Exhibit (2)(ii)
AGREEMENT PROVIDING FOR FORMATION AND CAPITALIZATION
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THIS AGREEMENT PROVIDING FOR FORMATION AND CAPITALIZATION (the
"Agreement") is made as of the _____ day of February, 2002 by and between the
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ TRUST and the ▇. ▇▇▇▇▇▇▇ YORK TRUST (herein referred to as the
"▇▇▇▇▇ Trust" and the "York Trust" respectively) by virtue of action taken by
the Trustees of the ▇▇▇▇▇ Trust and the York Trust, which Trustees are ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ and ▇. ▇▇▇▇▇▇▇ York (herein "▇▇▇▇▇" and "York", respectively and
collectively the "Trustees").
B A C K G R O U N D
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The ▇▇▇▇▇ Trust and the York Trust own of record and beneficially all
of the outstanding voting common stock of two Florida corporations which have
been formed and which exist under Florida law and which are known as Viatical
Capital, Inc. (herein "VCI") and Premiere Investment Capital, Inc. (herein
"Premiere"). VCI and Premiere have, since their formation, engaged in activities
relating to the providing of assistance in the formation of approximately 62
limited liability companies which have been formed under Nevada law and which
have been capitalized privately. Such 62 limited liability companies, as of the
date of this Agreement, each own a portfolio of life insurance policies which
are intended to be acquired by a company which has been or is being formed
pursuant to this Agreement and which will be known as Life Investment Funding
Enterprises, Inc. (herein "LIFE").
LIFE has been or is being formed under the corporate laws of the State
of Nevada, specifically Chapter 78, Nevada Revised Statutes,. The Articles of
LIFE which will be or have been filed in connection with the formation and
commencement of corporate existence of LIFE are included with this Agreement as
Schedule I.
When formed, LIFE intends to enter into a series of Asset Purchase
Agreements with all or a majority of the 62 limited liability companies above
described, which Asset Purchase Agreements will provide for, inter alia, the
acquisition by LIFE of the life insurance portfolios of each limited liability
company which becomes a party to an Asset Purchase Agreement. The form of Asset
Purchase Agreement intended to be used by LIFE is included with this Agreement
as Schedule II.
LIFE intends to be initially capitalized as a result of the
contribution of all of the outstanding voting common stock of VCI and Premiere
by the ▇▇▇▇▇ Trust and the York Trust as hereinafter provided and as a result of
the conduct of a limited and private offering of the shares of Class A
Convertible Preferred Stock of LIFE, which limited and private offering will be
conducted pursuant to a Private Offering Memorandum and related documents which
are in the process of being prepared.
The ▇▇▇▇▇ Trust and/or the York Trust or the Trustees thereof may from
time to time contemporaneous to the formation of LIFE and at times thereafter
make certain advances to LIFE in order to permit LIFE to pursue its business
plan. This Agreement provides for the making of such advancements and the
repayment thereof.
In connection with the asset acquisition transactions involving LIFE
and the limited liability companies which become parties to an Asset Purchase
Agreement, LIFE intends to cause to be prepared and filed and processed to
effectiveness a Registration Statement containing a prospectus, which
Registration Statement will be filed with the United States Securities and
Exchange Commission (herein the "Commission") at an appropriate time.
NOW, THEREFORE, in order to facilitate the formation of LIFE and the
initial capitalization thereof, the ▇▇▇▇▇ Trust and the York Trust hereby agree
as follows:
1. FORMATION OF LIFE. The Trustees, acting on their own behalf and as the
Trustees of the ▇▇▇▇▇ Trust and the York Trust, shall cause to be filed the
Articles of Incorporation relating to LIFE which are included with this
Agreement as Schedule I. The ▇▇▇▇▇ Trust and the York Trust, through the action
of the Trustees, shall take all action which is reasonably necessary in order to
cause the corporate existence of LIFE to come into being and thereafter to
assure the continuing corporate existence of LIFE. The Trustees also agree to
act as the initial members of the Board of Directors of LIFE and the initial
executive officers of LIFE until the permanent Board of Directors of LIFE is
established and the executive officers thereof are identified and employed.
