesses, if any;
(p) Since their respective inceptions the Target Companies have not
disposed of any assets or contractual rights which disposition has had
or will in the future have a materially adverse effect on the business
of the Target Companies and no such disposition will be made by the
Target Companies outside the ordinary course of business during the
interim between execution of this Agreement and the Closing, unless
this Agreement shall have been terminated, without the prior written
consent of the Holding Company;
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(q) The Target Companies have filed or will, prior to the Closing, arrange
to file with the appropriate governmental agencies all tax returns and
tax reports required to be filed; all federal, state and local income,
profits, franchise, sales, use, occupation, property or other taxes due
have been fully paid, except as listed on exhibit 1.3; and, the Target
Companies are not a party to any action or proceeding by any
governmental authority for assessment or collection of taxes, nor has
any claim for assessments been asserted against the Target Companies or
their assets;
(r) The Target Companies are, as of the date of this Agreement, validly
existing corporations, organized pursuant to the laws of the States of
Nevada (the Target Company) and Florida (the "Subsidiary"), with all
legal and corporate authority and power to conduct their businesses and
to own their properties and possess all necessary permits and licenses
required in connection with the conduct of their business;
(s) The conduct of the Target Companies' business is in full compliance
with all applicable federal, state and local governmental statutes,
rules, regulations, ordinances and decrees, other than, as to the
Target Company, the hereinafter defined Ascot 504 offering effected by
prior management prior to Ascot's acquisition of the Subsidiary, could
in the future result in an investigation or regulatory proceedings if
not resolved, and as to that, the restructure provisions of Section 4.9
of this Agreement provide the Holding Company with full protection
therefrom;
(t) The execution and delivery of this Agreement, the consummation of the
transactions herein contemplated and compliance with the terms of this
Agreement will not conflict with or result in a breach in any of the
terms or provisions of, or constitute a default under, the Articles of
Incorporation or By-Laws of the Target Companies; any indenture, other
agreement or instrument to which the Target Companies or their
stockholders are a party or by which the Target Companies or their
assets are bound; or, any applicable regulation, judgment, order or
decree of any governmental instrumentality or court, domestic or
foreign, having jurisdiction over the Target Companies, their
securities or properties;
(u) This Agreement constitutes the valid and binding agreement of the
Target Company and is enforceable in accordance with its terms, except
as enforcibility may be limited by applicable bankruptcy,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law, no
such proceeding being anticipated or under consideration);
(v) (1) The Target Companies have not experienced any material
difficulties with the management or recruiting of employees
for their businesses, nor do the Target Companies have any
reason to believe that any such difficulties will arise in the
future.
(2) None of the employees of the Target Companies are represented
by labor unions, nor do the Target Companies have any reason
to believe that any of their employees desire to be
represented by labor unions; and
(3) The Target Companies have no reason to believe that any of
their employees have any potential claims against the Target
Companies or their successors in interest based on
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violations of equal employment laws, occupational health and
safety standards, restrictions against sexual harassment or
any other legally protected rights;
(w) (1) The Target Companies have no reason to believe that they
have generated any hazardous wastes or engaged in activities
which violate or could be interpreted as violating any laws,
statutes, regulations ordinances or judicial decrees in any
manner regulating the generation or disposal of hazardous
waste.
(2) There are no on-site or off-site locations where the Target
Companies have stored, disposed or arranged for the disposal
of chemicals, pollutants, contaminants, wastes, toxic
substances, petroleum or petroleum products; there are no
underground storage tanks located on property owned or leased
by the Target Companies; and, no polychlorinated hiphenyle are
used or stored at any property owned or leased by the Target
Companies;
(x) (1) There are no impediments to obtaining hazard and liability
insurance covering all of the Target Companies' assets and
operations, at commercially reasonable insurance rates, nor do
the Target Companies have any basis for believing that such
insurance, at such rates, will not be obtainable by the Target
Companies in the future.
(2) Annexed hereto and made a part hereof as composite exhibit
2.2(x) are current copies of all policies of insurance or
binders therefor covering the Target Companies and their as
sets, all of which will remain in full force and effect after
the Closing.
(y) All of the information reflected in the foregoing representations and
warranties is complete and accurate, and does not omit any information
required to make the information provided non-misleading, accurate and
meaningful, in light of the nature of this transaction.
Article Three
Conditions & Closing
3.1 Conditions Precedent
(a) The obligations of the Holding Company under this Agreement are subject
to the Target Companies' (the term "Target Companies" in the context of
this Article being deemed to include all subsidiaries of the Target
Company and sibling business entities of the Target Company, the assets
and operations of which are to be included among the subjects of this
Agreement) and Subscribers' satisfaction, or the written waiver by the
Holding Company, of the following conditions prior to the Closing (the
"Conditions Precedent"). That:
(1) All covenants, agreements, actions, proceedings, instruments
and documents required to be carried out or delivered by a
Subscriber or the Target Companies pursuant to this Agreement
shall have been performed, complied with or delivered to the
Holding Company in accordance with the terms thereof.
(2) The warranties and representations made by the Subscribers and
the Target Companies in this Agreement shall be true and
correct in all material respects on and as of the date of the
Closing and shall be deemed to be made on and as of such date.
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(3) There are no material violations nor are the Subscribers or
the Target Companies aware of any potential material
violations of any laws, statutes, ordinances, orders,
regulations or requirements of any governmental authority
affecting the Target Companies or their assets, other than, as
to the Target Company, the hereinafter defined Ascot 504
offering effected by prior management prior to Ascot's
acquisition of the Subsidiary, and as to that, the restructure
provisions of Section 4.9 of this Agreement provide the
Holding Company with full protection therefrom.
(4) There is no action, suit or proceeding pending or threatened
against or affecting the Target Companies or their assets in
any court or before or by any federal, provincial, state,
county or municipal department, commission, board, bureau,
agency or other governmental instrumentality which would
affect a Subscriber's or the Target Companies' ability to
perform hereunder or which could affect the business of the
Target Companies in a materially adverse manner, other than,
as to the Target Company, the hereinafter defined Ascot 504
offering effected by prior management prior to Ascot's
acquisition of the Subsidiary, and as to that, the restructure
provisions of Section 4.9 of this Agreement provide the
Holding Company with full protection therefrom.
(5) The Target Companies are in material compliance with all
applicable federal, provincial, state or local statutes,
regulations, rules or ordinances applicable to the it, its
securities or assets and that the transactions contemplated
hereby will not result in any violations thereof, other
than, as to the Target Company, the hereinafter defined
Ascot 504 offering effected by prior management prior to
Ascot's acquisition of the Subsidiary, and as to that, the
restructure provisions of Section 4.9 of this Agreement
provide the Holding Company with full protection therefrom.
(6) The issuance of the Holding Company Stock and the transfer of
the Target Company Stock complies with the requirements for
exemption from registration under the statutes, regula tions
and rules applicable thereto and of comparable provisions of
the laws of the Holding Company's and the Subscribers' states
or provinces of domicile.
(7) All licenses, patents and intellectual property rights
heretofore used, held or owned by the Target Companies
continue to be in good standing and not subject to legal or
other challenges, and that after the Closing, they will
continue to remain in full force, effect and validity.
(8) The operations of the several affiliated entities which
comprise the total business of which the Target Companies have
been a part have been consolidated as to ownership and control
under the Target Company, in a manner resulting in the control
and ownership thereof by the Target Company, and, that as a
consequence of the transactions contemplated by this
Agreement, all such assets and operations shall become the
indirect property (through ownership of the Target Company's
capital stock) of the Holding Company.
(9) (A) The draft current report on Commission Form 8-KSB
prepared by the Registrant's legal counsel with
information provided by the management of the Target
Companies, as it pertains to the Target Companies and
their related personnel, completely and truthfully
addresses each item of information called for by the
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Commission's Regulation SB, and the Holding Company
may use all such information in conjunction with
preparation and filing of the current report on
Commission Form 8-KSB to be filed with the Commission
within 15 days after the Closing (hereinafter
referred to as the Target Companies Disclosure
Responses").
(B) The Target Companies Disclosure Responses have been
completed and answered in an accurate and complete
fashion, and do not fail to disclose any information
necessary to render the information provided, not
misleading.
(b) The obligations of the Subscribers under this Agreement are subject to
the Holding Company's satisfaction, or the written waiver thereof by
the Subscribers (acting by majority of Target Company shares of common
stock held by them immediately prior to the Closing), of the following
conditions prior to the Closing (the "Subscribers' Conditions
Precedent"):
(1) That all covenants, agreements, actions, proceedings,
instruments and documents required to be carried out or
delivered by the Holding Company pursuant to this Agreement
shall have been performed, complied with or delivered to the
Subscriber in accordance with the terms thereof.
(2) That the warranties and representations made by the Holding
Company in this Agreement shall be true and correct in all
material respects on and as of the date of the Closing and
shall be deemed to be made on and as of such date.
(3) That the issuance of the Holding Company Stock and the
transfer of the Target Company Stock complies with the
requirements for exemption from registration under the
statutes, regulations and rules applicable thereto, including,
without limitation, the provisions of Sections 4(1), 4(2) or
4(6) of the Securities Act of 1933, as amended, of Regulation
D promulgated thereunder, and of comparable provisions of the
laws of the Holding Company's and the Subscriber's states or
provinces of domicile.
3.2 Conditions Subsequent
(a) The obligations of the Parties are subject to the condition subsequent
that the Subsidiary's Financial Statements and all financial data
concerning the Target Company (assuming that the restructure provisions
of Section 4.9 doe not become applicable) complies or can within the 75
day period following the Closing be made to comply with the
requirements of Regulation S-B promulgated under the Exchange Act;
provided that:
(1) In the event that the Commission advises the Holding Company
that the Target Companies' financial statements (excluding pro
forma financial statements) filed with the Form 8-KSB of the
Holding Company relating to the acquisition of the Target
Company, os an amendment thereto fail to comply in a material
respect with generally accepted accounting principals or the
requirements of Regulation S-B and the Commission is unwilling
to waive such deficiencies, the Holding Company, the
Subscribers and the Target Companies will use their best
efforts to correct the subject financial statements in such
manner as will satisfy the Commission's objections thereto or
cause the Commission to withdraw its objections;
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(2) If such corrections are not affected or such objections
withdrawn within three months after any deficiencies are
raised by the Commission, the Holding Company may elect to
rescind this Agreement, ab initio, unless the Parties can, at
such time, agree on a restructuring of this transaction in a
manner meeting the applicable reporting requirements imposed
by applicable federal and state securities law requirements;
(3) If prior to the expiration of the three month correction
period set forth in the preceding paragraph, the Commission
advises the Holding Company that it intends to take
enforcement action or to disrupt trading in the Holding
Company's securities as a result of deficiencies in the Target
Companies' financial statements, then, at the Holding
Company's option, it may elect to rescind this Agreement, ab
initio, unless the Parties and the Commission can, at such
time, agree on a restructuring of this transaction in a manner
meeting the reporting requirements imposed by applicable
federal and state securities law requirements, as a result of
which the Commission will refrain from taking the actions
threatened.
(4) In the event that this condition subsequent becomes applicable
and this Agreement is rescinded, ab initio, then all sums
advanced to or invested in the Target Companies by the Holding
Company shall be converted into secured promissory notes of
the Target Companies, as co-makers, with a term calling for
balloon installments of principal and interest at the annual
rate of 10%, due and payable on the 30th day prior to the date
for payment of the Holding Company's Class A, Series A,
Convertible, Subordinated Debentures (the "American Internet
Notes"), the American Internet Notes to be secured by a first
lien on all of the Target Companies' assets (tangible,
intangible, current or inchoate), subject only to such prior
liens as currently exist as of the date of this Agreement.
(b) This Agreement is subject to the condition subsequent that the offering
effected by the Target Company in reliance on Commission Rule 504 prior
to its acquisition of the Subsidiary under prior management fully
complied with all requirements of applicable state and federal
securities laws, provided that, if the Parties are not mutually
satisfied that this condition has been met within 30 days following the
Closing, then this Agreement shall be restructured as called for under
Section 4.9 of this Agreement, such restructuring to be deemed
effective ab initio.
3.3 Closing.
The Closing on this transaction shall take place as follows:
(a) The Closing on this transaction will take place on the business day
following the date on which each of the Parties have advised the others
that all conditions precedent have been complied with, but not later
that June 30, 1999, with all required Closing documents to be
pre-cleared and exchanged by overnight post by legal counsel to the
Parties within one business day prior to any scheduled Closing, it
being currently contemplated that such closing will take place on
Thursday, June 24, 1999, at the offices of Yankees in Boca Raton,
Florida.
(b) The Closing may be adjourned and reconvened at another physical
location, if required, at the request of any Party, provided that it is
completed prior to July 15, 1999.
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(c) In the event that the Closing has not taken place by July 15, 1999,
then any Party may terminate this Agreement by provision of notice of
such election to all other Parties, in the manner hereinafter set forth
for provision of notice generally, in which case, all rights and
obligations under this Agreement shall be terminated, no Party having
any rights against another Party, or incurring any liabilities to
another Party, as a result of this Agreement.
3.4 Items to be Delivered at the Closing by the Target Company,
the Subsidiary and the Subscribers.
At the Closing, Xx. Xxxxxxx, on behalf of the Target Company, the
Subsidiary and the Subscribers, will deliver the following items to the Holding:
(a) (1) Certificates for the shares of the Target Company Stock,
duly endorsed or with stock power attached with appropriate
signature guarantees (except for any original issue shares by
the Target Company required to adjust the total Target Company
shares delivered to equal the 90% requirement heretofore set
forth), in form and substance adequate to permit immediate
transfer thereof to the Holding Company;
(2) For purposes of facilitating the restructuring called for by
Section 4.9, should it become applicable, certificates for all
of the shares of the Subsidiary's capital stock, duly endorsed
or with stock power attached with appropriate signature
guarantees in form and substance adequate to permit immediate
transfer thereof to the Holding Company or in the name of the
Holding Company;
(b) Certification from an officer of the Target Company to the effect that
the management of the Target Companies have been urged to consult with
legal counsel in conjunction with all aspects of the transactions
reflected in this Agreement and that either after consulting with
counsel or having determined to proceed without counsel, he or they
reasonably believe that:
(1) The issuance of the Holding Company Stock to the Subscribers
will not require any actions in the Subscriber's states or
provinces of domicile, other than such actions as have been
taken no later than the day prior to the Closing, in order to
comply with such states' or provinces' laws, regulations and
rules governing private placements, and that such issuance
will not violate any such laws, regulations or rules; and
(2) The transfer of the Target Company Stock as contemplated by
this Agreement meets the requirements of the exemption from
registration requirements provided by Sections 4(1), 4(2) or
4(6) of the Securities Act of 1933, as amended.
(c) Certification from the Target Company's chief financial officer
indicating that, after a review of the Target Companies' books and
records from the date of the Subsidiary's latest financial statements
annexed hereto until the fifth day prior to the Closing, such review
did not give such officer cause to believe that any materially
detrimental matters have occurred, or that there have been any
materially detrimental changes in the financial condition of the Target
Companies, other than as disclosed in this Agreement.
(d) An investment letter executed by each Subscriber in the form annexed
hereto as exhibit 3.4(d).
(e) Certified officers' certificates of resolutions of the boards of
directors of the Target Companies irrevocably and unqualifiedly
approving this Agreement and all instruments and agreements called for
hereby, and authorizing, empowering and directing the officers of the
Target Companies to enter into this Agreement and to take all actions
required to comply with the terms hereof.
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3.5 Items to be Delivered at the Closing by the Holding Company.
At the Closing, the Holding Company will deliver the following to Xx.
Xxxxxxx, receiving them on behalf of the Subscribers:
(a) Certified Board of Directors resolutions and signed, irrevocable
instructions to the Holding Company's transfer agent instructing it to
immediately issue certificates in the aggregate amount of 2,250,000
shares in the names of the Subscribers, allocated in proportion to
their ownership of the Target Company Stock on the date of the Closing,
and to reserve 4,500,000 shares of the Holding Company's common stock
for potential future issuance, as provided for in this Agreement.
(b) An opinion from the Holding Company's legal counsel that the issuance
of the Holding Company Stock as contemplated by this Agreement will
meet the requirements of the exemption from registration requirements
provided by Section 4(2) of the Securities Act of 1933, as amended.
(c) A certification from the Holding Company's chief financial officer
indicating that, after a review of the Holding Company's books and
records from the date of the Holding Company's latest financial
statements annexed hereto until the fifth day prior to the Closing,
such review did not give such officer cause to believe that any
materially detrimental matters have occurred, or that there have been
any materially detrimental changes in the financial condition of the
Holding Company, other than as disclosed in this Agreement.
(d) Certified officers' certificates of resolutions of the Holding
Company's board of directors irrevocably and unqualifiedly approving
this Agreement and all instruments and agreements called for hereby,
and authorizing, empowering and directing the officers of the Holding
Company to enter into this Agreement and to take all actions required
to comply with the terms hereof.
3.6 Closing Costs.
Except as expressly provided in this Agreement, each Party shall pay
their own Closing costs.
3.7 Brokers.
(a) This transaction has been brought about with the assistance of Yankees
which is entitled to compensation from the Holding Company in
accordance with the terms of its consulting agreement with the Holding
Company, heretofore filed as an exhibit to the Holding Company's
Exchange Act Reports (the "Yankees Agreement").
(b) Except as set forth in this Agreement:
(1) The Subscribers, the Target Company and the Subsidiary hereby
represent and warrant to the Holding Company that it will not
be subject to and will indemnify and hold it harmless against
any claims of brokers for commissions or other compensation in
connection with this Agreement and the consummation of the
transactions contemplated hereby.
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(2) The Holding Company hereby represents and warrants to the
Subscribers, the Target Company and the Subsidiary that,
except as disclosed in this Agreement, it has dealt with no
brokers in conjunction with its contemplated acquisition of
the Target Companies.
Article Four
Covenants
4.1 Post Closing Performance Criteria.
(a) Whether or not the restructuring provisions of Section 4.9 become
operative, the Holding Company will issue additional shares of its
common stock to the Subscribers as additional shares exchanged for the
Target Company Stock or if applicable pursuant to Section 4.9, all of
the Subsidiary's capital stock (the "Additional Exchange Shares"),
predicated on the Target Companies' attaining the following annual net,
pre-tax profit thresholds determined as of December 31 of each year in
accordance with generally accepted accounting principals, consistently
applied ("GAAP"), as follows:
Goal Time Frame Additional Exchange Shares
$200,000 1999 500,000 Shares
$500,000 2000 800,000 Shares
$1,000,000 2001 800,000 Shares
$1,5000,000 2002 800,000 Shares
$2,000,000 2003 800,000 Shares
$2,500,000 2004 800,000 Shares
(b) In the event that the thresholds are not attained and the Holding
Company has provided the Target Companies with at least $250,000 in
funding for their operations, then:
(1) If the net, pre tax earnings are less than 33% of the required
threshold during the subject 12 month period, the Additional
Exchange Shares for such period will be forfeited;
(2) If the net, pre tax earnings are between 33% and 80% of the
required threshold during the subject 12 month period, the
Additional Exchange Shares for such period and the required
threshold will be carried over to the next year, increasing
both the aggregate threshold and the aggregate bonus
attainable for such year; and
(3) If the net, pre tax earnings are between 80% and 100% of the
required threshold during the subject 12 month period, the
Additional Exchange Shares for such period shall be prorated.
