Amendments & Supplements to Reorganization Agreement
These amendments and supplements (the "Amendment") to the
Reorganization Agreement closed on by the following defined Parties on
June 25, 1999 (the "Agreement") are made and entered into by and among
AmeriNet Xxxxx.xxx, inc., a Delaware corporation with a class of
securities registered under Section 12 of the Securities Exchange Act
of 1934, as amended formerly operating as Equity Growth Systems, inc.
("AmeriNet" and the "Exchange Act," respectively); American Internet
Technical Center, Inc., a Florida corporation now wholly owned by
AmeriNet ("American") and, Messrs. J. Xxxxx Xxxxxxx, a Florida
resident ("Xx. Xxxxxxx") and Xxxxxxx X. Xxxxx, a Florida resident
("Xx. Xxxxx;" Messrs. Xxxxxxx and Xxxxx being sometimes collectively
hereinafter referred to as the "Subscribers"; AmeriNet, American 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, a number of the representations by American and the
Subscribers in the Reorganization Agreement and the exhibits thereto
have, after post closing review, proved to be materially inaccurate,
requiring adjustments to the substantive terms of the Reorganization
Agreement; but
WHEREAS, the Parties have agreed that the inaccuracies were
inadvertent and that the long term consequences thereof may prove
minimal, justifying a restructuring that permits the Subscribers to
recapture the bulk of the consideration originally contemplated in the
Reorganization Agreement; and
WHEREAS, the Subscribers have advised AmeriNet and Yankees that
American requires an immediate infusion of $25,000, in addition to the
short term capital requirements disclosed in the Reorganization
Agreement; and
WHEREAS, Yankees has indicated that it is willing to provide such
short term capital immediately, by purchasing 250,000 shares of
AmeriNet Stock (as hereinafter defined) from the Subscribers, and the
Subscribers have agreed to make such AmeriNet stock available for such
purposes, immediately paying over such proceeds to American; and
WHEREAS, the Parties desire to formally memorialize their
understandings concerning the required modifications and supplements
to the Reorganization Agreement required to effect the foregoing:
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NOW, THEREFORE, in consideration of the premises, as well as the
mutual covenants hereinafter set forth, the Parties, intending to be
legally bound, hereby amend and supplement the Reorganization
Agreement, as follows:
Witnesseth:
Article One
Amendments & Supplements
The Parties hereby amend & supplement the Reorganization Agreement,
in all manners required to reflect the following changes in the terms
thereof:
A. The Parties hereby agree to modify the provisions of the
Reorganization Agreement pertaining to the shares of AmeriNet
common stock (the "AmeriNet Stock") to be exchanged for all of
American capital stock (the "American Stock"), as follows:
(1) The initial shares of AmeriNet Stock issued to the Subscribers
shall be reduced to 1,482,756 shares of AmeriNet Stock and the
Subscribers will immediately convey 250,000 of such shares to
Yankees in consideration for the sum of $25,000, to be
immediately paid by the Subscribers to American as an
additional capital contribution, correcting a number of the
inaccuracies in their original representations and warranties
in the Reorganization Agreement;
(2) The remaining 750,000 shares of AmeriNet Stock deducted from
the shares originally received by the Subscribers shall be
immediately returned to AmeriNet for cancellation and shall be
reserved for re-issuance to the Subscribers as a component of
the shares of AmeriNet Stock issuable pursuant to the
Performance Criteria, as a result of which, the aggregate
number of shares of AmeriNet Stock issuable shall be increased
from 4,500,000 shares to 5,250,000 shares, as follows:
(3) AmeriNet will issue additional shares of AmeriNet Stock to the
Subscribers as additional shares exchanged for American Stock
(the "Additional Exchange Shares"), predicated on American's
attaining the following annual net, pre-tax profit thresholds
determined as of June 30 of each year in accordance with
generally accepted accounting principals, consistently applied
("GAAP"), as follows:
Goal Time Frame Additional Exchange Shares
(A) $200,000 2000 500,000 Shares; or
$259,000 2000 875,000 Shares;
(B) $500,000 2001 800,000 Shares; or
$559,000 2001 1,175,000 Shares;
(C) $1,000,000 2002 800,000 Shares;
$1,500,000 2003 800,000 Shares;
$2,000,000 2004 800,000 Shares;
$2,500,000 2005 800,000 Shares.
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(D) In the event that the thresholds are not attained and
AmeriNet has provided American 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.
(E) In the event that the thresholds are not attained but
AmeriNet has not provided American with at least $250,000
in funding for its operations, then, the Additional
Exchange Shares for such period shall be prorated.
B. The ratio of seats on American's board of directors allocated
to designees of the Subscribers shall be reduced from 2/3 to
1/2, the initial board membership being Messrs. Xxxxxxx and
Xxxxx, Xxxxxxx Xxxxxx Xxxxxx, currently AmeriNet's president,
and a further designee of AmeriNet.
C. Messrs. Xxxxxxx'x and Xxxxx'x annual salaries under their
employment agreements with American will be reduced from
$75,000 to $52,000, until profits from operations (after
required internal investments for expansion) attain the levels
contemplated in the Reorganization Agreement, such issue to be
revisited monthly until resolved.
D. If required by AmeriNet, American will hire a senior marketing
and production executive to be designated by AmeriNet on terms
materially identical to those reflected in the employment
agreements between American and the Subscribers and American
will acquire the assets and operations of another Internet
business capable of in house production and hosting of web
sites, designated by AmeriNet.