2. INITIAL CAPITAL CONTRIBUTION. LIFE shall be initially capitalized by
virtue of the conveyance of all of the right, title and interest in all of the
outstanding voting common stock of VCI and Premiere, which is owned of record
and beneficially by the ▇▇▇▇▇ Trust and the York Trust. The ▇▇▇▇▇ Trust and the
York Trust, by action of the Trustees, shall prepare, execute and deliver to
LIFE such instruments of conveyance with respect to all of the outstanding
voting common stock of VCI and Premiere as deemed necessary and appropriate by
legal counsel to LIFE. All of the outstanding voting common stock of VCI and
Premiere is sometimes referred to in this Agreement as the "VCI Stock" and the
"Premiere Stock", respectively, or collectively as the "Conveyed Stock"). As the
consideration for such initial capital contribution constituted by the Conveyed
Stock, LIFE shall cause to be issued an aggregate 60,000 shares of its common
stock and an aggregate 697,300 shares of its Class B Preferred Stock, each share
having a par value of $.001 per share. Such securities are sometimes referred to
in this Agreement as the "LIFE Common Stock" and the "LIFE Class B Stock",
respectively, or collectively as the "LIFE Securities". The LIFE Securities
shall be issued to the ▇▇▇▇▇ Trust and the York Trust in such share amounts as
the respective entitlements of the ▇▇▇▇▇ Trust and the York Trust exist on the
consummation of the conveyance transactions called for by this Agreement. The
Conveyed Stock shall be held by LIFE as a Restricted Security, as that term is
utilized under Commission Rule 144 and VCI and Premiere, until further action of
the Board of Directors of LIFE, shall be wholly-owned subsidiaries of LIFE. As a
result of the conveyance of the Conveyed Stock by the ▇▇▇▇▇ Trust and the York
Trust to LIFE, LIFE shall become the indirect beneficial owner of all of the
non-voting membership interests owned of record and beneficially by VCI and
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Premiere on the Closing Date, as hereinafter provided. As of the date of this
Agreement, such non-voting membership interests held in the described limited
liability companies are constituted by _____ non-voting membership units as have
been issued by the limited liability companies identified on Schedule III
hereto.
3. ADVANCES TO LIFE, REPAYMENT. The ▇▇▇▇▇ Trust, the York Trust, the
Trustees thereof and affiliates of such entities and persons, including, without
limitation, that business enterprise described as the "Life Settlement Network"
may from time to time make cash advances to LIFE in order to assist LIFE in
connection with the initiation and carrying out of the business plan of LIFE
which includes, among other activities, the asset acquisition transactions with
the approximate 62 limited liability companies, as such will be governed by the
Asset Purchase Agreement, the limited and private offering of the Class A
Preferred Stock of LIFE, the filing and processing of a Registration Statement
with the Commission relating to the asset acquisition transactions, the
acquisition, ownership and dealing in life insurance policies by LIFE and other
related activities. Any such advances may be evidenced in writing, which
writings may include an unsecured promissory note wherein LIFE is the payor and
the payee is the entity or persons effecting such advances. Such advances shall
be repaid by LIFE to the person or entity entitled to such repayment in such
manner as may be agreed by LIFE and the person and/or entity making such advance
from time to time.