(c) In the event that the thresholds are not attained but the Holding
Company has not provided the Target Companies with at least $250,000 in
funding for its operations, then, the Additional Exchange Shares for
such period shall be prorated.
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4.2 Employment of Certain Subscribers.
(a) The Holding Company hereby acknowledges that two of the Subscribers,
Xx. Xxxxxxx and Xxxxxxx X. Xxxxx ("Xx. Xxxxx") are parties to long term
employment agreements with the Target Companies which call for an
aggregate of annual compensation in the amount of $75,000 each, copies
of each employment agreement being annexed hereto and made a part
hereof as composite exhibit 4.2 (the "Subscribers' Employment
Agreements").
(b) The Holding Company hereby covenants and agrees that it will not take
any actions compelling the Target Companies to terminate the
Subscribers' Employment Agreements, except in the event of material
cause, as defined therein, or as may otherwise be required by law.
4.3 Maintenance of Target Companies.
Except as approved by the Holding Company's Board of Directors, on a
case by case basis during the interim between execution of this Agreement and
either the Closing or termination thereof:
(a) The Target Companies shall not sell or transfer any of their material
assets, real, personal, tangible or intangible, other than in the
ordinary course of business, without the Holding Company's explicit
prior written consent.
(b) The Target Companies will keep all of their material assets in good
standing, order and repair and shall cause any and all necessary
remedies and repairs thereto to be made on or before the Closing.
(c) The Target Companies will use all reasonable efforts to assure that all
of their material employees remain in their employ following the
Closing;
(d) The Target Companies will use all reasonable efforts to assure that all
of their material contracts and business relationships remain in good
standing and in full force and effect following the Closing.
4.4 Cooperation.
(a) The Parties and their agents shall have reasonable access to the
premises and assets of the others for the purpose of familiarizing
themselves with the operations of each others businesses.
(b) The Parties agree to cooperate with each other and to render a
reasonable amount of assistance in the orderly integration of the
business of the Target Companies into the Holding Company's operations
and the familiarization of the Parties therewith.
4.5 Post Closing Legal Activities.
(a) The Holding Company's general counsel shall prepare and file all
required reports of the transactions contemplated by this Agreement
with the Commission, such reports to include a detailed report of
special event on Commission Form 8-KSB, Commission Forms 3, 4 and 5 and
Commission Schedules 13D or 13G for the Subscribers and any current
control persons of the target Companies, and such other materials, and
such other matters as, in the opinion of the Holding Company's
management, may be required.
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(b) The Parties hereby covenant and agree to fully cooperate with the
Holding Company's general counsel in the timely preparation and filing
of all such materials and reports, all of which are due on or before
the fifteenth day following the Closing.
4.6 Covenants of the Holding Company
(b) During the five years following the Closing, the Holding Company shall
use its best efforts to assure that:
(1) At least one designee of the Subscribers is nominated for
membership on the Holding Company's Board of Directors at each
meeting of the Holding Company's stockholders or directors at
which the membership of its Board of Directors is up for
election, and to use their best efforts consistent with
applicable law to secure such nominee's election, so that the
membership of the Holding Company's Board of Directors
includes at least one designee of the Subscribers;
(2) Designees of the Subscribers are elected to at least two thirds
of the seats on the Target Companies' boards of directors; and
(3) On one occasion only, provide "piggy back" registration rights
covering up to an aggregate of 35,000 shares of the Holding
Company's Stock obtained pursuant to this Agreement to Messrs.
Xxxxx Xxxxxxx and Xxxx Walk; Xxxxxxxx Xxxx and Xxxxx Xxxx, his
wife, as tenants by the entireties; and, Xx. Xxx Xxxxxxx.
(c) The Holding Company will use its best efforts to fully enforce the
stock lock up and voting agreement in the form annexed hereto and made
a part hereof as exhibit 4.6(b) (the "Lock-Up & Voting Agreement,
entered into by the Holding Company's current officers, directors and
principal stockholders (the "Holding Company's Principals").
4.7 Additional Covenants of the Holding Company
(a) Within five business days following the Closing, the Holding Company
will make a direct equity investment in the Target Company of $100,000
and will use its best efforts to increase its direct equity investments
in the Target Company to $250,000 within 90 days after the Target
Companies provide the Holding Company with the Target Companies'
financial statements required for filing with the Commission, as
described in Articles Two and Three.
(b) The Subscribers and the Target Companies hereby covenant and agree to
use their best efforts to assist the Holding Company in developing and
effecting its capital raising activities by, among other things,
providing and disseminating all information required in conjunction
therewith on a timely basis and participating in meetings, telephone
conferences and other events with potential funding sources, as
arranged by or for the Holding Company.
(c) The Holding Company may from time to time, at the request of the Target
Companies, make available shares or units of the Holding Company's
securities for purposes of acquisitions by the Target Companies or for
use as compensation to the Target Companies' employees, provided that
109
in each such instance, the Target Companies shall be charged a price
equal to 85% of the price of such securities determined on the basis of
the last transaction price reported therefor by any NASD member firm on
the OTC Bulletin Board, or such superior market or exchange on which
the Holding Company's securities are then traded, or, if no such market
exists due to the non-trading nature of the securities involved, then
at the last price therefor recorded by the Holding Company, adjusted
based on the change in the value in the Holding Company's stockholders'
equity per share, since such date, such price to be charged as an
expense against the Target Companies' earnings for purposes of
determining eligibility for the additional exchange shares compensation
issuable to the Subscribers and any other purposes required by GAAP.
4.8 Additional Covenants of the Subscribers and the Target Companies.
(a) Being aware of the continuing information disclosure obligations
applicable to publicly held companies, the Subscribers and the Target
Companies hereby covenant and agree that they will develop, implement
and maintain record development and retention systems and compliance
procedures compatible with any procedures developed, implemented or
maintained by the Holding Company, for purposes of assuring timely
compliance with reporting requirements under federal and state
securities laws, federal, state and local tax laws and any other laws,
regulations, rules, ordinances or orders which may be applicable to
the business operations of the Holding Company and its subsidiaries.
(b) The Subscribers and the Target Companies hereby covenant and agree that
they will assist the Holding Company to develop and implement an
acquisition program designed to assist the Holding Company to develop
into a diversified Internet and related activity holding company with
the goal of becoming a material participant in the emerging Internet
based global communications and commerce industry; and, to assist the
Holding Company to develop, implement and engage in periodic fund
raising efforts required to properly capitalize such acquisition
activities.
4.9 Restructuring Covenant.
Notwithstanding anything in this Agreement to the contrary:
(a) In the event that within 30 days after the Closing the Parties are not
satisfied as to the legality of the offering of the Target Company's
securities by prior management of the Target Company in reliance on
Commission Rule 504 effected during the period staring on or about
March 2, 1998 and ending on or about August 20, 1998, as reflected in
the Form D, subscription execution records and transfer agency records
annexed hereto and made a part hereof as composite exhibit 4.9(a) (the
"Ascot Rule 504 offering" and the "504 Documents," respectively), then
this Agreement shall, without any further required action by any Party
other than delivery of a notice to the Parties by the Registrant's
legal counsel (after the fact), be restructured by the withdrawal of
the Target Company as a party hereto other than for the limited
purpose of consenting to the assignment and transfer of all of the
Subsidiary's common stock directly to the Holding Company and the
releases, acknowledgments and covenants and set forth in this Section
4.9, in consideration for the release by the Holding Company of the
Target Company from any liability to the Holding Company arising from
expenses associated with negotiating this Agreement, preparing the
instruments and documents required hereby and effecting the
transactions called for hereby, it being the clear agreement and
understanding of the Parties that as a result of such restructuring:
110
(1) All rights of the Target Company granted and obligations
assumed hereby will devolve on the Subsidiary;
(2) The Subsidiary shall become a direct wholly owned subsidiary
of the Holding Company;
(3) The Target Company will have no rights to any compensation or
of any other kind under this Agreement or from the
Subscribers, the Subsidiary or the Holding Company, from any
cause or reason whatsoever;
(4) The restructuring will be irrevocably considered as full,
complete and adequate consideration for a general release from
any and all liabilities, whether current or inchoate, of the
Subscribers, the Subsidiary or the Holding Company to the
Target Company;
(5) All liabilities of the Target Company to the Subscribers or
the Subsidiary as a result of any misrepresentation, breach
of covenants or breach of conditions under the exchange
agreement between some of the Subscribers, the Subsidiary
and the Target Company dated February 28, 1999, a copy of
which is annexed hereto and made a part hereof as composite
exhibit 4.9(a)(5) (the "Exchange Agreement"), including any
arising as a result of legal deficiencies in the Ascot Rule
504 offering, will be preserved for subsequent disposition
in conjunction with ultimate disposition of the Target
Company, as described below;
(6) All assets of the Target Company used directly or indirectly
by the Subsidiary in the operation of its business or which
the Subsidiary or the Holding Company believe to be reasonably
necessary for the operations or management of the Subsidiary
shall be deemed unconditionally conveyed to the Subsidiary by
the Target Company, as of the Closing;
(7) The Target Company will become a shell temporarily controlled
by the Subscribers until they, with the assistance of the
Registrant, Yankees and their legal counsel, can make
arrangements to either dissolve the Target Company or rescind
all transactions pursuant to which the Target Company
originally acquired the Subsidiary, returning control thereof
to the former management and subscribers to the Ascot Rule 504
offering.
(b) Such restructuring will have no effect on the rights of the Subscribers
hereunder, all of which shall remain intact.
(c) The Target Company hereby grants to the Holding Company, with full
power of delegation and substitution, an irrevocable power of attorney
coupled with an interest, in the Form annexed hereto and made a part
hereof as exhibit 4.9(c) (the "Target Company's Power of Attorney"), to
take any acts or execute any documents, instruments, certificates,
forms of releases, confessions of judgment or other documents or
instruments on behalf of the Target Company, reasonably designed to
effect the provisions of this Section 4.9, such power of attorney to
survive the Closing and the restructuring described in this Section
4.9.
(d) No Party shall be required to initiate any proceedings or actions of
any kind as a condition to exercise any of the rights granted in this
Section 4.9.
(e) The Holding Company shall, in the event of any disagreement concerning
the applicability or interpretation of this Section 4.9, be
irrevocably deemed the final authority on such decision, to be made in
its sole and exclusive discretion.
111
Article Five
Miscellaneous
5.1 Amendment.
No modification, waiver, amendment, discharge or change of this
Agreement shall be valid unless the same is evinced by a written instrument,
subscribed by the Party against which such modification, waiver, amendment,
discharge or change is sought.
5.2 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 unaudited
mail, return receipt requested, postage prepaid, addressed as follows:
To the Holding Company:
Equity Growth Systems, inc.
0000 XxXxxx Xxxxx Xxxxx; Xxxxxxxx, Xxxxxxx 00000;
Telephone (000) 000-0000; Fax (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx, President; with a copy to
G. Xxxxxxx Xxxxxxxxxx, Esquire; General Counsel
Equity Growth Systems, inc.
00000 Xxxxx Xxxxxxx 000; Xxxxxxxxxxx, Xxxxxxx
00000 Telephone (000) 000-0000, Fax (000) 000-0000; and,
e-mail, XxxxxxxxXx@xxx.xxx.
To the Subscribers:
At such addresses as they provide the
Holding Company's transfer agent for such purpose.
To the Target Company:
American Internet Technical Centers, Inc.
000 Xxxx Xxxxxx Xxxx; Xxxxxxx Xxxxx, Xxxxxxx 00000
Attention: J. Xxxxx Xxxxxxx, President.
Telephone (000) 000-0000; Fax (000) 000-0000; e-mail xxxx0@xxxxxxxxx.xxx
To the Subsidiary:
American Internet Technical Center, Inc.
000 Xxxx Xxxxxx Xxxx; Xxxxxxx Xxxxx, Xxxxxxx 00000
Attention: J. Xxxxx Xxxxxxx, President.
Telephone (000) 000-0000; Fax (000) 000-0000; e-mail xxxx0@xxxxxxxxx.xxx
112
To Yankees:
The Yankee Companies, Inc.
000 Xxxxx Xxxxx Xxxx, 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) (1) The Parties acknowledge that Yankees serves as a strategic
consultant to the Holding Company 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 the Holding Company's general
counsel, who has reviewed, approved and caused modifications
on behalf of the Holding Company, from representing anyone
other than the Holding Company in this transaction.
5.3 Merger.
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. All prior agreements whether written or
oral are merged herein and shall be of no force or effect.
5.4 Survival.
The several representations, warranties and covenants of the Parties
contained herein shall survive the execution hereof and the Closing hereon and
shall be effective regardless of any investigation that may have been made or
may be made by or on behalf of any Party.
5.5 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.
113
5.6 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) but 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.
5.7 Indemnification.
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. 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.
5.8 Litigation.
(a) In any action between the Parties to enforce any of the terms of this
Agreement or any other matter arising from this Agreement, 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 litigation is
initiated.
(b) 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 ex clusively 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 Yankees as agent for the current
Directors and stockholders of the Holding Company and
three by the Subscribers acting by majority vote
(based on their relative stock ownership in the
Holding Company).
(B) The mediation efforts shall be concluded within ten
business days after their in itiation 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 Yankees as agent for the current Directors and stockholders
of the Holding Company and three by the Subscribers acting by
majority vote (based on their relative stock ownership in the
Holding Company).
(3) (A) Expenses of mediation shall be borne by the Subsidiary
if successful.
114
(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.
5.9 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.
5.10 Captions.
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.
5.11 Number and Gender.
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.
5.12 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.
5.13 Status.
Nothing in this Agreement shall be construed or shall constitute a
partnership, joint venture, employer-employee relationship, lessor-lessee
relationship, or principal-agent relationship, rather, the relationships
established hereby are those of exchanging stockholders in a transaction meeting
the requirements of Section 368)(a)(1)(B) of the Code, and parties incidental
thereto.
5.14 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.
115
5.15 License.
(a) This Agreement is the property of Yankees and the use hereof by the
Parties is authorized hereby solely for purposes of this transaction.
(b) The use of this form of agreement or of any derivation thereof without
Yankees' prior written permission is prohibited.
(c) This Agreement shall not be construed more strictly against any Party
as a result of its authorship.
5.16 Exhibit Index.
Exhibit Description
0.1 Subscribers' Data & Powers of Attorney
1.3 Target Company's Disclosed Liabilities
2.1 Holding Company's Warranty Exceptions
2.2 Target Companies' Warranty Exceptions
2.2(a) List of Real and Personal Property Owned or Leased by Target
Company
2.2(i) Target Companies' Unaudited Consolidated Financial Statements
2.2(x) Target Company's Insurance Policies or Binders
3.4(d) Form of Investment Letters
4.2 Subscribers' Employment Agreements
4.6(b) The Lock-Up & Voting Agreement
4.9(a) The 504 Documents
4.9(a)(5) The [Target Companies] Exchange Agreement
4.9(c) Target Company's Power of Attorney
Signatures Subscribers' Powers of Attorney
In Witness Whereof, the Parties have caused this Agreement to be
executed effective as of the date last set forth below.
Signed, sealed and delivered
In Our Presence:
Equity Growth Systems, inc.
---------------------------------
_________________________________ By: ________________________________
Xxxxxxx X. Xxxxxxx, President
(Corporate Seal)
Attest: ______________________________
G. Xxxxxxx Xxxxxxxxxx, Secretary
Dated: June 25, 1999
116
American Internet Technical Centers, Inc.
(A Nevada corporation)
_________________________________
_________________________________ By: _______________________________
J. Xxxxx Xxxxxxx, President
(Corporate Seal)
Attest: ______________________________
Xxxxxxx X. Xxxxx, Secretary
Dated: June 24, 1999
American Internet Technical Center, Inc.
(A Florida corporation)
_________________________________
_________________________________ By: _______________________________
J. Xxxxx Xxxxxxx, President
(Corporate Seal)
Attest: ______________________________
Xxxxxxx X. Xxxxx, Secretary
Dated: June 25, 1999
Subscribers
---------------------------------
_________________________________ By: ______________________________
. Xxxxx Xxxxxxx, their duly designated
and serving attorney-in-fact, pursuant
to the powers of attorney annexed
hereto and made a part hereof.
Dated: June 25, 1999
The Yankee Companies, Inc.
for the limited purposes specifically
set forth in this Agreement
---------------------------------
_________________________________ By: _______________________________
Xxxxxxx Xxxxx Xxxxxx, President
(Corporate Seal)
Attest: ____________________________
Xxxxxxx X. Xxxxx, III, Secretary
Dated: June 25, 1999
117
EXHIBIT 0.1 of the Reorganization Agreement
Limited Power of Attorney
State of Florida }
County of Palm Beach } Ss.:
I, Xxxxxxx X. Xxxxx, hereby appoint J. Xxxxx Xxxxxxx, an individual
residing at 00 Xxxxxxxxx Xxxxx; Xxxxxxx Xxxxx, Xxxxxxx 00000 as my
attorney-in-fact to negotiate and execute all documents, agreements, instruments
and corrective instruments on my behalf and in my name, as if I myself had
undertaken such functions personally, with full recourse against me, in
conjunction with all matters concerning the Reorganization Agreement with Equity
Growth Systems, inc. and all instruments and agreements called for in the
agreement, and I hereby authorize, direct and empower Xx. Xxxxxxx to enter into
the Reorganization Agreement on my behalf and for him to take all actions
required to comply with the terms, thereof, and I hereby further authorize,
empower and direct Xx. Xxxxxxx to handle all related stock issuance,
cancellations, reservations and expenditures related to my American Internet
Technical Centers, Inc. stock.
IN WITNESS WHEREOF, I have executed this Indenture, on this ____ day of
________, 1999.
Signed, Sealed & Delivered
In Our Presence
----------------------
---------------------- ----------------------
Xxxxxxx X. Xxxxx
SWORN TO BEFORE ME, an official duly authorized by the State of Florida
to administer oaths, on the date first above written by the above referenced
grantor, who provided me with personal identification, as follows:.
My Commission expires:
[SEAL]
----------------------
Notary Public
Limited Power of Attorney
State of Florida }
County of } Ss.:
I, Xxxx Xxxxxxx, hereby appoint J. Xxxxx Xxxxxxx, an individual
residing at 00 Xxxxxxxxx Xxxxx; Xxxxxxx Xxxxx, Xxxxxxx 00000 as my
attorney-in-fact to negotiate and execute all documents, agreements, instruments
and corrective instruments on my behalf and in my name, as if I myself had
undertaken such functions personally, with full recourse against me, in
conjunction with all matters concerning the Reorganization Agreement with Equity
Growth Systems, inc. and all instruments and agreements called for in the
agreement, and I hereby authorize, direct and empower Xx. Xxxxxxx to enter into
the Reorganization Agreement on my behalf and for him to take all actions
required to comply with the terms, thereof, and I hereby further authorize,
empower and direct Xx. Xxxxxxx to handle all related stock issuance,
cancellations, reservations and expenditures related to my American Internet
Technical Centers, Inc. stock.