E. Yankees hereby covenants and agrees to immediately purchase
250,000 shares of AmeriNet Stock from the Subscribers in
consideration for $25,000, provided that such sum is paid
directly to American, for the purpose reflected above, and
acknowledges that such shares have not been registered under
state or federal securities laws, but rather, are being
transferred in reliance on exemptions from the registration
requirements thereof predicated on Yankees' status as an
accredited investor, investment intent and agreement to legending
and stop transfer restrictions required to assure that the shares
will not be transferred except in compliance with applicable
state and federal securities laws.
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Article Five
Miscellaneous
5.1 Amendment.
No modification, waiver, amendment, discharge or change of this
Amendment 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 AmeriNet:
AmeriNet Xxxxx.xxx, Inc.
000 Xxxxx Xxxxx Xxxx, Xxxxx 000; Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxx Xxxxxx, President
Telephone (000) 000-0000, Fax (000) 000-0000;
and, e-mail xxxxxxxxxx@xxxxxx.xxx; ; 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 AmeriNet's transfer
agent for such purpose.
To American:
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
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 AmeriNet and has acted as
scrivener for the Parties in this transaction but that
Yankees is neither a law firm nor an agency subject to any
professional regulation or oversight.
(2) Because of the inherent conflict of interests involved, Yankees
has advised all of the Parties to retain independent legal and
accounting counsel to review this Amendment and its exhibits
and incorporated materials on their behalf.
(3) The decision by any Party not to use the services of legal
counsel in conjunction with this transaction shall be solely at
their own risk, each Part acknowledging that applicable rules
of the Florida Bar prevent AmeriNet's general counsel, who has
reviewed, approved and caused modifications on behalf of
AmeriNet, from representing anyone other than AmeriNet in this
transaction.
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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 Amendment,
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
Amendment 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 af-
fected thereby.
5.6 Governing Law.
This Amendment 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 con-
sequence of the failure of the indemnifying Party to act, whether
pursuant to requirements of this Amendment 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.
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5.8 Dispute Resolution.
(a) In any action between the Parties to enforce any of the terms
of this Amendment or any other matter arising from this
Amendment, the prevailing Party shall be entitled to recover
its costs and expenses, including reasonable attorneys' fees up
to and including all negotiations, trials and appeals, whether
or not any formal proceedings are initiated.
(b) In the event of any dispute arising under this Amendment, or
the negotiation thereof or inducements to enter into the
Amendment, the dispute shall, at the request of any Party, be
exclusively resolved through the following procedures:
(1) (A) First, the issue shall be submitted to mediation
before a mediation service in Broward County, Florida to
be selected by lot from six alternatives to be provided,
one by Yankees, two by AmeriNet, one by American and one
by each of the Subscribers.
(B) The mediation efforts shall be concluded within ten business
days after their initiation unless the Parties unanimously
agree to an extended mediation period;
(2) In the event that mediation does not lead to a resolution of
the dispute then at the request of any Party, the Parties shall
submit the dispute to binding arbitration before an arbitration
service located in Broward County, Florida to be selected by
lot, from six alternatives to be provided, one by Yankees, two
by AmeriNet, one by American and one by each of the
Subscribers.
(3) (A) Expenses of mediation shall be borne by American, if
successful.
(B) Expenses of mediation, if unsuccessful and of arbitration
shall be borne by the Party or Parties against whom the
arbitration decision is rendered.
(C) If the terms of the arbitral award do not establish a
prevailing Party, then the expenses of unsuccessful
mediation and arbitration shall be borne equally by the
Parties involved.
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5.9 Benefit of Amendment.
The terms and provisions of this Amendment 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 Amendment are for convenience and reference
only and in no way define, describe, extend or limit the scope of this
Amendment 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, as-
signments, 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 Amendment.
5.13 Status.
Nothing in this Amendment 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 Amendment may be executed in any number of counterparts.
(b) All executed counterparts shall constitute one Amendment
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 Amendment which shall be the document
filed with the Commission.
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5.15 License.
(a) This Amendment 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 Amendment or of any derivation thereof
without Yankees' prior written permission is prohibited.
(c) This Amendment shall not be construed more strictly against any
Party as a result of its authorship.
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:
AmeriNet Xxxxx.xxx, Inc.
--------------------------------
_________________________________ By: /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx Xxxxxx Jordan, President
(Corporate Seal)
Attest: /s/ G. Xxxxxxx Xxxxxxxxxx
G. Xxxxxxx Xxxxxxxxxx, Secretary
Dated: August 25, 1999
American Internet Technical Centers, Inc.
_________________________________ (A Florida corporation)
_________________________________ By: /s/ J. Xxxxx Xxxxxxx
J. Xxxxx Xxxxxxx, President
(Corporate Seal)
Attest: /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx, Secretary
Dated: August 25, 1999
Subscribers
---------------------------------
--------------------------------- /s/ J. Xxxxx Xxxxxxx
---------------------------------
--------------------------------- /s/ Xxxxxxx X. Xxxxx
Dated: August 25, 1999
The Yankee Companies, Inc.
for the limited purposes specifically
set forth in this Agreement
---------------------------------
_________________________________ By: /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx Xxxxx Xxxxxx, President
(Corporate Seal)
Attest: /s/ Xxxxxxx X. Xxxxx, III
Xxxxxxx X. Xxxxx, III, Secretary
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