4. REPRESENTATIONS AND WARRANTIES.
A. BY THE ▇▇▇▇▇ TRUST AND THE YORK TRUST. The ▇▇▇▇▇ Trust and the
York Trust represent to LIFE as follows:
(i) The ▇▇▇▇▇ Trust and the York Trust are validly created Trusts
which have been created and are existing pursuant to the laws of
the State of Florida. The ▇▇▇▇▇ Trust and the York Trust have all
necessary power and have taken all requisite action in order to
permit the consummation of the transactions called for by this
Agreement which relates to the Conveyed Stock. The Trustees have
been duly appointed as Trustees of the ▇▇▇▇▇ Trust and the York
Trust, respectively, in accordance with the governing documents
of the ▇▇▇▇▇ Trust and the York Trust and such Trustees have been
and are vested with all necessary authority and power to enter
into this Agreement on behalf of the ▇▇▇▇▇ Trust and the York
Trust, as the case may be, and to consummate the transactions
provided for in this Agreement.
(ii) The ▇▇▇▇▇ Trust and the York Trust with respect to the Conveyed
Stock owned of record and beneficially by each of such Trust
entities constitutes all of the outstanding voting securities of
VCI and Premiere and there are not outstanding any options,
warrants or other rights providing, upon the exercise thereof,
for the issuance of any voting security of VCI and/or Premiere or
any security convertible into any voting security of VCI and
Premiere.
(iii)The ▇▇▇▇▇ Trust and the York Trust, with respect to the Conveyed
Stock owned by them of record and beneficially immediately prior
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to the Closing Date, have good and clean title to such Conveyed
Stock and there are no liens or encumbrances affecting such good
and clean title to the Conveyed Stock.
(iv) As to VCI and Premiere, the ▇▇▇▇▇ Trust and the York Trust (in
accordance with their respective ownership in the Conveyed Stock)
represent to LIFE as to VCI and Premiere as follows:
(a) The assets of VCI and Premiere, as of the date of
this Agreement and as of the Closing Date, are and
will be constituted solely by the non-voting
membership interest units in the limited liability
companies as are scheduled in Schedule III to this
Agreement. VCI and Premiere have no other significant
assets.
(b) To the best of the knowledge of the ▇▇▇▇▇ Trust and
the York Trust, the non-voting membership interest
units scheduled on Schedule IV hereto have been
validly issued by the issuing limited liability
company in conformance with Nevada law.
(c) VCI and Premiere are validly existing corporations in
good standing under the laws of the State of Florida.
(d) Each of the issuing limited liability companies
relating to the non-voting membership interest units
scheduled on Schedule III hereto to the best of the
knowledge of the ▇▇▇▇▇ Trust and the York Trust, have
been validly formed and exist under Nevada law, and
are in good standing under Nevada law.
(e) VCI and Premiere have filed all necessary tax returns
reflecting any tax due for any reporting period.
(f) VCI and Premiere are not panties to any material
contract providing for a consideration to be paid by
VCI and/or Premiere in excess of $1,000 or a term of
performance extending beyond December 31, 2002.
B. BY LIFE. LIFE represents to the ▇▇▇▇▇ Trust and the York Trust and
the Trustees that LIFE is acquiring the Conveyed Stock of VCI and Premiere for
investment purposes and not with a view to the resale or distribution thereof
and recognize that the Conveyed Stock constitutes Restricted Securities as that
term is utilized in Commission Rule 144.