118
IN WITNESS WHEREOF, I have executed this Indenture, on this ____ day of
________, 1999.
Signed, Sealed & Delivered
In Our Presence
----------------------
---------------------- ----------------------
Xxx Xxxxxxx
SWORN TO BEFORE ME, an official duly authorized by the State of Florida
to administer oaths, on the date first above written by the above referenced
grantor, who provided me with personal identification, as follows:.
My Commission expires:
[SEAL]
----------------------
Notary Public
EXHIBIT 1.3 of the Reorganization Agreement
OFFICER'S CERTIFICATION
for
AMERICAN INTERNET TECHNICAL CENTER, INC.,
a Florida corporation
Exhibit 1.3: Disclosed Liabilities
We, J. Xxxxx Xxxxxxx, President, and Xxxxxxx X. Xxxxx, Secretary, both
duly elected and currently serving officers of American Internet Technical
Center, Inc., a Florida corporation,(hereinafter referred to as the
"Corporation"), hereby certify, they reasonably believe that the following is a
true and correct listing of all long term Liabilities, other than with Equity
Growth Systems, inc. or other than with each other, as of June 24, 1999 for the
Corporation:
2. Xxxxxx Building: Lease is month to month, disclosed on contracts
certification of even date.
3. Marketing Agreement dated June 15, 1999, with Amazia's MarketPlace
disclosed on contracts certification of even date.
4. Life Insurance Premiums disclosed on Insurance binders and contract
certification of even date.
5. Xxxxxxx'x Comp. and Employment Liability on Insurance binders and
contract certification of even date.
6. Life Insurance premiums disclosed in insurance certification
7. Xxxxxxxx X. Xxxxxxxx x. American Internet Technical Center, (Ohio, case
no. 755845). Settlement Agreement without the admission of liability
anticipated. Copy of proposed settlement agreement is attached.
$7,500.00
119
8. Buckingham, Doolittle, Burroughs, LLP, attorney's fees. $4,000.00
9. Daszkal, Xxxxxx & Xxxxxx, CPA firm, $3,500.00
Total: $15,000.00
IN WITNESS WHEREOF, we have hereunto set our hand and seal, effective
as of the 25th day of June , 1999.
American Internet Technical Center, Inc.
-------------------- ----------------------
J. Xxxxx Xxxxxxx Xxxxxxx X. Xxxxx
President Secretary
BEFORE ME, the undersigned authority, on this date personally appeared
J. Xxxxx Xxxxxxx and Xxxxxxx X. Xxxxx, who first being duly sworn, deposes, and
says: that they are both duly elected officers of AMERICAN INTERNET TECHNICAL
CENTER, INC., a Florida corporation, and that they have read the same, know the
contents thereof, and that the same is true and correct to the best of their
knowledge and belief. Sworn to and subscribed before me this 25th day of June
1999.
My commission expires:
----------------------
Notary Public
Personally Known or produced I.D. Type of I.D. Produced:
120
OFFICER'S CERTIFICATION
for
AMERICAN INTERNET TECHNICAL CENTERS, INC.,
a Nevada corporation
Exhibit 1.3: Disclosed Liabilities
We, J. Xxxxx Xxxxxxx, President, and Xxxxxxx X. Xxxxx, Secretary, both duly
elected and currently serving officers of American Internet Technical Centers,
Inc., a Nevada, corporation, (hereinafter referred to as the "Corporation"),
hereby certify, they reasonably believe that the following is a true and correct
listing of all long term Liabilities, other than with Equity Growth Systems,
inc. or other than with each other, as of June 24, 1999 for the Corporation:
None
IN WITNESS WHEREOF, we have hereunto set our hand and seal, effective
as of the 25th day of June , 1999.
American Internet Technical Centers, Inc.
-------------------- ----------------------
J. Xxxxx Xxxxxxx Xxxxxxx X. Xxxxx
President Secretary
BEFORE ME, the undersigned authority, on this date personally appeared
J. Xxxxx Xxxxxxx and Xxxxxxx X. Xxxxx, who first being duly sworn, deposes, and
says: that they are both duly elected officers of AMERICAN INTERNET TECHNICAL
CENTERS, INC., a Nevada, corporation ; and that they have read the same, know
the contents thereof, and that the same is true and correct to the best of their
knowledge and belief. Sworn to and subscribed before me this 25th day of June
1999.
My commission expires:
----------------------
Notary Public
Personally Known or produced I.D. Type of I.D. Produced:
EXHIBIT 2.1 of the Reorganization Agreement
OFFICER'S CERTIFICATION
for
Equity Growth Systems, inc.
A publicly held Delaware corporation
Exhibit 2.1: Warranty Exceptions
We, Xxxxxxx X. Xxxxxxx, President, and G. Xxxxxxx Xxxxxxxxxx,
Secretary, both duly elected and currently serving officers of Equity Growth
Systems, inc., a publicly held Delaware corporation, (hereinafter referred to as
the "Corporation"), hereby certify, they reasonably believe that the following
is a true and correct listing of all Warranty Exceptions as of June 24, 1999 for
the Corporation:
General: We call your attention to the fact that any information filed
with the Securities and Exchange Commission to the extent that it is contrary to
the information provided in this Reorganization Agreement, is a warranty
exception to the Reorganization Agreement signed and executed between the
parties.
121
IN WITNESS WHEREOF, we have hereunto set our hand and seal, effective
as of the 25th day of June , 1999.
Equity Growth Systems, inc.
---------------------- -----------------------
Xxxxxxx X. Xxxxxxx, President G. Xxxxxxx Xxxxxxxxxx
President Secretary
BEFORE ME, the undersigned authority, on this date personally appeared
Xxxxxxx X. Xxxxxxx and G. Xxxxxxx Xxxxxxxxxx, who first being duly sworn,
deposes, and says: that they are both duly elected and currently serving
officers of EQUITY GROWTH SYSTEMS, inc., a publicly held Delaware, corporation ;
and that they have read the same, know the contents thereof, and that the same
is true and correct to the best of their knowledge and belief. Sworn to and
subscribed before me this 25th day of June 1999.
My commission expires:
---------------------------
Notary Public
Personally Known or produced I.D. Type of I.D. Produced:
EXHIBIT 2.2 of the Reorganization Agreement
OFFICER'S CERTIFICATION
for
AMERICAN INTERNET TECHNICAL CENTER, INC.,
a Florida corporation
Exhibit 2.2: Warranty Exceptions
We, J. Xxxxx Xxxxxxx, President, and Xxxxxxx X. Xxxxx, Secretary, both
duly elected and currently serving officers of American Internet Technical
Center, Inc., a Florida corporation, (hereinafter referred to as the
"Corporation"), hereby certify, they reasonably believe that the following is a
true and correct listing of all Warranty Exceptions as of June 24, 1999 for the
Corporation:
Litigation: Although none of the following lists the Corporation as a
Defendant, there is a possibility that the Corporation could be adversely
affected by the following:
1. The case of Xxxxxxxx X. Xxxxxxxx x. American Internet Technical
Center, (Ohio, case no. 355845), wherein a non-corporate affiliate of
the Company is a named party defendant in a class action law suit
alleging certain facsimile transmissions violate state and federal
law. Settlement negotiations have been conducted in the range of
$3,500.00 (initial offer of the Corporation) to $14,000.00, (initial
offer of Plaintiff.) The parties have orally agreed to execute a final
settlement agreement for $7,500.00. Copy of proposed settlement
agreement is attached. The Corporation admits no wrong doing.
122
2. In addition to the above mentioned case, citizen complaints as to
certain unsolicited facsimile advertising have been filed in certain
states. There exists a potential liability for each complaint of
$500.00 per complaint. Complaints have been filed against a
non-corporate affiliate in the following states: State of Idaho:
Office of State Attorney General, complaint letter January 7, 1999,
(Xxxxxxxx Xxxxxx, fax on 8/11/98); State of Florida: Office of the
State Attorney, letter dated June 18, 1998; State of Maryland: Office
of State Attorney, letter dated June 16, 1998, Xxxxxxx Xxxx, fax dated
June 9, 1998; State of Wisconsin: Dept of Agriculture, letter dated
January 25, 1999, Xxxxx Chappori, fax on June 22, 1998; Pear,
Xxxxxxxx, Xxxxx: Michigan attorney's letter dated May 6, 1998, with
demand for $500.00, (Domino's Pizza and the Law firm).
IN WITNESS WHEREOF, we have hereunto set our hand and seal, effective
as of the 25th day of June , 1999.
American Internet Technical Center, Inc.
-------------------- ----------------------
J. Xxxxx Xxxxxxx Xxxxxxx X. Xxxxx
President Secretary
BEFORE ME, the undersigned authority, on this date personally appeared
J. Xxxxx Xxxxxxx and Xxxxxxx X. Xxxxx, who first being duly sworn, deposes, and
says: that they are both duly elected officers of AMERICAN INTERNET TECHNICAL
CENTER, INC., a Florida corporation, and that they have read the same, know the
contents thereof, and that the same is true and correct to the best of their
knowledge and belief. Sworn to and subscribed before me this 25th day of June
1999.
My commission expires:
----------------------
Notary Public
Personally Known or produced I.D. Type of I.D. Produced:
123
OFFICER'S CERTIFICATION
for
AMERICAN INTERNET TECHNICAL CENTERS, INC.,
a Nevada corporation
EXHIBIT 2.2: Warranty Exceptions
We, J. Xxxxx Xxxxxxx, President, and Xxxxxxx X. Xxxxx, Secretary, both duly
elected and currently serving officers of American Internet Technical Centers,
Inc., a Nevada, corporation, (hereinafter referred to as the "Corporation"),
hereby certify, they reasonably believe that the following is a true and correct
listing of all Warranty Exceptions as of June 24, 1999 for the Corporation:
Litigation: Although none of the following lists American Internet Technical
Center, Inc., a Florida Corporation (hereinafter referred to as "American
Internet [Florida]") as a Defendant, there is a possibility that the Corporation
could be adversely affected by the following:
1. The case of Xxxxxxxx X. Xxxxxxxx x. American Internet [Florida],
(Ohio, case no. 355845), wherein a non-corporate affiliate of American
Internet [Florida] is a named party defendant in a class action law
suit alleging certain facsimile transmissions violate state and
federal law. Settlement negotiations have been conducted in the range
of $3,500.00 (initial offer of American Internet [Florida]) to
$14,000.00, (initial offer of Plaintiff.) The parties have orally
agreed to execute a final settlement agreement for $7,500.00. Copy of
proposed settlement agreement is attached. American Internet [Florida]
admits no wrong doing.
2. In addition to the above mentioned case, citizen complaints as to
certain unsolicited facsimile advertising have been filed in certain
states. There exists a potential liability for each complaint of
$500.00 per complaint. Complaints have been filed against a
non-corporate affiliate in the following states: State of Idaho:
Office of State Attorney General, complaint letter January 7, 1999,
(Xxxxxxxx Xxxxxx, fax on 8/11/98); State of Florida: Office of the
State Attorney, letter dated June 18, 1998; State of Maryland: Office
of State Attorney, letter dated June 16, 1998, Xxxxxxx Xxxx, fax dated
June 9, 1998; State of Wisconsin: Dept of Agriculture, letter dated
January 25, 1999, Xxxxx Chappori, fax on June 22, 1998; Pear,
Xxxxxxxx, Xxxxx: Michigan attorney's letter dated May 6, 1998, with
demand for $500.00, (Domino's Pizza and the Law firm).
IN WITNESS WHEREOF, we have hereunto set our hand and seal, effective
as of the 25th day of June , 1999.
American Internet Technical Centers, Inc.
-------------------- ----------------------
J. Xxxxx Xxxxxxx Xxxxxxx X. Xxxxx
President Secretary
BEFORE ME, the undersigned authority, on this date personally appeared
J. Xxxxx Xxxxxxx and Xxxxxxx X. Xxxxx, who first being duly sworn, deposes, and
says: that they are both duly elected officers of AMERICAN INTERNET TECHNICAL
CENTERS, INC., a Nevada, corporation ; and that they have read the same, know
the contents thereof, and that the same is true and correct to the best of their
knowledge and belief. Sworn to and subscribed before me this 25th day of June
1999.
My commission expires:
----------------------
Notary Public
Personally Known or produced I.D. Type of I.D. Produced:
124
EXHIBIT 2.2(a) of the Reorganization Agreement
OFFICER'S CERTIFICATION
for
AMERICAN INTERNET TECHNICAL CENTER, INC.,
a Florida corporation
Exhibit 2.2(a): Real and Personal Property List
We, J. Xxxxx Xxxxxxx, President, and Xxxxxxx X. Xxxxx, Secretary, both
duly elected officers of American Internet Technical Center, Inc., a Florida
corporation, (hereinafter referred to as the "Corporation"), hereby certify,
they reasonably believe that the following is a true and correct listing of the
real and personal property as of June 24, 1999 for he Corporation:
Real property: None
Lease: Month to Month
Personal property:
Computer Stations including
monitors and printers 9 $10.800.00
Hosting servers and software 3 $ 7,400.00
Xerox laser printer 1 $ 640.00
Xerox photocopier 1. $ 810.00
Xerox work center fax unit 1 $ 385.00
Regular fax machines 4 $ 615.00
Telephone and phone system 16 $ 750.00
Work stations/room dividers 12 stations $ 2,100.00
Miscellaneous, Desks, Chairs,
File Cabinets $ 1,946.00
Exterior Signs 1 $ 750.00
Total: $26,196.00
125
IN WITNESS WHEREOF, we have hereunto set our hand and seal, effective
as of the 25th day of June , 1999.
American Internet Technical Center, Inc.
-------------------- ----------------------
J. Xxxxx Xxxxxxx Xxxxxxx X. Xxxxx
President Secretary
BEFORE ME, the undersigned authority, on this date personally appeared
J. Xxxxx Xxxxxxx and Xxxxxxx X. Xxxxx, who first being duly sworn, deposes, and
says: that they are both duly elected officers of AMERICAN INTERNET TECHNICAL
CENTER, INC., a Florida corporation, and that they have read the same, know the
contents thereof, and that the same is true and correct to the best of their
knowledge and belief. Sworn to and subscribed before me this 25th day of June
1999.
My commission expires:
----------------------
Notary Public
Personally Known or produced I.D. Type of I.D. Produced:
OFFICER'S CERTIFICATION
for
AMERICAN INTERNET TECHNICAL CENTERS, INC.,
a Nevada corporation
Exhibit 2.2(a): Real and Personal Property List
We, J. Xxxxx Xxxxxxx, President, and Xxxxxxx X. Xxxxx, Secretary, both
duly elected officers of American Internet Technical Centers, Inc., a Nevada,
corporation, (hereinafter referred to as the "Corporation"), hereby certify,
they reasonably believe that the following is a true and correct listing of the
real and personal property as of June 24, 1999 for the Corporation:
Real property: None
Lease: None
Personal property: None
IN WITNESS WHEREOF, we have hereunto set our hand and seal, effective
as of the 25th day of June , 1999.
American Internet Technical Centers, Inc.
-------------------- ----------------------
J. Xxxxx Xxxxxxx Xxxxxxx X. Xxxxx
President Secretary
BEFORE ME, the undersigned authority, on this date personally appeared
J. Xxxxx Xxxxxxx and Xxxxxxx X. Xxxxx, who first being duly sworn, deposes, and
says: that they are both duly elected officers of AMERICAN INTERNET TECHNICAL
CENTERS, INC., a Nevada, corporation ; and that they have read the same, know
the contents thereof, and that the same is true and correct to the best of their
knowledge and belief. Sworn to and subscribed before me this 25th day of June
1999.
My commission expires:
----------------------
Notary Public
Personally Known or produced I.D. Type of I.D. Produced:
126
EXHIBIT 2.2(i) of the Reorganization Agreement
UNAUDITED FINANCIALS
AMERICAN INTERNET TECHNICAL CENTER, INC.
BALANCE SHEET
DECEMBER 31, 1998
ASSETS
Current assets:
Cash $ 3,694
Accounts receivable -
net of allowance for doubtful accounts $24,914 85,614
Prepaid expenses 4,461
Total current ass 93,769
Property and equipment: 26,196
Less: accumulated depreciation (3,930)
Total property and equipment 22,266
Other assets:
Deposits 13,000
Total assets $ 129,035
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 38,174
Accrued expenses 21,856
Total current liabilities 60,030
Stockholder's equity:
Common stock, $1.00 par value, 200 shares authorized,
issued and outstanding
200
Retained earnings 68,805
Total stockholder's equity 69,005
Total liabilities and stockholder's equity $ 129,035
==========
Unaudited-For Management Purposes Only
Page 1
127
AMERICAN INTERNET TECHNICAL CENTER, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
YEAR ENDED DECEMBER 31, 1998
Revenues earned $ 797,502
Costs of revenues earned 151,502
Gross profit 646,000
Operating expenses:
Selling 323,762
General Administrative expenses 135,017
Total Operating Expenses 458,779
Net income $ 187,221
============
Unaudited-For Management Purposes Only
Page 2
128
AMERICAN INTERNET TECHNICAL CENTER, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1998
Number of Additional
Shares Common Paid-in Retained
Stock Capital Earnings Total
Balance (deficit), April 15, 1998 200 $ 200 $ - $ - $ 200
Distributions to stockholders - - - (118,416) (118,416)
Net income - 1998 - - - 187,221 187,221
Balance (deficit), December 31, 1998 200 $ 200 $ - $ 68,805 $ 69,005
Unaudited-For Management Purposes Only
Page 3
AMERICAN INTERNET TECHNICAL CENTER, INC.
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1998
Cash flows from operating activities:
Net income $ 187,221
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation and amortization 3,930
(Increase) decrease in:
Accounts receivables (85,614)
Prepaid expenses (4,461)
Deposits (13,000)
Increase (decrease) in:
Accounts payable 38,174
Accrued expenses 21,856
Net cash provided by operating activities 148,106
Cash flow from investing activities:
Purchases of property and equipment (26,196)
Cash flows from financing activities:
Issuance of common stock 200
Distributions to stockholders (118,416)
Net cash used by financing activitie (118,216)
Net increase in cash 3,694
Cash at beginning of period -
Cash at end of period $ 3,694
=============
Additional cash payment information:
Interest paid
$ -
================
Income taxes $ -
================
Unaudited-For Management Purposes Only
Page 4
129
EXHIBIT 2.2(x) of the Reorganization Agreement
OFFICER'S CERTIFICATION
for
AMERICAN INTERNET TECHNICAL CENTER, INC.,
a Florida corporation
Exhibit 2.2(x): Insurance Binders and Contracts
We, J. Xxxxx Xxxxxxx, President, and Xxxxxxx X. Xxxxx, Secretary, both
duly elected officers of American Internet Technical Center, Inc., a Florida
corporation, (hereinafter referred to as the "Corporation"), hereby certify,
they reasonably believe that the following is a true and correct listing of all
insurance binders or contracts of any kind as of June 25, 1999 for the
corporation:
Life Insurance: Xxxxx X. Xxxxxxx
Banner Life, policy number 17B022746,
$300,000 (death benefit), $1,784.00 (Annual premium)
Xxxxxxx Xxxxx
Banner Life, policy number 17B022745,
$300,000 (death benefit), $1,521.00 (Annual premium)
Xxxxxxx'x Comp. and Employment Liability
Binder dated 06-12-99: Reliance Insurance Company
Code: 0851587
Each accident, 100,000
Disease; each employee: 100,000
Disease policy limit 500,000
Estimated annual premium $1,720.00
IN WITNESS WHEREOF, we have hereunto set our hand and seal, effective
as of the 25th day of June , 1999.
American Internet Technical Center, Inc.
---------------------- -----------------------
J. Xxxxx Xxxxxxx Xxxxxxx X. Xxxxx
President Secretary
BEFORE ME, the undersigned authority, on this date personally appeared
J. Xxxxx Xxxxxxx and Xxxxxxx X. Xxxxx, who first being duly sworn, deposes, and
says: that they are both duly elected officers of AMERICAN INTERNET TECHNICAL
CENTER, INC., a Florida corporation, and that they have read the same, know the
contents thereof, and that the same is true and correct to the best of their
knowledge and belief. Sworn to and subscribed before me this 25th day of June
1999.
My commission expires:
----------------------------------
Notary Public
Personally Known or produced I.D. Type of I.D. Produced:
130
OFFICER'S CERTIFICATION
for
AMERICAN INTERNET TECHNICAL CENTERS, INC.,
a Nevada corporation
Exhibit 2.2(x): Insurance Binders and Contracts
We, J. Xxxxx Xxxxxxx, President, and Xxxxxxx X. Xxxxx, Secretary, both
duly elected officers of American Internet Technical Centers, Inc., a Nevada,
corporation, (hereinafter referred to as the "Corporation"), hereby certify,
they reasonably believe that the following is a true and correct listing of all
insurance binders or contracts of any kind as of June 25, 1999 for the
corporation:
NONE
IN WITNESS WHEREOF, we have hereunto set our hand and seal, effective
as of the 25th day of June , 1999.
American Internet Technical Centers, Inc.
------------------------ ----------------------
J. Xxxxx Xxxxxxx Xxxxxxx X. Xxxxx
President Secretary
BEFORE ME, the undersigned authority, on this date personally appeared
J. Xxxxx Xxxxxxx and Xxxxxxx X. Xxxxx, who first being duly sworn, deposes, and
says: that they are both duly elected officers of AMERICAN INTERNET TECHNICAL
CENTERS, INC., a Nevada, corporation ; and that they have read the same, know
the contents thereof, and that the same is true and correct to the best of their
knowledge and belief. Sworn to and subscribed before me this 25th day of June
1999.
My commission expires:
-------------------------
Notary Public
Personally Known or produced I.D. Type of I.D. Produced:
131
EXHIBIT 3.4(d) of the Reorganization Agreement
FORM OF INVESTMENT LETTER
Xxxxxxx X. Xxxxxxx
President
Equity Growth Systems, inc.
0000 XxXxxx Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Dear Sir:
I hereby certify and warrant that I am acquiring 1,127,431 shares of
Equity Growth Systems, inc.'s (the "Company") unregistered common stock (the
"Stock"). I hereby certify under penalty of perjury that upon receipt of the
Stock, I will be accepting it for my own account for investment purposes without
any intention of selling or distributing all or any part thereof. I represent
and warrant that I qualify as an accredited investor (as that term is defined in
rule 501 of Regulation D promulgated under authority of the Securities Act of
1933, as amended) or have been specifically excused from such requirement, in
writing by the Company's management, or, in the alternative, that I am
sophisticated in financial affairs, or have relied on the advice of someone
sophisticated in financial affairs, and I able to bear the economic risks of
this investment and I do not have any reason to anticipate any change in my
circumstances, financial or otherwise, nor any other particular occasion or
event which should cause me to sell or distribute, or necessitate or require my
sale or distribution of the Stock. No one other than me has any beneficial
interest in the Stock.
I further certify that I have consulted with my own legal counsel who,
after having been apprized by me of all the material facts surrounding this
transaction, opined to me, for the benefit of
132
the Company, that this transaction was being effected in full compliance with
the applicable securities laws of my state of domicile.
I agree that I will in no event sell or distribute any of the Stock
unless in the opinion of your counsel (based on an opinion of my legal counsel)
the Stock may be legally sold without registration under the Securities Act of
1933, as amended, and/or registration and/or other qualification under
then-applicable State and/or Federal statutes, or the Stock shall have been so
registered and/or qualified and an appropriate prospectus, shall then be in
effect.
I am fully aware that the Stock is being offered and sold by the
corporation to me in reliance on the exemption provided by Sections 3(b), 4(2)
or 4(6) or the Securities Act of 1933, as amended, which exempts the sale of
securities by an issuer where no public offering is involved, and on my
certifications and warranties.
In connection with the foregoing, I consent to your legending my
certificates representing the Stock to indicate my investment intent and the
restriction on transfer contemplated hereby and to your placing a "stop
transfer" order against the Stock in the Company's stock transfer books until
the conditions set forth herein shall have been met.
I acknowledge by my execution hereof that I have had access to your
books, records and properties, and have inspected the same to my full and
complete satisfaction prior to my acquisition of the Stock. I represent and
warrant that because of my experience in business and investments, I am
competent to make an informed investment decision with respect thereto on the
basis of my inspection of your records and my questioning of your officers.
I further certify that my domicile is located at the address listed in
this letter.
Very truly yours,
/s/ J. Xxxxx Xxxxxxx /s/
-------------------
J. Xxxxx Xxxxxxx
00 Xxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxx 00000
Accepted:
This 25 day of June, 1999.
/s/ Xxxxxxx X. Xxxxxxx /s/
----------------
Xxxxxxx X. Xxxxxxx, President
Equity Growth Systems, inc.
133
FORM OF INVESTMENT LETTER
Xxxxxxx X. Xxxxxxx
President
Equity Growth Systems, inc.
0000 XxXxxx Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Dear Sir:
I hereby certify and warrant that I am acquiring 1,105,325 shares of
Equity Growth Systems, inc.'s (the "Company") unregistered common stock (the
"Stock"). I hereby certify under penalty of perjury that upon receipt of the
Stock, I will be accepting it for my own account for investment purposes without
any intention of selling or distributing all or any part thereof. I represent
and warrant that I qualify as an accredited investor (as that term is defined in
rule 501 of Regulation D promulgated under authority of the Securities Act of
1933, as amended) or have been specifically excused from such requirement, in
writing by the Company's management, or, in the alternative, that I am
sophisticated in financial affairs, or have relied on the advice of someone
sophisticated in financial affairs, and I able to bear the economic risks of
this investment and I do not have any reason to anticipate any change in my
circumstances, financial or otherwise, nor any other particular occasion or
event which should cause me to sell or distribute, or necessitate or require my
sale or distribution of the Stock. No one other than me has any beneficial
interest in the Stock.
I further certify that I have consulted with my own legal counsel who,
after having been apprized by me of all the material facts surrounding this
transaction, opined to me, for the benefit of the Company, that this transaction
was being effected in full compliance with the applicable securities laws of my
state of domicile.
I agree that I will in no event sell or distribute any of the Stock
unless in the opinion of your counsel (based on an opinion of my legal counsel)
the Stock may be legally sold without registration under the Securities Act of
1933, as amended, and/or registration and/or other qualification under
then-applicable State and/or Federal statutes, or the Stock shall have been so
registered and/or qualified and an appropriate prospectus, shall then be in
effect.
I am fully aware that the Stock is being offered and sold by the
corporation to me in reliance on the exemption provided by Sections 3(b), 4(2)
or 4(6) or the Securities Act of 1933, as amended, which exempts the sale of
securities by an issuer where no public offering is involved, and on my
certifications and warranties.
In connection with the foregoing, I consent to your legending my
certificates representing the Stock to indicate my investment intent and the
restriction on transfer contemplated hereby and to your placing a "stop
transfer" order against the Stock in the Company's stock transfer books until
the conditions set forth herein shall have been met.
I acknowledge by my execution hereof that I have had access to your
books, records and properties, and have inspected the same to my full and
complete satisfaction prior to my acquisition of the Stock. I represent and
warrant that because of my experience in business and investments, I am
134
competent to make an informed investment decision with respect thereto on the
basis of my inspection of your records and my questioning of your officers.
I further certify that my domicile is located at the address listed in
this letter.
Very truly yours,
/s/ Xxxxxxx X. Xxxxx /s/
-------------------
Xxxxxxx X. Xxxxx
000 Xxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
Accepted:
This 25th day of June, 1999.
/s/ Xxxxxxx X. Xxxxxxx /s/
----------------
Xxxxxxx X. Xxxxxxx, President
Equity Growth Systems, inc.
FORM OF INVESTMENT LETTER
Xxxxxxx X. Xxxxxxx
President
Equity Growth Systems, inc.
0000 XxXxxx Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Dear Sir:
I hereby certify and warrant that I am acquiring ________ shares of
Equity Growth Systems, inc.'s (the "Company") unregistered common stock (the
"Stock"). I hereby certify under penalty of perjury that upon receipt of the
Stock, I will be accepting it for my own account for investment purposes without
any intention of selling or distributing all or any part thereof. I represent
and warrant that I qualify as an accredited investor (as that term is defined in
rule 501 of Regulation D promulgated under authority of the Securities Act of
1933, as amended) or have been specifically excused from such requirement, in
writing by the Company's management, or, in the alternative, that I am
sophisticated in financial affairs, or have relied on the advice of someone
sophisticated in financial affairs, and I able to bear the economic risks of
this investment and I do not have any reason to anticipate any change in my
circumstances, financial or otherwise, nor any other particular occasion or
event which should cause me to sell or distribute, or necessitate or require my
sale or distribution of the Stock. No one other than me has any beneficial
interest in the Stock.
I further certify that I have consulted with my own legal counsel who,
after having been
135
apprized by me of all the material facts surrounding this transaction, opined to
me, for the benefit of the Company, that this transaction was being effected in
full compliance with the applicable securities laws of my state of domicile.
I agree that I will in no event sell or distribute any of the Stock
unless in the opinion of your counsel (based on an opinion of my legal counsel)
the Stock may be legally sold without registration under the Securities Act of
1933, as amended, and/or registration and/or other qualification under
then-applicable State and/or Federal statutes, or the Stock shall have been so
registered and/or qualified and an appropriate prospectus, shall then be in
effect.
I am fully aware that the Stock is being offered and sold by the
corporation to me in reliance on the exemption provided by Sections 3(b), 4(2)
or 4(6) or the Securities Act of 1933, as amended, which exempts the sale of
securities by an issuer where no public offering is involved, and on my
certifications and warranties.
In connection with the foregoing, I consent to your legending my
certificates representing the Stock to indicate my investment intent and the
restriction on transfer contemplated hereby and to your placing a "stop
transfer" order against the Stock in the Company's stock transfer books until
the conditions set forth herein shall have been met.
I acknowledge by my execution hereof that I have had access to your
books, records and properties, and have inspected the same to my full and
complete satisfaction prior to my acquisition of the Stock. I represent and
warrant that because of my experience in business and investments, I am
competent to make an informed investment decision with respect thereto on the
basis of my inspection of your records and my questioning of your officers.
I further certify that my domicile is located at the address listed in
this letter.
Very truly yours,
/s/ Xxxx Xxxxxxx /s/
-------------------
Xxxx Xxxxxxx
000 Xxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxx
Accepted:
This 25 day of June, 1999.
/s/ Xxxxxxx X. Xxxxxxx /s/
----------------
Xxxxxxx X. Xxxxxxx, President
Equity Growth Systems, inc.
136
EXHIBIT 4.2 of the Reorganization Agreement
Subscribers Employment Agreements
(See Exhibit 2.8 of the 8-KSB)
EXHIBIT 4.6(b) of the Reorganization Agreement
Lock-Up & Voting Agreement
(See Exhibit 10.33 of the 8-KSB)
EXHIBIT 4.9(a) of the Reorganization Agreement
The 504 Documents
137
Offering Memorandum
Dated March 2, 1998 Confidential
Ascot Industries, Inc.
(A Nevada Corporation)
1,600,000 Shares
At a Price of S.01 Per Share
Ascot Industries Inc., a Nevada corporation (the "Company"), is a
company which is in the Internet, advertising and communications business.
The Company's principal office is located at 000 Xxxxxxxx Xxxxxx, Xxxxx
000-000, Xxxx Xxxx Xxxxx, XX 00000.
AN INVESTMENT IN THE COMPANY IS SPECULATIVE AND INVOLVES A HIGH DEGREE
OF RISK. INVESTMENT IN THE SECURITIES OFFERED HEREBY IS SUITABLE ONLY FOR
PERSONS OF SUBSTANTIAL FINANCIAL MEANS WHO CAN AFFORD A TOTAL LOSS OF THEIR
INVESTMENT AND WILL BE SOLD ONLY TO ACCREDITED OR OTHERWISE QUALIFIED INVESTORS.
FOR A DISCUSSION OF THE MATERIAL RISKS IN CONNECTION WITH THE PURCHASE OF THE
SHARES, SEE "INVESTMENT RISK CONSIDERATIONS".
THE SECURITIES ARE BEING OFFERED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OF 1933 AS AMENDED (THE"ACT'), IN RELIANCE UPON THE EXEMPTION
FROM REGISTRATION AFFORDED BY SECTIONS 4(2) AND 3(B) OF THE SECURITIES ACT AND
REGULATION D PROMULGATED THEREUNDER.
THIS MEMORANDUM HAS NOT BEEN REVIEWED OR APPROVED OR DISAPPROVED, NOR
HAS THE ACCURACY OR ADEQUACY OF THE INFORMATION SET FORTH HEREIN BEEN PASSED
UPON BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
ADMINISTRATOR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THIS
OFFERING IS BEING MADE PURSUANT TO THE EXEMPTIONS AFFORDED BY SECTIONS 4(2! OR
3(B) OF THE SECURITIES ACT OF 1933 AN RULE 504 PROMULGATED THEREUNDER AND STATE
SMALL CORPORATE OFFERING REGISTRATION PROVISIONS. PURSUANT TO RULE 504 THE
SHARES SOLD HEREBY WILL NOT BE SUBJECT TO ANY LIMITATIONS ON RESALE THEREOF
UNDER FEDERAL LAW. THE SHARES MAY HOWEVER, BE SUBJECT TO LIMITATIONS ON THE
OFFER AND SALE AND THE RESALE OF THE SHARES IMPOSED BY THE BLUE SKY LAWS OF
INDIVIDUAL STATES IN ADDITION THE COMPANY INTENDS TO FILE THE REQUIRED DOCUMENTS
IN CERTAIN OTHER STATES IDENTIFIED BY MANAGEMENT AS HAVING POSSIBLE INVESTOR
INTEREST AND USE ITS BEST EFFORTS TO QUALIFY THE SHARES FOR SECONDARY TRADING IN
SUCH STATES, THOUGH NO ASSURANCE CAN BE GIVEN THAT IT WILL BE ABLE TO QUALIFY
THE SHARES FOR SECONDARY TRADING IN ANY SUCH STATES IN WHICH IT SUBMITS SUCH
APPLICATIONS AND DOCUMENTS. AN INABILITY TO QUALIFY THE SHARES FOR SECONDARY
TRADING WILL CREATE SUBSTANTIAL RESTRICTION ON THE TRANSFERABILITY OF SUCH
SHARES
138
WHICH MAY NEGATE THE BENEFIT OF THE EXEMPTION PROVIDED BY RULE 504 OF REGULATION
D. SEE "RISK FACTORS." THE COMPANY WILL USE ITS BEST EFFORTS TO CAUSE THE SHARES
TO BE LISTED ON THE ELECTRONIC BULLETIN BOARD OPERATED BY THE NATIONAL
ASSOCIATION OF SECURITIES DEALERS INC AS A MARKET IN WHICH THEY MAY BE TRADED.
THERE IS NO ASSURANCE THAT SUCH LISTING WILL BE OBTAINED OR THAT IF A LISTING IS
OBTAINED THAT ANY MARKET FOR THE SHARES WILL DEVELOP, OR IF DEVELOPED, THAT IT
WILL BE SUSTAINED.
Subscription Proceeds to the
Price Commissions(1 ) Company
Per Share $0.01 $ -0- $ 16,000
( 1 ) The Shares are being sold by the Company's sole Officer and no commissions
will be paid in connection with the Offering.
Ascot Industries, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxx 000-000
Xxxx Xxxx Xxxxx, XX 00000
(000) 000-0000
NOTICES TO PROSPECTIVE INVESTORS
THIS OFFERING MEMORANDUM IS SUBMITTED IN CONNECTION WITH THE OFFERING
OF THE SHARES AND MAY NOT BE REPRODUCED OR USED FOR ANY OTHER PURPOSE. BY
ACCEPTING DELIVERY OF THIS OFFERING MEMORANDUM, EACH RECIPIENT AGREES TO RETURN
THIS OFFERING MEMORANDUM AND ALL OTHER DOCUMENTS. IF THE RECIPIENT DOES NOT
AGREE TO PURCHASE ANY OF THE SHARES, TO THE COMPANY AT ITS ADDRESS LISTED ON THE
COVER OF THE OFFERING MEMORANDUM.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED BY THE
SECURITIES ACT OF 1933, AS AMENDED AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD DE AWARE THAT
THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.
IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THE
OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT
BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITIES. FURTHERMORE THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE
ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
139
THIS OFFERING MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO PURCHASE SHARES TO ANY PERSON IN ANY STATE OR IN ANY
JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS UNLAWFUL. SUBJECT TO THE
PRECEDING SENTENCE, THIS OFFERING MEMORANDUM IS INTENDED FOR THE EXCLUSIVE USE
OF THE PERSON TO WHOM IT IS DELIVERED OR AN AUTHORIZED AGENT OF THE COMPANY ON
BEHALF OF THE COMPANY.
PROSPECTIVE INVESTORS ARE NOT TO CONSTRUE THE CONTENTS OF THIS
CONFIDENTIAL OFFERING MEMORANDUM OR ANY PRIOR ON SUBSEQUENT COMMUNICATIONS AS
LEGAL, TAX OR INVESTMENT ADVICE. EACH INVESTOR SHOULD CONSULT HIS OWN COUNSEL,
ACCOUNTANT OR BUSINESS ADVISOR AS TO LEGAL, TAX AND RELATED MATTERS COVERING HIS
INVESTMENT.
THE SHARES ARE OFFERED SUBJECT TO THE ACCEPTANCE BY THE COMPANY OF
OFFERS BY PROSPECTIVE INVESTORS, ALLOCATION OF SHARES BY THE COMPANY AND OTHER
CONDITIONS SET FORTH HEREIN. THE COMPANY MAY REJECT ANY OFFER IN WHOLE OR IN
PART AND NEED NOT ACCEPT OFFERS IN THE ORDER RECEIVED.