5. RECONVEYANCE OF CONVEYED STOCK. The ▇▇▇▇▇ Trust, the York Trust and
LIFE acknowledge that, upon consummation of the asset acquisition transactions
between LIFE and the several limited liability companies, as will be governed by
the Asset Purchase Agreement included herewith as Schedule II, LIFE will acquire
from some of such limited liability companies life insurance policies which may
be characterized by irregularities with respect to the issuance thereof. Such
life insurance policies are generally referred to by LIFE and the several
limited liability companies as the "▇▇▇▇▇▇ Policies". LIFE estimates that the
face amount or death benefit of such ▇▇▇▇▇▇ Policies is approximately
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[$13,250,000]. To the extent that the ▇▇▇▇▇▇ Policies are acquired by LIFE in
the asset acquisition transactions involving all or some of the 62 limited
liability companies, the ▇▇▇▇▇ Trust and the York Trust agree to acquire from
LIFE all of such ▇▇▇▇▇▇ Policies and to remit to LIFE as consideration for such
acquisition shares of the Class B Preferred Stock of LIFE being issued hereunder
as consideration for the acquisition of the Conveyed Stock. For purposes of such
transaction, each share of Class B Preferred Stock of LIFE shall be attributed a
value of $25. The consideration to be paid by the ▇▇▇▇▇ Trust and the York Trust
for the acquisition of such ▇▇▇▇▇▇ Policies shall be the aggregate face amount
or death benefit of such ▇▇▇▇▇▇ Policies being acquired divided by such
attributed $25 per Class B Share amount. The obligation to reconvey shares of
the Class B Preferred Stock of LIFE in connection with the ▇▇▇▇▇▇ Policies
acquisition transaction shall be the several obligation of the ▇▇▇▇▇ Trust and
the York Trust and shall be apportioned between the ▇▇▇▇▇ Trust and the York
Trust in accordance with the number of shares of Common Stock and Class B
Preferred Stock of LIFE being conveyed to the ▇▇▇▇▇ Trust and the York Trust
hereunder. The ▇▇▇▇▇ Trust, the York Trust and LIFE may subsequently agree to
further modifications with respect to the number of shares of common stock and
Class B Preferred Stock of LIFE which shall be held of record and beneficially
owned by the ▇▇▇▇▇ Trust and the York Trust (or the designees thereof). Any such
further modifications shall be evidenced in a written addendum to this Agreement
duly executed by the ▇▇▇▇▇ Trust, the York Trust and LIFE. The shares of Common
Stock and Class B Preferred Stock of LIFE being conveyed under the provisions of
this Agreement may be conveyed to such persons and/or entities as instructed by
the Trustees.
6. DESCRIPTION OF LIFE COMMON STOCK AND CLASS B PREFERRED STOCK. Set
forth as Schedule IV to this Agreement is a description of the Common Stock and
Class B Preferred Stock of LIFE to be issued to the ▇▇▇▇▇ Trust and the York
Trust (or their designees) pursuant to this Agreement. Schedule IV is an extract
from an initial draft of the Private Offering Memorandum of LIFE relating to the
private offer and sale of its Class A Preferred Stock.
7. CLOSING. The consummation of the transactions called for by this
Agreement shall occur at a time and place mutually determined by the Trustees
and LIFE but shall occur not later than March 31, 2002. At such closing, the
Trustees shall deliver to LIFE the certificates representing the Conveyed Stock
endorsed in a manner satisfactory to legal counsel for LIFE. LIFE shall deliver
to the ▇▇▇▇▇ Trust and the York Trust (or to their designees) certificates
evidencing the Common Stock and the Class B Preferred Stock of LIFE being issued
and conveyed hereunder, which certificates shall be in a form satisfactory to
legal counsel for the ▇▇▇▇▇ Trust and the York Trust and which certificates
shall bear an appropriate restrictive endorsement in recognition of the
restrictive character of the Common Stock and the Class B Preferred Stock issued
and being conveyed hereunder. The ▇▇▇▇▇ Trust, the York Trust, the Trustees and
LIFE shall deliver such additional documents as may be reasonably required in
order to facilitate the consummation of the transactions provided for in this
Agreement.