THIS CONFIDENTIAL OFFERING MEMORANDUM DOES NOT CONTAIN AN UNTRUE
STATEMENT OF A MATERIAL FACT OR OMIT TO STATE A MATERIAL FACT NECESSARY TO MAKE
THE STATEMENTS MADE IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE,
NOT MISLEADING. IT CONTAINS A FAIR SUMMARY OF THE MATERIAL TERMS AND DOCUMENTS
PURPORTED TO BE SUMMARIZED HEREIN.
THE SHARES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED , OR THE SECURITIES LAWS OF CERTAIN STATES AND ARE BEING
OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF
SAID ACT AND SUCH LAWS. THE SHARES UNDERLYING THE SHARES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. THE SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR OTHER REGULATORY AUTHORITIES. NOR HAVE ANY
OF THE FOREGOING AUTHORITIES PASSED UPON ON ENDORSED THE MERITS OF THIS OFFERING
OR THE ACCURACY OR ADEQUACY OF THE OFFERING MEMORANDUM. ANY REPRESENTATION TO
THE CONTRARY IS UNLAWFUL.
THE SUBSCRIPTION PRICE FOR THE SHARES IS PAYABLE IN FULL UPON
SUBSCRIPTION. THE OFFERING PRICE WAS DETERMINED ARBITRARILY BY THE COMPANY AND
BEARS NO RELATIONSHIP TO ASSETS, EARNINGS, BOOK VALUE ON ANY OTHER CRITERIA OF
VALUE. NO REPRESENTATION IS MADE THAT THE SHARES HAVE A MARKET VALUE OF, ON
COULD BE RESOLD AT, THAT PRICE (SEE "RISK FACTORS')
THE SHARES WILL BE OFFERED BY THE COMPANY ON A BEST EFFORTS BASIS TO
A SELECT GROUP OF INVESTORS WHO MEET CERTAIN SUITABILITY STANDARDS. NO
COMMISSIONS AND NO NON-ACCOUNTABLE OR ACCOUNTABLE EXPENSE ALLOWANCE
140
OF ANY KIND WILL BE PAID FROM OR DEDUCTED FROM THE PROCEEDS RAISED HEREBY.
THE COMPANY WILL ADSORB ALL MARKETING EXPENSES ASSOCIATED WITH THIS
OFFERING (SEE "USE OF PROCEEDS ).
THE COMPANY HAS AGREED TO PROVIDE, PRIOR TO THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED HEREIN, TO EACH POTENTIAL PURCHASER OF SECURITIES (OR
HIS REPRESENTATIVES OR BOTH) THE OPPORTUNITY TO ASK QUESTIONS OF, AND RECEIVE
ANSWERS FROM, THE COMPANY OR ANY PERSON ACTING ON ITS BEHALF CONCERNING THE
TERMS AND CONDITIONS OF THIS OFFERING AND TO OBTAIN ANY ADDITIONAL INFORMATION,
TO THE EXTENT THEY POSSESS SUCH INFORMATION OR CAN ACQUIRE IT WITHOUT
UNREASONABLE EFFORT ON EXPENSE, NECESSARY TO VERIFY THE ACCURACY OF THE
INFORMATION SET FORTH HEREIN.
THIS OFFERING MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO ANY PERSON
WHO DOES NOT MEET THE SUITABILITY STANDARDS DESCRIBED HEREIN. REPRODUCTION
OF THIS OFFERING MEMORANDUM IS STRICTLY PROHIBITED.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS OFFERING MEMORANDUM EXCEPT AS NOTED ABOVE
WITH REGARD TO QUESTIONS ASKED OF THE COMPANY AND OF THOSE AUTHORIZED TO ACT ON
ITS BEHALF. NO OFFERING LITERATURE OR ADVERTISING HAS BEEN AUTHORIZED BY THE
COMPANY EXCEPT THE INFORMATION CONTAINED HEREIN. ANY INFORMATION ON
REPRESENTATION NOT CONTAINED HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ITS OFFICERS AND DIRECTORS. EXCEPT AS OTHERWISE
INDICATED, THIS OFFERING MEMORANDUM SPEAKS AS OF THE DATE ON THE COVER PAGE.
NEITHER THE DELIVERY OF THIS OFFERING MEMORANDUM NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES. CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE RESPECTIVE DATES AT WHICH THE
INFORMATION IS GIVEN HEREIN OR THE DATE HEREOF.
ANY UNSOLD SHARES MAY BE PURCHASED BY THE COMPANY OR ITS AFFILIATES ON
THE SAME TERMS AS SHARES PURCHASED BY OTHER INVESTORS.
NOTICES TO RESIDENTS OF CERTAIN STATES
NOTICE TO ALABAMA RESIDENTS
THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER THE
ALABAMA SECURITIES ACT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES
HAS NOT BEEN FILED WITH THE ALABAMA SECURITIES COMMISSION. THE COMMISSION DOES
NOT RECOMMEND OR ENDORSE THE PURCHASE OF ANY SECURITIES, NOR DOES IT PASS UPON
THE ACCURACY OR COMPLETENESS OF THIS OFFERING MEMORANDUM. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
ANYTHING TO THE CONTRARY HEREIN NOTWITHSTANDING THE INVESTMENT OF
141
AN ALABAMA PURCHASER WHO IS NOT AN ACCREDITED INVESTOR MAY NOT EXCEED
TWENTY (20%) PER CENT OF SUCH PURCHASER S NET WORTH, EXCLUSIVE OF PRINCIPAL
RESIDENCE, FURNISHINGS AND AUTOMOBILES.
NOTICE TO ALASKA RESIDENTS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE ALASKA SECURITIES
ACT AND MAY NOT SE SOLD WITHOUT REGISTRATION UNDER THAT ACT OR EXEMPTION
THEREFROM.
NOTICE TO ARIZONA RESIDENTS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE ARIZONA SECURITIES
ACT AND ARE BEING SOLD IN RELIANCE UPON THE EXEMPTION CONTAINED IN SECTION
44-1844(1) OF SUCH ACT. THESE SECURITIES MAY NOT BE SOLD WITHOUT REGISTRATION
UNDER SUCH ACT OR EXEMPTION THEREFROM.
ARIZONA RESIDENTS MUST HAVE EITHER (I) A MINIMUM NET WORTH OF AT LEAST
SEVENTY FIVE THOUSAND ($75,000) DOLLARS (EXCLUDING HOME, HOME FURNISHINGS AND
AUTOMOBILES) AND A MINIMUM ANNUAL GROSS INCOME OF SEVENTY FIVE THOUSAND
($75,000) DOLLARS; ON (II) A NET WORTH OF AT LEAST TWO HUNDRED TWENTY FIVE
THOUSAND ($225,000) DOLLARS (AS COMPUTED ABOVE).
NOTICE TO ARKANSAS RESIDENTS
THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER
SECTION 14(L))(14) OF THE ARKANSAS SECURITIES ACT AND SECTION 4(2) OF THE
SECURITIES ACT OF 1933. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES
HAS NOT BEEN FILED WITH THE ARKANSAS SECURITIES DEPARTMENT OR WITH THE
SECURITIES AND EXCHANGE COMMISSION. NEITHER THE DEPARTMENT NOR THE COMMISSION
HAS PASSED UPON THE VALUE OF THESE SECURITIES, MADE ANY RECOMMENDATIONS AS TO
THEIR PURCHASE, APPROVED OR DISAPPROVED THE OFFERING, OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS OFFERING MEMORANDUM. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, AN INVESTMENT BY A NON
ACCREDITED INVESTOR MAY NOT EXCEED TWENTY (20%) PER CENT OF THE INVESTORS NET
WORTH AT THE TIME OF PURCHASE, ALONE OR JOINTLY WITH SPOUSE.
NOTICE TO CALIFORNIA RESIDENTS
IF THE COMPANY ELECTS TO SELL SHARES IN THE STATE OF CALIFORNIA. IT IS
UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SHARES, OR OTHER INTEREST
THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR WITHOUT THE PRIOR WRITTEN
CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT
AS PERMITTED IN THE COMMISSIONERS RULES.
142
NOTICE TO CONNECTICUT RESIDENTS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE CONNECTICUT
SECURITIES ACT AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT REGISTRATION OR
EXEMPTION THEREFROM.
NOTICE TO DELAWARE RESIDENTS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE DELAWARE
SECURITIES ACT AND MAY NOT BE SOLD ON TRANSFERRED WITHOUT REGISTRATION OR
EXEMPTION THEREFROM.
NOTICE TO FLORIDA RESIDENTS
THE SHARES REFERRED TO HEREIN WILL BE SOLD TO, AND ACQUIRED BY, THE
HOLDER IN A TRANSACTION EXEMPT UNDER SECTION 517.061 OF THE FLORIDA SECURITIES
ACT. THE SHARES HAVE NOT BEEN REGISTERED UNDER SAID ACT IN THE STATE OF FLORIDA.
IN ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE PRIVILEGE OF VOIDING THE
PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE
BY SUCH PURCHASER TO THE ISSUER, AN AGENT OR THE ISSUER, AN ESCROW AGENT OR
WITHIN THREE (3) DAYS AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED
TO SUCH PURCHASER, WHICH EVER OCCURS LATER.
NOTICE TO GEORGIA RESIDENTS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE GEORGIA SECURITIES
ACT OF 1973 AS AMENDED. IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION SET
FORTH IN SECTION 9(M) OF SUCH ACT AND THE SECURITIES CANNOT BE SOLD OR
TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR IN A TRANSACTION WHICH
IS OTHERWISE IN COMPLIANCE WITH SAID ACT.
NOTICE TO IDAHO RESIDENTS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE CONNECTICUT
SECURITIES ACT AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT REGISTRATION OR
EXEMPTION THEREFROM.
ANYTHING TO THE CONTRARY NOTWITHSTANDING, THE INVESTMENT BY A NON-
ACCREDITED INVESTOR MAY NOT EXCEED TEN (10%) PER CENT OF THE INVESTOR'S NET
WORTH.
NOTICE TO INDIANA RESIDENTS
EACH INVESTOR PURCHASING SHARES MUST WARRANT THAT HE HAS EITHER (I)
143
A NET WORTH (EXCLUSIVE OF HOME, HOME FURNISHINGS AND AUTOMOBILES) EQUAL TO AT
LEAST THREE (3) TIMES THE AMOUNT OF HIS INVESTMENT BUT IN NO EVENT LESS THAN
SEVENTY FIVE THOUSAND ($75,000) DOLLARS OR (II) A NET WORTH (EXCLUSIVE OF HOME,
HOME FURNISHINGS AND AUTOMOBILES OF TWO (2) TIMES HIS INVESTMENT BUT IN NO EVENT
LESS THAN THIRTY THOUSAND ($30,000) DOLLARS AND A GROSS INCOME OF THIRTY
THOUSAND ($30.00.0) DOLLARS.
NOTICE TO IOWA RESIDENTS
IOWA RESIDENTS MUST HAVE EITHER (I) A NET WORTH OF AT LEAST FORTY
THOUSAND ($40,000) DOLLARS EXCLUDING HOME, HOME FURNISHINGS AND AUTOMOBILES} AND
A MINIMUM ANNUAL GROSS INCOME OF FORTY THOUSAND ($40,000) DOLLARS, OR (II) A NET
WORTH OF AT LEAST ONE HUNDRED TWENTY FIVE THOUSAND ($125,000) DOLLARS AS
COMPUTED ABOVE.
NOTICE TO KANSAS RESIDENTS
AN INVESTMENT BY A NON-ACCREDITED INVESTOR SHALL NOT EXCEED TWENTY
(20%) PER CENT OF THE INVESTOR'S NET WORTH; EXCLUDING PRINCIPAL RESIDENCE,
FURNISHINGS THEREIN AND PERSONAL AUTOMOBILES.
NOTICE TO KENTUCKY RESIDENTS
THESE SECURITIES REPRESENTED BY THIS CERTIFICATE (OR OTHER DOCUMENT),
HAVE BEEN ISSUED PURSUANT TO A CLAIM OF EXEMPTION FROM THE REGISTRATION OR
QUALIFICATION PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS AND MAY NOT BE
SOLD OR TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION
PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE
EXEMPTIONS THEREIN.
ANYTHING TO THE CONTRARY HEREIN NOTWITHSTANDING, THE INVESTMENT BY
A NON-ACCREDITED INVESTOR MAY NOT EXCEED TEN (10%) OF THE INVESTOR'S NET
WORTH.
NOTICE TO MAINE RESIDENTS
THESE SECURITIES ARE BEING SOLD PURSUANT TO THE EXEMPTION FROM
REGISTRATION WITH THE BANK SUPERINTENDENT OF THE STATE OF MAINE UNDER SECTION
10520(2)(R) OF TITLE 32 OF THE MAINE REVISED STATUTES. THESE SECURITIES MAY BE
DEEMED RESTRICTED SECURITIES AND AS SUCH THE HOLDER MAY NOT BE ABLE TO RESELL
THE SECURITIES UNLESS PURSUANT TO REGISTRATION UNDER STATE OR FEDERAL SECURITIES
LAWS OR UNLESS AN EXEMPTION UNDER SUCH LAWS ENLISTS.
NOTICE TO MARYLAND RESIDENTS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE MARYLAND
144
SECURITIES ACT IN RELIANCE UPON THE EXEMPTION FROM REGISTRATION SET FORTH IN
SECTION 11-602(9) OF SUCH ACT. UNLESS THESE SECURITIES ARE REGISTERED, THEY MAY
NOT BE REOFFERED FOR SALE OR RESOLD IN THE STATE OF MARYLAND, EXCEPT AS A
SECURITY, OR IN A TRANSACTION EXEMPT UNDER SUCH ACT.
NOTICE TO MASSACHUSETTS RESIDENTS
MASSACHUSETTS RESIDENTS MUST HAVE HAD EITHER (1) A MINIMUM NET WORTH OF
AT LEAST FIFTY THOUSAND ($50,000) DOLLARS EXCLUDING HOME, HOME FURNISHINGS AND
AUTOMOBILES AND HAD DURING THE LAST YEAR, OR IT IS ESTIMATED THAT THE SUBSCRIBER
WILL HAVE DURING THE CURRENT TAX YEAR, TAXABLE INCOME OF FIFTY THOUSAND
($50,000) DOLLARS, OR (2) A NET WORTH OF AT LEAST ONE HUNDRED FIFTY THOUSAND
($150,000) DOLLARS (AS COMPUTED ABOVE).
NOTICE TO MICHIGAN RESIDENTS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE MICHIGAN
SECURITIES ACT AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT REGISTRATION
UNDER THAT ACT OR EXEMPTION THEREFROM.
THE COMPANY SHALL PROVIDE ALL MICHIGAN INVESTORS WITH A DETAILED
WRITTEN STATEMENT OF THE APPLICATION OF THE PROCEEDS OF THE OFFERING WITHIN SIX
(6) MONTHS AFTER COMMENCEMENT OF THE OFFERING OR UPON COMPLETION, WHICHEVER
OCCURS FIRST, AMD WITH ANNUAL CURRENT BALANCE SHEETS AND INCOME STATEMENTS
THEREAFTER.
NOTICE TO MINNESOTA RESIDENTS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER CHAPTER 80 OF THE
MINNESOTA SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED ON OTHERWISE DISPOSED
OF FOR VALUE EXCEPT PURSUANT TO REGISTRATION OR OPERATION OF LAW.
NOTICE TO MISSISSIPPI RESIDENTS
THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER THE
MISSISSIPPI SECURITIES ACT. A REGISTRATION STATEMENT RELATING TO THESE
SECURITIES HAS NOT BEEN FILED WITH THE MISSISSIPPI SECRETARY OF STATE OR WITH
THE SECURITIES AND EXCHANGE COMMISSION. NEITHER THE SECRETARY OF STATE NOR THE
COMMISSION HAS PASSED UPON THE VALUE OF THESE SECURITIES, NOR HAS APPROVED OR
DISAPPROVED THE OFFERING. THE SECRETARY OF STAT E DOES NOT RECOMMEND THE
PURCHASE OF THESE OR ANY OTHER SECURITIES.
THERE IS NO ESTABLISHED MARKET FOR THESE SECURITIES AND THERE MAY NOT
BE ANY MARKET FOR THESE SECURITIES IN THE FUTURE. THE SUBSCRIPTION PRICE OF
THESE SECURITIES HAS BEEN ARBITRARILY DETERMINED BY THE ISSUER AND IS NOT AN
INDICATION OF THE ACTUAL VALUE OF THESE SECURITIES.
145
THE PURCHASER OF THESE SECURITIES MUST MEET CERTAIN SUITABILITY
STANDARDS AND MUST BE ABLE TO BEAR THE ENTIRE LOSS OR HIS INVESTMENT.
ADDITIONALLY. ALL PURCHASERS WHO ARE NOT ACCREDITED INVESTORS MUST HAVE A NET
WORTH OF AT LEAST THIRTY THOUSAND ($30,000) DOLLARS AND INCOME OF THIRTY
THOUSAND ($30,000) DOLLARS OR A NET WORTH OF SEVENTY FIVE THOUSAND ($75.000)
DOLLARS. THESE SECURITIES MAY NOT BE TRANSFERRED FOR A PERIOD OF ONE (1) EXCEPT
IN A TRANSACTION WHICH IS EXEMPT UNDER THE MISSISSIPPI SECURITIES ACT OR IN A
TRANSACTION IN COMPLIANCE WITH THE MISSISSIPPI SECURITIES ACT.
NOTICE TO MISSOURI RESIDENTS
THESE SECURITIES ARE SOLD TO, AND BEING ACQUIRED BY, THE HOLDER IN A
TRANSACTION EXEMPTED UNDER SECTION 10, SUBSECTION 409.402(B), MISSOURI
UNIFORM SECURITIES ACT (RMSO 1969).
THE SHARES HAVE NOT BEEN REGISTERED UNDER SAID ACT IN THE STATE OF
MISSOURI. UNLESS THE SHARES ARE REGISTERED, THEY MAY NOT BE REOFFERED OR RESOLD
IN THE STATE OF MISSOURI, EXCEPT AS A SECURITY, OR IN A TRANSACTION EXEMPT UNDER
SAID ACT.
ANYTHING TO THE CONTRARY NOTWITHSTANDING, AN INVESTOR MUST HAVE A MINIMUM ANNUAL
INCOME OF THIRTY THOUSAND ($30,000) DOLLARS AND A NET WORTH OF AT LEAST THIRTY
THOUSAND ($30,000) DOLLARS,(EXCLUSIVE OF HOME, FURNISHINGS AND AUTOMOBILES) OR A
NET WORTH OF SEVENTY FIVE THOUSAND ($75,000) DOLLARS EXCLUSIVE OF HOME,
FURNISHINGS AND AUTOMOBILES.
AN INVESTMENT BY A NON-ACCREDITED INVESTOR SHALL NOT EXCEED TWENTY
(20%) PER CENT OF THE INVESTOR'S NET WORTH.
NOTICE TO MONTANA RESIDENTS
EACH MONTANA RESIDENT WHO SUBSCRIBES FOR THE SECURITIES BEING
OFFERED HEREBY AGREES NOT TO SELL THESE SECURITIES FOR A PERIOD OF TWELVE
(12) MONTHS AFTER DATE OF PURCHASE.
ANYTHING TO THE CONTRARY NOTWITHSTANDING, THE INVESTMENT BY A NON-
ACCREDITED INVESTOR MAY NOT EXCEED TWENTY (20) PER CENT OF THE INVESTOR'S
NET WORTH.
NOTICE TO NEBRASKA RESIDENTS
THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE NEBRASKA SECURITIES
ACT AND MAY NOT BE SOLD WITHOUT REGISTRATION UNDER THAT ACT OR EXEMPTION
THEREFROM.
NOTICE TO NEW HAMPSHIRE RESIDENTS
146
EACH NEW HAMPSHIRE INVESTOR PURCHASING SHARES MUST WARRANT THAT HE HAS
EITHER (I) A NET WORTH (EXCLUSIVE OF HOME, HOME FURNISHINGS AND AUTOMOBILES) OF
TWO HUNDRED FIFTY THOUSAND ($250,000) DOLLARS OR (2) A NET WORTH (EXCLUSIVE OF
HOME, HOME FURNISHINGS AND AUTOMOBILES OF ONE HUNDRED TWENTY FIVE THOUSAND
($125,000) DOLLARS AND FIFTY THOUSAND ($50,000) DOLLARS ANNUAL INCOME.
NOTICE TO NEW JERSEY RESIDENTS
THE ATTORNEY GENERAL OF THE STATE HAS NOT PASSED ON OR ENDORSED THE
MERITS OF THIS OFFERING. THE FILING OF THE WITHIN OFFERING DOES NOT CONSTITUTE
APPROVAL OF THE ISSUE OR THE SALE THEREOF BY THE BUREAU OF SECURITIES OR THE
DEPARTMENT OF LAW AND PUBLIC SAFETY OF THE STATE OF NEW JERSEY. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
NOTICE TO NORTH DAKOTA RESIDENTS
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES COMMISSIONER OF THE STATE NORTH DAKOTA NOR HAS THE COMMISSIONER
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
NOTICE TO NEW YORK RESIDENTS
THIS OFFERING MEMORANDUM HAS NOT BEEN REVIEWED BY THE ATTORNEY
GENERAL. PRIOR TO ITS ISSUANCE AND USE. THE ATTORNEY GENERAL OF THE STATE OF
NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
THIS OFFERING MEMORANDUM DOES NOT CONTAIN AN UNTRUE STATEMENT OF A
MATERIAL FACT OR OMIT TO STATE A MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS
MADE IN OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING. IT
CONTAINS A FAIR SUMMARY OF THE MATERIAL TERMS AND DOCUMENTS PURPORTED TO BE
SUMMARIZED HEREIN.
NOTICE TO NORTH CAROLINA RESIDENTS
THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER THE
NORTH CAROLINA SECURITIES ACT. THE NORTH CAROLINA SECURITIES ADMINISTRATOR
NEITHER RECOMMENDS NOR ENDORSES THE PURCHASE OF ANY SECURITY, NOR HAS THE
ADMINISTRATOR PASSED ON THE ACCURACY OR ADEQUACY OF THE INFORMATION PROVIDED
HEREIN. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NOTICE TO OKLAHOMA RESIDENTS
147
THE SECURITIES RENDERED BY THIS CERTIFICATE XXXX NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR THE OKLAHOMA SECURITIES ACT. THE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED FOR VALUE
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION OF THEM UNDER THE SECURITIES ACT OF
1933 AND/OR THE OKLAHOMA SECURITIES ACT OF AN OPINION OF COUNSEL TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR ACTS.
ANYTHING TO THE CONTRARY NOTWITHSTANDING, AN INVESTMENT BY A NON-
ACCREDITED INVESTOR SHALL NOT EXCEED TEN (10) PER CENT OF THE INVESTOR'S NET
WORTH.
NOTICE TO OREGON RESIDENTS
THE SECURITIES OFFERED HAVE BEEN REGISTERED WITH THE DIRECTOR OF THE
STATE OF OREGON UNDER THE PROVISIONS OF OAR 000-00-000, THE INVESTOR IS ADVISED
THAT THE DIRECTOR HAS MADE ONLY A CURSORY REVIEW OF THE REGISTRATION STATEMENT
AND HAS NOT REVIEWED THIS DOCUMENT SINCE THIS DOCUMENT IS NOT REQUIRED TO BE
FILED WITH THE DIRECTOR.
THE INVESTOR MUST RELY ON THE INVESTOR'S OWN EXAMINATION OF THE COMPANY
CREATING THE SECURITIES, AND THE TERMS OF THE OFFERING INCLUDING THE MERITS AND
RISKS INVOLVED IN MAKING AN INVESTMENT DECISION ON THESE SECURITIES.
NOTICE TO PENNSYLVANIA RESIDENTS
ANY PERSON WHO ACCEPTS AN OFFER TO PURCHASE THE SECURITIES IN THE
COMMONWEALTH OF PENNSYLVANIA IS ADVISED, THAT PURSUANT TO SECTION 207(1N) OF
THEE PENNSYLVANIA SECURITIES ACT, HE SHALL HAVE THE RIGHT TO WITHDRAW HIS
ACCEPTANCE, AND RECEIVE A FULL REFUND OF ANY CONSIDERATION PAID, WITHOUT
INCURRING ANY LIABILITY, WITHIN TWO (2) BUSINESS DAYS FROM 'THE TIME THAT HE
RECEIVES NOTICE OF THIS WITHDRAWAL RIGHT AND RECEIVES THE PLACEMENT OFFERING
MEMORANDUM. ANY PERSON WHO WISHES TO EXERCISE SUCH RIGHTS OF WITHDRAWAL IS
ADVISED TO GIVE NOTICE BY LETTER OR TELEGRAM SENT AND POSTMARKED BEFORE THE END
OF THE SECOND BUSINESS DAY AFTER EXECUTION. IF THE REQUEST FOR WITHDRAWAL IS
TRANSMITTED ORALLY, WRITTEN CONFIRMATION MUST BE GIVEN. ANY PERSON WHO PURCHASES
INTERESTS WHO IS A PENNSYLVANIA RESIDENT WILL NOT SELL SUCH INTERESTS FOR A
PERIOD OF TWELVE (12) MONTHS BEGINNING WITH THE CLOSING DATE. PENNSYLVANIA
RESIDENTS MUST HAVE EITHER (I) A MINIMUM NET WORTH OF THIRTY THOUSAND ($30.000)
DOLLARS EXCLUDING HOME, HOME FURNISHINGS AND AUTOMOBILES AND A MINIMUM ANNUAL
GROSS INCOME OF THIRTY THOUSAND ($30.000) DOLLARS, OR (II) A NET WORTH OF AT
LEAST SEVENTY FIVE THOUSAND ($75,000) DOLLARS (AS COMPUTED ABOVE), AND MAY NOT
INVEST MORE THAN TEN (10%) PER CENT OF THEIR NET WORTH (EXCLUSIVE OF THE
SUBSCRIBER'S HOME, HOME FURNISHINGS AND AUTOMOBILES.
148
NOTICE TO SOUTH CAROLINA RESIDENTS
THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER THE
SOUTH CAROLINA UNIFORM SECURITIES ACT. A REGISTRATION STATEMENT RELATING TO
THESE SECURITIES HAS NOT BEEN FILED WITH THE SOUTH CAROLINA SECURITIES
COMMISSIONER. THE COMMISSIONER DOES NOT RECOMMEND OR ENDORSE THE PURCHASE OF ANY
SECURITIES, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF THIS OFFERING
MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NOTICE TO SOUTH DAKOTA RESIDENTS
THE SHARES HAVE NOT BEEN REGISTERED UNDER CHAPTER 47-31 OF THE SOUTH
DAKOTA SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED ON OTHERWISE DISPOSED OF
FOR VALUE EXCEPT PURSUANT TO REGISTRATION, EXEMPTION THEREFROM OR OPERATION OF
LAW.
SOUTH DAKOTA RESIDENTS MUST HAVE EITHER (I) A MINIMUM NET WORTH OF AT
LEAST SIXTY THOUSAND ($60,000) DOLLARS (EXCLUDING HOME, HOME FURNISHINGS AND
AUTOMOBILES) AND A MINIMUM GROSS INCOME OF SIXTY THOUSAND ($60,000) DOLLARS, OR
(II) A NET WORTH OF AT LEAST TWO HUNDRED TWENTY FIVE THOUSAND ($225,000) DOLLARS
(AS COMPUTED ABOVE).
NOTICE TO TENNESSEE RESIDENTS
ANYTHING TO THE CONTRARY NOTWITHSTANDING, AN INVESTMENT BY ANY INVESTOR
SHALL NOT EXCEED TEN (10%) PER CENT OR THE INVESTOR'S NET WORTH.
NOTICE TO TEXAS RESIDENTS
THIS OFFERING MEMORANDUM IS FOR THE INVESTOR'S CONFIDENTIAL USE AND MAY
NOT BE REPRODUCED. ANY ACTION CONTRARY TO THESE RESTRICTIONS MAY PLACE SUCH
INVESTOR AND THE ISSUER IN VIOLATION OR THE TEXAS SECURITIES ACT.
ANYTHING TO THE CONTRARY NOTWITHSTANDING, AN INVESTMENT BY ANY INVESTOR
SHALL NOT EXCEED TEN (10%) PER CENT OF THE INVESTOR'S NET WORTH.
NOTICE TO UTAH RESIDENTS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UTAH SECURITIES
ACT AND MAY NOT BE SOLD WITHOUT REGISTRATION UNDER THAT ACT ON EXEMPTION
THEREFROM.
NOTICE TO WASHINGTON RESIDENTS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE WASHINGTON
149
SECURITIES ACT AND THE ADMINISTRATOR OF SECURITIES OF THE STATE OF
WASHINGTON AS NOT REVIEWED THE OFFERING OR OFFERING MEMORANDUM. THESE
SECURITIES MAY NOT BE SOLD WITHOUT REGISTRATION UNDER THE ACT OR EXEMPTION
THEREFROM.
IT IS THE RESPONSIBILITY OF ANY INVESTOR PURCHASING SHARES TO SATISFY
ITSELF AS TO FULL OBSERVANCE OF THE LAWS OF ANY RELEVANT TERRITORY OUTSIDE THE
UNITED STATES IN CONNECTION WITH ANY SUCH PURCHASE, INCLUDING OBTAINING ANY
REQUIRED GOVERNMENTAL OR OTHER CONSENTS OR OBSERVING ANY OTHER APPLICABLE
REQUIREMENTS.
OFFERING MEMORANDUM
Ascot Industries, Inc.
(A Nevada Corporation)
Offering Memorandum Dated March 2, 1998
1,600,000 Shares
Ascot Industries, Inc., (the Company corporation, is offering on a
"best efforts, no minimum basis. up to a maximum of 1,600,000 shares of common
stock (~Common Stock ), $ 001 par value, at $0.01 per Share. Since there is no
minimum, no proceeds will be held in escrow account and all funds will be
immediately available to the Company.
The Company intends to apply for inclusion of the Common Stock on the
Over the Counter Electronic Bulletin Board. There can be no assurances that an
active trading market will develop, even if the securities are accepted for
quotation. Additionally, even if the Company's securities are accented for
quotation and active trading develops, the Company is still required to maintain
certain minimum criteria established by NASDAQ, of which there can be no
assurance that the company will be able to continue to fulfill such criteria.
Prior to this offend, there has been no public market for the common
stock of the Company. The price of the Shares offered hereby was arbitrarily
determined by the Company and does not bear any relationship to the Company's
assets, book value, net worth, results of operations or any other recognized
criteria of value. For additional information regarding the factors considered
in determining the offering price of the Shares, see "Risk Factors - Arbitrary
Offering Price",. "Description of Securities".
The Company does not presently file reports or other information with
the Securities and Exchange Commission ("Commission"). However, following
completion of this offering, the Company intends to furnish its security holders
with annual reports containing audited financial statements and such interim
reports, in each case as it may determine to furnish or as may be required by
law.
150
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OF ANY STATES ECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROS PECTUS.ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE SECURITIES ARE OFFERED BY THE COMPANY SUBJECT TO PRIOR SALE,
ACCEPTANCE OR AN OFFER TO PURCHASE, WITHDRAWAL, CANCELLATION OR MODIFICATION OF
THE OFFER WITHOUT NOTICE THE COMPANY RESERVES THE RIGHT TO REJECT ANY ORDER, IN
WHOLE OR In PART, FOR THE PURCHASE OF ANY OF THE SECURITIES OFFERED HEREBY.
This offering involves special risks concerning the Company (see "Risk
Factors"). Investors should carefully review the entire Memorandum and should
not invest any funds in this Offering unless they can afford to lose their
entire investment. In making an investment decision, investors must rely on
their own examination of the issuer and the terms of the Offering, including the
merit and risks involved.
OFFERING SUMMARY
The following summary information is qualified in its entirety by the
detailed information and financial statements and notes thereto appearing
elsewhere in this Memorandum.
The Company is in the Internet, advertising and communications
business. The Company was incorporated in the State of Nevada and its principal
executive office is located at 000 Xxxxxxxx Xxxxxx, Xxxxx 000--000, Xxxx Xxxx
Xxxxx, XX 00000 and its telephone number is (000 ) 000-0000
RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK. ONLY THOSE PERSONS ABLE TO LOSE THEIR ENTIRE INVESTMENT SHOULD PURCHASE
THESE SECURITIES. PROSPECTIVE INVESTORS,PRIOR TO MAKING AN INVESTMENT DECISION.
SHOULD CAREFULLY READ THIS PROSPECTUS AND CONSIDER, ALONG WITH OTHER MATTERS
REFERRED TO HEREIN, THE FOLLOWING RISK FACTORS:
Risk Factors Relating to the Business of the Company
Start-up or Development Stage Company. The Company did not have any
operations before its organization and is a "start-up" or "development stage"
company No assurances can be Liven that the Company will the able to compete
with other companies in its industry The purchase of the securities offered
hereby must be regarded as the placing of funds at a high risk in a new or
"start-up" venture with all the unforeseen costs. expenses, problems. and
difficulties to which such ventures are subject See "Use of Proceeds to Issuer"
and "Description of Business "
No Assurance of Profitability To date the Company has not generated any
revenues from operations. The Company does not anticipate any significant
revenues in the near future The Company's
151
ability to successfully implement its business plan is dependent on the
completion of this Offering There can be no assurance that the Company will be
able to develop Into a successful or profitable business
No Assurance of Payment of Dividends. No assurances can be made that
the future operations of the Company will result in additional revenues or will
be profitable. Should the operations of the Company become profitable it Is that
the Company would retain much or all of its earnings in order to finance future
growth and expansion Therefore, the Company does not presently intend to pay
dividends, and it is not likely that any dividends win be paid in the
foreseeable future. See "Dividend Policy".
Possible Need for Additional Financing . The Company intends to fund
its operations and other capital needs for the next 12 months substantially from
the operations and proceeds of this Offering, but there can be no assurance that
such funds will be sufficient for these purposes. The Company may require
additional amounts of capital for its future expansion, operating costs and
working capital. The Company has made no arrangements to obtain future
additional financing, and if required there can be no assurance that such
financing will be available, or that such financing will be available on
acceptable terms. See "Use of Proceeds.
Dependence on Management. The Company's success is principally dependent
on its current management personnel for the operation of its business.
Broad Discretion in Application of Proceeds. The management of the
Company has broad discretion to adjust the application and allocation of the net
proceeds of this offering, in order to address chanced circumstances and
opportunities As a result of the foregoing, the success of the Company will be
substantially dependent upon the discretion and judgment of the management of
the Company with respect to the application and allocation of the net proceeds
hereof. Pending use of such proceeds, the net proceeds of this offering will be
invested by the Company in temporary, short-term interest-bearing obligations.
See "Use of Proceeds.
Arbitrary Offering Price. There has been no prior public market for the
Company's securities. The price to the public of the Shares offered hereby has
been arbitrarily determined by the Company and bears no relationship to the
Company's earnings, book value or any other recognized criteria of value.
Immediate and Substantial Dilution. An investor in this offering will
experience immediate and substantial dilution.
Lack of Poor Market for Securities of the Company. No prior market has
existed for the securities being offered hereby and no assurance can be given
that a market will develop subsequent to this offering.
No Escrow of Investors' Funds. This offering is being made on a "best
efforts, no minimum basis As such all the funds from this Offering will be
immediately available to the Company.
No assurance of acquisition While it is the company's intend to acquire
either all of the shares or assets of other industry related companies in
addition to expanding its own operations, there is no assurance that the company
will be able to achieve this goal. That event would cause a materially adverse
effect on the future of the company
152
USE OF PROCEEDS
The Company will receive the proceeds from the Offering for working capital.
DIVIDEND POLICY
Holders of the Company's Common Stock are entitled to dividends when,
as and if declared by the Board of Directors out of funds legally available
therefor. The Company does not anticipate the declaration or payment of any
dividends in the foreseeable future. The Company intends to retain earnings, if
any to finance the development and expansion of its business. Future dividend
policy will be subject to the discretion of the Board of Directors and will be
contingent upon future earnings, if any, the Company's financial condition,
capital requirements, general business conditions and other factors Therefore,
there can be no assurance that any dividends of any kind will ever be paid.
THE COMPANY
The Company is in the Internet, advertising and communications
business. In addition, the company is negotiating with other companies in the
Internet, advertising and communications field with the intent of acquiring all
of the shares or assets of one or more of these companies However, if the
company is unable to complete the acquisition/acquisitions it will continue to
operate its existing business and expand its activities through internal growth.
Management
Xxxx X. Xxxxxxxx, Xx., is the Company's sole Director, and its President
and Secretary
EXECUTIVE COMPENSATION
Since the Company was recently incorporated, it has no historical
information with respect to executive compensation. At the conclusion of the
Offering, the Company does not intend to compensate its officers for services to
the Company from the proceeds of this Offering and will only do so when and if
the Company generates profits.
Compensation of Directors
Directors are not paid fees for their services nor reimbursed for expenses of
attending board meetings.
DESCRIPTION OF SECURITIES
Shares
The Company is offering hereby a "best efforts, no minimum basest' up to
1,600,000 shares of Commo n Stock at $.01 per Share.
Common Stock
153
The authorized capital stock of the Company consists of 20,000, 000
shares of Common Stock, $. 001 par value. Holders of the Common Stock do not
have preemptive rights to purchase additional shares of Common Stock or other
subscription rights. The Common Stock carries no conversion rights and is not
subject to redemption or to any sinking fund provisions. All shares of Common
Stock are entitled to share equally in dividends from sources legally available
therefor when, as and if declared by the Board of Directors and, upon
liquidation or dissolution of the Company, whether voluntary or involuntary, to
share equally in the assets of the Company available for distribution to
stockholders All outstanding shares of Common Stock are validly authorized and
issued, fully paid and non-assessable, and all shares to be sold and issued as
contemplated hereby, will be validly authorized and issued, fully paid and
non-assessable. The Board of Directors is authorized to issue additional shares
of Common Stock, not to exceed the amount authorized by the Company's
Certificate of Incorporation, on such terms and conditions and for such
consideration as the Board may deem appropriate without further stockholder
action. The above description concerning the Common Stock of the Company does
not purport to be complete. Reference is made to the Company's Certificate of
Incorporation and Bylaws which are available for inspection upon proper notice
at the Company's offices, as well as to the applicable statutes of the State of
Nevada for a more complete description concerning the rights and liabilities of
stockholders.