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8. INDEMNIFICATION, LITIGATION MATTERS. Set forth in Schedule V to this
Agreement is information identifying items of litigation or any other claim
assertion procedure with respect to which VCI and/or Premiere are party
defendants or respondents. Schedule V identifies the plaintiffs and all
defendants in each such item of litigation, the nature of the allegations
underlying the claim, the nature and amount of relief sought and the court or
other tribunal in which each item of litigation or claim is pending. The ▇▇▇▇▇
Trust and the York Trust represent with respect to each item of litigation so
scheduled that a vigorous defense is being conducted by VCI or Premiere, as the
case may be, and that valid defenses exist with respect to each such item of
litigation scheduled. With respect to each such item of litigation scheduled on
Schedule V hereto and with respect to each item of litigation or other claims
asserted against VCI and/or Premiere which occur subsequent to the date of this
Agreement, the ▇▇▇▇▇ Trust and the York Trust, severally, and in an amount equal
to their respective entitlements to the shares of Common Stock and Class B
Preferred Stock of LIFE being issued hereunder, agree to indemnify LIFE with
respect to any an all Losses incurred by LIFE as a result of the existence of
such present litigation so scheduled or litigation which may be initiated in the
future time. For purposes of such indemnification, the word "Losses" means
indemnification with respect to damages of any type whatsoever which may be
sustained by LIFE as a result of the prosecution of such present and future
litigation, as well as attorney fees and costs, as such may be incurred by LIFE
in connection with the conduct of any defense or other action (including appeal)
relative to such pending litigation or litigation or claims initiated at times
subsequent to the date of this Agreement. At its sole option, LIFE may assume
and exercise control over the defense of such litigation or claim item so
scheduled or such litigation or claims as may be asserted in the future against
LIFE as a result of the conduct, action or inaction of VCI and/or Premiere prior
to the date of this Agreement.
9. MISCELLANEOUS PROVISIONS.
A. NOTICES. All notices or other communications required or permitted
under this Agreement shall be in writing and shall be given by mail or by
facsimile transmission (in the event of facsimile transmission, a conforming
copy shall be mailed postage prepaid simultaneously therewith). If notice is to
be given to If notice is to be given to the ▇▇▇▇▇ Trust, such notice shall be
deemed given when provided in the manner provided herein to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
Trustee, the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Trust, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, 941/955-1999, facsimile 941/955-1871. If notice is to be given to
the York Trust, such notice shall be deemed given when provided in the manner
provided herein to ▇. ▇▇▇▇▇▇▇ York, Trustee, the ▇. ▇▇▇▇▇▇▇ York Trust, ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, 941/955-1999, facsimile
941/955-1871. If notice is to be given to VCI and/or Premiere, such notice shall
be deemed given when provided in the manner provided herein to ▇▇▇▇ Clause,
Esq., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, 941/955-1999,
facsimile 941/955-1871
B. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the Agreement Parties and their respective successors,
assigns, heirs and representatives.
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C. BACKGROUND STATEMENT AND SCHEDULES. The BACKGROUND statement of the
Agreement and the Schedules shall be construed with and as an integral part of
this Agreement to the same extent as if such Background statement and Schedules
had been set forth verbatim herein.
D. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding on the part of the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Trust, the ▇. ▇▇▇▇▇▇▇ York
Trust and LIFE, and any and all previous agreements and understandings are
superseded by this Agreement.
E. ATTORNEYS' FEES IN CONNECTION WITH LITIGATION. In the event of any
litigation arising out of or in connection with this Agreement, the prevailing
party shall be entitled to recover from the other its reasonable attorney's fees
and costs.
F.. COOPERATION. LIFE, the ▇▇▇▇▇ Trust, the York Trust and the Trustees
agree to execute such instruments and take such other actions as contemplated by
this Agreement to effectuate closing.
G. APPLICABLE LAW. This Agreement shall be governed by the laws of the
State of Florida except in those instances where the laws of Nevada are
applicable to LIFE, which circumstances relate to the organization and existence
of LIFE under Nevada corporate law.
H. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original of this Agreement, but
all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the ▇▇▇▇▇ Trust and the York Trust, by action of
their Trustees and LIFE, have executed this Agreement as of the date and year
first above written.