Prior to this offering there has been no market for the Common Stock of
the Company' and no predictions can be made of the effect, if any, that market
sales of shares or the availability of shares for sale will have on the market
price prevailing from time to time. Nevertheless, sales of significant amounts
of the Common Stock of the Company in the public market may adversely affect
prevailing market paces, and may impair the Company's ability to raise capital
at that time through the sale of its equity securities.
Each holder of Common Stock is entitled to one vote per share on all
matters on which such stockholders are entitled to vote. Since the shares of
Common Stock do not have cumulative voting rights, the holders of more than 50
percent of the shares voting for the election of directors can elect all the
directors if they choose to do so and, in such event, the holders of the
remaining shares will not be able to elect any person to the Board of Directors.
PLAN OF DISTRIBUTION
The Company has no underwriter for this Offering. The Offering is
therefore a self-underwriting. The Shares will be offered by the Company at the
offering price of $.01 per Share.
Price of the Offering.
There is no, and never has been, a market for the Shares, and there is
no guaranty that a market will ever develop for the Company's shares.
Consequently the offering price has been determined by the Company. Among other
factors considered in such determination were estimates of business potential
for the Company, the Company's financial condition, an assessment of the
Company's management and the general condition of the securities market at the
time of this Offering. However, such price does not necessarily bear any
relationship to the assets, income or net worth of the Company.
The offering price should not be considered an indication of the actual
value of the Shares. Such price is subject to change as a result of market
conditions and other factors, and no assurance can be given that the Shares can
be resold at the Offering Price.
154
There can be no assurance that an active trading market will develop
upon completion of this Offering, or if such market develops, that it will
continue. Consequently, purchasers of the Shares offered hereby may not find a
ready market for Shares.
ADDITIONAL INFORMATION
Each investor warrants and represents to the Company that, prior to
making an investment in the Company, that he has had the opportunity to inspect
the books and records of the Company and that he has had the opportunity to make
inquiries to the officers and directors of the Company and further that he has
been provided full access to such information.
INVESTOR SUITABILITY STANDARDS AND
INVESTMENT RESTRICTIONS
Suitability
Shares will be offered and sold pursuant an exemption under the
Securities Act, and exemptions under applicable state securities and Blue Sky
laws. There are different standards under these federal and state exemptions
which must be met by prospective investors in the Company.
The Company will sell Shares only to those Investors it reasonably
believes meet certain suitability requirements described below.
Each prospective Investor must complete a Confidential Purchaser
questionnaire and each Purchaser Representative, if any, must complete a
Purchaser Representative Questionnaire.
EACH INVESTOR MUST BE RESPONSIBLE FOR DETERMINING THAT IT IS PERMITTED
TO INVEST IN THE COMPANY, THAT ALL APPROPRIATE ACTIONS TO AUTHORIZE SUCH AN
INVESTMENT HAVE BEEN TAKEN, AND THAT ANY REQUIREMENTS THAT ITS INVESTMENTS BE
DIVERSIFIED OR SUFFICIENTLY LIQUID HAVE BEEN MEET.
An Investor will qualify as an Accredited Investor if it falls within
any one of the following categories at the time of the sale of the Shares to
that Investor.
( 1 ) A bank as defined in Section 3(a)(2) of the Securities Act, or a
savings and loan association or other institution as defined in Section
3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary
capacity; a broker or dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934; an insurance company as defined in Section 2(13) of the
Securities Act; an investment company registered the Investment Company Act of
1940 or a business development company as defined in Section 2(a)(48) of that
Act; a Small Business Investment Company licensed by the United States Small
Business Administration under Section 301(c)or(d)of the Small Business
Investment Act of 1958; a plan established and maintained by a state, its
political subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, if such plan has total
assets in excess of $5,000,000; an employee benefit plan within the meaning of
the Employee Retirement Income Security Act of 1974, if the investment decision
is made by a plan fiduciary, as defined in Section 3(21) of that Act, which is
either a bank, savings and loan association, insurance company, or registered
investment adviser, of the
155
employee benefit plan has total assets in excess of $5,000,000, or, if a
self-directed plan with the investment decisions made solely by persons that are
accredited investors;
(2) A private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1942;
(3) An organization described in Section 501(c)(3) of the internal
Revenue Code with total assets in excess of $5,000,000;
(4) A director or executive officer of the Company.
(5) A natural person whose individual net worth, or joint net worth
with that person's spouse, at the time of such person's purchase of the Shares
exceeds $1,100,000;
(6) A natural person who had an individual income in excess of $200,000
in each of the two most recent years or joint income with that person's spouse
in excess of $300,000 in each of those years and has a reasonable expectation of
reaching the same income level in the current year;
(7) A trust with total assets in excess of $5,000,000, not formed for
the specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person as describe in Rule 506(b)(2)(ii) of
Regulation D; and
(8) An entity in which all of the equity owners are accredited
investors (as defined above).
As used in this Memorandum the term "net worth" means the excess of
total assets over total liabilities. In computing net worth for the purpose of
(5) above, the principal residence of the investor must be valued at cost,
including cost of improvements, or at recently appraised value by an
institutional lender making a secured loan, net of encumbrances. In determining
income an Investor should add to the investor's adjusted gross income any
amounts attributable to tax exempt income received, losses claimed as a limited
partner in any limited partnership, deductions claimed for depletion,
contributions to an XXX or XXXXX retirement plan, alimony payments, and any
amount by which income form long-term capital gains has been reduced in arriving
at adjusted gross income.
In order to meet the conditions for exemption from the registration
requirements under the securities laws of certain jurisdictions, investors who
are residents of such jurisdiction may be required to meet additional
suitability requirements.
An investor that does not qualify as an accredited investor is a
non-accredited investor and may acquire Shares only if:
(1) The Investor is knowledgeable and experienced with respect to
investments in limited partnerships either alone or with its Purchaser
Representative, if any; and
(2) The Investor has been provided access to all relevant documents it
desires or needs; and
156
(3) The Investor is aware of its limited ability to sell and/or transfer
its Shares in the Company; and
(4) The investor can bear the economic risk(including loss of the
entire investment)without impairing its ability to provide for its financial
needs and contingencies in the same manner as it was prior to making such
investment.
THE COMPANY RESERVES THE RIGHT IN ITS ABSOLUTE DISCRETION TO
DETERMINE IF A POTENTIAL INVESTOR MEETS OR FAILS TO MEET THE SUITABILITY
STANDARDS SET FORTH IN THIS SECTION.
Additional Suitability Requirements for Benefit Plan Investors
In addition to the foregoing suitability standards generally applicable
to all Investors, the Employee Retirement Income Security Act of 1934, as
amended ("ERISA"), and the regulations promulgated thereunder by the Department
of Labor impose certain additional suitability standards for Investors that are
qualified pension, profit-sharing or stock bonus plans ("Benefit Plan
Investor"). In considering the purchase of Shares, a fiduciary with respect to a
prospective Benefit Pl an I investor must consider whether an investment in the
Shares will satisfy the prudence requirement of section 404(a)(1)(B) of ERISA,
since there is not expected to be any market created in which to sell or
otherwise dispose of the Shares In addition, the fiduciary must consider whether
the investment in Shares will satisfy the diversification requirement of Section
404(a)(1)(C) of ERISA
Restrictions on Transfer or Resale of Shares
The Availability of federal and state exemptions and the legality of
the offers and sales of the Shares are conditioned upon, among other things, the
fact that the purchase of Shares by all Investors are for investment purposes
only and not with a view lo resale or distribution. Accordingly each prospective
Investor will be required to represent in the Subscription Agreement that it is
purchasing the Shares for its own account and for the purpose of investment
only, not with a view to, or in accordance with, the distribution of sale of the
Shares and that it we not sell pledge. assign or transfer or offer to sell,
pledge, assign or transfer any of its Shares without an effective registration
statement under the Securities Act, or an exemption there from and an opinion of
counsel acceptable to the Company that registration under the Securities Act is
not required and that the transaction complies with elf other applicable federal
and state securities or Blue Sky laws.
157
Ascot Industries, Inc.
(A Nevada Corporation)
Subscription Documents
March 2, 1998
INSTRUCTION FOR COMPLETION:
In connection with your subscription for Ascot Industries, Inc. (the
Company), enclosed herewith are the following documents which must be properly
and fully completed and signed:
1. INVESTMENT AGREEMENT. Fully completed and signed. Please make your
check payable to the Company. (Note to partnerships who wish to subscribe: each
general partner of the partnership must fully complete and sign the Investment
Agreement).
NOTES TO SUBSCRIBERS:
(a) Please indicate on the Subscription Agreement and the Confidential
Purchaser Questionnaire how the Units are to be held (e.g. joint tenants with
rights of survivorship, tenants by the entireties, etc).
(b) Please return Subscription Documents and checks to the Company at
X.X. Xxx 000, Xxxx Xxxxx, XX 00000. Checks should be made payable to the Ascot
Industries, Inc.
(c) Additional copies of the required forms are available from the
Company at X.X. Xxx 000, Xxxx Xxxxx, XX 00000, or by calling the Company at
(000) 000-0000.
INVESTMENT SUBSCRIPTION AGREEMENT
To: Ascot Industries, Inc.
X.X. Xxx 000
Xxxx Xxxxx, XX 00000
Gentlemen:
You have informed me that the Company is offering shares of the
Company's common stock at a price of $0.01 per share.
1. Subscription. Subject to the terms and conditions of this
Subscription Agreement (the Agreement.), the undersigned hereby tenders this
subscription, together with the payment (in cash or by bank check in lawful
funds of the United States) of an amount equal to $0.01 per Share, and the other
subscription documents, all in the forms submitted to the undersigned.
2. Acceptance of Subscription: Adoption and Appointment. It is
understood and agreed that this Agreement is made subject to the following terms
and conditions:
(a) The Company shall have the right to accept or reject subscriptions
in any order it shall determine, in whole or in part, for any reason (or for no
reason).
(b) Investments are not binding on the Company until accepted by the
Company. The Company will refuse any subscription by giving written notice to
the purchaser by personal delivery or first-class mail. In its sole discretion,
the Company may establish a limit on the purchase of Units by a particular
purchaser.
158
(c) The undersigned hereby intends that his signature hereon shall
constitute an irrevocable subscription to the Company of this Agreement. subject
to a three day right of rescission for Florida residents pursuant to Section 517
061 of the Florida Securities and Investor Protection Act. Each Florida resident
has a right to withdraw his or her subscription for Units, without any liability
whatsoever, and receive a full refund of all monies paid, within three days
after the execution of this Agreement or payment for the Units has been made,
whichever is later. To accomplish this withdrawal, a subscriber need only send a
letter or telegram to the Company at the address set forth in this Agreement,
indicating his or her intention to withdraw. Such letter or telegram should be
sent and postmarked prior to the end of the aforementioned third day. It is
prudent to send such letter by certified mail, return receipt requested, to
ensure that is received and also to evidence the time when it was mailed. If the
request is made orally (in person or by telephone) to the Company a written
confirmation that the request has been received should be requested.
Upon satisfaction of the all the conditions referred to herein, copies
of this Agreement, duly executed by the Company, will be delivered to the
undersigned.
3. Representations and Warranties of the Undersigned The undersigned
hereby represents and warrants to the Company as follows:
(a) The undersigned (I) has adequate means of providing for his current
needs and possible personal contingencies, and he has no need for liquidity of
his investment in the Company;(ii) is an Accredited Investor, as defined below,
or has the net worth sufficient to bear the risk of losing his entire
investment, and (iii) has, alone or together with his Purchaser
Representative(as herein after defined), such knowledge end experience
nonfinancial matters that the undersigned is capable of evaluating the relative
risks and merits of this investment
"Accredited Investors" include (I) accredited investors as defined in
Regulation D under the Securities Act of 1933, as amended ("Reg D") i. e. (a)
$1,000,000 in net worth (including spouse) or (b) $200,000 in annual income for
the last two years end projected for the current year; and (ii)the Company or
affiliates of the Company.
"Non-Accredited Investors" are all subscribers who are not"Accredited Investors"
All investors must have either a preexisting personal or business
relationship with the Company or any of its affiliates, or by reason of their
business or financial experience (or the business or financial experience of
their unaffiliated professional advisors)would reasonably be assumed to have the
capacity to protect their own interests in connection with this investment. Each
subscriber must represent that he is purchasing for his own account not with a
view to or for resale in connection with any distribution of the Units.
(b) The address set forth in his Purchaser Questionnaire is his true
and correct residence, and he has no present intention of becoming a resident of
any other state or jurisdiction.
159
(c) The undersigned acknowledges that if a Purchaser Representative.,
as defined in Regulation D, has been utilized by the undersigned, (i) the
undersigned has completed and executed the Acknowledgment of Use of Purchaser
Representative; (ii) in evaluating his investment as contemplated hereby, the
undersigned has been advised by his Purchaser Representative as to the merits
and risks of the investment in general and the suitability of the investment for
the undersigned in particular; and (ii) the undersigned's Purchaser
Representative has completed and executed the Purchaser Representative
Questionnaire.
(d) The undersigned has received and read or reviewed with his
Purchaser Representative, if any, and represents he is familiar with this
Agreement, the other Subscription Documents and the Memorandum accompanying
these documents. The undersigned confirms that all documents, records and books
pertaining to the investment in the Company and requested by the undersigned or
his Purchaser Representative have been made available or have been delivered to
the undersigned and/or the undersigned's Purchaser Representative.
(e) The undersigned and/or his Purchaser Representative have had an
opportunity to ask questions of and receive answers from the Company or a person
or persons acting on its behalf, concerning the terms and conditions of this
investment and the financial condition, operations and prospects of the Company.
(f) The undersigned understands that the Units have not been registered
under the Securities Act of 1933, as amended (the "Securities Acts) or any state
securities laws and are instead being offered and sold in reliance on exemptions
from registration; and the undersigned further understands that he is purchasing
an interest in a Company without being furnished any offering literature or
prospectus other than the material furnished hereby.
(g) The Units for which the undersigned hereby subscribed are being
acquired solely for his own account, and are not being purchased with a view to
or for the resale, distribution, subdivision, or fractionalization hereof. He
has no present plans to enter into any such contract, undertaking, agreement or
arrangement. In order to induce the Company to sell and issue the Units
subscribed for hereby to the undersigned, it is agreed that the Company will
have no obligation to recognize the ownership, beneficial or otherwise, of such
Units by anyone but the undersigned.
(h) The undersigned has received, completed and returned to the Company
the Purchaser Questionnaire relating to his general ability to bear the risks of
an investment in the Company and his suitability as an investor in a private
offering; and the undersigned hereby affirms the correctness of his answers to
such Confidential Purchaser Questionnaire and all other written or oral
information concerning the undersigned's so it ability provided to the Company
by, or on behalf of, the undersigned.
(i) The person, if any, executing the Purchaser Representative
Questionnaire, a copy of which has been received by the undersigned, is acting
and is hereby designated to act as the undersigned's Purchaser Representative in
connection with the offer and sale of the Units to the undersigned. This
designation of a Purchaser Representative was made with the knowledge of the
representations and disclosures made in such Purchaser Representative
Questionnaire and other Subscription Documents.
160
(j) The undersigned acknowledges and is aware of the following:
(i) That there are substantial restrictions on the transferability of the
Units and the Units will not be, and Investors in the Company have no rights to
require that, the Units be registered under the Securities act, the undersigned
may not be able to avail himself of certain of the provisions of Rule 144
adopted by the Securities and Exchange Commission under the Securities Act with
respect to the resale of the Units and, accordingly, the undersigned may be
required to hold the Units for a substantial period of time and it may not be
possible for the undersigned to liquidate his Investment In the Company.
(ii) That no federal or state agency has made any finding or determination
as to the fairness of the Offering of Units for investment or any recommendation
or endorsement of the Units.
(1) The approximate or exact length of time that he will be required to
remain as owner of the Units.
(2) The poor performance on the part of the Company or any Affiliate
(as defined in Rule 405 under the Securities Act), or its associates, agents, or
employees or of any other person, will in any way indicate the predictable
results of the ownership of the Units or of the overall Company.
(3) Subscriptions will be accepted in the order in which they are
received.
(iii) That the Company shall incur certain costs and expenses and undertake
other actions in reliance upon the irrevocability of the subscription (following
the three day rescission period described in Paragraph 2 C of this Agreement)
for the Units made hereunder.
The foregoing representations and warranties are true and accurate as
of the date of delivery of the Funds to the Company and shall survive such
delivery. If, in any respect, such representations and warranties shall not
betrueandaccuratepriortothedeliveryoftheFundspursuanttoParagraph1 hereof, the
undersigned shall give written notice of such fact to his Purchaser
Representative, if any, specifying which representations and warranties are not
true and accurate and the reasons therefor, with a copy to the Company and
otherwise to give the same information to the Company directly.
4. Indemnification. The undersigned acknowledges that he understands
the meaning and legal consequences of the representations and warranties
contained in Paragraph 3 hereof, and he hereby indemnifies and holds harmless
the Company, agents, employees and affiliates, from and against any and all
losses, claims, damages or liabilities due to or arising out of a breach of any
representations(s) or warranty(s) of the undersigned contained in this
Agreement.
5. No Waiver. Notwithstanding any of the representations, warranties,
acknowledgment or agreements made herein by the undersigned, the undersigned
does not thereby or in any other manner waive any rights granted to him under
federal or sate securities laws
6. Transferability. The undersigned agrees not to transfer or assign
this Agreement, or any of his interest herein. Further, an investor in the Units
pursuant to this Agreement and applicable law, xxxx not be permitted to transfer
or dispose of the Units unless they are registered or unless such transaction is
exempt from registration under the Securities Act or other securities laws and
in the case of the purportedly exempt sale, such investor provided (at his own
expense) an opinion of counsel reasonably satisfactory to the Company that such
exemption is, in fact available.
161
7. Revocation. The undersigned acknowledges and agrees that his
subscription for the Units made by the execution and delivery of this Agreement
by the undersigned is irrevocable and subject to the three day right of
rescission in Florida described in Section 2c herein, and that such subscription
shall survive the death or disability of the undersigned, except as provided
pursuant to the blue sky laws of the states in which the Units may be offered,
or any other applicable state statutes or regulations
8. Miscellaneous.
(a) All notices or other communications given or made hereunder shall
be in writing and shall be delivered or mailed by registered or certified mail,
return receipt requested, postage prepaid, to the undersigned at his address set
forth below and to
(b) Notwithstanding the place where this Agreement may be executed by
any of the parties hereto, the parties expressly agree that all the terms and
provisions hereof shall be construed in accordance with and shall be govern by
the laws of the State of Florida
(c) This Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof any may be amended only by
writing executed by all parties
(d) This Agreement shall be binding upon the heirs, estates, legal
representatives, successors and assigns of all parties hereto
(e) All terms used herein shall be deemed to include the masculine and
the feminine and the singular and the plural as the context requires
ASCOT INDUSTRIES, INC.