LIFE INVESTMENT FUNDING ENTERPRISES,
INC., a Nevada corporation
By__________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
ATTEST:
----------------------------------------
Secretary
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THE ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ TRUST
By__________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, its sole Trustee
THE ▇. ▇▇▇▇▇▇▇ YORK TRUST
By__________________________________
▇. ▇▇▇▇▇▇▇ York, its sole Trustee
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FIRST ADDENDUM TO AGREEMENT PROVIDING
FOR FORMATION AND CAPITALIZATION
THIS First Addendum to the AGREEMENT PROVIDING FOR FORMATION AND
CAPITALIZATION (the "Addendum" and the "Agreement", respectively) is made as of
September 19, 2002 by and between the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ REVOCABLE TRUST and the ▇.
▇▇▇▇▇▇▇ YORK REVOCABLE TRUST (referred to in this Addendum and the Agreement as
the "▇▇▇▇▇ Trust" and the "York Trust", respectively) and LIFE INVESTMENT
FUNDING ENTERPRISES, INC., a corporation organized and existing pursuant to the
laws of the State of Nevada and having its principal place of business at
Sarasota, Florida (herein referred to as "LIFE").
ADDENDUM BACKGROUND
The ▇▇▇▇▇ Trust and the York Trust entered into the Agreement during
February 2002, which Agreement provided for the initial capitalization of LIFE
and for other matters relating to cash advances to be made by the ▇▇▇▇▇ Trust
and the York Trust and affiliates thereof to LIFE and the reconveyance of the
shares of Class B Preferred Stock and Common Stock of LIFE conveyed to the ▇▇▇▇▇
Trust and the York Trust under the provisions of the Agreement.
Unless otherwise indicated in this Addendum, capitalized terms have the
meanings attributed to them in the Agreement.
The ▇▇▇▇▇ Trust, the York Trust and LIFE affirm all of the provisions
and terms of the Agreement and by means of this Addendum wish to provide for
further provisions which arise from the development of events which relate to
the carrying out of the Business Plan of LIFE and its continuing plan of
capitalization, as particularly constituted by the limited and private offering
of the Class A Preferred Stock of LIFE.
Section 5 of the Agreement which is captioned "RECONVEYANCE OF CONVEYED
STOCK" provides under certain circumstances for the reconveyance to LIFE by the
▇▇▇▇▇ Trust and the York Trust of shares of the Class B Preferred Stock of LIFE
issued to the ▇▇▇▇▇ Trust and the York Trust under the provisions of the
Agreement. The ▇▇▇▇▇ Trust, the York Trust and LIFE reconfirm the provisions and
terms of Section 5 of the Agreement and provide as additional provisions of
Section 5 that shares of Class B Preferred Stock of LIFE may be reconveyed to
LIFE by the ▇▇▇▇▇ Trust and the York Trust in payment of that certain Class A
Preferred Stock share subscription obligation existing between the ▇▇▇▇▇ Trust,
the York Trust and LIFE and relating to the private offer and sale of a maximum
of 200,000 shares of Class A Preferred Stock of LIFE, all as is more fully
described in a Second Supplement to the Memorandum dated September 19, 2002 (the
"Supplement"). Any such conveyance made under the circumstances described in the
Supplement and involving the reconveyance of Class B Preferred Stock from the
▇▇▇▇▇ Trust and the York Trust to LIFE shall be attributed a value of $10 per
share of Class B Preferred Stock. The Supplement is included with this Addendum
as Addendum Schedule I.
IN WITNESS WHEREOF, the ▇▇▇▇▇ Trust, the York Trust and LIFE by action
of their Trustees and authorized officers have executed this First Addendum to
the Agreement as of September 19, 2002.
LIFE INVESTMENT FUNDING ENTERPRISES,
INC., a Nevada corporation
By__________________________________
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇, President
ATTEST:
-------------------------------------
Secretary
THE ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ REVOCABLE TRUST
By__________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, its sole Trustee
THE ▇. ▇▇▇▇▇▇▇ YORK REVOCABLE TRUST
By__________________________________
▇. ▇▇▇▇▇▇▇ York, its sole Trustee
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