SUBSCRIPTION AGREEMENT SIGNATURE PAGE
Accredited
Non Accredited
Number of Shares Subscribed for:
Amount tendered at $0.01 per Share:
(Signature of Subscriber) (Signature of Spouse, or joint tenant, if any)
(Printed Name of Subscriber) (Printed Name of Spouse, or other joint tenant
if any)
(Address) (Address)
(Social Security Number) (Social Security Number)
Subscription accepted
Ascot Industries, Inc.
162
The following people signed a Subscription Agreement Signature Page:
2. Xxxxxxxxx Xxxxxxxx
3. Xxxx X. Xxxxxxxx
4. Xxxx X. Xxxxxxxx, Xx.
5. Xxxx X. Xxxxxxxx
6. Xxxxx & Xxxxx Xxxxxx
7. Xxxxx X. Xxxxxxxx
8. King Trust
9. Advantage Management Reserves, LTD. Xxxxxxx X. Xxxxxx, Pres.
9. Xxxxxx Xxxxxx, Trustee Trust Dated 5/24/95
10. Xxx X. Xxxx
11. Xxxxxx X. Xxxxxxx Trust
12. Xxxxxxxx X. Xxxxxxx Trust
13. Xxxxx X. Xxxxxxx Trust No. 1 U/A 7/15/86
14. Xxxxx Xxxxxxx T-U-A 7/15/86
15. Xxxxx & Xxxxx Xxxxxxx
16. Xxxxxxxx X. Xxxxx
17. Xxxxx X. Xxxxx
18. Xxxxxx X. Callback
19. Xxxx X. Xxxxx
20. Xxxxx X. Xxxxxxxx Rev Living Trust
21. Xxxxxxx X. & Xxxxx Xxxxxxx
22. Country Xxxxx Development Corp. Xxxxx X. Xxxxxx, President
23. Xxxx Xxxxxx
24. Xxxxxxx Xxxxx, Xx. TTEE UAD 12/22/1992 Colton Charitable Remainder
Unitrust FBO Xxxxxx Xxxxxx (Recipient)
25. Xxxxxxx & Xxxx Xxx Xxxxxxx
26. Xxxxx Xxxxxxx, Trustee
27. Euro First Capital Corporation Xxxx X. Xxxxxxxx, President
28. Xxxxx X. Xxxxxxxx
29. Xxxxx X. Xxxxxxxx
30. Xxxxxx X. Xxxxxxx, Xx.
31. Xxxxxxx X. Xxxxxx
32. Xxxxx X. Xxxxxx
33. Xxxxxx Xxxxxxx
34. Xxxx X. Xxxxxxxx XX
163
35. Xxxxxx X. Xxxxxxxx
36. Xxxxxx X. Havilano
37. Xxxx X. & Xxxxxxx Xxxxx
38. D. Xxxxxx Xxxxxx, Jr.
39. Xxxx X. Xxxxxx, Xx.
40. Xxxxx X. XxXxxxxx
41. Xxxxxx X. XxXxxxxxx
42. Mr. & Xxx. Xxxx X. Xxxxxx
43. Xxxxx X. Xxxxxx
44. Xxxxxx X. Xxxxxxxxx, M.D.
45. Xxxxx-Xxxxxxx MOLEMA
46. Howrey Trust 2/5/952 & Xxxxxx X. Xxxxxx, TR
47. One Capital Corporation, Xxxx X. Xxxxxxxx, Xx., President
48. OTC Horizon Group, Xxxx X. Xxxxxxxx, Xx., President
49. Xxxxxx X. Xxxxxx, Trustee U/A DTD 11/23/92
50. The Xxxxx X. Xxxxxxxx Living Trust UTD 6/3/96
51. Xxxxxxx X. Xxxxxx
52. E. Xxxxxx Xxxx
53. Xxxx X. Xxxxxx
54. Xxxxx X. & Xxxxxxx X. Xxxxxx
55. Wiley X. Xxxxxxxx
56. Xxxxxxx X. Xxxxxxxx, Xx.
57. Xxxxxx X. Schhchter
58. Xxxx Xxxxxx
59. Xxxxxxxx Holdings, Inc., Xxxxxx X. Xxxxxxxx, President
60. Xxxxxx X. Xxxxxx
61. Xxxxx X. Xxxxx
62. Xxxxx Xxxxxx
63. Xxxxx X. & Xxxxxxx X. Xxxxxxxx
64. TVI Capital Corporation; Xxxx E, Finfrock, Jr. President
65. Xxxxx & Xxxx Xxxxxxxxx
66. Xxxx X. Xxxxxxx
67. Xxxxxx Xxxxxx
68. Xxxxxxxx X. Westfield
69. White Lake Enterprises; Xxxxx X. Xxxxxx, President
70. Xxxxxxx & Xxx Xxxxxxxxxxx
71. X. Xxxxx & Xxxxxxx Xxxxx
72. Legal Computer Technology Inc., Xxxxxx X. Xxxxxxxx
73. Xxxxxx X. Xxxxxxxx
164
FORM D
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
NOTICE OF SALE OF SECURITIES
PURSUANT TO REGULATION D,
SECTION 4(6), AND/OR
UNIFORM LIMITED OFFERING EXEMPTION
FILED WITH THE COMMISSION ON MARCH 16, 1998
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Name of Offering ( check if this is an amendment and name has changed, and
indicate change.) Ascot Industries, Inc.
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Filing Under (Check box(es) that apply): (X ) Rule 504 ( ) Rule 505 ( ) Rule 506
( ) Section 4(6) (X ) ULOE Type of Filing: (X) New Filing Amendment
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A. BASIC IDENTIFICATION DATA
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1. Enter the information requested about the issuer
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Name of Issuer ( check if this is an amendment and name has changed, and
indicate change.) Ascot Industries, Inc.
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Address of Executive Offices (Number and Street, City, State, Zip Code,
Telephone Number (Including Area Code) X.X. Xxx 000, Xxxx Xxxxx, XX 00000
000-000-0000
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Address of Principal Business Operations (Number and Street, City, State, Zip
Code, Telephone Number (Including Area Code) Same as above (if different from
Executive Offices)
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Brief Description of Business
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Type of Business Organization (X) corporation limited partnership, already
formed other (please specify): business trust limited partnership, to be formed
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Month Year Actual or Estimated Date of Incorporation or Organization: 2 98 (X)
Actual
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Jurisdiction of Incorporation or Organization: (Enter two-letter U.S. Postal
Service abbreviation for State: NV
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GENERAL INSTRUCTIONS Federal: Who Must File: All issuers making an offering of
securities in reliance on an exemption under Regulation D or Section 4(6), 17
CFR 230.501 et seq. or 15 U.S.C. 77d(6). When to File: A notice must be filed no
later than 15 days after the first sale of securities in the offering. A notice
is deemed filed with the U.S. Securities and Exchange Commission (SEC) on the
earlier of the date it is received by the SEC at the address given
165
below or, if received at that address after the date on which it is due, on the
date it was mailed by United States registered or certified mail to that
address. Where to File: U.S. Securities and Exchange Commission, 000 Xxxxx
Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000. Copies Required: Five (5) copies of this
notice must be filed with the SEC, one of which must be manually signed. Any
copies not manually signed must be photocopies of manually signed copy or bear
typed or printed signatures. Information Required: A new filing must contain all
information requested. Amendments need only report the name of the issuer and
offering, any changes thereto, the information requested in Part C, and any
material changes from the information previously supplied in Parts A and B. Part
E and the Appendix need not be filed with the SEC. Filing Fee: There is no
federal filing fee. State: This notice shall be used to indicate reliance on the
Uniform Limited Offering Exemption (ULOE) for sales of securities in those
states that have adopted ULOE and that have adopted this form. Issuers relying
on ULOE must file a separate notice with the Securities Administrator in each
state where sales are to be, or have been made. If a state requires the payment
of a fee as a precondition to the claim for the exemption, a fee in the proper
amount shall accompany this form. This notice shall be filed in the appropriate
states in accordance with state law. The Appendix in the notice constitutes a
part of this notice and must be completed. ATTENTION
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Failure to file notice in the appropriate states will not result in a loss of
the federal exemption. Conversely, failure to file the appropriate federal
notice will not result in a loss of an available state exemption unless such
exemption is predicated on the filing of a federal notice.
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A. BASIC IDENTIFICATION DATA
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2. Enter the information requested for the following: o Each promoter of the
issuer, if the issuer has been organized within the past five years; o Each
beneficial owner having the power to vote or dispose, or direct the vote or
disposition of, 10% or more of a class of equity securities of the issuer; o
Each executive officer and director of corporate issuers and of corporate
general and managing partners of partnership issuers; and o Each general and
managing partner of partnership issuers.
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Check Box(es) that Apply: ( ) Promoter ( ) Beneficial Owner (X ) Executive
Officer (X) Director ( ) General and/or Managing Partner
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Full Name (Last name first, if individual) Finfrock, Jr., Xxxx X.
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Business or Xxxxxxxxx Xxxxxxx (Xxxxxx xxx Xxxxxx, Xxxx, Xxxxx, Xxx Code) X.X.
Xxx 000, Xxxx Xxxxx, XX 00000
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(Use blank sheet, or copy and use additional copies of this sheet, as
necessary.)
166
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B. INFORMATION ABOUT OFFERING
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1. Has the issuer sold, or does the issuer intend to sell, to Yes No
non-accredited investors in this offering? .................... (X ) ( )
Answer also in Appendix, Column 2, if filing under ULOE.
2. What is the minimum investment that will be accepted from any
individual? ....................................................... $0
3. Does the offering permit joint ownership of a single unit? .... Yes No
(X ) ( )
4. Enter the information requested for each person who has been or will be paid
or given, directly or indirectly, any commission or similar remuneration for
solicitation of purchasers in connection with sales of securities in the
offering. If a person to be listed is an associated person or agent of a broker
or dealer registered with the SEC and/or with a state or states, list the name
of the broker or dealer. If more than five (5) persons to be listed are
associated persons of such a broker or dealer, you may set forth the information
for that broker or dealer only.
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Full Name (Last name first, if individual)
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Business or Xxxxxxxxx Xxxxxxx (Xxxxxx xxx Xxxxxx, Xxxx, Xxxxx, Xxx Code)
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Name of Associated Broker or Dealer
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States in Which Person Listed Has Solicited or Intends to Solicit Purchasers
(Check "All States" or check individual States) ............. ( ) All States
[AL] [AK] [AZ] [AR] [CA] [CO] [CT] [DE] [DC] [FL] [GA] [HI] [ID]
[IL] [IN] [IA] [KS] [KY] [LA] [ME] [MD] [MA] [MI] [MN] [MS] [MO]
[MT] [NE] [NV] [NH] [NJ] [NM] [NY] [NC] [ND] [OH] [OK] [OR] [PA]
[RI] [SC] [SD] [TN] [TX] [UT] [VT] [VA] [WA] [WV] [WI] [WY] [PR]
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(Use blank sheet, or copy and use additional copies of this sheet, as
necessary.)
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C. OFFERING PRICE, NUMBER OF INVESTORS, EXPENSES AND USE OF PROCEEDS
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1. Enter the aggregate offering price of securities included in this offering
and the total amount already sold. Enter "0" if answer is "none" or "zero". If
the transaction is an exchange offering, check this box ( ) and indicate in the
columns below the amounts of the securities offered for exchange and already
exchanged.
000
Xxxxxxxxx Xxxxxx Xxxxxxx
Type of Security Offering Price Sold
Debt .............................. $0 $0
Equity ............................ $16,000 $0
(X) Common ( ) Preferred
Convertible Securities (including
warrants) Convertible debentures $0 $0
Partnership Interests ............. $0 $0
Other (Specify_____________)................ $0 $0
Total ........................... $0 $0
Answer also in Appendix, Column 3, if filing under ULOE.
2. Enter the number of accredited and non-accredited investors who have
purchased securities in this offering and the aggregate dollar amounts of their
purchases. For offerings under Rule 504, indicate the number of persons who have
purchased securities and the aggregate dollar amount of their purchases on the
total lines. Enter "0" if answer is "none" or "zero".
Aggregate
Number Dollar Amount
Investors of Purchases
Accredited Investors .............. 0 $0
Non-accredited Investors .......... 0 $0
Total (for filings under Rule 504
only) ............................... 0 $0
Answer also in Appendix, Column 4, if filing under ULOE.
3. If this filing is for an offering under Rule 504 or 505, enter the
information requested for all securities sold by the issuer, to date, in
offerings of the types indicated, the twelve (12) months prior to the first sale
of securities in this offering. Classify securities by type listed in Part
C-Question 1.
Type of Dollar Amount
Type of offering Security Sold
Rule 505 ..........................
Regulation A ......................
Rule 504 ..........................
Total ...........................
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4. a. Furnish a statement of all expenses in connection with the issuance and
distribution of the securities in this offering. Exclude amounts relating solely
to organization expenses of the issuer. The information may be given as subject
to future contingencies. If the amount of an expenditure is not known, furnish
an estimate and check the box to the left of the estimate.
Transfer Agents Fees ............. [X] $0
Printing and Engraving Costs ...... [X] $0
Legal Fees ........................ [X] $1,500.00
Accounting Fees ................... [X] $0
Engineering Fees .................. [X] $0
Sales Commissions (specify finders
fees separately) .................... [X] $0
Other Expenses (identify)
Faxes, telephone, paper,
office expenses [ ] $
Total ........................... [ ] $
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C. OFFERING PRICE, NUMBER OF INVESTORS, EXPENSES AND USE OF PROCEEDS
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b. Enter the difference between the aggregate offering price given in
response to Part C - Question 1 and total expenses furnished in response to Part
C - Question 4.a. This difference is the "adjusted gross proceeds to the issuer"
............ $14,500
5. Indicate below the amount of the adjusted gross proceeds to the issuer used
or proposed to be used for each of the purposes shown. If the amount for any
purpose is not known, furnish an estimate and check the box to the left of the
estimate. The total of the payments listed must equal the adjusted gross
proceeds to the issuer set forth in response to Part C -Question 4.b above.
Payments to
Officers,
Directors, & Payments To
Affiliates Others
Salaries and fees ................ $ 0 $ 0 [ ]
Purchase of real estate .......... $ 0 $ 0 [ ]
Purchase, rental or leasing and
installation of machinery and $ 0 $ 0 [ ]
equipment ........................
Construction or leasing of plant $ 0 $ 0 [ ]
buildings and facilities ...........
169
Acquisition of other businesses
(including the value of securities
involved in this offering that may
be used in exchange for the
assets or securities of another $ 0 $ 0 [ ]
issuer pursuant to a merger) .......
Repayment of indebtedness ........ $ 0 $ 0 [ ]
Working capital .................. $ 0 $14,500.00 [X]
Other (specify): Advertising & promoting
Programs including hosting marketing on line $ 0 $ 0 [ ]
Column Totals .................... $ $ 0 [ ]
Total Payments Listed (column totals
added) ............................... $ 14,500.00 [X]
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D. FEDERAL SIGNATURE
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The issuer has duly caused this notice to be signed by the undersigned duly
authorized person. If this notice is filed under Rule 505, the following
signature constitutes an undertaking by the issuer to furnish to the U.S.
Securities and Exchange Commission, upon written request of its staff, the
information furnished by the issuer to any non-accredited investor pursuant to
paragraph (b)(2) of Rule 502.
Ascot Industries, Inc. /s/ Xxxx X. Xxxxxxxx, Xx. March 2, 1998
Issuer (Print or Type) Signature Date
Xxxx X. Xxxxxxxx, Xx. President
Name of Signer (Print or Type) Title of Signer (Print or Type)
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ATTENTION
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Intentional misstatements or omissions of fact constitute federal criminal
violations. (See 18 U.S.C. 1001.)
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EXHIBIT 4.9(a)5 of the Reorganization Agreement
The Target Companies Exchange Agreement
(See Exhibit 2.6 of the 8-KSB)
170
EXHIBIT 4.9(c) of the Reorganization Agreement
Target Company's Limited Power of Attorney
Limited Power of Attorney
Coupled with an Interest
State of Florida }
County of Palm Beach } ss.:
American Internet Technical Centers, Inc., a Nevada corporation (the
"Grantor"), by J. Xxxxx Xxxxxxx, an individual residing at 00 Xxxxxxxxx Xxxxx;
Xxxxxxx Xxxxx, Xxxxxxx 00000, serving as its president, pursuant to a resolution
of its Board of Directors dated June 25th, 1999, and in conjunction with its
obligations under Section 4.9 of that certain reorganization agreement entered
into with Equity Growth Systems, inc., a publicly held Delaware corporation
("Equity Growth"), and certain other parties, including the holders of
approximately 90% of the Grantor's capital stock. and, its wholly owned
subsidiary (the "Reorganization Agreement"), hereby irrevocably appoints the
Board of Directors of Equity Growth, acting by majority vote, with full power of
substitution and delegation, as its attorney-in-fact (the person or persons
designated to so act being hereinafter generically referred to as the
"Grantee"), for all purposes set forth in Section 4.9 of the Reorganization
Agreement and all matters incidental thereto, or convenient to accomplish the
goals thereof, including, without limiting the generality of the foregoing, to
negotiate and execute all indentures, certificates, stock powers, confessions of
judgment, documents, agreements, instruments and corrective instruments on its
behalf and in its name, as if it, itself had undertaken such functions directly
after having received complete and irrevocable directives to so act from the
Grantor's Board of Directors at a properly convened and directed meeting
thereof, with full recourse against it, in conjunction with all matters
concerning the Reorganization Agreement and Equity Growth, and all instruments
and agreements called for in the Reorganization Agreement.
IN WITNESS WHEREOF, I have executed this Indenture, on this 25th day of
June, 1999.
Signed, Sealed & Delivered
In Our Presence
American Internet Technical Centers,
Inc.
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_______________________________ By: _______________________________
J. Xxxxx Xxxxxxx, President
SWORN TO BEFORE ME, an official duly authorized by the State of Florida
to administer oaths, on the date first above written by the above referenced
Grantor, who provided me with personal identification, as follows:
and, after being duly sworn, did certify that he is the duly elected and serving
president of the Grantor, that his execution of this irrevocable power of
attorney coupled with an interest was duly authorized, empowered and directed by
the Grantor's Board of Directors at a duly convened meeting thereof, for the
purpose of inducing Equity Growth and the other parties to the Reorganization
Agreement to Close thereon, and to provide the Grantor with a substantial
infusion of capital and other material benefits, and that such act is duly
enforceable against the Grantor, in accordance with the terms of the
Reorganization Agreement and this Indenture.
My Commission expires:
[SEAL]
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Xxxxxxx X. Xxxxxxx
Notary Public
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171
